Asset Purchase Agreement between GlobalOptions Group, Inc. and James Lee Witt Associates, LLC (January 13, 2006)

 Exhibit 10.1 Execution Copy ASSET PURCHASE AGREEMENT BY AND AMONG GLOBALOPTIONS GROUP, INC. AND JAMES LEE WITT ASSOCIATES, LLC DATED AS OF JANUARY 13, 2006  EXHIBITS EXHIBIT A: Form of True-up Statement EXHIBIT A-1: Form of Closing Date Statement EXHIBIT B: Form of Promissory Note EXHIBIT C: Earnout EXHIBIT D: Allocation of Purchase Price EXHIBIT E: Reserved EXHIBIT F: Form of Assignment and Assumption of Lease EXHIBIT G: Form of Escrow Agreement EXHIBIT H: Form of Witt Employment Agreement EXHIBIT I: Stock Option Plan  SCHEDULES Schedule 1.1(a) Real Property Schedule 1.1(b) Tangible Property Schedule 1.1(c) Accounts Receivable Schedule 1.1(d) Seller Contracts Schedule 1.1(e) Governmental Authorizations Schedule 1.1(g) Intellectual Property Assets Schedule 1.1(i) Third Party Claims By Seller Schedule 1.1(j) Deposits and Prepayments Schedule 1.1(k) Independent Contractor Agreements Schedule 1.2(h) Certain Excluded Assets Schedule 1.4(a)(iv) Certain Assumed Liabilities Schedule 2.1(a) Foreign Jurisdictions Schedule 2.1(c) Equity Securities of Other Persons owned by Seller Schedule 2.2(b) Conflicts Schedule 2.2(c) Consents or Notices Required Schedule 2.3 Membership Interests Schedule 2.4 Financial Statements Schedule 2.6 Real Property Schedule 2.7(a) Title Schedule 2.7(b) Tangible Personal Property Schedule 2.9 Employees Schedule 2.10 Employee Benefits Schedule 2.11(b) Non-Transferable Governmental Authorizations Non-Transferable Schedule 2.12(a) Legal Proceedings Schedule 2.13 Insurance Policies Schedule 2.14(a) Seller Contracts Schedule 2.14(b) Independent Contractor Agreements Schedule 2.16 Related Person Transactions Schedule 2.20 Accounts Receivable Schedule 2.21 Material Customers Schedule 2.23 Customer Prepayments and Deposits Schedule 3.3 Buyer Consents and Approvals Schedule 3.6(a) Buyer Outstanding Convertible or Exchangeable Securities Schedule 8.1(a) Buyer Employee Benefits Schedule 8.10 Seller Sick Leave as of the Closing Date  ASSET PURCHASE AGREEMENT THIS ASSET PURCHASE AGREEMENT (this "AGREEMENT") is made as of January 13, 2006, by and among GLOBALOPTIONS GROUP, INC., a Nevada corporation ("BUYER") and JAMES LEE WITT ASSOCIATES, LLC, a Delaware limited liability company ("SELLER"). All capitalized terms used herein but not otherwise defined shall have the meanings given such terms in ANNEX A, attached hereto. RECITALS Seller desires to sell, and Buyer desires to purchase, the Assets (as defined below) of Seller for the consideration and on the terms set forth in this Agreement. AGREEMENT The parties, intending to be legally bound, hereby agree as follows: ARTICLE I SALE AND TRANSFER OF ASSETS; CLOSING SECTION 1.1 ASSETS TO BE SOLD. Upon the terms and subject to the conditions set forth in this Agreement, at the Closing (as defined in SECTION 1.6 below), Seller shall sell, convey, assign, transfer and deliver to Buyer, and Buyer shall purchase and acquire from Seller, free and clear of any charge, claim, equitable interest, lien, option, pledge, security interest, mortgage, encroachment, or restriction of any kind (an "ENCUMBRANCE"), other than any Encumbrance identified on ANNEX B (a "PERMITTED ENCUMBRANCE"), all of Seller's property and assets, real, personal or mixed, tangible and intangible, of every kind and description, wherever located, necessary to conduct Seller's crisis and emergency management consulting business (the "BUSINESS"), as currently conducted as of the Closing, excluding the Excluded Assets, but including the following: (a) all leasehold interest in all real property leased by Seller (the "REAL PROPERTY") described in SCHEDULE 1.1(A); (b) all equipment, furniture, office equipment, computer hardware, supplies, materials, vehicles, the RV, and other items of tangible personal property (other than inventory) of every kind owned or leased by Seller (the "TANGIBLE PERSONAL PROPERTY") described in SCHEDULE 1.1(B); (c) all trade accounts receivable and all other accounts or notes receivable of Seller described in SCHEDULE 1.1(C), as updated from time to time (the "ACCOUNTS RECEIVABLE");  (d) excluding the NDAs (as defined on SCHEDULE 1.4(A)(IV)), the Assumed Employment Agreements, the Equipment Leases, the Leases and the Independent Contractor Agreements, any oral or written contract or agreement described on SCHEDULE 1.1(D) (i) under which Seller has or may acquire any rights or benefits, (ii) under which Seller has or may become subject to any obligation or liability, (iii) by which Seller or any of the Assets is or may become bound (any such contract or agreement, a "SELLER CONTRACT"); (e) all Governmental Authorizations (as defined in SECTION 2.11(B)) and all pending applications therefor or renewals thereof, set forth on SCHEDULE 1.1(E), in each case to the extent transferable to Buyer; (f) all data and records related to the operations of Seller, and copies of all records referenced in SECTION 1.2(E) below; (g) all of the intangible rights and property of Seller, including the Intellectual Property Assets (as defined in SECTION 2.15) described on SCHEDULE 1.1(G) and the Proprietary Assets (as defined in SECTION 2.15), going concern value, goodwill, telephone, telecopy and e-mail addresses, and listings including the name "James Lee Witt Associates, LLC" and abbreviations thereof, except as set forth in SECTION 1.2 below; (h) all insurance benefits, including rights and proceeds, arising from or relating to the Assets after the date hereof and prior to the Closing Date, unless expended prior to the Closing Date in accordance with this Agreement; (i) all claims of Seller against third parties relating to the Asset set forth on SCHEDULE 1.1(I); (j) all rights of Seller relating to employee advances, deposits and prepaid expenses, claims for refunds and rights to offset in respect thereof which are not excluded under SECTION 1.2(F), set forth on SCHEDULE 1.1(J) (the "DEPOSITS AND PREPAYMENTS"); and (k) all rights under all subcontractor and independent consultant agreements set forth on SCHEDULE 1.1(K) (the "INDEPENDENT CONTRACTOR AGREEMENTS"). Notwithstanding the foregoing, the transfer of the Assets pursuant to this Agreement will not include the assumption of any liability or obligation in respect thereof unless Buyer expressly assumes such liability or obligation pursuant to SECTION 1.4(A). SECTION 1.2 EXCLUDED ASSETS. Notwithstanding anything to the contrary contained in SECTION 1.1 or elsewhere in this Agreement, the following items (collectively, the "EXCLUDED ASSETS") are not part of the sale and purchase contemplated hereunder, are excluded from the Assets, and will remain the property of Seller after the Closing: (a) cash, cash equivalents and short-term investments; -2-  (b) the certificate of organization (and any amendments thereto), minute book, membership records and company seal of Seller; (c) the membership interests of Seller; (d) all of Seller's insurance policies and rights thereunder (except to the extent specified in SECTIONS 1.1(H) and (I)); (e) all personnel records and other records that Seller is required by law to retain in its possession; (f) all claims for refund of taxes and other governmental charges of whatever nature; (g) all rights in connection with and assets of any Employee Benefit Plans (as defined in SECTION 2.10 below); (h) all rights of Seller under this Agreement and in connection with the transactions contemplated hereby, including without limitation the rights of Seller under the Bill of Sale, the Assignment and Assumption Agreement, the Assignment and Assumption of Lease, the Promissory Note, and the Escrow Agreement; (i) the property and assets expressly designated in SCHEDULE 1.2(H); and (j) the use of the name "James Lee Witt" by James Lee Witt, an individual and member of Seller, for non-commercial purposes, and for certain commercial purposes following the termination of the Witt Employment Agreement which uses do not conflict with any provisions of the Witt Employment Agreement. SECTION 1.3 PURCHASE PRICE. (a) The initial consideration for the Assets (the "INITIAL PURCHASE PRICE") will be Six Million and No/100 Dollars ($6,000,000) wherein the Initial Purchase Price shall include: (i) cash in the amount of Three Million Six Hundred Thousand and No/100 Dollars ($3,600,000); (ii) a promissory note in the principal amount of Four Hundred Thousand and No/100 Dollars ($400,000), in the form of EXHIBIT B (the "PROMISSORY NOTE"); (iii) such number of shares of Buyer Common Stock which equals Two Million and No/100 Dollars ($2,000,000) ("STOCK PORTION"), as such Stock Portion is determined in accordance with SECTION 1.3(D); and (iv) the assumption of the Assumed Liabilities (as defined in SECTION 1.4 below); PROVIDED, HOWEVER, (a) there shall be a dollar-for-dollar increase adjustment to the Initial Purchase Price, if at the Closing Date, the sum of (x) the Accounts Receivable and (y) Deposits and Prepayments exceeds the sum of (1) the amount outstanding under Seller's Bank Line of Credit as of the Closing Date, (2) the Trade Accounts Payable and (3) Accrued Expenses, or (b) there shall be a dollar-for-dollar decrease to the Initial Purchase Price, if at the Closing Date the sum of (x) the amount outstanding under Seller's Bank Line of Credit as of the Closing Date, (y) the Trade Accounts Payable -3-  and (z) Accrued Expenses exceeds the sum of (1) the Accounts Receivable and (2) Deposits and Prepayments. Such adjustment shall be equal to the amount of excess, and shall be paid to either Seller, in cash, if the excess increases the Initial Purchase Price or Buyer, in cash, if the excess decreases the Initial Purchase Price, as applicable as part of the Initial Purchase Price within ninety (90) days following the Closing Date (the "PURCHASE PRICE ADJUSTMENT"). Buyer shall return, assign, transfer, convey and deliver to Seller and any all such Accounts Receivable which have not been collected in full by Buyer as of the day that is ninety (90) days following the Closing Date, and Buyer shall relinquish all of its rights with respect to such Accounts Receivable, provided that if such Account Receivable was included in the Closing Date Statement (defined below) then such Account Receivable was not included in the True-Up Statement. Seller shall have the sole right to any amounts collected by Seller with respect to such Accounts Receivable returned to Seller by Buyer. (b) Seller shall prepare a closing date statement which contains estimates only and which estimates shall be based upon Seller's books and records as of the close of business on the business day immediately preceding the Closing Date (the "CLOSING DATE STATEMENT"), which shall be in the form of EXHIBIT A-1, and shall be delivered at Closing. On or before ninety (90) days after the Closing Date, Seller shall prepare a True-up Statement, substantially in the form of EXHIBIT A, in order to calculate the Purchase Price Adjustment, if any, to the Initial Purchase Price. (c) In accordance with SECTION 1.7(B), at the Closing, the Initial Purchase Price shall be delivered by Buyer to Seller and Escrow Agent, as follows: (i) the payment of Three Million Six Hundred Thousand and No/100 Dollars ($3,600,000) shall be delivered to Seller by wire transfer of immediately available funds to an account specified by Seller; (ii) the Promissory Note shall be delivered to Seller; (iii) stock certificates representing such number of shares of the Buyer Common Stock determined in accordance with SECTION 1.3(D), which shares of Buyer Common Stock shall have a value equal to One Million Eight Hundred Thousand and No/100 Dollars ($1,800,000) (the "CLOSING STOCK PAYMENT") shall be delivered to Seller; and (iv) stock certificates representing such number of shares of the Buyer Common Stock determined in accordance with SECTION 1.3(D), which shares of Buyer Common Stock shall have a value equal to Two Hundred Thousand and No/100 Dollars ($200,000) (the "ESCROWED STOCK") shall be delivered to the Escrow Agent and held by the Escrow Agent pursuant to the Escrow Agreement. The Promissory Note shall be paid, and the Escrowed Stock shall be released, in accordance with the terms of the Promissory Note and the Escrow Agreement, respectively. (d) The number of shares of Buyer Common Stock comprising the Stock Portion shall be equal to the number of shares resulting from $2,000,000 divided by the Fair Market Value of a Share (which thirty (30) trading day period referenced in the definition of the Fair Market Value of a Share shall end at the close of business on the trading day immediately preceding the Closing Date). (e) As set forth in more detail below, Buyer shall pay additional consideration to Seller if Seller Division achieves certain revenue goals subsequent to the Closing Date (the "EARNOUT") and said amount of the Earnout shall be included as part of the purchase price. -4-  (i) For the twelve (12) month periods ended on the first, second, third and fourth anniversaries of the Closing Date (the "EARNOUT PERIOD"), Seller shall be paid an Earnout in such amounts upon the meeting of such targets by Seller Division during each twelve (12) month period, as set forth on EXHIBIT C hereto setting forth the Earnout calculation. The Earnout shall be limited to a cumulative amount of $15,400,000 (the "MAXIMUM EARNOUT Amount") during the Earnout Period and subject to SECTIONS 1.3(E)(III) - (IV), below. Notwithstanding the foregoing, for a period of twelve (12) months immediately following the Closing Date, the first $400,000 of the Earnout shall be subject to offset for any unrecorded or undisclosed liabilities or claims of Seller paid by Buyer as a result of this transaction (the "$400,000 OFFSET") if the Promissory Note and the Escrowed Stock are insufficient to cover such claims. (ii) During the Earnout Period, the Earnout shall be paid by Buyer to Seller within sixty (60) days of the date of the respective anniversary of the Closing Date as follows: (A) the first $4,000,000 of the Earnout shall be paid in cash; and (B) the remainder of the Earnout shall be paid 50% in cash and 50% in shares of Buyer Common Stock (which number of shares shall be calculated by dividing the total amount payable of the Earnout in shares of Buyer Common Stock by the Fair Market Value of a Share which shall be determined on the last day of the last month of the twelve (12) month period in which the Earnout is earned). (iii) The following forms of revenue shall be included in the calculation of revenue targets of the Earnout set forth in EXHIBIT C: (A) any revenue with a Gross Margin of at least 50% that is generated by Seller Division which is attributable to Seller's historical lines of business and operations; (B) any revenue generated from any "tuck-in" acquisition or other acquisition by Seller Division, provided such revenue exceeds a 50% Gross Margin and such revenue exceeds the baseline revenue used for determining the purchase price of such "tuck-in" acquisition; and (C) any revenue generated by Buyer or other divisions of Buyer which are attributable to introductions made by Seller Division or employees or advisors of Seller Division, provided such revenues exceed a 50% Gross Margin. (iv) The Earnout payable by Buyer to Seller shall be modified if the following events occur: (A) If the Witt Employment Agreement (as defined in SECTION 1.7(A)(VI) below) is terminated in case of death or disability, or is terminated by Buyer or its affiliate without Cause (as such term is defined in the Witt Employment -5-  Agreement), or by Witt for Good Reason (as such term is defined in the Witt Employment Agreement) any time during the Earnout Period, the Earnout shall continue to accrue and be paid for a period of twelve (12) months from the date of such termination, if such Earnout is earned. The Earnout shall be paid in accordance with SECTION 1.3(E)(II); PROVIDED, HOWEVER, that if the twelve (12) months following such termination do not elapse on an anniversary of the Closing Date, then the portion of the Earnout which accrues following the anniversary shall be paid within thirty (30) days of the anniversary of the date of termination of the Witt Employment Agreement; (B) If Witt terminates the Witt Employment Agreement without Good Reason, the Earnout shall cease immediately, and no payment of any Earnout for said year or thereafter shall be paid; or (C) If Buyer or its affiliate terminates the Witt Employment Agreement for Cause, the Earnout shall be prorated and paid for such period up and until the date of termination, if any Earnout has been earned prior to such date of termination, and the Earnout shall be discontinued from such termination date. SECTION 1.4 LIABILITIES. (a) At the Closing, Buyer shall assume and agree to fully discharge Seller's Bank Line of Credit and only the following specifically enumerated liabilities and obligations of Seller (the "ASSUMED LIABILITIES"): (i) any trade account payable of Seller which remains unpaid at the Closing (the "TRADE ACCOUNTS PAYABLE"); (ii) any debt, liability, or obligation of Seller relating to the ownership or operation of the Assets (other than the Retained Liabilities) arising after the Closing Date; (iii) any obligations of Seller under any Seller Contract or Independent Contractor Agreement arising, on, prior to or after the Closing Date (other than any liability arising out of a breach which occurred prior to the Closing); (iv) any liability of Seller described in SCHEDULE 1.4(A)(IV), including amounts owed to Chambers Bank under Seller's Bank Line of Credit; (v) any liability or obligations of Seller arising subsequent to Closing out of or relating to the employment agreements between Seller and each of Mark Merritt, Barry Scanlon and Pate Felts (the "ASSUMED EMPLOYMENT AGREEMENTS"); and (vi) the following accrued expenses of Seller: finders' fees associated with such Finders Fees Agreements (as such term is defined in SCHEDULE 1.1(D)), accrued vacation, insurance expenses related to any Account Receivable, payroll taxes related to any Account Receivable, sales/use taxes related to any Account Receivable, prepayments and retainers, lease -6-  deposits, and other miscellaneous expenses related to Accounts Receivable (collectively, "ACCRUED EXPENSES"). (b) All liabilities and obligations of Seller including, without limitation any legal and accounting fees incurred by Seller in connection with the transactions contemplated by this Agreement, whether arising prior to or after the Closing Date, other than the Assumed Liabilities, are referred to as the "RETAINED LIABILITIES". All of the Retained Liabilities will remain the sole responsibility of and will be retained, paid, performed and discharged solely by Seller. SECTION 1.5 ALLOCATION. The Purchase Price will be allocated as set forth in EXHIBIT D. After the Closing, the parties shall make consistent use of the allocation specified in EXHIBIT D for all tax purposes and in any tax returns filed with the Internal Revenue Service in respect thereof, including IRS Form 8594. SECTION 1.6 CLOSING. The consummation of the purchase and sale provided for in this Agreement (the "CLOSING") will take place at the offices of Buyer's legal counsel's office at 1201 15th Street, N.W. Second Floor, Washington, D.C. 20005, at 10:00 a.m. (local time) on a date mutually agreed to by the parties but not later than February 28, 2006 (the "CLOSING DATE"); PROVIDED, HOWEVER, that the Closing Date shall automatically be extended, if necessary, to permit Seller sufficient time to deliver to Buyer the audited financial statements in a form which complies with SECTION 2.4 hereof. SECTION 1.7 CLOSING OBLIGATIONS. (a) At the Closing, Seller shall deliver, or caused to be delivered, to Buyer: (i) a bill of sale for all of the Assets in a form to be agreed upon (the "BILL OF SALE"), executed by Seller; (ii) an assignment of all of the Assets which are intangible personal property in a form to be agreed upon, which assignment will also contain Buyer's undertaking and assumption of the Assumed Liabilities including, without limitation, the Assumed Employment Agreements (the "ASSIGNMENT AND ASSUMPTION AGREEMENT"), executed by Seller; (iii) with respect to each leasehold interest in real property leased by Seller as set forth in SCHEDULE 1.1(A), an Assignment and Assumption of Lease in the form of EXHIBIT F (the "ASSIGNMENT AND ASSUMPTION OF LEASE"), executed by Seller, and a consent to such Assignment and Assumption of Lease by the lessor, if such lessor's consent to assignment is required by the terms of the applicable lease; (iv) copies of any Pre-Closing Consent or Non-Material Consent, obtained by Seller prior to Closing; (v) an escrow agreement in the form of EXHIBIT G, executed by Seller and the Escrow Agent (the "ESCROW AGREEMENT"); -7-  (vi) the employment agreement between Witt and Buyer, in the form of EXHIBIT H, executed by Witt (the "WITT EMPLOYMENT AGREEMENT") and any amendments to the Assumed Employment Agreements, if any, required to make such agreements' non-compete provisions materially consistent with those contained in the Witt Employment Agreement; (vii) a certificate of an officer or authorized representative of Seller certifying (A) as complete and accurate as of the Closing, attached copies of the Operating Agreement of Seller, (B) attached requisite resolutions or actions of the requisite Members of Sellers approving the execution and delivery of this Agreement, the consummation of the transactions contemplated hereby and the change of name contemplated by SECTION 8.7, (C) the incumbency of the officers or authorized representative of Seller executing this Agreement and any other document relating to the transactions contemplated hereby; (viii) the certificate of organization and all amendments thereto of Seller, duly certified as of a recent date by the Secretary of State of Delaware; (ix) certificates as to the good standing of Seller, executed by the appropriate officials of the jurisdiction of Seller's organization and each foreign jurisdiction in which Seller is licensed or qualified to do business as specified in SCHEDULE 2.1(A); (x) the Closing Date Statement; and (xi) any amendments or supplements to the Schedules attached to this Agreement for the purposes of including in such Schedules any matter hereafter arising or discovered which, if existing or known as of the date of this Agreement, would have been required to be set forth or described in such Schedules or that is necessary to complete or correct any information in any representation or warranty of Seller contained in this Agreement. Upon receipt of such updated schedules, Buyer may either elect to terminate this Agreement, if a disclosure on such updated schedules would have resulted in a breach of this Agreement if such updated disclosure was not made, or Buyer may elect to consummate the transaction contemplated by this Agreement. In either such case, Buyer shall waive any other remedy that Buyer may have had with respect to disclosures made to Buyer after the date hereof which appear on the updated schedules. (b) At the Closing, Buyer shall deliver to Seller: (i) Three Million Six Hundred Thousand and No/100 Dollars ($3,600,000), by wire transfer of immediately available funds to an account specified in writing by Seller (which wire transfer instructions must be delivered by Seller to Buyer at least one (1) Business Day prior to Closing); and the Closing Stock Payment; (ii) the Assignment and Assumption Agreement, executed by Buyer; (iii) the Escrow Agreement, executed by Buyer and the Escrow Agent; (iv) the Witt Employment Agreement and the amendments to the Assumed Employment Agreements, if any, required to make such agreements' -8-  non-compete provisions materially consistent with those contained in the Witt Employment Agreement, each executed by Buyer; (v) a certificate of the Secretary of Buyer certifying, as complete and accurate as of the Closing, attached copies of the bylaws of Buyer and certifying and attaching all requisite resolutions or actions of Buyer's board of directors approving the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby (including the reservation of shares of Buyer Common Stock to be issued in connection with the transactions contemplated hereby) and certifying to the incumbency of the officers of Buyer executing this Agreement and any other document relating to the transactions contemplated hereby; (vi) a stock option plan, attached hereto as EXHIBIT I for the former employees of Seller to be available to said employees from Buyer subsequent to the Closing Date, and said option plan will contain in part: (x) stock options at the value of $500,000 as of the Closing Date, based upon the fair market value of a share of Buyer's Common Stock as of the Closing Date (as fair market value is defined in such stock option plan, attached hereto as EXHIBIT I); (y) with a vesting schedule of four years; and (z) distribution list of said stock options to employees determined by Witt; (vii) the certificate of incorporation (and all amendments thereto) of Buyer, duly certified as of a recent date by the Secretary of State of the State of Nevada; (viii) the Promissory Note; and (ix) any amendments or supplements to the Schedules attached to this Agreement for the purposes of including in such Schedules any matter hereafter arising or discovered which, if existing or known as of the date of this Agreement, would have been required to be set forth or described in such Schedules or that is necessary to complete or correct any information in any representation or warranty of Seller contained in this Agreement. Upon receipt of such updated schedules, Seller may either elect to terminate this Agreement, if a disclosure on such updated schedules would have resulted in a breach of this Agreement if such updated disclosure was not made, or Seller may elect to consummate the transaction contemplated by this Agreement; PROVIDED, HOWEVER, that Seller may not terminate this Agreement if any amendments or supplements to SCHEDULE 3.6(A) relate to acquisitions made by Buyer or financing provided to Buyer. In either such case, Seller shall waive any other remedy that Seller may have had with respect to disclosures made to Seller after the date hereof which appear on the updated schedules. (c) At the Closing, Buyer shall deliver to the Escrow Agent the Escrowed Stock. SECTION 1.8 CONSENTS. Seller shall use its commercially reasonable efforts to obtain consent or Novation for assignment or transfer, as applicable, of Seller Contracts relating to the Material Customers and the Governmental Authorizations, to the extent the law permits assignment or transfer thereof (the "PRE-CLOSING CONSENTS") prior to Closing. Except for the Pre-Closing Consents, prior to the Closing Seller shall not be required to obtain consent to assignment of any agreement or contract from any other party identified on SCHEDULE 2.2(C) (collectively, the "NON-MATERIAL CONSENTS"). Notwithstanding anything to the contrary in this Agreement, if any Pre-Closing Consents or Non-Material Consents have not been obtained at or prior to the -9-  Closing, this Agreement will not constitute an assignment or an agreement to assign if such assignment or attempted assignment would constitute a breach of the underlying agreement, contract or Government Authorization or result in a loss or diminution related thereto; PROVIDED, HOWEVER, that with respect to each Non-Material Consent and Pre-Closing Consent not obtained prior to Closing, Seller shall take commercially reasonable steps after the Closing to obtain such Pre-Closing Consents and Non-Material Consents. Buyer shall cooperate with Seller in obtaining such Pre-Closing Consents and Non-Material Consents. In addition, until such consents are obtained, Seller shall cooperate with Buyer to the extent legally permissible and feasible in any reasonable arrangement designed to provide for Buyer the benefits of the underlying agreement, contract or Governmental Authorizations, including, without limitation, the enforcement, for the account and benefit of Buyer, of any and all rights of Seller against any other Person with respect to such underlying agreement, contract or Governmental Authorization, and Buyer shall reimburse Seller for any liabilities or expenses incurred by Seller relating to such underlying agreement, contract or Governmental Authorization during such period. ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLER Seller represents and warrants to Buyer as of the date hereof and as of the Closing Date, as follows: SECTION 2.1 ORGANIZATION AND GOOD STANDING. (a) Seller is a limited liability company duly organized, validly existing, and in good standing under the laws of the State of Delaware, with the requisite limited liability company power and authority to conduct its business as it is now being conducted, to own or use its properties and assets, and to perform all its obligations under its contracts. Seller is duly qualified to do business as a foreign entity under the laws of each state or other jurisdiction set forth in SCHEDULE 2.1(A). Seller is in good standing under the laws of each of the states listed on SCHEDULE 2.1(A). (b) Complete and accurate copies of the certificate of organization and operating agreement of Seller (collectively, the "GOVERNING DOCUMENTS"), as currently in effect, have been delivered to Buyer. (c) Except as set forth in SCHEDULE 2.1(C), Seller does not own and has not entered into any agreement or contract to acquire any equity securities or other securities of any Person or any direct or indirect equity ownership interest in any other business. SECTION 2.2 AUTHORITY; NO CONFLICT. (a) This Agreement constitutes the legal, valid, and binding obligation of Seller, enforceable against Seller in accordance with its terms except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization or similar laws from time to time in effect affecting creditors' rights generally and by legal and equitable limitations on the availability of specific remedies ("ENFORCEABILITY LIMITATIONS"). Upon the due execution and delivery by Seller of each of the documents and instruments to be executed and -10-  delivered by Seller at Closing pursuant to SECTION 1.7(A) (collectively, the "SELLER'S CLOSING DOCUMENTS"), each of Seller's Closing Documents will constitute the legal, valid, and binding obligation of Seller enforceable against Seller in accordance with their respective terms. Seller has the requisite limited liability company and power to execute and deliver this Agreement and Seller's Closing Documents and to perform its obligations under this Agreement and Seller's Closing Documents, and such action has been duly authorized by all necessary limited liability company action. (b) Except as set forth in SCHEDULE 2.2(B), to the best of Seller's knowledge, neither the execution and delivery of this Agreement nor the consummation or performance of any of the transactions contemplated hereby will (with or without notice or lapse of time): (i) contravene, conflict with, or result in a violation of any provision of any of the Governing Documents of Seller, (ii) contravene, conflict with, or result in a violation of any Legal Requirement (as defined in SECTION 2.11(A) below) (except for contraventions, conflicts or violations that would not have a material adverse impact on the Assets or the Business) or Order (as defined in SECTION 2.12(B) below) of any court or governmental authority to which Seller or any of the Assets are subject, or (iii) breach any provision of, give any Person the right to declare a default, accelerate the maturity or performance of or payment under, result in the creation or imposition of any Encumbrance (except a Permitted Encumbrance) upon any of the Assets under, or cancel, or terminate, any contract to which Seller is a party or by which Seller or the Assets are bound (except to the extent any of the foregoing would not have a material adverse impact on the Assets or the Business). (c) Except as set forth in SCHEDULE 2.2(C), Seller is not required to give any notice to or obtain any consent from any Person in connection with the execution and delivery of this Agreement or the consummation or performance of the transactions contemplated hereby (including the assignment of Seller Contracts hereunder). SECTION 2.3 CAPITALIZATION. The authorized equity of Seller consists of membership interests held entirely by the Persons listed on SCHEDULE 2.3. The members of Seller listed on SCHEDULE 2.3 own one hundred percent (100%) of the membership interests of Seller. SECTION 2.4 FINANCIAL STATEMENTS. Attached hereto as SCHEDULE 2.4 are Seller's unaudited balance sheet as of December 31, 2004, unaudited profit and loss statement for the twelve months ended December 31, 2004, unaudited balance sheet as of October 31, 2005 and unaudited profit and loss statement for the ten (10) months ended October 31, 2005 (the "FINANCIAL STATEMENTS"). Except as set forth on SCHEDULE 2.4, the Financial Statements fairly present the financial condition and the results of operations of Seller as at the respective dates of and for the periods referred to in such Financial Statements, all in accordance with generally accepted accounting principals ("GAAP"). Except as set forth on SCHEDULE 2.4, Seller shall provide to Buyer, on or before Closing, audited financial statements for the years ended December 31, 2004 and December 31, 2005, and such financial statements shall be materially consistent with the Financial Statements, but only with respect to the period that the Financial Statements represent. The aforementioned audited financial statements must be in the form and an opinion of an independent certified public accountant to meet -11-  the standards required by the Securities and Exchange Commission and the independent certified public accountant must provide its consent to the use of the Seller's audited financial statements in the Buyer's 8-K and other registration filings with the Securities and Exchange Commission. Further, the Seller's independent public accountant shall make all of its work papers and other supporting documents it utilized in proving its opinion available, if needed for review by the Buyer's independent certified public accountant. SECTION 2.5 SUFFICIENCY OF ASSETS. The Assets constitute all of the assets, tangible and intangible, necessary to conduct Seller's business in the manner presently operated by Seller. SECTION 2.6 REAL PROPERTY LEASES. SCHEDULE 1.1(A) sets forth all leases of Real Property to which Seller is a party (the "LEASES"). Complete and true copies in all material respects of the Leases, as amended or modified, have been delivered to Buyer. Except as set forth on Schedule 2.6, the Leases are in full force and effect, and to Seller's knowledge, are binding and enforceable on each of the parties thereto in accordance with their respective terms (except as limited by Enforceability Limitations), and have not been amended or modified since the date of delivery to Buyer. No party to any Lease has sent written notice to the other claiming that such party is in default thereunder, which alleged default remains uncured. Seller's possession and quiet enjoyment of any Real Property have not been materially disturbed. SECTION 2.7 PERSONAL PROPERTY. (a) as set forth on SCHEDULE 2.7(A), Seller owns good and transferable title to all of its Assets (excluding its interest in the Real Property described in SCHEDULE 1.1(A)), free and clear of any Encumbrances other than Permitted Encumbrances. (b) Except as set forth in SCHEDULE 2.7(B), each item of Tangible Personal Property set forth set forth on SCHEDULE 1.1(B) is in reasonable good repair and good operating condition, ordinary wear and tear excepted. Except as set forth on SCHEDULE 2.7(B), all Tangible Personal Property is in the possession of Seller. SECTION 2.8 TAXES. Seller has timely filed all material income tax returns that it was required to file, and has paid all material income taxes shown thereon as due. To Seller's knowledge, all such income tax returns were true and complete in all material respects. There are no Encumbrances for taxes on any of the Assets, other than Permitted Encumbrances. To Seller's knowledge, all material taxes that Seller was required by Legal Requirements to withhold, deduct or collect, and pay over have been duly withheld, deducted or collected and, to the extent required, have been paid to the proper governmental authority. SECTION 2.9 EMPLOYEES. SCHEDULE 2.9 sets forth a complete and accurate list, giving name, job title, current compensation paid or payable, vacation leave that is accrued but unused, and services credited for purposes of vesting and eligibility to participate under any Employee Benefit Plan (as defined below) (in each case, to the extent applicable), for each employee of Seller, including each employee on leave of absence or layoff status (the "EMPLOYEES"). Seller has not experienced any organized slowdown, work interruption strike or work stoppage by its employees, and, to the knowledge of Seller, there is no strike, labor dispute or union organization activities pending or threatened in writing against Seller. None of the Employees belongs -12-  to any union or collective bargaining unit. Except as set forth on SCHEDULE 2.9, no Employee of Seller is bound by (a) any employment or similar contract or agreement with Seller, or (b) to Seller's knowledge, any contract or agreement that purports to limit or restrict the ability of such Employee to (i) perform his duties as an employee of Seller, or (ii) engage in any conduct, activity, or practice relating to Seller's business. SECTION 2.10 EMPLOYEE BENEFITS. SCHEDULE 2.10 sets forth all plans, programs, or arrangements that Seller has maintained, adopted or obligated itself under with respect to employees' benefits, including pension or retirement plans, medical or dental plans, life or long-term disability insurance, bonus or incentive compensation, stock option or equity participation plans (the "EMPLOYEE BENEFIT PLANS"). Seller has no liability or obligation with respect to any Employee under any Employee Benefit Plan other than normal salary or wage accruals and paid vacation, sick leave and holiday accruals in accordance with Seller's past practice and policy. Seller has performed all obligations required to be performed under, and has complied with all Legal Requirements in connection with, all such Employee Benefit Plans and is not in arrears under any of the terms thereof. SECTION 2.11 COMPLIANCE WITH LEGAL REQUIREMENTS, GOVERNMENTAL AUTHORIZATIONS. (a) To Seller's knowledge, Seller is, and at all times since January 1, 2004, has been, in compliance in all material respects with any federal, state, or local law, ordinance or regulation (including with respect to environmental, disposal of hazardous substances, or public health or safety) (a "LEGAL REQUIREMENT"), applicable to the operation of the Business as currently conducted or the ownership or use of any of the Assets, except where the failure to so comply would not have a material adverse effect on the Assets (taken as a whole) or the Business. (b) SCHEDULE 1.1(E) contains a complete and accurate list of all Novations, approvals, licenses or permits that are necessary for Seller to lawfully conduct the Business as currently conducted and to permit Seller to own and use the Assets in the manner in which it currently owns and uses the Assets (the "GOVERNMENTAL AUTHORIZATIONS"), except where the failure to so possess such approval, license or permit would not have a material adverse effect on the Assets or the Business. Except as set forth on SCHEDULE 2.11(B), each such license or permit is transferable to Buyer as of the Closing. SECTION 2.12 LEGAL PROCEEDINGS, ORDERS. (a) Except as set forth in SCHEDULE 2.12(A), there are no actions or proceedings pending by or against Seller or against Seller in respect of the Assets or the Business. To the knowledge of Seller, no such action or proceeding has been threatened in writing. (b) There are no outstanding orders, injunctions, judgments or decrees (an "ORDER") against Seller issued by a court of competent jurisdiction or a regulatory body having authority over Seller. SECTION 2.13 INSURANCE. SCHEDULE 2.13 sets forth a complete and accurate list of all current insurance policies under which any of the assets or properties of Seller is covered or otherwise relating to the Business. All -13-  policies listed in SCHEDULE 2.13 are in full force and effect, and Seller has paid all premiums due, and no event of default exists under any of the policies listed in SCHEDULE 2.13, except for such defaults as would not have a material adverse effect on the Assets or the Business. SECTION 2.14 CONTRACTS; NO DEFAULTS. (a) SCHEDULE 1.1(D) contains a true and complete list of each Seller Contract necessary to operate the Business as currently conducted. Seller has delivered to Buyer an accurate and materially complete copy of each written Seller Contract, and has provided Buyer with a true and accurate description (in all material respects) of each oral Seller Contract. Each Seller Contract is valid and binding against Seller and in full force and effect. Except as set forth on SCHEDULE 2.14(A), with respect to each Seller Contract, Seller and, to Seller's knowledge, the other party thereto is in compliance with all material terms and requirements of each Seller Contract. There are no existing events of default under Seller Contracts, and no events have occurred, that with the giving of notice or lapse of time, or both, would constitute a default of Seller under any Seller Contract. (b) SCHEDULE 1.1(K) contains a true and complete list of each Independent Contractor Agreement which are currently used by Seller in the operation of the Business as currently conducted. Seller has delivered to Buyer an accurate and materially complete form of the terms and conditions that are incorporated into each Independent Contractor Agreement, as well as unexecuted final versions of each Independent Contractor Agreement. Seller has executed copies of each Independent Contractor Agreement on file, which files will be transferred to Buyer at Closing. Each Independent Contractor Agreement is valid and binding against Seller and in full force and effect. Except as set forth on SCHEDULE 2.14(B), with respect to each Independent Contractor Agreement, Seller and, to Seller's knowledge, the other party thereto is in compliance with all material terms and requirements of each Independent Contractor Agreement. SECTION 2.15 INTELLECTUAL PROPERTY. SCHEDULE 1.1(G) lists any legal names, assumed names, registered or unregistered trade names, patents, registered trademarks, registered or unregistered service marks, registered or unregistered copyrights, applications for any of the foregoing, computer software, and internet domain names, owned or licensed by Seller, in each such case which are necessary to the Business as currently conducted by Seller (collectively, the "INTELLECTUAL PROPERTY ASSETS"). The documentation relating to (a) such Intellectual Property Assets and (b) any trade secrets, know-how, confidential or proprietary information and customer lists of Seller, in each such case which are necessary to the Business as currently conducted by Seller (the items referenced in clause (b), the "PROPRIETARY ASSETS") is accurate, and reasonable in detail and content to allow the use by Seller in the Business as currently conducted. Seller has not received any written notice from any third Person that Seller's use of the Intellectual Property Assets and Proprietary Assets conflicts with the intellectual property rights of any third Person. SECTION 2.16 RELATIONSHIPS WITH RELATED PERSONS. Except as set forth in SCHEDULE 2.16, no member or any Related Person (as defined below) of the members, other than Seller, has any interest in any property (whether real, personal, or mixed and whether tangible or intangible), used in or pertaining to Seller's business. To the knowledge of Seller, no Member or any Related Person -14-  of any Member owns an equity interest or any other financial interest in any Person that has (a) had business dealings or a material financial interest in any transaction with Seller other than business dealings or transactions disclosed in SCHEDULE 2.16, each of which has been conducted in the Ordinary Course of Business at substantially prevailing market prices and on substantially prevailing market terms, or (b) engaged in competition with Seller with respect to Seller's business. Except as set forth on SCHEDULE 2.16, Seller is not indebted, directly or indirectly, to any Person who is an officer, director or Member of Seller or any Affiliate of any such Person in any amount other than for salaries for services rendered or reimbursable business expenses, and no such officer, director, Member or Affiliate is indebted to Seller, except for advances made to employees of Seller in the Ordinary Course of Business to meet reimbursable business expenses anticipated to be incurred by such Person. For the purposes of this SECTION 2.16, "RELATED PERSON" means, with respect to any individual: (i) an individual's spouse, siblings, siblings' children, children, grandchildren or parents; or (ii) a trust, corporation, partnership or other entity, the beneficiaries, stockholders, partners, or owners, or Persons holding a controlling interest of which consist of such individuals referred to in the immediately preceding clause (i). SECTION 2.17 NO MATERIAL UNDISCLOSED LIABILITIES. Except for liabilities or obligations reflected or reserved against in the unaudited balance sheet as of October 31, 2005 (the "INTERIM BALANCE SHEET") and current liabilities incurred in the Ordinary Course of Business of Seller, to Seller's knowledge, Seller has no liabilities or obligations which in the aggregate are material and adverse to the Business. SECTION 2.18 INTENTIONALLY DELETED. SECTION 2.19 BROKERS OR FINDERS. Neither Seller nor to Seller's knowledge, any of its officers, directors, employees or agents, in each case on behalf of Seller, has incurred any liability or obligation for brokerage or finders' fees or agents' commissions or other similar payment in connection with this Agreement or the transactions contemplated hereby. SECTION 2.20 ACCOUNTS RECEIVABLE. All Accounts Receivable set forth on SCHEDULE 1.1(C) represent or will represent valid claims against the account debtors that were generated by Seller in the Ordinary Course of Business. Except to the extent paid prior to the Closing Date and except as set on SCHEDULE 2.20, to Seller's knowledge, such Accounts Receivable are or will be as of the Closing Date collectible net of the respective reserves shown on the Interim Balance Sheet (which reserves are adequate to Seller's knowledge, and calculated consistent with past practice) without any set-off, within 365 days after the day on which it first becomes due and payable. SECTION 2.21 CUSTOMERS. Except as set forth on SCHEDULE 2.21, Since September 30, 2005, Seller has not received any written notice that any customer listed on SCHEDULE 2.21 (each, a "MATERIAL CUSTOMER") has terminated or intends to terminate its business with Seller. SECTION 2.22 BOOKS AND RECORDS. The books of account and other financial records of Seller are materially complete and correct and have been maintained in accordance with sound business practices. -15-  SECTION 2.23 PREPAYMENTS AND DEPOSITS. SCHEDULE 2.23 sets forth a materially complete and accurate list of all prepayments or deposits from customers for services to be performed after the Closing Date which have been received by Seller as of the date hereof. ARTICLE III REPRESENTATIONS AND WARRANTIES OF BUYER Buyer represents and warrants to Seller as of the date hereof and as of the Closing Date, as follows: SECTION 3.1 ORGANIZATION AND GOOD STANDING. (a) Buyer is a corporation duly organized, validly existing, and in good standing under the laws of the State of Nevada, with full corporate power and authority to conduct its business as it is now being conducted. (b) Complete and accurate copies of the certificate of incorporation (as amended) and bylaws (as amended) of Buyer (collectively, the "BUYER GOVERNING DOCUMENTS"), as currently in effect, have been delivered to Seller. SECTION 3.2 AUTHORITY, NO CONFLICT. (a) This Agreement constitutes the legal, valid, and binding obligation of Buyer, enforceable against it in accordance with its terms. Upon the execution and delivery by Buyer of each of the documents and instruments to be executed and delivered by Buyer at Closing pursuant to SECTION 1.7(B) (collectively, the "BUYER'S CLOSING DOCUMENTS"), each of Buyer's Closing Documents will constitute the legal, valid, and binding obligation of Buyer, enforceable against it in accordance with its terms. Buyer has the absolute right, power and authority to execute and deliver this Agreement and Buyer's Closing Documents and to perform its obligations under this Agreement and Buyer's Closing Documents, and such action has been duly authorized by all necessary corporate action. (b) Neither the execution and delivery of this Agreement by Buyer nor the consummation or performance of any of the transactions contemplated hereby by Buyer will (with or without notice or lapse of time): (i) contravene, conflict with or result in a violation of any provision of Buyer Governing Documents; (ii) contravene, conflict with or result in a violation of any Legal Requirement or Order of any court or governmental authority to which Buyer or its assets are subject; or (iii) conflict with or result in the breach or termination of any term or provision of, or constitute a default under, or cause any acceleration under, or cause the creation of any Encumbrance upon the properties or assets of Buyer pursuant to, any indenture, mortgage, deed of trust or other agreement or instrument to which Buyer is a party or by which Buyer or any of its properties is or may be bound. SECTION 3.3 CONSENTS AND APPROVALS. SCHEDULE 3.3 sets forth a complete and accurate list of all consents and approvals of third parties that are required in connection with the consummation by Buyer of the transactions -16-  contemplated by this Agreement, all of which consents and approvals either have been obtained or will be obtained prior to the Closing Date. SECTION 3.4 REGULATORY APPROVALS. All consents, approvals, authorizations or other requirements prescribed by any law, rule or regulation that must be obtained or satisfied by Buyer and that are necessary for the consummation of the transactions contemplated by this Agreement have been, or will be prior to the Closing Date, obtained and satisfied. SECTION 3.5 AVAILABILITY OF FINANCING. Buyer has no reason to believe that the private placement for the funds necessary to finance Buyer to consummate the transactions contemplated by this Agreement will not be available to Buyer on the Closing Date. SECTION 3.6 CAPITALIZATION. (a) Except as set forth on SCHEDULE 3.6(A), there has been no material change in the number of outstanding shares of Buyer Common Stock since the date of Buyer's most recent SEC Filing (defined below). All of the issued and outstanding shares of Buyer Common Stock have been duly authorized and validly issued and are fully paid and non-assessable. Except as disclosed in the SEC Filings (as defined below) or as set forth in SCHEDULE 3.6(A), Buyer does not have outstanding securities convertible into or exchangeable for any shares of Buyer's capital stock, nor will it have outstanding any rights to subscribe for or to purchase, or any options for the purchase of, or any agreements providing for the issuance (contingent or otherwise) of, or any calls, commitments or claims of any character relating to, any shares of Buyer's capital stock or any securities convertible into or exchangeable for any shares of Buyer's capital stock. As of the Closing, Buyer will not be subject to any obligation (contingent or otherwise) to repurchase or otherwise, acquire or retire any shares of its capital stock. (b) The preferences, rights, privileges, powers and restrictions in respect of the Buyer Common Stock are as set forth in the certificate of incorporation of Buyer and all such preferences, rights, privileges, powers and restrictions are valid, binding and enforceable and in accordance with all applicable laws. SECTION 3.7 ISSUANCE OF SHARES. The issuance and delivery of shares comprising the Stock Portion were, and any shares paid in respect of the Earnout in accordance with this Agreement shall be, duly authorized by all necessary corporate action on the part of Buyer, and all the shares comprising the Stock Portion have been duly reserved and the shares to be paid in respect of the Earnout will be available for issuance. The shares comprising the Stock Portion and the shares anticipated to be paid in respect of the Earnout, when issued and delivered, in accordance with the provisions of this Agreement shall be duly and validly issued, fully paid and non-assessable. SECTION 3.8 NO MATERIAL UNDISCLOSED LIABILITIES. Except for liabilities or obligations reflected or reserved against in the audited balance sheet as of September 30, 2005 and current liabilities incurred in the Ordinary Course of Business of Buyer, Buyer has no liabilities or obligations which in the aggregate are material to the Business. -17-  SECTION 3.9 INTENTIONALLY DELETED. SECTION 3.10 SEC FILINGS. Buyer has delivered to Seller true and complete copies of all reports, registration statements (other than registration statements on Form S-8), proxy statements and other definitive filings filed by Buyer with the Securities and Exchange Commission since January 1, 2004 (such reports, registration statements, proxy statements and other definitive filings, as amended, are sometimes collectively referred to as the "SEC FILINGS"). To the Buyer's knowledge, the SEC Filings comply in all material respects with the Securities Act of 1933, as amended and the Securities Exchange Act of 1934, as amended (the "EXCHANGE Act"), and did not as of the dates thereof contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements contained therein not misleading. The audited financial statements included in the SEC Filings were prepared in accordance with generally accepted accounting principles applied on a consistent basis and fairly present the financial position of Buyer as at the dates thereof and the results of operations and cash flow for the periods then ended. SECTION 3.11 BROKERS OR FINDERS. Neither Seller nor any of its officers, directors, employees or agents on behalf of Seller has incurred any liability or obligation for brokerage or finders' fees or agents' commissions or other similar payment in connection with this Agreement or the transactions contemplated hereby. ARTICLE IV COVENANTS OF SELLER PRIOR TO CLOSING SECTION 4.1 ACCESS AND INVESTIGATION. Prior to the Closing Date, and upon reasonable advance notice received from Buyer for purposes of facilitating the completion of the audit of Seller required in connection with Buyer's due diligence, Seller shall afford Buyer and its counsel reasonable access, during normal business hours, to Seller's management personnel offices, and books and records, such rights of access to be exercised in a manner that does not unreasonably interfere with the operations of Seller. SECTION 4.2 OPERATION OF THE BUSINESS OF SELLER. Between the date of this Agreement and the Closing Date, Seller shall: (a) conduct the business of Seller only in the Ordinary Course of Business, unless Seller has conferred with Buyer prior to any material change; (b) use its commercially reasonable efforts to preserve intact the current business organization of Seller, keep available the services of Seller's officers, employees, and agents, and maintain Seller's relations and good will with suppliers, customers, landlords, creditors, employees, agents, and others having business relationships with it; (c) confer with Buyer prior to implementing operational decisions of a material nature; and -18-  (d) otherwise report periodically (but no more often than weekly) to Buyer concerning the status of the business, operations, and finances of Seller. SECTION 4.3 NEGATIVE COVENANT. Except in the Ordinary Course of Business or as otherwise expressly permitted herein, between the date of this Agreement and the Closing Date, Seller shall not, without the prior written consent of Buyer: (a) increase any bonuses, salaries, or other compensation to any shareholder, director, officer or employee or enter into any severance or similar contract with any director, officer, or employee; (b) adopt, amend or increase the payments to or benefits under, any Employee Benefit Plan with respect to the Employees; (c) mortgage, pledge, or impose any Encumbrance on any Asset of Seller; (d) materially and adversely modify any material Seller Contract or Governmental Authorization; (e) cancel or waive any claims or rights with a value to Seller in excess of $50,000; or (f) agree, whether orally or in writing, to do any of the foregoing. SECTION 4.4 NOTIFICATION. Between the date of this Agreement and the Closing Date, Seller shall promptly notify Buyer in writing if it becomes aware of any fact or condition that causes or constitutes a breach of any of Seller's representations and warranties made as of the date of this Agreement. Should any such fact or condition require any change to the Schedules, Seller shall deliver to Buyer a supplement to the Schedules specifying such change prior to the Closing Date. SECTION 4.5 PAYMENT OF LIABILITIES. Seller shall pay or otherwise satisfy in the Ordinary Course of Business all of its liabilities and obligations as they become due. Buyer and Seller hereby waive compliance with the bulk transfer provisions of the Uniform Commercial Code (or any similar law) in connection with the contemplated transactions. ARTICLE V COVENANTS OF BUYER PRIOR TO CLOSING SECTION 5.1 REQUIRED APPROVALS. As promptly as practicable after the date of this Agreement, Buyer shall obtain all consents and approvals as identified in SCHEDULE 3.3. Buyer also shall fully cooperate with Seller in obtaining all consents identified in SCHEDULE 2.2(C). SECTION 5.2 BEST EFFORTS. Buyer shall use its best efforts to cause the conditions in Article VI and Article VII to be satisfied. -19-  ARTICLE VI CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE Buyer's obligation to purchase the Assets and to take the other actions required to be taken by Buyer at the Closing is subject to the satisfaction, at or prior to the Closing, of each of the following conditions (any of which may be waived by Buyer, in whole or in part): SECTION 6.1 ACCURACY OF REPRESENTATIONS. The representations and warranties of Seller in this Agreement shall be accurate in all material respects as of the Closing Date as if made on the Closing Date, except for any changes consented to in writing by Buyer. SECTION 6.2 SELLER'S PERFORMANCE. All of the covenants and obligations that Seller is required to perform or to comply with pursuant to this Agreement at or prior to the Closing must have been performed and complied with in all material respects. SECTION 6.3 CONSENTS. Any Pre-Closing Consent obtained prior to Closing shall be delivered to Buyer and shall be in full force and effect. SECTION 6.4 AVAILABILITY OF FINANCING. Buyer shall have received financing in an amount sufficient to consummate the transactions contemplated under this Agreement. SECTION 6.5 ADDITIONAL DOCUMENTS. Seller must have caused the documents and instruments required by SECTION 1.7(A) and the following documents to be delivered (or tendered subject only to Closing) to Buyer: (a) releases of all Encumbrances on the Assets, other than Permitted Encumbrances; and (b) an opinion of Swidler Berlin LLP, dated as of the Closing Date, in a form customary for similar transactions. SECTION 6.6 NO PROCEEDINGS. Since the date of this Agreement, there has not been commenced or threatened proceeding or action (a) involving any challenge to, or seeking damages or other relief in connection with, any of the contemplated transactions, or (b) that may have the effect of preventing, making illegal, imposing limitations or conditions on, or otherwise interfering, with any of the contemplated transactions. SECTION 6.7 NO MATERIAL ADVERSE CHANGE. Between the date of this Agreement and the Closing Date (a) there shall not have been any material adverse change in the Assets, results of operations or condition (financial or otherwise) of Seller (in each case taken as a whole); (b) there shall not have been any sale, lease, or other disposition of any Asset other than in the Ordinary Course of Business, or any Encumbrance on any Asset; and (c) Seller shall have conducted its business only in the Ordinary Course of Business. -20-  ARTICLE VII CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE Seller's obligation to sell the Assets and to take the other actions required to be taken by Seller at the Closing is subject to the satisfaction, at or prior to the Closing, of each of the following conditions (any of which may be waived by Seller, in whole or in part): SECTION 7.1 ACCURACY OF REPRESENTATIONS. All of Buyer's representations and warranties in this Agreement must be accurate in all material respects as of the Closing Date as if made on the Closing Date. SECTION 7.2 BUYER'S PERFORMANCE. All of the covenants and obligations that Buyer is required to perform or to comply with pursuant to this Agreement at or prior to the Closing must have been performed and complied with in all material respects. SECTION 7.3 CONSENTS. Any consent required to be obtained by Buyer as identified in SCHEDULE 3.3, shall be obtained and delivered to Seller by Buyer, and shall be in full force and effect. SECTION 7.4 ADDITIONAL DELIVERIES. Buyer must have caused the documents, instruments and deliverables required by SECTION 1.7(B) and (C) to be delivered to Seller or Escrow Agent (as applicable) and the following documents to be delivered (or tendered subject only to Closing) to Seller: (a) an opinion of the Law Offices of Morton S. Taubman, dated as of the Closing Date, in a form customary for similar transactions; and (b) such other documents as Seller may reasonably request for the purpose of evidencing the satisfaction of any condition referred to in this Article VII. SECTION 7.5 NO PROCEEDINGS. Since the date of this Agreement, there has not been commenced or threatened proceeding or action (a) involving any challenge to, or seeking damages or other relief in connection with, any of the contemplated transactions, or (b) that may have the effect of preventing, making illegal, imposing limitations or conditions on, or otherwise interfering, with any of the contemplated transactions. SECTION 7.6 NO MATERIAL ADVERSE CHANGE. Between the date of this Agreement and the Closing Date (a) there shall not have been any material adverse change in the assets of Buyer, results of operations or condition (financial or otherwise) of Buyer (in each case taken as a whole); (b) there shall not have been any sale, lease, or other disposition of any asset of Buyer other than in the Ordinary Course of Business; and (c) Buyer shall have conducted its business only in the Ordinary Course of Business. -21-  ARTICLE VIII ADDITIONAL COVENANTS SECTION 8.1 EMPLOYEES AND EMPLOYEE BENEFITS. (a) Effective immediately before the Closing Date, Seller shall terminate the employment of all of its Employees and shall release such Employees from the provisions of any restrictive covenants and/or agreements with Seller with respect to Buyer so as to enable Buyer to employ such individuals. Buyer shall offer employment to all of the Employees (the "AVAILABLE EMPLOYEES") following the Closing at the same base salary and incentive bonus arrangements, and the same or substantially the same group health insurance and other benefits, as each such Available Employee has with Seller, which Buyer benefits are described on SCHEDULE 8.1(A). Available Employees shall receive credit for all of their service with Seller under all welfare and benefit plans including but not limited to eligibility, participation, vesting, entitlement to benefits, and amount of benefits (other than the accrual of benefits under a defined benefit pension plan). Without limiting the foregoing, Buyer covenants and agrees that any Available Employee who is an Employee of Seller as of the Closing Date, shall be entitled to three (3) weeks of vacation per year for each year following such Available Employee's first anniversary of such Employee's hire date with Seller until such Available Employee should be entitled to more than three (3) weeks of vacation per year under Buyer's vacation plan and/or policy. No pre-existing condition limitation or exclusion shall apply to participation and coverage for such Available Employees under a group welfare or health benefit plan. (b) It is understood and agreed that (i) any offer of employment made by Buyer as referenced in SECTION 8.1(A) above will not constitute any commitment, contract or understanding (expressed or implied) of any obligation on the part of Buyer to a post-Closing Date employment relationship of any fixed term or duration or upon any terms or conditions other than those that Buyer may establish pursuant to individual offers of employment consistent with the terms herein; and (ii) employment offered by Buyer is "at will" and may be terminated by Buyer or by an employee at anytime for any reason (subject to any written commitments to the contrary made by Buyer). (c) Seller will be responsible for the payment of all wages and other remuneration due to its Employees with respect to their services as employees of Seller through the close of business on the Closing Date. Seller will be liable for any claims made or incurred by the Employees and their beneficiaries under the Employee Benefit Plans prior to the Closing, and Buyer will not have any responsibility, liability or obligation, to the Employees or to any other Person with respect to any Employee Benefit Plan. (d) Employees and their eligible dependents who experience a "qualifying event" (as defined in Code section 4980B) on or after the Closing Date shall be eligible to elect health plan continuation coverage the Consolidated Omnibus Budget Reconciliation Act of 1985(COBRA) under Buyer's group health plan. Employees of the Seller and their eligible dependents who are either (i) receiving COBRA continuation coverage under Seller's group health plan prior to the Closing Date or (ii) do whom Buyer does not offer employment -22-  and who experience a "qualifying event" as defined in Code section 4980B shall be eligible to elect COBRA continuation coverage under Seller's group health plan. SECTION 8.2 PAYMENT OF TAXES RESULTING FROM SALE OF ASSETS. Seller shall pay in a timely manner all taxes (other than income taxes) imposed on it resulting from or payable in connection with the sale of the Assets pursuant to this Agreement. SECTION 8.3 PAYMENT OF OTHER RETAINED LIABILITIES. In addition to payment of taxes pursuant to SECTION 8.2, Seller shall pay, or make adequate provision for the payment, in full of all of the Retained Liabilities. If any such Retained Liabilities are not so paid or provided for, or if Buyer reasonably determines that failure to make any payments will impair Buyer's use or enjoyment of the Assets or conduct of the business of Seller previously conducted using the Assets, Buyer may at any time after the Closing Date elect to make all such payments directly or through the escrow (but shall have no obligation to do so) and will be promptly reimbursed therefor by Seller. SECTION 8.4 COVENANT NOT TO COMPETE. (a) In consideration of the Purchase Price to be received under this Agreement, Seller agrees that, for a period of three (3) years after the Closing Date, Seller shall not directly or indirectly, do any of the following: (i) engage in, or invest in, own, manage, operate, finance, control, be employed by, associated with or in any manner connected with, or render services or advice to, any Person engaged in or planning to become engaged in, or any other business whose products or activities compete in whole or in part with, the business of Buyer, or any business carried on by Buyer utilizing the Assets, anywhere within the continental United States; (ii) induce or attempt to induce any employee of Buyer to leave the employ of Buyer, or solicit, offer employment to, otherwise attempt to hire, employ, or otherwise engage as an employee, independent contractor, or otherwise, any such employee of Buyer; or (iii) induce or attempt to induce any Person that was a customer or client of Buyer at any time during the one (1) year period preceding the Closing Date to cease doing business with Buyer, in any way interfere with the relationship between Buyer and any such customer or client, or solicit the business of any such customer or client. (b) Seller acknowledges that all of the foregoing provisions are reasonable and are necessary to protect and preserve the value of the Assets and to prevent any unfair advantage being conferred on Seller. If any of the covenants set forth in this SECTION 8.4 are held to be unreasonable, arbitrary, or against public policy, the restrictive time period will be deemed to be the longest period permissible by law under the circumstances and the restrictive geographical area will be deemed to comprise the largest territory permissible by law under the circumstances. -23-  SECTION 8.5 SATISFACTION OF RETAINED LIABILITIES. After the Closing, Seller shall satisfy the Retained Liabilities in a manner which is not materially detrimental to the Business and the Assets. SECTION 8.6 RETENTION AND ACCESS TO RECORDS. After the Closing Date, Buyer shall retain for a period of seven (7) years those records of Seller delivered to Buyer. Buyer also shall provide Seller, Seller's representatives, Seller's members and representatives of the members of Seller access thereto, during normal business hours and on at least three (3) days' prior written notice, to enable them to prepare financial statements or tax returns or deal with tax audits or for any purpose associated with any Seller Contracts as required thereunder. After the Closing Date, Seller shall provide Buyer and Buyer's representatives reasonable access to records that are Excluded Assets, (except for membership records and the Governing Documents) during normal business hours and on at least three (3) days' prior written notice, for any reasonable business purpose specified by Buyer in such notice. After the Closing Date, Buyer shall notify Seller if it becomes aware of any alleged breach of a Seller Contract that occurred prior to the Closing Date. SECTION 8.7 CHANGE OF NAME. Within thirty (30) days following the Closing Date, Seller shall take all actions necessary to amend its certificate of organization and change its name to one sufficiently dissimilar to Seller's present name to avoid confusion. SECTION 8.8 UPDATING ACCOUNTS RECEIVABLE. Seller shall prepare and deliver to Buyer a revised SCHEDULE 1.1(C) showing actual Accounts Receivable as of the Closing Date, within thirty (30) days following the Closing. Buyer shall permit employees of Seller who become employees of Buyer after the Closing to continue their respective roles with the collection of Accounts Receivable assumed by Buyer at the Closing. SECTION 8.9 POST-CLOSING OPERATIONS OF SELLER DIVISION. (a) During the period from the date of the Closing through the Earnout Period, with respect to Seller Division, Buyer shall: (i) At or prior to the Closing create, and thereafter maintain: (A) a wholly owned subsidiary or a separate and distinct operating division of Buyer to be known as "JAMES LEE WITT DIVISION", or some other mutually acceptable name (in either case, the "SELLER DIVISION"); and (B) true, complete and correct separate financial books and records of the results of operations, assets and liabilities of Seller Division ("SELLER DIVISION RECORDS") of sufficient detail so as to permit the accurate calculation of the Earnout and the production of financial statements of and for Seller Division, including without limitation, a profit and loss statement, aged accounts receivable schedule and bad debts schedule; and (ii) record all transactions in Seller Division Records, and prepare such financial statements in accordance with generally accepted accounting principles applied on a consistent basis and on a basis consistent with Buyer's prior practices, except as herein expressly provided to the contrary; (ii) At the Closing allocate to Seller Division, the Business and the Assets; and thereafter conduct the Business and utilize the Assets for the account and on behalf of Seller Division; -24-  (iii) Allocate to Seller Division and/or charge to its operations, in addition to the Assets only such other and further assets and liabilities as shall be acquired or incurred, as the case may be, by Seller Division in the Ordinary Course of Business of Seller or with the prior written consent of Witt and which consent shall not be unreasonably withheld or delayed (such assets and liabilities collectively, respectively, the "OTHER ASSETS" and "OTHER LIABILITIES"); (iv) Carry on and maintain the Business in the Ordinary Course of Business of Seller and in substantially the same manner as heretofore operated; perform, in all material respects all of the material agreements, leases and documents assumed and/or acquired from Seller and/or in the Ordinary Course of Business of the Seller Division subsequent to the Closing as herein provided; and use its commercially reasonable efforts to preserve, intact, the relationships with its customers and employees; (v) Maintain its corporate existence in full force and effect and good standing in each jurisdiction where the nature of the business of Seller Division and/or ownership of Seller Division assets requires Buyer to be qualified to do business; and use its commercially reasonable efforts, to obtain and/or maintain all material licenses, consents or approvals (from every governmental or regulatory body, or other person) required to be obtained and/or held by Buyer for or with respect to Seller Division Business (as defined below) and/or its assets; and (vi) Permit Witt to supervise the day-to-day operations of Seller Division (including, without limitation, approving the corporate and accounting policies of the Seller Division, subject to the review and approval of the Buyer's independent certified public accounting firm). (b) Without limiting the generality of SECTION 8.9(A) hereof and in furtherance and not in limitation thereof, Buyer shall, during the Earnout Period: (i) Cause and/or permit Seller Division to engage in only: (A) the Business; and (B) such other and further business lines to which Witt may consent and which consent shall not be unreasonably withheld or delayed (the "OTHER Business"); (ii) Provide or make available to the Seller Division all reasonable working capital funds required for the full and uninterrupted operation of the Business and Other Business (collectively, the "SELLER DIVISION BUSINESS") and full and timely satisfaction of the obligations of Seller Division and/or Buyer, provided such working capital funds were budgeted and forecasted by the Seller Division and approved by the Buyer; (iii) Provide Witt: (A) with a full and complete financial package of Seller Division, (B) such additional reports as may be reasonably necessary for the management of Seller Division, as reasonably requested by Witt; (C) to secure from Buyer such information as Witt shall reasonably deem necessary or appropriate; and (D) the right to review and copy such reasonable other, further and additional financial and operating data, materials and information as to Seller Division Business as may be reasonably requested by Witt; such access not to materially interfere with day-to-day operations of Buyer; -25-  (iv) Take and perform any and all reasonable actions necessary to satisfy the covenants required to be performed by Buyer under SECTION 1.3 of this Agreement; (v) Except as expressly provided herein to the contrary: (A) within thirty (30) days following the close of each calendar month distribute to Witt copies of the financial statements of Seller Division as at the end of such calendar month, PROVIDED, HOWEVER, the Seller Division must provide financial information to the Buyer in a timely manner; and (B) within sixty (60) days following each anniversary of the Closing Date distribute to Witt copies of the financial statements of Seller Division as of the end of such twelve (12) month period and for the twelve (12) month period then ending. (c) Without limiting the generality of SECTIONS 8.9(A) or (B) hereof and in furtherance and not in limitation thereof, Buyer shall not, nor shall Buyer authorize or permit Seller Division, unless such inaction would materially adversely effect the business of the Buyer during the Earnout Period (without the prior written consent of Witt in each instance, which consent shall not be unreasonably withheld or delayed), to: (i) Dispose of and/or discontinue or terminate, the line of business conducted by Seller prior to the Closing; (ii) Take or perform any action which would or might prevent, inhibit or preclude the satisfaction, in whole or in part, of the covenants required to be performed by Buyer under SECTION 1.3 of this Agreement; (iii) Other than as expressly required by GAAP, change the business, operations or financial condition, or the manner of managing or conducting Seller Division Business and operations if such changes, if any, may reasonably have a material adverse effect on such Seller Division Business or the operations or financial condition of Seller Division, taken as a whole; (iv) Except to the extent the same are inconsistent with the GAAP practices of Buyer, change the accounting methods or practices (including, without limitation, recognition of income) applied to Seller Division; (v) (A) Engage effective as of the Closing any individuals other than those designated by Witt and at the respective compensation levels in effect as of the date of the Closing; (B) subsequent to the Closing engage as an employee, consultant and/or independent contractor any person and/or entity to operate or manage Seller Division Business for so long as Witt is employed by Buyer; and (C) other than to Witt, permit any unreasonable increase in the salary or other compensation payable or to become payable to any of Seller Division's officers, directors, employees or agents (in their respective capacities as such), or the declaration, payment or commitment -26-  or obligation of any kind, nature or description for the payment to any of them of an unreasonable bonus or other unreasonable additional salary or compensation to any person; (vi) Other than in the Ordinary Course of Business, write off or take any charge or expense with regard to a receivable of Seller Division without either giving Witt the opportunity to review, discuss and assist in the handling of the claim; (vii) Take any charge or expense to net income with regard to the reduction or write-off of a receivable for the purpose of accommodating a customer relation, litigation or similar concern of Buyer relating in whole or in part to a business of Buyer other than Seller Division, and in such event, provide a reasonable credit for such reduction or write-off to Seller Division; (viii) Sell, lease, abandon, assign, transfer, license or otherwise dispose of any of the Assets constituting a material asset, or enter into any agreement and/or option for or with respect to any of the foregoing, which has or may have a material adverse effect on Seller Division Business, the financial condition of Seller Division, its assets or prospects; (ix) Amend, modify or provide for the early termination of any material agreement or license to which it is a party and which it acquired from Seller, which has or may have a material adverse effect on Seller Division Business, the financial condition of Seller Division, and Seller Division's assets or properties; or (x) Permit the allocation to Seller Division Business of, or burden Seller Division Business with, any corporate overhead charge other than what is consistently charged to other divisions or affiliated entities of Buyer for similar charges or burdens. (d) During the Earnout Period, if there is (i) a Buyer Change of Control, then prior to the consummation of the Buyer Change of Control, the Buyer shall cause the successor to Buyer to execute and deliver to Seller an undertaking covenanting to perform any obligations of Buyer which survive the Closing Date, including without limitation, Sections 1.3 and 8.9 (the "SUCCESSOR UNDERTAKING"), or (ii) a Buyer Private Change of Control, then prior to the consummation of the Buyer Change of Control, the Buyer shall cause the successor to Buyer to execute and deliver to Seller a Successor Undertaking, and such Successor Undertaking shall include an additional covenant which obligates such successor to pay the Earnout in cash only. (e) If a Triggering Event shall occur during the Earnout Period, then prior to the consummation of such Triggering Event, Buyer shall pay to Seller the Remainder Earnout Amount, if any. The Remainder Earnout Amount shall be determined by a Qualified Appraiser(s) in accordance with this Section 8.9(e), as follows: (i) At least thirty (30) days prior to the consummation of a Triggering Event, Buyer shall notify Seller of such prospective Triggering Event. Within ten (10) days of Seller's receipt of such notice, Seller and Buyer shall attempt to mutually agree upon a Qualified Appraiser to determine the Remainder Earnout Amount (including any amounts necessary for the calculation thereof). If Seller and Buyer cannot mutually agree upon a Qualified Appraiser by the end of such ten (10) day period, then Seller and Buyer shall each appoint, by notice to the other, a Qualified -27-  Appraiser within ten (10) days. Within thirty (30) days after such appointment, each Qualified Appraiser shall submit its determination of the Remainder Earnout Payment to Seller and Buyer. If either party fails to appoint a Qualified Appraiser within the ten (10) day period described above or if a Qualified Appraiser so appointed fails to submit its determination of the Remainder Earnout Payment within the required thirty (30) day period, and if such failure continues for twenty (20) days after notice of such failure from the other party, the fully-appointed Qualified Appraiser's timely determination of the Remainder Earnout Payment shall be deemed approved by each of Seller and Buyer for all purposes. (ii) If two Qualified Appraisers are appointed and deliver reports in timely fashion and if the Remainder Earnout Payments determined by the Qualified Appraisers vary by 10% or less, the average of the valuations shall be deemed approved by each of Seller and Buyer for all purposes. If the two Remainder Earnout Payments vary by more than 10%, the two Qualified Appraisers shall select a third Qualified Appraiser within fourteen (14) days after delivery of their respective reports to Buyer and Seller. If the two Qualified Appraisers are unable to agree upon the appointment of a third Qualified Appraiser pursuant to this SECTION 8.9(E)(II) within such fourteen (14) day period, either Seller or Buyer may, upon written notice to the other, request that such appointment be made by a judge sitting for a state or federal court of competent jurisdiction in New York. (iii) If all three Qualified Appraisers cannot agree upon the Remainder Earnout Payment within thirty (30) days following the selection of the third Qualified Appraiser (which agreed Remainder Earnout Payment shall in no event be higher than the higher, or lower than the lower, of the two previously submitted Remainder Earnout Payments), the third Qualified Appraiser shall, within thirty (30) days thereafter, submit its determination as to the Remainder Earnout Payment to the other two Qualified Appraisers and to Buyer and Seller in writing, and the average of the two numerically closest Remainder Earnout Payments (or, if the Remainder Earnout Payments are equidistant, the average of all three Remainder Earnout Payments) shall be deemed approved by each of Buyer and Seller for all purposes. (iv) If any Qualified Appraiser appointed hereunder resigns, refuses to perform or is unable to perform any obligation hereunder for reasons unrelated to the acts or omissions of the appointing party, then the party or parties appointing such Qualified Appraiser shall have the right unilaterally to appoint a substitute Qualified Appraiser and the deadline for the production of such Qualified Appraiser's report and determination of the Remainder Earnout Payment shall be subject to an extension of not more than thirty (30) days. (v) In connection with any process required by this SECTION 8.9(E), Buyer will provide the Qualified Appraisers full access during normal business hours to examine all pertinent books, records and files, agreements and other documents. The fees and expenses of the Qualified Appraiser or Appraisers shall be borne by Buyer. In the event that a Triggering Event shall occur prior to a final determination of the Remainder Earnout Payment in accordance with this SECTION 8.9(E) and the delivery of such Remainder Earnout Payment to Seller, then prior to the consummation of such Triggering Event, Buyer shall place into escrow a reasonable amount of money (as such amount shall be reasonably determined by Buyer and shall be subject to Seller's reasonable approval), in order to secure payment to Seller of the Remainder Earnout Payment. -28-  SECTION 8.10 TREATMENT OF ACCRUED SICK LEAVE. If subsequent to the date of this Agreement, Buyer assumes or agrees to assume sick leave of any other Person, then Buyer shall pay to Seller an amount equal to the total cost of accrued sick leave of Seller as of the Closing Date, as set forth on SCHEDULE 8.10. Buyer hereby represents and warrants that through the date hereof, Buyer has not assumed any accrued liability with respect to sick leave of any Person. ARTICLE IX TERMINATION SECTION 9.1 TERMINATION EVENTS. This Agreement may be terminated by written notice given prior to or at the Closing, subject to SECTION 9.2 as follows: (a) by Buyer or Seller if a material breach of any provision of this Agreement has been committed by the other party and such breach has not been waived by the non-breaching party; (b) by Buyer if any condition in Article VI has not been satisfied as of the date specified for Closing Date; or if satisfaction of such a condition by such date is or becomes impossible (other than through the failure of Buyer to comply with its obligations under this Agreement) and Buyer has not waived such condition on or before such date; (c) by Seller, if any condition in Article VII has not been satisfied as of the date specified for Closing Date or if satisfaction of such a condition by such date is or becomes impossible (other than through the failure of Seller to comply with its obligations under this Agreement) and Seller has not waived such condition on or before such date; (d) by mutual consent of Buyer and Seller; (e) by Seller, if Buyer has not received the funds necessary to finance Buyer to consummate the transactions contemplated by this Agreement; or (f) by Buyer or Seller if the Closing has not occurred on or before February 28, 2006 (provided that such date shall automatically be extended, if necessary, to permit Seller sufficient time to deliver to Buyer the audited financial statements in a form which complies with Section 2.4 hereof), or such later date as the parties may agree or as provided in this Agreement. SECTION 9.2 EFFECT OF TERMINATION. Each party's right of termination under SECTION 9.1 is in addition to any other rights it may have under this Agreement or otherwise, and the exercise of such right of termination will not be an election of remedies. If the Agreement is terminated pursuant to SECTION 9.1, all obligations of the parties under this Agreement will terminate, except that the obligations of (a) the parties in this SECTION 9.2; and (b) Buyer in SECTION 9.3, will survive; PROVIDED, HOWEVER, that if this Agreement is terminated because of a breach of this Agreement by the non-terminating party or because one or more of the conditions to the terminating party's obligations under this Agreement is not satisfied as a result of the party's failure to -29-  comply with its obligations under this Agreement, the terminating party's right to pursue all legal remedies will survive such termination unimpaired. SECTION 9.3 FINANCING FEES. In the event this Agreement is terminated due to Buyer failing to accomplish the financing contemplated in SECTION 3.5 or Buyer materially breaches any term hereof on or before the Closing Date, Buyer shall immediately pay to Seller an amount in cash equal to the total amount of any out-of-pocket expenses and third-party fees and expenses incurred by Seller in connection with this Agreement or the transactions contemplated by this Agreement, including all counsel fees and expenses, and all audit and accounting fees and expenses incurred in connection with the preparation of the audited financials statements, in an amount not to exceed $50,000. ARTICLE X INDEMNIFICATION SECTION 10.1 SURVIVAL. All representations, warranties, covenants, and obligations in this Agreement, the Schedules attached hereto, and the certificates delivered pursuant to SECTION 1.7, will survive the Closing and the consummation of the transactions contemplated hereby for a period of twelve (12) months, except that (a) the obligations of Buyer under SECTION 1.3(E) survive until the last Earnout payment is received by Seller following the expiration of the Earnout Period, unless the maximum amount of the Earnout is earned and paid prior to such expiration, then at such date as the maximum amount of the Earnout is paid to Seller, and (b) the obligations of Seller and Buyer as applicable under Article VIII shall survive until such covenants are fulfilled in accordance with their terms. Buyer is not aware of any facts or circumstances that would serve as the basis for a claim by Buyer against Seller based upon a breach of any of the representations and warranties of Seller contained in this Agreement or breach by any of Seller's covenants or agreements to be performed by any of them at or prior to Closing. Buyer will be deemed to have waived in full any breach of any of Seller's representations and warranties and any such covenants and agreements of which Buyer has such awareness at the Closing. SECTION 10.2 INDEMNIFICATION AND REIMBURSEMENT BY SELLER. Seller shall indemnify and hold harmless Buyer, and its directors, stockholders, members, partners, employees, representatives and agents (collectively, the "BUYER INDEMNIFIED PERSONS"), and shall reimburse Buyer Indemnified Persons, for any loss, liability, claim, damage (including incidental and consequential damages), or expense (including costs of investigation and defense and reasonable attorneys' fees and expenses) whether or not involving a third-party claim (collectively, "DAMAGES"), arising, directly or indirectly, from or in connection with: (a) any breach of any representation or warranty made by Seller in this Agreement, or in any certificate of Seller delivered pursuant to SECTION 1.7(A); (b) any breach of any covenant or obligation of Seller in this Agreement; and (c) any Retained Liabilities. -30-  SECTION 10.3 INDEMNIFICATION AND REIMBURSEMENT BY BUYER. Buyer shall indemnify and hold harmless Seller and its directors, members, partners, employees, representatives and agents (collectively, the "SELLER INDEMNIFIED PERSONS") and shall reimburse Seller Indemnified Persons for any Damages arising, directly or indirectly, from or in connection with: (a) any breach of any representation or warranty made by Buyer in this Agreement or in any certificate or document delivered by Buyer pursuant to this Agreement; (b) any breach of any covenant or obligation of Buyer in this Agreement or in any other document, writing or instrument delivered by Buyer pursuant to this Agreement; and (c) the Assumed Liabilities. SECTION 10.4 LIMITATIONS. (a) Seller will have no indemnification liability for the breach of any representation or warranty set forth in Article II, unless on or before the first anniversary of the Closing Date, Buyer notifies Seller of a claim specifying the factual basis of that claim in reasonable detail to the extent then known by Buyer; PROVIDED, HOWEVER, that any claim with respect to SECTION 2.8 taxes, 2.10 employee benefits or 2.11 only with respect to environmental matters may be made at any time, subject to the applicable period of statute of limitations. (b) Buyer will have no indemnification liability for the breach of any representation or warranty set forth in Article III, unless on or before the first anniversary of the Closing Date, Seller notifies Buyer of a claim specifying the factual basis of that claim in reasonable detail to the extent then known by Seller. (c) Notwithstanding anything to the contrary contained herein, except in the case of fraud, neither Buyer nor Seller shall have any liability for any amounts of Damages exceeding $1,000,000 in the aggregate for all claims made by the other party under this Article X. In addition, the amount of any Damages of any Seller Indemnified Party shall be reduced by any amount received by such Seller Indemnified Party with respect thereto under any insurance coverage. Likewise, the amount of any Damages of any Buyer Indemnified Party shall be reduced by any amount received by such Buyer Indemnified Party with respect thereto under any insurance coverage. Such Seller Indemnified Party or Buyer Indemnified Party, as applicable, shall use commercially reasonable efforts to collect any amounts available under such insurance coverage. If a Seller Indemnified Party or a Buyer Indemnified Party, as applicable, receives an amount under insurance coverage at any time subsequent to any indemnification provided by Buyer or Seller, as applicable, then such Seller Indemnified Party or Buyer Indemnified Party, as applicable, shall promptly reimburse Buyer or Seller, as applicable, for any payment made or expense incurred by Buyer or Seller, as applicable, in connection with providing such indemnification, up to such amount received by such Seller Indemnified Party or Buyer Indemnified Party, as applicable, but net of any expenses incurred by such Seller Indemnified Party or Buyer Indemnified Party in collecting such amount. -31-  (d) The Promissory Note, the Escrowed Shares, and $400,000 Offset (collectively, the "INDEMNITY FUNDS"), shall be the sole recourse available to Buyer Indemnified Parties for any claims under ARTICLE X, and any obligation of Seller to compensate any Buyer Indemnified Party for any Damages shall be satisfied in Indemnity Funds; PROVIDED, HOWEVER, that nothing herein shall limit the remedies that Buyer Indemnified Parties may have for Damages based on fraud. In furtherance of the foregoing, any claim for Damages made against the Indemnity Funds shall first be debited against the Promissory Note until the principal amount and any interest accrued through the date of such claim shall equal zero, next debited against the Escrowed Stock, which shares of Escrowed Stock shall have a Fair Market Value Per Share as of the date such claim is made against the Escrowed Stock, and last debited against the $400,000 Offset. SECTION 10.5 PROCEDURE FOR INDEMNIFICATION - THIRD PARTY CLAIMS. If, after the Closing Date, either a Buyer Indemnified Person or Seller Indemnified Person, as the case may be (the "INDEMNITEE"), receives notice of any third-party claim or alleged third-party claim asserting the existence of any matter of a nature as to which the Indemnitee is entitled to be indemnified under this Agreement, the Indemnitee shall promptly notify Seller, or Buyer, as the case may be (the "INDEMNITOR"), in writing with respect thereto, but the failure to notify the Indemnitor will not relieve the Indemnitor of any liability that it may have to an Indemnitee, except to the extent that the Indemnitor demonstrates that the defense of such action has been prejudiced by the Indemnitee's failure to give such notice. The Indemnitor will have the right to defend against any such claim provided (a) that the Indemnitor, within ten (10) days after the giving of such notice by Indemnitee, notifies Indemnitee in writing that (i) Indemnitor disputes such claim and gives reasons therefor, and (ii) Indemnitor will, at its own cost and expense, defend the same, and (b) such defense is instituted and continuously maintained in good faith by Indemnitor. Indemnitee may, if it so elects, designate its own counsel to participate with the counsel selected by Indemnitor in the conduct of such defense. Indemnitor will not permit any lien or execution to attach to the assets of Indemnitee as a result of such claim, and the Indemnitor shall provide such bonds or deposits as are necessary to prevent the same. In any event, Indemnitor will keep Indemnitee fully advised as to the status of such defense. If Indemnitor is given notice of a claim as aforesaid and fails to notify Indemnitee of its election to defend such claim within the time prescribed herein, or after having elected to defend such claim fails to institute and maintain such defense as prescribed herein, or if such defense is unsuccessful then, in any such event, the Indemnitor shall fully satisfy and discharge the claim within ten (10) days after notice from the Indemnitee requesting Indemnitor to do so. If the Indemnitor assumes the defense of any action or proceeding (y) no compromise or settlement of such claims may be effected by the Indemnitor without the Indemnitee's consent unless (A) there is no finding or admission of any violation of any legal requirement or any violation of the rights of any Person and no effect on any other claims that may be made against the Indemnitee, and (B) the sole relief provided is monetary damages that are paid in full by the Indemnitor; and (z) the Indemnitee will have no liability with respect to any compromise or settlement of such claims effected without its consent. SECTION 10.6 PROCEDURE FOR INDEMNIFICATION - OTHER CLAIMS. A claim for indemnification for any matter not involving a third-party claim may be asserted by notice to the party from whom indemnification is sought. -32-  ARTICLE X GENERAL PROVISIONS SECTION 11.1 EXPENSES. Except as otherwise expressly provided in this Agreement, each party to this Agreement shall bear its respective expenses incurred in connection with the preparation, execution, and performance of this Agreement and the transactions contemplated hereby, including all fees and expenses of its representatives. SECTION 11.2 NOTICES. All notices, consents, waivers, and other communications under this Agreement must be in writing and will be deemed to have been duly given when (a) delivered by hand (with written confirmation of receipt), (b) sent by facsimile with confirmation of transmission by the transmitting equipment, (c) received by the addressee, if sent by certified mail, return receipt requested, or (d) received by the addressee, if sent by a nationally recognized overnight delivery service, in each case to the appropriate addresses or facsimile numbers set forth below (or to such other addresses or facsimile numbers as a party may designate by notice to the other parties): Buyer: GlobalOptions Group, Inc. 75 Rockefeller Plaza, 27th Floor New York, NY 10019 Attn: Jeff Nyweide Fax: 212 ###-###-#### Email:  ***@*** with a copy to: Morton S. Taubman, Esq. 1201 15th Street, N.W., Second Floor Washington, D.C. 20005 Fax: 202 ###-###-#### Email:  ***@*** Seller: James Lee Witt Associates, LLC 701 13th Street, N.W. Suite 850 Washington, D.C. 20005 Attn: James Lee Witt Fax: 202 ###-###-#### Email:  ***@*** with a copy to: Swidler Berlin LLP 3000 K Street, N.W., Suite 300 Washington, D.C. 20007 Attn: Andrew M. Ray, Esq. Fax: 202 ###-###-#### Email:  ***@*** SECTION 11.3 JURISDICTION. The parties agree that the state and federal courts located in New York, New York, will be the sole venue and will -33-  have sole jurisdiction for the resolution of all disputes arising hereunder. Process in any action or proceeding referred to in the preceding sentence may be served on any party anywhere in the world. SECTION 11.4 WAIVER. No failure to exercise, and no delay in exercising, on the part of either party, any right hereunder will operate as a waiver thereof, nor will any single or partial exercise of any right hereunder preclude further exercise of any other right hereunder. SECTION 11.5 ENTIRE AGREEMENT AND MODIFICATION. This Agreement, together with the Schedules, Exhibits and other documents delivered pursuant to this Agreement, constitutes a complete and exclusive statement of the terms of the agreement between the parties with respect to its subject matter and supersedes all prior agreements, whether written or oral, between the parties with respect to its subject matter. This Agreement may not be amended except by a written agreement signed on behalf of each of the parties hereto; PROVIDED, HOWEVER, Buyer may waive any conditions contained in Article VI, and Seller may waive any conditions contained in Article VII, each without the consent of the other. SECTION 11.6 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS. No party may assign any of its rights or delegate any of its obligations under this Agreement without the prior written consent of the other parties, except that Buyer may assign any of its rights and delegate any of its obligations under this Agreement (i) to any wholly-owned affiliate of Buyer; and (ii) in connection with the sale of all or substantially all of the assets of Buyer, provided that no such assignment or delegation will relieve Buyer from any of its obligations hereunder. Subject to the preceding sentence, this Agreement will apply to, be binding in all respects upon, and inure to the benefit of the successors and permitted assigns of the parties. Nothing in this Agreement will be construed to give any Person other than the parties to this Agreement any legal or equitable right under or with respect to this Agreement or any provision of this Agreement, except such rights as shall inure to a successor or permitted assignee pursuant to this SECTION 11.6. SECTION 11.7 SEVERABILITY. If any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Agreement will remain in full force and effect. The parties agree that if any provision contained herein is, to any extent, held invalid or unenforceable in any respect under the laws governing this Agreement, they shall take any actions necessary to render the remaining provisions of this Agreement valid and enforceable to the fullest extent permitted by law and, to the extent necessary, shall amend or otherwise modify this Agreement to replace any provision contained herein that is held invalid or unenforceable with a valid and enforceable provision giving effect to the intent of the parties. SECTION 11.8 SECTION HEADINGS, CONSTRUCTION. The headings of Articles and Sections in this Agreement are provided for convenience only and will not affect its construction or interpretation. All Exhibits and Schedules to this Agreement are incorporated into and constitute an integral part of this Agreement as if fully set forth herein. All words used in this Agreement will be construed to be of such gender or number as the context requires. The language used in the Agreement shall be construed, in all cases, according to its fair meaning, and not for or against any party hereto. The parties acknowledge that each party has reviewed this Agreement and that rules of construction to the effect that any ambiguities are to be resolved against the drafting party will not be available in the interpretation of this Agreement. -34-  SECTION 11.9 GOVERNING LAW. This Agreement will be governed by and construed under the laws of the State of New York without regard to conflicts of laws principles that would require the application of any other law. SECTION 11.10 COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement. SECTION 11.11 FURTHER ASSURANCES. The parties shall cooperate reasonably with each other and with their respective representatives in connection with any steps required to be taken as part of their respective obligations under this Agreement, and the parties agree (a) to furnish upon request to each other such further information, (b) to execute and deliver to each other such other documents, and (c) to do such other acts and things, all as the other party may reasonably request for the purpose of carrying out the intent of this Agreement and the transactions contemplated hereby. SECTION 11.12 LEGAL FEES. In the event that legal proceedings are commenced by Buyer against Seller, or by Seller against Buyer, in connection with this Agreement or the transactions contemplated hereby, the party or parties that do not prevail in such proceedings shall pay the reasonable attorneys' fees and expenses incurred by the prevailing party in such proceedings. [SIGNATURE PAGE FOLLOWS.] -35-  ASSET PURCHASE AGREEMENT SIGNATURE PAGE IN WITNESS WHEREOF, the parties have executed this Asset Purchase Agreement as of the date first written above. BUYER: GLOBALOPTIONS GROUP, INC. By: /s/ Harvey W. Schiler -------------------------------------------- Name: Harvey W. Schiller ----------------------------------------- Title: Chairman and CEO ---------------------------------------- SELLER: JAMES LEE WITT ASSOCIATES, LLC By: /s/ James L. Witt ------------------------------------------- Name: James L. Witt Title: Member, The Holder of the Majority of the Outstanding Class A Common Interests -36-  ANNEX A "$400,000 OFFSET" shall have the meaning given such term in Section 1.3(e)(i). "ACCOUNTS RECEIVABLE" shall have the meaning given such term in Section 1.1(c). "ACCRUED EXPENSES" shall have the meaning given such term in Section 1.4(a)(vi). "AGREEMENT" shall have the meaning given such term in the preamble of this Agreement. "ASSETS" shall mean all of the property and assets to be transferred to Buyer by Seller under this Agreement. "ASSIGNMENT AND ASSUMPTION AGREEMENT" shall have the meaning given such term in Section 1.7(a)(ii). "ASSIGNMENT AND ASSUMPTION OF LEASE" shall have the meaning given such term in Section 1.7(a)(iii). "ASSUMED EMPLOYMENT AGREEMENTS" shall have the meaning given such term in Section 1.4(a)(v). "ASSUMED LIABILITIES" shall have the meaning given such term in Section 1.4. "AVAILABLE EMPLOYEES" shall have the meaning given such term in Section 8.1(a). "BAD DEBT WRITE-OFF" shall mean any uncollected accounts receivable of Seller Division written-off and charged to the bad debt reserve consistent with the Seller Division's corporate and accounting policies during the Earnout Period. "BILL OF SALE" shall have the meaning given such term in Section 1.7(a)(i). "BOARD OF DIRECTORS" shall mean the Board of Directors. "BUSINESS" shall have the meaning given such term in Section 1.1. "BUYER" shall have the meaning given such term in the preamble of this Agreement. "BUYER CHANGE OF CONTROL" shall be deemed to have occurred if (i) a Person, which shall include a "group" (within the meaning of section 13(d) of the Exchange Act) who does not currently own directly or indirectly 40% or more of the combined voting power of Buyer's outstanding securities becomes the "beneficial owner" (as defined in Rule 13d-3 under the Act) of securities of Buyer's representing more than 40% of the combined voting power of Buyer's then-outstanding securities; or (ii) the stockholders of Buyer approve a merger or consolidation of Buyer with any other publicly held corporation, other than a merger or consolidation which would result in the voting securities of Buyer outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the  surviving entity) at least 60% of the combined voting power of the voting securities of Buyer or such surviving entity outstanding immediately after such merger or consolidation; PROVIDED, HOWEVER, that if the merger or consolidation is not consummated following such stockholder approval and the transaction is abandoned, then the Change of Control shall be deemed not to have occurred. "BUYER PRIVATE CHANGE OF CONTROL" shall be deemed to have occurred if the stockholders of Buyer approve a merger or consolidation of Buyer with a privately held corporation, other than a merger or consolidation which would result in the voting securities of Buyer outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least 50% of the combined voting power of the voting securities of Buyer or such surviving entity outstanding immediately after such merger or consolidation. "BUYER COMMON STOCK" shall mean the common stock of Buyer, with a par value of $.001 per share, outstanding as of the date hereof, or any other shares of equity securities into which common stock of Buyer is converted, exchanged, or reclassified. "BUYER GOVERNING DOCUMENTS" shall have the meaning given such term in Section 3.1(b). "BUYER INDEMNIFIED PERSONS" shall have the meaning given such term in Section 10.2. "BUYER'S CLOSING DOCUMENTS" shall have the meaning given such term in Section 3.2(a). "CLOSING" shall have the meaning given such term in Section 1.6. "CLOSING DATE" shall have the meaning given such term in Section 1.6. "CLOSING DATE STATEMENT" shall have the meaning given such term in Section 1.3(b). "CLOSING STOCK PAYMENT" shall have the meaning given such term in Section 1.3(c). "CLOSING" shall have the meaning given such term in Section 1.6. "DAMAGES" shall have the meaning given such term in Section 10.2. "DEPOSITS AND PREPAYMENTS" shall have the meaning given such term in Section 1.1(j). "EARNOUT PERIOD" shall have the meaning given such term in Section 1.3(e)(i). "EARNOUT" shall have the meaning given such term in Section 1.3(e). "EMPLOYEE BENEFIT PLANS" shall have the meaning given such term in Section 2.10. "EMPLOYEES" shall have the meaning given such term in Section 2.9. "ENCUMBRANCE" shall have the meaning given such term in Section 1.1.  "ENFORCEABILITY LIMITATIONS" shall have the meaning given such term in Section 2.2(a). "ESCROW AGENT" shall be Swidler Berlin LLP, unless the parties hereto mutually agree upon another third party. "ESCROW AGREEMENT" shall have the meaning given such term in Section 1.7(a)(v). "ESCROWED STOCK" shall have the meaning given such term in Section 1.3(c). "EXCHANGE ACT" shall have the meaning given such term in Section 3.10. "EXCLUDED ASSETS" shall have the meaning given such term in Section 1.2. "FAIR MARKET VALUE OF A SHARE" means the average of the closing prices of the sales of Buyer Common Stock on all securities exchanges on which Buyer Common Stock may at the time be listed, or, if there have been no sales on any such exchange on any day, the average of the highest bid and lowest asked prices on all such exchanges at the end of such day, or, if on any day Buyer Common Stock are not so listed, the average of the representative bid and asked prices quoted in the NASDAQ System as of 4:00 P.M., New York time, or, if on any day Buyer Common Stock are not quoted in the NASDAQ System, the average of the highest bid and lowest asked prices on such day in the domestic over-the-counter market as reported by the National Quotation Bureau Incorporated, or any similar successor organization, in each such case averaged over a period of 30 trading days consisting of the trading day as of which the Fair Market Value of a Share is being determined and the 29 consecutive trading days prior to such day. If at any time Buyer Common Stock is not listed on any securities exchange or quoted in the NASDAQ System or the over-the-counter market, the Fair Market Value of a Share will be the fair value of such Buyer Common Stock as determined in good faith by the Board of Directors and set forth in a notice, which shall be delivered to Seller within ten (10) days after such 30 day period referred to in the foregoing sentence. If Seller disagrees with such determination, Seller shall deliver to the Board of Directors a written notice of objection within ten days. Upon receipt of Seller's written notice of objection, the Board of Directors and Seller will negotiate in good faith to agree on such Fair Market Value of a Share. If such agreement is not reached within 30 days after the delivery of Seller's objection, (i) Fair Market Value of a Share shall be determined by an appraiser jointly selected by the Board of Directors and Seller, in the event the Board of Directors' determination and Seller's determination differ by more than ten percent (10%) or (ii) Fair Market Value of a Share shall be deemed to be the average of the Board of Directors' determination and Seller's determination if the two determinations do not differ by more than ten percent (10%). If Fair Market Value of a Share is to be determined by an appraiser, such appraiser shall submit to the Board of Directors and Seller a report within 30 days of its engagement setting forth such determination. If the parties are unable to agree on an appraiser within 45 days after delivery of Seller's objection, within seven days, each party shall submit the names of four independent firms which are engaged in the business of valuing non-public securities, and each party shall be entitled to strike two names from the other party's list of firms, and the appraiser shall be selected by lot from the remaining four firms. The expenses of such appraiser shall be borne by Buyer. The determination of such appraiser as to Fair Market Value of a  Share shall be final and binding upon all parties. Notwithstanding anything to the contrary herein, the determination of Fair Market Value of a Share shall not include any premium (or discount) for control (or lack of control). "FINANCIAL STATEMENTS" shall have the meaning given such term in Section 2.4. "GAAP" shall have the meaning given such term in Section 2.4. "GOVERNING DOCUMENTS" shall have the meaning given such term in Section 2.1(b). "GOVERNMENTAL AUTHORIZATIONS" shall have the meaning given such term in Section 2.11(b). "GROSS MARGIN" shall mean revenue less all direct labor expense (i.e., salary and benefits of billed personnel) and all other direct expenses, including but not limited to: Bad Debt Write-off of Seller Division, referral fees, travel and entertainment directly attributable to the effort, and cost of outsourced labor. "INDEMNITEE" shall have the meaning given such term in Section 10.5. "INDEMNITOR" shall have the meaning given such term in Section 10.5. "INDEMNITY FUNDS" shall have the meaning given such term in Section 10.4(d). "INDEPENDENT CONTRACTOR AGREEMENT" shall have the meaning given such term in Section 1.1(k). "INITIAL PURCHASE PRICE" shall have the meaning given such term in Section 1.3(a). "INTELLECTUAL PROPERTY ASSETS" shall have the meaning given such term in Section 2.15. "INTERIM BALANCE SHEET" shall have the meaning given such term in Section 2.17. "LEASES" shall have the meaning given such term in Section 2.6. "LEGAL REQUIREMENT" shall have the meaning given such term in Section 2.11(a). "MATERIAL CONSENTS" shall have the meaning given such term in Section 6.3. "MATERIAL CUSTOMER" shall have the meaning given such term in Section 2.21. "MAXIMUM EARNOUT" shall have the meaning given such term in Section 1.3(e)(i). "NON-MATERIAL CONSENTS" shall have the meaning given such term in Section 1.8. "NOVATION" shall mean a novation required under any Seller Contract, and/or required by federal, state or local law or regulation. Any Seller Contract between Seller and any federal government or federal governmental entity is subject to 48 CFR 42.12. "ORDER" shall have the meaning given such term in Section 2.12(b).  "ORDINARY COURSE OF BUSINESS" means an action that is consistent in nature and scope with Seller's or Buyer's past practices, as the case may be, taken in the ordinary course of the normal day-to-day operations of Seller or Buyer, as the case may be, and that does not require specific authorization by the Board of Directors of Seller or of Buyer, as the case may be, or authorization of the members of Seller or stockholders of Buyer, as the case may be. "OTHER ASSETS" shall have the meaning given such term in Section 8.9(a)(ii). "OTHER BUSINESS" shall have the meaning given such term in Section 8.9(b)(i). "OTHER LIABILITIES" shall have the meaning given such term in Section 8.9(a)(ii). "PERMITTED ENCUMBRANCE" shall have the meaning given such term in Section 1.1. "PERSON" shall mean any individual, corporation, association, partnership (general or limited), joint venture, trust, unincorporated organization, limited liability company, any other entity or organization of any kind or a government or any department, agency, authority, instrumentality or political Seller Division thereof. "PRE-CLOSING CONSENTS" shall have the meaning given such term in Section 1.8. "PROMISSORY NOTE" shall have the meaning given such term in Section 1.3(c). "PROPRIETARY ASSETS" shall have the meaning given such term in Section 2.15. "PURCHASE PRICE ADJUSTMENT" shall have the meaning given such term in Section 1.3(a). "QUALIFIED APPRAISER" shall mean an appraiser duly appointed in accordance with Section 8.9(e). "REAL PROPERTY" shall have the meaning given such term in Section 1.1(a). "RELATED PERSON" shall have the meaning given such term in Section 2.16. "REMAINDER EARNOUT AMOUNT" shall mean the amount equal to (i) the total Earnout that Seller may have received during the entire Earnout Period according to EXHIBIT C, but for the Triggering Event, less (ii) the amount of Earnout already paid to Seller. "RETAINED LIABILITIES" shall have the meaning given such term in Section 1.4(b). "SEC FILINGS" shall have the meaning given such term in Section 3.9. "SELLER CONTRACT" shall have the meaning given such term in Section 1.1(d). "SELLER DIVISION" shall have the meaning given such term in Section 8.9(a)(i). "SELLER DIVISION BUSINESS" shall have the meaning given such term in Section 8.9(b)(ii). "SELLER DIVISION RECORDS" shall have the meaning given such term in Section 8.9(a)(i).  "SELLER INDEMNIFIED PERSONS" shall have the meaning given such term in Section 10.3. "SELLER'S BANK LINE OF CREDIT" shall mean that certain revolving credit facility between Seller and Chambers Bank. "SELLER'S CLOSING DOCUMENTS" shall have the meaning given such term in Section 2.2(a). "SELLER" shall have the meaning given such term in the preamble of this Agreement. "STOCK PORTION" shall have the meaning given such term in Section 1.3(a). "TANGIBLE PERSONAL PROPERTY" shall have the meaning given such term in Section 1.1(b). "TRADE ACCOUNTS PAYABLE" shall have the meaning given such term in Section 1.4(a)(i). "TRIGGERING EVENT" shall be deemed to occur if (i) the Seller Division is liquidated, reorganized, restructured or otherwise significantly altered without Witt's consent; (ii) prior to the consummation of a Buyer Change of Control, the successor to Buyer does not execute and deliver to Seller a Successor Undertaking; (iii) prior to the consummation of a Buyer Private Change of Control, the successor to Buyer does not execute and deliver to Seller a Successor Undertaking containing an additional covenant that obligates the successor to pay the Earnout in cash only; (iv) more than 50% of the assets of the Seller Division are sold or otherwise disposed without Witt's consent; or (v) the stockholders of Buyer approve a plan of complete liquidation of Buyer or an agreement for the sale or disposition by Buyer of all or substantially all of Buyer's assets (unless such liquidation or sale or disposition is not actually consummated). Notwithstanding the foregoing, a Triggering Event shall not be deemed to have occurred if the merger, plan of liquidation or sale of substantially all assets approved by stockholders is not consummated following such stockholder approval and the transaction is abandoned, then a Triggering Event shall be deemed not to have occurred. "TRUE-UP STATEMENT" shall mean that statement that is prepared by Seller on or before ninety (90) days after the Closing in connection with calculating the Purchase Price Adjustment, substantially in the form of EXHIBIT A. "WITT EMPLOYMENT AGREEMENT" shall have the meaning given such term in Section 1.7(a)(vi). "WITT" shall mean James Lee Witt, an individual.  ANNEX B: PERMITTED ENCUMBRANCES Permitted Encumbrances shall include the following: (i) purchase money Encumbrances on any property acquired by Seller in the Ordinary Course of Business, provided that the value of such lien does not exceed the value of the property so acquired; (ii) Encumbrances, deposits or pledges required to secure payments due in connection with workmen's compensation, unemployment insurance or other social security or old age pension obligations; (iii) Encumbrances for taxes, assessments or governmental charges which are not yet due or which are subject to a contest; (iv) legal or equitable Encumbrances arising in connection with legal proceedings if the same is subject to a contest; (v) minor defects, irregularities, encumbrances and clouds on title and statutory liens which do not materially impair the property affected thereby; (vi) liens to secure performance of bids, tenders, contracts (other than for the repayment of borrowed money) or leases, or for purposes of like general nature in the Ordinary Course of Business; (vii) mechanic's, workmen's, materialmen's, construction or other like liens arising in the Ordinary Course of Business; and (xii) any easements.