ASI_-_Kolb_Stewart__Associates_Inc._-_Asset_Purchase_Agreement__executed_.pdf

4866-9191-7180.7

ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT (this “Agreement”) is made and entered into as of October 2, 2023, by and among Advantage Surveillance, LLC, a Delaware limited liability company (“Purchaser”), Kolb, Stewart & Associates, Inc., an Arizona corporation (“Seller”), and Dave Stewart (“Owner”). Purchaser, Seller, and Owner are each referred to as a “Party” and collectively as the “Parties”.

W I T N E S S E T H :

WHEREAS, Seller is engaged in the business of providing private investigation services, including to insurance companies, third party administrators, self-insured organizations and attorneys for defense of claims related to workers compensation, generally liability, disability, auto liability and medical malpractice (the “Business”); and

WHEREAS, Seller desires to sell to Purchaser, and Purchaser desires to purchase from Seller, substantially all of the assets of Seller, as described in more detail herein, on the terms and subject to the conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the foregoing initial paragraph and recitals, and the representations, warranties, covenants, agreements, conditions and indemnities contained in this Agreement, and intending to be legally bound, the Parties agree as follows:

ARTICLE 1.

THE TRANSACTION

1.1 Purchase and Sale of Assets. At Closing, Seller shall sell, transfer and deliver to Purchaser, or cause to be sold, transferred and delivered to Purchaser, and Purchaser shall purchase from Seller, substantially all of the assets of Seller and the Business (the “Purchased Assets”), free and clear of all Liens. The Purchased Assets include, without limitation, the following, wherever located:

(a) All machinery, equipment, fixtures, furniture, supplies, tools, dies, molds, inventory (wherever held or in transit), materials, goods, signage, and other tangible personal property, including the property set forth on Schedule 1.1(a) (collectively, the “Tangible Personal Property”);

(b) All Intellectual Property, including the intellectual property set forth on Schedule 2.8 and the name “Kolb, Stewart & Associates”, any trade names, and any derivations or combinations thereof;

(c) All rights to and under the contracts, agreements, leases, subleases, assignments, instruments, Liens, guaranties or other similar arrangements, including those contracts set forth on Schedule 1.1(c) (collectively, the “Contracts”);

(d) All Accounts Receivable, as defined in Section 1.5 below;

(e) All claims, refunds, causes of action, choses in action, rights of recovery, rights of set-off, counterclaims and rights of recoupment, including for past, present or future damages for the breach, infringement or misappropriation of any Purchased Assets;

(f) All Permits;

(g) The goodwill of the Business;

(h) All books, records and other documents, including fixed asset records, sales and advertising materials (including price lists and customer lists), technical and research data, ledgers, files, correspondence, plats, drawings, specifications, creative materials, studies, reports and other items related to the Purchased Assets; and

(i) To the extent not otherwise specifically included in this Section 1.1 or excluded from this Transaction by Section 1.2, all assets of every kind, character, nature and description, whether tangible or intangible, choate or inchoate, corporeal or incorporeal, matured or unmatured, known or unknown, contingent or fixed.

1.2 Excluded Assets. The following assets of Seller shall not constitute Purchased Assets and shall be retained by Seller (collectively, the “Excluded Assets”):

(a) The franchise to be a corporation, corporate seals, minute books, stock of Seller, stock ledgers and any other records relating to the organization or capitalization of Seller;

(b) Books and records that Seller is required to retain pursuant to any applicable Law, provided that Seller permits Purchaser access to such books and records as provided in Section 4.2;

(c) All defenses, rights of set off and counterclaims arising out of or relating to any of the Retained Liabilities;

(d) Insurance policies and amounts payable to Seller under pending claims;

(e) Tax refund claims;

(f) All cash and cash equivalents; and

(g) The assets set forth on Schedule 1.2(g).

1.3 Assumption of Liabilities.

(a) Purchaser expressly is not assuming any obligations or liabilities, whether accrued, absolute, contingent, matured, unmatured or other, of Seller, Owner or their respective affiliates, except (i) all liabilities and obligations in respect of the contracts and agreements included in the Purchased Assets, but only to the extent that such liabilities and obligations thereunder are required to be performed after the Effective Date and do not relate to any failure to perform, improper performance, warranty or other breach, default or violation by Seller on or prior to the Effective Date; (ii) all liabilities and obligations arising after the Effective Date relating to Purchaser’s ownership or operation of the Business or the Purchased Assets after the Effective Date; and (iii) those obligations, if any, expressly set forth Schedule 1.3(a) (collectively, the “Assumed Liabilities”).

(b) Except for the Assumed Liabilities, Purchaser shall not assume, and Seller will pay, defend, discharge and perform, as and when due, and otherwise retain and remain solely responsible for: (i) any existing Liabilities of Seller, (ii) any existing Indebtedness of Seller, (iii) any existing Taxes of Seller, (iv) any Liability of any Person, directly or indirectly related to, accruing or arising out of, caused by or resulting from the operation or conduct of the Business or the ownership of the Purchased Assets prior to the Effective Date, whether or not recorded on the books and records of any Person, (v) any Liability of any Person, directly or indirectly related to, accruing or arising out of, caused by or resulting from the operation or conduct of the Excluded Assets prior to the Effective Date, whether or not recorded on the books and records of any Person, and (vi) any existing Liability that would otherwise become a Liability of Purchaser as a matter of Law in connection with this Agreement, any Ancillary Document or the Transaction. All such other Liabilities that are not expressly included in the Assumed Liabilities are referred to collectively as the “Retained Liabilities.”

1.4 Closing Payments. At Closing, Purchaser shall pay to Seller an amount consisting of

(i) $250,000.00 in cash plus (ii) the Accounts Receivable Adjustment set forth in Section 1.5 (the “Purchase Price”).

1.5 Accounts Receivable. At least two (2) days prior to Closing, Seller shall prepare and deliver to Purchaser an accounts receivable listing as of Closing (the “Accounts Receivable ”) setting forth the face amount of such Accounts Receivable as of Closing (the “Accounts Receivable Adjustment Amount”). The Purchase Price shall be increased pursuant to Section 1.4 by the amount of the Accounts Receivable Adjustment Amount.

1.6 Closing. The closing of the sale and purchase of the Purchased Assets (the “Closing”) shall take place on the third business day following the date on which all conditions precedent to the Parties’ obligations to close as set forth in Sections 1.7 and 1.8 herein shall have been satisfied in full (or waived in writing by the applicable Party at its sole discretion), or at such other date as mutually agreed upon by the Parties (the “Closing Date”); provided, however, for accounting and tax purposes only, all profits and losses arising from the ownership of the Shares shall pass to Purchaser effective as of 12:01 a.m., on October 1, 2023 (the “Effective Date”). All transactions that are to take place at the Closing shall be considered to have taken place simultaneously, and no delivery or payment shall be considered to have been made until all the transactions have been completed. Title to, ownership of, control over and risk of loss of the Purchased Assets shall pass to Purchaser effective as of 12:01 a.m. on the Closing Date unless provided otherwise herein. All monetary amounts payable pursuant to this Agreement shall be paid by wire transfer or delivery of other immediately available United States funds, as directed by the Party receiving payment.

1.7 Condition Precedent to Purchaser’s Obligation. The obligation of Purchaser to consummate the Transaction is subject to the satisfaction, at or prior to the Closing, of all of the conditions set forth in this Section 1.7. Purchaser may waive any or all of these conditions in whole or in part:

(a) All representations and warranties by Seller and Owner contained in this Agreement and any agreement or certificate delivered pursuant to this Agreement shall be true and correct on and as of the Closing Date.

(b) Seller and Owner shall have performed or complied with all covenants, agreements and obligations set forth in this Agreement that are required by this Agreement to be performed, complied with or satisfied at or prior to the Closing.

(c) No action, suit, proceeding, audit, hearing, investigation, claim or demand is pending or threatened where an unfavorable injunction, judgment, order, decree, ruling or charge would (i) prevent the consummation of any of the transactions contemplated by this Agreement, (ii) cause any of the transactions contemplated by this Agreement to be rescinded following consummation or (iii) adversely affect the right of Purchaser to own the Purchased Assets or operate the Business (and no such injunction, judgment, order, decree, ruling or charge shall be in effect).

(d) Purchaser shall have received an officer’s certificate from Seller, dated as of the Closing Date, certifying that the conditions specified in Sections 1.7(a)-(c) have been satisfied.

(e) Seller shall have delivered a bill of sale and assignment in the form of Exhibit 1.7(e) to Purchaser, duly executed by Seller.

(f) Seller shall have obtained third party consents from each of the Persons set forth on Schedule 1.7(f).

(g) Seller shall have delivered the Restrictive Covenant Agreements with Seller and Owner (the “Restrictive Covenant Agreements”) in the form of Exhibit 1.7(g) to Purchaser, duly executed by Seller and Owner.

(h) Seller shall have delivered Intellectual Property assignments in the form of Exhibit 1.7(i) to Purchaser, duly executed by Seller.

(i) Seller shall have delivered a Secretary’s Certificate in the form of Exhibit 1.7(i) to Purchaser, duly executed by officers thereto.

(j) Seller shall have delivered to Purchaser certificates of good standing for each jurisdiction in which Seller is qualified to do business.

(k) Seller shall have delivered payoff letters, in form and substance reasonably satisfactory to Purchaser, in respect of any Indebtedness required to be repaid as of the Closing Date, which shall release all Liens on or affecting the Purchased Assets or the assets of Seller and include satisfactory evidence of such release (including Uniform Commercial Code termination statements and all other related or necessary documentation).

(l) Seller shall have delivered the Consulting Agreement with Owner (the “Consulting Agreement”) in the form of Exhibit 1.7(l) to Purchaser, duly executed by Owner.

(m) No adverse event or condition material to the Business or the Purchased Assets shall have occurred, as determined by Purchaser in its reasonable discretion.

(n) Seller shall have delivered such other agreements, certificates and instruments as Purchaser may reasonably request.

1.8 Conditions Precedent to Seller’s Obligation. The obligation of Seller to consummate the Transaction is subject to the satisfaction, at or prior to Closing, of all of the conditions set forth in this Section 1.8. Seller may waive any or all of these conditions in whole or in part:

(a) All representations and warranties by Purchaser contained in this Agreement and any agreement or certificate delivered pursuant to this Agreement shall be true and correct on and as of the Closing Date.

(b) Purchaser shall have performed or complied with all covenants, agreements and obligations set forth in this Agreement that are required by this Agreement to be performed, complied with or satisfied at or prior to the Closing.

(c) No action, suit, proceeding, audit, hearing, investigation, claim or demand is pending or threatened where an unfavorable injunction, judgment, order, decree, ruling or charge would (i) prevent the consummation of any of the transactions contemplated by this Agreement, (ii) cause any of the transactions contemplated by this Agreement to be rescinded following consummation or (iii) adversely affect the right of Purchaser to own the Purchased Assets or operate the Business (and no such injunction, judgment, order, decree, ruling or charge shall be in effect).

(d) Seller shall have received an officer’s certificate from Purchaser, dated as of the Closing Date, certifying that the conditions specified in Sections 1.8(a)-(c) have been satisfied.

(e) Purchaser shall have delivered the Purchase Price to Seller.

(f) Purchaser shall have delivered the Restrictive Covenant Agreements to Seller, duly executed by Purchaser.

(g) Purchaser shall have delivered the Consulting Agreement to Seller, duly executed by Purchaser.

ARTICLE 2.

REPRESENTATIONS AND WARRANTIES

OF SELLER AND OWNER

Seller and Owner jointly and severally represent and warrant to Purchaser as follows:

2.1 Organization, Qualification and Power. Seller is a corporation duly organized, validly existing and in good standing under the Laws of the state of Arizona and has full corporate power and authority to carry on the Business, to own and use the Purchased Assets, and to fully perform all of its obligations under the Contracts. Seller has delivered to Purchaser true, correct and complete copies of Seller’s articles of incorporation, bylaws, and any other similar agreements, including any amendments thereto (collectively, the “Organizational Documents”). Neither Seller nor Owner is a party to or otherwise subject to any shareholder agreement, stock restriction agreement, or buy-sell agreement relating to the capital stock of Seller or the sale of the assets of Seller. Seller is not in default under or in violation of any provision of its Organizational Documents, in each case as amended, or any resolution adopted by the shareholders or directors of Seller.

2.2 Capitalization. Owner is the sole owner of all of the authorized, issued and outstanding capital stock of Seller. There are no outstanding or authorized options, warrants, purchase rights, subscription rights, exchange rights or other agreements or commitments that could result in any change in the capital stock of Seller. Seller has no subsidiaries and owns no equity interest in any other Person. There are no voting trusts, proxies or other agreements or arrangements with respect to the voting of the ownership, equity or capital interests of Seller.

2.3 Authority and Enforceability. Seller and Owner have full power and authority to execute, deliver and perform this Agreement and each Ancillary Document to which Seller or Owner is a party, and the execution, delivery and performance of this Agreement and the Ancillary Documents by Seller has been duly authorized by all necessary corporate action on the part of Seller. This Agreement and the Ancillary Documents have been duly executed and delivered by Seller and Owner and constitutes the valid and legally binding obligation of Seller and Owner, enforceable in accordance with their terms. Except as set forth on Schedule 2.3, neither Seller nor Owner is required to give any notice to, make any filing with or obtain any authorization, consent or approval of any Governmental Authority or any other Person in order for Seller and Owner to consummate the Transaction.

2.4 Noncontravention. None of the execution, delivery and performance of this Agreement or any Ancillary Document, compliance with any of the provisions hereof or thereof or the consummation of the Transaction, by Seller or Owner will (a) contravene, conflict with, or result in any violation or breach of any provision of, the Organizational Documents of Seller, (b) except as set forth in Schedule 2.4, conflict with, result in a violation or breach of, or constitute a default under, or result in the acceleration of, or create the right to accelerate, terminate or cancel, or give rise to a right of payment, prepayment or reimbursement, or termination, cancellation, modification or acceleration under any agreement Seller or Owner is a party to, any Contract or any Permit, in each case whether with or without notice, lapse of time or both, (c) result in a contravention, violation or breach of any Law or Order applicable to Seller or to any of its assets or the Business, or (d) result in an imposition of any Lien on any of the assets of Seller.

2.5 Financial Information.

(a) Schedule 2.5(a) contains correct, accurate and complete copies of the balance sheets and statements of income of Seller as of and for fiscal years 2021 and 2022 (the “Annual Financial Statements”), and the unaudited balance sheet and statement of income of Seller as of and for the 11-month period ending August 31, 2023 (the “Most Recent Balance Sheet”, and together with the Annual Financial Statements, each, a “Financial Statement” and collectively, the “Financial Statements”). Each Financial Statement (i) has been prepared based on, and in accordance with, the books of account and related records of Seller, and (ii) fairly presents the financial condition, financial position, results of operations, assets and Liabilities of Seller for the periods covered. The books of account and related records of Seller correctly, accurately and completely reflect all of its assets, Liabilities and transactions, applied on a consistent basis throughout the periods covered. Seller maintains proper and adequate internal accounting controls which provide assurance that: (i) transactions are executed with management’s authorization, (ii) transactions are recorded as necessary to permit preparation of the Financial Statements and to maintain accountability of assets, (iii) access to Seller’s assets is permitted only in accordance with management’s authorization, (iv) the reporting of Seller’s assets is compared with existing assets at regular intervals, and (v) accounts, notes and other receivables and inventory are recorded accurately, and proper and adequate procedures are implemented to effect the collection thereof on a current and timely basis.

(b) Schedule 2.5(b) sets forth all outstanding Indebtedness of Seller, and all Liens on the Purchased Assets securing such Indebtedness (which such Liens are being released in connection with the Closing).

(c) The Accounts Receivable represent valid obligations arising from transactions actually made or services actually performed by Seller in the Ordinary Course of Business. Unless paid prior to the Effective Date, the Accounts Receivable will be as of the Effective Date current and collectible in the ordinary course. There is no contest, claim or right of set off, relating to the amount or validity of any of the Accounts Receivable.

(d) Seller does not have any Liabilities (and there is no basis for any present or future action, suit, proceeding, hearing, investigation, charge, complaint, claim or demand against it giving rise to any Liability), except for (i) Liabilities set forth on Schedule 2.5(d), (ii) Liabilities set forth on the face of the Most Recent Balance Sheet, and (iii) Liabilities incurred in the Ordinary Course of Business since the date of Most Recent Balance Sheet (none of which results from, arises out of, or relates to any breach or violation of, or default under, a Contract or a Law).

2.6 Absence of Certain Changes. Except as set forth on Schedule 2.6, since January 1, 2023, there has not been any: (a) event that has had or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect; (b) announcement or implementation of any reduction in force, lay-off, early retirement program, severance program or other program or effort concerning the termination of employees of Seller; (c) extension or reduction of the term of payment of any vendors, suppliers or customers of Seller beyond or less than the term of payment customary in the Ordinary Course of Business;

(d) payment or increase by Seller of any bonuses, salaries, or other compensation to any shareholder, director, officer, or Employee which is outside of the Ordinary Course of Business; (e) other occurrence, event, incident, action, failure to take action or transaction involving Seller which is outside the Ordinary Course of Business; (f) changes in accounting methods, principles or practices; or (g) commitments to take any of the foregoing actions.

2.7 Claims; Legal Compliance. Except as set forth on Schedule 2.7(a), there are no, and during the past 5 years there have not been, actions, suits, proceedings, hearings, investigations, charges, complaints, claims or demands of any kind pending or, to the Knowledge of Seller, threatened against or affecting Seller, any of the assets of Seller or any aspect of the Business; and there are no Orders of any kind which are outstanding against or unsatisfied by Seller or relating to any of the assets of Seller or any aspect of the Business. Seller is currently and has been for the last 5 years, in compliance in all material respects with applicable Law. Except as set forth on Schedule 2.7(b), during the past 5 years: (a) Seller has not received any written notice from any Governmental Authority to the effect that Seller is not in compliance with any applicable Law or Order; and (b) Seller has not been subject to any adverse inspection, finding, investigation, penalty assessment, audit or other compliance or enforcement action. Seller has obtained all Permits required to conduct the Business or maintain the Purchased Assets (a listing of such Permits is set forth on Schedule 2.7(c)), and has complied with each such Permit. Each such Permit is current and has not been revoked, suspended, canceled or terminated, nor has notice been given of any threatened revocation, suspension, cancellation or termination. All employees and independent contractors of Seller have all necessary Permits required to conduct their duties or services on behalf of Seller or the Business, and are in compliance with all such Permits. Seller and Owner are not charged or, to the Knowledge of Seller, threatened with, or under investigation with respect to, any alleged violation of any provision of any Law.

2.8 Intellectual Property.

(a) Set forth on Schedule 2.8 is a complete and accurate list of each item of Intellectual Property owned or licensed by Seller. Seller owns (free and clear of all Liens or licenses) or has the right to use pursuant to license, sublicense, agreement or permission all Intellectual Property used in the Business or necessary for the operation of the Business. Seller has taken all necessary action to maintain and protect each item of Intellectual Property used by Seller or necessary for the operation of the Business. Each item of Intellectual Property used in the Business or necessary for the operation of the Business as of the Closing will be owned or available for use by Purchaser on identical terms and conditions immediately subsequent to the Closing. Seller has not interfered with, infringed upon, misappropriated, or otherwise conflicted with any Intellectual Property rights of any other Person, and Seller has not received any charge, complaint, claim, demand or notice alleging any such interference, infringement, misappropriation or violation. To the Knowledge of Seller, no other Person has interfered with, infringed upon, misappropriated or otherwise conflicted with any Intellectual Property rights of Seller. All Intellectual Property used by Seller is valid, subsisting and enforceable. Seller has not granted any license or similar right to any Person with respect to any Intellectual Property owned by Seller.

(b) Seller is, and at all times in the past 5 years has been, in material compliance with all Privacy and Information Laws. Neither (i) the execution, delivery or performance of this Agreement or the Ancillary Documents; nor (ii) consummation of the Transaction, nor (iii) Purchaser’s possession or use of any personal data or other information collected by Seller will result in any violation of any Privacy and Information Laws. Seller has all necessary and required rights to license, use, sublicense and distribute any personal data or other information collected by Seller. Seller has not, within the last 5 years, suffered a security breach.

2.9 Real Property. Seller does not own, and has never owned, any real property. Set forth on Schedule 2.9 is a list and brief description, including street address or location, of all real property leased by Seller (the “Leased Real Property”). With respect to each lease or sublease for the Leased Real Property:

(a) each such lease or sublease for the Leased Real Property has been duly authorized and executed by Seller and is in full force and effect, and there exists no breach or default by Seller or, to the Knowledge of Seller, by any other party under such leases or subleases, (b) all buildings, improvements or facilities leased or subleased thereunder have received all approvals of all applicable authorities (including all Permits) required in connection with the operation thereof and have been operated and maintained in accordance with each applicable Law, (c) all buildings, improvements or facilities leased or subleased thereunder are in good operating condition, have been maintained in accordance with good industry practice and are suitable for the uses for which they are presently being used in the Business, (d) to the Knowledge of Seller, the owner of the buildings, improvements or facilities leased or subleased has good and marketable title to the parcel of real property, free and clear of all Liens, and (e) none of the Leased Real Property contains any patent defects or, to the Knowledge of Seller, latent defects.

2.10 Title to Assets. Seller has good, valid and marketable title to the Purchased Assets, free and clear of all Liens.

2.11 Environmental Matters. Seller is, and at all times during the past 5 years has been, in material compliance with all Environmental Laws. Seller has obtained and Seller is, and at all times during the past 5 years has been, in compliance in all material respects with all Environmental Permits. Seller has not received any written notice and, to the Knowledge of Seller, any other notice that any condition exists that with notice or lapse of time or both would constitute a default under any Environmental Permit, and such Environmental Permits are valid and in full force and effect and will not be terminated or impaired or become terminable, in whole or in part, as a result of the Transaction. Seller has not engaged in or permitted any operations or activities upon, or any use or occupancy of Seller’s facilities or any real property ever operated or leased by Seller, or any portion thereof, for the purpose of or in any way involving the testing, investigation, handling, treatment, storage, release, discharge, dumping, removal or disposal of any

Hazardous Substance, under, in or about the Leased Real Property or any real property ever operated or leased by Seller, except for the storage of cleaning, pest control and office supplies held for use by Seller in the Ordinary Course of Business. To the Knowledge of Seller, there are no Hazardous Substances, presently deposited, stored, or otherwise located on, under, in or about the Leased Real Property, except for the storage of cleaning, pest control and office supplies held for use by Seller in the Ordinary Course of Business. No written notice, notification, demand, request for information, citation, summons or Order has been received, no complaint has been filed, no penalty has been assessed and no proceeding or investigation is pending, or, to the Knowledge of Seller, threatened by any Governmental Authority or other Person with respect to any matters relating to Seller and relating to or arising out of any Environmental Law. There are no material Liabilities of or relating to Seller of any kind whatsoever, arising out of or relating to any Environmental Law, and, to the Knowledge of Seller, there are no facts, conditions, situations or set of circumstances which could reasonably be expected to result in or be the basis for any such Liability. For purposes of this Section 2.11, the term “Seller” shall include any entity which is, in whole or in part, a predecessor of Seller.

2.12 Condition of Tangible Purchased Assets; All Assets. Each of the Purchased Assets constituting tangible assets has been maintained in accordance with normal industry practice, is in good operating condition and repair (subject to normal wear and tear), is suitable for the purposes for which it presently is used or currently contemplated to be used and contains no patent defects or, to the Knowledge of Seller, latent defects. The Purchased Assets include all assets that are used in or necessary for the Business as presently conducted, and as conducted in the past 12 months, without restriction, interruption, or limitation.

2.13 Employment Matters.

(a) Schedule 2.13(a) contains a true and complete list of the following information for each employee of Seller (collectively, the “Employees”): name, job title, date of hire, current compensation paid or payable, vacation accrued and unused personal time, and service credited for purposes of vesting or eligibility to participate under any employee benefit plans maintained by Seller. Seller is not a party to or bound by any collective bargaining agreement and has not experienced any strikes, grievances, claims of unfair labor practices or other collective bargaining disputes. Seller has complied with all Laws relating to employment matters in all material respects. Seller has not committed any unfair labor practice. No organizational effort is presently being made or, to the Knowledge of Seller, threatened by or on behalf of any labor union with respect to the Employees. All salaries, wages, commissions and other compensation and benefits payable to each employee and independent contractor have been accrued and paid by Seller when due for all periods through the Effective Date. Seller has maintained and currently maintains adequate insurance as required by applicable Law with respect to workers’ compensation claims and unemployment benefits claims. The execution, delivery and performance of this Agreement and the Transaction will not trigger any severance payment obligations under any agreement or at Law. Seller has delivered to Purchaser accurate copies of all current employment agreements, employee manuals and handbooks, disclosure materials, policy statements and other materials relating to the employment of employees of Seller. All persons performing services for Seller are, and have been during the past 5 years, properly classified as an employee or independent contractor. All employees of Seller classified as exempt under the Fair Labor Standards Act and state and local wage and hour laws are, and in the past 5 years have been, properly classified.

(b) Each Employee was hired in compliance with the Immigration Reform and Control Act of 1986 and the rules and regulations thereunder (“IRCA”) and/or any other applicable immigration related Law and Seller is in compliance with, and Seller has at all times complied with, all recordkeeping and other regulatory requirements under IRCA and/or any other applicable immigration related Law. Seller has only employed individuals authorized to work in the United States. Seller has not received written notice of any inspection, investigation, proceeding, and/or enforcement action relating to its alleged noncompliance with or violation of IRCA, nor has Seller been warned, fined, or otherwise penalized by reason of any failure to comply with IRCA or for any willful violation of any other immigration Law.

Except as set forth on Schedule 2.13(b), all of the Employees are U.S. citizens or U.S. lawful permanent residents. Seller has performed reasonable due diligence in response to any and all “no-match letters” which they have received from the U.S. Social Security Administration (“SSA”). Seller has made available to Purchaser any and all “no-match letters” which they have received from the SSA and copies of any and all documentation evidencing that they performed reasonable due diligence in response to their receipt of any and all such “no-match letters”.

2.14 Contracts. The contracts and agreements listed on Schedule 2.14 constitute all of the contracts or agreements that Seller is a party to and that are used in, necessary for, or useful for the operation of the Business as presently conducted. Seller has delivered to Purchaser a correct and complete copy of each written Contract, as amended to date, and a written summary setting forth the terms and conditions of each oral Contract. With respect to each Contract: (a) the Contract is legal, valid, binding and enforceable and in full force and effect; (b) the Contract will continue to be legal, valid, binding, enforceable and in full force and effect on identical terms following the consummation of the Transaction, subject to the approval of the other party to each such contract; and (c) no party is in breach or default, and no event has occurred which with notice or lapse of time would constitute a breach or default, or permit termination, modification or acceleration, under the Contract.

2.15 Employee Benefit Plans. Set forth on Schedule 2.15 is a true and complete list of all benefit plans providing benefits to any officer, employee, retiree, former employee, or if applicable director or agent, of Seller or any of its dependents, survivors or beneficiaries to which Seller is a party, which is sponsored, maintained or contributed to by Seller or with respect to which Seller could incur Liability under ERISA or the Code (individually, a “Seller Employee Benefit Plan”, and collectively, “Seller Employee Benefit Plans”). Each Seller Employee Benefit Plan complies in form and in operation with the applicable requirements of any Law. No payment pursuant to any Seller Employee Benefit Plan that is owed or may become due to any officer, director or agent of Seller or any Employee will be non-deductible to Seller or subject to any Taxes under Sections 280G or 4999 of the Code. Seller shall not be required to “gross up” or otherwise compensate any Person because of the imposition of any Taxes on a payment pursuant to a Seller Employee Benefit Plan to such Person. The Transaction shall not result in the payment, vesting or acceleration of any benefit under any Seller Employee Benefit Plan. All contributions which are due under the terms of each Seller Employee Benefit Plan have been made by the due date thereof and all contributions for any period ending before the Effective Date which are not yet due have been paid or properly accrued in the Financial Statements in accordance with applicable Law and, to the extent not paid as of the Effective Date, will paid by Seller within thirty (30) days of Closing. All premiums or other payments for all periods ending before the Effective Date have been paid with respect to each Seller Employee Benefit Plan. Seller has been and is in compliance with all requirements under the Patient Protection and Affordable Care Act and no excise taxes have been assessed against Seller by the IRS under Section 4980H of the Code. Seller maintains a Section 125 of the Code cafeteria plan that allows for the ability to make group health plan and other welfare benefit program payments on a pre-tax basis and such cafeteria plan is in compliance with the requirements under Section 125 of the Code.

2.16 Insurance. Seller has delivered to Purchaser accurate and complete copies of all policies of insurance (and a description of any self-insurance programs) to which Seller is a party, a list of which is included in Schedule 2.16.

2.17 Taxes.

(a) All Taxes for which Seller may be liable have been timely paid. All Tax returns, forms, reports, statements or similar documents (collectively, “Tax Returns”) required to have been filed by or with respect to Seller have been timely filed. All such Tax Returns are complete and accurate and disclose all Taxes required to be paid by or with respect to Seller for the periods covered thereby. The charges, accruals and reserves for Taxes with respect to Seller reflected in the Financial Statements

(excluding any provision for deferred income taxes) are adequate to cover tax liabilities accruing through the date thereof and Seller has not incurred or accrued any liability for Taxes subsequent to such date other than in the Ordinary Course of Business. No extension of time within which to file any Tax Return is in effect.

(b) There is no proceeding audit, examination, or investigation pending or threatened in writing or, to the Knowledge of Seller, proposed with respect to Taxes for which Seller is or may be liable.

(c) Seller has not received a currently pending written nexus inquiry or a notice of any claim by a Governmental Authority in a jurisdiction where it does not file Tax Returns that it is or may be required to pay Taxes or to file Tax Returns in such jurisdiction or with such Governmental Authority. To the Knowledge of Seller, Seller does not have nexus or a requirement to file Tax Returns or pay Taxes in a jurisdiction where it does not file Tax Returns.

(d) There are no Tax rulings, requests for rulings, or closing agreements relating to Taxes for which Seller may be liable that could affect Seller’s liability for Taxes for any taxable period ending after the Effective Date. Seller will not be required to include or accelerate the recognition of any item in income, or exclude or defer any deduction or other tax benefit, in each case in any taxable period (or portion thereof) after Closing, as a result of (i) any change in method of accounting under Section 481 of the Code (or any comparable provision of state, local, or foreign Tax law) or use of an improper method of accounting, (ii) any closing agreement under Section 7121 of the Code, (iii) any intercompany transaction, (iv) an installment sale or open transaction, (v) any election under Section 108(i) of the Code, or (vi) the receipt of any prepaid amount, in each case prior to Closing.

(e) There are no Liens for Taxes upon the assets of Seller except Liens relating to current Taxes not yet due.

(f) All Taxes which Seller is required by Law to withhold or to collect for payment have been duly withheld and collected and have been paid to the appropriate Governmental Authority.

(g) Seller does not have any liability for Taxes of another Person under Treasury Regulation § 1.1502-6 (or any similar provision of state, local or foreign Law), under any agreement or arrangement, as a transferee or successor, or otherwise. Seller is not a party to any written or unwritten agreement or arrangement providing for (i) the allocation or payment of Tax liabilities or for Tax benefits between or among members of any group of corporations that files, will file, or has filed Tax Returns on a combined, consolidated or unitary basis and (ii) one Person to pay any other Person for the use of or benefit derived from such Person’s Tax assets or deductions.

(h) Seller has not participated in any “listed transaction” within the meaning of Treasury Regulation § 1.6011-4(b)(2) and, with respect to each transaction in which Seller has participated that is a “reportable transaction” within the meaning of Treasury Regulation § 1.6011-4(b)(1), such participation has been properly disclosed on IRS Form 8886 (Reportable Transaction Disclosure Statement) and on any corresponding form required under state, local or other Law.

(i) To the Knowledge of Seller, there are no Tax credits, grants or similar amounts that are or could be subject to clawback or recapture as a result of (i) the Transaction or (ii) a failure by Seller to satisfy one or more requirements on which the credit, grant or similar amount is or was conditioned.

(j) During the last 5 years, Seller has not been a party to any transaction treated by the parties thereto as one to which Section 355 of the Code (or any similar provision of state, local or foreign Law) applied.

(k) Seller has delivered to Purchaser correct and complete copies of all US federal income Tax Returns, examination reports, and statement of deficiencies assessed against or agreed to by Seller since January 1, 2020.

2.18 Customers and Suppliers. Schedule 2.18 sets forth the top 10 customers by dollar volume for each of fiscal years 2021 and 2022, and the top 5 suppliers/vendors of Seller, by dollar volume for each of fiscal years 2021 and 2022 (the “Key Relationships”). No Key Relationship has, during the last 12 months, cancelled, terminated or materially and adversely modified the terms of its business relationship with Seller. Neither Seller, nor any of its officers, directors or employees, has received written, or to the Knowledge of Seller, oral notification that any Key Relationship intends to cancel, terminate or materially and adversely modify the terms of its business relationship with Seller. To the Knowledge of Seller, no event has occurred that would reasonably be expected to result in any Key Relationship’s termination, cancelation or material and adverse modification of its business relationship with Seller.

2.19 Brokers. There are no brokers or finders known to Seller or Owner to be involved with the Transaction and neither Seller nor Owner has made any agreement or taken any other action which might cause any Person to become entitled to a broker’s or finder’s fee or commission as a result of the Transaction.

2.20 Restrictions on Business Activities. Except as set forth on Schedule 2.20, (a) there is no agreement, commitment, or Order to which Seller is a party or otherwise binding upon Seller which has or reasonably would be expected to have the effect of prohibiting or materially impairing the Business as currently conducted or any acquisition of property (tangible or intangible) by Seller, (b) no agreement or commitment to which Seller is a party contains a non-competition, non-solicitation, non-disparagement, or similar clause, (c) no agreement or commitment to which Seller is a party contains an exclusivity, “most favored customer” or similar clause, and (d) to the extent an agreement or commitment to which Seller is a party does contain an exclusivity, “most favored customer” or similar clause, Seller is in compliance with all such provisions.

2.21 Affiliate Transactions. Except as set forth on Schedule 2.21, no Affiliate or Employee of Seller, (a) is a party to any agreement, contract, commitment or transaction with Seller or that pertains to the Business, (b) has any interest in any property, real or personal or mixed, tangible or intangible, used by or pertaining to Seller, or (c) is engaged in competition with Seller (other than an interest of not more than one percent of the outstanding stock of any company which is publicly traded on a national stock exchange or the over the counter market).

2.22 Full Disclosure. No representation, warranty, covenant or agreement made by Seller or Owner in this Agreement or in any Ancillary Document contains or will contain any false or misleading statement of a material fact, or omits any material fact required to be stated therein or necessary in order to make the statements therein not false or misleading.

ARTICLE 3.

REPRESENTATIONS AND WARRANTIES

OF PURCHASER

Purchaser represents and warrants to Seller as follows:

3.1 Organization and Good Standing. Purchaser is duly organized, validly existing and in good standing under the Laws of the state of Delaware.

3.2 Authority and Enforceability. Purchaser has full power and authority to execute, deliver and perform this Agreement and each Ancillary Document to which Purchaser is a party, and the execution, delivery and performance of this Agreement by Purchaser have been duly authorized by all necessary company action on the part of Purchaser. This Agreement has been duly executed and delivered by Purchaser and constitutes the valid and legally binding obligation of Purchaser, enforceable in accordance with its terms. Purchaser is not required to give any notice to, make any filing with or obtain any authorization, consent or approval of any authority or Person in order for Purchaser to consummate the Transaction.

3.3 Noncontravention. The Transaction will not: (a) violate any Law to which Purchaser is subject; or (b) conflict with, result in a breach of, constitute a default under, result in the acceleration of, give any Person the right to accelerate, terminate, modify or cancel, or require any notice under, any agreement, Permit, instrument or other arrangement to which Purchaser is a party or by which Purchaser is bound or to which any of the assets or properties of Purchaser are subject.

3.4 Brokers. There are no brokers or finders known to Purchaser to be involved with the Transaction and Purchaser has not made any agreement or taken any other action which might cause any Person to become entitled to a broker’s or finder’s fee or commission as a result of the Transaction.

ARTICLE 4.

COVENANTS

4.1 General. The Parties shall use their best reasonable efforts to take all actions and do all things necessary, proper or advisable in order to consummate and make effective the Transaction (including satisfaction, but not waiver, of the conditions to Closing set forth in Article 1). In case at any time after the Closing any further action is necessary or desirable to carry out the purposes of this Agreement or any other Ancillary Document, each of the Parties shall take such further action (including the execution and delivery of such further instruments and documents) as any other Party reasonably may request, all at the sole cost and expense of the requesting Party (unless the requesting Party is entitled to indemnification therefor under Article 5, in which case provisions of such Article 5 shall apply).

4.2 Conduct of the Business. Prior to the Closing Date, Seller shall, and Owner shall cause Seller to: (a) conduct, carry on, maintain and preserve the Business, keep available the services of the Employees, agents and representatives of the Business, preserve the good will with suppliers, customers and others having business relations with the Business, and maintain the Purchased Assets and its books of account, records and files, all in the ordinary course of business consistent with past practice; and (b) not take or omit to take any action which if taken or omitted prior to Closing would constitute a breach of any representations, warranties or covenants of Seller or Owner in this Agreement.

4.3 Access to Information. Prior to the Closing Date, Seller and Owner shall continue to furnish to Purchaser all documents, records and information concerning the affairs of the Business and the Purchased Assets as Purchaser may reasonably request and access to Seller’s personnel and properties as Purchaser may reasonably request.

4.4 Notice of Developments. Prior to the Closing Date, Seller or Owner shall give prompt notice to Purchaser of any development, event or occurrence that has caused or could reasonably be expected to cause a breach of covenant, representation or warranty under this Agreement.

4.5 Subsequent Acquisition Proposals. Owner and Seller shall not, nor shall they permit any employee or any broker, attorney, accountant or other representative or agent retained by, or acting with the authority of Seller or Owner to, solicit, initiate, encourage (including by way of furnishing information), induce, endorse or enter into any agreement with respect to, or take any other action to facilitate, any inquiry or the making of any proposal that constitutes, or may be reasonably expected to lead to, any transaction for the sale of any capital stock or assets of Seller.

4.6 Post-Closing Cooperation and Access to Information. Without limiting the generality of Section 4.1, Seller, Owner and Purchaser shall cooperate fully with each other after Closing so that each Party has access to the business records, contracts and other information existing as of Closing and relating in any manner to the Purchased Assets, the Assumed Liabilities or the conduct of the Business (whether in the possession of Seller, Owner or Purchaser). Seller and Owner shall also cooperate fully with the transition of the Business to Purchaser, including the transition of customer and vendor relationships. No files, books or records existing as of Closing and relating in any manner to the conduct of the Business shall be destroyed by any Party in a manner inconsistent with such Party’s record retention policies or practices after the Closing Date without giving the other Party at least 30 days’ prior written notice, during which time such other Party shall have the right to examine and reproduce any such files, books and records prior to their destruction.

4.7 Employee Matters. At or prior to the Closing, Seller shall pay any and all obligations to any Employees with respect to any periods before the Closing including any obligations arising out of, or provided by, employee benefit plans maintained by Seller. Purchaser shall have no obligation to employ any Employees of Seller and is assuming no Liabilities with respect to the Employees or any Seller Employee Benefit Plans.