Rekor Systems, Inc 8-K, filed Jul 6, 2020
Rekor Systems, Inc. (REKR)
8-K
2020-07-06
For: 2020-06-29
View Original
Added on
April 12, 2026
About this 8-K
Rekor Systems, Inc filed this 8-K on July 6, 2020, reporting on events of June 29, 2020.
Items reported
- Item 1.01: Entered into a material agreement
- Item 2.01: Completed an acquisition or sale of assets
- Item 3.02: Unregistered sale of equity
- Item 8.01: Other events
- Item 9.01: Financial statements and exhibits
UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
FORM 8-K
____________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of
Report (Date of earliest event reported): June 29,
2020
____________________
REKOR SYSTEMS, INC.
(Exact
name of registrant as specified in its charter)
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Delaware
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001-38338
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81-5266334
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(State
or Other Jurisdiction
of
Incorporation)
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(Commission
File Number)
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(IRS
Employer
Identification
No.)
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7172 Columbia Gateway Drive, Suite 400, Columbia, MD
21046
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(Address
of Principal Executive Offices)
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Registrant's
Telephone Number, Including Area Code: (410)
762-0800
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Check
the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant
under any of the following provisions:
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☐ Written communications pursuant to Rule 425 under
the Securities Act (17 CFR 230.425)
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☐ Soliciting material pursuant to Rule 14a-12 under
the Exchange Act (17 CFR 240.14a-12)
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☐ Pre-commencement communications pursuant to Rule
14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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☐ Pre-commencement communications pursuant to Rule
13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Securities registered pursuant to Section 12(b) of the
Act:
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Title
of each class
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Trading
Symbol(s)
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Name of
each exchange on which registered
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Common
Stock, $0.0001 par value per share
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REKR
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The
Nasdaq Stock Market
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Indicate
by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the
Securities Act of 1933 (§230.405 of this chapter) or Rule
12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this
chapter)
Emerging
Growth Company ☐
If
an emerging
growth company, indicate
by check mark if the registrant has elected not to use the extended
transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 13(a) of the Exchange Act.
☐
Item
1.01
Entry
into a Material Definitive Agreement.
Global Technical Services Transaction
On
June 29, 2020, Rekor Systems, Inc. (the “Company”)
entered into a Stock Purchase Agreement (the “Purchase
Agreement”) by and among the Company, Global Technical
Services, Inc., a Texas corporation and wholly owned subsidiary of
the Company (“TeamGlobal”), and Talent Teams LLC, a
Texas limited liability company owned by the members of
TeamGlobal’s management (the “Buyer”), pursuant
to which the Company agreed to sell TeamGlobal, which is a national
staffing firm that provides skilled technical professionals and
maintenance and modification specialists to the aerospace and
aviation maintenance industries, to Buyer.
Subject
to the terms and conditions of the Purchase Agreement, the Buyer
agreed to purchase all of the outstanding equity interests of
TeamGlobal for a purchase price of $4,000,000, comprising (i) an
aggregate of $2,300,000 in cash, consisting of $300,000 of cash
received from Buyer and $2,000,000 of cash received from
TeamGlobal, and (ii) a secured promissory note (the “Secured
Note”) in the initial principal amount of $1,700,000, with
such Secured Note secured by a Pledge and Security Agreement (the
“Pledge Agreement”) with respect to all the outstanding
shares of TeamGlobal being acquired by Buyer (the
“Transaction”). The Transaction closed concurrently
with execution of the Purchase Agreement.
The
Purchase Agreement contains customary representations, warranties
and covenants related to TeamGlobal and the Transaction. For a
period of five years, the Company has agreed not to engage in
activities that compete with the Business, nor for a period of two
years solicit customers of TeamGlobal, among other covenants with
respect to TeamGlobal as set forth more fully in the Purchase
Agreement. Both the Company and the Buyer have agreed to indemnify
the other party for losses arising from certain breaches of
covenants contained in the Purchase Agreement and other
liabilities, subject to certain limitations.
The
Purchase Agreement also contains customary representations and
warranties that the Company and the Buyer made to each other as of
the date of the Purchase Agreement. The assertions embodied in
those representations and warranties were made solely for purposes
of the contract between the Company and the Buyer, and may be
subject to important qualifications and limitations agreed to by
the parties in connection with negotiating its terms. Moreover, the
representations and warranties are subject to a contractual
standard of materiality that may be different from what may be
viewed as material to stockholders of the Company, and the
representations and warranties may have been used to allocate risk
between the Company and the Buyer rather than establishing matters
as facts.
The
foregoing descriptions of the Purchase Agreement, the Secured Note,
and the Pledge Agreement do not purport to be complete and are
qualified in their entirety by reference to the complete text of
the Purchase Agreement, Secured Note, and Pledge Agreement,
respectively. A copy of the Purchase Agreement is filed as Exhibit
2.1, and a copy of the Secured Note and the Pledge Agreement are
filed as Exhibits 10.1 and 10.2, respectively, to this Current
Report on Form 8-K and are incorporated by reference
herein.
Note Exchange Transaction
On June
30, 2020, the Company entered into Exchange Agreements with certain
holders (the “Exchange Share Recipients”) of the
Company’s senior secured promissory notes issued pursuant to
that certain Note Purchase Agreement, dated March 12, 2019 (the
“Note Purchase Agreement”), among the Company, the
guarantors from time to time party thereto, U.S. Bank, National
Association, and the Exchange Share Recipients and other purchasers
from time to time party thereto (the “2019
Notes”). Subject to the terms and conditions set forth
in the Exchange Agreements, and in reliance on Section 3(a)(9) of
the Securities Act of 1933, as amended (the “Securities
Act”), approximately $14.6 million aggregate principal amount
of the 2019 Notes, including accreted interest plus certain fees
payable pursuant to the terms of the 2019 Notes, will be redeemed
in exchange for approximately 4,209,000 shares of the
Company’s common stock, par value $0.0001 per share, at a
rate of $4 per share (the “Exchange”). Following
the Exchange, approximately $4.9 million aggregate principal amount
of the 2019 Notes will remain outstanding, and the total number of
shares of the Company’s common stock issued and outstanding
following the Exchange will be approximately 27,151,000. The
Exchange is subject to customary closing conditions, including but
not limited to the receipt of approval from Nasdaq for the listing
of the shares to be issued in the Exchange.
The
foregoing description of the Exchange Agreements does not purport
to be complete and is qualified in its entirety by reference to the
full text of the Exchange Agreements, a form of which is attached
hereto as Exhibit 10.3 and incorporated herein by
reference.
Third Amendment to Note Purchase Agreement
As previously disclosed on the Company’s Current Report on
Form 8-K as filed with the SEC on March 26, 2020, the Company
entered into a First Amendment to Note Purchase Agreement (the
“First Note Amendment”), by and among parties to the
Note Purchase Agreement. Pursuant to the terms of the First Note
Amendment, the maturity date for the notes issued under the First
Note Purchase Agreement was extended from March 11, 2021 to June
12, 2021, unless earlier accelerated pursuant to the terms of the
Note Purchase Agreement, as amended.
As previously disclosed in the Company’s Current Report on
Form 8-K as filed with the SEC on April 6, 2020, the Company
entered into a Partial Release and Second Amendment to Note
Purchase Agreement (the “Second Amendment”), by and
among the parties to the Note Purchase Agreement. Pursuant to the
terms of the Second Amendment, the Company’s wholly-owned
subsidiary AOC Key Solutions, Inc. (“AOC”) was released
as a credit party and the assets related to AOC were released as
collateral, and the Asset Disposition Proceeds terms of the Note
Purchase Agreement were amended to reflect the AOC
sale.
On
June 29, 2020, in connection with the Transaction and the Exchange,
the Company entered into a Partial Release and Third Amendment to
Note Purchase Agreement (the “Third Amendment”), by and
among the parties to the Note Purchase Agreement. Pursuant to the
terms of the Third Amendment, TeamGlobal was released as a credit
party and the assets related to TeamGlobal were released as
collateral, the mandatory prepayments provision of the Note
Purchase Agreement were waived with regard to the sale of
TeamGlobal, the Exchange was authorized, the maturity date of the
2019 Notes remaining outstanding following the completion of the
Exchange was extended to December 31, 2021, and certain other
conforming amendments related to the foregoing were
made.
The
foregoing description of the Third Amendment does not purport to be
complete and is qualified in its entirety by reference to the full
text of the Third Amendment a copy of which is attached hereto as
Exhibit 10.4 and incorporated herein by reference.
Item 2.01
Completion of Acquisition or Disposition of Assets.
The disclosure set forth above in Item 1.01 regarding the
Transaction is incorporated into this Item 2.01 by
reference.
Item
3.02
Unregistered
Sales of Equity Securities.
The
disclosure set forth above under Item 1.01 regarding the Exchange
is incorporated into this Item 3.02 by
reference.
Item
8.01
Other Events.
On June 30, 2020, the Company issued a press release announcing the
Transaction. A copy of this press release is attached hereto as
Exhibit 99.1 hereto and is incorporated by reference
herein.
On July 1, 2020, the Company issued a press release announcing the
Exchange. A copy of this press release is attached hereto as
Exhibit 99.2 hereto and is incorporated by reference
herein.
Forward-Looking Statements
The
Press Releases attached to this Current Report on
Form 8-K contain forward-looking statements within the
meaning of U.S. federal securities laws. Such forward-looking
statements include, but are not limited to, statements regarding
the expectations, hopes, beliefs, intentions, plans, prospects or
strategies of the Company. Any statements contained therein that
are not statements of historical fact may be deemed to be
forward-looking statements. In addition, any statements that refer
to projections, forecasts or other characterizations of future
events or circumstances, including any underlying assumptions, are
forward-looking statements. The words “anticipate,”
“believe,” “continue,” “could,”
“estimate,” “expect,”
“intends,” “may,” “might,”
“plan,” “possible,”
“potential,” “predict,”
“project,” “should,” “would”
and similar expressions may identify forward-looking statements,
but the absence of these words does not mean that a statement is
not forward-looking. The forward-looking statements contained in
the Press Releases are based on certain assumptions and analyses
made by the management of the Company in light of their respective
experience and perception of historical trends, current conditions
and expected future developments and their potential effects on the
Company as well as other factors they believe are appropriate in
the circumstances. There can be no assurance that future
developments affecting the Company will be those anticipated. These
forward-looking statements involve a number of risks, uncertainties
(some of which are beyond the control of the parties) or other
assumptions that may cause actual results or performance to be
materially different from those expressed or implied by these
forward-looking statements. Should one or more of these risks or
uncertainties materialize, or should any of the assumptions being
made prove incorrect, actual results may vary in material respects
from those projected in these forward-looking statements. We
undertake no obligation to update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise, except as may be required under applicable securities
laws.
Item
9.01.
Financial
Statements and Exhibits
(d)
Exhibits.
The following exhibits are filed herewith:
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ExhibitNumber
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Description
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Stock
Purchase Agreement, dated June 29, 2020, by and among Rekor
Systems, Inc., Global Technical Services, Inc. and Talent Teams
LLC.
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Secured
Promissory Note dated June 29, 2020.
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Pledge
and Security Agreement by and between Rekor Systems, Inc. and
Talent Teams LLC dated June 29, 2020.
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Form of
Exchange Agreement
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Third
Amendment to Note Purchase Agreement, dated June 29, 2020, by and
among the Company, the Purchasers from time to time party thereto
and the Agent.
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10.5
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Second
Amendment to Note Purchase Agreement, dated April 2, 2020, by and
among the Company, the Purchasers from time to time party thereto
and the Agent (incorporated by reference to Exhibit 10.2 to the
Current Report on Form 8-K as filed with the SEC on April 6,
2020).
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10.6
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First
Amendment to Note Purchase Agreement, dated March 26, 2020, by and
among the Company, the Purchasers from time to time party thereto
and the Agent (incorporated by reference to Exhibit 10.1 to the
Current Report on Form 8-K as filed with the Securities and
Exchange Commission on March 26, 2020.).
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10.7
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Note
Purchase Agreement, dated as of March 13, 2019, by and among the
Credit Parties, the Purchasers from time to time party thereto and
the Agent (incorporated by reference to Exhibit 4.3 to the Current
Report on Form 8-K as filed with the Securities and Exchange
Commission on March 18, 2019).
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Press
Release issued on June 30, 2020
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Press
Release issued on July 1, 2020
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†
Schedules and
similar attachments to this Exhibit have been omitted pursuant to
Item 601(a)(5) of Regulation S-K. The Company agrees to furnish
supplementally a copy of such omitted materials to the SEC upon
request.
SIGNATURE
Pursuant to the
requirements of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
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REKOR SYSTEMS, INC.
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Date:
July 6, 2020
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/s/
Robert A. Berman
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Name:
Robert A. Berman
Title:
President and Chief Executive Officer
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Execution Version
Exhibit 2.1
STOCK PURCHASE AGREEMENT
BY AND AMONG
TALENT TEAMS LLC,
REKOR SYSTEMS, INC.,
AND
GLOBAL TECHNICAL SERVICES, INC.
TABLE OF CONTENTS
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ARTICLE 1 DEFINITIONS
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1
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Section
1.01 Defined
Terms.
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1
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Section
1.02 Interpretation.
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5
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ARTICLE 2 THE TRANSACTIONS
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5
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| Section 2.01 The Purchase. |
5
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Section
2.02 Closing.
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6
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Section
2.03 Closing
Deliverables.
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6
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Section
2.04 Additional Closing
Events.
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7
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ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF
SELLER
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7
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Section
3.01 Organization and
Qualification.
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7
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Section
3.02 Power and
Authority.
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7
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Section
3.03 Authorization of
Agreement; Etc.
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7
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Section
3.04 No
Conflict.
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8
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Section
3.05 Capitalization.
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8
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Section
3.06 Tax
Status.
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8
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Section
3.07 Brokers.
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8
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Section 3.08 Financial Statements, No Undisclosed
Liabilities.
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9
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Section
3.09 Existing
Indebtedness.
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9
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Section 3.10 Absence of Certain Changes and
Events.
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9
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Section
3.11 Disclaimer.
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10
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ARTICLE
4 ADDITIONAL REPRESENTATIONS AND WARRANTIES OF
SELLER
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10
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Section
4.01 Good
Title.
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10
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ARTICLE
5 REPRESENTATIONS AND WARRANTIES OF BUYER
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10
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Section
5.01 Organization.
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11
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Section
5.02 Power and
Authority.
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11
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Section
5.03 Authorization of
Agreement; Etc.
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11
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Section
5.04 No
Conflict.
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11
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Section
5.05 Sufficiency of
Funds.
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11
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Section
5.06 No
Brokers.
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11
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ARTICLE
6 COVENANTS AND ADDITIONAL AGREEMENTS OF THE
PARTIES
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11
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Section
6.01 Public
Announcements.
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11
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Section
6.02 Notices of Certain
Events.
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11
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Section
6.03 Consents of Third
Parties.
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11
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Section 6.04 Non-Competition; Non-Solicitation;
Non-Disparagement.
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12
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Section
6.05 Further
Assurances.
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13
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Section 6.06Tax Returns for
Pre-Closing Tax Periods.
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13
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Section
6.07 Continuing
Indemnification.
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13
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ARTICLE
7 SURVIVAL; INDEMNIFICATION
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14
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Section
7.01 Survival.
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14
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Section
7.02 Indemnification by
Seller.
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14
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Section
7.03 Indemnification by
Buyer.
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15
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Section
7.04 Indemnification
Procedures.
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16
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Section
7.05 Cooperation.
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16
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Section
7.06 Payments.
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16
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Section
7.07 Certain
Limitations.
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16
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Section 7.08 Tax Treatment of Indemnification
Payments.
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16
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Section
7.09 Exclusive
Remedy.
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16
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ARTICLE
8 MISCELLANEOUS
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17
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Section
8.01 Notices.
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17
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Section
8.02 Dispute
Resolution.
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18
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Section
8.03 Governing
Law.
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18
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Section
8.04 Waiver of Jury
Trial.
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18
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Section
8.05 Attorneys’
Fees.
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18
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Section
8.06 Confidentiality.
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18
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Section
8.07 Public Announcements
and Filings.
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19
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Section
8.08 Schedules;
Knowledge.
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19
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Section
8.09 Third-Party
Beneficiaries.
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19
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Section
8.10 Expenses.
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19
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Section
8.11 Entire
Agreement.
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19
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Section
8.12 Amendment or
Waiver.
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19
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Section
8.13 Commercially
Reasonable Efforts.
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19
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Section
8.14 Successors and
Assigns.
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20
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Section
8.15 Counterparts.
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20
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Exhibits
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Exhibit
A
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Capitalization
Table
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Exhibit
B
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Form of Promissory
Note
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Exhibit
C
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Sources and Uses of
Funds and Wiring Instructions
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Exhibit
D
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Form of Stock Power
for Global Technical Services, Inc.
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Exhibit
E
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Form of Stock
Pledge Agreement
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STOCK PURCHASE AGREEMENT
Dated as of June 29, 2020
This
Stock Purchase Agreement, (this “Agreement”) is entered
into as of the date first set forth above (the “Closing Date”), by and
among (i) Talent Teams LLC, a Texas limited liability company
(“Buyer”), (ii) Rekor
Systems, Inc., a Delaware corporation (“Seller”), and (iii)
Global Technical Services, Inc., a Texas corporation,
(“TeamGlobal”). Each of
Buyer, Seller and TeamGlobal may be referred to herein collectively
as the “Parties” and separately
as a “Party.”
WHEREAS, Seller
owns all of the outstanding shares of common stock, $0.10 par value
per share of TeamGlobal (the “TeamGlobal Common
Stock”);
WHEREAS, Buyer
desires to acquire from Seller, Seller desires to sell and transfer
to Buyer, certain shares of TeamGlobal Common Stock held by Seller,
and TeamGlobal desires to purchase, and Seller desires to sell to
TeamGlobal all of the remaining shares of TeamGlobal Common Stock,
in exchange for the payment of certain cash and other consideration
and delivery of a promissory note on the terms and subject to the
conditions set forth herein (together with the other transactions
contemplated herein, the “Transactions”);
WHEREAS, the
Managers of Buyer (“Buyer Managers”) and the
Board of Directors of Seller (“Seller Board”) have
determined that the Transactions are desirable and in the best
interests of Buyer and Seller; and
WHEREAS, this
Agreement is being entered into for the purpose of setting forth
the terms and conditions of the Transactions.
NOW
THEREFORE, on the stated premises and for and in consideration of
the mutual covenants and agreements hereinafter set forth and the
mutual benefits to the Parties to be derived herefrom, and for
other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, and intending to be legally bound
hereby, the Parties hereby agree as follows:
ARTICLE 1
For
purposes of this Agreement, the following terms shall have the
following meanings:
(a) “Action” means any
claim, action, cause of action, demand, lawsuit, arbitration,
inquiry, audit, notice of violation, proceeding, litigation,
citation, summons, subpoena or investigation of any nature, civil,
criminal, administrative, regulatory or otherwise, whether at law
or in equity.
(b) “Affiliate” of a
Person means any other Person that directly or indirectly, through
one or more intermediaries, controls, is controlled by, or is under
common control with, such Person, and the term
“control” (including the terms “controlled
by” and “under common control with”) means the
possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or
otherwise.
(c) “Agreement” has the
meaning set forth in the introductory paragraph
hereof.
(d) “Balance Sheet” has the
meaning set forth in Section 3.08(a).
(e) “Basket” has the meaning
set forth in Section
7.07(a).
(f) “Business Day” shall mean
any day on which commercial banks are generally open for business
in the State of Maryland.
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(g) “Buyer” has the meaning
set forth in the introductory paragraph hereof.
(h) “Buyer Indemnified Party”
has the meaning set forth in Section 7.02.
(i) “Buyer Managers” has the
meaning set forth in the recitals hereto.
(j) “Cap” has the meaning set
forth in Section
7.07(c).
(k) “Capitalization Table”
means the table illustrating the amount of each “equity
security”, as that term is defined in the Exchange Act held
by every shareholder of TeamGlobal, attached hereto as Exhibit A.
(l) “Cash Purchase Price” has
the meaning set forth in Section 2.01(b).
(m) “Closing” has the meaning
set forth in Section 2.02.
(n) “Closing Date” has the
meaning set forth in the recitals hereto.
(o) “Code” means the Internal
Revenue Code of 1986, as amended.
(p) “Competing Business” means
any business within the United States, Canada, or on or through the
World-Wide Web, which: (i) involves any products or services
offered by TeamGlobal or described at https://www.teamglobal.com, as of the date immediately preceding
the Closing Date; or (ii) is the same as, substantially similar in
terms of product and service offering to, or competitive with a
business described in the foregoing clauses (i) or
(ii).
(q) “Contract” means all
contracts, leases, deeds, mortgages, licenses, instruments, notes,
commitments, undertakings, indentures, joint ventures and all other
agreements, commitments and legally binding arrangements, whether
written or oral.
(r) “Customer” has the meaning
set forth in Section
1.02(a)(ii).
(s) “Derivatives” means any
options, warrants, convertible securities or other rights,
agreements, arrangements or commitments of any character relating
to the Equity Securities of TeamGlobal or obligating TeamGlobal to
issue or sell any Equity Securities.
(t) “Direct Claim” has the
meaning set forth in Section
7.04(c).
(u) “Dispute” has the meaning
set forth in Section
8.02(a).
(v) “Enforceability
Exceptions” means (a) applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance and
other similar Laws of general application affecting enforcement of
creditors’ rights generally and (b) general principles
of equity.
(w) “Exchange Act” means the
Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.
(x) “Financial Statements” has
the meaning set forth in Section 3.08(a).
(y) “Fundamental
Representations” has the meaning set forth in
Section
7.01(a).
(z) “GAAP” has the meaning set
forth in Section
3.08(a).
2
(aa) “Governmental
Authority” means any federal, state, local or
foreign government or political subdivision thereof, or any agency
or instrumentality of such government or political subdivision, or
any self-regulated organization or other non-governmental
regulatory authority or quasi-governmental authority (to the extent
that the rules, regulations or orders of such organization or
authority have the force of Law), or any arbitrator, court or
tribunal of competent jurisdiction.
(bb) “Governmental
Authorization” means any (a) consent, license,
registration, or permit issued, granted, given, or otherwise made
available by or under the authority of any Governmental Authority
or pursuant to any Law; or (b) right under any Contract with any
Governmental Authority.
(cc) “Income
Tax” or “Income Taxes” means all
federal, state, local, foreign and other net income, gross income,
gross receipts, franchise, or profits taxes, fees, assessments, or
charges of any kind whatsoever (including any amounts resulting
from the failure to file any Tax Return), in each case together
with any interest, additions, or penalties with respect thereto and
any interest in respect of such additions or
penalties.
(dd) “Indebtedness”
means, with respect to TeamGlobal, (i) all capital lease
obligations of such party, (ii) all obligations of TeamGlobal for
borrowed money (including lines of credit, term loans, mortgage
loans, bonds, debentures, notes, deeds of trust, and member loans
or with respect to deposits, overdrafts, or advances of any kind),
(iii) all guarantees by such party of Indebtedness of other
Persons, and (iv) all accrued but unpaid interest, redemption,
termination, or prepayment premiums or penalties and any other fees
and expenses relating to any of the obligations described in
clauses (i), (ii), and (iii).
(ee) “Indemnified
D&O Party” has the meaning set forth in
Section
6.07(a).
(ff) “Indemnified
Party” has the meaning set forth in Section 7.04.
(gg) “Indemnifying
D&O Parties” has the meaning set forth in
Section
6.07(b).
(hh) “Indemnifying
Party” has the meaning set forth in Section 7.04.
(ii) “Knowledge
of Seller” means the actual knowledge, after due
inquiry, of Robert Berman, Eyal Hen and Riaz
Latifullah.
(jj) “Law” means
any statute, law, ordinance, regulation, rule, code, order,
constitution, treaty, common law, judgment, decree, other
requirement or rule of law of any Governmental
Authority.
(kk) “Liabilities”
means any liabilities, obligations or commitments of any nature
whatsoever, asserted or unasserted, known or unknown, absolute or
contingent, accrued or unaccrued, matured or unmatured or
otherwise, including without limitation any penalties, interest
and/or excise tax as may be applicable, including, without
limitation and regard to materiality, obligations to officers,
directors, employees, and Affiliates.
(ll) “Liens”
has the meaning set forth in Section 4.01.
(mm) “Losses”
means losses, damages, Liabilities, deficiencies, Actions,
judgments, interest, awards, penalties, fines, costs or expenses of
whatever kind, including reasonable attorneys’ fees and the
cost of enforcing any right to indemnification hereunder and the
cost of pursuing any insurance providers; provided, however, that
“Losses” shall not include (i) punitive damages, except
in the case of fraud or to the extent actually awarded to a
Governmental Authority or other third party or (ii) lost profits or
consequential damages, in any case.
(nn) “Note”
has the meaning set forth in Section 2.01(b).
(oo) “Parties”
and “Party” have the meanings
set forth in the introductory paragraph hereof.
(pp) “Person” means
an individual, corporation, partnership, joint venture, limited
liability company, Governmental Authority, unincorporated
organization, trust, association or other entity.
3
(qq) “Pre-Closing
Tax Period” means any taxable period ending on or
before the Closing Date and, with respect to any taxable period
beginning before and ending after the Closing Date, the portion of
such taxable period ending on and including the Closing
Date.
(rr) “Purchase
Price” has the meaning set forth in Section 2.01(b).
(ss) “Representative” means,
with respect to any Person, any and all directors, officers,
employees, consultants, financial advisors, counsel, accountants
and other agents of such Person.
(tt) “Selected
Courts” has the meaning set forth in Section 8.03.
(uu) “Seller”
has the meaning set forth in the introductory paragraph
hereof.
(vv) “Seller
Board” has the meaning set forth in the recitals
hereto.
(ww) “Seller
Charter Documents” means the Certificate of
Incorporation, bylaws and other corporate documents and agreements
of Seller.
(xx) “Seller
Disclosure Schedules” has the meaning set forth in the
introductory paragraph to ARTICLE 3.
(yy) “Seller
Indemnified Party” has the meanings set forth in
Section
7.03.
(zz) “Stock
Pledge Agreement” means a stock pledge agreement
substantially in the form attached as Exhibit E pursuant to which
Buyer will grant to Seller a first priority perfected security
interest in the TeamGlobal Common Stock to fully secure the
Note.
(aa) “Stock
Power” has the meaning set forth in Section
2.03(a)(i).
(bb) “Taxes”
means: all federal, state, and local sales, use, ad valorem,
transfer, registration, license, lease, service, service use,
withholding, payroll, employment, excise, severance, stamp,
occupation, premium, property, unclaimed property, escheat,
windfall profits, customs, duties or other taxes of any kind
whatsoever (including any amounts resulting from the failure to
file any Tax Return), together with any interest and any penalties,
additions to tax or additional amounts with respect thereto. The
term “Taxes” also includes all
Income Taxes.
(cc) “Tax
Representation” has the meaning set forth in
Section
7.01(a).
(dd) “Tax
Return” or “Tax Returns” has the
meaning set forth in Section 3.06(a).
(ee) “TeamGlobal”
has the meaning set forth in the introductory paragraph
hereof.
(ff) “TeamGlobal
Charter Documents” has the meaning set forth in
Section
3.01(b).
(gg) “TeamGlobal
Common Stock” has the meaning set forth in the
recitals hereto.
(hh) “Third-Party
Claim” has the meaning set forth in Section 7.04(a).
4
(ii) “Transaction
Documents” means this Agreement, the Note, the
Stock Power, the Seller Disclosure Schedules and any other
document, certificate or agreement to be delivered hereunder or in
connection with the Transactions.
(jj) “Transaction
Expenses” means any unpaid amount of any and all fees
and expenses, incurred by or on behalf of, or paid or to be paid
directly by, TeamGlobal or any Person that TeamGlobal pays or
reimburses or is otherwise legally obligated to pay or reimburse
(and which Seller causes to be incurred) by or on behalf of
TeamGlobal on or before the Closing Date, in connection with the
negotiation, preparation or execution of this Agreement, the
Transaction Documents or the performance or consummation of the
Transactions.
(kk) “Transactions”
has the meaning set forth in the recitals hereto.
Unless
the express context otherwise requires: (i) the words
“hereof,” “herein,” and
“hereunder” and words of similar import, when used in
this Agreement, shall refer to this Agreement as a whole and not to
any particular provision of this Agreement; (ii) terms defined in
the singular shall have a comparable meaning when used in the
plural, and vice versa; (iii) the terms “Dollars” and
“$” mean United States Dollars; (iv) references herein
to a specific Section, Subsection, Recital or Exhibit shall refer,
respectively, to Sections, Subsections, Recitals or Exhibits of
this Agreement; (v) wherever the word “include,”
“includes,” or “including” is used in this
Agreement, it shall be deemed to be followed by the words
“without limitation”; (vi) references herein to any
gender shall include each other gender; (vii) references herein to
any Person shall include such Person’s heirs, executors,
personal Representatives, administrators, successors and assigns;
provided, however, that nothing contained in this Section
1.02 is intended to authorize any assignment or transfer
not otherwise permitted by this Agreement; (viii) references herein
to a Person in a particular capacity or capacities shall exclude
such Person in any other capacity; (ix) references herein to any
Contract (including this Agreement) mean such Contract as amended,
supplemented or modified from time to time in accordance with the
terms thereof; (x) with respect to the determination of any period
of time, the word “from” means “from and
including” and the words “to” and
“until” each means “to but excluding”; (xi)
references herein to any Law or any license mean such Law or
license as amended, modified, codified, reenacted, supplemented or
superseded in whole or in part, and in effect from time to time;
and (xii) references herein to any Law shall be deemed also to
refer to all rules and regulations promulgated
thereunder.
ARTICLE 2
(a) On the terms and
subject to the conditions set forth in this Agreement, on the
Closing Date, Seller, shall sell, assign, transfer and deliver to
Buyer, free and clear of all Liens, seven and one-half percent
(7.5%) all of the shares of TeamGlobal Common Stock held by Seller,
as set forth on the Capitalization Table, for the payment set forth
in Section
2.01(b)(i), and TeamGlobal shall purchase, free and clear of
all Liens, all the remaining shares of TeamGlobal Common Stock for
the payments set forth in Section 2.01(b)(ii) and
Section
2.01(b)(iii).
(b) In exchange for the
sale, assignment, transfer, redemption, and delivery of the
TeamGlobal Common Stock, Buyer and TeamGlobal shall pay to Seller a
total purchase price of $4,000,000 (the “Purchase Price”). The
Purchase Price shall be paid by: (i) wire transfers from Buyer to
Seller on the Closing Date of the total amount of $300,000; (ii)
wire transfer from TeamGlobal to Seller on the Closing Date of the
total amount of $2,000,000; and (iii) delivery by TeamGlobal to
Seller of a duly executed promissory note in the initial principal
amount of $1,700,000 dated the Closing Date in the form attached as
Exhibit B (the
“Note”). The payments
described in clauses (i) and (ii) of the preceding sentence are
hereafter referred to as the “Cash Purchase Price” and
will be made pursuant to wire instructions set forth on
Exhibit
C.
(c) Seller shall be
responsible for the payment of any and all Taxes that may be
imposed on Seller pursuant to the Transactions, including, without
limitation, as a result of the receipt of the Purchase
Price.
5
The
closing of the Transactions (the “Closing”) shall take
place on the Closing Date remotely via the electronic exchange of
documents and signatures related to the Transactions. At the
Closing, the Parties shall exchange the documents and make the
payment contemplated by Section 2.03 and Section
2.01(b).
For Tax and accounting purposes, the Parties will treat the Closing
as being effective as of 11:59 p.m. Eastern Time on the Closing
Date.
(a) At
the Closing, Seller shall deliver to Buyer:
(i) a certificate of a
duly authorized officer of Seller, dated as of the Closing Date, in
form and substance satisfactory to Buyer: (A) attaching and
certifying copies of any resolutions of the Seller Board relating
to this Agreement, the other Transaction Documents and the
Transactions; (B) certifying the name, title and true signature of
each officer of Seller executing or authorized to execute this
Agreement, the Transaction Documents, and such other documents,
instruments and certifications required or contemplated hereby or
thereby; (C) attaching and certifying copies of resolutions or
written consents of the TeamGlobal Board of Directors and the
Seller authorizing the Transactions and (D) attaching and
certifying (i) a true, correct and complete copy of the TeamGlobal
Charter Documents, certified by the Secretary of State of the State
of Texas, and (ii) a certificate of good standing and legal
existence of Seller and TeamGlobal issued by the Secretary of State
of the State of Texas and dated as of a date no earlier than three
Business Days prior to the Closing Date;
(ii) a
stock power, substantially in the form attached hereto as
Exhibit D
(“Stock
Power”) duly executed by Seller and referencing the
TeamGlobal Common Stock to be sold to Buyer at the Closing by
Seller;
(iii) evidence
of payment by the Seller of all Transaction Expenses (if any),
including true and correct copies of all invoices with respect to
the Transaction Expenses (if any);
(iv) an
IRS Form W-9 completed by Seller;
(v) suitable
documentation evidencing that control of all bank accounts set
forth on Section 2.03(a)(v) of the Seller Disclosure
Schedules will be turned over to Buyer effective as of the
Closing;
(vi) evidence
reasonably satisfactory to the Buyer of the release of any Liens on
the TeamGlobal Common Stock and TeamGlobal assets maintained by
U.S. Bank, N.A. and its Affiliates, and release of all obligations
and Liabilities under that certain Note Purchase Agreement dated as
of March 12, 2019, as amended, between Novume Solutions, Inc., the
Guarantors (as defined in the Note Purchase Agreement, U.S. Bank
N.A., and Cedarview Capital Management, L.P.) and any related
ancillary agreements;
(vii) written
resignations of each TeamGlobal director other than Scott
Kostelecky and Gene Rhoades, effective as of the Closing Date;
and
(viii) the
Stock Pledge Agreement signed by the Seller;
(ix) such
other documents as Buyer may reasonably request for the purpose of
evidencing the accuracy of any of Seller’s representations
and warranties or otherwise facilitating the consummation or
performance of any of the Transactions.
(b) At the
Closing:
(i) Buyer and
TeamGlobal shall deliver to Seller the Cash Purchase
Price;
(ii) TeamGlobal
shall deliver to Seller the Note;
(iii) Buyer
shall deliver to Seller the Stock Pledge Agreement;
6
(iv) Buyer
shall deliver to Seller a certificate of the Secretary of Buyer,
dated as of the Closing Date, in form and substance satisfactory to
Seller: (A) attaching and certifying copies of any resolutions of
the Buyer Managers relating to this Agreement, the other
Transaction Documents and the Transactions; (B) certifying the
name, title and true signature of each officer of Buyer executing
or authorized to execute this Agreement, the Transaction Documents,
and such other documents, instruments and certifications required
or contemplated hereby or thereby; and
(v) Buyer and
TeamGlobal shall deliver such other documents as Seller may
reasonably request for the purpose of evidencing the accuracy of
any of Buyer’s representations and warranties or otherwise
facilitating the consummation or performance of any of the
Transactions.
At
the Closing, Buyer, TeamGlobal and Seller shall execute,
acknowledge, and deliver (or shall cause to be executed,
acknowledged, and delivered), any and all certificates, Financial
Statements, schedules, agreements, resolutions, rulings or other
instruments required by this Agreement to be so delivered at or
prior to the Closing, together with such other items as may be
reasonably requested by the Parties hereto and their respective
legal counsel in order to effectuate or evidence the
Transactions.
ARTICLE
3
As an
inducement to the consummation of the Transactions, Seller
represents and warrants to Buyer, as modified by the schedules of
exceptions to the representations of Seller annexed hereto (the
“Seller Disclosure
Schedules”) as follows:
(a) TeamGlobal
is a corporation duly organized, validly existing, and in good
standing under the Laws of the State of Texas and has the power and
is duly authorized under all applicable Laws, to carry on its
business in all material respects as it is now being conducted.
TeamGlobal is qualified to do business in the states where the
character of the properties and assets occupied, owned, leased or
operated by TeamGlobal or the nature of its business requires such
qualification, except where any failure to be so qualified would
not individually or in the aggregate be material to TeamGlobal. To
the Knowledge of Seller, no proceeding has been instituted in any
jurisdiction revoking, limiting or curtailing or seeking to revoke,
limit or curtail the power and authority or qualification of
TeamGlobal within such jurisdiction. TeamGlobal does not have any
subsidiaries and does not own Equity Securities of any other
Person.
(b) The Articles of
Incorporation, bylaws and other corporate documents and agreements
of TeamGlobal (the “TeamGlobal Charter
Documents”) are set forth in Section 3.01(b) of the Seller
Disclosure Schedules. Seller and TeamGlobal have taken all actions
required by Law, the TeamGlobal Charter Documents, or otherwise to
authorize the execution and delivery of this
Agreement.
(c) Seller is duly
organized, validly existing, and in good standing under the Laws of
the State of Delaware and has the power and is duly authorized
under all applicable Laws, to carry on its business in all material
respects as it is now being conducted.
Seller
and TeamGlobal have all requisite power and authority to execute,
deliver and perform their obligations under this Agreement and the
Transaction Documents, and to consummate Transactions.
The
execution, delivery and performance of this Agreement and the other
Transaction Documents by Seller and TeamGlobal, and the
consummation of Transactions, have been duly authorized and all
necessary corporate action of Seller and TeamGlobal. This Agreement
has been duly executed and delivered on behalf of Seller and
TeamGlobal. This Agreement constitutes a valid and binding
obligation of Seller and TeamGlobal enforceable in accordance with
its terms, except that such enforcement may be limited by the
Enforceability Exceptions, and subject to the qualification that
the availability of equitable remedies is subject to the discretion
of the court before which any proceeding therefore may be
brought.
7
The
execution of this Agreement and the Transaction Documents, and the
consummation of the Transactions (i) will not violate any provision
of the TeamGlobal Charter Documents or the Seller Charter
Documents, (ii) will not, with or without notice, lapse of time or
both, result in the breach of any term or provision of, constitute
a default under, or terminate, accelerate or modify the terms of
any indenture, mortgage, deed of trust, material Contract, or other
material agreement, or instrument to which TeamGlobal or Seller is
a party or to which any of its assets, properties or operations are
subject, (iii) violate any provision of Law, statute, rule,
regulation, Governmental Authority order, or executive order to
which TeamGlobal or Seller is subject, (iv) violate any judgment,
order, writ or decree of any court applicable to TeamGlobal or
Seller, or (v) result in the creation of any Liens or Indebtedness
(other than that explicitly provided for in this Agreement), except
in the case of clauses (ii), (iii) and (iv) of this sentence for
breaches or violations that would not individually or in the
aggregate be reasonably expected to materially and adversely affect
the business or financial results of either TeamGlobal or
Seller.
(a) The authorized
shares of capital stock of TeamGlobal consist of 1,000,000 shares
of common stock, $0.10 par value per share.
(b) The Capitalization
Table is true, correct and complete.
(c) The only shares of
TeamGlobal Common Stock issued and outstanding are those owned by
Seller, in the amounts set forth on the Capitalization Table. None
of the outstanding shares of TeamGlobal Common Stock were issued in
violation of the preemptive or other rights of any shareholder or
other Person. All of the shares of TeamGlobal Common Stock owned by
Seller have been offered, sold and delivered by TeamGlobal in
compliance with all applicable federal and state securities Laws or
an exemption thereto.
(d) Other than as set
forth on the Capitalization Table, there are no outstanding or
authorized Derivatives, and TeamGlobal does not have outstanding or
authorized any stock appreciation, phantom stock, profit
participation or similar rights. There are no voting trusts,
stockholder agreements, proxies or other agreements or
understandings in effect with respect to the voting or transfer of
any of the shares of TeamGlobal Common Stock or to which such
shares are subject.
(e) The issued and
outstanding shares of TeamGlobal Common Stock are duly authorized,
validly issued, fully paid, non-assessable, and owned beneficially
by the Seller, free and clear of all Liens, other than restrictions
on transfer provided for in the Transaction Documents, the
TeamGlobal Charter Documents and under applicable Laws. Upon
consummation of the Transactions contemplated by this Agreement,
Buyer shall own all of the shares of TeamGlobal Common Stock, free
and clear of all Liens.
(b) For the period from
October 1, 2017 to the date hereof TeamGlobal (or the Seller on
TeamGlobal’s behalf) has made or filed all federal and state
Income Tax Returns, reports and declarations required by any
jurisdiction to which it is subject (unless, and only to the
extent, TeamGlobal has set aside on its books, provisions
reasonably adequate for the payment of all such unpaid and
unreported taxes) with respect to any Tax, including but not
limited to Income Tax (the “Tax Return” or
“Tax
Returns”). Such Tax Returns are, or will be, true,
complete, and correct in all respects. TeamGlobal (or Seller) has
paid all Income Taxes that are shown or determined to be due on
such Tax Returns, except those being contested in good faith. To
the Knowledge of Seller, there are no unpaid Income Taxes claimed
to be due or may be due by TeamGlobal by the taxing authority of
any jurisdiction. To the Knowledge of Seller, there are no unpaid
Taxes (other than Income Taxes) in any material amount claimed to
be due by TeamGlobal by the taxing authority of any
jurisdiction.
(c) To the Knowledge of
Seller, no extensions or waivers of statutes of limitations have
been given or requested with respect to any TeamGlobal Income
Taxes. All Income Tax deficiencies asserted, or assessments made,
against TeamGlobal as a result of any examinations by any taxing
authority have been fully paid. TeamGlobal is not a party to any
Action by any taxing authority. To the Knowledge of Seller, there
are no pending or threatened Actions by any taxing authority.
Seller has delivered to Buyer copies of all Tax Returns,
examination reports, and statements of deficiencies assessed
against, or agreed to by, TeamGlobal for all Income Tax periods
ending after October 1, 2017. To the Knowledge of Seller, there are
no Liens for Taxes (other than for current Taxes not yet due and
payable) upon the assets of TeamGlobal.
(d) Except for
TeamGlobal’s participation as a member of the Rekor Systems,
Inc. Tax group, TeamGlobal has not been a member of an affiliated,
combined, consolidated or unitary Tax group for Tax purposes. To
the Knowledge of Seller, TeamGlobal has no Liability for Taxes of
any Person (other than TeamGlobal) under Treasury Regulations
Section 1.1502-6 (or any corresponding provision of state, local,
or foreign Law), as a transferee or successor, by contract or
otherwise.
Except
as disclosed in Section
3.07 of the Seller Disclosure Schedules, neither Seller nor
TeamGlobal has retained any broker or finder in connection with any
of the Transactions, and has not incurred or agreed to pay, or
taken any other action that would entitle any Person to receive,
any brokerage fee, finder’s fee or other similar fee or
commission with respect to any of the Transactions.
8
(a) Financial
Statements. TeamGlobal’s unaudited financial
statements for fiscal years 2018 and 2019, and the unaudited
balance sheet of TeamGlobal for the period ended on May 31, 2020
(collectively, the “Financial Statements”),
copies of all of which have been provided to Buyer and TeamGlobal,
are true, correct, and complete in all material respects and have
been prepared from the books, records and accounts of TeamGlobal
consistently applied and fairly present in all material respects
the financial position of TeamGlobal as of the date of the
statements and the results of TeamGlobal’s operations for the
periods covered by the statements. TeamGlobal Financial Statements
are prepared in accordance with United States generally accepted
accounting principles (“GAAP”). There has been no
material adverse change in TeamGlobal’s financial condition
since May 31, 2020. The balance sheet for the period ending May 31,
2020 is referred to in this Agreement as the “Balance Sheet.”
Section 3.08(a) of
the Seller Disclosure Schedules contains a copy of the Balance
Sheet.
(b) No Undisclosed Liabilities. To
the Knowledge of Seller, TeamGlobal does not have any Liability or
obligation of any nature, whether accrued, absolute, contingent or
otherwise, whether known or unknown, except for Liabilities (i) set
forth on Section
3.08(b) of the Seller Disclosure Schedule, (ii) reflected on
the Balance Sheet, (iii) incurred since the date of the Balance
Sheet in the ordinary course of business consistent with past
practice and which are not, individually or in the aggregate,
material in amount, or (iv) which are expressly disclosed on any
other section of the Seller Disclosure Schedule or this Agreement.
To the Knowledge of Seller, all the assets of TeamGlobal are free
and clear of any Liens placed thereon by Seller or caused to be
placed thereon by Seller, except for any Liens related to
Indebtedness listed on Section 3.09 of the Seller
Disclosure Schedule.
Except
as described therein, and except with respect to Indebtedness from
which TeamGlobal will be released on the Closing Date, Section
3.09 of the Seller Disclosure Schedule sets forth a
complete and correct list of all outstanding Indebtedness of
TeamGlobal as of the Closing Date, specifying whether such
Indebtedness is secured or unsecured. Except as set forth on
Section 3.09 of the
Seller Disclosure Schedule, as of the Closing Date, to the
Knowledge of Seller, TeamGlobal is not in default and no waiver of
default is currently in effect, in the payment of any principal or
interest on any such Indebtedness, and no event or condition exists
with respect to any such Indebtedness, that would permit (or that
with notice or the lapse of time, or both, would permit) one or
more Persons to cause such Indebtedness to become due and payable
before its stated maturity or before its regularly scheduled dates
of payment.
Since
December 31, 2019, to the Knowledge of Seller, TeamGlobal has
conducted its business only in the ordinary course and there has
not been any:
(a) change in the
authorized or issued shares of TeamGlobal’s capital stock
(including TeamGlobal Common Stock) or split, combination or
reclassification of any shares of TeamGlobal Common
Stock;
(b) grant of any
option, warrant, or other right to purchase or obtain (including
upon conversion, exchange, or exercise) shares of TeamGlobal Common
Stock;
(c) issuance of any
security convertible into such TeamGlobal Common
Stock;
(d) grant of any
purchase, redemption, or other acquisition of any shares of
TeamGlobal Common Stock; or declaration or payment of any
distribution or payment in respect of shares of TeamGlobal Common
Stock;
(e) material change in
the accounting methods used by TeamGlobal;
(f) imposition, by
action of the Seller, of any Liens or other encumbrances upon any
of TeamGlobal Common Stock; or
(g) action by Seller to
make, change, or rescind any Tax election for TeamGlobal, amend any
TeamGlobal Tax Return, or take any position on any Tax Return, take
any action, omit to take any action or enter into any other
transaction that would have the effect of increasing the Tax
Liability or reducing any Tax asset of TeamGlobal in respect of any
post-Closing Tax period.
9
BUYER
ACKNOWLEDGES AND AGREES THAT EXCEPT AS OTHERWISE EXPRESSLY SET
FORTH IN THIS AGREEMENT, INCLUDING THE REPRESENTATIONS AND
WARRANTIES IN THIS ARTICLE
3 (AS MODIFIED BY THE SELLER DISCLOSURE SCHEDULES), ANY
CERTIFICATE DELIVERED PURSUANT HERETO, OR ANY TRANSACTION DOCUMENT
(I) SELLER EXPRESSLY DISCLAIMS ANY REPRESENTATIONS OR WARRANTIES OF
ANY KIND OR NATURE, EXPRESS OR IMPLIED, AS TO THE CONDITION, VALUE
OR QUALITY OF TEAMGLOBAL OR ITS ASSETS, AND SELLER SPECIFICALLY
DISCLAIMS ANY REPRESENTATION OR WARRANTY OF MERCHANTABILITY, USAGE,
SUITABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE WITH RESPECT TO
TEAMGLOBAL OR ITS ASSETS, OR THE ABSENCE OF ANY DEFECTS IN THE
ASSETS OF TEAMGLOBAL, WHETHER LATENT OR PATENT, IT BEING UNDERSTOOD
THAT TEAMGLOBAL AND ITS ASSETS AND LIABILITIES ARE BEING ACQUIRED
THROUGH THE TRANSACTIONS “AS IS, WHERE IS” ON THE
CLOSING DATE, AND IN THEIR PRESENT CONDITION, AND BUYER SHALL RELY
ON ITS OWN EXAMINATION AND INVESTIGATION THEREOF; (II) NONE OF
SELLER NOR ANY OF ITS AFFILIATES, NOR ANY REPRESENTATIVE OF THE
FOREGOING, IS MAKING ANY REPRESENTATION OR WARRANTY WHATSOEVER
REGARDING THE SUBJECT MATTER OF THIS AGREEMENT, EXPRESS OR IMPLIED
EXCEPT AS PROVIDED IN THIS ARTICLE 3 AND AS OTHERWISE SET
FORTH ELSEWHERE IN THIS AGREEMENT, AND ANY OTHER STATEMENT OR
INFORMATION MADE, COMMUNICATED, OR FURNISHED (ORALLY OR IN WRITING)
TO BUYER OR ITS AFFILIATES OR ITS REPRESENTATIVES (INCLUDING ANY
OPINION, INFORMATION, PROJECTION, OR ADVICE THAT MAY HAVE BEEN OR
MAY BE PROVIDED TO BUYER OR ANY BUYER REPRESENTATIVE BY ANY
DIRECTOR, OFFICER, EMPLOYEE, AGENT, CONSULTANT, OR REPRESENTATIVE
OF SELLER OR ANY SELLER AFFILIATE) IS SUPERSEDED HEREBY; AND (III)
SELLER HEREBY DISCLAIMS ALL LIABILITY AND RESPONSIBILITY FOR ANY OF
THE FOREGOING REFERENCED IN SUB-CLAUSES (I) AND (II).
ARTICLE 4
Seller
hereby represents and warrants to Buyer, solely with respect to the
shares of TeamGlobal Common Stock tendered by Seller at Closing, as
follows.
Seller is the record and beneficial owner, and has good title
to the shares of TeamGlobal Common Stock set forth opposite its
name on the Capitalization Table, with the right and authority to
sell and deliver such shares of TeamGlobal Common Stock, free and
clear of all Liens and claims, accounts (whether payable or
receivable), charges, encumbrances, pledges, mortgages, security
interests, options, rights to acquire, proxies, voting trusts or
similar agreements, restrictions on transfer or adverse claims of
any nature whatsoever (collectively, “Liens”)
other than restrictions on transfer provided for in the Transaction
Documents, the TeamGlobal Charter Documents and under applicable
Laws and other than Liens to be released prior to Closing.
None of the shares of TeamGlobal Common Stock held by Seller
is subject to pre-emptive or similar rights, either pursuant to any
TeamGlobal Charter Documents, requirement of Law or any Contract,
and Seller does not have any pre-emptive rights or similar rights
to purchase or receive any TeamGlobal Common Stock or other
interests in TeamGlobal. Seller has the power and authority to
transfer the shares of TeamGlobal Common Stock set forth opposite
its name on the Capitalization Table to Buyer and TeamGlobal as
contemplated pursuant to the terms of this Agreement and upon
delivery of any certificate or certificates duly assigned,
representing the same as herein contemplated and/or upon
registering Buyer and TeamGlobal or their designees as the new
owners of such shares of TeamGlobal Common Stock in the records
maintained by TeamGlobal listing the names of shareholders and
their respective ownership of shares of TeamGlobal Common Stock.
Buyer and TeamGlobal or their designees will receive good title to
such shares of TeamGlobal Common Stock, free and clear of all Liens
other than Liens provided for in the Transaction Documents, the
TeamGlobal Charter Documents, the Financial Statements of
TeamGlobal provided to Buyer and TeamGlobal and under applicable
Laws.
ARTICLE
5
As an
inducement to, and to obtain the reliance of Seller, Buyer
represents and warrants to Seller as follows:
Buyer
is a limited liability company duly organized, validly existing,
and in good standing under the Laws of the State of Texas and has
the power and is duly authorized under all applicable Laws,
regulations, ordinances, and orders of public authorities to carry
on its business in all material respects as it is now being
conducted. The execution and delivery of this Agreement and the
Transaction Documents does not, and the consummation of
Transactions will not, violate any provision of Buyer’s
articles of organization or operating agreement. Buyer has taken
all action required by Law, its articles of organization or
operating agreement, or otherwise to authorize the execution and
delivery of this Agreement and the consummation of the
Transactions.
10
Buyer
has all requisite power and authority to execute, deliver and
perform its obligations under this Agreement and the Transaction
Documents and to consummate the Transactions.
This
Agreement has been duly executed and delivered on behalf of Buyer.
This Agreement constitutes, and when executed the Transaction
Documents will constitute, valid and binding obligations of Buyer
enforceable in accordance with their terms, except that such
enforcement may be limited by the Enforceability Exceptions, and
subject to the qualification that the availability of equitable
remedies is subject to the discretion of the court before which any
proceeding therefore may be brought.
The
execution of this Agreement and the Transaction Documents and the
consummation of the Transactions: (i) will not, with or without
notice, lapse of time or both, result in the breach of any term or
provision of, constitute a default under, or terminate, accelerate
or modify the terms of any indenture, mortgage, deed of trust, or
other material agreement, or instrument to which Buyer is a party
or to which any of its assets, properties or operations are
subject; (ii) violate any Law to which Buyer is subject; or (iii)
violate any judgment, order, writ or decree of any court applicable
to Buyer.
Buyer
shall have at Closing, sufficient cash, available lines of credit
or other sources of immediately available funds on hand to enable
Buyer to perform all of its respective obligations under the
Transaction Documents, including the payment of the Purchase
Price.
Buyer
has not retained any broker or finder in connection with any of the
Transactions, and Buyer has not incurred or agreed to pay, or taken
any other action that would entitle any Person to receive, any
brokerage fee, finder’s fee or other similar fee or
commission with respect to any of the Transactions.
ARTICLE 6
Except
as required by applicable Law or as set forth in herein, the
Parties shall consult with each other before issuing any press
release or making any public statement with respect to this
Agreement or Transactions.
In
addition to any other notice required to be given by the terms of
this Agreement, each of the Parties shall promptly notify each of
the other Parties of:
(a) any notice or other
communication received from any Person alleging that the consent of
such Person is or may be required in connection with any of the
Transactions;
(b) any notice or other
communication from any governmental or regulatory agency or
authority in connection with the Transactions; and
(c) any Actions
commenced or, to its knowledge threatened against, relating to or
involving or otherwise affecting such Party that, if pending on the
date of this Agreement, would have been required to have been
disclosed pursuant hereto or that relates to the consummation of
the Transactions.
Each
of the Parties will give any notices to third parties, and will use
its commercially-reasonable efforts to obtain any third-party
consents, that the other Parties reasonably may request in
connection with this Agreement. Each of the Parties will give any
notices to, make any filings with, and use its commercially
reasonable efforts to obtain any Governmental Authorizations in
connection with the Transactions.
11
(a) For
a period of five (5) years following the Closing, Seller shall not,
and shall cause any Affiliate not to, directly or indirectly
through any Person or contractual arrangement:
(i) engage in Competing
Business or perform management, executive or supervisory functions
with respect to, own, operate, join, control, render financial
assistance to, exert any influence upon, participate in, or allow
any of its officers or employees to be connected as an officer,
employee, partner, member, stockholder or consultant with, any
Person engaged in a Competing Business; or
(ii) approach
with respect to or seek Competing Business from any Customer (as
hereinafter defined), refer Competing Business from any Customer to
any Person or be paid commissions based on sales received from any
Customer by any Person where such business or sale relates to
Competing Business. For purposes of this clause (a)(ii), the term
“Customer” means any
Person to which TeamGlobal provided products or services during the
thirty-six-month period prior to Closing; provided, that the
foregoing shall not prohibit any referral of business by Seller to
Buyer.
(b) For a period of two
(2) years following the Closing, neither Seller nor Buyer shall,
nor shall Seller or Buyer cause or permit any Affiliate
to:
(i) directly or
indirectly through any Person or contractual arrangement, disparage
the other Party, TeamGlobal or any of their respective Affiliates
in any way that could adversely affect any of their goodwill,
reputation or business relationships with the public generally, or
with any of their customers, suppliers or employees;
or
(ii) solicit,
recruit or hire any Person who is or during the thirty-six-month
period prior to Closing was an officer, director or employee of the
other Party, provided, that the foregoing shall not prohibit (A) a
general solicitation to the public by general advertising or
similar methods of solicitation by search firms not specifically
directed at officers, directors or employees of the other Party and
(B) any Party from soliciting, recruiting or hiring any officer,
director or employee of the other Party six or more months
following the cessation of employment of such Person by the other
Party or any of its Affiliates following the Closing.
For
greater certainty, in this Section 6.04, TeamGlobal shall
not be considered an Affiliate of Seller.
(c) The Parties
acknowledge and agree that compliance with the covenants set forth
in this Section
6.04 is necessary to protect the value of the ongoing
business and assets (including the goodwill) and other proprietary
interests of their businesses. Each Party further acknowledges and
agrees that any breach by it of any applicable provision of this
Section 6.04 will
result in irreparable and continuing injury to the other Party for
which there will be no adequate remedy at Law. Each Party
acknowledges and agrees that in the event of such a breach, in
addition to all other remedies available at Law, the other Party
shall be entitled to equitable relief, including interim relief (in
the form of a temporary restraining order) or injunctive relief, to
have such other covenant(s) specifically enforced by any court
having equity jurisdiction, and an equitable accounting of all
earnings, profits or other benefits arising therefrom, as well as
such other damages or relief as may be appropriate. Each Party has
independently consulted with its counsel and after such
consultation agrees that the covenants set forth in this
Section 6.04 are
reasonable and proper to protect the legitimate interests of the
other Party.
(d) It is the intention
of the Parties that the scope and effect of the covenants contained
in this Section
6.04 shall be as broad in time and geography, and in all
other respects, as is permitted pursuant to applicable Law. The
provisions of this Section
6.04 are severable and independent and shall be interpreted
and applied consistently with the requirements of reasonableness
and equity. If a court of competent jurisdiction determines that
the character, duration or geographical scope of the provisions of
this Section 6.04
are unreasonable, it is the intention and the agreement of the
Parties that these provisions shall be construed by the court in
such a manner as to impose only those restrictions on the conduct
of the Parties that are reasonable in light of the circumstances
and as are necessary to assure to the Parties the benefits of this
Agreement.
(e) Each Party agrees
that if it breaches or violates the covenants set forth in this
Section 6.04, such
breach or violation will result in significant damage to the other
Party, including the loss of a significant portion of the benefit
that the other Party would otherwise receive hereunder. Each Party
further agrees that it is and would be inherently difficult or
impossible to ascertain the amount of damages caused by such a
breach or violation. Therefore, notwithstanding any other
provisions of this Agreement, each Party agrees, as liquidated
damages and not as a penalty, and without any need of the other
Party to otherwise prove or disprove the amount of damages, to pay
to the other Party an amount equal to 10% (ten percent) of the
Purchase Price, or, in the alternative, such maximum lesser amount
permitted by Law, in the event a Party violates the covenants set
forth in this Section
6.04. The Parties agree this is fair because of the
difficulty in calculating with accuracy the damages suffered by a
Party in the event the other Party violates its obligations as set
forth in this Section
6.04 and further agrees that the liquidated damages amount
is a fair estimate of such damages. The provisions of this
Section 6.04 shall
be supplemental to, and shall in no way limit, non-monetary
remedies that may be available to a Party, including the right of a
Party to seek specific performance or injunctive relief in the
event of a breach by the other Party of its obligations as set
forth in this Section
6.04.
12
(f) Confidentiality. From and after
the Closing, Seller shall, and shall cause its Affiliates (for the
avoidance of doubt, other than TeamGlobal) to, hold, and shall use
its reasonable best efforts to cause its or their respective
Representatives to hold, in confidence any and all information,
whether written or oral, concerning TeamGlobal, except to the
extent that Seller can show that such information (i) is generally
available to and known by the public through no fault of Seller,
any of its Affiliates or their respective Representatives; (ii) is
lawfully acquired by Seller, any of its Affiliates or their
respective Representatives from and after the Closing from sources
which are not prohibited from disclosing such information by a
legal, contractual or fiduciary obligation; or (iii) is required to
be disclosed pursuant to legal obligations or stock exchange rules.
If Seller or any of its Affiliates or their respective
Representatives are compelled to disclose any information by
judicial, investigative, or administrative process or by other
requirements of Law, Seller shall promptly notify Buyer in writing,
to the extent commercially and shall disclose only that portion of
such information which Seller is advised by its counsel in writing
is legally required to be disclosed, provided that Seller shall use
reasonable best efforts to assist Buyer in obtaining an appropriate
protective order or other reasonable assurance that confidential
treatment will be accorded such information.
Following
the Closing, each of the Parties shall, and shall cause their
respective Affiliates to, execute and deliver such additional
documents, instruments, conveyances, and assurances, and take such
further actions as may be reasonably required to carry out the
provisions hereof and give effect to the Transactions. To the
extent Seller fails to deliver an item required to be delivered by
it at Closing under Section 2.03, no
action of Buyer, including the execution of this Agreement, will be
a waiver of such obligation or any Buyer remedies. Seller shall
deliver such items promptly after Closing.
Seller
shall prepare, or cause to be prepared, all Tax Returns required to
be filed by TeamGlobal after the Closing Date with respect to a
Pre-Closing Tax Period. Seller shall pay all Taxes that are shown
or determined to be due on such Tax Returns for Pre-Closing Tax
Periods.
(a) Buyer
and Seller agree that all rights to indemnification, advancement of
expenses, and exculpation by TeamGlobal now existing in favor of
each Person who is now, or has been at any time prior to the date
hereof an officer or director of TeamGlobal or any of its
subsidiaries (each an “Indemnified D&O
Party”) as provided in the Bylaws of TeamGlobal, as in
effect on the Closing Date, or pursuant to any other Contracts in
effect on the date hereof, shall survive the Transactions and shall
remain in full force and effect in accordance with their
terms.
(b) For a period of six
(6) years from the Effective Time, the Buyer and TeamGlobal (the
“Indemnifying
D&O Parties”) shall indemnify, defend and hold
harmless each Indemnified D&O Party (in all their capacities)
against all losses, claims, damages, liabilities, fees, expenses,
judgments and fines incurred in connection with any claim, suit,
action or proceeding, whether civil, criminal, administrative, or
investigative (each a “Claim”) and shall provide
advancement of expenses (including reasonable attorneys’
fees) to each Indemnified D&O Party to the same extent such
Indemnified D&O Party has the right to advancement of
reasonable and documented expenses pursuant to the TeamGlobal
Charter Documents as in effect on the date of this Agreement and to
the extent that such Indemnified D&O Party does not have such a
right to advancement of expenses, the Indemnifying D&O Parties
shall promptly reimburse each Indemnified D&O Party for any
legal or other expenses reasonably incurred by such Indemnified
D&O Party in connection with investigating or defending any
such Claim as such expenses are incurred, subject to the receipt of
an undertaking by such Indemnified D&O Party to repay such
legal and other fees and expenses paid in advance if it is
ultimately determined in a final and non-appealable judgment of a
court of competent jurisdiction that such Indemnified D&O Party
is not entitled to be indemnified under applicable
Law.
(c) The obligations of
Seller and TeamGlobal under this Section 6.07 shall survive the
Transactions and shall not be terminated or modified in such a
manner as to adversely affect any Indemnified D&O Party to whom
this Section 6.07
applies without the consent of such affected Indemnified D&O
Party (it being expressly agreed that the Indemnified D&O
Parties to whom this Section 6.07 applies shall be
third party beneficiaries of this Section 6.07, each of whom may
enforce the provisions of this Section 6.07).
(d) In the event Buyer,
TeamGlobal or any of their respective successors or assigns: (i)
consolidates with or merges into any other Person and shall not be
the continuing or surviving corporation or entity in such
consolidation or merger; or (ii) transfers all or substantially all
of its properties and assets to any Person, then, and in either
such case, proper provision shall be made so that the successors
and assigns of Buyer or TeamGlobal, as the case may be, shall
assume all of the obligations set forth in this Section 6.07. The agreements
and covenants contained herein shall not be deemed to be exclusive
of any other rights to which any Indemnified D&O Party is
entitled, whether pursuant to Law, Contract, or otherwise. Nothing
in this Agreement is intended to, shall be construed to, or shall
release, waive, or impair any rights to directors’ and
officers’ insurance claims under any policy that is or has
been in existence with respect to TeamGlobal or its officers,
directors, and employees, it being understood and agreed that the
indemnification provided for in this Section 6.07 is not in lieu of
or in substitution for, any such claims under any such
policies.
13
ARTICLE
7
(a) Subject to the
limitations and other provisions of this Agreement, the
representations and warranties contained herein shall survive the
Closing Date and shall remain in full force and effect as follows:
(i) the representations and warranties set forth in Section 3.01, Section 3.02, Section 3.03, Section 3.04(i), (iii) and (v), Section 3.05, Section 4.01, Section 5.01, Section 5.02 and Section 5.03 (collectively, the
“Fundamental
Representations”) shall survive until the date that is
twenty four (24) months after the Closing Date; (ii) any claim
based on fraud or intentional misrepresentation, shall survive
indefinitely; (iii) the representations and warranties set forth in
Section 3.06 (the
“Tax
Representation”) shall survive the Closing Date until
sixty (60) days following the expiration of the applicable statute
of limitations; and (iv) all other representations and warranties
contained herein shall survive until the date that is eighteen (18)
months after the Closing Date.
(b) The covenants or
agreements required to be performed following Closing shall each
survive until the later of (i) the thirtieth (30th) day following
the expiration of the applicable statute of limitations (giving
effect to the waiver, mitigation, or extension thereof) or, (ii)
until fully performed in accordance with their terms (unless a
shorter period is prescribed with respect to such covenant or
agreement).
(c) Any claim arising
out of or in connection with this Agreement must be brought, if at
all, within the applicable survival period for the applicable
representation, warranty or covenant with respect to which the
claim is raised, or within such shorter period as may be specified
with respect to a particular claim, or it will be deemed waived and
released. Notwithstanding the other provisions of this Section 7.01, any claims
asserted in good faith with reasonable specificity (to the extent
known at such time) and in writing by notice from the non-breaching
party to the breaching party prior to the expiration date of the
applicable survival period shall not thereafter be barred by the
expiration of the relevant representation, warranty, covenant, or
agreement, and such claims shall survive until finally
resolved.
Subject
to the provisions of this ARTICLE 7, Seller hereby
covenants and agrees with Buyer that Seller shall indemnify Buyer,
its owners, officers and employees, and post-Closing, TeamGlobal,
and each of their respective Representatives, successors and
assigns (individually, a “Buyer Indemnified
Party”), and hold them harmless from, against and in
respect of any and all Losses incurred or sustained by, or imposed
upon any Buyer Indemnified Party resulting from or related to,
arising out of, or based upon: (i) any inaccuracy or breach of any
representation or warranty of Seller in this Agreement or in any
instrument or certificate delivered by or on behalf of Seller
pursuant to this Agreement; (ii) the non-fulfillment or breach of
any agreement, covenant or obligation by Seller made in this
Agreement (including without limitation any Exhibit or Schedule
hereto and any certificate or instrument delivered in connection
herewith); (iii) Income Taxes of TeamGlobal for any taxable period
beginning on or after October 1, 2017 and ending on or before the
Closing Date; (iv) Transaction Expenses (if any) not paid prior to
Closing; or (v) fraud or intentional misrepresentations of Seller.
For the avoidance of doubt, after the Closing, Seller shall not
have any obligations to indemnify or reimburse Buyer or TeamGlobal
for any assessment against TeamGlobal or Buyer relating to any
payroll Taxes.
Subject
to the provisions of this ARTICLE 7, Buyer hereby
covenants and agrees that Buyer shall indemnify Seller and
Seller’s directors, officers, employees and Affiliates, and
each of their respective Representatives, successors and assigns
(individually a “Seller Indemnified
Party”) and hold them harmless from, against and in
respect of any and all Losses incurred or sustained by, or imposed
upon any Seller Indemnified Party resulting from or related to,
arising out of, or based upon: (i) any inaccuracy or breach of any
representation or warranty of Buyer in this Agreement or in any
instrument or instrument or certificate delivered by or on behalf
of Seller pursuant to this Agreement; (ii) the non-fulfillment or
breach of any agreement, covenant or obligation by Buyer made in
this Agreement (including without limitation any Exhibit or
Schedule hereto and any certificate or instrument delivered in
connection herewith); or (iii) fraud or intentional
misrepresentation of Buyer.
14
The
Party making a claim under this ARTICLE 7 is referred to as the
“Indemnified
Party” and the Party against whom such claims are
asserted under this ARTICLE 7 is referred to as the
“Indemnifying
Party”.
(a) Third-Party Claims. If any Indemnified
Party receives notice of the assertion or commencement of any
Action made or brought by any Person who is not a party to this
Agreement or an Affiliate of a Party to this Agreement or a
Representative of the foregoing (a “Third-Party Claim”)
against such Indemnified Party with respect to which the
Indemnifying Party is obligated to provide indemnification under
this Agreement, the Indemnified Party shall give the Indemnifying
Party reasonably prompt written notice thereof, but in any event
not later than thirty (30) calendar days after receipt of such
notice of such Third-Party Claim. The failure to give such prompt
written notice shall not, however, relieve the Indemnifying Party
of its indemnification obligations, except and only to the extent
that the Indemnifying Party forfeits rights or defenses by reason
of such failure. Such notice by the Indemnified Party shall
describe the Third-Party Claim in reasonable detail, shall include
copies of all material written evidence thereof and shall indicate
the estimated amount, if reasonably practicable, of the Loss that
has been or may be sustained by the Indemnified Party. The
Indemnifying Party shall have the right to participate in, or by
giving written notice to the Indemnified Party, to assume the
defense of any Third-Party Claim at the Indemnifying Party’s
expense and by the Indemnifying Party’s own counsel, and the
Indemnified Party shall cooperate in good faith in such defense.
Before the Indemnifying Party may assume the defense of any
Third-Party Claim, it must acknowledge in a writing directed to the
Indemnified Party its obligation to indemnify the Indemnified Party
from any Losses that result from the Third-Party Claim. In the
event that the Indemnifying Party assumes the defense of any
Third-Party Claim, subject to Section 7.04(b), it shall
have the right to take such action as it deems necessary to avoid,
dispute, defend, appeal or make counterclaims pertaining to any
such Third-Party Claim in the name and on behalf of the Indemnified
Party. The Indemnified Party shall have the right to participate in
the defense of any Third-Party Claim with counsel selected by it
subject to the Indemnifying Party’s right to control the
defense thereof. The fees and disbursements of such counsel shall
be at the expense of the Indemnified Party, provided, that if in
the reasonable opinion of counsel to the Indemnified Party, (A)
there are legal defenses available to an Indemnified Party that are
different from or additional to those available to the Indemnifying
Party; or (B) there exists a conflict of interest between the
Indemnifying Party and the Indemnified Party that cannot be waived,
the Indemnifying Party shall be liable for the reasonable fees and
expenses of counsel to the Indemnified Party in each jurisdiction
for which the Indemnified Party determines counsel is required. If
the Indemnifying Party elects not to compromise or defend such
Third-Party Claim, fails to promptly notify the Indemnified Party
in writing of its election to defend as provided in this Agreement,
or fails to diligently prosecute the defense of such Third-Party
Claim, the Indemnified Party may, subject to Section
7.04(b), pay, compromise, defend such Third-Party Claim
and seek indemnification for any and all Losses based upon, arising
from or relating to such Third-Party Claim. The Parties shall
cooperate with each other in all reasonable respects in connection
with the defense of any Third-Party Claim, including making
available records relating to such Third-Party Claim and
furnishing, without expense (other than reimbursement of actual
out-of-pocket expenses) to the defending Party, management
employees of the non-defending Party as may be reasonably necessary
for the preparation of the defense of such Third-Party
Claim.
(b) Settlement of Third-Party Claims.
Notwithstanding any other provision of this Agreement, the
Indemnifying Party shall not enter into settlement of any
Third-Party Claim without the prior written consent of the
Indemnified Party, except as provided in this Section
7.04(b). If a firm offer is made to settle a Third-Party
Claim without leading to liability or the creation of a financial
or other obligation on the part of the Indemnified Party and
provides, in customary form, for the unconditional release of each
Indemnified Party from all Liabilities and obligations in
connection with such Third-Party Claim and the Indemnifying Party
desires to accept and agree to such offer, the Indemnifying Party
shall give written notice to that effect to the Indemnified Party.
If the Indemnified Party fails to consent to such firm offer within
ten (10) days after its receipt of such notice, the Indemnified
Party may continue to contest or defend such Third-Party Claim and
in such event, the maximum liability of the Indemnifying Party as
to such Third-Party Claim shall not exceed the amount of such
settlement offer. If the Indemnified Party fails to consent to such
firm offer and also fails to assume defense of such Third-Party
Claim, the Indemnifying Party may settle the Third-Party Claim upon
the terms set forth in such firm offer to settle such Third-Party
Claim. If the Indemnified Party has assumed the defense pursuant to
Section 7.04(a), it
shall not agree to any settlement without the written consent of
the Indemnifying Party (which consent shall not be unreasonably
withheld or delayed).
(c) Direct Claims. Any Action by an
Indemnified Party on account of a Loss which does not result from a
Third-Party Claim (such Action not resulting from a Third-Party
Claim, a “Direct
Claim”) shall be asserted by the Indemnified Party
giving the Indemnifying Party reasonably prompt written notice
thereof, but in any event not later than thirty (30) calendar days
after the Indemnified Party becomes aware of such Direct Claim. The
failure to give such prompt written notice shall not, however,
relieve the Indemnifying Party of its indemnification obligations,
except and only to the extent that the Indemnifying Party forfeits
rights or defenses by reason of such failure. Such notice by the
Indemnified Party shall describe the Direct Claim in reasonable
detail, shall include copies of all material written evidence
thereof and shall indicate the estimated amount, if reasonably
practicable, of the Loss that has been or may be sustained by the
Indemnified Party. The Indemnifying Party shall have thirty (30)
calendar days after its receipt of such notice to respond in
writing to such Direct Claim. The Indemnified Party shall allow the
Indemnifying Party and its professional advisors to investigate the
matter or circumstance alleged to give rise to the Direct Claim,
and whether and to what extent any amount is payable in respect of
the Direct Claim and the Indemnified Party shall assist the
Indemnifying Party’s investigation by giving such information
and assistance as the Indemnifying Party or any of its professional
advisors may reasonably request. If the Indemnifying Party does not
so respond within such thirty (30) calendar day period, the
Indemnifying Party shall be deemed to have rejected such claim, in
which case the Indemnified Party shall be free to pursue such
remedies as may be available to the Indemnified Party on the terms
and subject to the provisions of this Agreement.
15
Upon
a reasonable request made by the Indemnifying Party, each
Indemnified Party seeking indemnification hereunder in respect of
any Direct Claim, hereby agrees to consult with the Indemnifying
Party and act reasonably to take actions reasonably requested by
the Indemnifying Party in order to attempt to reduce the amount of
Losses in respect of such Direct Claim. Any costs or expenses
associated with taking such actions shall be included as Losses
hereunder.
Subject
to the terms and conditions herein, once a Loss is agreed to by the
Indemnifying Party or finally adjudicated to be payable pursuant to
this ARTICLE 7 or otherwise pursuant to this Agreement, the
Indemnifying Party shall satisfy its indemnification obligations
within fifteen (15) Business Days of such agreement or
adjudication.
The
indemnification provided for in Section 7.02 and Section 7.03 shall
be subject to the following limitations:
(a) The Seller shall not be liable to the
Buyer Indemnified Parties for indemnification under Section 7.02(i) until the
aggregate amount of all Losses in respect of indemnification under
Section 7.02(i)
exceeds $50,000 (the “Basket”), in which event
Seller shall be liable for any amount of Losses in excess of the
Basket.
(b) Buyer shall not be
liable to the Seller Indemnified Parties for indemnification under
Section 7.03(i)
until the aggregate amount of all Losses in respect of
indemnification under Section 7.03(i) exceeds the
Basket, in which event Buyer shall be liable for any amount of
Losses in excess of the Basket.
(c) The Parties
acknowledge and agree that the maximum liability of Seller, on the
one hand, and Buyer, on the other hand, for indemnification under
Section 7.02(i) or Section
7.03(i),
as applicable, shall be the sum of $370,000 (the
“Cap”),
and neither Seller, on the one hand, or Buyer, on the other hand,
shall have any liability to the other for claims hereunder in
excess of the Cap, provided that any liability for Losses incurred
and arising from or related to a breach of the Fundamental
Representations, or pursuant to Section 7.02(ii), Section 7.02(iii), Section 7.02(iv), Section
7.02(v),
Section 7.03(ii) or
Section 7.03(iii),
shall not be subject to the Cap. The Cap shall be calculated
without taking into account Losses due to breaches of the
Fundamental Representations or other provisions of this Agreement
not subject to the Cap.
(d) Seller shall not be
liable under this ARTICLE
7 for any Losses based upon or arising out of any inaccuracy
in or breach of any of the representations or warranties of Seller
if Buyer, Scott Kostelecky or Gene Rhoades had knowledge of such
inaccuracy or breach prior to the Closing.
(e) All Liabilities and
obligations of one Party to the other Party that may arise under
ARTICLE 7, if any,
will be satisfied by tender of cash, via wire transfer, pursuant to
wire instructions provided to Buyer or to Seller, as the case may
be.
All
indemnification payments made under this Agreement shall be treated
by the Parties as an adjustment to the consideration paid hereunder
unless otherwise required by applicable Law.
16
Section
7.10
In
the event that the Closing occurs, the indemnification provisions
contained in this ARTICLE 7 shall be the sole and exclusive remedy
of the Parties with respect to the Transactions for any and all
breaches or alleged breaches of any representations, warranties,
covenants or agreements of the Parties hereto or any other
provision of this Agreement, except (i) with respect to any
equitable remedy to which such Party may be entitled with respect
to any claims or causes of action arising from the breach of any
covenants or agreement of a Party that is to be performed
subsequent to the Closing Date (including, but by no means limited
to, specific performance), (ii) remedies provided in the other
Transaction Documents; (iii) with respect to a Party, an
actual and intentional fraud with respect to this Agreement and the
Transactions.
ARTICLE
8
Any
notice or other communications required or permitted hereunder
shall be in writing and shall be sufficiently given if personally
delivered to it or sent by overnight courier or registered mail or
certified mail, postage prepaid, or electronic mail with a follow
up copy by overnight courier, addressed as follows:
If to
Buyer:
Talent
Teams LLC
Attn:
Scott Kostelecky
4000
Sandshell Drive
Fort
Worth, TX 76137
Email:
skostele@teamglobal.com
with a
copy, which shall not constitute notice, to:
Decker
Jones, P.C.
Attn:
Charles B. Milliken
801
Cherry St. Unit #46
Burnett
Plaza, Ste. 2000
Fort
Worth, TX 76102
Email:
cmilliken@deckerjones.com
If to
Seller:
Rekor
Systems, Inc.
Attn:
Eyal Hen
7172
Columbia Gateway Drive, Suite 400
Columbia, MD
21046
E-mail:
eyal@rekorsystems.com and
cathy@rekorsystems.com
with a
copy, which shall not constitute notice, to:
Crowell
& Moring LLP
Attn:
Lex Eley
1001
Pennsylvania Avenue NW
Washington, DC
20004-2595
Email:
leley@crowell.com
or such
other addresses as shall be furnished in writing by any Party in
the manner for giving notices hereunder, and any such notice or
communication shall be deemed to have been given: (i) upon receipt,
if personally delivered or sent by electronic mail; (ii) on the day
after dispatch, if sent by overnight courier; and (iii) three (3)
days after mailing, if sent by registered or certified
mail.
17
(a) If
there is any dispute or controversy relating to this Agreement or
any of the Transactions (each, a “Dispute”), such Dispute
shall be resolved in accordance with the applicable provisions of
Section 7.04 and
this ARTICLE
8.
This
Agreement shall be governed by, enforced, and construed under and
in accordance with the Laws of the State of Maryland, without
giving effect to principles of conflicts of Law thereunder. The
venue for all matters arising hereunder shall be exclusively in the
Federal or State courts of the State of Maryland (the
“Selected
Courts”), and each of the Parties irrevocably consents
and agrees that any legal or equitable Action arising under or in
connection with this Agreement shall be brought exclusively in the
Selected Courts. By execution and delivery of this Agreement, each
Party hereto irrevocably submits to and accepts, with respect to
any such Action, generally and unconditionally, the jurisdiction of
the Selected Courts and choice of law above, and irrevocably waives
any and all rights such Party may now or hereafter have to object
to such jurisdiction or choice of law.
EACH
PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE
UNDER THIS AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS IS LIKELY
TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH
SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION ARISING OUT
OF OR RELATING TO THIS AGREEMENT, THE OTHER TRANSACTION DOCUMENTS
OR THE TRANSACTIONS. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (A)
NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE
FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION, (B) SUCH PARTY HAS
CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY MAKES
THIS WAIVER VOLUNTARILY, AND (D) SUCH PARTY HAS BEEN INDUCED TO
ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS Section
8.04.
In
the event that any Party institutes any Action to enforce this
Agreement or to secure relief from any default hereunder or breach
hereof, the prevailing Party shall be reimbursed by the losing
Party for all costs, including reasonable attorneys’ fees,
incurred in connection therewith and in enforcing or collecting any
judgment rendered therein.
Subject
to Section 8.07, each of the
Parties shall hold, and shall cause its Representatives to hold, in
confidence all non-public documents and information furnished to it
by or on behalf of any other Party in connection with the
Transactions until the Closing Date, at which time the obligations
of the Parties under this Section 8.06 shall terminate only in
respect of that portion of such confidential information
exclusively relating to TeamGlobal and its business.
18
Other
than as set forth in Section 6.01, unless required
by applicable Law or regulatory authority, none of the Parties will
issue any report, statement or press release to the general public,
trade or trade press, or to any third party (other than its
advisors and Representatives in connection with Transactions) or
file any document, relating to this Agreement and Transactions,
except as may be mutually agreed by the Parties. Copies of any such
filings, public announcements or disclosures, including any
announcements or disclosures mandated by Law or regulatory
authorities, shall be delivered to each Party prior to the release
thereof.
Buyer
and, after Closing, TeamGlobal are presumed to have full knowledge
of all information set forth in the Seller Disclosure
Schedules.
This
contract is strictly between the Parties and, except as
specifically provided, no director, officer, stockholder (other
than Seller), employee, agent, independent contractor or any other
Person shall be deemed to be a third-party beneficiary of this
Agreement.
Other
than as specifically set forth herein, whether or not the
Transactions are consummated, Buyer, on the one hand, and Seller
and TeamGlobal, on the other hand, will each bear their own
respective expenses incurred prior to Closing, without limitation
the fees and expenses of their legal, accounting and financial
advisors, incurred in connection with the
Transactions.
This
Agreement and the other Transaction Documents represent the entire
agreement between the Parties relating to the subject matter
thereof and supersede all prior agreements, understandings and
negotiations, written or oral, with respect to such subject matter.
If any term or provision of this Agreement is invalid, illegal or
unenforceable in any jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other term or provision of
this Agreement or invalidate or render unenforceable such term or
provision in any other jurisdiction. Upon such determination that
any term or other provision is invalid, illegal or unenforceable,
the Parties shall negotiate in good faith to modify this Agreement
so as to effect the original intent of the Parties as closely as
possible in a mutually acceptable manner in order that the
Transactions be consummated as originally contemplated to the
greatest extent possible.
Other
than as specifically set forth herein, every right and remedy
provided herein shall be cumulative with every other right and
remedy, whether conferred herein, at Law, or in equity, and may be
enforced concurrently herewith, and no waiver by any Party of the
performance of any obligation by the other shall be construed as a
waiver of the same or any other default then, theretofore, or
thereafter occurring or existing. This Agreement may by amended
only by a writing signed by all Parties hereto.
Subject
to the terms and conditions herein provided, each Party shall use
its commercially reasonable efforts to perform or fulfill all
conditions and obligations to be performed or fulfilled by it under
this Agreement so that Transactions shall be consummated as soon as
practicable. Each Party also agrees that it shall use its
commercially reasonable efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary,
proper or advisable under applicable Laws and regulations to
consummate and make effective this Agreement and the Transactions.
Following the Closing, each of the parties hereto shall, and shall
cause their respective Affiliates to, execute and deliver such
additional documents, instruments, conveyances, and assurances as
may be reasonably required to carry out the provisions hereof and
give effect to the Transactions.
19
This
Agreement shall be binding upon and shall inure to the benefit of
the Parties and their respective successors and permitted assigns.
No Party may assign its rights or obligations hereunder without the
prior written consent of the other Parties. No attempted transfer
or assignment in violation of this Section
8.14 shall be valid, enforceable or
binding.
This
Agreement may be executed in multiple counterparts, each of which
shall be deemed an original and all of which taken together shall
be but a single instrument. A signed copy of this Agreement
delivered by facsimile, e-mail or other means of electronic
transmission shall be deemed to have the same legal effect as
delivery of an original signed copy of this Agreement.
[Signature Pages Follow]
20
IN
WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the Closing Date.
Talent
Teams LLC
By:_/s/_ Scott
Kostelecky __________
Name: Scott
Kostelecky
Title:
Member
Talent
Teams LLC
By:_/s/_ Gene
Rhoades _____________
Name: Gene
Rhoades
Title: Member
Rekor
Systems, Inc.
By:_/s/_ Robert
Berman______________
Name:
Robert Berman
Title: Chief
Executive Officer
Global
Technical Services, Inc.
By:_/s/_ Scott
Kostelecky______________
Name:
Scott Kostelecky
Title: President
[Signature Page to
TeamGlobal – Talent Teams Stock Purchase
Agreement]
21
Exhibit
10.1
Exhibit 10.2
Execution Version
PLEDGE AND SECURITY AGREEMENT
THIS PLEDGE AND SECURITY AGREEMENT (this
“Agreement”),
dated as of June 29, 2020, is made by Talent Teams LLC, a Texas
limited liability company State of Texas (the “Pledgor”) in favor of Rekor
Systems, Inc., a Delaware corporation, (the “Secured Party”).
RECITALS
A.
Pledgor and Secured Party and the other parties thereto have
entered into that certain Stock Purchase Agreement dated as of June
29, 2020 pursuant to which Secured Party has agreed to sell and
Pledgor has agreed to buy from Secured Party, certain of the issued
and outstanding shares in Global Technical Services, Inc. (the
“Company”) (the
“Acquired
Shares”) of which Secured Party is the sole record and
beneficial owner (the “Transaction”);
B.
Following the Transaction the Acquired Shares will be 100% of the
issued and outstanding capital stock of the Company and Pledgor
will be the sole stockholder of the Company, and therefore receive
substantial benefits as a result of the Transaction.
C.
As partial consideration for the Transaction, the Company has
agreed to issue a promissory note to Secured Party (the
“Note”) which
Note and the obligations of the Company evidenced thereby are to be
secured by Pledgor’s pledge of the Acquired
Shares;
D.
To induce the Secured Party to enter into the Transaction and
execute all other documents related thereto, the Pledgor, by this
Agreement, intends to collaterally pledge and assign to the Secured
Party and grant the Secured Party a first priority security
interest in the Pledgor shares in the Company as more specifically
identified on Schedule
I attached hereto (the “Pledged Shares”), and the products
and proceeds thereof, both cash and non-cash, as security for
(among other things) the due and timely observance and performance
of all obligations of the Company under the Note.
NOW,
THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Pledgor hereby agrees as
follows:
1. Definitions.
(a) The
following terms have the following meanings:
“Acquired Shares” shall have the
meaning ascribed to such term in the Recitals to this
Agreement.
“Agreement” shall have the meaning
ascribed to such term in the preamble to this
Agreement.
“Articles of
Incorporation” shall mean the Articles of
Incorporation of the Company as in effect on the date
hereof.
“Collateral” shall have the meaning ascribed to
such term in Section
2(a).
“Company” shall have the meaning ascribed to
such term in the preamble to this Agreement.
“Event of Default” shall have the meaning ascribed to
such term in Section
9.
“Management Rights” shall have the meaning ascribed to
such term in Section
2(a).
“Note” shall have the meaning
ascribed to such term in the Recitals to this
Agreement.
“Obligations” shall mean and include all
obligations: (i) of the Company to the Secured Party under the
Note; and (ii) of the Pledgor to the Secured Party
hereunder.
“Person” shall mean any individual,
partnership, joint venture, corporation, trust, unincorporated
organization, limited liability company, governmental authority and
any other person or entity.
“Pledged Shares” shall have the
meaning ascribed to such term in the Recitals to this
Agreement.
“Secured Party” shall have the
meaning ascribed to such term in the preamble to this
Agreement.
“Transaction” shall have the
meaning ascribed to such term in the preamble to this
Agreement.
“UCC” shall mean the Uniform Commercial
Code as in effect in the State of Texas.
(b) Unless otherwise
expressly specified herein, defined terms denoting the singular
number shall, when in the plural form, denote the plural number of
the matter or item to which such defined terms refer, and
vice-versa.
(c) Words of the neuter
gender mean and include correlative words of the masculine and
feminine gender.
(d) The Section and
Schedule headings used in this Agreement are for conveyance only
and shall not affect the construction or meaning of any provisions
of this Agreement.
2
(e)
Unless
otherwise specified, the words “hereof”, “herein”, “hereunder” and other similar words refer to
this Agreement as a whole and not just to the Section, subsection
or clause in which they are used.
(f)
References in this
Agreement to other instruments, agreements or documents shall be
references to such instruments, agreements or documents as they may
be amended, supplemented, restated or otherwise modified from time
to time, in accordance with the terms of, and to the extent
permitted by, such instruments, agreements or
documents.
(g)
All
references to statutes and regulations shall include any amendments
of same and any successor statutes and regulations.
(h) Unless otherwise
specified, references to Sections, Recitals and Schedules are
references to Sections of, and Recitals and Schedules to, this
Agreement.
(i) Unless otherwise
defined herein, terms used herein that are defined in the UCC shall
have the meanings assigned to them in the UCC. However, if a term
is defined in Article 9 of the UCC differently than in another
Article of the UCC, the term has the meaning specified in Article
9.
2. Grant
of Security Interest, Etc.
(a) As
continuing collateral security for the full and punctual payment
and performance of the Obligations (whether upon stated maturity,
by acceleration or otherwise), Pledgor hereby irrevocably grants,
pledges and assigns, subject to the terms of this Agreement, a
continuing first priority lien on and security interest in, and, as
a part of such grant, pledge and assignment, hereby assigns to the
Secured Party, as collateral security all of the following (whether
now owned or at any time hereafter acquired or now existing or
hereafter existing or created): (x) all of the Pledged Shares
including without limitation: (i) Pledgor’s interest in all
profits, distributions and other amounts to which Pledgor shall at
any time be entitled to in respect of the Pledged Shares; (ii) all
of Pledgor’s rights (including control rights), powers and
remedies, arising from its ownership of the Pledged Shares (the
rights described in this subsection (ii) shall be referred to as
“Management
Rights”); and (y) to the extent not
otherwise included, additions to, accessions to, substitutions of,
products or proceeds of any or all of the foregoing collateral
(collectively, (x) and (y) shall be referred to as the
“Collateral”).
(b) Pledgor hereby
acknowledges and consents (i) in the event of a foreclosure of the
Collateral pursuant to Section 10 to the transfer and
assignment to Secured Party, its designee, nominee or transferee of
the Collateral subject to this Pledge Agreement, and (ii) to the
exercise on one or more occasions of any rights or remedies by the
Secured Party pursuant to Section 10 or as allowed by
law.
3
(c) Rights
of Secured Party. The
security created by this Agreement shall be held by Secured Party
as continuing security for the payment and performance of the
Obligations (whether existing on the date of this Agreement or
arising from time to time thereafter). Each and every right,
remedy, power and privilege conferred on or reserved to Secured
Party hereunder shall be cumulative and in addition to, and not in
limitation of, each and every right, remedy, power or privilege
conferred on or reserved to Secured Party under the
Note.
3. Distributions.
So long as no Event of Default shall have occurred and be
continuing, the Pledgor shall be entitled to receive and retain and
otherwise deal with any and all distributions paid to Pledgor from
proceeds in respect of the Collateral. Upon the occurrence and
during the continuance of an Event of Default all rights of the
Pledgor to receive the distributions and other payments which they
would otherwise be authorized to receive and retain pursuant to
this Section 3
shall cease, and all such rights shall thereupon become vested in
the Secured Party which shall thereupon have the sole right to
receive and hold as Collateral such distributions and other
payments.
4. Registration
of Pledge. The
Pledgor hereby represents and warrants that as of the date hereof
no Pledged Share in the Company is represented by any instrument or
certificate, other than instruments or certificates that have been
or are concurrently herewith being delivered to the Secured Party.
In the event that at any time after the date hereof any Collateral
shall be evidenced by an instrument or a certificate, the Pledgor
shall or shall cause the Company to promptly deliver such
instrument or certificate, duly endorsed or subscribed by the
Pledgor or accompanied by appropriate instruments of transfer or
assignment duly executed in blank by the Pledgor, to the Secured
Party as additional Collateral.
5. Representations
of Pledgor. Pledgor
represents and warrants to the Secured Party that:
(a) Pledgor
has the power and authority and the legal right to execute, deliver
and perform this Agreement and to grant the lien on the Collateral
contemplated hereby in favor of the Secured Party;
(b) the
execution, delivery and performance of this Agreement by the
Pledgor and the granting of the lien on the Collateral contemplated
hereby has been duly authorized by all necessary action and does
not and will not (i) violate any applicable law, rule or regulation
or any provision relating to the Pledgor, (ii) conflict with,
result in a breach of, or constitute a default under any provision
of the Articles of Incorporation or any agreement, indenture,
mortgage or other agreement or instrument to which the Pledgor are
a party or by which they or any of their properties or assets is
bound or subject or any license, judgment, order or decree of any
governmental authority having jurisdiction over the Pledgor or its
activities, properties or assets or (iii) result in or require the
creation or imposition of any lien upon or with respect to any
properties or assets now or hereafter owned by the Pledgor (other
than the liens created hereunder);
4
(c) this
Agreement has been duly executed and delivered by the Pledgor and
constitutes a legal, valid and binding obligation of the Pledgor
enforceable against the Pledgor in accordance with its terms except
as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting
enforceability of creditors’ rights generally and except as
specific performance may be subject to equitable principles of
general applicability;
(d) no
consent or authorization of, filing with, or other act by or in
respect of, any arbitrator or governmental authority and no consent
of any other Person is required (i) for the execution, delivery and
performance of this Agreement by the Pledgor, (ii) for the pledge
by the Pledgor of the Collateral to the Secured Party pursuant to
this Agreement, or (iii) for the exercise by the Secured Party of
the rights provided for in this Agreement or the remedies in
respect of the Collateral pursuant to this Agreement, except (1)
such as have been obtained, made or taken and are in full force and
effect, or (2) such as may be required under federal or state
securities laws in connection with any sale of the
Collateral;
(e) the
Pledgor is the legal and beneficial owner of, and has good title to
the Collateral free and clear of all liens or security interests
other than the lien in favor of the Secured Party created by this
Agreement;
(f) there
are no outstanding options, warrants or other agreements with
respect to the Collateral; and
(g) Pledgor’s
principal address and the principal place where the Pledgor’s
records concerning the Collateral are kept is located at its
address set forth in Section 15. Pledgor will not
change the location of its principal address without giving the
Secured Party thirty (30) days prior written notice
thereof.
6. Covenants
of Pledgor. Pledgor
further represents, warrants, and covenants to the Secured Party
that:
(a) The
Pledgor will not sell, transfer, convey or otherwise dispose of any
interest in the Collateral.
(b) The
Pledgor will not suffer or permit any lien to exist on or with
respect to the Collateral except the lien created under this Pledge
Agreement.
(c) The
Pledgor hereby authorizes the Secured Party to file one or more
financing or continuation statements and amendments thereto
relating to all or part of the Collateral without the
Pledgor’s signature and Pledgor hereby ratifies its
authorization with respect to any such filings made prior to the
date hereof.
(d) The
Pledgor shall not permit or consent to: (i) any issuance of capital
stock or securities convertible into any capital stock of the
Company; or (ii) any amendment of the Articles of Incorporation
other than amendments or modifications that could not reasonably be
expected to adversely affect the Collateral, Secured Party or the
Pledgor’s duty or ability to perform any of its Obligations
under this Agreement, without the prior written consent of Secured
Party.
5
7. Management
Rights of Pledgor. So
long as no Event of Default has occurred and is continuing and the
Secured Party has not elected to exercise its remedies pursuant to
Section 10, the
Pledgor shall be entitled to exercise all Management Rights with
respect to the Collateral. Upon the occurrence and during the
continuance of an Event of Default, the Secured Party, upon
delivering written notice to the Pledgor that it has elected to
exercise its remedies pursuant to Section 10, shall have the
exclusive right to exercise such Management Rights with respect to
the Collateral.
8. Additional
Rights of the Secured Party.
(a) If
the Pledgor fails to perform any agreement contained herein, the
Secured Party may (but shall not be obligated or required to)
perform, or cause the performance, of such agreement.
(b) At
any time upon the occurrence and during the continuance of an Event
of Default, the Secured Party may (but shall not be obligated or
required to):
i. cause the
Collateral to be transferred to its name or to the name of its
nominee or nominees and thereafter exercise as to such Collateral
all of the rights, powers and remedies of an owner;
and
ii. ask for, demand,
collect, sue for, recover, compromise, receive and give
acquittances and receipts for monies due or to become due under or
in respect of any of the Collateral and hold the same as part of
the Collateral, or apply the same to any of the Obligations in such
manner as the Secured Party may direct in its sole
discretion.
All
amounts advanced by, or on behalf of, Secured Party in exercising
its rights under this Section 8 (including, but not
limited to, reasonable legal expenses and disbursements incurred in
connection therewith), shall be payable by Pledgor to Secured Party
on demand and shall be secured by the Collateral.
9. Event
of Default. An
“Event of
Default” shall exist if Pledgor breaches
any of its Obligations hereunder or any Event of Default, as
defined in the Note, shall have occurred and be continuing beyond
any applicable cure or notice period.
10. Remedies.
Upon the occurrence and during the continuance of an Event of
Default:
(a) The
Secured Party shall have all the rights and remedies of a secured
party under the UCC. In addition, the Secured Party shall have the
right, without demand of performance or other demand, advertisement
or notice of any kind, except as specified below, to or upon the
Pledgor or any other Person (all and each of which demands,
advertisements and/or notices are hereby expressly waived to the
extent permitted by law), to proceed forthwith to collect, receive,
appropriate and realize upon the Collateral, or any part thereof
and to proceed forthwith to sell, assign, give an option or options
to purchase, contract to sell, or otherwise dispose of and deliver
the Collateral or any part thereof in one or more parcels at public
or private sale or sales at any stock exchange, broker’s
board or at any of the Secured Party’s offices or elsewhere
at such prices and on such terms and restrictions (including,
without limitation, a requirement that any purchaser of all or any
part of the Collateral shall be required to purchase any securities
constituting the Collateral solely for investment and without any
intention to make a distribution thereof) as the Secured Party may
deem appropriate without any liability for any loss due to decrease
in the market value of the Collateral during the period held. If
any notification to the Pledgor of the intended disposition of the
Collateral is required by law, such notification shall be deemed
reasonable and properly given if given in the manner required by
Section 15 at least
ten (10) business days’ prior to such
disposition.
6
(b) All
of the Secured Party’s rights and remedies under this
Agreement and under applicable law, including but not limited to
the foregoing, shall be cumulative and not exclusive and shall be
enforceable alternatively, successively or concurrently as the
Secured Party may deem expedient.
(c) Upon
any sale or other disposition, the Secured Party shall have the
right to deliver, endorse, assign and transfer to the purchaser
thereof the Collateral so sold or disposed of. Each purchaser at
any such sale or other disposition, including the Secured Party,
shall hold the Collateral free from any claim or right of whatever
kind, including any equity or right of redemption.
11. Disposition
of Proceeds. The
proceeds of any sale or disposition of all or any part of the
Collateral shall be applied (after payment of any amounts payable
to the Secured Party pursuant to Section 13) by the Secured
Party to the payment of the Obligations in such order as the
Secured Party may elect. Any surplus thereafter remaining shall be
paid to the Pledgor.
12. Duration
and Scope. This
Agreement shall remain in full force and effect until the
Obligations have been repaid in full, and until such time, this
Agreement shall:
(a) create
a continuing security interest in the Collateral;
(b) be
binding upon the Pledgor and their permitted successors and assigns
with respect to the Collateral or this Agreement; and
(c) inure
to the benefit of the Secured Party and its successors, transferees
and assigns.
13. Expenses
of the Secured Party.
All reasonable expenses (including, without limitation, reasonable
attorneys’ fees and disbursements) actually incurred by the
Secured Party in connection with the failure by the Pledgor to
perform or observe any provision of this Agreement, the exercise or
enforcement of any rights of the Secured Party under this Agreement
and the custody or preservation of any of the Collateral and any
actual or attempted sale or exchange of, or any enforcement,
collection, compromise or settlement respecting, the Collateral, or
any other action taken by the Secured Party hereunder, shall be
deemed an obligation of Pledgor and shall be deemed an Obligation
for all purposes of this Agreement and the Secured Party may apply
the Collateral to payment of or reimbursement of itself for such
liability.
14. Survival
and Continuation of Obligations.
(a) No
failure on the part of the Secured Party to exercise, and no delay
in exercising, any right, power or remedy hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise by
the Secured Party of any right, power or remedy hereunder preclude
any other or future exercise thereof, or the exercise of any other
right, power or remedy. The representations, covenants and
agreements of the Pledgor herein contained shall survive the date
hereof.
7
(b) No
amendment or waiver of any provision of this Agreement nor consent
to any departure by the Pledgor herefrom nor release of all or any
part of the Collateral shall in any event be effective unless the
same shall be in writing, signed by the Secured Party and the
Pledgor. Any such waiver or consent or release shall be effective
only in the specific instance and for the specific purpose for
which it is given.
(c) The
Obligations of the Pledgor under this Agreement shall remain in
full force and effect without regard to, and shall not be impaired
or affected by any amendment or modification or addition or
supplement to the Note, any document or instrument delivered in
connection therewith or any assignment or transfer
thereof.
15. Notices.
All notices, requests and demands to or upon the respective parties
hereto to be effective shall be in writing (or by telex, fax or
similar electronic transfer confirmed in writing), and, unless
otherwise expressly provided herein, shall be deemed to have been
duly given or made (a) when delivered by hand or (b) if given by
mail, three business days after deposited in the mails by certified
mail, return receipt requested, postage prepaid, or (c) if by
telex, fax or similar electronic transfer, when sent and receipt
has been confirmed, addressed as follows.
If to
Pledgor:
Talent
Teams LLC
Attn:
Scott Kostelecky
4000
Sandshell Drive
Fort
Worth, TX 76137
Email:
skostele@teamglobal.com
with a
copy, which shall not constitute notice, to:
Decker
Jones, P.C.
Attn:
Philip Spencer
801
Cherry St. #46
Burnett
Plaza, Ste. 2000
Fort
Worth, TX 76102
Email:
pspencer@deckerjones.com
If to
Secured Party:
Rekor
Systems, Inc.
Attn:
Eyal Hen
7172
Columbia Gateway Drive, Suite 400
Columbia, MD
21046
E-mail:
eyal@rekorsystems.com and cathy@rekorsystems.com
with a
copy, which shall not constitute notice, to:
Crowell
& Moring LLP
Attn:
Lex Eley
1001
Pennsylvania Avenue NW
Washington, DC
20004-2595
Email:
leley@crowell.com
8
Any
party may change its address for notices by notice to the other
parties hereto in the manner provided in this
subsection.
16. Severability;
Automatic Reformation.
(a) All
rights, powers and remedies provided herein may be exercised only
to the extent that the exercise thereof does not violate any
applicable law, and are intended to be limited to the extent
necessary so that they will not render this Agreement invalid or
unenforceable. If any one or more of the provisions contained in
this Agreement shall for any reason be held to be invalid, illegal
or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions hereof, but
the balance of this Agreement shall be construed as if such
invalid, illegal or unenforceable provision or provisions had never
been included.
(b) If
any provision of this Agreement is determined by a court of
competent jurisdiction to be unenforceable, such provision shall be
automatically reformed and construed so as to be valid, operative
and enforceable to the maximum extent permitted by the law while
most nearly preserving its original intent. The invalidity of any
part of this Agreement shall not render invalid the remainder of
this Agreement.
17. Further
Assurances. Pledgor
shall, at the Pledgor’s cost and expense, at any time and
from time to time after the execution and delivery of this
Agreement, promptly after request by Secured Party, execute,
acknowledge and deliver such further conveyances, assignments,
agreements and instruments of further assurances and other
documents and do such further acts and things as Secured Party may
reasonably request and are reasonably necessary in order to carry
into effect the purposes of this Agreement or to further assure and
confirm unto Secured Party its rights, powers and remedies
hereunder. Pledgor hereby consents and agrees that Company or any
registrar or transfer agent for any of the Collateral shall be
entitled to accept the provisions hereof as conclusive evidence of
the right of Secured Party to effect any transfer pursuant to this
Agreement, notwithstanding any other notice or direction to the
contrary heretofore or hereafter given by the Pledgor or any other
Person to Company or to any such registrar or transfer
agent.
18. Governing
Law; Entire Agreement. This Agreement and the rights and
Obligations of the Pledgor and the Secured Party under this
Agreement shall be governed by, and construed and interpreted in
accordance with, the law of the State of Maryland without regard to
principles of conflict of laws thereunder. This Agreement, together
with the Note, set forth the entire understanding of the parties
hereto with respect to the subject matter hereof and supersedes all
prior agreements and understandings, whether oral or written,
relating thereto.
19. Waiver
of Trial by Jury.
EACH OF PLEDGOR AND SECURED PARTY HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT AND FOR ANY COUNTERCLAIM
THEREIN AND THAT PLEDGOR OR SECURED PARTY MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION 19 WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF PLEDGOR AND SECURED PARTY TO THE
WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
9
20. Counterparts;
Section Headings.
(a) This Agreement may
be executed in counterparts, each of which when so executed and
delivered shall be deemed an original, but all such counterparts
taken together shall constitute but one and the same instrument.
Any signature delivered by a party by facsimile transmission, and
any signature on a pdf. copy of a document delivered by electronic
transmission, shall be deemed to be an original signature
hereto.
(b) The section
headings in this Agreement are for convenience of reference only
and shall not affect the interpretation thereof.
21. No
Waiver; Cumulative Remedies. No course of dealing between Pledgor
and Secured Party, no failure on the part of Secured Party to
exercise, and no delay in exercising, any right, power or remedy
hereunder shall operate as a waiver thereof; nor shall any single
or partial exercise of any such right, power or remedy by Secured
Party preclude any other or further exercise thereof or the
exercise of any other right, power or remedy. All remedies
hereunder are cumulative and not exclusive of any other remedies
provided by law to the extent not inconsistent with the provisions
hereof, including without limitation the rights and remedies of a
secured party under the Uniform Commercial Code.
[Signature page follows]
10
IN WITNESS WHEREOF, Pledgor has caused
this Agreement to be executed as of the day and year first above
written.
|
|
PLEDGOR:
TALENT
TEAMS LLC
By:
/s/ Scott
Kostelecky
Name:
Scott Kostelecky
Title:
Member
By:
/s/ Gene
Rhoades
Name:
Gene Rhoades
Title:
Member
SECURED
PARTY:
REKOR
SYSTEMS, INC.
By:
/s/ Robert
Berman
Name:
Robert Berman
Title:
Chief Executive Officer
|
[Signature Page to Pledge and Security
Agreement]
Exhibit
10.3
Exhibit
10.4
Exhibit 99.1
Rekor Systems Divests Final Non-Core Asset Subsidiary
Company completes approximately
$4M sale of
TeamGlobal
COLUMBIA, MD – July XX, 2020 - Rekor Systems, Inc.
(NASDAQ:REKR) ("Rekor") (the “Company”), a
Maryland-based company providing real-time roadway intelligence
through artificial intelligence (“AI”) driven
decisions, announced today that it has divested its
TeamGlobal
subsidiary, as a final step in its announced change in strategic
direction. Last year the Company announced that it would take steps
to divest itself of the assets in its Professional Services Segment
as it moves ahead with its business strategy to focus on providing
its vehicle recognition solutions for the public safety, smart
cities and customer service markets. This marks the end of a
year-long strategy to sell lower margin assets and focus on
Rekor’s core
technology segment.
Rekor has sold TeamGlobal to current members of the TeamGlobal management team
for approximately $4M in cash and secured notes. TeamGlobal is a
premier national staffing firm that provides skilled technical
professionals and maintenance and modification specialists to the
aerospace and aviation maintenance industries.
The Company’s Board of Directors announced last year that it
was planning to sell subsidiaries that are no longer core to the
strategic direction of the Company. On April 6, 2020, the Company
announced the completion
of the sale of its former subsidiary,
AOC Key Solutions. The sale of TeamGlobal removes the last
remaining asset from the Company’s professional services
segment.
Since announcing the change in its strategic direction, the Company
has concentrated on its technology segment, working to increase
sales and further develop its line of AI-driven products and
services. Rekor’s technology segment currently sells products
and provides services used in more than 70 countries by customers
that include some of the world’s largest companies and
governmental organizations. These products and services address
complex issues in public safety, customer experience and smart
cities using proprietary systems designed using AI techniques such
as machine learning and deep learning data analysis.
Rekor’s current suite of solutions is based on its
industry-leading vehicle recognition software. In addition, the
Company is developing further product and service expansions for
the public safety, transportation, customer service and residential
markets worldwide.
“This
transaction marks the completion of a major milestone in our
transition to a pure technology centric company. Our Board
concluded last year that a rational monetization process for our
professional services segment was likely to unlock value more
quickly and with greater certainty for the benefit of the
Company’s shareholders,” said Robert A. Berman,
Rekor’s President and CEO. “Given our current strategic
direction, the Board determined that divestiture of our last
non-core asset at this price was a logical step in maximizing
shareholder value and fully focusing on our plan to expand growth
in our core markets.”
Rekor recently announced a new contract with the Department of
Defense for additional licenses for its vehicle recognition
software to use with DOD’s existing cameras. It also
announced a joint venture with Cygnet Infotech to automate parking
enforcement. Rekor’s stock is followed by B. Riley and was
recently added to the Russell Microcap Index®.
To
learn more about Rekor, please visit www.rekor.ai.
About Rekor Systems, Inc.
Rekor
(Nasdaq: REKR) is a Maryland-based company providing real-time
roadway intelligence through AI-driven decisions. Rekor bridges
commercial and government sectors with actionable, real-time
vehicle recognition data to enable faster, better informed
decisions with greater outcomes. Rekor is transforming industries
like Public Safety, Customer Experience, and Smart Cities in more
than 70 countries across the globe with smarter, quicker,
cost-competitive vehicle recognition solutions for security,
revenue discovery and recovery, public safety, electronic toll
collection, brand loyalty, parking operations, logistics, and
traffic management. We use the power of artificial intelligence to
analyze video streams and transform them into AI-driven decisions.
Our machine learning software can turn most IP cameras into highly
accurate and affordable vehicle recognition devices used to help
protect lives, increase brand loyalty, and enhance operations and
logistics, without the need to install expensive new
infrastructure. We make what was once considered impossible,
possible. To learn more please visit our website:
http://www.rekor.ai
Forward-Looking Statements
This press release includes statements concerning Rekor Systems,
Inc. and its future expectations, plans and prospects that
constitute "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended, including
statements regarding the impact of Rekor's core suite of AI-powered
technology and the size of the market for global ALPR systems. Such
forward-looking statements are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
For this purpose, any statements that are not statements of
historical fact may be deemed to be forward-looking statements. In
some cases, you can identify forward-looking statements by terms
such as "may," "should," "expects," "plans," "anticipates,"
"could," "intends," "target," "projects," "contemplates,"
"believes," "estimates," "predicts," "potential," or "continue," by
the negative of these terms or by other similar expressions. You
are cautioned that such statements are subject to many risks and
uncertainties that could cause future circumstances, events, or
results to differ materially from those projected in the
forward-looking statements, including the risks that actual
circumstances, events or results may differ materially from those
projected in the forward-looking statements, particularly as a
result of various risks and other factors identified in our filings
with the Securities and Exchange Commission. All forward-looking
statements contained in this press release speak only as of the
date on which they were made and are based on management's
assumptions and estimates as of such date. We do not undertake any
obligation to publicly update any forward-looking statements,
whether as a result of the receipt of new information, the
occurrence of future events, or otherwise.
Media Contacts:
Emily Burdeshaw
REQ For Rekor Systems
rekor@req.co
Investor Contacts:
Charles Degliomini
Rekor Systems, Inc.
ir@rekor.ai
Exhibit 99.2
Rekor Systems Announces Agreement on Note Exchange
Company to improve liquidity and financial stability
Columbia, Md., July 1, 2020 -- Rekor Systems, Inc. (REKR) (“Rekor”),
a Maryland-based company providing real-time roadway intelligence
through AI-driven decisions, announced today that it has reached an
agreement on a consensual balance-sheet restructuring with its
lenders involving a debt-for-equity swap and other loan
modifications. The transaction will have an immediate impact on the
Rekor’s balance sheet by extending the maturity and
significantly reducing the amount of the Company’s
outstanding promissory notes.
In March 2019, investors loaned Rekor $20,000,000 in exchange for
senior secured promissory notes (the “Notes”) and
warrants. A portion of the Notes were previously redeemed.
In an agreement reached yesterday noteholders have agreed to a redemption of
approximately 75% of the remaining principal balance of the Notes
as of June 30, 2020. Upon closing of the transaction, approximately
$14.6 million aggregate principal amount of the Notes, including
accreted interest plus certain fees payable pursuant to the terms
of the Notes, will be redeemed in exchange for common stock at a
rate of $4 per share. The noteholders have also agreed that the
maturity of the $4.9 million remaining balance of the Notes will be
extended until December 31, 2021.
“The agreement to this refinancing is an important milestone
for the Company and is a critical next step in our journey,”
said Robert A. Berman, CEO, Rekor. “The new capital structure
will give us the flexibility to invest in continued growth,
immediately expand our go-to-market strategy and generate greater
free cash flow going forward at all points in our business
cycle.”
The holders of the remaining Notes have also agreed to modify
certain covenants in the Notes, which will allow the Company to use
proceeds from its recently completed corporate restructuring for
working capital purposes. Rekor has completed the previously
announced restructuring by selling its remaining non-core
subsidiary.
“This note exchange will be a giant step forward. It will
immediately improve the Company’s liquidity and financial
stability. The covenant modifications will allow proceeds from the
sale of our non-core subsidiary to be immediately directed to the
rapid expansion of our high margin technology
segment.” said
Eyal Hen, CFO Rekor. “The Company will also realize positive
stockholder’s equity and achieve a significant reduction in
interest cost, which will further contribute to shareholder
value.”
Closing of the Note exchange, and amendment of the remaining Notes,
remains subject to satisfaction of customary closing conditions,
including approval for the listing of the exchange shares by
Nasdaq.
About Rekor Systems, Inc.
Rekor
(Nasdaq:REKR) is a Maryland-based company providing real-time
roadway intelligence through AI-driven decisions. Rekor bridges
commercial and government sectors with actionable, real-time
vehicle recognition data to enable informed decisions faster, and
with greater outcomes. Rekor is transforming industries like Public
Safety, Customer Experience, and Smart Cities in more than 70
countries across the globe with smarter, quicker, cost-competitive
vehicle recognition solutions for security, revenue discovery and
recovery, public safety, electronic toll collection, brand loyalty,
parking operations, logistics, and traffic management. We use the
power of artificial intelligence to analyze video streams and
transform them into AI-driven decisions by our clients. Our machine
learning software can turn most IP cameras into highly accurate and
affordable vehicle recognition devices used to help protect lives,
increase brand loyalty, and enhance operations and logistics,
without the need to install expensive new infrastructure. We make
what was once considered impossible, possible. To learn more please
visit our website: https://rekor.ai.
Forward-Looking Statements
This press release includes statements concerning Rekor Systems,
Inc. and its future expectations, plans and prospects that
constitute "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended, including
statements regarding the closing of the Note exchange and the
amendment of the remaining Notes. Such forward-looking statements
are made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. For this purpose, any
statements that are not statements of historical fact may be deemed
to be forward-looking statements. In some cases, you can identify
forward-looking statements by terms such as "may," "should,"
"expects," "plans," "anticipates," "could," "intends," "target,"
"projects," "contemplates," "believes," "estimates," "predicts,"
"potential," or "continue," by the negative of these terms or by
other similar expressions. You are cautioned that such statements
are subject to many risks and uncertainties that could cause future
circumstances, events, or results to differ materially from those
projected in the forward-looking statements, including the risks
that actual circumstances, events or results may differ materially
from those projected in the forward-looking statements,
particularly as a result of various risks and other factors
identified in our filings with the Securities and Exchange
Commission. All forward-looking statements contained in this press
release speak only as of the date on which they were made and are
based on management's assumptions and estimates as of such date. We
do not undertake any obligation to publicly update any
forward-looking statements, whether as a result of the receipt of
new information, the occurrence of future events, or
otherwise.
Media Contact:
Emily Burdeshaw
REQ For Rekor Systems
rekor@req.co
Investor Contact:
Charles Degliomini
Rekor Systems, Inc.
ir@rekor.ai