AGREEMENT AND PLAN OF MERGER

Exhibit 10.46

AGREEMENT AND PLAN OF MERGER

Among

GLOBALSECURE HOLDINGS, LTD.,
GLOBALSECURE MERGER SUB, INC.,
HAZTRAIN, INC.

and

JERRY L. SMITH, Ph.D.

and

HAZTRAIN, INC. EMPLOYEE STOCK OWNERSHIP PLAN

Dated as of December 15, 2003

TABLE OF CONTENTS

				Page
RECITALS					1
ARTICLE 1 MERGER					1
SECTION 1.1		The Merger			1
SECTION 1.2		Articles of Merger			2
SECTION 1.3		Closing Effective Time of the Merger			2
SECTION 1.4		Directors			2
SECTION 1.5		Officers			2
SECTION 1.6		Conversion of Shares			2
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF COMPANY AND SHAREHOLDER					5
SECTION 2.1		Organization and Qualification, Etc.; Capital Stock; Subsidiaries			5
SECTION 2.2		Authority Relative to Agreement			6
SECTION 2.3		No Breach; Consents			7
SECTION 2.4		No Material Adverse Change			7
SECTION 2.5		Title to Properties			7
SECTION 2.6		Tax Matters			7
SECTION 2.7		Contracts and Commitments			8
SECTION 2.8		Litigation, Etc			9
SECTION 2.9		Brokerage			9
SECTION 2.10		Insurance			10
SECTION 2.11		Compliance with Laws			10
SECTION 2.12		Employees			10
SECTION 2.13		Licenses and Permits			11
SECTION 2.14		Business Records; Bank Accounts			11
SECTION 2.15		Environmental Matters			11
SECTION 2.16		Financial Statements			12
SECTION 2.17		Accounts Receivable			12
SECTION 2.18		Absence of Undisclosed Liabilities			12
SECTION 2.19		Inventories			13
SECTION 2.20		Transactions with Certain Persons			13
SECTION 2.21		Absence of Certain Business Practices			13
SECTION 2.22		Operations			13
SECTION 2.23		Absence of Certain Developments			13
SECTION 2.24		ERISA			15
SECTION 2.25		Intellectual Property			16
SECTION 2.26		Debt			18
SECTION 2.27		Material Misstatements or Omissions			18

				Page
SECTION 2.28		Effective Date of Warranties, Representations and Covenants			18
SECTION 2.29		Investment Representations			18
SECTION 2.30		Resignations			19
SECTION 2.31		GlobalSecure’s Knowledge			19
SECTION 2.32		Disclosures			19
SECTION 2.33		U.S. Real Property Holding Corporation			19
SECTION 2.34		Business Activity Restriction			19
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF GLOBALSECURE					20
SECTION 3.1		Organization Etc			20
SECTION 3.2		Authority Relative to Agreement			20
SECTION 3.3		No Breach; Consents			20
SECTION 3.4		Litigation			21
SECTION 3.5		Brokerage			21
SECTION 3.6		Financial Statements			21
SECTION 3.7		Intellectual Property			21
ARTICLE 4 CLOSING CONDITIONS					21
SECTION 4.1		Closing Conditions Relating to GlobalSecure			21
SECTION 4.2		Closing Conditions Relating to the Company Shareholders			23
ARTICLE 5 PRE-CLOSING AGREEMENTS					24
SECTION 5.1		Due Diligence			24
SECTION 5.2		Operation of Business			25
SECTION 5.3		Best Efforts			25
SECTION 5.4		Confidentiality			25
SECTION 5.5		Public Announcements			26
ARTICLE 6 POST-CLOSING AGREEMENTS					26
SECTION 6.1		Indemnification by the Shareholder and GlobalSecure			26
SECTION 6.2		Further Assurances			28
SECTION 6.3		Transfer			28
SECTION 6.4		Lock Up Agreements			29
SECTION 6.5		ESOP Provisions			29
ARTICLE 7 TERMINATION					29
ARTICLE 8 MISCELLANEOUS					30
SECTION 8.1		Survival			30
SECTION 8.2		Expenses			30
SECTION 8.3		Amendments and Waivers			31
SECTION 8.4		Notices			31

				Page
SECTION 8.5		Assignment			32
SECTION 8.6		Severability			32
SECTION 8.7		Complete Agreement			32
SECTION 8.8		No Third-Party Beneficiaries			32
SECTION 8.9		Singular and Plural; Gender			32
SECTION 8.10		Governing Law			32
SECTION 8.11		Counterparts			33
SECTION 8.12		Schedules			33
SECTION 8.13		Headings			33
SECTION 8.14		Further Documents			33
SECTION 8.15		Arbitration			33

EXHIBITS AND SECTIONS OF DISCLOSURE SCHEDULE

Annex A		Allocation of Merger Consideration
Exhibit A		Form of Articles of Merger
Exhibit B		Disclosure Schedule
Exhibit 1.6.3		Form of First Promissory Note
Exhibit 1.6.3.A		Form of Second Promissory Note
Exhibit 1.6.3.B		Form of Security Agreement
Section 1.6.8		Exclusions to GAAP
Section 2.3		Exceptions to No Breach; Consents
Section 2.7		Contracts and Commitments
Section 2.8		Litigation, Etc.
Section 2.10		Insurance
Section 2.12		Employees
Section 2.13		Licenses and Permits
Section 2.14		Bank Accounts
Exhibit 2.16		Financial Statements
Section 2.17		Account Receivable Adjustments
Section 2.18		Liabilities
Section 2.20		Transactions with Certain Persons
Section 2.21		Certain Business Practices
Section 2.22		Operations
Section 2.23		Exceptions to Absence of Certain Developments
Section 2.24		ERISA
Section 2.25		Intellectual Property
Exhibit 4.1.6.1		General Release and Noncompetition Agreement
Exhibit 4.1.6.2		Employment Agreement
Exhibit 4.1.6.4		Opinion of Counsel for the Shareholder and the Company
Exhibit 4.1.6.4.A		Opinion of Counsel for the ESOP
Exhibit 6.1.6.1		Indemnity Escrow Agreement

AGREEMENT AND PLAN OF MERGER

     THIS AGREEMENT AND PLAN OF MERGER (the “Agreement”) dated as of December 15, 2003 among GLOBALSECURE HOLDINGS, LTD., a Delaware corporation (“GlobalSecure”); GLOBALSECURE MERGER SUB, INC., a Maryland corporation (“GlobalSecure Sub”) and a wholly-owned subsidiary of GlobalSecure; HAZTRAIN, INC., a Maryland corporation (the “Company”); and JERRY L. SMITH, Ph.D. (the “Shareholder” or “Dr. Smith”) and the HAZTRAIN, INC. EMPLOYEE STOCK OWNERSHIP PLAN by its sole trustee, Timothy J. Czysz (the “ESOP” and, collectively with the Shareholder, the Company Shareholder”).

W I T N E S S E T H

     WHEREAS, the Company is engaged in the business of providing environmental health and safety training and providing products and services to the hazardous materials management industry at facilities located in White Plains, Maryland (the “Business”); and

     WHEREAS, the Shareholder is the owner of a majority of the issued and outstanding shares of capital stock of the Company and, together with the ESOP, owns all of the issued and outstanding shares of capital stock of the Company (the “Stock”); and

     WHEREAS, GlobalSecure and GlobalSecure Sub desire that GlobalSecure Sub merge with and into the Company and, to realize the benefits thereof, the Company and the Shareholder also desire that GlobalSecure Sub merge with and into the Company, upon the terms and subject to the conditions set forth herein and in accordance with the Maryland General Corporation Law, and that the outstanding shares of Common Stock, no par value per share, of the Company (“Company Common Stock”), excluding any such shares held in the treasury of the Company, be converted upon such merger (the “Merger”) into the right to receive cash and such number of shares of voting common stock, par value $0.001 per share, of GlobalSecure (“GlobalSecure Common Stock”) as is equal to the Merger Consideration (GlobalSecure Sub and the Company being hereinafter sometimes referred to as the “Constituent Corporations” and the Company being hereinafter sometimes referred to as the “Surviving Corporation”);

     NOW, THEREFORE, in consideration of the premises, and of the mutual representations, warranties, covenants, agreements and conditions hereinafter set forth, and in order to set forth the terms and conditions of the Merger and the mode of carrying the same into effect, the parties hereby agree as follows:

ARTICLE 1

MERGER

     SECTION 1.1 The Merger. At the Effective Time (as hereinafter defined), GlobalSecure Sub shall be merged with and into the Company on the terms and conditions hereinafter set forth as permitted by and in accordance with the Maryland General Corporation Law. Thereupon, the separate existence of GlobalSecure Sub shall cease, and the Company, as the Surviving Corporation, shall continue to exist under and be governed by the Maryland

General Corporation Law and its Articles of Incorporation and Bylaws as in effect at the Effective Time shall remain unchanged until further amended in accordance with the provisions thereof and applicable law.

     SECTION 1.2 Articles of Merger. As soon as practicable following fulfillment or waiver of the conditions specified in Article 4 hereof, and provided that this Agreement has not been terminated or abandoned pursuant to Article 7 hereof, the Company and GlobalSecure Sub will cause the Articles of Merger in substantially the form of Exhibit A attached hereto (the “Articles of Merger”) to be executed and filed with the Maryland State Department of Assessments and Taxation as provided in the Maryland General Corporation Law. The purpose of the Surviving Corporation shall be to engage in any and all business activities in which a corporation is permitted to engage in accordance with the Maryland General Corporation Law.

     SECTION 1.3 Closing Effective Time of the Merger.

          1.3.1 The closing of the Merger (the “Closing”) shall take place on December 18, 2003, or on such other date as GlobalSecure and the Company may agree. The time and date on which Closing is actually held is sometimes referred to herein as the “Closing Date”.

          1.3.2 The Merger shall become effective at 11:59 p.m. on the day of the filing of the Articles of Merger with the Maryland State Department of Assessments and Taxation or at such other date or time thereafter as the parties may agree. The date and time of such effectiveness is herein sometimes referred to as the “Effective Time”.

     SECTION 1.4 Directors. From and after the Effective Time, the members of the Board of Directors of the Surviving Corporation shall consist of the members of the Board of Directors of GlobalSecure Sub (as constituted immediately prior to the Effective Time) until changed in accordance with its Articles of Incorporation and Bylaws and applicable law.

     SECTION 1.5 Officers. From and after the Effective Time, the officers of the Surviving Corporation shall consist of the officers of the Company (as constituted immediately prior to the Effective Time) until changed in accordance with its Articles of Incorporation and Bylaws and applicable law.

     SECTION 1.6 Conversion of Shares.

          1.6.1 Consideration. Upon the Effective Time, the shares of Company Common Stock issued and outstanding immediately prior to the Effective Time (other than any shares of Company Common Stock to be canceled pursuant to Section 1.6.2 and any Dissenting Shares (as hereinafter defined)) shall, without any further action on the part of GlobalSecure or GlobalSecure Sub, on the one hand, or the Company or its shareholders, on the other hand, be converted into the right to receive such amount of consideration as shall equal such cash and such number of shares of GlobalSecure Common Stock as is determined in accordance with the formula set forth in Section 1.6.3 below.

          1.6.2 Cancellation of Shares; Conversion of GlobalSecure Sub Common Stock. At the Effective Time, (i) all shares of Company Common Stock owned by the Company or any direct or indirect wholly-owned subsidiary of the Company immediately prior to the Effective

Time shall be cancelled and extinguished without any conversion thereof and (ii) all shares of common stock of GlobalSecure Sub shall be converted without further action into shares of common stock of the Company.

          1.6.3 Conversion of Company Common Stock. At the Effective Time, the aggregate outstanding shares of Company Common Stock shall be converted, in the aggregate, into (i) cash in the amount of $1,348,906.80 (the “Cash Merger Consideration”); (ii) two promissory notes from GlobalSecure in the aggregate original principal amount of $1,000,000, one of which notes will be in the original principal amount of $250,000 in the form of Exhibit 1.6.3 attached hereto and hereby made a part hereof (the “First Promissory Note”) and the second of which notes will be in the original principal amount of $750,000 in the form of Exhibit 1.6.3.A attached hereto and hereby made a part hereof (the “Second Promissory Note”) (the First Promissory Note and the Second Promissory Note are collectively referred to as the “Promissory Notes”) (the “Promissory Note Merger Consideration”) together with a security agreement from GlobalSecure in the form of Exhibit 1.6.3.B attached hereto and hereby made a part hereof (the “Security Agreement”); and (iii) 300,000 shares of GlobalSecure Common Stock (the “Common Stock Merger Consideration”). In addition, at Closing, GlobalSecure shall cause to be refinanced by the Company $1,312,500 of liabilities of the Company (the “Bank Loan”) and will cause the assets pledged by Dr. Smith to secure the Bank Loan to be released. Moreover, the shares of Company Common Stock pledged in consideration for a loan from the Company to the ESOP (the “ESOP Loan”) pursuant to an ESOP Pledge Agreement dated July 19, 2002 (the “Pledge Agreement”), to the extent pledged and not yet released and allocated to participants in the ESOP as of the Closing Date, shall be surrendered by the ESOP to the Company for cancellation and any outstanding debt owing from the ESOP to the Company pursuant to the ESOP Loan shall be discharged. The Cash Merger Consideration, the Promissory Note Merger Consideration and the Common Stock Merger Consideration are collectively referred to herein as the “Merger Consideration”. The Merger Consideration and the assumed liability consisting of the Bank Loan are collectively referred to herein as the ‘Purchase Price”. The Merger Consideration shall be allocated to Dr. Smith and to the ESOP as set forth on Annex A hereto. At the Effective Time, the Company shall have a target amount of accounts receivable (defined as the ‘Target Amount”) equal to $440,000, which shall be calculated by taking the actual amount of accounts receivable as reflected on the Company’s balance sheet and adding to that amount any Cash on Hand in excess of $100,000. In addition, the Company will have a “Closing Cash Requirement” totaling at least $100,000 in Cash on Hand as of the Effective Time. Cash on Hand as used herein is defined as the cash reflected in the Company’s financial books and ledgers. To the extent that the accounts receivable plus Cash on Hand in excess of the Closing Cash Requirement at the Effective Time is less than the Target Amount or the Cash on Hand on the Closing Date is less than the Closing Cash Requirement, the Cash Merger Consideration payable to Dr. Smith shall be reduced by One Dollar ($1.00) for each One Dollar ($1.00) that the Closing Amount is less than the Target Amount and that the Cash on Hand is less than the Closing Cash Requirement The Company shall, at Closing, issue to Dr. Smith, as additional compensation, a promissory note (the “Excess Accounts Receivable Note”) in an original principal amount equal to the excess, if any, of the Closing Amount over the Target Amount, which Excess Accounts Receivable Note shall not bear interest and shall be repaid, if at all, in an amount equal to 50% of the amounts actually collected and received by the Company following Closing on account of such accounts receivable which are on the Company’s books at Closing

and thereafter collected, until the principal balance of the Excess Accounts Receivable Note has been reduced to zero.

          1.6.4 Surrender. At Closing, the Company Shareholders shall deliver certificates representing all of the issued and outstanding shares of Company Common Stock together with duly executed stock powers.

          1.6.5 Dissenting Shares.

          (a) No Conversion. Notwithstanding any provision of this Agreement to the contrary, any shares of Company Common Stock held by a shareholder who has demanded and perfected appraisal or dissenters’ rights for such shares in accordance with the Maryland General Corporation Law and who has not effectively withdrawn or lost such appraisal or dissenters’ rights (“Dissenting Shares”) shall not be converted into or represent a right to receive the Merger Consideration set forth in Section 1.6.3, but the holder thereof shall only be entitled to such rights as are granted by the Maryland General Corporation Law.

          (b) Withdrawal or Loss of Dissenters’ Rights. Notwithstanding the provisions of Section 1.6.5(a), if any holder of shares of Company Common Stock who is otherwise entitled to exercise appraisal or dissenters’ rights under the Maryland General Corporation Law shall effectively withdraw or lose (through failure to perfect or otherwise) such appraisal or dissenters’ rights, then, as of the later of the Effective Time and the occurrence of such event, such shareholder’s shares shall automatically be converted into and represent only the right to receive the Merger Consideration upon surrender of the certificate representing such shares.

          (c) Notice, etc. The Company shall give GlobalSecure (i) prompt notice of any written demands for the exercise of appraisal or dissenters’ rights in respect of any shares of Company Common Stock, withdrawals of such demands, and any other instruments served pursuant to the Maryland General Corporation Law (including instruments concerning appraisal or dissenters’ rights) and received by the Company and (ii) the opportunity to participate in all negotiations and proceedings with respect to such demands. The Company shall not, except with the prior written consent of GlobalSecure, voluntarily make any payment with respect to any demands for the exercise of appraisal or dissenters’ rights in respect of any shares of Company Common Stock or offer to settle or settle any such demands.

          1.6.6 No Further Transfers; Lost, Stolen or Destroyed Certificates. The amount paid pursuant to the Merger upon and following the surrender of shares of Common Stock, in accordance with the terms hereof shall be deemed to have been paid in full satisfaction of all rights pertaining to such shares of Company Common Stock, and, upon and after the Effective Time, no transfer of the shares of Company Common Stock outstanding prior to the Effective Time shall be made on the stock transfer books of the Surviving Corporation. If, after the Effective Time, certificates representing Company Common Stock are presented to the Surviving Corporation for any reason, they shall be cancelled and exchanged as provided in this Article 1.

          1.6.7 Closing. Evidence of the fulfillment or waiver of the conditions set forth in Article 4 hereof (the “Closing”) shall be provided by the parties hereto to each other (a) at the offices of GlobalSecure, 8401 Corporate Drive, Suite 230, Landover, Maryland 20785 at 10 a.m.,

local time, on the business day on which the last of the conditions set forth in Article 4 hereof is fulfilled or waived or (b) at such other time and place as the parties hereto may agree.

          1.6.8 Effect of the Merger. Upon and after the Effective Time: (a) GlobalSecure Sub shall merge with and into the Surviving Corporation; (b) the separate existence of GlobalSecure Sub shall cease; (c) the shares of the Company shall be converted as provided in this Agreement; (d) the former holders of such shares are entitled only to the rights provided in this Agreement or to the rights provided under Section 3-202 of the Maryland General Corporation Law; and (e) the Merger shall otherwise have the effect provided under the applicable laws of the State of Maryland (including Section 3-114 of the Maryland General Corporation Law).

          1.6.9 Further Assurances. If at any time after the Effective Time the Surviving Corporation shall consider or be advised that any further deeds, assignments or assurances in law or any other acts are necessary, desirable or proper (a) to vest, perfect or confirm, of record or otherwise, in the Surviving Corporation, the title to any property or right of the Constituent Corporations acquired or to be acquired by reason of, or as a result of, the Merger, or (b) otherwise to carry out the purposes of this Agreement, the Constituent Corporations agree that the Surviving Corporation and its proper officers and directors shall and will execute and deliver all such property, deeds, assignments and assurances in law and do all acts necessary, desirable or proper to vest, perfect or confirm title to such property or rights in the Surviving Corporation and otherwise to carry out the purposes of this Agreement, and that the proper officers and directors of the Constituent Corporations and the proper officers and directors of the Surviving Corporation are fully authorized in the name of the Constituent Corporations or otherwise to take any and all such action.

ARTICLE 2

REPRESENTATIONS AND WARRANTIES OF COMPANY AND SHAREHOLDER

     As a material inducement to GlobalSecure to enter into and perform its obligations under this Agreement, the Company and Shareholder, jointly and severally, hereby represent and warrant to GlobalSecure and GlobalSecure Sub that, except as set forth on the disclosure schedule attached hereto as Exhibit B (the “Disclosure Schedule”) (which specifically identifies the relevant subsection(s) hereof, which Disclosure Schedule shall be deemed to be part of the representations and warranties as if made hereunder):

     SECTION 2.1 Organization and Qualification, Etc.; Capital Stock; Subsidiaries.

          2.1.1 The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Maryland, and has the corporate power to own, lease or operate all of its properties and assets and to carry on the Business as and where it is now being conducted. Copies of the Company’s Articles of Incorporation and Bylaws, previously delivered to GlobalSecure and certified by the Secretary of the Company, are true, correct and complete copies of such documents and will not be amended prior to the Closing Date without the prior written consent of GlobalSecure. The Company is duly qualified to transact business as a foreign corporation in each jurisdiction in which the nature of the business

conducted by the Company or the character and location of its properties or assets require that it be so qualified, except where the failure to be so qualified is not reasonably likely to have a material adverse change in or effect on the business, assets, properties, operations, results of operations, or condition (financial or otherwise) or prospects of the Company, the legality or validity of the Company, the enforceability as against the Company of, or the ability of the Company to perform its obligations under, this Agreement or its Articles of Incorporation (a “Material Adverse Effect”).

          2.1.2 The entire authorized capital stock of the Company consists of 500,000 shares of common stock, no par value per share. There are presently issued and outstanding 500,000 shares of common stock of the Company, all of which are duly authorized, validly issued, fully paid and nonassessable and without restriction on the right of transfer thereof. All of the issued and outstanding shares of the Company (the “Stock’) are owned of record by the Company Shareholders free and clear of all liens, security interests, claims and encumbrances or other restrictions of any kind, except for the Bank Loan, and no shares are held in the Company’s treasury. The Company does not have outstanding any stock or securities convertible or exchangeable for any shares of its capital stock, nor does it have outstanding any warrants, rights or options to subscribe for or to purchase any capital stock or any capital stock or securities convertible into or exchangeable for any capital stock. There are no preemptive rights existing with respect to the capital stock of the Company. The Company is not subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any shares of its capital stock. There are no agreements (oral or written) to which any of the Company Shareholders is a party or by which any Company Shareholder is bound involving the voting or sale of any of the Stock.

          2.1.3 The Company does not own, of record or beneficially, any capital stock or other securities of any other corporation; does not own, directly or indirectly, any interest in a business, business trust, joint stock company or other business organization or association; and is not a party to any partnership or joint venture agreement. The Company, to the extent it may have previously owned stock in any corporation, has legally divested itself of such ownership, has paid all obligations relative to such ownership, has filed all tax returns and paid all taxes required by such prior ownership and divestment thereof, and certifies that it has no obligations, contingent or otherwise, relating to such ownership or sale or divestment thereof.

     SECTION 2.2 Authority Relative to Agreement. Each Company Shareholder has the power, capacity and authority, and the Company has the corporate power and authority, to execute and deliver this Agreement and to consummate the transactions contemplated hereby. Each Company Shareholder has the power, capacity and authority to transfer and deliver the Company Common Stock hereunder, free and clear of all liens, claims of ownership, security interests and encumbrances whatsoever, except for the Bank Loan. The execution and delivery of this Agreement by the Company and the consummation of the transactions contemplated on its part have been authorized by its Board of Directors. No other corporate proceedings on the part of the Company are necessary to authorize the execution and delivery of this Agreement by it or the consummation by it of the transactions contemplated on its part hereby. Except for consents by participants in the ESOP who are beneficial owners of not more than 27, 990 shares of the 245,000 shares of Company Common Stock owned by the ESOP, which consents the Company agrees to use its reasonable efforts to obtain by December 15, 2003, this Agreement

has been duly executed and delivered by each Company Shareholder and the Company and is a valid and binding agreement of each Company Shareholder and the Company, enforceable in accordance with its terms, except as the enforceability may be affected by bankruptcy, insolvency, reorganization or other similar laws presently or hereafter in effect affecting the enforcement of creditors’ rights generally.

     SECTION 2.3 No Breach; Consents. Except as set forth in Section 2.3 of the Disclosure Schedule, the negotiation, execution, delivery and performance of this Agreement by the Company Shareholders and the Company, and the consummation of the transactions contemplated hereby, (i) do not and will not conflict with or result in any breach of any of the provisions of, constitute a default under, result in a violation of, result in the creation of any lien, security interest, charge, encumbrance or other restriction upon the assets of the Company under, or require arty authorization, consent, approval, exemption or other action by or notice to any third party under, the provisions of the Charter or Bylaws of the Company or any license, permit, contract, franchise, indenture, mortgage, lease, loan agreement or other agreement (oral or written) or instrument to which the Company is a party or under which its properties are bound or to which any Company Shareholder is a party, and (ii) do not require arty authorization, consent, approval, exemption or other action by or notice to any court or governmental body under any law, statute, rule, regulation or decree to which the Shareholder or the Company is subject.

     SECTION 2.4 No Material Adverse Change. Except for accounts receivable and cash, which are addressed in Section 1.6.3 hereof, since August 31, 2003, there has been no material adverse change in the financial condition, properties, assets, operating results, employee relations, relations with suppliers, customer relations or business of the Company.

     SECTION 2.5 Title to Properties.

          2.5.1 Except for leased property (in which it holds a valid leasehold interest), the Company owns good and marketable title, free and clear of all liens and encumbrances, to all of the material properties and assets shown on its balance sheet as of August 31, 2003, or acquired thereafter, except to the extent that such properties and assets have been disposed of for fair value in the ordinary course of business consistent with past practice.

          2.5.2 To the Shareholder’s knowledge, the Company is not in violation of any material applicable zoning ordinance or other law, regulation or requirement relating to the operation of owned or leased properties and the Company has not received any notice of any such material violations within the three years prior to the date hereof which has not been remedied.

          2.5.3 The Company leases, licenses or owns all of the properties and assets used in the Business.

     SECTION 2.6 Tax Matters. Each of the Company and its subsidiaries has filed all tax returns and reports as required by law. To the best of the Company’s and the Shareholder’s knowledge these returns and reports are true and correct in all material respects. Each of the Company and its subsidiaries has paid all taxes and other assessments due. The Company has

not elected pursuant to Section 1362(a) of the Internal Revenue Code of 1986, as amended (the “Code”), and applicable provisions of state law, to be treated as an S corporation. The Company has not elected to be treated as a collapsible corporation pursuant to Section 341(f) of the Code, nor has it made any other elections pursuant to the Code (other than elections that relate solely to methods of accounting, depreciation, or amortization) that are reasonably likely to have a Material Adverse Effect. The Company has never had any tax deficiency assessed, or, to the best of the Company’s and the Shareholder’s knowledge, proposed, against it and has not executed any waiver of any statute of limitations on the assessment or collection of any tax or governmental charge. Except as set forth in Section 2.6 of the Disclosure Schedule, none of the Company’s federal income tax returns and none of its state income or franchise tax or sales or use tax returns have ever been audited by governmental authorities. The Company has withheld or collected from each payment made to each of its employees the amount of all taxes, including, but not limited to, federal income taxes, Federal Insurance Contribution Act taxes and Federal Unemployment Tax Act taxes required to be withheld or collected therefrom, and had paid the same to the proper tax receiving officers or authorized depositories. The Company has made adequate provisions on its books or account for all taxes, assessments, and governmental charges with respect to its business, properties, and operations through the Closing Date. The consideration payable to Dr. Smith for his Stock will be reduced by the amount of any Company federal income taxes payable for the calendar year ending December 31, 2003, but in no event shall the reduction in such consideration be greater than the amount of tax payable on taxable income of $100,000. If any reduction in the consideration payable to Dr. Smith is required pursuant to this Section 2.6, such reduction shall be effected by reducing the principal amount of the First Promissory Note by the amount of the reduction.

     SECTION 2.7 Contracts and Commitments. Except as set forth in Section 2.7 of the Disclosure Schedule, the Company is not a party to:

     (i) any contract, agreement, purchase order (other than purchase orders in the ordinary course of business) or other commitment for the purchase, sale or provision to or by the Company of goods, property or services having an individual value in excess of $10,000 or an aggregate value in excess of $100,000;

     (ii) any pension, profit sharing, stock option, employee stock purchase or other plan providing for deferred compensation or other employee benefit plan, or any contract with any labor union;

     (iii) any agreement or indenture relating to the borrowing of money or to the mortgaging, pledging or otherwise placing a lien on any asset or group of assets of the Company;

     (iv) any lease or agreement under which it is lessee of or holds or operates any property, real or personal, owned by any other party, except for any lease of personal property under which the aggregate annual rental payments do not exceed $5,000;

     (v) any lease or agreement under which it is lessor of or permits any third party to hold or operate any property, real or personal, owned or controlled by it;

     (vi) any agreements providing for the services of an independent contractor to which the Company is a party or by which it is bound;

     (vii) any oral or written direct or indirect guarantee of any obligation; or

     (viii) any other or additional material contracts, commitments, agreements, arrangements, writings, guarantees, leases and licenses to which the Company is a party or by which the Company or any of its property is bound having an individual value in excess of $10,000 or an aggregate value in excess of $100,000.

     Each of the contracts, agreements, leases, licenses and commitments required to be listed in Section 2.7 of the Disclosure Schedule (the “Contracts”) is valid and binding, enforceable in accordance with its respective terms, in full force and effect and, at Closing, will remain in full force and effect without the consent, approval or act of, or the making of any filing with, any other person. To the Shareholder’s knowledge, none of the Contracts were entered into with any intent or for any purpose prohibited by law. True and complete copies of all of the Contracts (together with any and all amendments thereto) have been delivered to GlobalSecure and initialed by the Company’s Secretary and identified with a reference to this Section of this Agreement. The Company has performed all obligations required to be performed by it and is not in default under, or in breach of, or in receipt of any claim of default or breach under, any of the Contracts and no event has occurred which with the passage of time or the giving of notice or both would result in a default, breach or event of noncompliance under any such Contract neither the Company nor the Shareholder has any knowledge of any breach or anticipated breach by the other parties to any such Contract and to the Shareholder’s knowledge the Company is not a party to any Contract for the purchase of goods or services at a rate currently materially above market prices.

     SECTION 2.8 Litigation, Etc. Except as set forth in Section 2.8 of the Disclosure Schedule, there are no actions, suits, proceedings, orders, investigations (including without limitation any official inquiries or requests for documents to the Company or the Shareholder or others relating to the Company’s business) or claims pending or, to the knowledge of the Shareholder or the Company, threatened against the Company, or to which the Company is a party, at law or in equity, or before or by any court tribunal, governmental department commission, board, bureau, agency or instrumentality, or any arbitration proceedings pending under collective bargaining agreements or otherwise, or any actions which seek to prohibit restrict or delay the consummation of transactions contemplated hereby or to limit in any manner the right of GlobalSecure to control the Company or any material aspect of the business of the Company after the Closing Date.

     SECTION 2.9 Brokerage. There are no claims for brokerage commissions, finders’ fees or similar compensation in connection with the transactions contemplated by this Agreement based on any arrangement or agreement (oral or written) binding upon the Shareholder or the

Company. The Shareholder will pay, and hold the Company and GlobalSecure harmless against any liability, loss or expense (including, without limitation, attorneys’ fees and out-of-pocket expenses) arising in connection with any such claim.

     SECTION 2.10 Insurance. Section 2.10 of the Disclosure Schedule contains an abstract or summary of each outstanding insurance policy maintained by the Company. The Company has given to GlobalSecure a copy of each such insurance policy maintained with respect to the Company’s properties, assets and the Business, and each such policy is in full force and effect.

     SECTION 2.11 Compliance with Laws. To the Shareholder’s knowledge, the Company has complied in an material respects with all laws, rules, regulations, ordinances, orders, judgments, and decrees applicable to its business or properties and has not failed to comply with any law or any regulation or requirement which reasonably could be expected to have a Material Adverse Effect and the Company has not received notice of any such violation or non-compliance.

     SECTION 2.12 Employees. To the best knowledge, information and belief of the Shareholder, the Company has complied with all laws relating to the employment of labor, including provisions thereof relating to wages, hours, equal opportunity, collective bargaining and the payment of social security and other taxes. To the Shareholder’s knowledge, no present or former employee of the Company has any material claim against the Company (whether under law, any employment agreement or otherwise) on account of or for (i) overtime pay, other than overtime for the current payroll period, (ii) wages or salary for any period other than the current payroll period, (iii) vacation, time off or pay in lieu of vacation or time off, other than that earned in respect of the current fiscal year, or (iv) any violation of any statute, ordinance or regulation relating to minimum wages or maximum hours of work To the knowledge of the Shareholder and the Company, no person has any claim or basis for any proceeding against the Company arising out of any statute, ordinance or regulation relating to discrimination in employment