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ASSET PURCHASE AND INDEMNITY AGREEMENT
This
Asset Purchase and Indemnity Agreement (this “
Agreement ”)
is made and entered into as of this 16 day of October, 2007 by and
among Fireline Restoration, Inc., a Florida corporation as the
purchaser (the “
Purchaser ”),
RG America, Inc., a Nevada corporation (“
RGA ”)
and the following RGA subsidiaries: Restoration Group America 2003,
Inc., a Texas corporation, Restoration Group America, Inc., a Texas
corporation (“
Restoration Group America ”),
RG Restoration, Inc., a Texas corporation, RG Insurance Services,
Inc., a Texas corporation, CTFD, Inc., a Texas corporation
(“
CTFD ”),
CTFD Marine, Inc., a Texas corporation (“
CTFD Marine ”),
RG Risk Management, Inc., a Texas corporation (“
RGRM ”),
Invvision Funding, Inc., a Texas corporation, Practical Building
Solutions 2000, Inc., a Texas corporation, and RG Florida GC, Inc.,
a Florida corporation, as the seller (RGA and the foregoing
subsidiaries are referred to herein collectively as the
“
Seller ”
and individually as a “
Seller Entity ”).
R E
C
I
T
A
L
S
:
A.
The
Seller desires to sell to the Purchaser, and the Purchaser
desires to purchase from the Seller, certain equipment and
vehicles comprising the Assets (as defined below) used in the
restoration and construction business and Restoration Group
America’s PropertySMART
TM risk
management program (the restoration and construction business and
the PropertySMART
TM risk
management program are collectively referred to herein as the
“
Business ”).
B.
Laurus
Master Fund, Ltd. (“
Laurus ”)
has provided financing to the Seller (the “
Laurus Debt ”)
and in connection therewith was granted Liens (as defined below) on
all assets of the Seller, including, without limitation, Liens on
the Assets (as defined below), all pursuant to that certain
Security Agreement dated as of October 1, 2005.
C.
The
Purchaser is a party to that certain Consulting Agreement,
dated as of March 2007 (the “
Consulting Agreement ”),
among Home Solutions of America, Inc., a Delaware corporation and
parent company of the Purchaser (“
HSOA ”),
RGA and certain of RGA’s subsidiaries that are parties
thereto, whereby, among other things, RGA and certain of the RGA
subsidiaries granted to the Purchaser certain of their respective
rights to collect certain accounts receivable (the “
Consulting Assets ”).
D.
Laurus
and HSOA are parties to that certain Release Agreement of even
date herewith (the “
Release Agreement ”),
whereby Laurus has agreed, among other things, to release its Liens
on all of the assets of RGA and its subsidiaries, including the
Assets, and whereby HSOA has agreed to issue to Laurus, 2,000,000
shares of its common stock, par value $.001 per share (the
“
Shares ”).
E.
At
the closing of the transactions contemplated by this
Agreement, HSOA has agreed to enter into the Royalty Agreement
with RGRM in the form attached hereto as
Exhibit “A” (the
“
Royalty Agreement ”),
pursuant to which HSOA agrees to pay RGRM the Royalty (as defined
in the Royalty Agreement).
F.
HSOA
enters into this Agreement for the limited purpose of agreeing
to enter into the Royalty Agreement with RGRM.
A G
R
E
E
M
E
N
T
:
NOW,
THEREFORE, for and in consideration of the premises, the
mutual covenants and agreements contained in this Agreement,
and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Seller and
the Purchaser agree as follows:
ARTICLE I
PURCHASE AND SALE
1.01
Purchase and Sale of Assets .
Subject to the terms and conditions in this Agreement, the Seller
agrees to sell and convey, and the Purchaser agrees to purchase and
accept, all of the Seller’s right, title and interest in and
to (i) the equipment and vehicles listed on
Schedule 1.01 together
with all ownership and maintenance records, title certificates, and
warranties related thereto and (ii) the PropertySMART
TM risk
management program as described on
Schedule 1.01 (collectively,
the “
Assets ”),
free and clear of any and all liens, prior assignments, security
interests, charges, pledges, claims or encumbrances of any kind or
character whatsoever (collectively, “
Liens ”),
except for the Lien set forth on
Schedule 3.05 .
1.02
Purchase Price .
The purchase price for the Assets (the “
Purchase Price ”)
is (i) HSOA obtaining Laurus’ release of the Laurus Debt and
its Liens on the Assets pursuant to the Release Agreement, in
exchange for HSOA’s issuance of the Shares to Laurus pursuant
to and in accordance with the Release Agreement; and (ii) the
amounts due to RGRM pursuant to the Royalty Agreement. The Seller
acknowledges and agrees that Laurus’ release of the Laurus
Debt and its Liens on the Assets in exchange for HSOA’s
issuance of the Shares to Laurus, and the amounts due to RGRM
pursuant to the Royalty Agreement are material benefits to the
Seller and as such, represent sufficient consideration for the sale
of the Assets to the Purchaser.
1.03
Date, Time and Place of Closing .
The closing of the transactions contemplated by this Agreement (the
“
Closing ”)
shall take place at the offices of the Seller at 10:00 a.m., local
time, on November 5, 2007, or as promptly as practicable thereafter
as soon as the conditions set forth in
Article VI are
satisfied, or at such other date, time or place fixed by mutual
written consent of the Purchaser and the Seller, but in no event
later than November 30, 2007, unless the Purchaser agrees to extend
such date (such date, as it may be extended, the “
Termination Date ”).
All proceedings to take place at the Closing shall take place
simultaneously, and no delivery shall be considered to have been
made until all such proceedings have been completed (the date of
such Closing is referred to herein as the “
Closing Date ”).
1.04
Effective Time .
The transactions contemplated by this Agreement shall be deemed
effective for tax and all other purposes as of 8:00 a.m., Dallas,
Texas time, on the Closing Date (the “
Effective Time ”),
unless otherwise mutually agreed in writing by the parties.
Notwithstanding the foregoing, for accounting purposes, the
effective time of the transactions contemplated by this Agreement
shall be the effective time determined by Purchaser as reflected in
its books and records.
1.05
Assumed Liabilities .
Purchaser is not assuming any liability or obligation of the Seller
or with respect to the Assets, including, without limitation,
accounts payable, or any obligations with respect to the
Seller’s lenders and creditors.
1.06
Instruments Delivered at Closing
.
(a)
At
the Closing, the Seller shall execute and/or deliver to the
Purchaser:
(i)
a
bill of sale, in form and substance satisfactory to the
Purchaser, for the Assets;
(ii)
such
other instruments of transfer as the Purchaser shall deem
necessary or appropriate to convey the Assets to the
Purchaser, including, without limitation, assignments of
patents, trademarks and other intellectual property rights
sufficient to transfer the rights to the PropertySMART
TM risk
management program to the Purchaser, and individual assignments and
bills of sale for each vehicle and piece of equipment comprising a
portion of the Assets in forms reasonably acceptable to Purchaser,
title certificates, and such other documents, bills of sale,
certificates of title, endorsements, assignments and instruments
necessary, advisable or desirable to vest in Purchaser good and
marketable title to all of the Assets;
(iii)
such
keys and other similar items as the Purchaser shall require to
obtain full occupation, possession and control of the
Assets;
(iv)
written
consents from all third parties required for the transfer and
assignment of the Assets;
(v)
corporate
resolutions of each Seller Entity pursuant to
Section 3.02 .
(b)
At
the Closing, the Purchaser shall cause to be delivered to the
Seller:
(i)
a
counterpart to the Royalty Agreement, duly executed by HSOA;
and
(ii)
corporate
resolutions pursuant to
Section 4.01 .
ARTICLE 2
COSTS AND ALLOCATION
S
2.01
Closing Costs .
The Purchaser shall pay any sales and other transfer tax
attributable to the transfer of the Assets to the Purchaser. All
legal, accounting, or other costs incurred by the Seller or the
Purchaser in connection with the transactions contemplated herein
shall be borne by the party who incurred such costs; provided,
however, that the Purchaser agrees to reimburse the Seller for bona
fide legal fees incurred by the Seller solely in connection with
the negotiation of the transactions contemplated by this Agreement
and the preparation and filing of the Information Statement (as
defined in
Section 4.04 herein),
subject to the offset rights of HSOA set forth in the Royalty
Agreement, in an amount not to exceed Fifty Thousand and NO/100
Dollars ($50,000.00), upon the Purchaser’s receipt of invoice
from the Seller’s legal counsel.
2.02
Allocation of Purchase Price .
The Seller and the Purchaser agree to allocate the Purchase Price
among the Assets on the basis set forth on
Exhibit “B” .
The Seller and the Purchaser agree to furnish such reports and
returns to the Internal Revenue Service and the Secretary of the
Treasury as may be required by Section 1060 of the Internal Revenue
Code of 1986, as amended and Treasury Regulations thereunder, and
such returns or reports shall be consistent with the allocation of
Purchase Price set forth on
Exhibit “B” .
2.03
Liabilities .
Except for the liabilities set forth on
Section 2.03 of
the Seller’s Disclosure Schedule (herein so called),
Purchaser shall not assume and shall not be liable for or obligated
to pay or assume, and none of the Assets or the assets of Purchaser
shall be or become liable for or subject to, any liability,
indebtedness, commitment or obligation of any Seller Entity or any
of their Affiliates (as hereinafter defined), whether known or
unknown, fixed or contingent, recorded or unrecorded, currently
existing or hereafter arising or otherwise. As used herein, the
term “
Affiliate ”
shall mean, with respect to any party to this Agreement, any entity
or person that directly or indirectly controls, is controlled by or
is under common control with such party. The Seller agrees that the
Seller will pay all of its liabilities.
2.04
Prorations .
All insurance, licenses, etc. shall be prorated between the
Purchaser and the Seller as of the day of Closing.
2.05
Covenants and Further Assurance .
The Seller shall, at any time and from time to time after the
Closing Date, upon request of the Purchaser and without further
cost or expense to Purchaser, execute and deliver such instruments
of conveyance and assignment and shall take such actions as the
Purchaser may reasonably request to more effectively carry out the
transactions contemplated by this Agreement.
ARTICLE III
REPRESENTATIONS OF SELLER
Each
Seller Entity, jointly and severally, represents to the
Purchaser the following:
3.01
Good Standing .
RGA is a corporation duly organized, validly existing and in good
standing under the laws of the State of Nevada. Each Seller Entity
is a corporation duly organized, validly existing and in good
standing under the laws of the state in which it is
incorporated.
3.02
Corporate and Stockholder Approval
.
This Agreement, and the execution, delivery and performance of
same, have been duly approved by the Seller (and each Seller
Entity) and constitutes a valid and binding obligation against the
Seller (and each Seller Entity), enforceable in accordance with its
terms, subject as to enforceability, to bankruptcy, insolvency
reorganization, moratorium and other laws of general applicability
relating to or affecting creditors’ rights and to general
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law). A copy of all
corporate resolutions of each Seller Entity approving this
Agreement and the transactions contemplated hereby shall be
delivered by the Seller to the Purchaser upon the execution hereof.
Other than the RGA Stockholder Consent (as hereinafter defined), no
consent, approval, or order of any person, entity, organization,
third party, lender, creditor or the shareholders of any entity is
required in connection with the execution, delivery or performance
of the transactions contemplated by this Agreement.
3.03
Conflicts; Defaults .
The execution and delivery of this Agreement and the performance by
the Seller of the transactions contemplated hereby, do not and will
not (a) violate, conflict with, or constitute a breach or default
under any of the terms of the certificate of incorporation,
articles of incorporation, bylaws, or other organizational
documents of the Seller (or any entity comprising the Seller), (b)
result in the creation or imposition of any Liens in favor of any
third party upon any of the Assets or the Business,
(c) violate or require any authorization, approval, consent or
other action by, or registration, declaration or filing with or
notice to any governmental authority pursuant to any law, statute,
judgment, decree, injunction, order, writ, rule or regulation of
any governmental authority affecting the Business or the Assets, or
(d) conflict with or result in a breach of, create an event of
default (or event that, with the giving of notice or lapse of time
or both, would constitute an event of default) under, any contract,
lease, agreement, note, deed of trust, indenture, order, judgment
or decree to which any Seller is a party or by which any Seller or
any of the Assets is bound or affected.
3.04
Enforceability .
This Agreement has been, and the other agreements and instruments
to be executed and delivered by the Seller in connection herewith
will be, on or prior to the Closing Date, duly executed and
delivered by each Seller Entity and (assuming due authorization,
execution and delivery hereof by the Purchaser) constitute or, upon
execution and delivery, will constitute the valid, legal and
binding obligations of each Seller Entity, enforceable against each
Seller Entity in accordance with their respective terms; subject as
to enforceability, to bankruptcy, insolvency, reorganization,
moratorium and other laws of general applicability relating to or
effecting creditors’ rights and the exercise of judicial
discretion in accordance with principles of equity.
3.05
Clear Title .
The Seller is the owner of, and has good and marketable title to,
all of the Assets. Except as set forth on
Schedule 3.05 of
the Seller’s Disclosure Schedule, the Assets are owned by the
Seller, and shall be delivered to the Purchaser, free and clear of
all Liens.
3.06
Adverse Agreements and Changes .
The Seller is not (a) a party to any agreement or instrument, or to
the best of Seller’s knowledge, subject to any judgment,
order, writ, injunction, decree, rule or regulation which
materially adversely affects the Assets or the Business, or
(b) aware of any pending event or condition which will have a
material adverse impact on the Assets or Business,
except
as set forth on
Schedule 3.08 of
the Seller’s Disclosure Schedule.
3.07
Brokers or Finders Fees .
No person is entitled to compensation by reason of any agreement or
understanding with the Seller, as a broker or finder in connection
with the sale and purchase of the Assets.
3.08
Litigation .
Except as set forth on
Schedule 3.08 of
the Seller’s Disclosure Schedule, there is not pending or, to
the best knowledge of the Seller, threatened, any litigation,
action, suit, arbitration, investigation, inquiry, audit,
complaint, charge, or other proceeding to which the Seller is a
party involving the Assets or Business, or to which the Assets or
the Business is or could be subject, before or by any court or
governmental or regulatory agency or body.
3.09
Assets .
Schedule 1.01 contains
a true, complete and accurate list of all of the Assets, including
(i) for vehicles and equipment comprising a portion of the Assets,
a description of each vehicle or piece of equipment, the year of
manufacture, the complete address of its location, the state of
registration, and title registration number(s), the name of the
Seller Entity owning each such Asset, and the name of the Seller
Entity in which title for each such Asset is registered,
respectively, and (ii) with respect to PropertySMART
TM risk
management program, a complete description of such
program.
3.10
Stockholder Consent .
RGA has obtained the written affirmative consent of no less than 66
2/3% of the stockholders of RGA in connection with the execution,
delivery or performance of this Agreement and the consummation of
the transactions contemplated hereby (“
RGA Stockholder Consent ”).
A true and correct copy of the RGA Stockholder Consent has been
delivered to the Purchaser. No stockholder of RGA has rescinded its
consent or informed Seller that such stockholder intends to rescind
its consent.
3.11
Absence of Undisclosed Information
.
Except as set forth on
Schedule 3.11 of
the Seller’s Disclosure Schedule, the Assets are not subject
to (i) any liabilities or obligations of any nature, fixed or
contingent, or any facts that might give rise to any such
liabilities or obligations, which would materially adversely affect
the Assets, or (ii) any liabilities or adverse claims against or
relating to the Assets.
3.12
Personal Property Leases .
None of the Assets are subject to a personal property, vehicle,
equipment or other lease or contingent sale
arrangement.
3.13
Taxes .
(a)
Each
Seller Entity has, on the Closing Date will have, (i) timely
filed all returns, schedules and declarations (including any
withholding and information returns) required to be filed by
any jurisdiction to which any Seller Entity is or has been
subject with respect to any Taxes (as defined below), all of
which returns, schedules and declarations are, or will, when
filed by the applicable filing date (including any extensions
thereof), be true, complete, accurate and correct in all
material respects, (ii) paid in full all Taxes due and payable
(or claimed to be due and payable by any federal, state, local
or foreign Taxing authority), including all taxes on the
Assets, (iii) paid or finally settled all Tax deficiencies
asserted or assessed against any Seller Entity, and (iv) made
timely payments to the proper governmental authorities of the
Taxes required to be deducted and withheld from the wages paid
to its employees.
(b)
No
Seller Entity (i) is delinquent in the payment of any Tax,
(ii) has been granted an extension of time to file any Tax
return which has expired, or will expire, on or before the
Closing Date without such return having been filed, and (iii)
has granted to any other person or entity a power of attorney
or similar authorization with respect to the settlement of its
liability for Taxes.
(c)
No
deficiencies for any Tax has been claimed, proposed or
assessed (whether or not finally or tentatively, orally or in
writing), no requests for waivers of the time to assess any
deficiency for any Taxes are pending, and there are no pending
or threatened Tax audits, investigations or claims for or
relating to (i) the assessment or collection of Taxes, or (ii)
a claim for refund made with respect to Taxes previously paid.
There are no matters under discussion or dispute with any
governmental authorities with respect to Taxes that may have
been raised, nor are there any issues Seller believes will be
raised in the future, by any Taxing authority with respect to
Taxes accruing on or prior to the Closing Date.
(d)
There
are, and as of the Closing Date there will be, no Liens for
Taxes upon the Assets except for statutory Liens for Taxes not
yet due and not delinquent. On the Closing Date, Purchaser
will take title to the Assets free and clear of all Liens for
Taxes except for statutory Liens for Taxes not yet due and not
delinquent.
As
used in this Agreement, “
Taxes ”
(and all derivations thereof) means all federal, state, local and
foreign income, sales, use, property, payroll and other taxes
imposed by any governmental authority with respect to the
ownership, operation, transfer or use of the Business or the
Assets, or in any other way relating to the Business or the
Assets.
3.14
Environmental Laws .
To the best knowledge of each Seller Entity, neither any Seller
Entity nor the Business is or has been (a) subject to any
environmental hazards, risks, or liabilities, or (b) in violation
of any federal, state or local statutes, regulations, laws or
orders pertaining to environmental matters, including, without
limitation, the Comprehensive Environmental Response, Compensation
and Liability Act of 1980 (“
CERCLA ”),
as supplemented and amended, 42 U.S.C. Section 9601 et seq.; the
Resource Conservation and Recovery Act, as amended (“
RCRA ”),
42 U.S.C. Section 6901, et seq.; the Federal Clean Air Act, 42
U.S.C. Section 7401, et seq.; the Federal Water Pollution Control
Act, Federal Clean Water Act of 1977, 33 U.S.C. Section 1251, et
seq.; Federal Hazardous Materials Transportation Act, 48 U.S.C.
Section 1801, et seq.; Federal Toxic Substances Control Act, 15
U.S.C. Section 2601, et seq.; and the Federal Safe Drinking Water
Act, 42 U.S.C. Section 300f, et seq. To the best knowledge of each
Seller Entity, no Hazardous Substances (which for purposes of
this
Section 3.14 shall
mean and include any hazardous or toxic substances, pollutants,
contaminants, materials or wastes, including but not limited to
those substances, pollutants, contaminants, materials and wastes
listed in the United States Department of Transportation Table (49
CFR 172.101) or by the Environmental Protection Agency as hazardous
substances pursuant to 40 CFR Part 302, or such substances,
materials and wastes which are regulated under any federal
environmental law or any applicable local or state environmental
law, including without limitation CERCLA, ECRA, RCRA; toxic
substances as defined under the Toxic Substance Control Act, 15
U.S.C. 2601, et seq.; or any of the following: hydrocarbons,
petroleum and petroleum products, asbestos, polychlorinated
biphenyls, formaldehyde, radioactive substances, flammables and
explosives) have been and through the Closing Date will be,
disposed of or released or discharged from or onto (including
groundwater contamination) any Asset or any place where the
Business has been operated or services have been provided by any
Seller Entity in violation of any applicable environmental statute,
regulation, or ordinance. To the best knowledge of each Seller
Entity, neither any Seller Entity, nor any Affiliate of any Seller
Entity has allowed any Hazardous Substances to be discharged,
possessed, managed, processed, or otherwise handled in a manner
which is in violation of applicable law, and each Seller Entity has
complied and is compliant with all environmental laws applicable to
the Assets. Neither any Seller Entity nor its Affiliates or agents
have received any communication (written or oral) that alleges that
any Seller Entity or the Business is not in compliance with all
applicable environmental laws.
3.15
Full Disclosure
. The
information provided and to be provided by the Seller to Purchaser
in this Agreement, in the Schedules attached hereto or in any other
writing pursuant hereto does not and will not contain any untrue
statement of a material fact and does not and will not omit to
state a material fact required to be stated herein or therein or
necessary to make the statements contained herein or therein, in
light of the circumstances in which they are made, not false or
misleading. Copies of all statements, reports, documents and other
materials heretofore or hereafter delivered or made available to
the Purchaser pursuant hereto and thereto were or will be at the
time of their delivery to the Purchaser true, complete and accurate
copies of such statements, reports, documents and other
materials.
3.16
Intellectual Property .
(a)
The
Seller (i) owns and has independently developed or acquired or
(ii) has the valid right or license to all Seller IP Rights
(as hereinafter defined) relating to the Assets. The Seller IP
Rights are sufficient for the conduct of PropertySMART
TM risk
management program as it has been historically conducted in all
material respects.
(b)
Seller
has not transferred ownership of any Intellectual Property
that is or was Seller-Owned IP Rights and that relates or was
related to the Assets to any third party or knowingly
permitted Seller’s rights in any Intellectual Property
that is or was Seller-Owned IP Rights to enter the public
domain or, with respect to any Intellectual Property for which
Seller has submitted an application or obtained a
registration, lapse (other than through the expiration of
registered Intellectual Property at the end of its maximum
statutory term).
(c)
Seller
owns and has good and exclusive title to each item of
Seller-Owned IP Rights and each item of Seller Registered
Intellectual Property that comprises a portion of the Assets,
free and clear of any Liens (other than non-exclusive licenses
granted by Seller in the ordinary course of its business
consistent with past practice on its standard form of customer
agreement and on terms materially similar to such standard
form). “
Seller Registered Intellectual Property
”
means all United States, international and foreign: (i) patents and
patent applications (including provisional applications); (ii)
registered trademarks, applications to register trademarks,
intent-to-use applications or other registrations or applications
related to trademarks; (iii) registered Internet domain names; (iv)
registered copyrights and applications for copyright registration;
and (v) any other Intellectual Property that is the subject of an
application, certificate, filing, registration or other document
issued, filed with or recorded by any governmental authority owned
by, registered or filed in the name of Seller. “
Third-Party Intellectual Property Rights
”
means any Intellectual Property owned by a third
party.
(d)
Schedule 3.16 of
the Seller Disclosure Schedule lists all Seller Registered
Intellectual Property that comprises a portion of the Assets,
including the jurisdictions in which each such item of Intellectual
Property has been issued or registered or in which any application
for such issuance and registration has been filed or in which any
other filing or recordation has been made.
(e)
All
registration, maintenance and renewal fees currently due in
connection with each item of Seller Registered Intellectual
Property have been paid and all documents, recordations and
certificates in connection with such Seller Registered
Intellectual Property currently required to be filed have been
filed with the relevant patent, copyright, trademark or other
authorities in the United States or foreign jurisdictions, as
the case may be, for the purposes of prosecuting, maintaining
and perfecting such Seller Registered Intellectual Property
and recording the Seller’s ownership interests
therein.
(f)
There
are no royalties, honoraria, fees or other payments payable by
the Seller to any person or entity (other than salaries
payable to employees, consultants and independent contractors
not contingent on or related to use of their work product), as
a result of the ownership, use, possession, license-in,
license-out, sale, marketing, advertising or disposition of
any Seller-Owned IP Rights by Seller.
(g)
To
the best knowledge of the Seller, there is no unauthorized
use, unauthorized disclosure, infringement or
misappropri
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