Exhibit 99(1)
STOCK PURCHASE AGREEMENT
AGREEMENT made as of the 1st day of April, 2004 by and among ACI
ACQUISITION INC. ("Buyer"), a New Jersey corporation, having an address at 000
Xxxxxxx Xxxxxx, Xxxxxx Xxxxx, Xxx Xxxxxx 00000, DIVERSIFIED SECURITY SOLUTIONS,
INC. ("Parent"), a Delaware corporation, having an address at 000 Xxxxxxx
Xxxxxx, Xxxxxx Xxxxx, Xxx Xxxxxx 00000, AIRORLITE COMMUNICATIONS, INC.
("Company"), a North Carolina corporation, having an address at 000 Xxxxxxx
Xxxxxx, Xxxxxx Xxxxx, Xxx Xxxxxx 00000, XXXXXX XXXXX ("XxXxx"), an individual
having an address at 2479 Xxxxxxx Point Drive, X.X. Xxx 000, Xxxxxxxxx Xxxx,
Xxxxx Xxxxxxxx 00000 and XXX XXXXXXX ("Xxxxxxx"), an individual having an
address at 000 Xxxxxx Xxxxx, Xxxx Xxx Xxxx, Xxx Xxxxxx 00000 (each of XxXxx and
Masoian, is hereinafter referred to individually as a "Seller" and collectively
as the "Sellers").
W I T N E S S E T H:
WHEREAS, XxXxx is the owner of three (3) shares of the capital stock, no
par value, of the Company, and Masoian is the owner of two (2) shares of the
capital stock of the Company, no par value (collectively, the "Shares"), which
Shares shall constitute all of the presently issued and outstanding securities
of the Company of every class;
WHEREAS, Sellers have agreed to sell, and Buyer has agreed to purchase, all
of the Shares upon the terms, subject to the conditions and in reliance on the
representations and warranties hereinafter set forth;
NOW, THEREFORE, in consideration of the respective agreements hereinafter
set forth, the parties agree as follows:
ARTICLE I
SALE OF SHARES, CONSIDERATION, PAYMENT AND RELATED MATTERS
On the basis of the representations and warranties contained in and subject
to the terms and conditions of this Agreement:
1.01 Sale. Sellers shall at the Closing (as hereinafter defined) sell,
assign, transfer, convey and deliver to Buyer, and Buyer shall purchase, the
Shares, free and clear of all liens, claims, charges, equities, encumbrances,
restrictions and voting agreements of every kind, for the consideration, and
payable as hereinafter provided. Certificates for the Shares shall be delivered
by Sellers to Buyer at the Closing duly endorsed, or accompanied by stock powers
duly endorsed, in blank. The certificates for the Shares and stock powers, if
any, shall be delivered at the Closing to the Company which shall promptly issue
new certificates for the Shares, in the same amounts, in the name of Buyer.
1.02 Purchase Price and Payment.
(a) The aggregate purchase price for the Shares shall be determined as
specified in Section 1.02(b) and (c) (the "Purchase Price").
(b) At the Closing:
(i) Buyer shall pay the sum of $200,000 to Masoian by wire
transfer in immediately available funds;
(ii) Buyer shall pay the sum of $100,000 to XxXxx by wire
transfer in immediately available funds, in payment in full of the outstanding
balance of the loan made by XxXxx to the Company, and XxXxx shall deliver to
Buyer the promissory note evidencing such loan;
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(iii) Parent shall issue to XxXxx or his designee, 37,000 shares
of fully paid and nonassessable shares of the common stock of Parent (the
"Common Stock").
(c) Upon evidence of the filing of the Company's tax return for the
period ended March 31, 2004 pursuant to Section 3.04(b), the Company shall,
within five business days of such filing, reimburse each Seller for his pro-rata
share of the tax liability, if any, in an amount equal to the amount of such tax
liability grossed up by 54%.
ARTICLE III
CLOSING AND RELATED MATTERS
2.01 Closing. The consummation of the transactions contemplated by this
Agreement (the "Closing") will take place at the offices of Xxxxxxx Xxxxx
Xxxxxxx Xxxxx & Xxxxxx LLP, Xxx Xxxxxxxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, at
such date and time as may be mutually agreeable to the parties hereto.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers, represents and warrants to and agrees with Parent and Buyer that
except as otherwise set forth or referred to in this Agreement and a separate
schedule dated and executed contemporaneously herewith from the Seller and
Shareholder to (and received by) Buyer (hereinafter referred to as the "Sellers'
Schedule"):
3.01 Corporate Organization, Standing and Subsidiaries. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of North Carolina and has all requisite corporate power and authority to conduct
its business and own, lease and operate its properties as and in the places
where such business is now conducted and such properties are now owned, leased
or operated. Copies of the Certificate of Incorporation,
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By Laws and minutes of the Company heretofore delivered to Buyer are true,
correct and complete copies of each thereof, in the case of the Certificate of
Incorporation and By Laws each as amended to date and presently in full force
and effect. At the Closing, Sellers shall deliver to Buyer a certificate to the
foregoing effect executed by the Company's Secretary or Assistant Secretary. The
Company is duly qualified and in good standing under the laws of each
jurisdiction where the failure to be so qualified reasonably could be expected
to have a material adverse effect on the Company. The Company has no
subsidiaries. The Company has no interest in any partnership, corporation or
other entity, other than as set forth in the Sellers' Schedule.
3.02 Capital Stock, Ownership, Etc.
(a) The authorized securities of the Company consists of 100,000
shares of Common Stock, no par value, of which the Shares are the only issued
and outstanding securities. The Shares are duly and validly issued and
outstanding, fully paid and non assessable, with no personal liability attaching
to the ownership thereof. The Company has no outstanding subscriptions, options,
warrants, rights, calls or other agreements, obligations or commitments of any
kind to issue, sell or purchase, or convert any obligations into, any securities
of any kind or class.
(b) The Sellers are the sole record and beneficial owners of the
Shares, in each case free and clear of all liens, claims, charges, equities,
encumbrances, restrictions, options and voting and other agreements of every
kind, and each Seller has full and unrestricted right and authority to sell and
transfer its Shares to Buyer in accordance with this Agreement and is conveying
to Buyer good and unencumbered title thereto.
3.03 Financial Statements; Financial Condition and Changes.
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(a) The compiled financial statements of the Company for the fiscal
years ended December 31, 2003 and for the interim period ended March 31, 2004,
including balance sheets and statements of revenue, expenses and retained
earnings heretofore delivered by the Sellers to Buyer (the "Compiled Financial
Statements") are true, correct and complete in all material respects and in
conformity with the books and records of the Company, consistently applied
through the periods covered (except as otherwise stated therein) and fairly
present in all material respects the financial condition and results of
operations of the Company as at the dates thereof and for the periods covered
thereby. Except as set forth in the Sellers' Schedule, there have been no
occurrences or developments since March 31, 2004, which would require any
material adverse changes to be made in the Compiled Financial Statements.
(b) Except as set forth in the Sellers' Schedule, as of the date of
this Agreement, the Company has no liabilities or obligations of any kind,
whether absolute, accrued, contingent, or otherwise, other than those (i) set
forth or referred to in the Compiled Financial Statements, (ii) incurred since
March 31, 2004 in the ordinary course of business and (iii) to be performed
under (A) executory agreements entered into in each case in the ordinary course
of business and of a type not required under generally accepted accounting
principles to be reflected or disclosed in financial statements, and (B) the
other agreements listed or referred to in the Sellers' Schedule or elsewhere in
this Agreement (but excluding any claim of or liability for breach by the
Company of any such agreements), but only to the extent that the liabilities and
obligations referred to in the preceding clauses (i) through (iii) inclusive do
not otherwise constitute a breach of any of the other representations or
warranties of the Seller in this Article III or elsewhere in this Agreement.
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(c) Except as set forth in the Sellers' Schedule, since March 31,
2004, there have been no changes in the financial condition, assets,
liabilities, operating results or business of the Company other than changes in
the ordinary course of business, none of which has been, individually or in the
aggregate, materially adverse, nor any material damage, destruction or loss of
any of its property, and the business and operations of the Company have been
conducted only in the usual, regular and ordinary course. Without limiting the
generality of the foregoing, since March 31, 2004, the Company has not (i)
declared or paid, or set aside for payment, any dividend or other distribution
in respect of its outstanding securities, (ii) entered into any material
agreements or transactions or incurred any material liabilities or obligations
other than in each case in the ordinary course of business and none of which,
individually or in the aggregate, has been or to the best of the Sellers'
knowledge and belief will be materially adverse; (iii) borrowed or agreed to
borrow any money or loaned or agreed to loan to, or guaranteed or agreed to
guarantee the obligations of, any person; (iv) canceled, compromised or waived
any amounts owing to or any claims heretofore made by it except for immaterial
adjustments in the ordinary course of business or otherwise waived, surrendered
or released any material rights, contractual or other; (v) acquired any assets,
tangible or intangible, subject to, or subjected any of its assets, tangible or
intangible, to, any mortgage, pledge, lien, security interest or other
encumbrance; (vi) sold, leased, abandoned or otherwise disposed of any of its
property, tangible or intangible, or interests therein, other than in the
ordinary course of business; (vii) made any increase in the compensation payable
to any of its employees or agents, or agreed so to do, or paid or agreed to pay
any deferred compensation or bonus to any such person, or entered into any
employment agreement with any such person, or established any incentive,
deferred compensation or other employee benefit plans or arrangements, other
than in each case those
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terminable by the Company without payment or penalty on not more than fourteen
days notice or those required by any collective bargaining agreements referred
to in the Sellers' Schedule or elsewhere in this Agreement; (viii) terminated or
agreed to terminate any material contract, agreement or other arrangement or
relationship with any of its major suppliers or customers or lost, or received
information that it may lose, the business of any customer or customers; (ix)
made or entered into any agreement or commitment to make any capital
expenditures requiring the payment after the date of this Agreement of more than
$1,000 in the aggregate; (x) experienced any material labor troubles or
disputes; or (xi) to the best of the Sellers' knowledge, experienced any other
event or condition of any character which has materially adversely affected or
may in the future materially adversely affect its assets, business, operations
or prospects.
(d) The books of account and other records of the Company are in all
material respects complete and correct, have been maintained in accordance with
good business practices and accurately reflect the information contained
therein.
3.04 Taxes; Tax Returns.
(a) The Company (i) has filed, or will file before the date due, all
applicable Federal, state, county and local tax and franchise returns and
reports required to be filed by it as of March 31, 2004 and has paid (or, as to
taxes not currently due and payable, has made adequate provision for the payment
of) all income and other taxes, assessments, franchise fees and other
governmental charges required by law (including, without limitation,
withholding, social security, payroll and similar taxes) and all interest and
penalties, if any, thereon and (ii) is not a party to any pending action or
proceeding by any governmental authority for the assessment or collection of any
taxes, assessments, franchise fees or other governmental charges and no claim
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for any thereof is pending or to the best of Sellers' knowledge threatened.
Copies of the Company's Federal tax returns for the fiscal years ended December
31, 2003 and 2002 heretofore delivered to Buyer are true, correct and complete.
(b) Sellers shall file all Federal, state, county and local tax
returns and reports required to be filed by the Company for the interim period
ended March 31, 2004, no later than June 15, 2004.
3.05 Material Agreements. The Sellers' Schedule contains, among other
things, a true, correct, and complete list of (and except as therein set forth
the Company is not a party to nor is it or any of its properties or assets bound
by or subject to) any material written or oral agreement, commitment or
understanding (i) not made in the ordinary course of business; (ii) relating to
loans, credits and guarantees, whether to or for the benefit of or made by the
Company; (iii) for the purchase or leasing by or furnishing to the Company of
any merchandise, supplies or services not to be performed within three months or
individually or in the aggregate representing a commitment by the Company of
more than $1,000; (iv) for the sale, leasing or furnishing by the Company of any
merchandise, supplies or services; (v) relating to the employment of any person
or with any labor union or association not terminable without penalty or premium
on notice of fourteen days or less; (vi) involving incentive, bonus or deferred
compensation plans or arrangements or stock option, stock purchase or similar
plans or arrangements; (vii) for the leasing of any property, real or personal,
whether as lessor or lessee; (viii) relating to the furnishing of brokerage,
agency, dealer, distributorship, sales representative, consulting or advertising
services, whether to, for or by the Company; (ix) relating to partnerships or
joint ventures or involving the sharing of profits; (x) providing for the
furnishing of services or the sale of property by the Company for less than the
fair value thereof; or (xi)
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providing for expenditures, capital or otherwise, in excess of $1,000
individually or in the aggregate. All such agreements are valid, binding, and
enforceable in accordance with their respective provisions, performance by the
Company of any thereof will not, individually or in the aggregate, have any
material adverse effect on the business, assets, operations or financial
condition of the Company, and true and complete copies of all such agreements
which are in writing have been delivered or made available to Buyer except as
otherwise indicated in the Sellers' Schedule.
3.06 Property Leases.
(a) The Company has good and marketable title to all of its assets,
real, personal and mixed, tangible and intangible, in each case free and clear
of all liens, security interests, claims, charges and encumbrances except (i) as
expressly set forth in the Sellers' Schedule and (ii) the lien, if any, of
current taxes not yet due and payable. All machinery, fixtures, equipment and
similar assets of, and all real property of or leased by the Company are in good
operating condition and repair.
(b) All leases to which the Company is a party are listed on the
Sellers' Schedule.
(c) All leases to which the Company is a party are in good standing,
and are valid, binding and enforceable in accordance with the respective
provisions thereof.
3.07 Default. Except as set forth in the Sellers' Schedule, neither the
Company nor, to the best of Sellers' knowledge, any other party hereto is in
material violation of or default under, and no event (including, without
limitation, execution of and consummation of the transactions provided for in
this Agreement) has occurred which with the passage of time or notice from or
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action by any party thereto or otherwise could result in a material breach of or
default under, or give any other person the right to terminate, as the case may
be, any material indenture, mortgage, security, loan, lease or other agreement
(including, without limitation, those listed or referred to in the Sellers'
Schedule) to which the Company is a party or by which it is bound or to which
any of its assets are subject or result in the creation, imposition or
acceleration of any material lien, encumbrance, charge, equity or restriction of
any nature in favor of any other person upon any of the assets of the Company.
3.08 Permits; Compliance with Laws. The Company possesses all necessary
valid licenses, permits, franchises, consents, authorizations and approvals of
or from governmental departments, agencies and instrumentalities for the
business and operations of the Company as presently conducted and is not in
material default with respect to nor in violation of, and has not received
notice of any violation of or of any proceedings for the termination or
revocation of, any such license, permit, franchise, consent, authorization or
approval or any applicable Federal, state, local or foreign law, statute,
ordinance, regulation, order or requirement relating to its business, operations
or assets, or the use thereof, which default or violation could have a
materially adverse affect upon its business, operations or assets. The Sellers'
Schedule includes a list (including expiration dates) of all material licenses,
permits, consents, authorizations and approvals of or from governmental
departments, agencies and instrumentalities held by the Company in the conduct
of its business.
3.09 Employee Benefit Plans. The Company does not sponsor any Benefit Plans
and there exist no agreements between the Company and any of its employees
whereby the Company is obligated to provide any benefit to any of its employees
arising out of the employment relationship. As used herein, the term "Benefit
Plan" shall mean any "employee benefit plan"
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within the meaning of ERISA Section 3(3) and the term "ERISA" shall mean the
Employee Retirement Income Security Act of 1974, as amended.
3.10 Intangible Rights. The Company does not own any Intangible Rights. As
used herein, the term "Intangible Rights" means and includes all right, title
and interest in, to and under, any United States and foreign patents,
trademarks, trade names, trade styles, service marks, designs, copyrights and
labels, together in each case with all registrations, applications, recordings,
reissuances, extensions, renewals, licenses and rights, if any, and all books,
records, documents advertising materials, brochures, and instruments, thereof or
therefor or relating thereto, the goodwill of the business symbolized thereby,
and all claims against third parties for violation or infringement of any
thereof.
3.11 Litigation. Except as set forth in the Sellers' Schedule, there are no
actions, suits, claims, arbitrations, administrative or other proceedings or
governmental investigations pending or, to the best of the Sellers' knowledge,
threatened against, relating to or affecting the Company or its business,
operations or assets, whether or not fully covered by insurance, or which
question or seek to prevent consummation of the transactions provided for in
this Agreement, whether at law or in equity, or before or by any Federal, state,
local, foreign or other governmental department, agency or instrumentality nor
to the best of Sellers' knowledge is there any basis therefor. The Company is
not bound or adversely affected by or in default with respect to any judgment,
order, writ, injunction or decree of any court or of any governmental
department, agency or instrumentality.
3.12 Employees; Insurance; Banks; Etc. The Sellers' Schedule contains a
complete and correct list and, where applicable, a summary description of:
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(a) The names and current annual rates of compensation paid by the Company
to each employee or agent.
(b) All insurance policies of the Company (including insurance on the lives
of any employees of the Company) and performance, surety and similar bonds
presently in force and effect with respect to the business, operations and
assets of the Company, all of which policies and bonds are validly outstanding
and in full force and effect. The Company has not been advised that any insurer
or surety intends or proposes to cancel any such policy or bond prior to the
present expiration or termination date thereof or to increase the applicable
premium rate, rate classification or charge therefor prior to or following such
expiration or termination date or is unwilling to renew or extend any such
policy or bond following its normal expiration or termination date.
(c) The names of each bank in which the Company maintains an account or
safe deposit box and of each security broker with which the Company maintains an
account (including, in each case, the name and account number or other
designation thereof) and the names of all persons authorized to draw thereon or
to give instructions with respect or having access thereto.
(d) The names of all persons, if any, holding tax, customs and other powers
of attorney from the Company and a brief description thereof.
3.13 Transactions with the Company. Except as set forth in the Seller's
Schedule, neither Sellers nor any director, officer or employee of the Company
nor any associate of any of the foregoing (as such term is hereinafter defined),
directly or indirectly (i) has any claim of any kind against the Company; or is
owed any amounts by the Company other than compensation payable by the Company
for its current (but not any prior) pay period, all such other claims and
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obligations, if any, of any Seller as against or owing to such Seller by the
Company being hereby waived and released by such Seller, (ii) is obligated to
the Company, (iii) has any interest in the assets of the Company whether
pursuant to any lease, other agreement or otherwise, (iv) is a party to any
executory agreement with the Company, (v) is an adverse party, directly or
indirectly, to any litigation or other proceedings to which the Company or any
of its assets are or may be subject, or (vi) owns, manages, operates, controls,
is employed by or is otherwise in any manner connected with or interested in any
entity with which the Company has had any material business relationships,
whether as a customer, supplier or otherwise, or which has been a competitor,
directly or indirectly, of the Company . As used in this Section, the term
"associate" means any relative by blood or marriage or any Company, partnership,
trust or other entity in which any of the Sellers or any such person or entity
has, directly or indirectly, an interest of five percent (5%) or more or any
other person who, directly or indirectly, controls or is controlled by or is
under common control with any of the Sellers or any such relative, other person
or entity.
3.14 Investment Purpose. XxXxx is acquiring the Common Stock for investment
and not with a view to the sale or distribution thereof, for his own account and
not on behalf of others and has not granted any other person any right or option
or any participation or beneficial interest in any of the Common Stock. XxXxx
acknowledges his understanding that the Common Stock constitutes restricted
securities within the meaning of Rule 144 of the SEC under the Securities Act of
1933, as amended (the "Securities Act"), and that the Common Stock may not be
sold except pursuant to an effective registration statement under the Securities
Act or in a transaction exempt from registration under the Securities Act, and
XxXxx acknowledges that he understands the meaning and effect of such
restriction. XxXxx is aware that no federal or state regulation agency or
authority has passed upon the sale of the Common Stock or the terms of the sale
or the
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accuracy or adequacy of any material being provided to XxXxx and that the price
of the Common Stock was negotiated between Buyer and XxXxx and does not
necessarily bear any relationship to the underlying assets or value of Parent.
XxXxx understands that an investment in the Common Stock involves a high degree
of risk.
3.15 Authorization; Validity. This Agreement and each of the other
instruments executed or to be executed by each Seller pursuant to this Agreement
has been duly authorized and constitutes the valid and legally binding
obligations of such Seller in accordance with its terms except as enforcement
may be limited by applicable bankruptcy, insolvency and other laws relating to
or affecting creditors' rights generally and subject also to general principles
of equity affecting the right to specific performance and injunctive relief.
3.16 Authorization Approvals. No authorization or approval of, or filing
with, or compliance with any applicable order, judgment, decree, statute, rule
or regulation of, any court or governmental authority, or approval, consent,
release or action of any third party, is required in connection with the
execution and delivery by the Sellers of, or the performance or satisfaction of
any agreement of the Sellers contained in or contemplated by, this Agreement.
3.17 Disclosure. Neither this Agreement nor the schedules and exhibits to
this Agreement nor any other written certificate, statement or document
furnished or to be furnished by Seller in connection with the transactions
provided for in this Agreement contains or will contain any untrue statement of
a material fact or omits or will omit to state any material fact necessary in
order to make the statements contained herein or therein, in light of the
circumstances under which made, not misleading, and to the best of Sellers'
knowledge and belief, all such material books, records, agreements, documents,
financial and operating data and other information of or relating to the Company
as Buyer has requested or may request has
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heretofore been or will be made available to Buyer. Without limiting the
generality of the foregoing, to the best of Sellers' knowledge, there has not
occurred and does not exist in any event, circumstance or development not
disclosed to Buyer relating to the Company (as contrasted with general industry,
economic or business conditions) which has materially adversely affected or in
the future reasonably may, so far as Seller can now foresee, materially
adversely affect the business, operations or assets of the Company.
3.18 Opportunity to Meet with Management. Sellers acknowledge that they
have had an opportunity to meet with and ask questions of Parent's management.
3.19 Receipt of Disclosure Documents. Each Seller acknowledges that it has
received and reviewed copies of the following (the "Financial Statements") from
Parent its Annual Report on Form 10-KSB for the fiscal year ended December 31,
2003.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER AND PARENT
4.01 Organization; Authorization. Buyer is a company duly organized,
validly existing and in good standing under the laws of the State of New Jersey.
Parent is a company duly organized, validly existing and in good standing under
the laws of the State of Delaware. Buyer and Parent each possess all requisite
corporate power and authority to enter into and perform all of its respective
obligations under this Agreement.
4.02 No Violations; Validity. No provision of Parent's or Buyer's
respective Certificate of Incorporation or By laws, or of any material
agreement, instrument or understanding, or of any material order, judgment,
decree, statute, rule or regulation of any court or governmental authority, to
which Parent or Buyer is a party or by which it is bound or subject, has been or
will be violated by the execution by Parent or Buyer, as the case may be, of, or
the
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performance or satisfaction of any agreement or condition upon its part to be
performed or satisfied under, this Agreement, and all requisite corporate and
other authorizations for such execution, delivery, performance and satisfaction
have been duly obtained by Parent and Buyer, respectively. This Agreement and
each of the other agreements, instruments and documents executed or to be
executed by Parent or Buyer, as the case may be, pursuant to this Agreement
constitutes the valid and legally binding obligation of Parent or Buyer, as the
case may be, in accordance with its terms except as enforcement may be limited
by applicable bankruptcy, insolvency and other laws relating to or affecting
creditors' rights generally and subject also to general principles of equity
affecting the right to specific performance and injunctive relief.
4.03 Authorizations; Approvals. No authorization or approval of, or filing
with, or compliance with any applicable order, judgment, decree, statute, rule
or regulation of, any court or governmental authority, or approval, consent,
release or action of any third party, is required in connection with the
execution and delivery by Parent or Buyer, as the case may be, of, or the
performance or satisfaction of any agreement of Parent or Buyer, as the case may
be, contained in or contemplated by, this Agreement other than in connection
with any applicable laws and/or rules pertaining to the issuance of Parent's
Common Stock.
4.04 Investment Representation. Buyer is acquiring the Shares for its own
account and not with a view to the distribution thereof within the purview of,
and none of the Shares will be offered, sold, or otherwise disposed of by Buyer,
in violation of any applicable provisions of the Security Act.
4.05 Authorization of Common Stock. The issuance and delivery by Parent of
the Common Stock to XxXxx or his designee has been duly authorized by all
requisite corporate action of the Parent and the Common Stock issued to XxXxx or
his designee, when issued and
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delivered in accordance with the terms of this Agreement, will be validly issued
and outstanding, fully paid and nonassessable, free and clear of any liens and
not subject to preemptive or other similar rights of stockholders of the Parent.
ARTICLE V
PRE-CLOSING MATTERS
5.01 Information as to Operations of the Company. Until the Closing:
(a) The Company shall, and Seller shall cause the Company to, afford
to Buyer, its attorneys, accountants and other representatives, upon reasonable
request, full and free access during normal business hours to all properties,
books, records and other documents of the Company, including the right to make
extracts there from or copies thereof, and shall furnish Buyer with, or with
copies of, all such agreements, documents and records, financial and operating
data and other information concerning the Company as Buyer may reasonably
request. Buyer shall hold in strict confidence and shall not use or otherwise
publicly disclose, and shall cause its officers, attorneys, accountants and
other representatives to hold in strict confidence and not to use or publicly
disclose, all information so furnished or made available by the Company which
the Company indicates in advance is confidential other than information which is
or becomes publicly available or otherwise in the public domain. Should this
Agreement be terminated or the transactions contemplated hereby not be
consummated for any reason, Buyer shall, upon written request from Seller,
return to the Company all written information so furnished and all copies
thereof and extracts therefrom.
(b) The Company shall, and the Sellers shall cause the Company to,
refrain from taking or omitting to take any action or entering into any
transaction which, had such action been taken or omitted or such transaction
entered into immediately prior to execution of this
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Agreement, would have caused any of the representations, warranties or
agreements of the Sellers or the Company in this Agreement to be untrue,
incorrect or inaccurate in any material respect as of the time of execution of
this Agreement or would cause any such representations, warranties or agreements
to be untrue, incorrect or inaccurate in any material respect as of the time
immediately following such action, omission or transaction or as of the date of
Closing. Without limiting the generality of the foregoing, except as otherwise
set forth or provided in the Sellers' Schedule, the Company shall and the
Sellers shall cause the Company to (i) conduct its business only in the usual,
regular and ordinary course in the same manner as heretofore, (ii) use its best
efforts to preserve its business, properties and assets, maintain its business
organization intact, keep available the services of its present officers and
employees and preserve its goodwill and existing relationships with customers,
suppliers and others having dealings with it, (iii) maintain its properties in
customary repair, order and condition, reasonable use and wear and tear
accepted, (iv) maintain insurance on its properties and with respect to the
conduct of its business in amounts not less than and of such kinds as are
comparable to the insurance in effect on the date of this Agreement, and (v)
maintain its books, accounts and records in the usual, regular and ordinary
manner.
5.02 Adverse Circumstances.
(a) The Sellers and the Company shall promptly notify Buyer, as soon
as any of them obtains knowledge, of any facts, circumstances or occurrences
which have adversely affected or might reasonably be expected to adversely
affect the business, properties, assets, financial condition or prospects of the
Company or which could or reasonably might be expected to cause any of their
representations, warranties or agreements in this Agreement to be untrue,
incorrect or inaccurate in any material respect.
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(b) Should Buyer elect to consummate the Closing after receipt of any
notice pursuant to subsection 5.02(a), then, anything elsewhere in this
Agreement to the contrary notwithstanding, Buyer shall be deemed to have waived
any rights or claims which it might possess under this Agreement, or otherwise,
against the Sellers or the Company with respect to the matters expressly
referred to (but only if and to the extent such matters are adequately and
properly referred to or disclosed) in such notice.
ARTICLE VI
CONDITIONS PRECEDENT
6.01 Conditions Precedent to Obligation of Buyer. The obligation of Parent
and Buyer to consummate the transactions provided for in this Agreement shall be
subject to the fulfillment at or prior to the Closing of each of the following
conditions (any or all of which may be waived, in whole or in part, by Buyer in
its discretion):
(a) Each of the representations and warranties of the Sellers in, or
in any instrument delivered in connection with or pursuant to, this Agreement
shall, except as otherwise contemplated or permitted by this Agreement, be true
and correct in all material respects on and as of the date of Closing as if made
at and as of such time. The Sellers and the Company shall have each duly
performed and complied in all material respects with all agreements, covenants
and conditions required by this Agreement to be performed or complied with by
them prior to or at the Closing. Buyer shall have received from the Company and
each Seller a certificate, dated the date of Closing, to the foregoing effect.
(b) Buyer shall receive from each of the Sellers a general release
dated the date of Closing of all then existing claims of every kind against the
Company excluding, however, such claims, if any, as are expressly referred to or
described in the Sellers' Schedule.
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(c) The Sellers and the Company shall have delivered to Buyer the
minute and stock books of the Company and the resignation of all present
directors and officers of the Company other than those, if any, designated by
Buyer at or prior to the Closing.
(d) Parent and Buyer shall have received the opinion of The Law
Offices of Xxxxxxx X. Xxxxxxx, counsel for Sellers and the Company, dated the
date of Closing, in substantially the form of Exhibit 6.01(d) attached hereto,
to the effect that as set forth in Sections 3.01, 3.02, 3.08, 3.11, 3.15 and
3.16 (to the best of counsel's knowledge, based on counsel's review of the
corporate books and records but without having made any independent
investigation thereof as to Sections 3.01 and 3.09), (i) this Agreement has been
duly executed and delivered by and constitutes the valid and legally binding
obligation of each Seller and the Company in accordance with its terms, (ii)
upon the sale of the Shares to Buyer in accordance with this Agreement, Buyer
will acquire good and marketable title thereto, free and clear of all liens,
claims, equities, encumbrances, restrictions, options and voting agreements of
every kind (assuming, for purposes of such opinion, that Buyer is a bona fide
purchaser within the meaning of Article VIII of the Uniform Commercial Code) and
(iii) such counsel, without however having made any independent investigation
thereof, has no reason to believe that any of the other representations and
warranties of each Seller in this Agreement or in the certificate of each Seller
referred to in subsection 6.01(a) are untrue, incorrect or inaccurate in any
material respect.
(e) All actions, proceedings, instruments, documents and other legal
matters relating to the transactions provided for in this Agreement or
incidental thereto shall be reasonably satisfactory to and approved by Xxxxxxx
Xxxxx Xxxxxxx Xxxxx & Xxxxxx LLP, counsel to Parent and Buyer, and Sellers and
the Company shall have furnished to such counsel
20
all such instruments, documents and papers as such counsel may have reasonably
requested for this purpose.
6.02 Conditions Precedent to Obligation of Seller. The obligation of the
Sellers to consummate the transactions provided for in this Agreement shall be
subject to the fulfillment at or prior to the Closing of each of the following
conditions (any or all of which may be waived, in whole or in part, by the
Sellers in their discretion):
(a) Each of the representations and warranties of Parent and Buyer in,
or in any instrument delivered in connection with or pursuant to, this Agreement
shall, except as otherwise contemplated or permitted by this Agreement, be true
and correct in all material respects on and as of the date of Closing as if made
at and as of such time. Parent and Buyer shall have duly performed and complied
in all material respects with all agreements, covenants, and conditions required
by this Agreement to be performed or complied with by it prior to or at the
Closing. The Sellers shall have received Parent's and Buyer's certificates,
dated the date of Closing, to the foregoing effect.
(b) The Sellers shall have received the opinion of Xxxxxxx Xxxxx
Xxxxxxx Xxxxx & Xxxxxx LLP, counsel for Parent and Buyer, dated the date of
Closing, in substantially the form of Exhibit 6.02(b) attached hereto, to the
effect that as set forth in Section 4.01, 4.02, 4.03 and 4.05, such counsel,
without however having made any independent investigation thereof, has no reason
to believe that any of the representations and warranties of Parent and Buyer in
this Agreement or in the certificates of Parent and Buyer referred to in
subsection 6.02(a) are untrue, incorrect or inaccurate in any material respect.
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(c) All actions, proceedings, instruments, documents and other legal
matters relating to the transactions provided for in this Agreement or
incidental thereto shall be reasonably satisfactory to and approved by Xxxxxxx
X. Xxxxxxx, Esq., counsel to the Sellers and the Company, and Parent and Buyer
shall have furnished to such counsel all such instruments, documents and papers
as such counsel may have reasonably requested for this purpose.
6.03 Compliance with Conditions. All of the conditions to the obligations
of Parent, Buyer and the Sellers respectively set forth in Sections 6.01 and
6.02 are and shall be deemed covenants and agreements by the other and also by
the Company to comply with and fulfill such conditions as require action by it
or them (to the extent within its or their power) and to use its commercially
reasonable efforts to obtain compliance with and satisfaction of each such
condition as requires action by any other party or persons, including any person
not a party.
ARTICLE VII
ADDITIONAL AGREEMENTS OF THE PARTIES
7.01 Covenant Not to Complete.
(a) In order to induce Buyer to enter into and consummate the
transactions provided for in this Agreement, each Seller covenants ands agree
that (i) during the period of three (3) years following the date of Closing he
will not, without the prior written consent of Buyer in each instance, directly
or indirectly, whether for himself or for any other person and whether as
proprietor, principal, stockholder, partner, agent, director, officer, employee,
consultant, independent contractor or in any other capacity, engage in, or have
any interest in any business or other entity that provides products and support
for wireless coverage extension of emergency service transmissions and of
private and public wireless carriers anywhere in the continental United States
or (ii) at any time after the Closing knowingly do any act which would
22
impair the value of the business, operations or assets of, or injure the
goodwill or reputation of, Buyer or the Company or divert any of its business or
employees. Without limiting the generability of the foregoing, Seller agrees
that during such five year period he will not solicit any business from any
person, firm, corporation or entity which was a customer of the Company within
the three year period prior to the Closing nor will he hire any person who was
an employee of the Company at the date of Closing.
(b) Each Seller agrees that each provision of subsection 7.01(a) is
reasonable and necessary for the protection of Buyer; that each such provision,
and the period or periods of time, geographical areas and types and scopes of
restrictions on his activities specified therein, are and are intended to be
divisible; that if any portion thereof (including any sentence, clause or part)
shall be held contrary to law or invalid or unenforceable in any respect in any
jurisdiction, or as to any one or more periods of time, areas or business
activities, or any part thereof, the remaining provisions shall not be affected
but shall remain in full force and effect as to the other and remaining parts;
and that any such invalid or unenforceable provision shall be deemed, without
further action on the part of the parties hereto, modified, amended and limited
to the extent necessary to render the same valid and enforceable in such
jurisdiction. Seller further recognizes and agrees that any violation of his
agreement in subsection 7.01(a) would cause such damages to Buyer as would be
irreparable and the exact amount of which would be impossible to ascertain and
that, for such reason, among others, Buyer shall be entitled, as a matter of
course, to injunctive relief from any court of competent jurisdiction
restraining any further violation. Such right to injunctive relief shall be
cumulative and in addition to and not in limitation of all other rights and
remedies which Buyer may possess.
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7.02 Further Assurances. From and after the date of this Agreement and the
date of Closing, the parties hereto shall from time to time, at the request of
any other party and without further consideration, do, execute and deliver, or
cause to be done, executed and delivered, all such further acts, things and
instruments as may be reasonably requested or required more effectively to
evidence and give effect to the transactions provided for in this Agreement
without limiting the generability of the foregoing, the parties shall cooperate
with each other (i) in connection with the filing of the Company's tax returns
with respect to any period up to the Closing, and (ii) in the furnishing of
information, evidence, testimony and other assistance in connection with any
legal actions, proceedings or disputes involving any of the parties based upon
any contracts, agreements, arrangements or other matters whether occurring prior
or subsequent to the date of this Agreement and the date of Closing.
ARTICLE VIII
SURVIVAL, INDEMNIFICATION AND RELATED MATTERS
8.01 Survival. All of the provisions of, and all of the representations,
warranties, covenants and agreements of the parties in, or in any document or
other instrument executed or delivered pursuant to or in connection with, this
Agreement shall, unless waived, survive and continue in force and effect from
and after the date of Closing and any investigation at any time made by or on
behalf of any party.
8.02 Indemnification. Parent and Buyer, on the one hand, and Sellers, on
the other:
(a) Shall each indemnify and hold the other free and harmless from and
against and shall reimburse the other for any and all claims, liabilities,
damages, losses, judgments, costs and expenses including reasonable counsel fees
and other reasonable out-of-pocket expenses (the foregoing being hereinafter
collectively referred to as "damages")
24
arising out of or resulting from any inaccuracy or inadequacy in or breach or
default of any of its or his representations, warranties, covenants or
agreements in, or in any document or other instrument executed or delivered
pursuant to or in connection with, this Agreement.
(b) Shall give the other written notice of any claim, demand, action,
suit or proceeding raised, brought, threatened, made or commenced against it or
the Company relating to any matter to which the indemnification provisions of
this Section 8.02 apply, and such other party shall have the right, at its
expense, to participate in the settlement and defense thereof using counsel of
its own choice. Failure to give such notice shall not, however, affect the
liability of any other party under this Agreement unless such failure shall
materially adversely prejudice the defense thereof by such other party. Nothing
herein shall limit the right of any party to settle any claim, demand, action,
suit or proceeding brought or threatened against it, provided, however, that in
any such event no other party shall be bound by the amount or terms of any such
settlement not consented to by it.
(c) The provisions of this Section 8.02 shall not be construed as a
waiver by any party of any other rights or remedies which it may possess,
whether under this Agreement, at law or in equity, arising out of or resulting
from any breach or default of or inaccuracy or inadequacy in any other party's
representations, warranties, covenants or agreements.
ARTICLE IX
MISCELLANEOUS
9.01 Expenses. Each party shall bear and pay all legal, accounting and
other fees and expenses incurred by it in connection with, and with the
transactions provided for in, this Agreement and the performance of all its
obligations and agreements hereunder.
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9.02 Notices. All notices, requests, demands and other communications
required or permitted under this Agreement shall be in writing and shall be
deemed to have been duly given if personally delivered or if mailed by first
class registered or certified mail return receipt requested, or by first class
mail if received, addressed to the parties at their respective addresses set
forth or referred to on the first page and signature page of this Agreement,
with copies to their respective counsel, Xxxxxxx Xxxxx Xxxxxxx Xxxxx & Xxxxxx
LLP, Att: Xxxxxx X. Xxxxxxxx, Esq., Xxx Xxxxxxxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000, in the case of Parent and Buyer, and The Law Offices of Xxxxxxx X.
Xxxxxxx, Attn: Xxxxxxx X. Xxxxxxx, Esq., 000 Xxxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxxxx
00000, in the case of Sellers and the Company (until the Closing after which
time copies of notices, requests, demands and other communications to the
Company shall be sent to Xxxxxxx X. Xxxxxxx, Esq.) or to such other person or
address as may be designated by like notice hereunder.
9.03 Parties in Interest. This Agreement shall be binding upon, and shall
inure to the benefit of and be enforceable by, the parties hereto and their
respective legal representatives, successors and assigns, but no other person
shall acquire or have any rights under this Agreement.
9.04 Entire Agreement; Modification; Waiver. This Agreement (as below
defined) contains the entire agreement and understanding among the parties
hereto with respect to the subject matter hereof and supersedes all prior
negotiations and understandings, if any, and there are no agreements,
representations or warranties other than those set forth, provided for or
referred to herein. All exhibits and schedules to this Agreement are expressly
made a part of this Agreement as fully as though completely set forth herein,
and all references to this Agreement herein, in any of such writings or
elsewhere shall be deemed to refer to and include all such
26
writings. Neither this Agreement nor any provisions hereof may be modified,
amended, waived, discharged or terminated, in whole or in part, except in
writing signed by the party to be charged. Any party may extend the time for or
waive performance of any obligation of any other party or waive any inaccuracies
in the representations or warranties of any other party or compliance by any
other party with any of the provisions of this Agreement. No waiver of any such
provisions or of any breach of or default under this Agreement shall be deemed
or shall constitute a waiver of any other provisions, breach or default, nor
shall any such waiver constitute a continuing waiver.
9.05 Interpretation. All pronouns and words used in this Agreement shall be
read in the appropriate number and gender, the masculine, feminine and neuter
shall be interpreted interchangeably and the singular shall include the plural
and vice versa, as the circumstances may require.
9.06 Applicable Law. This Agreement shall be deemed to be a contract made
under the laws of the State of New Jersey and for all purposes shall be
construed in accordance with the laws of said state applicable to contracts made
and to be performed entirely within such State. The Parent, Buyer and the
Sellers each hereby (i) agree that any legal suit, action or proceeding arising
out of or relating to this Agreement shall be instituted exclusively in the
State and Federal Courts located within the State of New Jersey.
9.07 Headings; Counterparts. The article and section headings in this
Agreement are for reference purposes only and shall not define, limit or affect
the meaning or interpretation of this Agreement. This Agreement is being
executed in two or more counterparts, each of which shall be deemed an original
but all of which shall constitute one and the same instrument. This Agreement
may be executed and delivered by facsimile and the parties agree that such
facsimile
27
execution and delivery shall have the same force and effect as delivery of an
original document with original signatures, and that each party may use such
facsimile signatures as evidence of the execution and delivery of this Amendment
by all Parties to the same extent that an original signature could be used.
[Signature page to follow.]
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first above written.
DIVERSIFIED SECURITY SOLUTIONS. INC.
By:
------------------------------------
Xxxxx X. Xxxxxxxx, President
ACI ACQUISITION INC.
By:
------------------------------------
Xxxxx X. Xxxxxxxx, President
AIRORLITE COMMUNICATIONS, INC.
By:
------------------------------------
Xxx Xxxxxxx, President
---------------------------------------
XXXXXX XXXXX
---------------------------------------
XXX XXXXXXX
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