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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement ("Agreement") is made as of January
8, 1996 by and between MASADA SECURITY, INC., a Delaware corporation
("Buyer"); XXXX XXXXXXXXX, an individual residing in Austin, Texas ("Xxxx");
and XXXX XXXXXXXXX, an individual residing in Austin, Texas ("Xxxx" and,
collectively with Xxxx, "Sellers").
RECITALS
Sellers own 1,000 shares (the "Shares") of the common stock, no par
value, of Kristynik Security Systems, Inc., a Texas corporation (the
"Company"), which constitutes all of the issued and outstanding shares of
capital stock of the Company. Sellers desire to sell, and Buyer desires to
purchase, the Shares for the consideration and on the terms set forth in this
Agreement.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
1. DEFINITIONS
For the purposes of this Agreement, the following terms have the
meanings specified or referred to in this Section 1:
"ACCOUNTS RECEIVABLE" OR "A/R" -- as defined in Section 3.9.
"ADJUSTMENT AMOUNT" -- as defined in Section 2.6.
"ALARM ACCOUNT" -- as defined in Section 3.18.
"ASSUMED LIABILITIES" -- as defined in Section 2.3.
"APPLICABLE CONTRACT" -- any Contract excluding Alarm Accounts (a)
under which Company has or may acquire any rights, (b) under which Company has
or may become subject to any obligation or liability, or (c) by which Company
or any of the assets owned or used by Company is or may become bound.
"BALANCE SHEET" -- as defined in Section 3.4.
"BREACH" -- a "Breach" of a representation, warranty, covenant,
obligation, or other provision of this Agreement or any instrument delivered
pursuant to this Agreement will be deemed to have occurred if there is or has
been any inaccuracy or any failure to perform or comply with, such
representation, warranty, covenant, obligation, or other provision.
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"BUILDER INSTALLATION" -- arrangement in which Company contracts with
residential single family home builders to install an alarm system in a new
home during construction. Builder Installations are typically completed in the
following two phases: (i) "pre-wire" phase in which wires necessary for alarm
system operation are pulled before sheetrock installation; (ii) "trim-out"
phases in which devices necessary for alarm system monitoring (panels,
contacts, motion detectors, etc.) are installed.
"BUYER" -- as defined in the first paragraph of this Agreement.
"CLOSING" -- as defined in Section 2.4.
"CLOSING DATE" -- the date and time as of which the Closing actually
takes place.
"CODE" -- the Internal Revenue Code of 1986 or any successor law, and
regulations issued by the IRS pursuant to the Internal Revenue Code or any
successor law.
"COMPANY" -- as defined in the second paragraph of this Agreement.
"CONSENT" -- any approval, consent, ratification, waiver, or other
authorization (including any Governmental Authorization).
"CONSULTING AGREEMENT" -- as defined in Section 2.5.
"CONTEMPLATED TRANSACTIONS" -- all of the transactions contemplated by
this Agreement, including:
(a) the sale of the Shares by Sellers to Buyer;
(b) the execution, delivery, and performance of the
Consulting Agreement, the Noncompetition Agreement,
and the Escrow Agreement.
(c) the performance by Buyer and Sellers of their
respective covenants and obligations under this
Agreement; and
(d) Buyer's acquisition and ownership of the Shares and
exercise of control over the Company.
"CONTRACT" -- any agreement, contract, obligation, promise, or
undertaking (whether written or oral and whether express or implied) that is
legally binding.
"DAMAGES" -- as defined in Section 10.2.
"ENCUMBRANCE" -- any charge, claim, community property interest,
condition, equitable interest, lien, option, pledge, security interest, right
of first refusal, or restriction of any kind,
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including any restriction on use, voting (in the case of any security),
transfer, receipt of income, or exercise of any other attribute of ownership.
"ENVIRONMENTAL REQUIREMENT" -- any Legal Requirement designed:
(a) to advise appropriate authorities, employees, and the
public of intended or actual Releases of pollutants
or hazardous substances or Hazardous Materials,
violations or discharge limits, or other prohibitions
and of the commencements of activities, such as
resource extraction or construction, that could have
significant impact on the environment;
(b) to prevent or acceptably minimize the Release of
pollutants or hazardous substances or materials into
the environment;
(c) to reduce the quantities, prevent the Release, and
minimize the hazardous characteristics of wastes that
are generated;
(d) to assure that products are designed, formulated,
packaged, or used so that they do not present
unreasonable risks to human health or the environment
when used or disposed of;
(e) to protect resources, species, or ecological
amenities;
(f) to acceptably minimize the risks inherent in
transportation of hazardous substances, pollutants,
oil, or other potentially harmful substances;
(g) to clean up pollutants that have been Released,
prevent the threat of Release, or pay the costs of
such clean up or prevention; or
"ESCROW AGREEMENT" -- as defined in Section 2.5.
"ESCROWED OVER 60 RMR" -- means the sum of the purchase price
associated with the Over 60 RMR Alarm Accounts.
"EXCLUDED ASSETS" -- means (a) any life insurance policies on Sellers
which are owned by the Company; (b) the guard patrol service business and any
related Contracts and assets owned by the Company; (d) the 1995 Ford Explorer
which is listed on the Company's December 1995 depreciation; (e) the 1992 Isuzu
pick up truck which is listed on the Company's December depreciation
schedule as number 10; (f) the 1993 Isuzu pick up truck which is listed on the
Company's December 1995 depreciation schedule as number 8; (g) the 1995
Chevrolet S-10 truck which is listed on the Company's December 1995
depreciation schedule as number 13; (h) the tradename "Texas Protection
Specialist, Inc."; (i) the license issued by the Texas Board of Investigation
and Private Security
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Agency numbered B-04481; (j) any property not owned by the Company; (k) any
accounts receivable from Employees or officers of the Company as listed on the
Interim Balance Sheet; and (l) any other asset mutually agreed to in writing by
the Sellers and the Buyer.
"FACILITIES" -- any real property, leaseholds, or other interests
currently or formerly owned or operated by the Company (or any predecessor
Person) and any buildings, plants, structures, or equipment currently or
formerly owned, leased, or operated by the Company (or any predecessor Person).
"GOVERNMENTAL AUTHORIZATION" -- any approval, consent, license,
permit, waiver, or other authorization issued, granted, given, or otherwise
made available by or under the authority of any Governmental Body or pursuant
to any Legal Requirement.
"GOVERNMENTAL BODY" -- any federal, state, local, municipal, foreign,
or other government.
"GROSS RMR ATTRITION" -- means the RMR of former monitoring customers
of the Company for a specified time period which have cancelled the monitoring
services provided by the Company divided by the beginning RMR of all monitoring
customers of the Company for the same period of time and at the same locations.
"HAZARDOUS MATERIALS" -- any substance that is listed, defined,
designated, or classified as, or otherwise determined to be hazardous,
radioactive, or toxic or a pollutant or a contaminant under or pursuant to any
Legal Requirement, including any admixture or solution thereof, and specifically
including petroleum and all derivatives thereof or synthetic substitutes
therefor and asbestos or asbestos-containing materials.
"HOLDBACK PERIOD I" -- the six months following the Closing Date.
"HOLDBACK PERIOD II" -- the twelve months following the Closing Date.
"INDEMNIFIED PERSONS" -- as defined in Section 10.2.
"INTELLECTUAL PROPERTY ASSETS" -- as defined in Section 3.23.
"INTERIM BALANCE SHEET" -- as defined in Section 3.4.
"IRS" -- the United States Internal Revenue Service or any successor
agency, and, to the extent relevant, the United States Department of the
Treasury.
"KNOWLEDGE" -- an individual will be deemed to have "Knowledge" of a
particular fact or other matter if:
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(a) such individual is actually aware of such or other
matter; or
(b) a prudent individual could be expected to discover or
otherwise become aware of such fact or other matter in
the course of conducting a reasonably comprehensive
investigation concerning the existence of such fact or
other matter.
A Person (other than an individual) will be deemed to have "Knowledge" of a
particular fact or other matter if any individual who is serving, or who has at
any time served, as a director, officer, partner, executor, or trustee of such
Person (or in any similar capacity) has, or at any time had, knowledge of such
fact or other matter.
"LEGAL REQUIREMENT" -- any federal, state, local, municipal, foreign,
international, multinational, or other constitution, law, ordinance, principle
of common law, regulation, statute, or treaty.
"LOST RMR" -- means as of the end of the Holdback Period II, the Alarm
Account customers which were included in RMR (a) whose accounts receivable
balances (whether attributable to RMR or otherwise) are more than 60 days past
due from the invoice due date; (b) who have cancelled or failed to renew their
Contract for any reason; or (c) who have been reasonably cancelled or
terminated by Buyer for excessive false alarms or other customer abuses.
"LOST RMR OFFSET" -- means the sum of the following:
(a) the RMR associated with properly executed security
monitoring Contracts which Sellers have presented to
Buyer during the Holdback Period II on a form of
Contract approved by Buyer in its sole discretion;
and
(b) total payments received by the Company or Buyer after
Closing from Alarm Accounts included in Lost RMR
multiplied by 8%.
"NONCOMPETITION AGREEMENT" -- as defined in Section 2.5.
"NET ASSET VALUE" -- means the sum of the following amounts as of the
Closing Date:
(a) cash or cash equivalents acceptable to Buyer in its
sole discretion, valued at one hundred percent (100%);
(b) A/R existing as of the Closing which relates to
monitoring, installation and other non-security guard
related services provided on or before Closing. The
purchase price for A/R will be based upon the most
delinquent A/R amount included in the various aging
categories for each of the respective Alarm Accounts.
The total amount paid for A/R will
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equal the sum of products resulting from the
individual A/R amounts for each of the Alarm Accounts
multiplied by the following discount factors:
(i) the total A/R balance related to Alarm
Accounts for which the oldest applicable A/R
balance is 30 days or less past due from the
invoice due date: 95% of the face value;
(ii) the total A/R balance related to Alarm
Accounts for which the oldest applicable A/R
balance is 31 days to 60 days past due from
the invoice due date: 85% of the face value;
(iii) the total A/R balance related to Alarm
Accounts for which the oldest applicable A/R
balance is 61 days to 90 days past due from
the invoice due date: 60% of the face value.
(iv) the total A/R balance related to Alarm
Accounts for which the oldest applicable A/R
balance is over 91 days past due from the
invoice due date is being transferred to
Buyer at no charge.
the total of (i) - (iii) shall not exceed $200,000.
(c) inventory, valued at book value, subject to a maximum
value of $50,000.00;
(d) prepaid expenses which arise in the Ordinary Course
of Business, valued at one hundred percent (100%);
(e) furniture, fixtures, vehicles, leasehold improvements,
machinery and equipment, valued at book value, subject
to a maximum value of $100,000.00;
(f) any Contract listed on Schedule 3.18(a) for the
providing of security monitoring services that does
not include an evergreen renewal provision or that
expires within 36 months of the Closing Date and that
is not included in RMR, valued at a mutually agreed
upon value (at the time of the execution of this
Agreement there was no such Contract and no such
Contract is expected to exist at Closing);
(g) rental revenue that relates to "lease-to-own"
Contracts listed on Schedule 3.18(b) providing for
nominal buy-out of an alarm system upon lease
expiration and that is not included in RMR, at a
mutually agreed upon value.
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The following will be excluded from the calculation of Net Asset Value: (a)
receivables from employees, officers and directors; (b) intercompany
transactions involving other entities owned, fully or partially, by Sellers; and
(c) other assets - security systems.
"ORDER" -- any award, decision, injunction, judgment, order, ruling,
subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.
"ORDINARY COURSE OF BUSINESS" -- an action taken by a Person will be
deemed to have been taken in the "Ordinary Course of Business" only if:
(a) such action is consistent with the past practices of
such Person and is taken in the ordinary course of
the normal day-to-day operations of such Person;
(b) such action is not required to be authorized by the
board of directors of such Person (or by any Person
or group of Persons exercising similar authority) and
does not require any other separate or special
authorization of any nature; and
(c) such action is similar in nature and magnitude to
actions customarily taken, without any separate or
special authorization, in the ordinary course of the
normal day-to-day operations of other Persons that
are in the same line of business as such Person.
"ORGANIZATIONAL DOCUMENTS" -- the articles of incorporation, the
bylaws and any amendment thereto.
"OVER 60 RMR" -- RMR which otherwise meets the definition of RMR set
forth in Section 1 except that the accounts receivable balance associated with
the Alarm Account is over 60 days past due from the oldest outstanding invoice
due date but does not represent more than 3 delinquent payments related to RMR.
"PERSON" -- any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, or other entity or
Governmental Body.
"PROCEEDING" -- any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative, investigative, or
informal) commenced, brought, conducted, or heard by or before, or otherwise
involving, any Governmental Body or arbitrator.
"PURCHASE PRICE DEDUCT" -- means 35 multiplied by the difference
between the Lost RMR and the Lost RMR Offset.
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"QUALIFYING OVER 60 RMR" -- with respect to each Over 60 RMR Alarm
Account acquired as of the Closing, each such Alarm Account that does not have
an Accounts Receivable balance upon the expiration of Holdback Period I of (i)
over 60 days past due from the oldest applicable invoice due date and (ii) that
represents more than 3 delinquent payments.
"RMR" means the amount of the Company's recurring monthly revenue (net
of any finance, communication, utility company or third party pass-through
charges, assessments, taxes or customer discounts) from Alarm Account customers
as of the day immediately preceding the Closing Date and which is derived
solely from open/close, perpetual lease, maintenance and repair service
agreements acceptable to Buyer. RMR shall not include any revenue: (i) from
customers whose accounts receivable balances (whether attributable to RMR or
otherwise) are more than 60 days past due from the oldest applicable invoice
due date; (ii) that is not periodic in nature but relates to installation
purchase payments or one-time assessments or charges; (iii) from Alarm Account
customers of which Sellers or the Company have received notice of a pending
termination (iv) from third-party monitoring agreements; (v) from Alarm Account
customers who were recently added as a result of extraordinary marketing
efforts or an amnesty program; (vi) that pertains to any security monitoring
services Contract that does not include an evergreen renewal provision or that
expires within 36 months of the Closing Date; (vii) from lease-to-buy Contracts
that provide the customer with the option of buying the security system for a
nominal amount; or (viii) that relate to guard patrol services.
"RELEASE" -- any spilling, leaking, emitting, discharging, depositing,
escaping, leaching, dumping, or other releasing into the environment.
"REPRESENTATIVE" -- with respect to a particular Person, any director,
officer, employee, agent, consultant, advisor, or other representative of such
Person, including legal counsel, accountants, and financial advisors.
"SECURITIES ACT" -- the Securities Act of 1933 or any successor law,
and regulations and rules issued pursuant to that Act or any successor law.
"SELLERS" -- as defined in the first paragraph of this Agreement.
"SHARES" -- as defined in the second paragraph of this Agreement.
"SUBSIDIARY" -- with respect to any Person (the "Owner"), any
corporation or other Person of which securities or other interests having the
power to elect a majority of that corporation's or other Person's board of
directors or similar governing body, or otherwise having the power to direct
the business and policies of that corporation or other Person (other than
securities or other interests having such power only upon the happening of a
contingency that has not occurred) are held by the Owner or one or more of its
Subsidiaries; when used without reference to a particular Person, "Subsidiary"
means a Subsidiary of the Company.
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"TAX" -- any tax (including any income tax, capital gains tax,
value-added tax, sales tax, property tax, gift tax, or estate tax), levy,
assessment, tariff, duty (including any customs duty), deficiency, or other
fee, and any related charge or amount (including any fine, penalty, interest,
or addition to tax), imposed assessed, or collected by or under the authority
of any Governmental Body.
"TAIL END INSURANCE POLICY" -- as defined in Section 7.4.
2. SALE AND TRANSFER OF SHARES; CLOSING
2.1 SHARES. Subject to the terms and conditions of this
Agreement, at the Closing, Sellers will sell and transfer to Buyer, and Buyer
will purchase from Sellers, the Shares free and clear from any encumbrance.
2.2 PURCHASE PRICE. The purchase price for the Shares will be:
(a) thirty-five times RMR (the "RMR Purchase Price"); (b) plus thirty-five
times Over 60 RMR ("Over 60 RMR Purchase Price") (a and b collectively the
"Total RMR Purchase Price") (provided, however that no additional consideration
shall be paid in the event that RMR plus Over 60 RMR exceeds $90,000.00); (c)
plus or minus, as appropriate, the Adjustment Amount; (d) plus or minus, as
appropriate, other liabilities or credits, prepaid items and deferred charges
relating to the Company existing on the Closing Date prorated in accordance
with generally accepted accounting principles (a, b, c and d collectively the
"Purchase Price").
2.3 ASSUMED LIABILITIES. Except as set forth on Schedule 2.3 (the
"Assumed Liabilities") Buyer shall not assume, take subject to, pay, discharge
or in any manner be obligated for, any debts, liabilities or obligations of the
Company or the Sellers incurred prior to Closing, whether such liabilities
become due and payable prior to or subsequent to Closing. In the event the
Company does not pay and fully satisfy at or before Closing, any liabilities
not specifically assumed by Buyer, then Sellers shall assume personal
responsibility for payment of such liabilities and Buyer shall be able: (a) to
set off such unpaid liability against the Holdback; or (b) to proceed directly
against the Sellers.
2.4 CLOSING. The purchase and sale (the "Closing") provided for
in this Agreement will take place at a mutually agreed upon location in Austin,
Texas on January 8, 1996, or at such other time and place as the parties may
mutually agree. Subject to the provisions of Section 9, failure to consummate
the purchase and sale provided for in this Agreement on the date and time and
at the place determined pursuant to this Section 2.4 will not result in the
termination of this Agreement and will not relieve any party of any obligation
under this Agreement.
2.5 CLOSING OBLIGATIONS. At the Closing:
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(a) Sellers will deliver to Buyer:
(i) certificates representing the Shares, duly endorsed
(or accompanied by duly executed stock powers), for
transfer to Buyer;
(ii) consulting agreement in the form of Exhibit
2.5(a)(ii), executed by Xxxx (the "Consulting
Agreement");
(iii) noncompetition agreement in the form of Exhibit
2.5(a)(iii), executed by Sellers (the "Noncompetition
Agreement"), and
(iv) a certificate executed by Sellers representing and
warranting to Buyer that each of Sellers'
representations and warranties in this Agreement was
accurate in all respects as of the date of this
Agreement and is accurate in all respects as of the
Closing Date as if made on the Closing Date; and
(b) Buyer will deliver to Sellers:
(i) 95 percent (95%) of the RMR Purchase Price plus or
minus, as appropriate, the Adjustment Amount by wire
transfer to the joint account specified by Xxxx and
Xxxx;
(ii) the Over 60 RMR Purchase Price and the remainder of
the RMR Purchase Price after taking into account the
amount paid in accordance with Section 2.5(b)(i) (the
"Holdback") to the escrow agent referred to in the
Escrow Agreement by wire transfer;
(iii) a certificate executed by Buyer to the effect that,
except as otherwise stated in such certificate, each
of Buyer's representations and warranties in this
Agreement was accurate in all respects as of the date
of this Agreement and is accurate in all respects as
of the Closing Date as if made on the Closing Date;
and
(iv) the Consulting Agreement, executed by Buyer.
(c) Buyer and Sellers will enter into an escrow agreement in the
form of Exhibit 2.4(c) (the "Escrow Agreement").
2.6 ADJUSTMENT AMOUNT. The "Adjustment Amount" shall equal the
difference between the Net Asset Value as of the Closing Date and the Assumed
Liabilities as of the Closing Date. If the Net Asset Value exceeds the Assumed
Liabilities, the Purchase Price will be increased by the amount of such excess,
subject to a maximum increase of Three Hundred
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Thousand Dollars ($300,000.00). If the Net Asset Value is less than the
Assumed Liabilities, the Purchase Price will be decreased by the amount of such
difference.
2.7 HOLDBACK.
(a) Within 30 days after the end of the Holdback Period I, Buyer
shall submit to Sellers substantially in the form attached hereto as Exhibit
2.7(a) along with all appropriate supporting documentation, a report reflecting:
(i) the Escrowed Over 60 RMR; (ii) the liabilities of the Company accruing on or
before the Closing which are not Assumed Liabilities but which have been paid by
the Buyer or the Company after the Closing, if any; (iii) the Non-Qualifying
Over 60 RMR and; (iv) the resulting difference between the Escrowed Over 60 RMR
plus the amount associated with Section 2.7(a)(ii) less the Non-Qualifying Over
60 RMR. If Sellers do not notify Buyer of a dispute regarding such report
within ten business days from the date such report is submitted by Buyer to
Sellers or if Sellers notify Buyer of its acceptance of such report, such report
shall be deemed complete and accurate and Sellers and Buyer shall notify Escrow
Agent to pay the sums computed below to Seller or Buyer, as the case may be. The
amount disbursed from the Escrow Account at the end of Holdback Period I shall
be the amount of the Escrowed Over 60 RMR and the interest earned on that
amount. If the amount associated with (iv) is a positive amount then Sellers
and Buyer shall instruct the Escrow Agent to first pay Sellers such amount and
the remainder of the Escrowed Over 60 RMR shall be paid by Escrow Agent to
Buyer. If the amount associated with (iv) is equal to zero or is a negative
amount, then Sellers and Buyer shall instruct the Escrow Agent to pay Buyer the
entire Escrowed Over 60 RMR amount.
(b) Within 30 days after the end of the Holdback Period II, Buyer
shall submit to Sellers substantially in the form attached hereto as Exhibit
2.7(b) along with all appropriate supporting documentation, a report
reflecting: (i) the Holdback; (ii) the amount disbursed in accordance with
Section 2.7(a); (iii) the Purchase Price Deduct; (iv) the liabilities of the
Company accruing on or before the Closing which are not Assumed Liabilities but
which have been paid by the Buyer or the Company after the Closing Date and
which were not paid out of the proceeds of the Escrowed Over 60 RMR, if any;
and (v) the resulting difference between the Holdback less the credits
associated with Section 2.7(b)(ii), (iii) and (iv) (the "Resulting
Difference"). If Sellers do not notify Buyer of a dispute regarding such
report within ten business days from the date such report is submitted by Buyer
to Sellers or if Sellers notify Buyer of its acceptance of such report, such
report shall be deemed complete and accurate and Sellers and Buyer shall notify
Escrow Agent to pay the sums computed below to Sellers or Buyer, as the case
may be, and the Escrow Account shall then be closed after payment by the Escrow
Agent of all funds held by it in the Escrow Account. If the Resulting
Difference is a positive amount then Sellers and Buyer shall instruct the
Escrow Agent to first pay the Sellers the Resulting Difference and the
remainder of the Escrow Amount shall be paid by Escrow Agent to Buyer. If the
Resulting Difference is equal to zero or is a negative amount, then Sellers and
Buyer shall instruct the Escrow Agent to pay Buyer the entire Escrow Amount and
Sellers shall owe no further amount to Purchaser.
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(c) All disputes and differences with respect to the Escrow
Account shall be determined by binding arbitration under the rules then in
effect of the American Arbitration Association, such arbitration hearing to be
held in Birmingham, Alabama. The arbitration proceedings shall be heard by one
arbitrator selected from the proposed panel of arbitrators issued by the
American Arbitration Association, Sellers, on the one hand, and Buyer, on the
other hand, shall attempt to select a mutually acceptable arbitrator. If the
parties are unable to select a mutually acceptable arbitrator within five
business days following the issuance of the list of potential arbitrators by
the American Arbitration Association, Sellers, on the one hand, and Buyer, on
the other hand, shall each select on person from the list, and those two
persons selected shall appoint a third person from the list, which person shall
be the arbitrator for the dispute. All arbitration awards shall include an
award of expenses including, but not limited to, legal and accounting fees.
3. REPRESENTATIONS AND WARRANTIES TO SELLERS
Sellers represent and warrant to Buyer as follows:
3.1 ORGANIZATION AND GOOD STANDING
(a) The Company is a corporation duly organized, validly existing,
and in good standing under the laws of the state of Texas, with full corporate
power and authority to conduct its business as it is now being conducted, to own
or use the properties and assets that it purports to own or use, and to perform
all its obligations under the Alarm Accounts and the Applicable Contracts. The
Company is duly qualified to do business as a foreign corporation and is in good
standing under the laws of each state or other jurisdictions in which either the
ownership or use of the properties owned or used by it, or the nature of the
activities conducted by it, requires such qualification.
(b) Sellers have delivered to Buyer copies of the Organizational
Documents of the Company, as currently in effect.
3.2 AUTHORITY; NO CONFLICT
(a) This Agreement constitutes the legal, valid, and binding
obligation of Sellers, enforceable against Sellers in accordance with its terms.
Upon the execution and delivery by Sellers of the Escrow Agreement, the
Consulting Agreement and the Noncompetition Agreement (collectively, the
"Sellers' Closing Documents"), the Sellers' Closing Documents will constitute
the legal, valid, and binding obligations of Sellers, enforceable against
Sellers in accordance with their respective terms. Sellers have the absolute
and unrestricted right, power, authority, and capacity to execute and deliver
this Agreement and the Sellers' Closing Documents and to perform their
obligations under this Agreement and the Sellers' Closing Documents.
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(b) Neither the execution and delivery of this Agreement nor the
consummation or performance of any of the Contemplated Transactions will,
directly or indirectly (with or without notice or lapse of time):
(i) contravene, conflict with, or result in a violation
of (A) any provision of the Organizational Documents
of the Company, or (B) any resolution adopted by the
board of directors or the stockholders of the
Company;
(ii) contravene, conflict with, or result in a violation
of, or give any Governmental Body or other Person the
right to challenge any of the Contemplated
Transactions or to exercise any remedy or obtain any
relief under, any Legal Requirement or any Order to
which any the Company or either Seller, or any of the
assets owned or used by the Company, may be subject;
(iii) contravene, conflict with, or result in a violation of
any of the terms or requirements of, or give any
Governmental Body the right to revoke, withdraw,
suspend, cancel, terminate, or modify, any
Governmental Authorization that is held by the Company
or that otherwise relates to the business of, or any
of the assets owned or used by, the Company;
(iv) cause Buyer or the Company to become subject to, or to
become liable for the payment of, any Tax;
(v) cause any of the assets owned by the Company to be
reassessed or revalued by any taxing authority or
other Governmental Body;
(vi) contravene, conflict with, or result in a violation or
breach of any provision of, or give any Person the
right to declare a default or exercise any remedy
under, or to accelerate the maturity or performance
of, or to cancel, terminate, or modify, any Alarm
Account or any Applicable Contract; or
(vii) Result in the imposition or creation of any
Encumbrance upon or with respect to any of the assets
owned or used by the Company.
Except as set forth in Schedule 3.2, neither the Sellers or the Company is or
will be required to give any notice to or obtain any Consent from any Person in
connection with the execution and delivery of this Agreement or the
consummation or performance of any of the Contemplated Transactions.
3.3 CAPITALIZATION. The authorized equity securities of the
Company consists of 100,000 shares of common stock, no par value, of which 1,000
shares are issued and outstanding and constitute the Shares. There are no
outstanding stock options or rights to
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purchase shares of stock of the Company. Sellers are and will be on the Closing
Date the recorded and beneficial owners and holders of the Shares, free and
clear of all Encumbrances. Xxxx and Xxxx, collectively own 1,000 of the Shares.
No legend or other reference to any purported Encumbrance appears upon any
certificate representing equity securities of the Company. All of the
outstanding equity securities of the Company have been duly authorized and
validly issued and are fully paid and nonassessable. There are no Contracts
relating to the issuance, sale, or transfer of any equity securities or other
securities of the Company. None of the outstanding equity securities or other
securities of the Company was issued in violation of the Securities Act or any
other Legal Requirement. The Company does not own, or have any Contract to
acquire, any equity securities or other securities of any Person or any direct
or indirect equity or ownership interest in any other business.
3.4 FINANCIAL STATEMENTS. Sellers have delivered to Buyer: (a)
the unaudited balance sheet of the Company as at December 31, 1994 (the "Balance
Sheet"); (b) the unaudited balance sheets of the Company as at December 31 in
each of the years 1992 through 1994, and the related statements of income,
changes in stockholders' equity, and cash flow for each of the fiscal years then
ended which were used in the preparation of the Company's federal and state
employment, income and sales and use tax returns, and (b) an unaudited balance
sheet of the Company as at November 30, 1995 (the "Interim Balance Sheet") and
the related unaudited statements of income, changes in stockholders' equity, and
cash flow for the eleven (11) months then ended, (the "Interim Financial
Statements"). Such financial statements fairly present the financial condition
and the results of operations, changes in stockholders' equity, and cash flow of
the Company as at the respective dates of and for the periods referred to in
such financial statements, subject, in the case of Interim Financial Statements,
to normal recurring year-end adjustments (the effect of which will not,
individually or in the aggregate, be materially adverse); the financial
statements referred to in this Section 3.4 reflect the consistent application of
accounting principles which are acceptable to federal and state taxing
authorities throughout the periods involved.
3.5 BOOKS AND RECORDS. The books of account, minute books, stock
record books, and other records of the Company, all of which have been made
available to Buyer, are complete and correct and have been maintained in
accordance with sound business practices. The minutes books of the Company
contain accurate and complete records of all meetings held by, and corporate
action taken by, the stockholders, the Boards of Directors, and committees of
the Boards of Directors of the Company, and no meeting of any such stockholders,
Board of Directors, or committee has been held for which minutes have not been
prepared and are not contained in such minute books. At the Closing, all of
those books and records will be in the possession of the Company.
3.6 REAL PROPERTY. The Company does not own and has never owned
any real property. Schedule 3.6 contains a complete and accurate list of all
parcels of real property together with all buildings, structures, improvements
and fixtures thereon and all hereditaments appurtenant thereto, which are leased
by the Company. Sellers have delivered or made available to Buyer copies of the
instruments by which the Company acquired such interests.
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3.7 TITLE TO PROPERTIES. The Company owns all the properties and
assets (whether real, personal, or mixed and whether tangible or intangible)
that it purports to own, including (a) all of the properties and assets
reflected in the Interim Balance Sheet (except for personal property sold since
the date of the Interim Balance Sheet, as the case may be, in the Ordinary
Course of Business), and (b) all of the properties and assets purchased or
otherwise acquired by the Company since the date of the Interim Balance Sheet
(except for personal property acquired and sold since the date of the Interim
Balance Sheet in the Ordinary Course of Business and consistent with past
practice). The properties and assets purchased or otherwise acquired by the
Company since the date of the Interim Balance Sheet (other than inventory
purchased in the Ordinary Course of Business) are listed in Schedule 3.7. The
properties and assets (a) owned by the Company which are reflected in the
Interim Balance Sheet and Schedule 3.7 and (b) leased by the Company pursuant
to a Contract listed in Schedules 3.6 and 3.18(b) comprise all of the assets
and properties used by the Company in the operation of its business as it is
currently being conducted
3.8 CONDITION AND SUFFICIENCY OF ASSETS. The equipment of the
Company is in good operating condition and repair, and is adequate for the uses
to which they are being put, and none of such equipment is in need of
maintenance or repairs except for ordinary, routine maintenance and repairs
that are not material in nature or cost. The equipment of the Company is
sufficient for the continued conduct of the Company's business after the
Closing in substantially the same manner as conducted prior to the Closing.
3.9 ACCOUNTS RECEIVABLE. All accounts receivable of the Company
that are reflected on the Balance Sheet or the Interim Balance Sheet or on the
accounting records of the Company as of the Closing Date (collectively, the
"Accounts Receivable" or "A/R") represent or will represent valid obligations
arising from sales actually made or services actually performed in the Ordinary
Course of Business. Sellers shall not themselves nor shall Sellers permit any
of the Company's Employees or agents to pay any of the Accounts Receivable
outstanding on the date of this Agreement or generated between the date of this
Agreement and the Closing Date. There is no contest, claim, or right of
set-off, other than returns in the Ordinary Course of Business, under any
Contract with any maker of an Accounts Receivable relating to the amount or
validity of such Accounts Receivable. Schedule 3.9 contains a complete and
accurate list of all Accounts Receivable which relate to services provided on
or prior to the Closing Date which list sets forth the aging of such Accounts
Receivable in the following categories ("Current" and for Alarm Accounts that
have A/R balances that are delinquent ("0-30 days past due from the oldest
applicable invoice due date"; "31-60 days past due from the oldest applicable
invoice due date"; "61-90 days past due from the oldest applicable due date";
"Over 90 days past due from the oldest applicable invoice due date")).
3.10 INVENTORY. All inventory of the Company, whether or not
reflected in the Balance Sheet or the Interim Balance Sheet, consists of
equipment which is of a quality usable and salable in the Ordinary Course of
Business, except for obsolete items and items of below-standard quality, all of
which have been written off or written down to net realizable value in the
Balance Sheet or the Interim Balance Sheet or on the accounting records of the
Company as
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of the Closing Date, as the case may be. The quantities of each item of
inventory are not excessive, but are reasonable in the present circumstances of
the Company. The inventory of the Company as of January 1, 1996 is listed on
Schedule 3.10. Sellers shall update Schedule 3.10 to reflect all inventory of
the Company as of the day before Closing.
3.11 NO UNDISCLOSED LIABILITIES. Except as set forth in Schedule
3.11, the Company has no liabilities or obligations of any nature (whether
known or unknown and whether absolute, accrued, contingent, or otherwise)
except for liabilities or obligations reflected or reserved against in the
Balance Sheet or the Interim Balance Sheet and current liabilities incurred in
the Ordinary Course of Business since the respective date thereof.
3.12 TAXES.
(a) The Company has filed or caused to be filed all tax returns
that are or were required to be filed by or with respect to it, pursuant to
applicable Legal Requirements. Sellers have delivered or made available to
Buyer copies of, and Schedule 3.12 contains a complete and accurate list of,
all such tax returns relating to income or franchise taxes filed since December
31, 1994. The Company has paid, or made provision for the payment of, all
Taxes that have or may have become due pursuant to those tax returns or
otherwise, or pursuant to any assessment received by Sellers or any Company,
except such Taxes, if any, as are listed in Schedule 3.12 and are being
contested in good faith and as to which adequate reserves have been provided in
the Balance Sheet and the Interim Balance Sheet.
(b) Schedule 3.12 contains a complete and accurate list of all
audits of all tax returns of the Company, including a reasonably detailed
description of the nature and outcome of each audit. All deficiencies proposed
as a result of such audits have been paid, reserved against, settled, or as
described in Schedule 3.12 are being contested in good faith by appropriate
proceedings. Except as described in Schedule 3.12, neither the Sellers or
Company has given or been requested to give waivers or extensions (or is or
would be subject to a waiver or extension given by any other Person) of any
statute of limitations relating to the payment of Taxes of the Company or for
which the Company may be liable.
(c) The charges, accruals, and reserves with respect to Taxes on
the respective books of the Company are adequate and are at least equal to the
Company's liability for Taxes. There exists no proposed tax assessment against
any Company except as disclosed in the Balance Sheet or in Schedule 3.12. All
Taxes that the Company is or was required by Legal Requirements to withhold or
collect have been duly withheld or collected and, to the extent required, have
been paid to the proper Governmental Body or other Person.
(d) All tax returns filed by the Company are true, correct, and
complete. The Company is not, or has not within the five-year period preceding
the Closing Date been, an "S" corporation.
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3.13 NO MATERIAL ADVERSE CHANGE. Since the date of the Balance
Sheet, there has not been any material adverse change (which for the purposes
of this Section 3.13 shall be defined as greater a than 5% change) in the
business, operations, properties, prospects, assets, or condition of the
Company, and no event has occurred or circumstance exists that may result in
such a material adverse change.
3.14 EMPLOYEE BENEFITS. Except as set forth in Schedule 3.14
attached hereto, the Company does not maintain, contribute to, sponsor or
participate in, and no past or present Employee of the Company participates in
or is benefited by any employee pension benefit or welfare plan as defined in
the Employee Retirement Income Security Act of 1974 ("ERISA"), or any other
plan, arrangement or commitment, whether oral or written, formal or informal,
relating to severance, sick pay, vacation, bonus, retirement, pension, profit
sharing, option, deferred compensation, life, medical or dental insurance or
other benefits (collectively "Employee Plan") covering any Employee or former
Employee of the Company, nor has the Company taken any action to institute any
such Employee Plan. Sellers have provided Buyer with a copy of the current
handbook given to each Employee which handbook describes the Employee Plans.
3.15 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL
AUTHORIZATIONS.
(a) Except as set forth in Schedule 3.15:
(i) the Company is, and at all times since its inception
has been, in full compliance with each Legal Requirement that is or
was applicable to it or to the conduct or operation of its business or
the ownership or use of any of its assets;
(ii) no event has occurred or circumstance exists that
(with or without notice or lapse of time) (A) may constitute or result
in a violation by the Company of, or a failure on the part of the
Company to comply with, any Legal Requirement, or (B) may give rise to
any obligation on the part of the Company to undertake, or to bear all
or any portion of the cost of, any remedial action of any nature; and
(iii) the Company has not received, at any time any notice
or other communication (whether oral or written) from any Governmental
Body or any other Person regarding (A) any actual, alleged, possible,
or potential violation of, or failure to comply with, any Legal
Requirement, or (B) any actual, alleged, possible, or potential
obligation on the part of the Company to undertake, or to bear all or
any portion of the cost of, any remedial action of any nature.
(b) Schedule 3.15 contains a complete and accurate list of each
Governmental Authorization that is held by the Company or that otherwise
relates to the business of, or to any of the assets owned or used by the
Company. Each Governmental Authorization listed or required to be listed in
Schedule 3.15 is valid and in full force and effect. Except as set forth in
Schedule 3.15:
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(i) the Company is, and at all times has been, in full
compliance with all of the terms and requirements of each Governmental
Authorization identified or required to be identified in Schedule
3.15;
(ii) no event has occurred or circumstance exists that may
(with or without notice or lapse of time) (A) constitute or result
directly or indirectly in a violation of or a failure to comply with
any term or requirement of any Governmental Authorization listed or
required to be listed in Schedule 3.15 or (B) result directly or
indirectly in the revocation, withdrawal, suspension, cancellation, or
termination of, or any modification to, any Governmental Authorization
listed or required to be listed in Schedule 3.15;
(iii) the Company has not received, at any time any notice
or other communication (whether oral or written) from any Governmental
Body or any other Person regarding (A) any actual, alleged, possible,
or potential violation of or failure to comply with any term or
requirement of any Governmental Authorization, or (B) any actual,
proposed, possible, or potential revocation, withdrawal, suspension,
cancellation, termination of, or modification to any Governmental
Authorization; and
(iv) all applications required to have been filed for the
renewal of the Governmental Authorizations listed or required to be
listed in Schedule 3.15 have been duly filed on a timely basis with
the appropriate Governmental Bodies, and all other filings required to
have been made with respect to such Governmental Authorizations have
been duly made on a timely basis with the appropriate Governmental
Bodies.
The Governmental Authorizations listed in Schedule 3.15 collectively constitute
all of the Governmental Authorizations necessary to permit the Company to
lawfully conduct and operate its business in the manner it currently conducts
and operates such business and to permit the Company to own and use its assets
in the manner in which it currently owns and uses such assets.
3.16 LEGAL PROCEEDINGS, ORDERS
(a) Except as set forth in Schedule 3.16, there is no pending
Proceeding:
(i) that has been commenced by or against the Company or
that otherwise relates to or may affect the business of, or any of the
assets owned or used by, the Company; or
(ii) that challenges, or that may have the effect of
preventing, delaying, making illegal, or otherwise interfering with,
any of the Contemplated Transactions.
To the Knowledge of Sellers and the Company, (1) no such Proceeding has been
threatened, and (2) no event has occurred or circumstance exists that may give
rise to or serve as a basis for the
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commencement of any such Proceeding. Sellers have delivered to Buyer copies of
all pleadings, correspondence, and other documents relating to each Proceeding
listed in Schedule 3.16;
The Proceedings listed in Schedule 3.16 will not have a material
adverse effect on the business, operations, assets, condition, or prospects of
the Company.
(b) Except as set forth in Schedule 3.16;
(i) there is no Order to which the Company, or any of the
assets owned or used by the Company, is subject;
(ii) neither Seller is subject to any Order that relates
to the business of, or any of the assets owned or used by, the
Company; and
(iii) no officer, director, agent, or employee of the
Company is subject to any Order that prohibits such officer, director,
agent, or employee from engaging in or continuing any conduct,
activity, or practice relating to the business of the Company.
(c) Except as set forth in Schedule 3.16:
(i) the Company is, and at all times has been, in full
compliance with all of the terms and requirements of each Order to
which it, or any of the assets owned or used by it, is or has been
subject;
(ii) no event has occurred or circumstance exists that may
constitute or result in (with or without notice or lapse of time) a
violation of or failure to comply with any term or requirement of any
Order to which the Company, or any of the assets owned or used by the
Company, is subject; and
(iii) the Company has received, at any time since any
notice or other communication (whether oral or written) from any
Governmental Body or any other Person regarding any actual, alleged,
possible, or potential violation of, or failure to comply with, any
term or requirement of any Order to which the Company, or any of the
assets owned or used by the Company, is or has been subject.
3.17 ABSENCE OF CERTAIN CHANGES AND EVENTS. Except as set forth in
Schedule 3.17, since the date of the Interim Balance Sheet, the Company has
conducted its businesses only in the Ordinary Course of Business and there has
not been any:
(a) change in the Company's authorized or issued capital
stock; grant of any stock option or right to purchase
shares of capital stock of the Company; issuance of
any security convertible into such capital stock;
grant of any registration rights; purchase,
redemption, retirement, or other acquisition by the
Company of any shares of any such capital stock; or
declaration or
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payment of any dividend or other distribution or
payment in respect of shares of capital stock;
(b) amendment to the Organizational Documents of the
Company;
(c) payment or increase by the Company of any bonuses,
salaries, or other compensation to any stockholder,
director, officer, or (except in the Ordinary Court
of Business) employee or entry into any employment,
severance, or similar Contract with any director,
officer, or employee;
(d) adoption of, or increase in the payments to or
benefits under, any Employee Plan;
(e) damage to or destruction or loss of any asset or
property of the Company, whether or not covered by
insurance, materially and adversely affecting the
properties, assets, business, financial condition, or
prospects of the Company, taken as a whole;
(f) entry into, termination of, or receipt of notice of
termination of (i) any license, distributorship,
dealer, sales representative, joint venture, credit,
or similar agreement, or (ii) any Contract or
transaction involving a total remaining commitment by
the Company of greater than $2,000.00;
(g) sale (other than sales of inventory in the Ordinary
Course of Business), lease, or other disposition of
any asset or property of the Company or mortgage,
pledge, or imposition of any lien or other encumbrance
on any material asset or property of the Company,
including the sale, lease, or other disposition of any
of the Intellectual Property Assets;
(h) material change in the accounting methods used by the
Company; or
(i) agreement, whether oral or written, by the Company to
do any of the foregoing.
3.18 CONTRACTS; NO DEFAULTS
(a) Schedule 3.18(a) contains a complete and accurate list of each
Contract for the rendering of security monitoring services to existing customers
(the "Alarm Accounts") which list is broken down according to those Contracts
which meet the definition of RMR and those Contracts that do not meet the
definition of RMR and such list indicates the Contracts which are oral
agreements. Sellers have delivered to Buyer true and complete copies of all
such written Contracts.
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(b) Schedule 3.18(b) contains a complete and accurate list, and
Sellers have delivered to Buyer true and complete copies of:
(i) each Applicable Contract that involves performance of
services or delivery of goods or materials to the
Company of an amount or value in excess of $1,000.00;
(ii) each Applicable Contract that was not entered into in
the Ordinary Course of Business;
(iii) each lease, rental agreement, license, installment
and conditional sale agreement, and other Applicable
Contract affecting the ownership of, leasing of,
title to, use of, or any leasehold or other interest
in, any personal property;
(iv) each collective bargaining agreement and other
Applicable Contract to or with any labor union or
other employee representative of a group of employees
relating to wages, hours, and other conditions of
employment;
(c) Except as set forth in Schedule 3.18(c):
(i) each Contract identified or required to be identified
in Schedules 3.18(a) and 3.18(b) is in full force and effect and is
valid and enforceable in accordance with its terms; and
(ii) no Contract identified or required to be identified
in Schedules 3.18(a) and 3.18(b) contains any term or requirement that
is not in the Ordinary Course of Business.
(d) There are no renegotiations of, attempts to renegotiate, or
outstanding rights to renegotiate any material amounts paid or payable to the
Company under current or completed Contracts with any Person having the
contractual or statutory right to demand or require such renegotiation and no
such Person has made written demand for such renegotiation.
3.19 INSURANCE.
(a) Sellers have delivered to Buyer: true and complete copies of
all policies of insurance to which the Company is a party or under which the
Company is or has been covered at any time within the three (3) years
preceding the date of this Agreement.
(b) Schedule 3.19 sets forth, by year, for the current policy year
and each of the two (2) preceding policy years;
(i) a summary of the loss experience under each policy;
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(ii) a statement describing each claim under an insurance
policy for an amount in excess of $100.00, which sets
forth;
(A) the name of the claimant;
(B) a description of the policy by
insurer, type of insurance, and
period of coverage; and
(C) the amount and a brief description of
the claim; and
(iii) a statement describing the loss experience for all
claims that were self-insured, including the number
and aggregate cost of such claims.
(c) Except as set forth in Schedule 3.19:
(i) All policies to which the Company is a party or that
provide coverage to the Company;
(A) are valid, outstanding, and
enforceable;
(B) are issued by Monticello Insurance
Company, an insurance underwriter
which has an A-Excellent rating by
A. M. Best insurance rating agency;
(C) taken together, provide
"occurrence-based" general liability
insurance coverage of at least
$500,000.00 per single occurrence.
For purposes of this Agreement,
"occurrence-based" means if a claim
arose after the Closing Date for an
event which occurred prior to the
Closing Date, the Company's
applicable insurance policy in
existence on the date such event
occurred would cover such claim;
(D) are sufficient for compliance with
all Legal Requirements and Contracts
to which the Company is a party or
by which it is bound; and
(E) will continue in full force and
effect following the consummation of
the Contemplated Transactions.
(ii) The Sellers and the Company has not received (A) any
refusal of coverage or any notice that a defense will be afforded with
reservation of rights, or (B) any notice of cancellation or any other
indication that any insurance policy is no longer in full force or
effect or that the issuer of any policy is not willing or able to
perform its obligations thereunder.
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(iii) The Company has paid all premiums due, and have
otherwise performed all of its respective obligations,under each
policy to which the Company is a party or that provides coverage to
the Company.
(iv) The Company has given notice to the insurer of all
claims that may be insured thereby.
3.20 ENVIRONMENTAL MATTERS. The Company has at all times been in
full compliance with all Environmental Requirements. Sellers and the Company
have not at any time placed, located, disposed of, buried, stored or accumulated
any Hazardous Materials in, on or under the Facilities or any part thereof. To
the Knowledge of Sellers, no Person has at any time placed, located, disposed
of, buried, stored or accumulated any Hazardous Material in, on or under the
Facilities. To the Knowledge of Sellers no portion of the Facilities has been
designated, listed or identified in any manner by any Government Body or under
or pursuant to Environmental Requirements as a Hazardous Materials disposal or
removal site, superfund or clean-up site or candidate for removal or closure
pursuant to any Environmental Requirement. No lien arising under or in
connection with any Environmental Requirements as attached to any revenues or to
the Facilities. Neither the Sellers or the Company has received a summons,
citation, notice, directive, letter or other communication, written or oral,
from any Governmental Body pursuant to any Environmental Requirement concerning
any act or omission by the Company resulting in a Release of Hazardous
Materials. Neither Sellers or the Company has received notice of any
nonconforming condition of the Facilities. If such notice or citation is
received or any such condition is found to exist which existed prior to Closing,
Sellers shall be obligated to correct such conditions even if such conditions
are discovered after the Closing Date.
3.21 EMPLOYEES.
(a) Schedule 3.21 contains a complete and accurate list of the
following information for each employee or director of the Company, including
each employee on leave of absence or layoff status; name; job title; employment
date; current compensation paid or payable and any change in compensation since
January 1, 1995; most recent and next anticipated salary review date; vacation
accrued; and service credited for purposes of vesting and eligibility to
participate under the Employee Plans.
(b) No former or current employee or current or former director of
the Company is a party to, or is otherwise bound by, any agreement or
arrangement, including any confidentiality, non-competition, or proprietary
rights agreement, between such employee or director and any other entity or
person that in any way adversely affected, affects, or will affect (v) the
performance of his or her duties as an employee or director of the Company, or
(vi) the ability of the Company to conduct its business. To Sellers' current
Knowledge, no employee of the Company intends to terminate his or her employment
with such Acquired Company.
(c) Schedule 3.21 also contains a complete and accurate list of the
following information for each retired employee or director of the Company, or
their dependents, receiving
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benefits or scheduled to receive benefits in the future, name, pension benefit,
pension option election, retiree medical insurance coverage, retiree life
insurance coverage, and other benefits.
(d) No employee of the Company has a written employment agreement
with the Company.
3.22 LABOR DISPUTES; COMPLIANCE. The Company has not been or is not
a party to any collective bargaining or other labor Contract. The Company has
complied in all respects with all Legal Requirements relating to employment,
equal employment opportunity, nondiscrimination, immigration, wages, hours,
benefits, collective bargaining, the payment of social security and similar
taxes, occupational safety and health, and plant closing. The Company is liable
for the payment of any taxes, fines, penalties, or other amounts, however
designated, for failure to comply with any of the foregoing Legal Requirements.
3.23 INTELLECTUAL PROPERTY.
(a) The term "Intellectual Property Assets" includes:
(i) the Company's name, all fictional business names,
trading names, registered and unregistered trademarks,
service marks, and applications (collectively,
"Marks");
(ii) all patents and patent applications (collectively,
"Patents");
(iii) all copyrights in both published works and unpublished
works that are material to the Company' businesses
(collectively, "Copyrights"); and
(iv) all know-how, trade secrets, confidential information,
software, technical information, process technology,
plans, drawings, and blue prints (collectively, "Trade
Secrets");
(b) Schedule 3.23 contains a complete and accurate list and
summary description, of all Intellectual Property Assets.
(c) Sellers and the Company have taken all reasonable precautions
to protect the secrecy, confidentiality, and value of their Trade Secrets. The
Trade Secrets are not part of the public knowledge or literature, and, to
Sellers' Knowledge, have not been used, divulged, or appropriated either for
the benefit of any Person or to the detriment of the Company. No Trade Secret
is subject to any adverse claim or has been challenged or threatened in any
way.
3.24 PRODUCT WARRANTIES AND MEDICAL INFORMATION. Except for the
standard warranties on installations detailed in Schedule 3.24, there are no
written warranties or oral warranties given by the Company applicable to any of
the Alarm Accounts. The Company has not entered into any Contract with any of
its customers which would require Buyer to provide
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any medical or health information on its customers to any third party and the
Company is not obligated to keep or obtain medical or health information on any
or all of its customers.
3.25 BUSINESS POSITION.
(a) the RMR of the Alarm Accounts is approximately $80,000.00;
(b) the Company monitors approximately 3,800 Alarm Account
customers;
(c) the Company does not have more than 15 customers that have
Contracts which require video monitoring;
(d) Gross RMR Attrition has not exceeded 7.5% during each of the
last three calendar years;
(e) as of the Closing Date there is no Legal Requirement that
would preclude monitoring of the Alarm Accounts outside of the city limits of
Austin, Texas or outside of the State of Texas;
(f) as of the Closing Date, all of the Alarm Account customers can
be remote call forwarded to Buyer's central monitoring station without the
requirement of either a site visit for alarm panel dialer number reprogramming
or remote reprogramming of the alarm panel dialer;
(g) the Company does not have more than 300 customers that require
"long range radio" monitoring; and
(h) Sellers and the Company have not increased or decreased the
recurring monitoring rates during the previous six month period.
(i) Revenues reasonably anticipated to be received by the Company
for work required to complete any Builder Installations will exceed all
liabilities associated with completion of such installations. Schedule 3.25(i)
sets forth a list of builders who provide Builder Installations.
3.26 CERTAIN PAYMENTS. The Company or director, officer, agent, or
employee of the Company, or to Sellers' Knowledge any other Person associated
with or acting for or on behalf of the Company, has directly or indirectly (a)
made any contribution, gift, bribe, rebate, payoff, influence payment,
kickback, or other payment to any Person, private or public, regardless of
form, whether in money, property, or services (i) to obtain favorable treatment
in securing business, (ii) to pay for favorable treatment for business secured,
or (iii) to obtain special concessions or for special concessions already
obtained, for or in respect of the Company, or (b) established or maintained
any fund or asset that has not been recorded in the books and records of the
Company.
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3.27 DISCLOSURE.
(a) No representation or warranty of Sellers in this Agreement or
attachments thereto omits to state a material fact necessary to make the
statements herein or therein, in light of the circumstances in which they were
made, not misleading.
(b) No notice given pursuant to Section 5.5 will contain any
untrue statement or omit to state a material fact necessary to make the
statements therein or in this Agreement, in light of the circumstances in which
they were made, not misleading.
(c) There is no fact known to either Seller that has specific
application to either the Sellers or the Company (other than general economic or
industry conditions) and that materially adversely affects or, as far as either
Seller can reasonably foresee, materially threatens, the assets, business,
prospects, financial condition, or results of operations of the Company that has
not been set forth in this Agreement or the attachments thereto.
3.28 BROKERS OR FINDERS. Sellers and their agents have incurred no
obligation or liability, contingent or otherwise, for brokerage or finders' fees
or agents' commissions or other similar payment in connection with this
Agreement.
4. REPRESENTATIONS AND WARRANTIES OF BUYER
4.1 ORGANIZATION AND GOOD STANDING. Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the State
of Delaware.
4.2 AUTHORITY; NO CONFLICT.
(a) This Agreement constitutes the legal, valid, and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms.
Upon the execution and delivery by Buyer of the Escrow Agreement, and the
Consulting Agreements, (collectively, the "Buyer's Closing Documents"), the
Buyer's Closing Documents will constitute the legal, valid, and binding
obligations of Buyer, enforceable against Buyer in accordance with their
respective terms. Buyer has the absolute and unrestricted right, power, and
authority to execute and deliver this Agreement and the Buyer's Closing
Documents and to perform its obligations under this Agreement and the Buyer's
Closing Documents.
(b) Neither the execution and delivery of this Agreement by Buyer
nor the consummation or performance of any of the Contemplated Transactions by
Buyer will give any Person the right to prevent, delay, or otherwise interfere
with any of the Contemplated Transactions pursuant to:
(i) any provision of Buyer's Organizational Documents;
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(ii) any resolution adopted by the stockholders of Buyer;
(iii) any Legal Requirement or Order to which Buyer may be
subject; or
(iv) any Contract to which Buyer is a party or by which
Buyer may be bound.
Buyer is not and will not be required to obtain any Consent from any Person in
connection with the execution and delivery of this Agreement or the
consummation or performance of any of the Contemplated Transactions.
4.3 INVESTMENT INTENT. Buyer is acquiring the Shares for its own
account and not with a view to their distribution within the meaning of Section
2.11 of the Securities Act.
4.4 CERTAIN PROCEEDINGS. There is no pending Proceeding that has
been commenced against Buyer and that challenges, or may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any of the
Contemplated Transactions. To Buyer's Knowledge, no such Proceeding has been
Threatened.
4.5 BROKERS OR FINDERS. Buyer and its officers and agents have
incurred no obligation or liability, contingent or otherwise, for brokerage or
finders' fees or agents' commissions or other similar payment in connection
with this Agreement.
5. COVENANTS OF SELLERS PRIOR TO CLOSING DATE
5.1 ACCESS AND INVESTIGATION. Between the date of this Agreement
and the Closing Date, Sellers after 24 hours advance notice will, and will
cause the Company and its Representatives to, (a) afford Buyer and its
Representatives full and free access to the Company's personnel, properties,
contracts, books and records, and other documents and data, (b) furnish Buyer
and its Representatives with copies of all such contracts, books and records,
and other existing documents and data as Buyer may reasonably request, and (c)
furnish Buyer and its Representatives with such additional financial,
operating, and other data and information as Buyer may reasonably request.
5.2 OPERATION OF THE BUSINESSES OF THE COMPANY. Between the date
of this Agreement and the Closing Date, Sellers will, and will cause the
Company to:
(a) conduct the business of the Company only in the Ordinary
Course of Business except that Sellers may cause the Company
to distribute or otherwise transfer the Excluded Assets to
Sellers or any other Person designated by Sellers;
(b) use their Best Efforts to preserve intact the current business
organization of the Company, keep available the services of
the current officers, employees, and agents of the Company,
and maintain the relations and good will with suppliers,
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customers, landlords, creditors, employees, agents, and others
having business relationships with the Company;
(c) confer with Buyer concerning operational matters of a material
nature; and
(d) otherwise report periodically to Buyer concerning the status
of the business, operations, and finances of the Company.
5.3 NEGATIVE COVENANT. Except as otherwise expressly permitted by
this Agreement, between the date of this Agreement and the Closing Date,
Sellers will not, and will cause the Company not to, without the prior consent
of Buyer, take any affirmative action, or fail to take any reasonable action
within their or its control, as a result of which any of the changes or events
listed in Section 3.17 is likely to occur.
5.4 NOTIFICATION. Between the date of this Agreement and the
Closing Date, each Seller will promptly notify Buyer in writing if such Seller
or the Company becomes aware of any fact or condition that causes or
constitutes a Breach as of the date of this Agreement, or if such Seller or the
Company becomes aware of the occurrence after the date of this Agreement of any
fact or condition that would (except as expressly contemplated by this
Agreement) cause or constitute a Breach of any representation or warranty had
such representation or warranty been made as of the time of occurrence or
discovery of such fact or condition. Should any such fact or condition require
any change in any schedule to this Agreement, if such schedule were dated the
date of the occurrence or discovery of any such fact or condition, Sellers will
promptly deliver to Buyer a supplement to the appropriate schedule specifying
such change. During the same period, each Seller will promptly notify Buyer of
any event that may make the satisfaction of the conditions in Section 7
impossible or unlikely.
5.5 NO NEGOTIATION. Until such time, if any, as this Agreement is
terminated pursuant to Section 9, Sellers will not, and will cause the Company
and its Representatives not to, directly or indirectly solicit, initiate, or
encourage any inquiries or proposals from, discuss or negotiate with, provide
any non-public information to, or consider the merits of any unsolicited
inquiries or proposals from, any Person (other than Buyer) relating to any
transaction involving the sale of the business or assets (other than in the
Ordinary Course of Business) of the Company, or any of the capital stock of the
Company, or any merger, consolidation, business combination, or similar
transaction involving the Company.
5.6 BEST EFFORTS. Between the date of this Agreement and the
Closing Date, Sellers will use their Best Efforts to cause the conditions in
Sections 7 and 8 to be satisfied.
6. COVENANTS OF BUYER PRIOR TO CLOSING DATE
6.1 BEST EFFORTS. Between the date of this Agreement and the
Closing Date, Buyer will use its Best Efforts to cause the conditions in
Sections 7 and 8 to be satisfied.
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6.2 NOTIFICATION. Between the date of this Agreement and the
Closing Date, Buyer will promptly notify Sellers in writing if Buyer becomes
aware of any fact or condition that causes or constitutes a Breach as of the
date of this Agreement, or if Buyer becomes aware of the occurrence after the
date of this Agreement of any fact or condition that would (except as expressly
contemplated by this Agreement) cause or constitute a Breach of any
representation or warranty had such representation or warranty been made as of
the time of occurrence or discovery of such fact or condition. During the same
period Buyer will promptly notify Sellers of any event that may make the
satisfaction of the conditions in Section 8 impossible or unlikely.
7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
Buyer's obligation to purchase the Shares and to take the other
actions required to be taken by Buyer at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived, in whole or in part):
7.1 ACCURACY OF REPRESENTATIONS. All of Sellers' representations
and warranties in this Agreement must have been accurate in all material
respects as of the date of this Agreement, and must be accurate in all material
respects as of the Closing Date as if made on the Closing Date, without giving
effect to any supplement to the Schedules.
7.2 SELLERS' PERFORMANCE.
(a) All of the covenants and obligations that Sellers are required
to perform or to comply with pursuant to this Agreement at or prior to the
Closing must have been duly performed and complied with in all material
respects.
(b) Each Seller must have delivered each of the documents required
to be delivered by such Seller pursuant to Section 2.5, and each of the other
covenants and obligations in this Agreement must have been performed and
complied with in all respects.
7.3 CONSENTS. Each of the Consents identified on Schedule 3.2
must have been obtained and must be in full force and effect.
7.4 ADDITIONAL INSURANCE. In the event that the Company has not
maintained general liability insurance coverage of at least $1,000,000.00 per
single occurrence and workers compensation insurance equal to or greater than
that required by any Legal Requirement, in addition to and separate and apart
from the Holdback, Sellers shall purchase a $1,000,000.00 "tail end" liability
insurance policy reasonably satisfactory to Buyer (the "Tail End Insurance
Policy"). The Tail End Insurance Policy will name Buyer as beneficiary and
coverage will be prepaid for a period ending 42 months after the Closing Date.
The Tail End Insurance Policy will provide one source, but not the only source,
for the payment of any claims that Buyer may have.
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7.5 THIRD PARTY MONITORING AGREEMENT. The Company shall continue
to have a contract with Austin Central Monitoring, Inc., a Texas corporation
wholly owned by Xxxx, which provides for the monitoring of the Alarm Accounts at
rates and subject to terms reasonably acceptable to Buyer.
7.6 LEGAL OPINION. Sellers must have caused an opinion of Sellers'
counsel, dated the Closing Date, in the form of Exhibit 7.6 to be delivered to
Buyer.
7.7 NO PROCEEDINGS. Since the date of this Agreement, there must
not have been commenced or threatened against Buyer, or against any Person
affiliated with Buyer, any Proceeding (a) involving any challenge to, or seeking
damages or other relief in connection with, any of the Contemplated
Transactions, or (b) that may have the effect of preventing, delaying, making
illegal, or otherwise interfering with any of the Contemplated Transactions.
7.8 NO CLAIM REGARDING STOCK OWNERSHIP OR SALE PROCEEDS. There
must not have been made or threatened by any Person any claim asserting that
such Person (c) is the holder or the beneficial owner of, or has the right to
acquire or to obtain beneficial ownership of, any stock of, or any other
voting, equity, or ownership interest in, the Company, or (d) is entitled to
all or any portion of the Purchase Price payable for the Shares.
7.9 NO PROHIBITION. Neither the consummation nor the performance
of any of the Contemplated Transactions will, directly or indirectly (with or
without notice or lapse or time), materially contravene, or conflict with, or
result in a material violation of, or cause Buyer or any Person affiliated with
Buyer to suffer any material adverse consequence under, (a) any applicable
Legal Requirement or Order, or (b) any Legal Requirement or Order that has been
published, introduced, or otherwise proposed by or before any Governmental
Body.
8. CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO CLOSE
Sellers' obligation to sell the Shares and to take the other actions
required to be taken by Sellers at the Closing is subject to the satisfaction,
at or prior to the Closing, of each of the following conditions (any of which
may be waived by Sellers, in whole or in part).
8.1 ACCURACY OF REPRESENTATIONS. All of Buyer's representations
and warrants in this Agreement, must have been accurate in all material respects
as of the date of this Agreement and must be accurate in all material respects
as of the Closing Date as if made on the Closing Date.
8.2 BUYER'S PERFORMANCE.
(a) All of the covenants and obligations that Buyer is required to
perform or to comply with pursuant to this Agreement at or prior to the Closing,
must have been performed and complied with in all material respects.
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(b) Buyer must have delivered each of the documents required to be
delivered by Buyer pursuant to Section 2.5 and must have made the cash payments
required to be made by Buyer pursuant to Sections 2.5(b)(i) and 2.5(b)(ii).
8.3 CONSENTS. Each of the Consents identified on Schedule 3.2
must have been obtained and must be in full force and effect.
8.4 ADDITIONAL DOCUMENTS. Buyer must have caused an opinion of
Buyer's counsel, dated the Closing Date, in the form of Exhibit 8.4 to be
delivered to the Sellers.
8.5 NO INJUNCTION. There must not be in effect any Legal
Requirement or any injunction or other Order that (a) prohibits the sale of the
Shares by Sellers to Buyer, and (b) has been adopted or issued, or has
otherwise become effective, since the date of this Agreement.
9. TERMINATION
9.1 TERMINATION EVENTS. This Agreement may, by notice given prior
to or at the Closing, be terminated:
(a) by either Buyer or Sellers if a material Breach of any
provision of this Agreement has been committed by the other
party and such Breach has not been waived;
(b) (i) by Buyer if any of the conditions in Section 7 has
not been satisfied as of the Closing Date or if
satisfaction of such a condition is or becomes
impossible (other than through the failure of Buyer
to comply with its obligations under this Agreement)
and Buyer has not waived such condition on or before
the Closing Date; or
(ii) by Sellers, if any of the conditions in Section 8 has
not been satisfied of the Closing Date or if
satisfaction of such a condition is or becomes
impossible (other than through the failure of Sellers
to comply with their obligations under this Agreement)
and Sellers have not waived such condition on or
before the Closing Date;
(c) by mutual consent of Buyer and Sellers; or
(d) by either Buyer or Sellers if the Closing has not occurred
(other than through the failure of any party seeking to
terminate this Agreement to comply fully with its obligations
under this Agreement) on or before February 29, 1996, or such
later date as the parties may agree upon.
9.2 EFFECT OF TERMINATION. Each party's right of termination
under Section 9.1 is in addition to any other rights it may have under this
Agreement or otherwise, and the exercise
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of a right of termination will not be an election of remedies. If this
Agreement is terminated pursuant to Section 9.1, all further obligations of the
parties under this Agreement will terminate, except that the obligations in
Sections 11.1 and 11.3, will survive; provided, however, that if this Agreement
is terminated by a party because of the Breach of the Agreement by the other
party, or because on or more of the conditions to the terminating party's
obligations under this Agreement is not satisfied as a result of the other
party's failure to comply with its obligations under this Agreement, the
terminating party's right to pursue all legal remedies will survive such
termination unimpaired.
10. INDEMNIFICATION; REMEDIES
10.1 SURVIVAL. All representations, warranties, covenants, and
obligations in this Agreement, the attachments thereto, and any other document
delivered pursuant to this Agreement will survive the Closing; the right to
indemnification, reimbursement, or other remedy based on such representations,
warranties, covenants, and obligations will not be affected by any investigation
conducted with respect to, or any Knowledge acquired (or capable of being
acquired) about the accuracy or inaccuracy of or compliance with, any such
representation, warranty, covenant, or obligation. The waiver of any condition
based on the accuracy of any representation or warranty, or on the performance
of or compliance with any covenant or obligation, will not affect the right to
indemnification, reimbursement, or other remedy based on such representations,
warranties, covenants, and obligations.
10.2 INDEMNIFICATION AND REIMBURSEMENT BY SELLERS. Sellers, jointly
and severally, will indemnify and hold harmless Buyer, the Company, and their
respective Representatives, stockholders, controlling persons, and affiliates
(collectively, the "Indemnified Persons"), and will reimburse the Indemnified
Persons, for any loss, liability, claim, damage, expense (including costs of
investigation and defense and reasonable attorneys' fees) or diminution of
value, whether or not involving a third-party claim (collectively, "Damages"),
arising from or in connection with:
(a) any Breach of any representation or warranty made by Sellers
in this Agreement and attachments thereto, or any other
document delivered by Sellers pursuant to this Agreement;
(b) any Breach by either Seller of any covenant or obligation of
such Seller in this Agreement;
(c) any service provided by or any omission in a service which was
required to be provided by the Company prior to the Closing
Date; provided, however any service required to be provided by
the Company related to a warranty (that is listed on Schedule
3.24) on an installation of security monitoring equipment
which arises after the Closing Date shall be the
responsibility of the Buyer; or
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(d) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or
understanding alleged to have been made by any such Person
with either Seller or the Company (or any Person acting on
their behalf) in connection with any of the Contemplated
Transactions.
10.3 INDEMNIFICATIONS AND REIMBURSEMENT BY SELLERS - ENVIRONMENTAL
MATTERS. In addition to the provisions of Section 10.2, Sellers, jointly and
severally, will indemnify and hold harmless Buyer, the Company, and the other
Indemnified Persons, and will reimburse Buyer, the Company, and any other
Indemnified Person, for any Damages related to an Environmental Requirement
(including costs of cleanup, containment, or other remediation) arising from or
in connection with:
(a) any liability or claim arising out of or relating to: (i)(A)
the ownership, operation, or condition at any time on or prior
to the Closing Date of any properties and assets (whether
real, personal, or mixed and whether tangible or intangible)
in which Sellers or the Company has or had an interest, or (B)
any Hazardous Materials or other contaminants that were
present on the properties and assets at any time on or prior
to the Closing Date; or (ii) any Hazardous Materials or other
contaminants, wherever located, that were, or were allegedly,
generated, transported, stored, treated, Released, or
otherwise handled by Sellers or the Company or by any other
Person for whose conduct they are or may be held responsible
at any time on or prior to the Closing Date.
(b) any bodily injury (including illness, disability, and death,
and regardless of when any such bodily injury occurred, was
incurred, or manifested itself), personal injury, property
damage (including trespass, nuisance, wrongful eviction, and
deprivation of the use of real property), or other damage of
or to any Person, including any employee or former employee of
Sellers or the Company or any other Person for whose conduct
they are or may be held responsible, in any way arising from
or allegedly arising from any Hazardous Material that was
Released or allegedly Released by Sellers or the Company or
any other Person for whose conduct they are or may be held
responsible, at any time on or prior to the Closing Date.
Buyer will be entitled to control any cleanup, any related Proceeding, and,
except as provided in the following sentence, any other Proceeding with respect
to which indemnity may be sought under this Section 10.3. The procedure
described in Section 10.5 will apply to any claim solely for monetary damages
relating to a matter covered by this Section 10.3.
10.4 INDEMNIFICATION AND REIMBURSEMENT OF BUYER. Buyer will
indemnify and hold harmless Sellers, and will reimburse Sellers, for any
Damages arising from or in connection with (a) any Breach of any representation
or warranty made by Buyer in this Agreement or in any document delivered by
Buyer pursuant to this Agreement, (b) any Breach by Buyer of any
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covenant or obligation of Buyer in this Agreement, or (c) any claim by any
Person for brokerage or finder's fees or commissions or similar payments based
upon any agreement or understanding alleged to have been made by such Person
with Buyer (or any Person acting on its behalf) in connection with any of the
Contemplated Transactions, (d) any service provided by or any omission in a
service which was initially required to be provided by the Company or the Buyer
after the Closing Date.
10.5 PROCEDURE FOR INDEMNIFICATION - THIRD PARTY CLAIMS.
(a) Within 10 days after receipt by an indemnified party of notice
of the commencement of any Proceeding against it, such indemnified party will,
if a claim is to be made against an indemnifying party under this Section 10,
give notice to the indemnifying party of the commencement of such claim, but
the failure to notify the indemnifying party will not relieve the indemnifying
party of any liability that it may have to any indemnified party, except to the
extent that the indemnifying party demonstrates that the defense of such action
is prejudiced by the indemnifying party's failure to give such notice.
(b) If any Proceeding is brought against an indemnified party and
it gives notice to the indemnifying party of the commencement of such
Proceedings, the indemnifying party will, be entitled to participate in such
Proceeding and, to the extent that it wishes (unless (i) the indemnifying party
is also a party to such Proceeding and the indemnified party determines in good
faith that joint representation would be inappropriate, or (ii) the
indemnifying party fails to provide reasonable assurance to the indemnified
party of its financial capacity to defend such Proceeding and provide
indemnification with respect to such Proceeding), assume the defense of such
Proceeding with counsel satisfactory to the indemnified party and, after notice
from the indemnifying party to the indemnified party of its election to assume
the defense of such Proceeding, the indemnifying party will not, as long as it
diligently conducts such defense, be liable to the indemnified party under this
Section 10 for any fees of other counsel or any other expenses with respect to
the defense of such Proceeding, in each case subsequently incurred by the
indemnified party in connection with the defense of such Proceeding, other than
reasonable costs of investigation. If the indemnifying party assumes the
defense of a Proceeding, (i) it will be conclusively established for purposes
of this Agreement that the claims made in the Proceeding are within the scope
or and subject to indemnification; (ii) no compromise or settlement of such
claims may be effected by the indemnifying party without the indemnified
party's consent unless (A) there is no finding or admission of any violation of
Legal Requirements or any violation of the rights of any Person and no effect
on any other claims that may be made against the indemnified party, and (B) the
sole relief provided is monetary damages that are paid in full by the
indemnifying party; and (iii) the indemnifying party will have no liability
with respect to any compromise or settlement of such claims effected without
its consent. If notice is given to an indemnifying party of the commencement
of any Proceeding and the indemnifying party does not, within ten days after
the indemnified party's notice is given, give notice to the indemnified party
of its election to assume the defense of such Proceeding, the indemnifying
party will be bound by any determination made in such Proceeding or any
compromise or settlement effected by the indemnified party.
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(c) Notwithstanding the foregoing, if an indemnified party
determines in good faith that there is reasonable probability that a Proceeding
may adversely affect it or its affiliates other than as a result of monetary
damages for which it would be entitled to indemnification under this Agreement,
the indemnified party may, by notice to the indemnifying party, assume the
exclusive right to defend, compromise, or settle such Proceeding, but the
indemnifying party will not be bound by any determination of a Proceeding so
defended or any compromise or settlement effected without its consent (which
may be unreasonably withheld).
(d) Sellers hereby consent to the non-exclusive jurisdiction of
any court in which a Proceeding is brought against any Indemnified Person for
purposes of any claim that an Indemnified Person may have under this Agreement
with respect to such Proceeding or the matters alleged therein, and agree that
process may be served on Sellers with respect to such a claim anywhere in the
world.
11. GENERAL PROVISIONS
11.1 EXPENSES. Except as otherwise expressly provided in this
Agreement, each party to this Agreement will bear its respective expenses
incurred in connection with the preparation, execution, and performance of this
Agreement and the Contemplated Transactions, including all fees and expenses of
agents, representatives, counsel, and accountants. In the event of termination
of this Agreement, the obligation of each party to pay its own expenses will be
subject to any rights of such party arising from a breach of this Agreement by
another party.
11.2 PUBLIC ANNOUNCEMENTS. Any public announcement or similar
publicity with respect to this Agreement or the Contemplated Transactions will
be issued, if at all, at such time and in such manner as shall be mutually
agreeable to Buyer and Seller. Unless consented to by the other party in
advance prior to the Closing Buyer and Seller shall, and shall cause the
Company to, keep this Agreement strictly confidential and may not make any
disclosure of this Agreement to any Person. Sellers and Buyer will consult
with each other concerning the means by which the Company' employees,
customers, and suppliers and others having dealings with the Company will be
informed of the transactions contemplated by this Agreement, and Buyer will
have the right to be present for any such communication.
11.3 CONFIDENTIALITY. Between the date of this Agreement and the
Closing Date, Buyer and Seller will maintain in confidence, and will cause the
directors, officers, employees, agents, and advisors of Buyer and the Company
to maintain in confidence, any written, oral or other information obtained in
confidence from another party or the Company in connection with this Agreement
or the Contemplated Transactions, unless (a) such information is already known
to such party or to others not bound by a duty of confidentiality or such
information becomes publicly available through no fault of such party, (b) the
use of such information is necessary or appropriate in making any filing or
obtaining any consent or approval required for the consummation of the
Contemplated Transactions, or (c) the furnishing or use of such information is
required by legal proceedings.
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If the Contemplated Transactions are not consummated, each party will
return or destroy as much of such written information as the other party may
reasonably request.
11.4 NOTICES. Any notice required or permitted to be delivered
pursuant to the terms of this Agreement shall be considered to have been
sufficiently delivered within five days after posting, if mailed by U.S. Mail,
certified or registered, return receipt requested, postage prepaid or, upon
receipt by overnight courier maintaining records of receipt by addressee or if
delivered by hand or telecopied with the original notice being mailed the same
day by one of the foregoing methods and addressed as follows:
IF TO MASADA AT:
Masada Security, Inc.
000 00xx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xx. Xxxxx X. Xxxxxxx
FACSIMILE: 0-000-000-0000
WITH COPY TO:
Xxxx & Xxxxxx
3100 SouthTrust Tower
000 Xxxxx 00xx Xxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attention: W. Xxx Xxxxxxx, Esq.
FACSIMILE: (000) 000-0000
IF TO SELLERS AT:
0000 Xxxxxx Xxxx Xxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxx and Xxxx Xxxxxxxxx
FACSIMILE: (000)000-0000
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WITH COPY TO:
Xxxxxx, Xxxxxx & Xxxxxxxxx, P. C.
000 Xxxxxx Xxxxxxx Xxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: X. Xxxxx Xxxxxxxxx, Jr., Esq.
FACSIMILE: (000) 000-0000
or at such address as the party may designate by ten days advance written
notice to the other party. Notice shall be effective when delivered to a
responsible person at the address of the addressee.
11.5 FURTHER ASSURANCES. The parties agree (a) to furnish upon
request to each other such further information, (b) to execute and deliver to
each other such documents, and (c) to do such other acts and things, all as the
other party may reasonably request for the purpose of carrying out the intent
of this Agreement and the documents referred to in this Agreement including,
without limitation cooperating with each other if it is necessary to obtain a
new Federal Communications Commission Radio License as a result of the
transactions resulting from this Agreement.
11.6 WAIVER. The rights and remedies of the parties to this
Agreement are cumulative and not alternative. Neither the failure nor any
delay by any party in exercising any right, power, or privilege under this
Agreement or the documents referred to in this Agreement will operate as a
waiver of such right, power, privilege, and no single or partial exercise of
any such right, power, or privilege will preclude any other or further exercise
of such right, power, or privilege or the exercise of any other right, power,
or privilege. To the maximum extent permitted by applicable law, (a) no claim
or right arising out of this Agreement or the documents referred to in this
Agreement can be discharged by one party, in whole or in part, by a waiver or
renunciation of the claim or right unless in writing signed by the other party;
(b) no waiver that may be given by a party will be applicable except in the
specific instance for which it is given; and (c) no notice to or demand on one
party will be deemed to be a waiver of any obligation of such party or of the
right of the party giving such notice or demand to take further action without
notice or demand as provided in this Agreement or the documents referred to in
this Agreement.
11.7 ENTIRE AGREEMENT AND MODIFICATION. This Agreement supersedes
all prior agreements between the parties with respect to its subject matter
(including the letter of intent between Buyer and Sellers dated November 14,
1995) and constitutes (along with the documents referred to in this Agreement)
a complete and exclusive statement of the terms of the agreement
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between the parties with respect to its subject matter. This Agreement may not
be amended except by a written agreement executed by the party to be charged
with the amendment.
11.8 SCHEDULES.
(a) The disclosures in the Schedules to this Agreement, and those
in any supplement thereto, must relate only to the representations and
warranties in the Section of the Agreement to which they expressly relate and
not to any other representation or warranty in this Agreement.
(b) In the event of any inconsistency between the statements in
the body of this Agreement and those in the Schedules (other than an exception
expressly set forth as such in the Disclosure Letter with respect to a
specifically identified representation or warranty), the statements in the body
of this Agreement will control.
11.9 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS. Neither
party may assign any of its rights under this Agreement without the prior
consent of the other parties except that Buyer may assign any of its rights
under this Agreement to any Subsidiary or affiliate of Buyer. Subject to the
preceding sentence, this Agreement will apply to, be binding in all respects
upon, and inure to the benefit of the successors and permitted assigns of the
parties. Nothing expressed or referred to in this Agreement will be construed
to give any Person other than the parties to this Agreement any legal or
equitable right, remedy, or claim under or with respect to this Agreement or
any provision of this Agreement. This Agreement and all of its provisions and
conditions are for the sole and exclusive benefit of the parties to this
Agreement and their successors and assigns.
11.10 SEVERABILITY. If any provision of this Agreement is held
invalid or unenforceable by any court of competent jurisdiction, the other
provisions of this Agreement will remain in full force and effect. Any
provision of this Agreement held invalid or unenforceable only in part or
degree will remain in full force and effect to the extent not held invalid or
unenforceable.
11.11 SECTION HEADINGS, CONSTRUCTION. The headings of Sections in
this Agreement are provided for convenience only and will not affect its
construction or interpretation. All references to "Sections" refer to the
corresponding Sections of this Agreement. All words used in this Agreement
will be construed to be of such gender or number as the circumstances require.
Unless otherwise expressly provided, the word "including" does not limit the
preceding words or terms.
11.12 GOVERNING LAW. This Agreement will be governed by and
construed under the laws of the State of Texas without regard to conflicts of
laws principles.
11.13 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
Buyer: Sellers:
MASADA SECURITY, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx /s/ Xxxx Xxxxxxxxx
--------------------------- -------------------------------------
Xxxx Xxxxxxxxx
/s/ Xxxx Xxxxxxxxx
-------------------------------------
Xxxx Xxxxxxxxx
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LIST OF EXHIBITS
Exhibit 2.5(a)(ii) Consulting Agreement
Exhibit 2.5(a)(iii) Noncompetition Agreement
Exhibit 2.5(c) Escrow Agreement
Exhibit 2.7(a) Holdback Period I Calculation
Exhibit 2.7(b) Holdback Period II Calculation
Exhibit 7.5 Third Party Monitoring Agreement
Exhibit 7.6 Seller's Legal Opinion
Exhibit 8.4 Buyer's Legal Opinion
LIST OF SCHEDULES
Schedule 2.3 Assumed Liabilities
Schedule 3.2 Required Consents
Schedule 3.6 Real Property Leases
Schedule 3.7 Title to Property
Schedule 3.9 Accounts Receivable
Schedule 3.10 Inventory
Schedule 3.11 Undisclosed Liabilities
Schedule 3.12(a) Tax Returns Relating to income or franchise taxes filed since December 31, 1994
Schedule 3.12(b) All Audits of tax return
Schedule 3.12(c) Proposed Assessments
Schedule 3.14 Employee Benefits
Schedule 3.15(a) Compliance with Legal Requirements
Schedule 3.15(b) Governmental Authorizations
Schedule 3.16 Legal Proceedings
Schedule 3.17 Absence of Changes
Schedule 3.18(a) Contracts (Alarm Accounts)
Schedule 3.18(b) Applicable Contracts
Schedule 3.18(c) Contracts - Miscellaneous Issues
Schedule 3.19 Insurance
Schedule 3.21 Employees
Schedule 3.23 Intellectual Property
Schedule 3.24 Product Warranties
Schedule 3.25(i) Builder Installations
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