AMENDED STOCK PURCHASE AGREEMENT
This Amended Stock Purchase Agreement
is made and entered into effective March 1, 2010 by and between SecureAlert,
Inc., formerly known as RemoteMDx, Inc., a Utah corporation (“Buyer”) and Xxxxx X.
Xxxxxxxx, an individual residing in the state of Mississippi (“Seller” or “Xxxxxxxx”). Buyer
and Seller are referred to collectively herein as the “Parties.”
RECITALS:
A.
Buyer and Seller originally entered into a Stock Purchase Agreement
effective as of December 1, 2007 (as thereafter amended and supplemented, the
“Purchase
Agreement”).
B.
Pursuant to the Purchase Agreement, Buyer acquired from
Seller 51% of the issued and outstanding capital stock of Court Programs, Inc.,
Court Programs of Florida, Inc., Court Programs of Illinois, Inc., and Court
Programs of Northern Florida, Inc. (collectively hereinafter, “CPI” or the “CPI
Entities”).
C.
The Parties desire to supplement and amend the Purchase
Agreement by finalizing Buyer’s exercise of the Buyer’s Option granted under the
Purchase Agreement and completing Buyer’s purchase of the CPI
Entities.
NOW
THEREFORE, in consideration of the understandings and the mutual promises herein
made, and in consideration of the representations, warranties, and covenants
herein contained, the Parties agree as follows.
ARTICLE
1
DEFINITIONS
1.1 Defined
Terms. The capitalized terms in this Amendment will have the
same meaning as defined within the Purchase Agreement.
ARTICLE
2
PURCHASE AND SALE OF
SHARES
2.1 Purchase
Price. Buyer hereby purchases and Seller hereby sells to Buyer
the Remaining Shares. The Parties agree that the purchase price for
the Remaining Shares (the “Option Exercise
Price”) shall be $2,374,790, based on 1.5 times CPI’s revenues of
$3,231,006 for the twelve months ended January 31, 2010, multiplied by 49
percent. This sum of $2,374,790 shall be paid to Seller as
follows:
(A) The
note payable by CPI to Buyer in the amount of $255,403 (the “CPI Note”) shall be
applied and credited in full as a partial payment of the Option Exercise Price.
The CPI Note shall be marked “Paid in Full” and delivered to the Seller at the
Closing.
(B) The
notes payable by CPI to Buyer for the purchase of SCRAM units (the “Equipment Notes”) in
the aggregate amount of $71,046, shall be applied and credited in full as a
partial payment of the Option Exercise Price. The Equipment Notes
shall be marked “Paid in Full” and delivered to the Seller at the
Closing.
1
(C) Buyer
shall assume and pay outstanding American Express Corporate Card Charges
totaling $3,814 and the same sum will be credited against the Option Exercise
Price.
(D) Buyer
shall assume and pay additional CPI and Seller debt obligations totaling
$307,475 and this amount shall be offset against the Option Exercise
Price.
(E) Buyer
shall assume and pay additional accounts payable and accrued expenses of Seller
and CPI totaling $506,222 as an offset against the Option Exercise
Price.
(F) The
balance of the Option Exercise Price totaling $1,230,830 shall be paid as
follows:
a. $100,000
in cash shall be paid at the Closing and upon execution of this
Amendment;
b. $200,000
in cash shall be paid in four (4) equal installments of $50,000 each on July 15,
October 15, 2010, January 15, 2011, and April 15, 2011, together with interest
on any unpaid amounts at eight percent (8%) per annum (see Exhibit
A).
c. The
remaining $930,830 shall be paid in the Buyer’s stock, as follows:
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i.
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Buyer
shall issue a promissory note in the amount of $849,630.93 in the form
attached hereto as Exhibit B (the
“Purchase
Note”).
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ii.
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Buyer
and Seller agree that Seller shall exchange the Purchase Note for that
certain Senior Secured Convertible Promissory Note dated March 13, 2009
(“Senior
Note”). Following the exchange of the Purchase Note for
the Senior Note, Seller shall exchange the Senior Note for 621 shares of
Buyer’s Series D Convertible Preferred Stock (the “Preferred
Shares”). Each Preferred Share is convertible into 6,000 shares of
the Buyer’s Common Stock. Upon conversion of 621 Preferred
Shares, Seller would receive 3,726,000 shares of Common Stock in total.
For purposes of this Agreement, the conversion value equivalent for Common
Stock shall be approximately $0.25 per each share of the Buyer’s Common
Stock, or $930,830 in the
aggregate.
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2
2.2 Completion of Purchase and
Sale of Remaining Shares.
(A) Purchase of Remaining
Shares. In consideration of the payment of the Option Exercise
Price set forth in Section 2.1, above, Buyer shall purchase from Seller, and the
Seller shall sell, convey, assign, transfer and deliver to Buyer, all Remaining
Shares of the outstanding capital stock of the CPI Entities (the “Remaining Shares”),
free and clear of any lien and restriction on transfer. Seller represents and
warrants to Buyer that such Remaining Shares represent all of the issued and
outstanding Shares of the equity or capital stock of the CPI Entities not
presently held by Buyer and that there are no outstanding options, warrants,
notes, or other instruments related to the issuance of any Shares of common
stock or other capital stock of any of the CPI Entities.
(B) Loans and
Guarantees. Buyer shall exercise its best efforts to pay in
full or obtain the release of Seller under any and all personal pledges and
guarantees made by Seller on behalf of the CPI Entities, including, without
limitation, all SBA loans, personal guarantees, pledges of real or personal
property, liens and other arrangements in which Seller has personally guaranteed
or secured the performance of any of the CPI Entities, as disclosed in the
Purchase Agreement.
(C) SBA Loan. The parties
agree that in the event the currently outstanding SBA loan is forgiven by the
lender, Buyer and Seller shall share the benefit of the forgiveness amount
equally by payment in Buyer’s common stock having an equivalent fair market
value.
2.3
Closing.
(A) Closing
Date. The Closing of the sale and purchase of the Remaining
Shares (the “Closing”) will occur
at the offices of the Buyer at 10:00 a.m. on Monday, March 1, 2010; provided,
however, that the Parties may, by mutual written consent, set the date and
location of Closing at such other time and place as they may mutually desire
without further amendment to this Agreement.
(B) Deliveries at the
Closing. At the Closing, (i) the Seller will deliver to the
Buyer (a) stock certificates representing all of the Remaining Shares, endorsed
in blank or accompanied by duly executed assignment documents, and (b) all books
and records, bank statements and accounting records of the CPI Entities; and
(ii) the Buyer will deliver to Seller the Purchase Price for such Remaining
Shares as specified in Section 2.1, provided, however,
that the Preferred Shares shall be delivered pursuant to the schedule set forth
in Section 2.1(C).
ARTICLE
3
REMAINING CONDITIONS AND
AGREEMENTS
3.1
Remaining Conditions and
Agreements to Continue in Effect. The Parties agree that
except where expressly modified or amended by this Amendment, all of the terms,
conditions, agreements and understandings as set forth in the Purchase Agreement
shall remain in full force and effect.
3
ARTICLE
4
EMPLOYMENT
AGREEMENT
4.1 Management
Agreement. The Company and Xxxxxxxx shall execute a Management
Agreement. The Management Agreement shall include, among others, the
following provisions:
(A) Term. The
term of the Management Agreement shall be three (3) years.
(B) Compensation. The
fee payable to Xxxxxxxx under the Management Agreement shall be $100,000 per
year.
(C) Title. Xxxxxxxx
shall have the title of Vice President, New Business Development and Legislative
Relations, reporting to Xxxx X. Xxxxxxxx, IIC, the President of the
Company. In addition, Xxxxxxxx shall serve as a member of the
Company’s Operating Board & Steering Committee for the CPI Entities, which
board shall oversee the integration of the CPI Entities with the business
operations of the Company.
(D) Additional
Benefits. The Company shall provide Xxxxxxxx a car to be used
for business purposes reimbursing all related business expenses in connection
with such use including gas, insurance, and maintenance charges.
4.2 Employment
Agreement. The Company also shall enter into Employment
Agreements with Xxxx Xxxxxxxx. The Employment Agreement shall provide
for annual compensation of $90,000, life insurance benefits, and Company-paid
health benefits on the same terms as other Company full-time
employees. As additional consideration, the Company agrees to execute
a 3 year Management Contract and 3 year Non-Compete Agreement (from time of
termination) with Xxxxx Xxxxxxxx, at a Salary of $100,000 per year.
4.3 Right of First
Refusal. In the event the Company or its successor in interest
shall divest all of its ownership interest in or substantially all of the assets
of any of the CPI Entities, Xxxxxxxx shall have the right of first refusal to
purchase from the Company up to 100% of such interest, or assets, as the case
may be, at a price equal to the greater of (i) the then fair market value of the
divested assets or ownership interest, or (ii) 1.5 times annual revenues of the
divested entity; provided, however, that as a condition to the exercise of such
right of first refusal, Xxxxxxxx shall resign from all positions within the
Company and the Management Agreement shall be terminated without further
obligation of the Company thereunder. In addition, Xxxxxxxx shall
continue to operate such divested entity as a primary distributor of the Company
and its products and services for a minimum of two (2) years following his
purchase of such assets or ownership interests, as the case may be, at levels
that are at least the same as the levels of product and service sales revenue
for the year prior to Xxxxxxxx’x purchase.
4.4 Covenant Not to
Compete. The Management Agreement and the Employment
Agreements shall also include a covenant not to compete during the term of the
agreements and for a period of two (2) years following the termination of the
agreements.
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ARTICLE
5
ADDITIONAL REPRESENTATIONS
AND WARRANTIES OF SELLER
Seller represents and
warrants to Buyer as follows:
5.1 Assets and
Liabilities. The assets and liabilities of the CPI Entities
are as contained on the financial statements of the respective entities dated as
of January 31, 2010 (“Seller’s Financial Statements”, Exhibit
C). Buyer shall not be responsible for any liability of any CPI
Entity that is not contained on the Seller’s Financial Statements.
5.2 Conduct of Business.
The business of the CPI Entities has been conducted in the ordinary course.
Seller and the CPI Entities have paid their obligations and expenses in a timely
manner and there are no delinquent accounts or amounts owing as of the date
hereof, except as disclosed in writing on the attached Schedule
5.2. Neither Seller nor any of the CPI Entities have at any
time disbursed or withdrawn any material amount of cash from the business and
operations of the CPI Entities outside the ordinary course of business. The
available cash of the CPI Entities at Closing shall be as indicated in the
attached Exhibit
C. Following the Closing, Seller shall not make any payments
or incur any liability without the prior written consent of Buyer.
[Signatures
appear on the following page.]
5
IN
WITNESS WHEREOF, the Parties have executed this Amendment effective March 1,
2010.
By: /s/ Xxxx X. Xxxxxxxx,
III
Xxxx X. Xxxxxxxx, III
Title: President
COURT
PROGRAMS, INC., COURT PROGRAMS OF FLORIDA, INC., COURT PROGRAMS OF NORTHERN
FLORIDA, INC., and COURT PROGRAMS OF ILLINOIS, INC.
By: /s/ Xxxxx X.
Xxxxxxxx
Xxxxx X. Xxxxxxxx
Title: President
/s/ Xxxxx X.
Xxxxxxxx
Xxxxx X.
Xxxxxxxx, Individually
6
Exhibit
A
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AMORTIZATION
SCHEDULE - Normal Amortization
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Date
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Payment
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Interest
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Principal
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Balance
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Loan
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3/1/2010
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200,000.00
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1
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7/15/2010
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55,961.64
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5,961.64
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50,000.00
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150,000.00
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2
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10/15/2010
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53,024.66
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3,024.66
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50,000.00
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100,000.00
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2010
Totals
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108,986.30
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8,986.30
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100,000.00
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3
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1/15/2011
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52,016.44
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2,016.44
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50,000.00
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50,000.00
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4
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4/15/2011
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50,986.30
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986.30
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50,000.00
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0.00
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2011
Totals
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103,002.74
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3,002.74
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100,000.00
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Grand
Totals
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211,989.04
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11,989.04
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200,000.00
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