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EXHIBIT 10.52
INVESTMENT AGREEMENT
THIS AGREEMENT dated as of March 15, 2001 (this "AGREEMENT") among
XxxxxxxxXxxxxxx.xxx Inc., a Delaware corporation ("SECURITYVILLAGE"),
SecurityVillage Technologies, Ltd., Security Associates International, Inc., a
Delaware corporation ("SAI"), KC Acquisition Corp., a New Jersey corporation
("KING"), TJS Partners, L.P., a New York limited partnership ("TJS"), Xxxxx X.
Xxxxxxx, Xxx Xxxxx, the Xxxx Stockholders (as defined herein) (King and the King
Stockholders are parties hereto solely for the purposes of Article 2, Section
3.2, Article 5, Sections 6.1, 6.2, 6.5 and Article 7) and the SecurityVillage
Controlling Stockholders (as defined herein). Capitalized terms used but not
otherwise defined herein shall have the meanings set forth in Section 1.1
hereof.
RECITALS
1. Pursuant to a letter among SecurityVillage, SAI, King, TJS and certain
individuals dated April 21, 2000, as amended on May 10, 2000 (as so amended, the
"LETTER AGREEMENT"), the parties thereto agreed to negotiate in good faith the
terms and conditions of definitive agreements regarding the acquisition of
Monital Signal Corp. ("MONITAL") by King, the subsequent acquisition of King by
SAI, the making of certain direct investments in SAI by SecurityVillage, the
granting by SAI and by each of Xxxxxx Few, Xxxxxxx XxXxxx and Xxxxx Xxxxx (the
"XXXX STOCKHOLDERS") of certain options to SecurityVillage to purchase
securities of SAI, and the proposed future business combination of SAI and
SecurityVillage under certain circumstances (collectively, the "TRANSACTIONS").
2. On May 11, 2000:
(a) Pursuant to a Share Purchase Agreement dated as of May 11, 2000 and
other related agreements, King became the direct and indirect owner of
99% of Monital (collectively, the "MONITAL TRANSACTIONS").
(b) The King Stockholders entered into a Plan and Agreement of Merger (the
"KING ACQUISITION AGREEMENT"), providing for the merger of King with
and into a wholly owned subsidiary of SAI (the "King Acquisition").
3. In response to intervening circumstances, all of the parties hereto have
agreed to supercede and restate the Letter Agreement in its entirety as set
forth herein.
4. SAI provides monitoring and dispatch services on behalf of dealers and
directly to consumers relating to critical events, provides other remote
monitoring of electronic devices and provides ancillary services to those
dealers that may include but not be limited to marketing, financial, educational
business management, all as set forth in further detail in SAI's filings as made
with the Securities and Exchange Commission and in SAI's press releases.
Additionally, SAI intends to continue to develop and offer to its customers new
services which are compatible with, or complimentary to, the foregoing.
5. SecurityVillage Technologies invests and develops strategic marketing
agreements with primary technology companies which develop products in the
security and
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related industries; and markets those products on a business-to-business basis
to distributors and other companies that utilize or sell those products to
consumers of those products or services.
AGREEMENT
In consideration of the premises and of the mutual covenants, terms
and conditions herein contained, the parties hereto agree as follows:
ARTICLE 1 DEFINITIONS
Section 1.1 Definitions
The following terms, as used herein, have the following meanings:
"AFFILIATE" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control with
such Person. For the purpose of this definition, the term "CONTROL" (including
with correlative meanings, the terms "CONTROLLING", "CONTROLLED BY" and "UNDER
COMMON CONTROL WITH") means the possession of the power to direct or cause the
direction of the management and policies of a Person.
"AGREEMENT PARTY" means each party to this Agreement, including any
Person who becomes a party to this Agreement after the date hereof.
"ASSET PURCHASE AGREEMENT" means the Asset Purchase Agreement , dated
as of the date of the Investment Closing, between SAI and SecurityVillage, as
the same may be amended from time to time.
"BUSINESS DAY" means any day except a Saturday, Sunday or other day on
which commercial banks in New York City or Chicago, Illinois are authorized by
law to close.
"CONTRACT" means any contract, commitment, agreement, arrangement,
obligation, undertaking, instrument, permit, concession, franchise or license.
"CORPORATE PARTIES" mean SecurityVillage, King and SAI.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"GAAP" means United States generally accepted accounting principles,
consistently applied.
"GOVERNMENTAL OR REGULATORY AUTHORITY" means any exchange, court,
tribunal, arbitrator, authority, agency, commission, official or other
instrumentality of the United States, any foreign country or any political
subdivision.
"INVESTMENT CLOSING" has the meaning given to such term in Section
3.1.
"INVESTOR LETTER" shall mean an investor letter in the form attached
hereto, including representations and agreements substantially similar to
Section 5.6.
"KING SHARES" mean all of the outstanding common stock of King.
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"KING STOCKHOLDERS" has the meaning set forth in Paragraph 1 of the
Recitals, including their successors and assigns.
"LETTER AGREEMENT" has the meaning set forth in Paragraph 1 of the
Recitals.
"MONITAL" has the meaning set forth in Paragraph 1 of the Recitals.
"MONITORING SERVICES" means the provision of remote alarm monitoring
services to Subscribers, and all related remote security services.
"PERSON" means an individual or entity.
"SAI" has the meaning set forth in the introductory paragraph to this
Agreement.
"SAI COMMON" means the common stock, par value $0.001 per share, of
SAI.
"SAI CONTROLLING STOCKHOLDERS" means TJS, Xxxxx X. Xxxxxxx and Xxx
Xxxxx.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITYVILLAGE" has the meaning set forth in the introductory
paragraph to this Agreement.
"SECURITYVILLAGE CONTROLLING STOCKHOLDERS" means each of St. Martins
Holdings II, Limited, Xxxxx Xxxxx, Audiogard International and 3K Digital
Limited.
"SECURITYVILLAGE DESIGNEES" shall mean those person or persons to be
designated by SecurityVillage to acquire the shares of Series A Preferred and/or
Warrants hereunder or SAI Common under the Asset Purchase Agreement, each of
whom shall deliver an Investor Letter to SAI on or prior to the Investment
Closing, which may include an escrow agent so long as each of the beneficiaries
of the escrow arrangement have delivered an Investor Letter to SAI;
"SECURITYVILLAGE TECHNOLOGIES" shall mean SecurityVillage
Technologies, Ltd., an Israeli corporation.
"SERIES A PREFERRED" means the Series A Convertible Preferred Stock,
par value $10.00 per share, of SAI, of which there shall be 167,686 total
authorized shares, each having a liquidation value of $350 per share and
convertible into 100 shares of SAI Common, and otherwise having substantially
the terms, preferences and provisions set forth in the Certificate of
Designations therefore filed in the State of Delaware, as amended. The Series A
Preferred shall rank junior as to the Series C Preferred and Series D Preferred,
as to liquidation preference and dividends. Except as to liquidation and
dividend preference and their respective liquidation values, the Series A
Preferred, Series C Preferred and Series D Preferred shall be substantially
identical in all other material respects.
"SERIES C PREFERRED" means the Series C Convertible Preferred Stock,
par value $10.00 per share, of SAI, of which there shall be 36,000 total shares
authorized, each having a
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liquidation value of $350 per share and convertible into 100 shares of SAI
Common, and otherwise having substantially the terms, preferences and provisions
set forth in the Certificate of Designations therefore filed in the State of
Delaware. The Series C Preferred and Series D Preferred shall rank pari pasu as
to each other, and collectively rank senior over the Series A Preferred, as to
liquidation preference and dividends. Except as to liquidation and dividend
preference and their respective liquidation values, the Series A Preferred,
Series C Preferred and Series D Preferred shall be substantially identical in
all other material respects.
"SERIES D PREFERRED" means the Series D Convertible Preferred Stock,
par value $10.00 per share, of SAI, of which there shall be 9,000 total shares
authorized, each having a liquidation value of $450 per share and convertible
into 100 shares of SAI Common, and otherwise having substantially the terms,
preferences and provisions set forth in the Certificate of Designations therefor
filed in the State of Delaware. The Series C Preferred and Series D Preferred
shall rank pari passu as to each other, and collectively rank senior over the
Series A Preferred, as to liquidation preference and dividends. Except as to
liquidation and dividend preference and their respective liquidation values, the
Series A Preferred, Series C Preferred and Series D Preferred shall be
substantially identical in all other material respects.
"SUBSCRIBER" means an individual or entity who has contracted to
obtain Monitoring Services.
"SUBSIDIARY" means any entity of which securities or other ownership
interests having ordinary voting power to elect a majority of the board of
directors or other Persons performing similar functions are at the time directly
or indirectly owned by any Person.
"TRANSACTIONS" has the meaning set forth in Paragraph 1 of the
Recitals.
Section 1.2 Interpretation, Etc.
Unless the context of this Agreement otherwise requires, (a) words of
any gender include each other gender; (b) words using the singular or plural
number also include the plural or singular number, respectively; (c) the terms
"hereof," "herein," "hereby" and derivative or similar words refer to this
entire Agreement; and (d) the terms "Article" or "Section" refer to the
specified Article or Section of this Agreement. Whenever this Agreement refers
to a number of days, such number shall refer to calendar days unless Business
Days are specified. All accounting terms used herein and not expressly defined
herein shall have the meanings given to them under GAAP.
ARTICLE 2 KING ACQUISITION TRANSACTIONS
Section 2.1 King Acquisition
(a) Consummation of King Acquisition. SAI, King and the King
Stockholders agree to take all commercially reasonable steps to cause the King
Acquisition to be consummated as soon as practicable on the terms set forth in
the King Acquisition Agreement, as amended by Amendment No.1 thereto dated as of
March ___, 2001 (collectively, the "AMENDED KING AGREEMENT"), subject to the
respective rights of each Agreement Party thereunder. The parties hereto consent
and agree to the execution, delivery and performance of the Amended
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King Agreement, together with such other changes as may hereafter be mutually
agreed by SAI, King and the King Stockholders (the "KING ACQUISITION").
(b) Consideration. The consideration to be paid to the King
Stockholders in the King Acquisition, allocated as stated in the Amended King
Agreement, shall be as follows:
(1) An aggregate of 36,000 shares of Series C Preferred.
(2) An aggregate of 9,000 shares of Series D Preferred.
(3) Cash in the aggregate amount of $6,500,000.
(c) SAI Preferred Stock; Registration Rights. SAI, the King
Stockholders, SecurityVillage and the holders of the approximately 100,000
shares of outstanding Series A Preferred whose underlying SAI Common is not
already registered (the "UNREGISTERED SERIES A"), will enter into a Registration
Rights Agreement in the form attached hereto as Exhibit 2.1 (the "REGISTRATION
RIGHTS AGREEMENT").
Section 2.2 Simultaneous SV Transactions
The parties hereto agree that, in addition to the transactions
contemplated by Section 3.1, simultaneously with the closing of the King
Acquisition, the following Transactions shall occur:
(a) SecurityVillage Acquisition of SAI Common. SAI shall issue
1,000,000 shares of SAI Common to SecurityVillage or the SecurityVillage
Designees in consideration of SecurityVillage's services in connection with
King's acquisition of Monital; provided, that if SecurityVillage does not
consummate the SV Investment (as defined in Section 3.1), then SAI shall not
issue these shares to SecurityVillage.
(b) SAI Common in Exchange for the Monital Note. SAI shall issue an
additional 300,000 shares of SAI Common in exchange and in full payment for the
$1,500,000 promissory note made by King in favor of SecurityVillage or its
designees, against receipt of the original note marked "cancelled."
(c) SecurityVillage Technologies Warrants. At the closing of the
King Acquisition, SecurityVillage Technologies shall issue to SAI a stock
purchase warrant, entitling SAI to purchase fifteen percent (15%) of
SecurityVillage Technologies on a fully diluted basis (subject to customary
adjustments for stock splits and the like and subject to customary antidilution
provisions) (the "SV WARRANTS"). The SV Warrants shall have a term of ten (10)
years and shall have an exercise price reflecting a fully diluted enterprise
value equal to the lower of (i) the pre-money valuation at the time of
SecurityVillage Technologies' initial public offering, or (ii) $50,000,000.
ARTICLE 3 SECURITYVILLAGE INVESTMENT
Section 3.1 SecurityVillage Investment
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(a) Within three (3) business days of the satisfaction of the
Financing Condition (defined below), but in no event later than March 30, 2001,
SecurityVillage or the SecurityVillage Designees shall purchase and SAI shall
issue to SecurityVillage or the SecurityVillage Designees, for a total cash
purchase price of $10,500,000: (i) 30,000 shares of Series A Preferred and (ii)
stock purchase warrants entitling the holder of such warrants to purchase
4,500,000 shares of SAI's common (the "WARRANTS"). The Warrants will have an
exercise price of $3.50 per share and otherwise have the terms and provisions
set forth on Exhibit 3.1 attached hereto.
(b) Completion of the purchase and sale of the Series A Preferred and
the Warrants is subject to (i) the receipt by SecurityVillage of at least
$14,000,000 in new financing cash, or such lesser amount as SecurityVillage
deems sufficient to consummate the transactions contemplated hereunder (the
"FINANCING CONDITION") and (ii) the consummation of the Asset Purchase Agreement
("ASSET PURCHASE AGREEMENT CONDITION"). If the Financing Condition has not been
satisfied by March 30, 2001, then this Agreement shall terminate in accordance
with Section 3.1(c). If the Financing Condition and the Asset Purchase Agreement
Condition have been satisfied on or prior to March 30, 2001, then
SecurityVillage and SAI shall, within three days following the date that such
Financing Condition has been satisfied, but in no event later than March 30,
2001, consummate the purchase and sale of Series A Preferred and Warrants
contemplated by Section 3.1(a) at a closing (the "INVESTMENT CLOSING"), to occur
at the offices of Xxxxxxxx & Xxxxxx, Ltd., 00 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000,
Xxxxxxx, Xxxxxxxx, 00000, or at such other place as may be mutually agreed by
the parties. At the Investment Closing, SecurityVillage shall pay to SAI a total
of $10,500,000 by wire transfer of immediately available funds, against delivery
by SAI of the shares of Series A Preferred and Warrants contemplated hereby to
SecurityVillage and/or the SecurityVillage Designees; provided, that if at the
time of the Investment Closing the AMEX Approval (as defined in the Asset
Purchase Agreement) has not been obtained, then the Series A Preferred and
Warrants will be issued to an escrow agent mutually agreeable to SAI and
SecurityVillage (the "ESCROW AGENT"), to hold for the benefit of SecurityVillage
and the SecurityVillage Designees, pursuant to an escrow agreement to be
mutually agreed upon by SecurityVillage, SAI and the Escrow Agent. The
consummation of the issuance and sale of the Series A Preferred and the Warrants
either directly or in escrow, as contemplated hereby, is referred to herein as
the "SV INVESTMENT."
(c) If SecurityVillage has not completed the SV Investment for
$10,500,000 on or prior to March 30, 2001, then (i) SAI and the King
Stockholders shall have the full and unfettered right to consummate the King
Acquisition without reference to, obligation or accounting to, or the need to
seek the agreement of, SecurityVillage whatsoever (other than issuing the shares
of SAI Common expressly contemplated by Sections 2.2(b), and 7.1), and (ii) this
Agreement shall be terminated and shall be of no further force and effect, other
than Sections 2.2(b) and 7.1, which shall remain in full force and effect and
enforceable by the parties.
Section 3.2 Stockholders Agreement; Board Representation
In connection with the SV Investment, SecurityVillage, SAI, the King
Stockholders and the holders of the currently outstanding Series A Preferred
will enter into a Stockholders Agreement in the form attached hereto as Exhibit
3.2 (the "STOCKHOLDERS AGREEMENT").
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ARTICLE 4 ASSET PURCHASE WITH SECURITYVILLAGE
Section 4.1 Asset Purchase
At or promptly after the consummation of the SV Investment in
accordance with Article 3, SAI and SecurityVillage shall enter into the Asset
Purchase Agreement in the form attached hereto as Exhibit 4.1 (the "ASSET
PURCHASE AGREEMENT").
Section 4.2 SecurityVillage Distribution Agreement
Upon closing of the Asset Purchase Agreement, SAI and
SecurityVillage Technologies shall enter into an agreement, in the form attached
hereto as Exhibit 4.2.
Section 4.3 Video Domain Option
In consideration for TJS renegotiating the Letter Agreement and
entering into this Agreement, SecurityVillage will assign to TJS or its
designees (the "HOLDER"), fifty percent (50%) of SecurityVillage's option (the
"VIDEO DOMAIN OPTION") to acquire ten percent (10%) of the fully diluted capital
stock of Video Domain, an Israeli corporation ("VIDEO DOMAIN"), at an aggregate
exercise price of $2,050,000 (the "VIDEO DOMAIN ASSIGNMENT"). The parties hereby
acknowledge and agree that the Video Domain Assignment is subject to
SecurityVillage receiving the consent of Video Domain to the Video Domain
Assignment (the "VIDEO DOMAIN CONSENT"). SecurityVillage shall use its best
efforts to obtain the Video Domain Consent. If SecurityVillage has not obtained
the Video Domain Consent prior to the closing of the Asset Purchase Agreement,
the Video Domain Assignment shall be made as soon thereafter as practicable
following the receipt by SecurityVillage of the Video Domain Consent. Unless and
until Video Domain provides to SecurityVillage the Video Domain Consent,
SecurityVillage shall (a) maintain the Video Domain Option in full force and
effect, and shall not amend, release or take any action to waive or otherwise
impair or exercise the Video Domain Option, except as contemplated herein, and
(b) (i) exercise the Video Domain Option upon the request of Holder and receipt
of payment of the exercise price from Holder and (ii) distribute to Holder the
securities received by SecurityVillage upon exercise of the Video Domain Option.
At the request of Holder, SecurityVillage shall give Holder copies of all
information it receives from Video Domain. SecurityVillage hereby grants to
Holder a security interest in the Video Domain Option, any securities issued
upon exercise of the Video Domain Option, and any proceeds therefrom or
substitutions thereof to secure its obligations under this Section 4.3 and
agrees to take such actions as reasonably requested to perfect the security
interest of Holder therein.
ARTICLE 5 REPRESENTATIONS AND WARRANTIES
As a material inducement to the other Agreement Parties to enter
into this Agreement, each Agreement Party, as to itself, represents and warrants
to the others that:
Section 5.1 Organization
Each Corporate Party is a corporation, duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and is authorized to do business in each jurisdiction where the
character or location of its assets or properties owned, leased or operated by
it or the nature of its activities makes such qualification necessary. TJS is
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a limited partnership, duly organized, validly existing and in good standing
under the laws of the jurisdiction of its formation.
Section 5.2 Authorization of Transactions
Each Agreement Party has all requisite power, authority and legal
capacity to enter into this Agreement, subject to any stockholder approval that
may be required by AMEX. The execution, delivery and performance of this
Agreement by each of the Corporate Parties and the consummation of each of the
transactions contemplated hereby have been duly and validly approved by its
board of directors, and no other corporate proceedings on the part of any
Corporate Party are necessary to authorize the execution, delivery and
performance of this Agreement by Agreement Parties and the consummation by any
of them of the transactions contemplated hereby and thereby, other than in the
case of the Corporate Parties obtaining, where regulated, the approval of their
respective stockholders. This Agreement has been duly and validly executed and
delivered by each of the Agreement Parties and, subject (in the case of the
Corporate Parties) to the obtaining, where required by applicable laws and
regulations, of the approval of their respective stockholders, constitutes
legal, valid and binding obligations of each of the Agreement Parties
enforceable against each of the Agreement Parties in accordance with their
terms.
Section 5.3 Non-Contravention; Approvals and Consents
(a) Except as set forth on each Agreement Party's Schedule 5.3(a),
the execution and delivery of this Agreement does not, and the performance by
each of them of its obligations hereunder and the consummation of the
transactions contemplated hereby will not, conflict with, result in a violation
or breach of, constitute (with or without notice or lapse of time or both) a
default under, result in or give to any Person any right of payment or
reimbursement, termination, cancellation, modification or acceleration of, or
result in the creation or imposition of any lien upon any of its assets or
properties or under any of the terms of (i) its certificate or articles of
incorporation or bylaws (or other comparable charter documents), or (ii) subject
to the obtaining of any necessary stockholders' approval and the taking of the
actions described in paragraph (b) of this Section, (x) any laws or orders of
any Governmental or Regulatory Authority, or (y) any contracts to which any of
them or their assets are bound, excluding those which, in the aggregate, could
not be reasonably expected to have a material adverse effect on any Agreement
Party or on the ability of any Agreement Party to consummate the transactions
contemplated by this Agreement.
(b) Except: (i) as set forth on each Agreement Party's Schedule
5.3(b), (ii) for filings to be made with the SEC, the declaration of the
effectiveness of any such filings by the SEC and filings with, and stockholder
approvals required by, various Governmental and Regulatory Authorities that are
required in connection with the transactions contemplated by this Agreement, and
(iii) for the filing of a certificate of merger and other appropriate documents
with the relevant authorities of the states in which a Corporate Party is
incorporated or qualified to do business, no consent, approval or action of,
filing with or notice to any Governmental or Regulatory Authority or other third
party is necessary for the execution and delivery of this Agreement and the
performance of its obligations hereunder and the consummation of the
transactions contemplated hereby , other than those which the failure to make or
obtain, in the
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aggregate, could not be reasonably expected to have a material adverse effect on
an Agreement Party or on the ability of it to consummate the transactions
contemplated by this Agreement.
Section 5.4 Legal Proceedings
There are no actions, suits, arbitrations or proceedings pending or,
to the knowledge of any Agreement Party, threatened against, relating to or
affecting, nor are there any Governmental or Regulatory Authority investigations
or audits pending or to the knowledge of any Agreement Party threatened against,
relating to or affecting, such Agreement Party or any of its assets which, in
the aggregate, could be reasonably expected to have a material adverse effect on
it or on its ability to consummate the transactions contemplated by this
Agreement, and there are no facts or circumstances known to any Agreement Party
that could be reasonably expected to give rise to any such action, suit,
arbitration, proceeding, investigation or audit, and none of the Agreement
Parties is subject to any order of any Governmental or Regulatory Authority
which, in the aggregate, is having or could be reasonably expected to have a
material adverse effect on such Agreement Party or on its ability to consummate
the transactions contemplated by this Agreement.
Section 5.5 Restricted Securities
SecurityVillage understands that: (i) the SAI Common, Series A
Preferred and Warrants to be issued pursuant to this Agreement have not been
registered under the Securities Act or under any state securities laws; (ii)
such securities are being offered and issued in reliance upon federal and state
exemption for transactions not involving any public offering; and (iii) all
certificates representing securities of SAI issued pursuant to this Agreement,
and any SAI Common issued upon conversion or exercise of such securities
(collectively, "SAI SECURITIES") will bear on their face the following legend:
The shares evidenced by this certificate have not been registered
under the Securities Act of 1933, as amended, or any applicable state
securities laws. No transfer or sale of these shares or any interest
therein may be made without such registration and qualification unless
the issuer has received an opinion of counsel satisfactory to it that
a proposed transfer or sale does not require registration or
qualification under applicable law.
Section 5.6 Private Offering
SecurityVillage further represents that: (i) the SAI Securities are
being acquired by SecurityVillage for its own account, for investment purposes,
and not with a view to distribution thereof (except for those SAI Securities to
be distributed or designated for issuance to SecurityVillage Designees), (ii)
SecurityVillage is an "accredited investor" as defined in Rule 501 under the
Securities Act and is a sophisticated investor with knowledge and experience in
business and financial matters; (iii) SecurityVillage has had access to all SEC
Reports filed by SAI during the current year and the year preceding the current
year, and has had the opportunity to obtain additional information and ask
questions and receive answers as desired in order to evaluate the merits and
risks inherent in holding the SAI Securities; (iv) SecurityVillage has not been
offered the SAI Securities by any form of general advertising or general
solicitation; and
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(v) SecurityVillage is able to bear the economic risk and lack of liquidity
inherent in holding the SAI Securities.
Section 5.7 Capitalization.
SecurityVillage hereby represents and warrants to SAI that set forth
on Schedule 5.7 is a list setting forth the authorized and issued capital stock,
by class, and all rights to acquire capital stock or securities convertible into
or exchangeable for capital stock, of each of SecurityVillage and
SecurityVillage Technologies as of the date hereof and after giving effect to
the transactions contemplated hereby, including the name of the record owner and
beneficial owner if known. SAI hereby represents and warrants to SecurityVillage
that set forth on Schedule 5.7(b) is a list setting forth the authorized and
issued capital stock, by class, and all rights to acquire capital stock or
securities convertible into or exchangeable for capital stock, of SAI as of the
date hereof and after giving effect to the transactions contemplated hereby,
including the name of the record owner and beneficial owner if known. The
SecurityVillage Controlling Stockholders collectively own approximately 47% of
the voting capital stock of SecurityVillage on a fully diluted basis, which is
sufficient under SecurityVillage's certificate of incorporation, bylaws and all
voting agreements to authorize the transactions contemplated hereby. Except for
the SecurityVillage Controlling Stockholders, no other person owns, directly or
indirectly, more than 5% of the voting capital stock of SecurityVillage on a
fully diluted basis.
Section 5.8 Disclosure
The representations and warranties made by each Agreement Party
herein, and all statements made in any exhibit, schedule or certificate
furnished by any Agreement Party pursuant to this Agreement, do not contain, and
at the time of the closing of the respective Transactions will not contain, any
untrue statement of a material fact, or omit to state any material fact required
to be stated herein, or necessary in order to make the statements made, in light
of the circumstances under which they were made, not misleading.
ARTICLE 6 CERTAIN COVENANTS AND AGREEMENTS
Section 6.1 No Inconsistent Agreements
Each of the Agreement Parties shall use its best efforts to ensure
that none of their respective Subsidiaries, Affiliates or shareholders enter
into any agreement or take any action with respect to the Transactions or any
other matter contemplated by this Agreement which is inconsistent with the
fulfillment of its obligations under this Agreement or which otherwise conflicts
with the provisions hereof.
Section 6.2 Fulfillment of Conditions
Each of the Agreement Parties will proceed diligently to satisfy
each condition to the other's obligations contained in this Agreement and to
consummate the Transactions, and none will take or fail to take any action that
could be reasonably expected to result in the nonfulfillment of any such
condition or to cause any of the Transactions not to be consummated.
Section 6.3 Confidentiality
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Each Corporate Party will hold, and will use its best efforts to
cause its Affiliates, and their respective representatives to hold, in strict
confidence from any Person (other than an Affiliate or representative) all
documents and information concerning any other Corporate Party or its Affiliates
furnished to it by the other Corporate Party or its representatives in
connection with this Agreement or the transactions contemplated hereby. The
provisions of this Section shall not apply to the extent that such documents or
information can be shown to have been (a) previously known by the party
receiving it, (b) in the public domain through no fault of the receiving party
or (c) acquired by the receiving party from another source if the source is not
under an obligation to another Corporate Party to keep such documents and
information confidential. The foregoing shall not apply: (a) if a party is
compelled to disclose by judicial or administrative process or by other
requirements of law; (b) if confidential information is disclosed in an action
or proceeding brought by a Corporate Party in pursuit of its rights or in the
exercise of its remedies; or (c) to a Corporate Party's use of documents and
information concerning the other Corporate Party after acquiring another
Corporate Party. In the event the King Acquisition or the merger contemplated by
the Merger Agreement is not consummated, upon the request of a disclosing
Corporate Party, each other Corporate Party to the transaction that was not
consummated will, and will cause its Affiliates and their respective
representatives to, promptly return all copies of confidential documents and
information furnished by the disclosing Corporate Party and destroy all writings
containing confidential information.
Section 6.4 Approvals
Subject to the exercise of fiduciary obligations under applicable
law as advised in writing by independent legal counsel, each Corporate Party
shall deliver resolutions of its board of directors approving all necessary
corporate actions required to fulfill such Corporate Party's obligations
pursuant to this Agreement. Each Corporate Party shall take all commercially
reasonable steps to obtain the adoption and approval of such corporate actions
by such Corporate Party's stockholders where necessary.
Section 6.5 Voting Agreement
In the event that SAI in its sole discretion determines that a vote
of its stockholders is required to approve any or all of the transactions
contemplated hereby, each of the parties to this Agreement hereby agree to vote
all shares they control and are entitled to vote in favor of the transactions
contemplated hereby at any meeting of stockholders or written consent requested
by SAI. SecurityVillage agrees to promptly call a meeting of its stockholders to
approve the transactions contemplated hereby, and each of the SecurityVillage
Controlling Stockholders agree to vote all shares of SecurityVillage's voting
capital stock held or controlled by them, in favor of all of the transactions
contemplated hereby.
Section 6.6 SecurityVillage Designees
Prior to the Investment Closing, SecurityVillage will deliver to SAI
a schedule that sets forth the SecurityVillage Designees who will acquire the
SAI Securities contemplated by Section 2.2 and Articles 3 and 4 hereof and
specifies, for each such SecurityVillage Designee, the SAI securities they will
receive. The SAI securities may initially be held by an escrow agent on behalf
of SecurityVillage and the SecurityVillage Designees.
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ARTICLE 7 MISCELLANEOUS
Section 7.1 Entire Agreement; Mutual Release
This Agreement and any other agreements executed in connection
herewith, including without limitation, Amended King Agreement, constitute the
entire agreement between the parties with respect to the subject matter hereof
and supersede all prior agreements and understandings between the parties with
respect to the subject matter hereof, including without limitation, the Letter
Agreement. Without limiting the generality of the foregoing, this Agreement
supersedes the Letter Agreement in its entirety and the Letter Agreement is
hereby terminated and shall be of no further force and effect. Each party hereto
releases and forever discharges each other party hereto and its respective
agents, servants, members, managers, employees, directors, officers, attorneys,
affiliates, subsidiaries, successors and assigns and all persons, firms,
corporations, and organizations acting on their behalf, from all damage, loss,
claims, demands, liabilities, obligations, actions and causes of action
whatsoever, known or unknown, liquidated or unliquidated, certain or contingent,
that such Party hereto has had, now has, may now have or claim to have, or may
hereafter have, against each and every other party hereto, on account of, in
connection with, or in any way touching, concerning, relating to, arising out of
or founded upon, the Letter Agreement and any of the transactions contemplated
thereby, whether oral or written, including all such loss or damage of any kind
heretofore sustained, or that may otherwise arise as a consequence of the
dealings between the Parties hereto up to and including the date of this
Agreement, other than the obligations of a party under the express terms of this
Agreement or any definitive agreement executed by such party pursuant to this
Agreement or pursuant to the Letter Agreement (collectively, the "RELEASED
CLAIMS"). Each party hereby represents and warrants to the other parties that
such party has not sold, assigned or transferred any Released Claims (in whole
or in part), agrees not to bring any action with respect to any of the Released
Claims and agrees that this Section 7.1 may be plead as a complete defense and
bar to any such action.
Section 7.2 No Assignment; Binding Effect
Neither this Agreement nor any right, interest or obligation
hereunder may be assigned by any party hereto without the prior written consent
of the other parties hereto and any attempt to do so will be void. Subject to
the preceding sentence, this Agreement is binding upon, inures to the benefit of
and is enforceable by the parties hereto and their respective permitted
successors and assigns.
Section 7.3 Amendment; Waiver; Termination
No provision of this Agreement may be waived except by an instrument
in writing executed by the party against whom the waiver is to be effective. No
provision of this Agreement may be amended or otherwise modified except in
writing executed by each of the Agreement Parties.
Section 7.4 Public Announcements
Except as otherwise required by law or the rules of any applicable
securities exchange or national market system, so long as this Agreement is in
effect, none of the
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Agreement Parties will, or permit any of their representatives to, cause the
publication of any press release or other public announcement relating to the
Transactions without the consent of the Corporate Parties, which consent shall
not be unreasonably withheld, provided, however such consent will be deemed
given five (5) days after receipt of the material sought to be published if
consent is not withheld in writing. The Corporate Parties will cooperate with
each other in the development and distribution of all press releases and other
public announcements with respect to the Transactions, and will furnish the
other with drafts of any such releases and announcements as far in advance as
practicable, but in no event less than five (5) days prior to publication.
Section 7.5 No Third-Party Beneficiaries
The terms and provisions of this Agreement are intended solely for
the benefit of each party hereto and their respective successors or permitted
assigns, and it is not the intention of the parties to confer third-party
beneficiary rights upon any other Person other than the SecurityVillage
Designees.
Section 7.6 Intentionally omitted.
Section 7.7 Notices
All notices and other communications given or made pursuant hereto,
unless otherwise specified, shall be in writing and shall be deemed to have been
duly given or made if sent by fax (with confirmation in writing), delivered
personally or sent by registered or certified mail (postage prepaid, return
receipt requested) to the parties at the fax number or address set forth below
or at such other addresses as shall be furnished by the parties by like notice,
and such notice or communication shall be deemed to have been given or made upon
receipt:
if to SecurityVillage, to: XxxxxxxxXxxxxxx.xxx, Inc.
85 Nedinat Xx'xxxxxxx
X.X. Xxx 0000
Xxxxxxxx Xxxxxxx
00000 Xxxxxx
Facsimile: 972-9-955-7580
if to SAI, to: Security Associates International, Inc.
0000 X. Xxxxxxxxx Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxx Xxxxxxx, XX 00000-0000
Facsimile: 000-000-0000
Attn: President
with a copy to: Xxxxxxxx & Xxxxxx, Ltd.
00 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Facsimile: 000-000-0000
Attn: Xxxxxxx Xxxxxxxxxx
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if to TJS: TJS Partners, L.P.
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Facsimile: 000-000-0000
if to King: KC Acquisition Corp.
X.X. Xxx 0000
Xxxxx Xxxxxxxxxx, XX 00000-0000
if to Xxxxxx Few: Xx. Xxxxxx Few Sr.
C/o King Acquisition Corp.
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
if to Xxxxxxx XxXxxx: Xx. Xxxxxxx XxXxxx
X/x XxXxxx Xxxxx
00 Xxxx Xxxxxx
Xxxxxx, XX 00000
if to Xxxxx Xxxxx: Mr. Xxxxx Xxxxx
X/x XxXxxx Xxxxx
00 Xxxx Xxxxxx
Xxxxxx, XX 00000
for each of King, Few,
XxXxxx and Xxxxx,
with a copy to: Xxxxxxx & Xxxxxxx
000 Xxxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxx
if to any other Agreement Party, to the address set forth opposite its name on
the signature pages hereto.
Section 7.8 Headings
The headings contained in this Agreement and in the Schedules and
Exhibits hereto are for convenience only and shall not affect the meaning or
interpretation of this Agreement.
Section 7.9 Counterparts
This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original and all of which together shall be
deemed to be one and the same instrument.
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Section 7.10 Applicable Law
This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Delaware, without regard to the conflicts of law
rules of such state.
Section 7.11 Invalid Provisions
If any provision of this Agreement is held to be illegal, invalid
or unenforceable and if the rights or obligations of any party hereto under this
Agreement will not be materially and adversely affected thereby, (i) such
provision will be fully severable, (ii) this Agreement will be construed and
enforced as if such illegal, invalid or unenforceable provision had never
comprised a part hereof, (iii) the remaining provisions of this Agreement will
remain in full force and effect and will not be affected by the legal, invalid
or unenforceable provision or by its severance herefrom and (iv) in lieu of such
illegal, invalid or unenforceable provision, there will be added automatically
as a part of this Agreement a legal, valid and enforceable provision as similar
in terms to such illegal, invalid or unenforceable provision as may be possible.
Section 7.12 Specific Enforcement
The parties hereto agree and acknowledge that money damages would
not be a sufficient remedy for any breach of any provision of this agreement by
any of the parties hereto and that any such breach would constitute immediate
and irreparable harm, and that in addition to all other remedies which any party
hereto may have, each party will be entitled, without posting any bond, to
specific performance and injunctive relief, without showing any actual damage,
or other equitable relief as a remedy for any such breach.
Section 7.13 Mutual Drafting
This Agreement is the mutual product of the parties, and each
provision hereof has been subject to the mutual consultation, negotiation and
agreement of each of the Agreement Parties, and shall not be construed for or
against any Agreement Party hereto.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
XXXXXXXXXXXXXXX.XXX INC.
By:____________________________________
Name:_______________________________
Title:______________________________
SECURITYVILLAGE TECHNOLOGIES, LTD.
By:____________________________________
Name:_______________________________
Title:______________________________
SECURITY ASSOCIATES INTERNATIONAL, INC.
By:____________________________________
Name:_______________________________
Title:______________________________
KC ACQUISITION CORP.*
By:____________________________________
Name:_______________________________
Title:______________________________
TJS PARTNERS. L.P.
By: TJS Management, L.P.
General Partner
By: TJS Corporation
General Partner
By:________________________
Xxxxxx X. Xxxxxxxxx
President
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--------------------------------
XXXXX X. XXXXXXX
--------------------------------
XXX XXXXX
--------------------------------
XXXXXX FEW*
--------------------------------
XXXXXXX XXXXXX*
--------------------------------
XXXXX XXXXX*
--------------------------------
XXXXX XXXXX
ST. MARTINS HOLDINGS II, LIMITED
By:_____________________________
Title:__________________________
AUDIOGUARD INTERNATIONAL
By:_____________________________
Its:____________________________
3K DIGITAL LIMITED
By:_____________________________
Its:____________________________
* For purposes of Article 2,
Section 3.2, Article 5,
Section 6.1, 6.2, 6.5, and
Article 7 only.
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