ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("Agreement") is made this 7th day of
May, 1997, but made effective as of May 1, 1997, by and between GUARDIAN
INTERNATIONAL, INC., a Nevada Corporation ("Buyer") and ALARM CONTROL, INC., a
Florida Corporation ("Seller") with the joinder and consent of XXXXX X. XXXXX
("Shareholder").
WITNESSETH
WHEREAS, Seller is engaged in the business of marketing and installing
residential and commercial security system accounts, transacting business within
the State of Florida; and
WHEREAS, Buyer is in the business of acquiring existing and new
accounts and the management of such accounts, which includes the monitoring of
security alarm systems and the billing and collecting of monitoring fees
(hereinafter referred to as "Buyer's Business"), and has an operating facility
for such business; and
WHEREAS, subject to the terms and conditions set forth herein, Seller
desires to sell the "Purchased Assets" (as hereinafter defined) to Buyer, and
Buyer desires to purchase the Purchased Assets from Seller as hereinafter
provided; and
WHEREAS, as a material inducement to Buyer to enter into this
Agreement, and as a condition to purchasing the Purchased Assets, Buyer desires
to obtain from Seller the "Restrictive Covenants" (as hereinafter defined) upon
the terms and provisions hereinafter set forth;
NOW THEREFORE, in consideration of the premises and the mutual
covenants of the parties hereinafter expressed, it is hereby agreed as follows:
ARTICLE I
RECITALS, EXHIBITS, SCHEDULES
The foregoing recitals are true and correct and, together with the
schedules and exhibits referred to hereafter, are hereby incorporated into this
Agreement without further references thereto.
ARTICLE II
PURCHASE AND SALE OF ASSETS
2.1 PURCHASED ASSETS. Subject to the terms and conditions of this
Agreement, at "Closing" (as hereinafter defined), Seller shall sell, transfer,
convey, assign and deliver to Buyer, and Buyer shall purchase, acquire and
accept from Seller, all of the following:
(a) All of Seller's right, title and interest in and to the
service, leasing and monitoring contracts described in EXHIBIT "A" attached
hereto and made a part hereof ("Contracts"), and all alarm equipment owned by
Seller and utilized by, or in connection with, customers of Seller.
(b) All processes, know-how, trade secrets and other
intellectual property rights utilized by Seller in its business and all books
and records relating thereto.
(c) All data and materials utilized by Seller in its business
and operations and all books and records relating to the Contracts and/or
customers.
(d) All trade names utilized by Seller in its business
(including, without limitation, all of Seller's right, title and interest in and
to the name "Alarm Control, Inc." , "ACI", and any derivations or variations
thereof), and all books and records relating thereto.
(e) All goodwill and customer and subscriber lists pertaining
to Seller's business and all books and records relating thereto.
(f) All inventory and equipment on hand remaining on the
Closing date relating to the servicing of customer accounts.
(g) All computer software utilized by Seller in connection
with the Contracts.
(h) Those certain vans and trucks described on EXHIBIT "B"
attached hereto and made a part hereof ("Vehicles").
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(i) All telephone lines, communication lines and network
information systems utilized in connection with the Seller's business.
The foregoing assets, properties and rights are collectively
referred to herein as the "Purchased Assets".
The sale, assignment, transfer, conveyance and delivery of the
Purchased Assets shall be made by such bills of sale, endorsements, assignments,
certificates of title and other instruments of assignment, transfer and
conveyance as Buyer shall reasonably request.
2.2 NO ASSUMPTION OF LIABILITIES. Notwithstanding, anything contained
herein to the contrary, Buyer does not assume nor shall Buyer be responsible for
any liabilities or obligations of Seller whatsoever, except with regard to the
Contracts and with regard to the Vehicles and telephone lines, provided such
liabilities or obligations are first occurring subsequent to the date of
Closing. In that regard, Seller and the Shareholder, jointly, severely and
collectively, hereby indemnify and hold Buyer forever harmless from and against
all loss, cost, damage, claims and or threats of claims incurred by reason of
any liabilities or obligations of Seller in violation of the provisions of this
Paragraph 2.2 The provisions of this Paragraph 2.2 shall survive Closing or
earlier termination of this Agreement.
ARTICLE III
PURCHASE PRICE
3.1 PURCHASE PRICE. In exchange for the Purchased Assets and the
Restrictive Covenants, Buyer agrees, subject to the terms, conditions and
limitations set forth in this Agreement, to pay to or for the account of Seller
("Purchase Price") being the aggregate of the following: (i) Two Million Two
Hundred Thousand and No/100 Dollars ($2,200,000.00) ("Cash Portion"); (ii)
50,000 shares of the common stock, par value $.001 per share, of Buyer ("Common
Stock"); and (iii) an option to purchase 100,000 shares of Common Stock at an
exercise price of $2.50 per share, as more fully set forth in the "Option
Agreement" attached hereto and made a part hereof as EXHIBIT "C" ("Option")(the
Common Stock, the Option and the shares issuable upon the exercise of the Option
are sometimes hereinafter collectively referred to as the "Securities").
3.2 PAYMENT OF PURCHASE PRICE. The Purchase Price, subject to
proration, credits and adjustments as hereinafter set forth, shall be paid by
Buyer to Seller as follows, to wit:
(i) At Closing, the Cash Portion shall be paid by Buyer to
Seller in cash, cashiers check or by wire transfer.
(ii) At Closing, Buyer shall deliver the Common Stock and the
Option Agreement to Seller as more fully set forth in Paragraph 11.2 hereof.
Further, the Purchase Price shall be allocated to the
Purchased Assets as agreed on EXHIBIT "D" attached hereto and made a part
hereof.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER AND SHAREHOLDER
Seller and Shareholder, jointly, hereby makes the following
representations and warranties to Buyer, each of which is true and correct on
date hereof and shall be true and correct on the Closing date, each of which
shall survive Closing and each of which shall be deemed to be material and
relied upon by Buyer regardless of any investigation made by or information
known to Buyer, to wit:
4.1 CORPORATION EXISTENCE AND QUALIFICATION. Seller is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Florida. Seller has the corporate power and authority to own and use
its properties and to transact the business in which it is engaged, holds all
franchises, licenses, occupancy licenses and permits necessary and required
therefor and is not required to be licensed or qualified to do business in any
other jurisdiction. Seller has no subsidiaries or affiliates, direct or
indirect, except as set forth on EXHIBIT "E" attached hereto and made a part
hereof.
4.2 NO VIOLATION. Neither the execution and delivery of this Agreement,
nor the performance by Seller of its obligations hereunder will (a) violate any
provision of the articles of incorporation or bylaws of Seller, (b) violate, or
be in conflict with, or constitute a default under, or require the consent of
any other party to, or result in the creation or imposition of any lien upon any
of the assets of Seller under any agreement or commitment which Seller is a
party or by which it is bound, or (c) violate any statute or law or any
judgment, decree, order, regulation or rule of any court or governmental
authority to which Seller is subject.
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4.3 AUTHORITY AND APPROVAL OF AGREEMENT BY SELLER. The execution and
delivery of this Agreement by Seller and the performance of all obligations of
Seller hereunder have bean duly authorized and approved by Corporation and its
shareholders pursuant to all applicable state and federal laws.
4.4 FINANCIAL STATEMENTS. To the best of Seller's knowledge, all of the
books and records and all other business reports, information, summaries, and
other documents of the Seller have been prepared in accordance with generally
accepted accounting principles, on the accrual basis, consistently applied, as
applicable as to each such document in question and reflects true and accurate
information regarding the operations, as well as the Purchased Assets.
4.5 PURCHASED ASSETS. Except as set forth on SCHEDULE 4.5 attached
hereto, Seller has good and marketable title to the Purchased Assets, free and
clear of all deeds of trust, mortgages, options, liens, charges, security
interests, leases, covenants, conditions, agreements, claims, restrictions, and
other liens, claims or encumbrances of every kind or nature and there exists no
restriction or prohibition on the assignment, transfer and use of such assets.
At Closing, good and marketable title to the Purchased Assets will be vested in
Buyer, free and clear of all liens, claims and encumbrances, and the customers
under the Contracts shall attorn to and recognize the Buyer thereunder.
4.6 CONTRACTS. The Contracts are in full force and effect, and no event
has occurred that, with the passage of time and/or the giving of notice, would
result in a default thereunder by any party thereto which results or could
result in a material modification to the "MRI" (as hereinafter defined)
anticipated to be collected by Buyer by purchasing the Purchased Assets.
Further, Seller has received no notice, nor has any knowledge of any pending or
contemplated termination of any of the Contracts and, no such termination is
proposed or has been threatened. Further, there have been no modifications to
the Contracts, except as specifically set forth in writing, copies of which
having been delivered to Buyer. Further, except as set forth on SCHEDULE 4.5, no
consent, approval, permission, or other confirmation, notice or communication is
required under any of the contracts in connection with the transaction
contemplated by this Agreement. Further, simultaneous with Closing, Buyer shall
be the owner and holder of those Contracts assigned to Buyer in accordance with
the terms and provisions hereof, and such assignment shall be binding upon each
customer corresponding to each Contract acquired by Buyer.
4.7 MONTHLY RECURRING REVENUE AND SUBSCRIBER ACCOUNTS. Seller has
approximately two thousand two hundred (2,200) residential and commercial
subscriber accounts as reflected on EXHIBIT "F". The MRI is approximately Sixty
Thousand and No/100 Dollars ($60,000.00) per month as reflected on EXHIBIT "F".
For purposes of this Agreement, the term "Monthly Recurring
Revenue" or "MRI" means the total recurring regular amounts billable for a one
(1) month period to customers under a Contract (regardless of whether such
customer is billed monthly or less frequently) measured by the amounts most
recently billed to and collected from any customer for a one (1) month period
relating to monitoring revenues, leasing revenues and service agreements.
4.8 LITIGATION. There is no suit, claim, action or proceeding now
pending or, to the best of Seller's knowledge, threatened before any court, any
administrative or regulatory body or any governmental or quasi-governmental
agency to which Seller or the Purchased Assets is a party.
4.9 LABOR AGREEMENTS, EMPLOYEE BENEFIT PLANS AND EMPLOYMENT AGREEMENTS.
Except as set forth on SCHEDULE 4.9 attached hereto, Seller is not a party to:
(i) any union collective bargaining or similar agreement; (ii) any profit
sharing, pension, retirement, deferred compensation, bonus, stock option, stock
purchase, retainer, consulting, health, welfare or incentive plan or agreement,
whether legally binding or not; (iii) any plan providing for "fringe benefits"
to its employees, including, but not limited to, vacation, disability, sick
leave, medical, hospitalization and life insurance and other insurance plans,
and related benefits; or (iv) any employment agreements.
4.10 DISCRIMINATION AND OCCUPATIONAL SAFETY STATUTES AND REGULATIONS.
To the best of Seller's knowledge, no person or party (including, but not
limited to, governmental agencies of any kind) has any claim, or basis for any
action or proceeding against Seller arising out of any statute, ordinance or
regulation relating to discrimination in employment or to employment practices
or occupation safety and health standards, which, if upheld, would have an
adverse effect on the business or condition, financial or otherwise, of Seller.
4.11 LICENSURE. Seller maintains all necessary approvals, consents,
permits and licenses that are required by any and all governmental and
quasi-governmental authorities having jurisdiction thereof in connection with
the operation and conduct of a burglar alarm company.
4.12 SHAREHOLDER. Shareholder owns legally and beneficially, one
hundred percent (100%) of all authorized, issued and outstanding capital stock
of Seller. Seller and Shareholder each has full authority to enter into and
perform their respective obligations under this Agreement and neither the
execution, delivery nor performance by Seller of this Agreement will result in a
violation or breach of any term or provision, nor
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constitute a default under, any contract or agreement to which either Seller is
a party or by which either Seller is bound, or violate any order, writ,
injunction or decree of any court, administrative agency or governmental or
quasi-governmental body.
4.13 TAX MATTERS. All federal, foreign, state, county, local and other
taxes, including, but not limited to, employee withholding taxes, social
security payments, unemployment taxes, payroll taxes, sales taxes and ad valorem
taxes, due and payable by Seller on or before the date of this Agreement, have
been paid or accrued and Seller has filed by all tax returns and reports
required to be filed by it with all such taxing authorities. No assessments of
deficiencies have been made against Seller and no extensions of time are in
effect for the assessment of deficiencies. Seller has no notice of any of its
federal income tax returns being presently examined by the Internal Revenue
Service.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby makes the following representations and warranties to
Seller, each of which is true and correct on the date hereof and shall be true
and correct on the Closing date, each of which shall survive Closing and each of
which shall be deemed to be material and relied upon by Seller regardless of any
investigation made by or information known to Seller, to wit:
5.1 CORPORATION EXISTENCE AND QUALIFICATION. Buyer is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Nevada. Buyer has the corporate power and authority to own and to use
its properties and to transact the business in which it is engaged, holds
franchises, licenses, occupancy licenses and permits necessary and required
therefor, and is not required to be licensed or qualified to do business in any
other jurisdiction.
5.2 AUTHORITY AND APPROVAL OF AGREEMENT BY BUYER. The execution and
delivery of this Agreement by Buyer and the performance of all obligations of
Buyer hereunder have been duly authorized and approved by Buyer pursuant to all
applicable state and federal laws.
ARTICLE VI
BROKERAGE
6.1 BROKERS. No brokers , finder or other similar intermediary has been
engaged by Buyer or Seller in connection with the transaction contemplated by
this Agreement.
ARTICLE VII
RESTRICTIVE COVENANTS
7.1 NONSOLICITATION; COVENANT AGAINST INTERFERENCE; NONDISCLOSURE OF
CONFIDENTIAL INFORMATION.
(a) Seller, its officers and directors, and the Shareholder
(jointly, severally and collectively "Covenantors" ) hereby covenant and agree
with Buyer that, from and after the date of Closing this Agreement, and
continuing until twenty-three (23) months following the date of the termination
or expiration of Shareholder's employment or engagement with the Buyer (whether
with or without cause) they shall not: directly or indirectly, (i) solicit or
counsel any third person or business entity that Seller knows or should know is
or was (within the previous five years) a customer of Seller, Buyer (or
affiliated companies), regardless of such person's or entity's location, and
regardless of whether such third person or business entity has terminated any
business relationship with Buyer or commenced a similar business relationship
with any other individual or business entity; (ii) accept, with or without
solicitation, business from any third person or business entity that Seller
knows or should know is or was (within the previous five years) a customer of
Seller, Buyer (or affiliated companies), regardless of such person's or entity's
location; or (iii) solicit for employment, employ or otherwise engage the
services of, any employees, affiliates, or agents of Buyer, regardless of such
person's or entity's location. The Covenantors hereby acknowledge that the
foregoing Covenant includes and prohibits Covenantors to advertise, in all
mediums, the Covenantors' prior affiliation with Seller.
(b) Covenantors acknowledge that they possess confidential
information of a special and unique nature and value affecting and relating to
the Seller's business, including, but not limited to, the identity of Seller's
customers and accounts, the prices being charged by Seller to such customers and
accounts, the Contracts, books and records, business records and other records,
Seller's trade secrets and other similar information relating to Seller and the
Seller's business and Buyer (all the foregoing being hereinafter referred to
collectively as "Confidential Information"). Covenantors recognize and
acknowledge that all Confidential Information is the exclusive property of
Buyer, is material and confidential, and greatly affects the goodwill and the
effective and successful conduct of the Seller's business. As a material
inducement for Buyer to enter
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into this Agreement, Covenantors covenant and agree that they will not at any
time, directly or indirectly, divulge, reveal or communicate any Confidential
Information to any person, firm, corporation or entity whatsoever, or use any
Confidential Information for their own benefit or for the benefit of others.
Notwithstanding the foregoing, from and after a date which is six (6) years
following the Closing, Shareholder shall be entitled to use information that he
has learned and acquired as a result of being in the burglar alarm business for
many years for his benefit; provided; however, at no time shall Covenantors ever
be able to use, divulge, reveal or communicate, directly or indirectly, any
Confidential Information that Covenantors learned or acquired from, or that
belongs to, Buyer or Buyer's Business.
(c) In view of the irreparable harm and damage to Buyer which
would result from a breach or a threatened breach of the covenants or agreements
under Subsections (a) and (b) of this Section ("Restrictive Covenants"), and in
view of the lack of an adequate remedy at law to protect Buyer' s interest,
Buyer shall have the right to receive, and Covenantors hereby consent to the
issuance of a temporary and permanent injunction enjoining Covenantors from any
violation of the Restrictive Covenants. In this regard, Covenantors are hereby
estopped from asserting an objection to same. Covenantors acknowledge that a
temporary and permanent injunction is an appropriate remedy for such a breach or
threatened breach. The foregoing remedy shall be in addition to, and not in
limitation of, any other rights or remedies to which Buyer is or may be entitled
at law or in equity. It is further agreed that in the event Buyer is required to
take any action in order to enforce the provisions of this Article VIII, the
prevailing party shall be entitled to all legal fees and costs, including, but
not limited to, attorneys' fees, paralegals' fees and court costs arising from
or incidental to any action so taken through and including all trial and
appellate levels.
(d) Covenantors hereby acknowledge the existence of the
following legitimate business interests of the Buyer: (i) valuable confidential
business information relating to and associated with Corporation, Buyer and
Buyer's Business; (ii) substantial relationships with prospective or existing
customers; and (iii) customer goodwill associated with Buyer and Buyer's
Business and the specific geographic location in which the Buyer operates its
business. Covenantors further acknowledge that they have carefully read and
considered the Restrictive Covenants and, having done so, upon advice of legal
counsel, agree that the restrictions set forth herein are fair and reasonable
and are reasonably required for the protection of the legitimate business
interests of Buyer, including, without limitation, the protection of the
legitimate business interests of Buyer set forth in the immediately preceding
sentence. It is the belief of the parties that the best protection which can be
given to Buyer which does not in any way infringe on the rights of Covenantors
to conduct any business (not otherwise in violation of these Restrictive
Covenants) is to provide for the restrictions described above. Covenantors
acknowledge that their ability to find gainful work in its, his or her,
respectively, field will not be significantly impaired by their compliance with
said restrictions. In the event any of such restrictions shall be held
unenforceable by any court of competent jurisdiction, the parties hereto agree
that it is their desire that such court shall substitute a reasonable,
judicially enforceable limitation in place of any limitation deemed
unenforceable and, as so modified, this covenant shall be as fully enforceable
as if it had been set forth herein by the parties hereto. In determining this
limitation, it is the intent of the parties that the court recognize that the
parties hereto desire that the Restrictive Covenants be imposed and maintained
to the maximum lawful extent. Further, the parties hereto acknowledge that the
Covenantors should be entitled to remain in the security alarm business subject
to the terms of these Restrictive Covenants.
ARTICLE VIII
COVENANTS OF SELLER
8.1 PRESERVATION OF SELLER'S BUSINESS. From the date hereof through the
Closing date, Seller agrees to conduct its business in the ordinary course, and
without the prior written consent of Buyer, shall not dispose of any of the
Purchased Assets, encumber, pledge or lien any of the Purchased Assets. In
addition, Seller represents and warrants that, from and after a date which was
ninety (90) days prior to the date of the execution of this Agreement, through
the date of the execution of this Agreement, Seller has conducted its business
in the ordinary course and have not entered into agreements with customers
included within the Purchased Assets in a manner inconsistent with the normal
practice of the Seller's business , nor in contemplation of the transaction
contemplated by this Agreement. Immediately after executing this Agreement,
Seller will furnish, or cause to be furnished, to Buyer any documents and other
information requested by Buyer with respect to the Purchased Assets, which
Seller has in its possession or has a right to possess (without payment of
additional fees therefor except for reasonable copy charges, if any).
8.2 INSPECTIONS. Between the date of the execution of this Agreement
and Closing, Seller shall allow Buyer to inspect copies of all permits,
licenses, approvals, reports, studies and any and all other documents which
Seller may have pertaining to the Purchased Assets. Buyer, its authorized
agents, employees and Seller shall have the right of access to such Books and
Records and all other documents and instruments pertaining to the Purchased
Assets at all reasonable times subsequent to the date of the execution of this
Agreement at reasonable times, upon reasonable notice, with full right to: (i)
inspect the Purchased Assets ; and (ii) conduct on all Books and Records, and
all other documents and instruments, studies, surveys and tests on the Purchased
Assets as Buyer, its authorized agents, employees and Sellers shall deem
necessary or desirable (collectively, the foregoing are hereinafter referred to
as "Inspections"). Such rights of Inspection,
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or the exercise or non-exercise of same, shall not constitute a waiver by Buyer
of the breach of any representation or warranty of Seller which were or might
have been disclosed by such Inspections.
8.3 CONTRACT CUSTODIAN. Seller hereby acknowledges that Buyer has
advised that, in connection with its acquisition line of credit financing, the
originals of the Contracts must be delivered to a custodian in order for there
to be a timely disbursement of the loan proceeds. In that regard, Seller hereby
covenants and agrees to deliver to Buyer, within three (3) business days of
written request therefor, the original Contracts solely for the purposes of
immediately delivering same to the custodian. Upon receipt of the original
Contracts, Buyer agrees to make copies of same for Seller, at Buyer's expense.
In the event the transaction contemplated by this Agreement is not consummated
for any reason, Buyer covenants and agrees that within three (3) business days
following written request therefor, Buyer shall cause the original Contracts to
be returned to Seller.
8.4 EMPLOYEES OF SELLER'S BUSINESS. Seller hereby covenants and agrees
that attached hereto as EXHIBIT "G" is a true and correct list of all employees
associated with Seller's business designating thereon the length of service with
Seller, the position maintained, the salary level and benefits currently offered
by Seller. Further, Seller represents and warrants that none of its employees
has any employment agreement (written or oral), regarding the staffing of
Seller's business. Further, if, as and to the extent Buyer desires to employ any
or all of Seller's employees, Buyer is authorized to pursue such persons during
the term hereof. The terms and provisions of this Paragraph shall survive
Closing.
8.5 ACQUISITION OF SECURITIES.
(a) RESTRICTIONS ON TRANSFER; NO RIGHT TO REQUIRE
REGISTRATION. Seller and Shareholder acknowledge and agree that the Securities
have not been registered under the Securities Act of 1933, as amended (the
"Securities Act"), or under relevant state securities laws and, therefore, they
cannot be sold, pledged, assigned, transferred or otherwise disposed of unless
they are subsequently registered under the Securities Act and/or under relevant
state securities laws or an exemption from such registration is available.
Seller further understands that as a result of the foregoing restrictions, they
must bear the economic risk of holding the Securities for an indefinitie period
of time until the Securities are registered under the Securities Act, or an
exemption from registration thereunder is available. Further the Seller and the
Shareholder understand that they have no right to require Buyer to register the
Securities under the Securities Act or relevant state securities laws.
(b) INVESTMENT INTENT. As a material inducement to Buyer to
enter into, execute and deliver this Agreement, Seller and Shareholder hereby
represent and warrant that Seller is acquiring the Securities solely for the
account of Seller for investment purposes only and not with a view for
distribution or resale to others. Seller and Shareholder further represent and
warrant that Seller will not, directly or indirectly, offer, sell, transfer,
assign, pledge, hypothecate or otherwise dispose of ("Transfer") the Securities,
unless (i) the Transfer is pursuant to an effective registration statement under
the Securities Act, and (ii) counsel for Seller (which counsel shall be
reasonable acceptable to Buyer) shall have furnished the Buyer with an opinion,
reasonably satisfactory in form and substance to the Buyer, to the effect that
no such registration is required because of the availability of an exemption
from registration under the Securities Act, or that such shares have been sold
in compliance with Rule 144 under the Securities Act.
(c) SOPHISTICATION. Seller and Shareholder hereby represent
and warrant that they each have knowledge and experience in financial and
business matters in general and are capable of evaluating the merits and risks
of the prospective investment in the Securities.
(d) ACCESS TO INFORMATION. Seller and Shareholder hereby
acknowledge and confirm that they have been given complete access to all public
documents, records, contracts and books of the Buyer, and that Seller and the
Shareholder have engaged in a complete examination of all such public documents,
records, contracts and books to the extent deemed necessary by them in reaching
the decision to obtain and become investors in Buyer. Seller and the Shareholder
hereby further acknowledge and confirm that they have had an opportunity to ask
questions of and receive answers from the executive officers of the Buyer
concerning the Securities, the Buyer and its affairs and related matters and
with respect to any other matter the Seller or the Shareholder deemed relevant,
and all such inquiries have been completed to the Seller's and the Shareholder
satisfaction.
(e) RELIANCE ON REPRESENTATIONS. Seller and Shareholder
acknowledge and understand that Buyer will be relying on the accuracy and
completeness of all matters set forth in this Paragraph 8.6, and the Seller and
Shareholder represent and warrant to the Buyer that the representations,
warranties, acknowledgments, covenants and agreements set forth herein are
complete, true and correct and may be relied upon by them in determining whether
the offer and sale of the Securities to the Seller is exempt from registration
under the Securities Act and relevant state securities laws.
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(f) LEGEND. Seller further understands that the certificates
evidencing the Common Stock and the certificates issuable upon the exercise of
the Option will bear a legend in substantially the following form:
The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended (the "Act") and may not be
sold, assigned or transferred in the absence of an effective
registration statement under the Act, an opinion of counsel
satisfactory to Guardian International, Inc. that such registration is
not required, or evidence that the shares have been sold in compliance
with Rule 144 under the Act.
8.6 LEASE OF PREMISES. Seller and Shareholder represent that
Shareholder and Xxxxxxx X. Xxxxx (collectively "Lessor") are the fee simple
title holders to the "Building" (as hereinafter defined). At Closing, Buyer
shall receive exclusive possession of Suite B-15 of a building located at 0000
X.X. 000xx Xxxxxx, Xxxxx Xxxxx, Xxxxxxx ("Building"), presently occupied by
Seller and execute a lease reasonably acceptable to Buyer at a rental rate of
Two Thousand Seven Hundred Forty-Two and No/100 Dollars ($2,742.00) per month.
The term shall be on a month to month basis, terminable by Buyer upon five (5)
days written notice to Seller.
8.7 CENTRAL STATION. Seller is a wholesale customer of Buyer in
connection with monitoring of the Contracts through Buyer's central station.
Subsequent to the date of this Agreement through Closing, Seller shall continue
to direct all monitoring services for its customers to Buyer's central station.
8.8 CHANGE OF NAME OF SELLER. Seller will, at Closing, execute and
deliver (and pay for) all documents necessary to change its corporate name to a
name dissimilar to its present name and Seller further covenants and agrees not
use the logo's currently used by Seller or similar logos. At Closing, Seller
shall also execute and deliver, all necessary documents to terminate any d/b/a
filings or any other rights in and to the "Alarm Control" name and logo or
similar names and logos.
ARTICLE IX
CLOSING
The closing of the transaction contemplated by this Agreement
("Closing") shall be effective as of 12:00 a.m. on the day of Closing, and shall
be held at the office of Buyer's attorneys, Navon, Kopelman, & X'Xxxxxxx, P.A.,
0000 Xxxxxxxx Xxxx, Xxxxx X-000, Xx. Xxxxxxxxxx, XX 00000, Attn.: Xxxxxx X.
Xxxxx, Esq., commencing at 10:00 o'clock A.M. on May 1, 1997, unless extended by
other provisions of this Agreement, or unless otherwise agreed to in writing by
the parties.
ARTICLE X
DOCUMENTS TO BE DELIVERED AT CLOSING
10.1 At Closing, Seller shall deliver or cause to be delivered to
Buyer, the following:
(a) The original of all documents which Seller may have
pertaining to the Purchased Assets and a Xxxx of Sale, Absolute, in form and
content satisfactory to the Buyer's legal counsel conveying to Buyer all of
Seller's right, title and interest in and to the Purchased Assets, free and
clear of all liens, claims and encumbrances ;
(b) A standard No Lien and Party-In-Possession Affidavit
executed by Seller which shall be in recordable form and otherwise satisfactory
to the Buyer's counsel;
(c) A duly executed and delivered assignment, with full
recourse and warranty, free and clear of liens, claims and encumbrances, of the
Purchased Assets, which shall be in recordable form and otherwise satisfactory
to the Buyer' s counsel;
(d) A certificate of good standing with regard to the Seller,
together with a corporate resolution and incumbency certificate satisfactory to
Buyer's counsel;
(e) A notice to each customer of the Purchased Assets advising
of the transaction contemplated by this Agreement in form and content acceptable
to Buyer and Seller;
(f) Uniform Commercial Code Financing Statements UCC-3's
required in connection with all UCC-1s filed with respect to the Purchased
Assets in favor of and naming Seller (and its predecessors) as secured parties
thereunder to assign all of Seller's (and its predecessors) interest to Buyer ,
as well as UCC-3's required to terminate any UCC-1's naming Seller as debtor and
which affect any of the Purchased Assets;
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(g) An officer's certificate of Seller and an affidavit from
the Shareholder attesting to the truth and accuracy of the representations and
warranties of Seller and Shareholder, including, but not limited to, the
accounts and the MRI generated therefrom, in form acceptable to Buyer's counsel;
and
(h) Such other documents or instruments reasonably required by
this Agreement.
10.2 The Buyer shall deliver:
(a) The Purchase Price;
(b) At Closing, Buyer shall cause its transfer agent to issue
the certificates representing the Common Stock to Seller, together with any
stock issuance taxes or fees required in connection with such issuance. In
connection with the issuance of the Common Stock, Seller shall provide Buyer, or
its transfer agent, with Seller's address and federal employee identification
number, and such other information as Buyer, or its transfer agent, may
reasonably request in connection with the issuance of the Common Stock; and
(c) The Option Agreement.
10.3 At Closing, Seller and Buyer shall mutually execute and deliver to
each other a Closing statement in customary form.
ARTICLE XI
EXPENSES, PRORATIONS AND ADJUSTMENTS
11 .1 EXPENSES. Any cost to obtain and record any curative or
corrective documents required by this Agreement, the UCC-11 search fees
regarding UCC-1 filings with the Secretary of State of Florida, transfer taxes
and / or other transfer costs delivered at Closing in order to vest fee simple
title of the Purchased Assets in Buyer shall be paid by Buyer. Except in the
event of a default, each party shall bear its own respective attorneys' fees.
11.2 PRORATIONS AND ADJUSTMENTS. Seller shall be entitled to all MRI
generated under the Contracts for the period prior to the Closing; Buyer shall
be entitled to all MRI generated under the Contracts accruing thereafter;
provided, however, notwithstanding anything contained in this Agreement to the
contrary with respect to prorations, Seller shall not be entitled to a credit
for accrued but uncollected MRI, provided that if and to the extent such amounts
are collected by Buyer following the date of closing ("Adjustment Date"), such
sums forthwith shall be tendered to Seller (if Buyer receives such sums in the
forms of checks such checks may be endorsed by Buyer from and after the
Closing). All monies received by Buyer from customers under the Contracts shall
first be applied to obligations incurred from and after the Closing. In the
event the Seller is obligated to pay ad valorem personal property taxes or
intangible personal property taxes with respect to the purchased Assets, same
shall be prorated between Seller and Buyer as of midnight on the date of
Closing. Such taxes shall be prorated on the basis of the current year's tax, if
known. If the Closing shall occur before the amount of current taxes can be
determined, such taxes shall be prorated upon the basis of the taxes for the
most recent fiscal year applied to the latest assessed valuation and shall be
promptly reprorated after receipt of the current year's tax statement. Payment
required by either party to the other shall be made within fifteen (15) days'
notice by either party to the other when the current taxes are ascertained, and
a statement to the effect of the foregoing is to be set forth on the Closing
statements.
ARTICLE XII
DEFAULT
12.1 In the event Buyer shall default in any of the material covenants
of this Agreement on the part of the Buyer to be performed, and Seller shall
have performed all of its obligations hereunder, Seller shall notify the Buyer,
in writing, of any such default and the action Seller deems necessary to cure
such default, and Buyer shall have ten (10) days from receipt of such notice in
which to cure any such default. In the event Buyer fails to cure such default
within said cure period, Seller shall be entitled terminate this Agreement.
12.2 If on or before the Closing: (i) there shall be an adverse change
in the status of title to the Purchased Assets from and after the effective date
of this Agreement so that Seller is unable to deliver good and marketable title
to the Purchased Assets as required by this Agreement; or (ii) Seller shall have
failed to comply with any other material term, provision or covenant of this
Agreement; or (iii) any of the representations, warranties and covenants made by
Seller herein shall be in any material respect inaccurate or there is an
omission of a material fact necessary to make any representation, warranty, or
covenant contained herein not misleading in light of the circumstances under
which it was made, Buyer shall have the right to terminate this Agreement.
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ARTICLE XIII
MISCELLANEOUS
13.1 SUCCESSION OF AGREEMENT. This Agreement and the rights and
obligations contained herein shall inure to the benefit of and be binding upon
the parties hereto and their respective successors and assigns.
13.2 EXECUTION DATE. The "date of the execution of this Agreement"
shall mean the last day upon which it becomes fully executed by Seller and
Buyer.
13.3 SURVIVAL. The representations and warranties set forth in and made
pursuant to this Agreement shall remain operative and shall survive the Closing
and the execution and delivery of the Assignment of Contract and Xxxx of Sale
and shall not be merged therein.
13.4 FURTHER ASSURANCES. The parties hereto each agree to execute,
acknowledge and deliver aid cause to be done, executed, acknowledged and
delivered all such further assignments, transfers and assurances and perform
such acts as shall reasonably be requested of either of them, respectively, in
order to carry out this Agreement and give effect thereto. The parties hereto
acknowledge that it is to their mutual benefit to effectuate an orderly and
efficient transfer of ownership as contemplated hereby. Accordingly, without in
any manner limiting the specific rights and obligations set forth in this
Agreement, the parties declare their intention to cooperate each with the other
in effecting the terms of this Agreement.
13.5 TIME IS OF THE ESSENCE. For purposes herein, the parties agree
that time shall be of the essence of this Agreement.
13.6 CAPTIONS AND PARAGRAPH HEADINGS. Captions and paragraph headings
contained in this Agreement are for convenience and reference only and in no way
define, describe, extend or limit the scope or intent of this Agreement, nor the
intent of any provision hereof.
13.7 NO WAIVER. No waiver of any provision of this Agreement shall be
effective unless it is in writing, signed by the party against whom it is
asserted and any such written waiver shall only be applicable to the specific
instance to which it relates and shall not be deemed to be a continuing or
future waiver.
13.8 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
shall constitute one and the same Agreement.
13.9 GENDER. All terms and words used in this Agreement regardless of
the number and gender in which used, shall be deemed to include any other gender
or number as the context or the use thereof may require.
13.10 POSSESSION. Possession of the Purchased Assets shall be delivered
to Buyer at the Closing.
13.11 ENTIRE AGREEMENT AND MODIFICATION. This Agreement constitutes the
entire understanding and agreement between the parties and may not be changed,
altered or modified except by an instrument in writing signed by all parties
against whom enforcement of such change would be sought. In the event any term
or provision of this Agreement be determined by appropriate judicial authority
to be illegal or otherwise invalid, such provision shall be given its nearest
legal meaning or be construed as deleted as such authority determines, and the
remainder of this Agreement shall be construed to be in full force and effect.
This Agreement shall not be modified (and no purported modification thereof
shall be effective) unless in writing and signed by the party to be charged.
13.12 EXHIBITS. All Exhibits attached hereto contain additional terms
of this Agreement. Typewritten or handwritten provisions inserted in this form
or attached hereto shall control all printed provisions in conflict therewith.
13.13 GOVERNING LAW. This Agreement shall be construed and interpreted
according to the laws of the State of Florida, and venue with respect to any
litigation shall be Broward County, Florida.
13.14 EMPLOYMENT AGREEMENT. At Closing, Buyer and Xxxxx X. Xxxxx shall
execute and deliver an "Employment Agreement" in the form of EXHIBIT "H"
attached hereto and made a part hereof.
ARTICLE XIV
NOTICES
All notices of request, demand and other communications hereunder shall
be addressed to the parties as follows:
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If to Buyer: GUARDIAN INTERNATIONAL, INC.
Attn.: Xxxxxxx Xxxxxxxx
0000 X 00 Xxxxxxx
Xxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
With a copy to: NAVON, XXXXXXXX & X'XXXXXXX, P.A.
0000 Xxxxxxxx Xxxx, Xxxxx X-000
Xxxx Xxxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxx, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
If to Seller: ALARM CONTROL, INC.
0000 X.X. 000xx Xxxxxx, Xxxxx X-00
Xxxxx Xxxxx, XX 00000
Attn: Xxxxx X. Xxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
With a copy to: Xxxxxxxx X. Xxxx, Esq.
0000 X.X. 00xx Xxxxx
Xxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
unless the address is changed by the party by like notice given to the other
parties. Notice shall be in writing, mailed certified mail, return receipt
requested, postage prepaid and shall be deemed delivered when mailed or upon
hand delivery to the address indicated. Notwithstanding the foregoing, notice,
requests or demands or other communications referred to in this Agreement may be
sent by telegraph, federal express or other method of delivery, but shall be
deemed to have been given only when received.
ARTICLE XV
INDEMNIFICATION
15.1 Seller and Shareholder hereby jointly, severally and collectively
indemnify and hold Buyer forever harmless from and against any and all
liabilities and obligations or claims asserted against Buyer for acts of the
Seller taken or omitted prior to Closing. In addition, Seller and Shareholder
hereby jointly, severally and collectively indemnify and hold Buyer forever
harmless from and against any and all liability, damage, cost, claim or expense
which may be or cause to be incurred by the Buyer arising out of or in
connection with any breach of any warranty, representation or agreement given by
Seller and/or Shareholder hereunder or the falsity of any representation,
warranty or agreement made by Seller and/or Shareholder hereunder.
15.2 Buyer hereby agrees to indemnify and hold Seller harmless from and
against any and all liabilities and obligations or claims asserted against
Seller for acts of the Buyer taken or omitted on or subsequent to the date of
Closing. In addition, Buyer hereby indemnifies and holds Seller harmless from
and against any and all liability, damage, cost, claim or expense which may be
or cause to be incurred by the Seller arising out of, or in connection with any
breach of any warranty, representation or agreement given by Buyer hereunder, or
the falsity of any representation, warranty or agreement made by Buyer
hereunder.
15.3 The party responsible to provide indemnification hereunder
("Indemnifying Party") shall be solely responsible, at its expense, for
litigating, defending or otherwise attempting to resolve any action, matter or
proceeding against which the other party ("Indemnified Party") is indemnified
under this Article XV, except that: (i) the Indemnified Party shall have the
right to participate in the defense of any such action, matter or proceeding, at
the Indemnified Party's expense and through counsel of the Indemnified Party's
choice; (ii) the Indemnified Party may, at its option, defend or otherwise
attempt to resolve, at the Indemnifying Party's expense, any such action, matter
or proceeding, or cause the Indemnifying Party to defend or otherwise attempt to
resolve, any such action, matter or proceeding against which the Indemnified
Party is indemnified under this Article XV, if the Indemnifying Party does not
promptly and diligently defend or otherwise attempt to resolve any such action,
matter or proceeding, or if the Indemnified Party, in good faith, believes that
the defense or resolution of such action, matter or proceeding might adversely
affect its relations with a customer or supplier, in which event the
Indemnifying Party shall continue to be obligated to indemnify the Indemnified
Party hereunder in connection with such action, matter or proceedings; and (iii)
the Indemnifying Party shall not agree to any settlement without the Indemnified
Party's express prior written consent which shall not be unreasonably withheld.
The terms of this Article XV shall survive Closing.
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ARTICLE XVI
CONDITIONS
The occurrence of the following events or conditions, or the written
waiver thereof by Buyer, shall be conditions precedent to Buyer' s obligation to
close the transaction contemplated by this Agreement, to wit:
(a) The representations, warranties and covenants of Seller set forth
herein shall remain true and correct in all material respects.
(b) At Closing, the Contracts shall remain in full force and effect, no
event shall have occurred that with the passage of time and/or the giving of
notice would or may result in a termination thereunder which results or could
result in a material modification to the MRI anticipated to be collected by
Buyer, and no termination thereof shall have been proposed or threatened and
Seller has no knowledge of any fact or condition which would result in a
termination of the Contracts resulting in a material modification to the MRI
anticipated to be collected by Buyer.
Buyer shall, however, have the right to waive, in whole or in part,
such conditions set forth in this Article XVI. If such conditions have not been
satisfied or waived, on or before the Closing, Buyer shall have the right to:
(i) terminate this Agreement by giving written notice to Seller, whereupon the
parties shall be released of all further obligations each to the other
hereunder; or (ii) proceed to Closing, whereby the conditions not otherwise
satisfied shall be deemed waived.
ARTICLE XVII
DISCLOSURE
17.1 CONFIDENTIALITY. Seller and Shareholder covenant and agree that
they shall keep the specific terms and provisions of this Agreement, including,
without limitation, Purchase Price and all other financial aspects of this
transaction, strictly confidential, except with regard to any disclosure of such
information required in connection with the retaining of any accountants,
attorneys or other professionals necessary to further any of the rights or
remedies of the parties hereto pursuant to the terms and provisions of this
Agreement and except as otherwise mandated by court order; it being the
intention of the parties hereto that such information shall not be disseminated
to the public at large by Seller or Shareholder.
17.2 PRESS RELEASE. Seller acknowledges that as a result of Buyer's
obligations as a company registered under the Securities and Exchange Act of
1934, Buyer is mandated, and intends, to issue certain press releases regarding
the transaction contemplated by this Agreement.
ARTICLE XVIII
PIGGY-BACK REGISTRATION RIGHTS
18.1 REGISTRATION RIGHTS.
(a) From the date of Closing and for a period of twelve (12)
months thereafter, if Buyer (or any successor entity into or with whom Buyer may
have merged or consolidated) proposes to register any securities of Buyer under
the Securities Act of 1933, as amended (the "Act"), on any registration form
(otherwise than for the registration of securities to be offered and sold by
Buyer pursuant to (A) an employee benefit plan, (B) a dividend or interest
reinvestment plan, (C) other similar plans, (D) reclassifications of securities,
mergers, consolidations and acquisitions of assets, or (E) shares on Form S-8 to
qualified consultants), then not less than ninety (90) days prior to each such
registration, Buyer shall give to Shareholder written notice of such proposal
which shall describe in detail the proposed registration and distribution and,
upon the written request of Shareholder furnished within thirty (30) days after
the date of any such notice, proceed to include in such registration the number
of shares of Buyer's Common Stock ("Piggy-Back Shares") as have been requested
by Shareholder to be included in such registration (subject to the limitations
set forth below). Buyer will in each instance use its best efforts to cause all
such Piggy-Back Shares to be registered under the Act and qualified under the
securities or blue sky laws of any jurisdiction requested by Shareholder, all to
the extent necessary to permit the sale or other disposition thereof (in the
manner stated in such request) by Shareholder.
(b) If the managing underwriter, who shall be selected by the
Buyer, advises Buyer in writing that, in its opinion, the inclusion of the
Piggy-Back Shares with the securities being registered by Buyer would adversely
affect the distribution of all such securities, then Shareholder shall not be
entitled to the registration rights set forth in Section 18.1(a) above.
(c) Shareholder, by acceptance of the terms and provisions
hereof, agrees to: (A) the selection by Buyer of the underwriter to manage such
registration; and (B) to execute an underwriting agreement with such
underwriter; provided, however, that such underwriting agreement is in customary
form.
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Nothing in this Section shall be deemed to require Buyer to proceed with any
registration of its securities after giving the notice as provided herein.
18.2 REGISTRATION AND QUALIFICATION PROCEDURES. Whenever Buyer is
required by the provisions of Section 18.1 above, to effect the registration of
the Buyer's Common Stock under the Act, Buyer will, as expeditiously as is
possible, take such steps as are necessary or appropriate to prepare for a
registration or qualification of its securities, including without limitation
preparing and filing with the Securities and Exchange Commission ("Commission")
a registration statement, and amendments and supplements thereto, furnishing to
each seller sufficient copies of prospectuses, preparing and filing
registrations under the blue sky laws of applicable jurisdictions, entering into
and performing underwriting agreements, keeping each seller advised as to the
progress of the steps being taken and otherwise taking such actions in
cooperation with each seller as are customarily taken or required in connection
with the public registration and sale of securities. Buyer and Shareholder shall
cooperate with each other in supplying such information as may be necessary for
any of such parties to complete and file any information reporting forms
presently or hereafter required by the Commission or any commissioner or other
authority administering the blue sky or securities laws of any jurisdiction
where shares of the Buyer's Common Stock are proposed to be sold hereunder.
18.3 ALLOCATION OF EXPENSES.
(a) Buyer shall pay all registration expenses in connection
with the registration of the Buyer's Common Stock, including, without
limitation, all registration fees and filing fees, printing expenses, expenses
of complying with state or blue sky laws (including fees of counsel for Buyer
and counsel for the underwriters, if necessary), fees and disbursements of
counsel for Buyer, and accountants' fees and expenses incident to or required by
any such registration. It shall be a condition precedent to the obligation of
Buyer to take any action under this Article XVIII that: (x) Buyer shall have
received an undertaking satisfactory to it from Shareholder to notify Buyer, at
any time when a prospectus relating to the Buyer's Common Stock is required to
be delivered under the Act, of the happening of any event relating to such
Shareholder, the Buyer's Common Stock held by such Shareholder, or the method of
disposition of Shareholder's Common Stock in Buyer, as a result of which such
prospectus includes an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing; and (y)
Shareholder shall furnish to Buyer such information regarding such Shareholder,
the Common Stock held by such Shareholder and the method of disposition of such
Common Stock held by such Shareholder as Buyer shall reasonably request and as
shall be required in connection with the action to be taken by Buyer.
(b) All underwriting fees incurred by Shareholder and all fees
and disbursements of counsel for Shareholder shall be borne by Shareholder.
18.4 INDEMNIFICATION. In connection with any registration or
qualification of securities under this Article XVIII, Buyer agrees to indemnify
Shareholder and each underwriter thereof, against all losses, claims, damages,
liabilities and expenses (including reasonable costs of investigation and the
costs, fees and expenses of legal counsel) caused by any untrue, or alleged
untrue, statement of a material fact contained in any registration statement,
preliminary prospectus, prospectus or notification or offering circular (as
amended or supplemented if Buyer shall have furnished any amendments or
supplements thereto) or caused by any omission, or alleged omission, to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages, liabilities or expenses are caused by any untrue statement or alleged
untrue statement or omission or alleged omission based upon information
furnished in writing to Buyer by Shareholder or underwriter expressly for use
therein. Buyer and each officer, director and controlling person of Buyer shall
be indemnified, respectively, by Shareholder for all such losses, claims,
damages, liabilities and expenses (including the costs of reasonable
investigation and the costs, fees. and expenses of legal counsel) caused by any
such untrue, or alleged untrue, statement or any such omission or alleged
omission, based upon information furnished in writing to Buyer by such
Shareholder expressly for use therein.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written.
SIGNED, SEALED AND DELIVERED
IN THE PRESENCE OF:
BUYER:
GUARDIAN INTERNATIONAL, INC.
a Nevada corporation
/s/ Xxxxxxxx Xxxx By: /s/ Xxxxxxx Xxxxxxxx
------------------------- -------------------------------------
Print Name: Xxxxxxxx Xxxx Xxxxxxx Xxxxxxxx, President
/s/ Xxxxx Xxxxx
-------------------------
Print Name: Xxxxx Xxxxx
SELLER:
ALARM CONTROL, INC.,
a Florida corporation
/s/ Xxxxxxxx Xxxx By: /s/ Xxxxx X. Xxxxx
------------------------- -------------------------------------
Print Name: Xxxxxxxx Xxxx Xxxxx X. Xxxxx, President
/s/ Xxxxx Xxxxx
-------------------------
Print Name: Xxxxx Xxxxx
/s/ Xxxxxxxx Xxxx By: /s/ Xxxxx X. Xxxxx
------------------------- -------------------------------------
Print Name: Xxxxxxxx Xxxx XXXXX X. XXXXX, individually
/s/ Xxxxx Xxxxx
-------------------------
Print Name: Xxxxx Xxxxx
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