EXHIBIT 10.59
ASSET PURCHASE AGREEMENT
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THIS AGREEMENT is made and entered into this 13th day of November, 1998
(the "Closing Date"), by and between Lifeline Systems, Inc., a Massachusetts
corporation with principal offices at 000 Xxxxxxxx Xxxxx, Xxxxxxxxx, XX 00000
(the "Buyer"), and AlertCall, Inc., a New York corporation with principal
offices at 0000 Xxxxxxx Xxxxx Xxxxxxxxx, Xxxxxxx, Xxx Xxxx 00000, and AlertCall
LLC, a Delaware limited liability company with principal offices at X.X. Xxx
000000, Xxxxxxxxxxxx, Xxxxxxx 00000 (together with AlertCall, Inc., the
"Sellers").
RECITALS
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WHEREAS, the Sellers are engaged in the business of providing in-home
personal response services to Subscribers (as defined in Section 2.15 herein)
who utilize the Buyer's home communicators, and who are monitored by the Buyer's
Lifeline Central(R) Monitoring Service.
WHEREAS, the Sellers desire to sell to the Buyer, and the Buyer desires to
purchase from the Sellers, substantially all of the assets of the Sellers, for
the consideration set forth below, as more fully described in this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants, agreements and conditions hereinafter
set forth, and intending to be legally bound hereby, the parties hereto agree as
follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
I.1 Assets to be Purchased from Sellers. Simultaneously with the closing
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of the transaction contemplated hereby (the "Closing"), the Sellers are selling,
conveying, assigning, transferring and delivering to the Buyer, free and clear
of all obligations, liabilities, liens, mortgages, security interests, charges,
pledges or other encumbrances or adverse claims of any nature except as
otherwise disclosed pursuant to this Agreement, and the Buyer is purchasing from
the Sellers, all of the Sellers' right, title and interest in and to all of the
Sellers' assets (tangible and intangible) and other claims, rights and interests
of every kind and nature (the "Assets"), including, without limitation, the
assets described below:
(a) all subscriber and inquiry files and all purchase history
information, in all forms in which such information is recorded, including,
without limitation, the name and address list of all Subscribers as defined in
Section 2.15 herein.
(b) all inventory (the "Inventory") of the Sellers, wherever located,
including, without limitation, office supplies, raw materials, work in process,
finished goods, maintenance supplies, packaging materials, spare parts and
similar items of the Sellers;
(c) all accounts, accounts receivable, notes and notes receivable,
other than inter-Seller receivables as set forth on Schedule 1.1(c), existing on
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the Closing Date that are payable to the Sellers, including any security held by
the Sellers for the payment thereof (the "Accounts Receivable");
(d) all prepaid expenses;
(e) all outstanding purchase orders (the "Purchase Orders");
(f) all fixtures, furnishings, motor vehicles, equipment and
appliances owned by the Sellers (including, but not limited to, manufacturing
and maintenance equipment, all central monitoring hardware and software, and all
home communicators and other equipment being used by Subscribers) and all
service agreements, license agreements, supplier agreements and warranties
(express or implied) relating thereto;
(g) all rights of the Sellers under the contracts, agreements,
leases, licenses and other instruments as set forth on Schedules 2.21 and 2.23
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hereto, including, but not limited to, any and all contracts or agreements with
Subscribers, any and all contracts or agreements with customers, and the lease
(the "Lease") for premises located at 0000 Xxxxxxx Xxxxx Xxxxxxxxx, Xxxxxxx, Xxx
Xxxx;
(h) a copy of all records, history and analysis relating to
purchasing, selling, advertising and promotional activities, in all forms in
which such information is recorded, wherever located;
(i) all intangible property rights and goodwill related thereto,
including, but not limited to, inventions, discoveries, trade secrets,
processes, protocols, formulae, know-how, trade names, including the names
"AlertCall," "AlertCall, Inc." and "AlertCall LLC," or any derivation thereof,
trademarks, trademark registrations, applications for trademark registrations
(collectively, the "Trademarks"), copyrights, copyright registrations, owned, or
where not owned, used by the Sellers, and all licenses and other agreements to
which the Sellers are a party (as licensor or licensee) or by which the Sellers
are bound relating to any of the foregoing kinds of property or rights to any
"know-how" or disclosure or use of ideas but excluding any patents or pending
patents owned by the Sellers indicated on Schedule 1.1(i);
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(j) to the extent assignable, all licenses, permits, franchises,
approvals and authorizations by or of any governmental body or other persons
required for the conduct of the business of the Sellers or in connection with
the ownership of the Assets, if any.
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(k) all causes of action, judgments, awards, claims and demands of
whatever nature of the Sellers against any person relating to the Assets or
arising in connection with the Sellers' business heretofore existing or
hereinafter accruing to the Sellers; and
(i) all other assets, properties, claims, rights and interests of the
Sellers relating to the business that exist on the Closing Date, of every kind
and nature, whether tangible or intangible, real, personal or mixed.
I.2 Excluded Assets. Notwithstanding the provisions of Section 1.1 above,
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the assets to be transferred to the Buyer under this Agreement shall not include
those assets listed on Schedule 1.2 hereto (the "Excluded Assets").
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I.3 Liabilities Retained by the Sellers. The Sellers are retaining and
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agree to perform, pay or discharge all of their liabilities and obligations
(whether known or unknown, absolute or contingent, direct or indirect, asserted
or unasserted), including, without limitation, those relating to the Assets,
except for those liabilities to be assumed by the Buyer as specifically set
forth on Schedule 1.3 hereto (the "Assumed Liabilities"); provided, however, in
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no event shall the contractual share obligations referenced in Schedule 1.3
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exceed $40,000 in the aggregate.
I.4 Purchase Price. The aggregate cash portion of the purchase price is
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$1,500,000 (the "Purchase Price") to be paid as follows:
(a) $100,000 (the "Escrow Deposit") upon Closing to be delivered to
the Escrow Agent pursuant to Section 1.7 herein; and
(b) $1,400,000, to be adjusted as provided on Schedule 1.4(b) (the
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"Initial Purchase Price") to be paid to the Sellers at the Closing as provided
in Section 1.6 herein.
I.5 Deliveries by the Sellers. Simultaneously with the Closing, the
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Sellers shall deliver or cause to be delivered to the Buyer the items listed
below, unless the condition of the delivery of such item is waived in writing by
the Buyer:
(a) a Xxxx of Sale in the form of Schedule 1.5(a) hereto;
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(b) such deeds, endorsements, assignments and other good and
sufficient instruments of conveyance and transfer, in form reasonably
satisfactory to the Buyer, as shall be effective to vest in the Buyer all of the
Sellers' title to and interest in the Assets;
(c) an opinion of Xxxxxxx, Xxxx, Xxxxxxx, Xxxxx & Goodyear, LLP,
counsel to the Sellers, in the form of Schedule 1.5(c) attached hereto, as to
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certain matters agreed upon by legal counsel for the Buyer and the Sellers;
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(d) the certificate of a duly authorized officer of each of the
Sellers dated the Closing Date, as to the Sellers' representations and
warranties as contained in this Agreement;
(e) copies of any and all notices to landlords, vendors, or other
third parties, where such notices of the transaction contemplated hereby are
required by the terms of the agreements between such parties and the Sellers or
otherwise;
(f) except as provided on Schedule 1.5(f) attached hereto, the
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requisite consents and approvals of all parties whose consents or approvals to
the transactions contemplated hereby are required by the terms of their
agreements with the Sellers or otherwise in order for the Sellers to consummate
the transactions contemplated by this Agreement, including, without limitation,
the consent or approval of all parties required under any managed care contracts
of the Sellers;
(g) a true, correct and complete list and amount, as of a date within
five business days before Closing, of the Accounts Receivable, including an
aging thereof;
(h) certificates of the Secretaries of State (or corresponding
entity), dated as of the Closing Date or the most recent practicable date, of
the states of formation of each of the Sellers as to their legal existence and
good standing (including tax good standing);
(i) certificates of the Secretaries of State (or corresponding
entity), dated as of the Closing Date or the most recent practicable date, as to
the Sellers' valid existence, good standing and due qualifications from those
jurisdictions in which the Sellers' ownership of property or the character of
their business requires such qualification;
(j) certificates of the Secretaries of each of the Sellers setting
forth the resolutions of their respective governing bodies authorizing the
execution and delivery of this Agreement and other documents referred to herein
and the consummation of the transactions contemplated hereby, and certifying
that such resolutions were duly adopted and have not been rescinded or amended,
and attesting to the incumbency of their respective officers and the
authenticity and continued validity of their respective charter documents;
(k) estoppel certificate from the lessor under the Lease, consenting
to the assumption of the Lease by the Buyer and representing that there are no
outstanding claims against the Sellers under the Lease;
(l) a report of a reputable lien search firm indicating the status of
liens of record against any of the Assets;
(m) a cross-receipt executed by the Sellers and The Manufacturers and
Traders Trust Company;
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(n) a guaranty executed and delivered by Homemakers Upstate Group,
Inc., in the form attached hereto as Schedule 1.5(n) (the "Guaranty");
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(o) the Escrow Agreement in the form attached hereto as Schedule 1.7;
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and
(p) such other certificates, instruments or documents as may be
reasonably necessary to carry out the transaction contemplated by this Agreement
and to comply with the terms hereof.
I.6 Deliveries by the Buyer. Simultaneously with the Closing, the Buyer
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shall deliver or cause to be delivered to the Sellers the following:
(a) the Initial Purchase Price, by wire transfer and by the
assumption of the Assumed Liabilities by execution of the instrument of
assumption of liabilities as provided in Section 1.6(c) below;
(b) [INTENTIONALLY LEFT BLANK];
(c) an instrument of assumption of liabilities in the form of
Schedule 1.6(c) attached hereto;
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(d) certificates of duly authorized officers of the Buyer, dated the
Closing Date, setting forth the resolutions of the Board of Directors of the
Buyer authorizing the execution and delivery of this Agreement and other
documents referred to herein by the Buyer and the consummation of the
transactions contemplated hereby and thereby, and certifying that such
resolutions were duly adopted and have not been rescinded or amended and
attesting to the incumbency of their respective officers and to the authenticity
and continued validity of their respective charter documents;
(e) the certificate of a duly authorized officer of the Buyer, dated
the Closing Date, as to the representations and warranties as contained in this
Agreement;
(f) an opinion of Xxxx and Xxxx LLP, counsel to the Buyer, in the
form of Schedule 1.6(f) attached hereto, as to certain matters agreed upon by
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legal counsel for the Buyer and the Sellers;
(g) a cross-receipt executed by the Buyer;
(h) a credit memo for sales of PERS units and related equipment from
the Buyer to the Sellers since September 15, 1998, in form satisfactory to the
Sellers;
(i) such other certificates, instruments or documents as may be
reasonably necessary to carry out the transactions contemplated by this
Agreement and to comply with the terms hereof; and.
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(j) the Escrow Agreement in the form attached hereto as Schedule 1.7.
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I.7 Escrow Arrangement. Simultaneously with the Closing, the Buyer shall
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deposit the Escrow Deposit (as defined in Section 1.4) with Manufacturers and
Traders Trust Company (the "Escrow Agent") to be held and disbursed in
accordance with the Escrow Agreement in the form attached hereto as Schedule
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1.7. The Escrow Deposit shall serve as security for all obligations of Sellers
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pursuant to Section 7.2 of this Agreement.
1.8 Closing. The acquisition of the Assets and the other transactions
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contemplated by this Agreement shall be consummated at a closing (the "Closing")
to be held on November __, 1998 at 10:00 a.m. Boston Time (the "Closing Date"),
or such other time as the parties hereto shall mutually agree.
1.9 Further Assurances. At any time, and from time to time, at the
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request of any party hereto and without further consideration, the other parties
will execute and deliver to such requesting party such documents, instruments of
sale, transfer, conveyance, assignment and confirmation and take such other
action (but without incurring any material financial obligation) as such
requesting party may reasonably request in order to consummate more effectively
the transactions contemplated hereby, including, without limitation, vesting in
the Buyer good, valid and marketable title to the Assets.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Each of the Sellers, jointly and severally, represents and warrants to the
Buyer as follows:
II.1 Organization; Good Standing. AlertCall, Inc. is a corporation duly
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organized, validly existing and in good standing (including tax) under the laws
of New York and has the requisite power and authority to carry on its business
as presently being conducted, to execute and deliver this Agreement and the
agreements contemplated herein, and to consummate the transactions contemplated
hereby. AlertCall LLC is a limited liability company duly organized, validly
existing and in good standing (including tax) under the laws of Delaware and has
the power and authority to carry on its business as presently being conducted,
to execute and deliver this Agreement and the agreements contemplated herein and
to consummate the transactions contemplated hereby. Each of the Sellers is duly
qualified to do business and is in good standing in all of jurisdictions in
which its ownership of property or the character of its business requires such
qualifications.
II.2 Authorization. The execution and delivery of this Agreement and the
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other agreements, documents and instruments to be executed and delivered by the
Sellers pursuant hereto and the consummation by the Sellers of the transactions
contemplated hereby and thereby, have been duly authorized by all requisite
corporate and limited liability company
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action. No further corporate actions or other proceedings on the part of the
Sellers are necessary to authorize this Agreement or the other agreements,
documents and instruments to be executed and delivered by the Sellers pursuant
hereto or the transactions contemplated hereby and thereby. Neither of the
Sellers owns, directly or indirectly, any capital stock of or other equity
interest in any corporation, partnership or other entity.
II.3 Capitalization of Sellers. AlertCall, Inc.'s authorized capital
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stock consists of 20,000 shares of Common Stock, $1.00 par value per share, of
which one hundred (100) shares are issued and outstanding and held of record and
beneficially owned by the shareholders listed on Schedule 2.3 attached hereto.
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All of such shares have been duly and validly issued and are fully paid and
nonassessable. The interests of any persons in AlertCall LLC are as set forth
on Schedule 2.3 attached hereto.
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II.4 Valid and Binding Agreement. The Sellers have the necessary power
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and authority to enter into this Agreement and other agreements, documents and
instruments to be executed and delivered by the Sellers pursuant hereto, and to
carry out the transaction contemplated hereby and thereby. When fully executed
and delivered, this Agreement and each of the other agreements, documents and
instruments to be executed and delivered by the Sellers pursuant hereto will
constitute valid and legally binding agreements and obligations of the Sellers
enforceable against the Sellers in accordance with their respective terms,
except that the enforcement of the rights and remedies created hereby and
thereby are subject to bankruptcy, insolvency, reorganization or other laws of
general application of creditors' rights and that the availability of specific
performance, injunctive relief or other equitable remedy is subject to the
discretion of the court before which any proceeding therefore may be brought.
II.5 No Violation. Neither the execution and delivery of this Agreement
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or other agreements, documents and instruments to be executed and delivered by
the Sellers pursuant hereto nor the consummation by the Sellers of the
transactions contemplated hereby or thereby (a) will violate any provision of
the Certificate of Incorporation, Certificate of Formation, Bylaws or Operating
Agreement, as applicable, of the Sellers, each as currently in effect, (b)
except as set forth on Schedule 2.5, will violate or conflict with any
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applicable statute, law, ordinance, rule, regulation, order, judgment, award or
decree or (c) except as set forth on Schedule 2.5, will violate or conflict with
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or constitute a default (or an event which, with notice or lapse of time, or
both, would constitute a default) under, or will result in the termination of,
or accelerate the performance required by, or result in the creation of any
lien, security interest, charge or encumbrance upon any of the Assets under, any
contract, commitment, understanding, arrangement, agreement or restriction of
any kind by which the Assets are bound or affected, to which the Assets are
subject, or to which the Sellers are a party.
II.6 Consents; Notices; Filings. Except as set forth on Schedule 2.6, no
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registration or filing with, notice to, or consent, approval, permit,
authorization or action by, any third party (including, without limitation, any
federal, state, local, foreign or other governmental agency, instrumentality,
commission, authority, board, or body or other person or entity) is
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required in connection with the execution and delivery by the Sellers of this
Agreement or the other agreements, documents and instruments to be executed and
delivered by the Sellers pursuant hereto or the consummation by the Sellers of
the transactions contemplated hereby or thereby.
II.7 Financial Statements. The Sellers have delivered to the Buyer the
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reviewed financial statements of AlertCall, Inc. for the fiscal years ended
December 31, 1995, 1996 and 1997, the unaudited financial statements of
AlertCall, Inc. for the nine months ended September 30, 1998, and the unaudited
financial statements of AlertCall LLC for the fiscal years ended December 31,
1996 and 1997, and the nine months ended September 30, 1998 (the "Financial
Statements"), and such Financial Statements are true, complete and accurate and
fairly present the results of operations and financial condition of the Sellers
at the dates and for the periods therein referred to on a stand-alone basis in
accordance with generally accepted accounting principles as consistently applied
throughout such periods.
II.8 No Material Adverse Change. No material adverse change in the
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business, prospects, operations or condition (financial or otherwise) of the
Sellers or in the Assets has occurred since September 30, 1998. The Sellers
have no knowledge of any existing or threatened occurrence, event or development
which, as far as can be reasonably foreseen, could have a material adverse
effect on the Sellers or their business, properties, assets, condition
(financial or otherwise) or prospects. Without limiting the foregoing
representation, the Sellers' balance sheet dated October 30, 1998 does not
include or reflect any of the PERS units and related equipment received by the
Sellers on or after September 15, 1998.
II.9 Compliance with Laws. The operations of the Sellers have been
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conducted in substantial accordance with all applicable laws, regulations and
other requirements of all national governmental authorities, states,
municipalities and other political subdivisions and agencies thereof, having
jurisdiction over the Sellers, including, without limitation, all such laws,
regulations and requirements relating to antitrust, consumer protection,
employee benefit, Medicare, Medicaid, occupational safety, or environmental
protection matters. The Sellers have not received any notification of any
asserted present or past failure to comply with such laws, rules and
regulations.
II.10 Litigation. Except as set forth on Schedule 2.10 attached hereto,
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the Sellers are not, and have not been parties to or, to the Sellers' knowledge,
threatened with any litigation, suit, action, investigation, proceeding or
controversy before any court, administrative agency or other governmental
authority relating to or affecting the Assets or the business or condition
(financial or otherwise) of the Sellers. The Sellers are not in violation of or
in default with respect to any judgment, order, writ, injunction, decree or rule
of any court, administrative agency or governmental authority or, to the
Sellers' knowledge, any regulation of any administrative agency or governmental
agency or governmental authority.
II.11 Tax Matters. The Sellers have filed all federal, state and local
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tax returns which are required to be filed and have paid all taxes, interest,
penalties, assessments and deficiencies
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which have become due or which have been claimed to be due, whether or not
reflected on such tax returns. The Sellers are current in the payment of all
income, franchise, real estate, sales, use and withholding taxes and other
employee benefits, taxes or imposts. No deficiencies have been asserted or
assessed as a result of any audit by the Internal Revenue Service or any state
or local taxing authority and no such deficiency or audit has been proposed or,
to the knowledge of the Sellers, threatened.
None of the assets of the Company or any subsidiary: (i) is property that
is required to be treated as being owned by any other person pursuant to the
provisions of former Section 168(f)(8) of the Code; (ii) is "tax-exempt use
property" within the meaning of Section 168(h) of the Code; and (iii) directly
or indirectly secures any debt the interest on which is tax exempt under Section
103(a) of the Code.
II.12 Good Title to and Ownership of the Assets. Except as set forth on
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Schedule 2.12 attached hereto, the Sellers have complete and unrestricted power
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and the unqualified right to sell, convey, assign, transfer and deliver to the
Buyer, and at the Closing, the Buyer will acquire good, valid and marketable
and, with respect to the Trademarks, recordable title to the Assets, free and
clear of title defects, liabilities, objections, liens, pledges, claims,
charges, security interest or other encumbrances of any nature whatsoever. The
Xxxx of Sale and other instruments of transfer of ownership contemplated by this
Agreement will constitute valid and binding obligations of the Sellers and,
except as set forth on Schedule 2.12 attached hereto, will effectively vest in
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the Buyer good, valid and marketable and, with respect to the Trademarks,
recordable title to all of the Assets. Except for the Excluded Assets, the
Assets constitute all of the rights, properties, and other assets of every type
and description (whether tangible or intangible, real or personal) used in the
Sellers' business.
II.13 Trademarks. The Sellers own and have the sole and exclusive right
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to use the Trademarks listed on Schedule 2.13, which Schedule 2.13 contains a
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list of all of the Trademarks of the Sellers. To the Sellers' knowledge, no
claims have been asserted by any person against the Sellers in regard to their
use of the Trademarks (and the Sellers do not know of any valid basis for any
such claim), and the use of the Trademarks does not infringe on the rights of
any person.
II.14 No Undisclosed Liabilities. The Sellers have no material
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liabilities or obligations of any nature (whether absolute, accrued, known or
unknown, contingent or otherwise and whether due or to become due) which are not
disclosed on the most recent Financial Statement, other than (i) liabilities
which have arisen since September 30, 1998 in the ordinary course of business
which are similar in nature and amount to the liabilities which arose during the
comparable period of time in the immediately preceding quarter, and (ii)
contractual liabilities incurred in the ordinary course of business which are
not required by generally accepted accounting principles ("GAAP") to be
reflected on a balance sheet. For purposes of this Section 2.14, "material"
shall mean any amount in excess of $10,000.
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II.15 Subscriber List. Attached hereto as Schedule 2.15 is a true,
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correct and complete summary of the Subscriber List (the "Subscriber List").
The Subscriber List contains the true, correct and complete names and addresses
of all of the Sellers' active subscribers who utilize the Buyer's home
communicators on a monthly basis and who are monitored by Lifeline Central as of
date hereof (the "Subscribers"). The Subscriber List includes the names and
addresses of no fewer than 3,350 Subscribers.
II.16 Accounts Receivable. Schedule 2.16 attached hereto sets forth a
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true, correct and complete list of all Accounts Receivable, including an aging
thereof as of October 30, 1998. All Accounts Receivable arose out of sales of
inventory or services in the ordinary course of business.
II.17 Purchase Orders. The Sellers have heretofore made available to the
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Buyer. The Purchase Orders were made in the ordinary course of business and
consistent with past practice of the business of the Sellers.
II.18 Insurance. Schedule 2.18 attached hereto sets forth a true, correct
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and complete list of all fire, theft, casualty, general liability, workers
compensation, business interruption, environmental impairment, product
liability, automobile and other insurance policies insuring the Assets or
business of the Sellers and of all life insurance policies maintained for any of
its employees, specifying the type of coverage, the amount of coverage, the
premium, the insurer and the expiration date of each such policy (collectively,
the "Insurance Policies"). The Insurance Policies are in such amounts and of a
nature which are adequate and customary for the Sellers' business (not including
life insurance). All premiums due on the Insurance Policies or renewals thereof
have been paid and to the knowledge of the Sellers there is no default under any
of the Insurance Policies (not including life insurance).
II.19 Brokers. The Sellers are not obligated to pay, nor have the Sellers
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retained any broker or finder or other person who is entitled to, any broker's
or finder's fee or any other commission or financial advisory fee based on any
agreement or understanding made by the Sellers in connection with the
transactions contemplated hereby.
II.20 Fixed Assets. Schedule 2.20 sets forth a true, correct and complete
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summary of the Fixed Assets, including a description and valuation thereof, as
of no longer than five (5) business days before Closing. All of the Fixed
Assets are in good operating condition and repair, normal wear and tear
excepted, are currently used by the Sellers in the ordinary course of business
and in the production of products of the Sellers and normal maintenance has been
consistently performed with respect to such Fixed Assets.
II.21 Leases. Schedule 2.21 attached hereto sets forth a true, correct
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and complete list as of the Closing Date of all leases of real and personal
property, to which the Sellers are a party (the "Leases"). True, correct and
complete copies of the Leases, and all amendments, modifications and
supplemental agreements thereto, have previously been delivered by the Sellers
to the Buyer. The Leases are in full force and effect, are binding and
enforceable
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against each of the parties thereto in accordance with their respective terms
and, except as set forth on Schedule 2.21, have not been modified or amended
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since the date of delivery to the Buyer. No party to any Lease has sent written
notice to the other claiming that such party is in default thereunder, which
remains uncured. Except as set forth on Schedule 2.21 attached hereto, there has
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not occurred any event which would constitute a breach of or default in the
performance of any material covenant, agreement or condition contained in any
Lease, nor has there occurred any event which with the passage of time or the
giving of notice or both would constitute such a breach or material default. The
Sellers are not obligated to pay any leasing or brokerage commission relating to
any of the Leases. No material construction, alterations or other leasehold
improvement work with respect to any of the Leases remains to be paid for or to
be performed by the Sellers.
II.22 Books and Records. The general ledgers and books of account of the
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Sellers, all federal, state and local income, franchise, property and other tax
returns filed by the Sellers, with respect to the Assets, and all other books
and records of the Sellers are in all material respects, except as disclosed in
the footnotes to the Financial Statements, pursuant to this Agreement, complete
and correct and have been maintained in accordance with good business practice
and in accordance with all applicable procedures required by laws and
regulations.
II.23 Contracts and Commitments.
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(a) Schedule 2.23 attached hereto contains a true, complete and
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correct list and description of the following contracts and agreements of the
Sellers, in relation to the personal emergency response business, whether
written or oral:
(i) all contracts, agreements, commitments, purchase orders or
other understandings or arrangements to which the Sellers are a party or by
which the Sellers or any of their property is bound which (A) involve payments
or receipts by the Sellers of more than $1,000 in the case of any single (or
series of related) contracts, agreements, commitments, understandings or
arrangements under which full performance (including payment) has not been
rendered by all parties thereto or (B) which may materially adversely affect the
condition (financial or otherwise) or the properties, assets, business or
prospects of the Sellers;
(ii) all employment and consulting agreements, executive
compensation plans, bonus plans, deferred compensation agreements, pension
plans, retirement plan, employee stock option or stock purchase plans and group
life, health and accident insurance and other employee benefit plans,
agreements, arrangements or commitments to which the Sellers are a party or by
which the Sellers or any of their property is bound;
(iii) all agency, distributor, sales representative and similar
agreements to which the Sellers are a party;
(iv) all contracts, agreements or other understandings or
arrangements between the Sellers and any officers, shareholder, manager, member
or affiliate of the Sellers; and
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(v) any other material agreement or contract entered into by the
Sellers.
(b) Except as set forth on Schedule 2.23 attached hereto:
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(i) each contract is a valid and binding agreement of the
Sellers, enforceable against the Sellers in accordance with its terms, and the
Sellers do not have any knowledge that any contract is not a valid and binding
agreement of the other parties thereto;
(ii) the Sellers have fulfilled all material obligations
required pursuant to the contracts to have been performed by the Sellers on
their part prior to the date hereof, and the Sellers have no reason to believe
that they will not be able to fulfill, when due, all of their obligations under
the contracts which remain to be performed after the date hereof;
(iii) the Sellers are not in breach of or default under any
contract, and no event has occurred which with the passage of time or giving of
notice or both would constitute such a default, result in a loss of rights or
result in the creation of any lien, charge or encumbrance, thereunder or
pursuant thereto; and
(iv) to the best knowledge of the Sellers, there is no existing
breach or default by any other party to any contract, and no event has occurred
which with the passage of time or giving of notice or both would constitute a
default by such other party, result in a loss of rights or result in the
creation of any lien, charge or encumbrance thereunder or pursuant thereto;
(v) the Sellers are not restricted by any contract from
carrying on their business in the states of New York, Florida or Pennsylvania;
and
(c) True, correct and complete copies of all contracts listed on
Schedules 2.21 and 2.23(a) have previously been delivered by the Sellers to the
--------------------------
Buyer.
II.24 Absence of Certain Changes or Events. Except as set forth on
------------------------------------
Schedules 2.24 attached hereto, since September 30, 1998, the Sellers have not
---------------
entered into any transaction which is not in the usual and ordinary course of
business, and, without limiting the generality of the foregoing, the Sellers
have not, other than in the ordinary course of business:
(a) Discharged or satisfied any lien or encumbrance or paid any
obligation or liability other than current liabilities reflected in the current
balance sheet;
(b) Mortgaged, pledged or subjected to lien, charge or other
encumbrance any of the Assets;
-12-
(c) Sold or purchased, assigned or transferred any of its intangible
assets or cancelled any debts or claims, except for inventory sold and raw
materials purchased in the ordinary course of business;
(d) Made any material amendment to or termination of any contract or
done any act or omitted to do any act which would cause the material breach of
any contract; and
(e) Received notice of any litigation, warranty claim or product
liability claims.
II.25 Employees. The Sellers have satisfied any severance and accrued
---------
vacation obligations related to each person employed by the Sellers at the
Closing Date. The Sellers shall cooperate with the Buyer in the Buyer's efforts
to obtain the employment of those employees of the Sellers who the Buyer desires
to hire.
II.26 Disclosure. No representation or warranty by the Sellers in this
----------
Agreement or in any Exhibit hereto, or any list, statement, document or
information set forth in or attached to any Schedule delivered or to be
delivered pursuant to this Agreement, contains or will contain any untrue
statement of a material fact or omits or will omit any material fact necessary
in order to make the statements contained therein not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Sellers as follows:
III.1 Organization. The Buyer is a corporation duly organized, validly
------------
existing and in good standing under the laws of the Commonwealth of
Massachusetts, and the Buyer has the power and authority to carry on its
business as presently being conducted.
III.2 Authorization. The Board of Directors of the Buyer has duly
-------------
authorized the execution and delivery of this Agreement and other agreements,
documents and instruments to be executed and delivered by the Buyer pursuant
hereto and the consummation by the Buyer of the transactions contemplated hereby
and thereby. No further corporate actions or other proceedings on the part of
the Buyer are necessary to authorize this Agreement or the other agreements,
documents and instruments to be executed and delivered by the Buyer pursuant
hereto or the transactions contemplated hereby or thereby.
III.3 Valid and Binding Agreement. The Buyer has the necessary power and
---------------------------
authority to enter into this Agreement and the other agreements, documents and
instruments to be executed and delivered by the Buyer pursuant hereto, and to
carry out the transactions contemplated hereby and thereby. When fully executed
and delivered, this Agreement and each of the other agreements, documents and
instruments to be executed and delivered by the Buyer pursuant hereto will
constitute valid and binding agreements of the Buyer, enforceable
-13-
against the Buyer in accordance with their terms, except that the enforcement of
the rights and remedies created hereby and thereby are subject to bankruptcy,
insolvency, reorganization or other laws of general application of creditors'
rights and that the availability of specific performance, injunctive relief or
other equitable remedy is subject to the discretion of the court before which
any proceeding therefore may be brought.
III.4 No Violation. Neither the execution and delivery of this Agreement
------------
or other agreements, documents, and instruments to be executed and delivered by
the Buyer pursuant hereto nor the consummation by the Buyer of the transactions
contemplated hereby or thereby (a) will violate any provision of the Articles of
Organization or By-Laws of the Buyer, each as currently in effect, or (b) will
violate or conflict with any applicable statute, law, ordinance, rule,
regulation, order, judgment or decree.
III.5 Consents; Notices; Filings. No registration or filing with, notices
--------------------------
to, or consent, approval, permit authorization or action by, any third party
(including, without limitation, any federal, state, local, foreign or other
governmental agency, instrumentality, commission, authority, board or body or
person or entity), is required in connection with the execution and delivery by
the Buyer of this Agreement or other agreements, documents and instruments to be
executed and delivered by the Buyer pursuant hereto or the consummation by the
Buyer of the transactions contemplated hereby or thereby.
III.6 Brokers. The Buyer is not obligated to pay, nor has the Buyer
-------
retained any broker or finder or other person who is entitled to, any broker's
or finder's fee or any other commission or financial advisory fee based on any
agreement or understanding made by the Buyer in connection with the transactions
contemplated hereby.
III.7 Disclosure. No representation or warranty by the Buyer in this
----------
Agreement or in any Exhibit hereto, or any list, statement, document or
information set forth in or attached to any Schedule delivered or to be
delivered pursuant to this Agreement, contains or will contain any untrue
statement of a material fact or omits or will omit any material fact necessary
in order to make the statements contained therein not misleading.
ARTICLE IV
CERTAIN COVENANTS OF THE PARTIES
IV.1 Notices. The Buyer hereby waives (a) the giving of any notices which
-------
may be required pursuant to the terms of any of the leases, contracts or
agreements listed on Schedules 2.21 and 2.23(a) attached hereto and to accept
--------------------------
the assignment of any such leases, contracts or agreements at the Closing and
(b) any rights to indemnification the Buyer might have for failure to give any
required notice pursuant to terms of any of the leases, contracts or agreements
listed on Schedules 2.21 and 2.23(a) attached hereto or to give notice pursuant
--------------------------
to terms of any of the leases, contracts or agreements listed on Schedules 2.21
--------------
and 2.23(a) attached hereto for a required number of days.
-----------
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IV.2 Purchase Price Allocation. The allocation of the Purchase Price,
-------------------------
which shall be utilized by the parties hereto in connection with the preparation
of their respective federal and state tax returns and the return required by
Section 1060 of the Internal Revenue Code of 1986, as amended, shall be as set
forth on Schedule 4.2, attached hereto. Such allocation shall be subject to
------------
adjustment to the extent that the Purchase Price is adjusted pursuant to the
terms of this Agreement.
IV.3 Non-competition.
----------------
(a) For a period of five years after the Closing Date, the Sellers
shall not, and they shall cause their respective affiliates to not, directly or
indirectly, in any capacity whatsoever (i) engage in any business competitive
with business of the Sellers as conducted on the Closing Date, in the states of
New York, Pennsylvania and Florida (the "Territory"), (ii) solicit any customers
or Subscribers or any prospective customers or Subscribers for emergency medical
response services or (iii) recruit, solicit or hire any employee or former
employee of the Sellers.
(b) The parties hereto agree that the duration and geographic scope
of the non-competition provision set forth in this Section 4.3 are reasonable.
In the event that any court determines that the duration or the geographic
scope, or both, are unreasonable and that such provision is to that extent
unenforceable, the parties hereto agree that the provision shall remain in full
force and effect for the greatest time period and in the greatest area that
would not render it unenforceable. The parties intend that this non-competition
provision shall be deemed to be a series of separate covenants, one for each and
every county of each and every state of the United States of America included in
the Territory. The Sellers agree that damages are an inadequate remedy for any
breach of this provision and that the Buyer shall, whether or not it is pursuing
any potential remedies at law, be entitled to equitable relief in the form of
preliminary and permanent injunctions without bond or other security upon any
actual or threatened breach of this non-competition provision.
IV.4 Mail; Referrals; Checks and Other Instruments. The Sellers agree,
---------------------------------------------
and shall cause their respective affiliates to agree that, as of the Closing
Date, all mail addressed to the Sellers relating to the business of the Sellers
or the Assets shall be delivered to the Buyer at the address specified pursuant
to Section 8.2, and that all inquiries to the Sellers or their respective
affiliates regarding personal emergency response services will be referred by
the Sellers to the Buyer. The Sellers hereby authorize the Buyer to open any
and all mail addressed to the Sellers (if delivered to the Buyer) if received on
or after the Closing Date and hereby grant to the Buyer a power of attorney to
endorse and cash those checks or instruments remitted for payment of the
Accounts Receivable listed on Schedule 2.16 and made payable or endorsed to the
-------------
Sellers or their order and received by the Buyer. The Buyer agrees to forward
all other checks or instruments not remitted for payment of the Accounts
Receivable listed on Schedule 2.16 and made payable or endorsed to the Sellers
-------------
and, any mail of the Sellers received by the Buyer not related to the business
or the Assets, to the Sellers pursuant to Section 8.02. The
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Sellers agree that they will forward promptly to the Buyer any monies, checks or
other instruments received by them after the Closing Date with respect to the
Accounts Receivable.
IV.5 Use of Name. The Sellers agree not to use, following the Closing
-----------
Date, the names and marks "AlertCall," "AlertCall, Inc.," or "AlertCall LLC" or
any derivation thereof or name similar thereto. For five years after the
Closing Date, the Sellers will not use any name or xxxx that is associated with,
or confusingly similar to, or may be commonly understood to be associated with,
any other name or xxxx used in the emergency personal response industry. As
soon as practicable after the Closing Date, AlertCall, Inc. and AlertCall LLC
shall deliver to the Buyer (a) a duplicate original of a document, in form
sufficient for filing, amending the Certificate of Incorporation and the
Certificate of Formation of the Sellers so as to change the names of the Sellers
to names which, in the opinion of the Buyer, are sufficiently distinct from the
Sellers' current names so as to not be confused therewith and (b) a true,
complete and correct copy, certified by the Secretaries of the Sellers, of the
resolutions of the Sellers' Board of Directors or managers, whichever is
applicable and, if necessary, shareholders or Members, authorizing and approving
such change of name. In order to effectuate such change, the Sellers shall file
the originals thereof with the state of New York and the State of Delaware and
any other state requiring such a filing, as applicable, as soon as practicable
after the Closing Date. The Sellers are delivering to the Buyer at the Closing
a written consent to the use by the Buyer of the Sellers' names, or any
variation and such other documents as may be necessary to effectuate the
foregoing in respect of any states in which the Sellers are qualified to do
business. As soon as practicable after the termination of the Escrow Period,
AlertCall, Inc. and AlertCall LLC shall be dissolved and copies of Certificates
of Dissolution shall be provided to the Buyer. Notwithstanding the foregoing,
the Sellers shall be allowed to use the names "AlertCall", "AlertCall, Inc.,"
"AlertCall LLC," or any variations thereof, for such time and only to such
extent, as is necessary to wind-up and dissolve their businesses and to make any
necessary tax filings.
IV.6 Proprietary Information.
-----------------------
(a) The Sellers agree to hold in confidence, and use their best
efforts to have all of their officers, directors, managers, members, personnel,
affiliates and other such agents hold in confidence, all knowledge and
information of a secret or confidential nature with respect to the businesses of
the Sellers and shall not disclose, publish or make use of the same without the
written consent of the Buyer, except to the extent that (1) such knowledge and
information shall have become public knowledge other than by breach of this
Agreement by the Sellers or any of their respective officers, directors,
members, personnel, affiliates and other such agents, or (2) one or both of the
Sellers or any of their officers, directors, managers, members, personnel,
affiliates and other such agents is required by law or pursuant to a court order
to disclose such secret or confidential knowledge or information. Without
limiting the foregoing, neither of the Sellers shall retain a copy of the
Subscriber List.
-16-
(b) The Sellers each agree that the remedy at law for any breach of
this Section 4.6 would be inadequate and that the Buyer shall be entitled to
injunctive relief in addition to any other remedy it may have upon breach of any
provision of this Section 4.6.
IV.7 Taxes. The Buyer, on the one hand, and the Sellers, on the other
-----
hand, shall each be responsible for one half of the payment of any transfer,
sales, use or other similar taxes imposed by reason of the transfer of the
Assets, pursuant to this Agreement and any deficiency, interest or penalty with
respect to such taxes; except that any transfer, sales or use tax imposed by
reason of the transfer of any motor vehicles to the Buyer from the Sellers shall
be the responsibility of the Buyer. With regard to the joint payment by the
Sellers and the Buyer of any sales tax liability owing to the State of New York
as a result of the bulk transfer of the assets listed on Schedule 4.7 pursuant
------------
to this Agreement (the "Bulk Transfer"), the Sellers shall include in their
respective 1998 New York State sales tax returns (the "Returns" or individually
a "Return") a report of the Bulk Transfer based on the allocation of Purchase
Price agreed to by the parties hereto and listed on Schedule 4.2. The Sellers
------------
shall deliver the Returns to the Buyer for the Buyer's review such that the
Buyer shall have received the Returns no later than March 2, 1999. The Buyer
shall then forward the Returns and funds payable to each Seller in amount equal
to exactly fifty percent (50%) of the New York State sales tax due from each
Seller, including any deficiency, penalty or interest assessed, for whatever
reason, as a result of the Bulk Transfer. The Buyer's delivery to the Sellers
shall be such that each Seller shall have received the Return and the funds no
later than March 6, 1999. The Sellers shall then file the Returns and remit a
payment to New York State sufficient to discharge the entire sales tax liability
arising due to the Bulk Transfer, including any deficiency, penalty or interest
assessed, for whatever reason, no later than March 20, 1999. Nothing in this
Section 4.7 shall impose an obligation on the Buyer to pay any New York State
sales tax, including any deficiency, penalty or interest accrued or assessed for
whatever reason, which is owed by either of the Sellers as a result of any sale
or transfer, other than the transfer of the Assets pursuant to this Agreement or
the Bulk Transfer.
IV.8 Access to Books and Records. From the Closing Date and for a period
---------------------------
of seven (7) years thereafter, each of the Sellers and the Buyer and their
respective attorneys, accountants and agents shall be allowed upon reasonable
notice during normal business hours to inspect and copy, at the requesting
party's expense, the books and records of the other's business pertaining to
transactions occurring or assets relating to the transactions contemplated
hereby held at or before the Closing Date. The Sellers and the Buyer agree to
keep such books and records confidential, except and only to the extent required
by law, rule, regulation or court order. The Buyer agrees not to destroy or
abandon any such books or records for a period of seven (7) years following the
Closing Date and, for the two years following the initial seven year period, to
provide thirty (30) days' advance written notice to the Sellers before
destroying such books or records. If, following such notice any party requests
the surrender of such books or records the other party will, at the requesting
party's expense, surrender at the office of the requesting party or at such
location as directed by the requesting party, such books or records so requested
rather than proceeding with such destruction.
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IV.9 Nonassignable Contracts. To the extent that the assignment hereunder
-----------------------
by the Sellers to the Buyer of any contract listed on Schedules 2.21 and
------------------
2.23(a) attached hereto is not permitted without the consent of any other party
-------
to the contract, except for the contracts listed on Schedule 1.5(f), this
Agreement shall not be deemed to be an assignment of any such contract if such
consent is not given or if such assignment otherwise would constitute a breach
of, or cause a loss of contractual benefits under, any such contract, and the
Buyer shall not assume any obligations or liabilities thereunder. Without in
any way limiting the Sellers' obligations to obtain all consents necessary for
the sale, transfer, assignment and delivery of the contracts to the Buyer
hereunder, if such consent is not obtained or if such assignment is not
permitted, irrespective of consent, and the Closing hereunder is consummated,
the Sellers shall continue to use their best efforts to obtain such consents and
shall cooperate with the Buyer in any arrangement to provide the Buyer with the
rights and benefits under any such contracts.
IV.10 Bulk Sales. The Buyer and the Sellers shall comply with the bulk
----------
sales provisions of the sales tax laws of the State of New York. The Buyer and
the Sellers each hereby waive compliance with all provisions of the Uniform
Commercial Code -- Bulk Transfer laws of the State of New York and any other
state imposed upon it (subject to the indemnity provided for in Article VII).
IV.11 Medicaid Provider Number. The Buyer shall promptly apply for its
-------------------------
own Medicaid provider number and hereby agrees that it will not at any time use
the Sellers' Medicaid provider number.
IV.12 Termination of Agreements. The monitoring agreement dated September
-------------------------
3, 1993 by and between the Buyer and AlertCall, Inc. and the services agreement
dated August 18, 1998 are hereby terminated and are of no further force and
effect, and all of the benefits, liabilities and obligations of the Buyer and
AlertCall, Inc. thereunder shall cease and terminate immediately.
ARTICLE V
CONDITIONS TO OBLIGATIONS OF THE BUYER
The obligations of the Buyer under this Agreement are subject to the
fulfillment, at the Closing Date, of the following conditions precedent, each of
which may be waived in writing in the sole discretion of the Buyer:
V.1 Delivery of Documents. The Sellers shall have delivered to the Buyer
---------------------
all items described in Section 1.5 above and required to be delivered pursuant
thereto.
V.2 Continued Truth of Representations and Warranties of the Sellers;
-----------------------------------------------------------------
Compliance with Covenants and Obligations. The representations and warranties
-----------------------------------------
of the Sellers shall be true in all material respects on and as of the Closing
Date as though such representations and warranties were made on and as of such
date, except for any changes permitted by the terms
-18-
hereof or consented to in writing by the Buyer. The Sellers shall have performed
and complied with all terms, conditions, covenants, obligations, agreements and
restrictions required by this Agreement to be performed or complied with by them
prior to or at the Closing Date.
V.3 Employment Agreements. The Buyer shall have entered into employment
---------------------
agreements or arrangements, if the Buyer in its sole discretion shall so desire,
with Xxxxxxxx XxXxxxx in a form satisfactory to the Buyer in its sole
discretion.
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF THE SELLERS
The obligations of the Sellers under this Agreement are subject to the
fulfillment, at the Closing Date, of the following conditions precedent, each of
which may be waived in writing in the sole discretion of the Sellers:
VI.1 Delivery of Documents. The Buyer shall have delivered to the Sellers
---------------------
all items described in Section 1.6 above and required to be delivered pursuant
thereto.
VI.2 Continued Truth of Representations and Warranties of the Buyer;
---------------------------------------------------------------
Compliance with Covenants and Obligations. The representations and warranties
-----------------------------------------
of the Buyer shall be true in all material respects on and as of the Closing
Date as though such representations and warranties were made on and as of such
date, except for any changes permitted by the terms hereof or consented to in
writing by the Sellers. The Buyer shall have performed and complied with all
terms, conditions, covenants, obligations, agreements and restrictions required
by this Agreement to be performed or complied with by it prior to or at the
Closing Date.
VI.3 [INTENTIONALLY LEFT BLANK]
VI.4 Letter Agreement with Xxxxxxxx XxXxxxx. The Sellers shall have
--------------------------------------
entered into a letter agreement, in form satisfactory to them, relating to,
among other things, the termination of any and all ownership interests or rights
to ownership interests Xxxxxxxx XxXxxxx may have in either of the Sellers, and
of her employment by the Sellers.
ARTICLE VII
SURVIVAL AND INDEMNIFICATION
VII.1 Survival. The representations and warranties and covenants
--------
contained in this Agreement shall not be deemed waived by an investigation at
any time made by or on behalf of any party. The representations and warranties
contained in this Agreement shall survive the Closing for a period of 18 months
after the Closing unless prior to the expiration of such 18 month period either
party notifies the other of a claim in reasonable detail to the extent then
known by the party making the claim. Notwithstanding the foregoing, the
Sellers' obligations arising under or relating to Section 7.2(a)(iv) herein
shall survive until the expiration of the
-19-
applicable periods (including any extensions) of the respective statutes of
limitation applicable to the payment of any taxes referred to in Section
7.2(a)(iv) herein. All of the covenants and agreements set forth in this
Agreement shall survive the Closing and continue until fully performed or
discharged.
VII.2 Indemnification.
---------------
(a) The Sellers, jointly and severally, shall indemnify, defend, and
hold harmless the Buyer and its subsidiaries and affiliates and its directors,
officers, employees and agents (collectively, the "Buyer's Indemnified
Persons"), and reimburse the Buyer's Indemnified Persons for, from and against
all payments, demands, claims, suits, judgments, liabilities, losses, costs,
damages and expenses, including, without limitation, interest, penalties and
reasonable attorneys' fees, disbursements and expenses (a "Claim"), imposed on
or incurred by the Buyer's Indemnified Persons, directly or indirectly, which
relate to or arise out of (i) breach of any representation and warranty of, or
covenant to be performed by, the Sellers, in each case contained in this
Agreement or in any other agreements specifically referred to herein, (ii) any
of the liabilities or obligations retained by the Sellers pursuant to Section
1.3, (iii) the failure of the Sellers or of the Buyer to comply with any bulk
sales laws applicable to the transactions contemplated hereby, or (iv) any tax
liabilities of the Sellers, including, but not limited to, any accrued state
sales and/or use tax liability.
(b) The Buyer shall indemnify, defend, and hold harmless each of the
Sellers and their subsidiaries and affiliates and their directors, officers,
employees and agents (collectively the "Sellers' Indemnified Persons"), and
reimburse each of the Sellers' Indemnified Persons for, from and against Claims,
imposed or incurred by the Sellers' Indemnified Persons, directly or indirectly,
which relate to or rise out of (i) a breach of any representation and warranty
of, or covenant to be performed by, the Buyer in each case contained in this
Agreement or in any other agreement specifically referred to herein, or (ii) any
of the Assumed Liabilities.
(c) No indemnification shall be payable to an indemnified party
pursuant to Section 7.2(a) or 7.2(b) or any successor thereto (the "Indemnified
Party") unless the total of all of the Indemnified Party's Claims for
indemnification pursuant to Section 7.2(a) or 7.2(b) shall exceed Twenty
Thousand Dollars ($20,000) in the aggregate (the "Threshold") (in which case the
Sellers shall be liable for the entire amount for which they are providing
indemnification hereunder, and not just the amount in excess of the Threshold);
provided, however, that the Threshold shall not apply to Claims arising out of
--------- -------
breaches of representations or warranties contained in Section 2.11 (Tax
Matters), and the Sellers shall indemnify the Buyer for any Claim related
thereto in accordance with this Article VII without regard to the Threshold.
The indemnification obligations under Section 7.2(a) or 7.2(b) shall be limited,
in the aggregate, to an amount equal to the Purchase Price.
(d) An Indemnified Party shall give prompt written notice to an
indemnifying party (the "Indemnifying Party") of any Claim in respect of which
such
-20-
Indemnifying Party has a duty to provide indemnity to such Indemnified Party
under this Section 7.2, except that any delay or failure to so notify the
Indemnifying Party only shall relieve the Indemnifying Party of its obligations
hereunder to the extent, if at all, that it is prejudiced by reason of such
delay or failure.
(e) If a Claim is brought or asserted by a third party (a "Third Party
Claim"), the Indemnifying Party shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to the Indemnified Party and the
payment of all expenses. The Indemnified Party shall have the right to employ
separate counsel in such Third Party Claim and participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
the Indemnified Party. In the event that the Indemnifying Party, within 20 days
after written notice of any Third Party Claim, fails to assume the defense
thereof, the Indemnified Party shall have the right to undertake the defense,
compromise or settlement of such Third Party Claim for the account of the
Indemnifying Party. Anything in this Section 7.2(f) to the contrary
notwithstanding, the Indemnifying Party shall not, without the Indemnified
Party's prior written consent, settle or compromise any Third party Claim or
consent to the entry of any judgment with respect to any Third Party Claim which
would have any adverse effect on the Indemnified Party, except as provided
immediately below. The Indemnifying Party may, without the Indemnified Party's
prior written consent, settle or compromise any such Third Party Claim or
consent to entry of any judgment, with respect to any Third party Claim which
requires solely money damages paid by the Indemnifying Party and which includes
as an unconditional term thereof the release by the claimant or the plaintiff of
the Indemnified Party from all liability in respect of such Third Party Claim.
(f) With respect to any Claim other than a Third Party Claim, the
Indemnifying Party shall have 30 days from receipt of written notice from the
Indemnified Party of such claim within which to respond thereto. If the
Indemnifying Party does not respond within such 30-day period, the Indemnifying
Party shall be deemed to have accepted responsibility to make payment and shall
have no further right to contest the validity of such Claim. If the
Indemnifying Party notifies the Indemnified Party within such 30-day period that
it rejects such Claim in whole or in part, the Indemnified Party shall be free
to pursue such remedies as may be available to the Indemnified Party under
applicable law.
(g) Anything in this Section 7.2 to the contrary notwithstanding, if a
third party asserts that an Indemnified Party is liable to such third party for
a monetary or other obligation which may constitute or result in damages for
which such Indemnified Party may be entitled to indemnification pursuant to this
Section 7.2, and such Indemnified Party reasonably determines that it has a
valid business reason to fulfill such obligation, then (i) such Indemnified
Party shall be entitled to satisfy such obligation without consent from the
Indemnifying Party, (ii) such Indemnified Party may make a claim for
indemnification pursuant to this Section 7.2 and (iii) such Indemnified Party
shall be reimbursed, for any such damages for which it is entitled to
indemnification pursuant to this Section 7.2 (subject to the right of the
Indemnifying Party to dispute the Indemnified Party's entitlement to
indemnification under the terms of this Section 7.2).
-21-
VII.3 Confidentiality. Each of the parties hereto agrees to cooperate in
---------------
such a manner as to preserve in full the confidentiality of all information
received (whether received before or after the date of this Agreement) relating
to any party to this Agreement, or an affiliate of such party or relating to the
transactions contemplated by this Agreement (the "Confidential Information").
In connection therewith, each party hereto agrees that:
(a) it will use all reasonable and lawful efforts, in any action,
suit or proceeding in which it has assumed or participated in the defense, to
avoid producing the Confidential Information, and in the event a party hereto
determines that disclosure must be made as being required by law or court order,
it may make such disclosure only to that extent as required by such applicable
law or court order and only after prior consultation between the principals and
attorneys of each party; and
(b) all communications between any party hereto and counsel
responsible for, or participating in, the defense of any action, suit or
proceeding shall, to the extent possible, be made so as to preserve any
applicable attorney-client or work-product privilege.
VII.4 Remedies Cumulative. Except as otherwise provided herein, the
-------------------
remedies provided herein shall be cumulative and shall not preclude the
assertion by any party hereto of any other rights or the seeking of any other
remedies against any other party hereto.
VII.5 Set-off. Any amount or amounts due from the Sellers to the Buyer
-------
under this Article VII may be set off by the Buyer, at the Buyer's option, from
the Escrow Deposit pursuant to the terms of the Escrow Agreement. Neither the
exercise of nor the failure to exercise such right of set-off or to give a
notice of a claim will constitute an election of remedies or limit Buyer in any
manner in the enforcement of any other remedies that may be available to it.
ARTICLE VIII
GENERAL PROVISIONS
VIII.1 Amendment and Waiver. No amendment of any provision of this
--------------------
Agreement shall in any event be effective unless the same shall be in writing
and signed by the parties hereto. Any failure of any party to comply with any
obligation, agreement or condition hereunder may only be waived in writing by
the Buyer if such failure is by the Sellers and by the Sellers if such failure
is by the Buyer, but such waiver shall not operate as a waiver of, or estoppel
with respect to, any subsequent or other failure. No failure by any party to
take any action against any breach of this Agreement or default by the other
party shall constitute a waiver of such party's right to enforce any provision
hereof or to take any such action.
-22-
VIII.2 Notices. All notices, requests, demands and other communications
-------
hereunder shall be in writing and shall be sent by personal delivery or
registered or certified mail, postage prepaid, or by telecopier as follows:
(a) if to the Sellers:
AlertCall, Inc.
X.X. Xxx 0000
Xxxxxxx, XX 00000
Attn: Xx. Xxxxxx X. Xxxxx
with a copy to:
Xxxxxxx, Xxxx, Xxxxxxx, Xxxxx & Goodyear LLP
Xxxxx 0000, Xxx X&X Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxx Xxxxx Xxxxxxx, Esq.
(b) if to the Buyer:
Lifeline Systems, Inc.
000 Xxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attention: Xx. Xxxxxx Xxxxxxxxx, President
with a copy to:
Xxxx and Xxxx LLP
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Any party may change its address for receiving notice by written notice given to
the others named above. All notices shall be effective upon the earlier of
actual delivery or when deposited in the mail addressed as set forth above.
VIII.3 Counterparts and Facsimile Signature. This Agreement may be
------------------------------------
executed simultaneously in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
Agreement. This Agreement may be executed by facsimile signature, and such
facsimile signature shall be deemed an original.
VIII.4 Parties in Interest. This Agreement shall bind and inure to the
-------------------
benefit of the parties named herein and their respective heirs, successors and
assigns. This Agreement shall not be assignable by any party without the prior
written consent of the other parties, (except
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that Buyer may assign its rights under this Agreement to Protection One, Inc. or
any affiliate of Protection One, Inc. without the consent of any other party
hereto.
VIII.5 Entire Transaction. This Agreement and the other agreements,
------------------
documents and instruments referred to herein contain the entire understanding
among the parties with respect to the transactions contemplated hereby and
supersede all other agreements and understandings among the parties.
VIII.6 Applicable Law. This Agreement shall be governed by and construed
--------------
in accordance with the internal substantive laws of the Commonwealth of
Massachusetts, and the parties hereby consent to the sole jurisdiction of
Massachusetts courts over all matters relating to this Agreement.
VIII.7 Headings. The section and other headings contained in this
--------
Agreement are for reference and convenience purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
VIII.8 Expenses. Except as otherwise expressly provided in this Agreement
--------
or the agreements, documents and instruments to be executed and delivered
pursuant hereto, each party to this Agreement shall pay its own costs and
expenses in connection with the transactions contemplated hereby.
VIII.9 Announcements. Except as required by law (and then only to the
-------------
extent as required by such applicable law), no announcement of this Agreement or
the transactions contemplated hereby shall be made by either party without the
written approval of the other parties, which approval shall not be unreasonably
withheld or delayed.
VIII.10 Third Parties. Except as specifically set forth or referred to
-------------
herein, nothing herein expressed or implied is intended or shall be construed to
confer upon or give to any person or entity other than the parties hereto and
their successors or assigns, any rights or remedies under or by reason of this
Agreement.
VIII.11 Severability. If any term, provision, covenant or restriction of
------------
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
[Remainder of Page Intentionally Left Blank.
Signature Page(s) to Follow]
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
duly executed all as of the day and year first written above.
SELLERS:
ALERTCALL, INC.
By: /s/ Xxxxxx X. Xxxxx
--------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Vice President/Chief Financial
Officer
ALERTCALL LLC
By: /s/ Xxxxxx X. Xxxxx
--------------------------------------
Name: Xxxxxx X. Xxxxx
Its: Member
LIFELINE SYSTEMS, INC.
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
