AGREEMENT
THIS AGREEMENT (the "AGREEMENT"), dated as of February 29, 2000, by and
among, Protection One, Inc., a Delaware corporation ("PROTECTION ONE"),
Protection One Alarm Monitoring, Inc., a Delaware corporation and wholly owned
direct subsidiary of Protection One ("MONITORING", and collectively with
Protection One, the "SELLERS" and each a "SELLER"), and Westar Capital, Inc., a
Kansas corporation (the "PURCHASER").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Monitoring is the record and beneficial owner of all of the
issued and outstanding shares of capital stock of Protection One (UK) plc, a
corporation formed under the laws of the United Kingdom (formerly Hambro
Countrywide Security plc, "P1 UK" and such stock, the "P1 UK STOCK"); Monitoring
is the record and beneficial owner of all of the issued and outstanding capital
stock of Protection One International, Inc., a Delaware corporation ("P1
INTERNATIONAL" and such stock, the "P1 INTERNATIONAL STOCK"); Protection One is
the record and beneficial owner of all of the issued and outstanding shares of
capital stock of Protection One Investments, Inc., a Delaware corporation ("P1
INVESTMENTS" and such stock, the "P1 INVESTMENTS STOCK"); and P1 Investments is
the owner of a portfolio of marketable securities (the "PORTFOLIO") listed on
Schedule A hereto and certain Series C 7% Redeemable Cumulative Preferred Stock
and Series D 6% Convertible Cumulative Preferred Stock of Guardian
International, Inc. listed on Schedule B hereto (the "GUARDIAN STOCK");
WHEREAS, the Purchaser desires to purchase, and Sellers desire to sell,
all of the P1 UK Stock, the P1 International Stock and the P1 Investments Stock,
subject to the terms and conditions of this Agreement;
WHEREAS, the Purchaser desires to transfer, and Protection One desires
to accept, certain outstanding debt securities of Monitoring in part payment of
the securities transferred hereunder, subject to the terms and conditions of
this Agreement;
WHEREAS, Monitoring and the Purchaser desire to enter into an amendment
(the "CREDIT AGREEMENT AMENDMENT") in the form attached hereto as Exhibit I to
that certain Credit Agreement, dated as of December 21, 1998, among Monitoring,
as borrower, NationsBank, N.A. (now known as Bank of America, N.A.), as
Administrative Agent, the Syndication Agent, the Documentation Agent and the
Lenders (as each is defined therein) (as amended, modified and revised from time
to time, the "CREDIT AGREEMENT"), such Lenders' and such Administrative Agent's
interests thereunder having been assigned to and assumed by the Purchaser
pursuant to that certain Assignment and Acceptance dated as of December 17,
1999, executed by Monitoring, the Lenders defined therein, and the Purchaser, as
assignee and successor Administrative Agent; and
WHEREAS, Western Resources, Inc., a Kansas corporation and the parent
of the Purchaser ("WESTERN RESOURCES"), the Purchaser and Protection One desire
to enter into an amendment (the "CONTRIBUTION AGREEMENT AMENDMENT") in the form
attached hereto as Exhibit II to that certain Contribution Agreement, dated as
of July 30, 1997, as amended on October 2, 1997, between Western Resources and
Protection One (as amended, modified and revised from time to time, the
"CONTRIBUTION AGREEMENT");
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and agreements hereinafter set forth, and
upon the terms and subject to the conditions hereinafter set forth, the
Purchaser and the Sellers hereby agree as follows:
ARTICLE I - PURCHASE AND SALE OF STOCK
1.1 Acquisition and Transfer of Stock and Other Assets. Upon the terms and
subject to the conditions hereinafter set forth, each Seller hereby sells,
assigns, transfers, conveys and delivers to the Purchaser, and the Purchaser
hereby purchases, acquires and accepts from each Seller, all of such Seller's
right, title and interest in and to the P1 UK Stock, the P1 International Stock
and the P1 Investments Stock.
ARTICLE II - PURCHASE PRICE; VALUATION OF DEBT CONSIDERATION
2.1 Purchase Price and Payment. The aggregate purchase price to be paid by
the Purchaser to the Sellers for the P1 UK Stock, the P1 International Stock and
the P1 Investments Stock is Two hundred forty-four million dollars
($244,000,000) (the "PURCHASE PRICE"), comprised of cash consideration in the
amount of One hundred eighty-three million twenty-five thousand dollars
($183,025,000) (the "CASH CONSIDERATION") and the balance in the 13-5/8% Senior
Subordinated Discount Notes due 2005, the 6-3/4% Convertible Senior Subordinated
Notes due 2003 and the 8-1/8% Senior Subordinated Notes due 2009 of Monitoring
owned by the Purchaser (the "DEBT CONSIDERATION") in the principal amounts and
market values (determined pursuant to Section 2.3 hereof) set forth on Schedule
C.
2.2 Allocation of Purchase Price. The Purchaser and Protection One on
behalf of the Sellers hereby agree that the Purchase Price of the P1 UK Stock,
the P1 International Stock and the P1 Investments Stock will be allocated as set
forth on Schedule D hereto. Subject to the requirements of any applicable tax
law, all tax returns and reports filed by the Purchaser and the Sellers shall be
prepared consistently with such allocation.
2.3 Valuation of Debt Consideration. The Debt Consideration deliverable by
the Purchaser to Protection One on behalf of the Sellers hereunder has been
valued as follows: each class of Debt Consideration has been valued as the
average of the daily average of the closing bid price and the asked price quoted
for each day, rounded to the
nearest cent, over the ten (10) trading days ending on and including the trading
day immediately preceding the date of calculation, February 29, 2000. Protection
One attempted to obtain closing bid and asked prices from Xxxxxxxxx, Xxxxxx &
Xxxxxxxx Securities Corporation, Chase Securities, Inc. and Bear, Xxxxxxx & Co.
Inc. Inasmuch as Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation was the
only one of the three that was actively making a market in the Monitoring debt,
the calculation of the value of the Debt Consideration was based solely upon the
quotes provided by Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation.
ARTICLE III - THE CLOSING
3.1 Closing Date. The closing (the "CLOSING") shall take place at the
offices of Weil, Gotshal & Xxxxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx at a
time specified by the parties, on the date hereof or such other place or time or
on such other date as Protection One on behalf of the Sellers and the Purchaser
may agree. The date of the Closing is referred to in this Agreement as the
"CLOSING DATE."
3.2 Deliveries by Sellers to the Purchaser. At the Closing (or in the case
of clause (e) below, as soon as practicable following the Closing) and on the
terms and subject to the conditions hereof, the Sellers, as applicable, shall
deliver, against receipt of the consideration set forth in 2.1 hereof, to the
Purchaser or, where applicable, to the securities account designated by the
Purchaser:
(a) certificates or book-entry transfer of the shares of the P1 UK
Stock, the P1 International Stock and the P1 Investments Stock, which in the
case of certificates shall be duly endorsed in blank or accompanied by stock
powers duly executed;
(b) the Contribution Agreement Amendment, executed by a duly authorized
officer of Protection One and accompanied by evidence reasonably satisfactory to
the Purchaser of its authorization and approval by the Continuing Directors (as
defined in the Contribution Agreement) of Protection One;
(c) the Credit Agreement Amendment, executed by a duly authorized
officer of Monitoring;
(d) the opinions of Weil, Gotshal & Xxxxxx LLP in the forms attached
hereto as Exhibit III; and
(e) written resignation letters from such directors and officers of P1
UK, P1 International, P1 Investments and their respective subsidiaries as the
Purchaser shall request prior to the Closing Date.
3.3 Deliveries by the Purchaser to the Sellers. At the Closing, the
Purchaser shall deliver or cause to be delivered to the Sellers or, where
applicable, to the securities account designated by Protection One on behalf of
the Sellers, the following:
(a) immediately available funds in the amount of the Cash
Consideration;
(b) certificates or book-entry transfer of the securities constituting
Debt Consideration hereunder, which in the case of certificates shall be duly
endorsed in blank or accompanied by the appropriate assignment or transfer
agreement duly executed;
(c) the Contribution Agreement Amendment, executed by a duly authorized
officer of Western Resources;
(d) the Credit Agreement Amendment, executed by a duly authorized
officer of the Purchaser; and
(e) the opinion of Xxxxxxx Xxxxxxx, General Counsel of Western
Resources, in the form attached hereto as Exhibit IV.
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF THE SELLERS
The Sellers hereby represent and warrant as of the date hereof and
the Closing Date to the Purchaser as follows:
4.1 Organization and Good Standing.
(a) Each of Protection One and Monitoring is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization. Each Seller has all requisite corporate power and
authority to carry on its business as it is now being conducted, and to execute,
deliver and perform this Agreement and to consummate the transactions
contemplated hereby.
(b) Each of P1 UK, P1 International, P1 Investments and their
respective subsidiaries is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation and has all
requisite corporate power and authority to own, lease and operate its properties
and to carry on its business as now being conducted. Each of P1 UK, P1
International, P1 Investments and their respective subsidiaries is duly
qualified as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the character of its properties owned or leased or the
nature of its activities makes such qualification necessary, with such
exceptions as are not reasonably likely, individually or in the aggregate, to
have a material adverse effect on the business, assets, condition (financial or
other) or results of operations on P1 UK, P1 International, P1 Investments and
their respective subsidiaries, taken as a whole. Sellers have delivered to the
Purchaser accurate and complete copies of the certificate or
articles of incorporation or organization and bylaws (or other applicable
charter documents), as currently in effect, of each of P1 UK, P1 International,
P1 Investments and their respective subsidiaries.
4.2 Authorization of Agreement. Each Seller has full corporate power and
authority to execute and deliver this Agreement and each other agreement,
document, instrument or certificate contemplated by this Agreement or to be
executed by any Seller in connection with the consummation of the transactions
contemplated by this Agreement (all such other agreements, documents,
instruments and certificates required to be executed by such Seller being
hereinafter referred to, collectively, as the "SELLER DOCUMENTS"), and to
perform fully its obligations hereunder and thereunder. The execution, delivery
and performance by the Sellers of this Agreement and each of the Seller
Documents, as applicable, have been duly authorized by all necessary corporate
action on the part of the Sellers. This Agreement and the Seller Documents have
been duly executed and delivered by each Seller, as applicable, and (assuming
the due authorization, execution and delivery by the other parties hereto and
thereto) this Agreement and the Seller Documents constitute the legal, valid and
binding obligations of such Sellers, enforceable against each Seller in
accordance with their respective terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally and subject, as to enforceability, to general
principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity).
4.3 Capitalization; Ownership and Transfer of Stock.
(a) The authorized capital stock of P1 UK consists of 7,040,000
ordinary shares of (pound)1 per share. As of the date hereof, there are issued
and outstanding 4,490,611 ordinary shares of (pound)1 per share, all issued in
the name of Monitoring.
(b) The authorized capital stock of P1 International consists of 1,000
shares of common stock, par value $0.10 per share. As of the date hereof, there
are issued and outstanding 1,000 shares of common stock, all issued in the name
of Monitoring.
(c) The authorized capital stock of P1 Investments consists of 1,000
shares of common stock, par value $0.10 per share. As of the date hereof, there
are issued and outstanding 1,000 shares of common stock, all issued in the name
of Protection One.
(d) Except as set forth on Section 4.3(d) of the Disclosure Schedule,
there is no existing option, warrant, call, right, commitment or other agreement
of any character to which any of the Sellers, P1 UK, P1 International, P1
Investments or any of the subsidiaries of P1 UK, P1 International or P1
Investments is a party requiring, and there are no securities of P1 UK, P1
International, P1 Investments or any of the subsidiaries of P1 UK, P1
International or P1 Investments outstanding which upon conversion or exchange
would require, the issuance, sale or transfer of any additional
shares of capital stock or other equity securities of P1 UK, P1 International,
P1 Investments or any of the subsidiaries of P1 UK, P1 International or P1
Investments or other securities convertible into, exchangeable for or evidencing
the right to subscribe for or purchase shares of capital stock or other equity
securities of P1 UK, P1 International, P1 Investments or any of the subsidiaries
of P1 UK, P1 International or P1 Investments. None of the Sellers, P1 UK, P1
International, P1 Investments or any of the subsidiaries of P1 UK, P1
International or P1 Investments is a party to any voting trust or other voting
agreement with respect to any of the shares of the P1 UK Stock, P1 International
Stock, P1 Investments Stock or capital stock of any of the subsidiaries of P1
UK, P1 International or P1 Investments or to any agreement relating to the
issuance, sale, redemption, transfer or other disposition of the capital stock
of P1 UK, P1 International, P1 Investments or any of the subsidiaries of P1 UK,
P1 International or P1 Investments.
(e) Protection One is the record and beneficial owner of, and has good
and valid title to, the P1 Investments Stock free and clear of any Liens (as
defined below). Monitoring is the record and beneficial owner of, and has good
and valid title to, the P1 UK Stock and the P1 International Stock, free and
clear of any Liens. P1 Investments is the record and beneficial owner of, and
has good and valid title to the Portfolio, free and clear of any Liens. P1
Investments is the beneficial owner of, and has good and valid title to the
Guardian Stock, free and clear of any Liens. At the Closing, each Seller, as
applicable, will transfer to the Purchaser good and marketable title to the P1
UK Stock, the P1 Investments Stock and the P1 International Stock, free and
clear of any Liens. Except as set forth on Section 4.3(e) of the Disclosure
Schedule, each of P1 UK, P1 International and P1 Investments is directly or
indirectly the record and beneficial owner of, and has good and valid title to,
all of the outstanding shares of capital stock of each of its subsidiaries, free
and clear of any Liens. The only direct or indirect subsidiaries of P1 UK, P1
International or P1 Investments are those listed in Section 4.3(e) of the
Disclosure Schedule. Except as set forth in Section 4.3(e) of the Disclosure
Schedule, neither P1 UK, P1 International or P1 Investments owns directly or
indirectly any interest in any corporation, partnership, joint venture or other
business association or entity.
4.4 No Conflicts. Except as set forth on Section 4.4 of the Disclosure
Schedule, neither the execution and delivery by the Sellers of this Agreement
and the Seller Documents, the consummation of the transactions contemplated
hereby or thereby, nor compliance by the Sellers with any of the provisions
hereof or thereof will (i) conflict with, or result in the breach of, any
provision of the certificate of incorporation or by-laws or comparable
organizational documents of any Seller, P1 UK, P1 International, P1 Investments
or any of the subsidiaries of P1 UK, P1 International or P1 Investments; (ii)
conflict with, violate, result in the breach of, or constitute a default (or an
event which, with notice or lapse of time or both, would constitute a default)
under, or result in the termination or suspension of, or accelerate the
performance required by, or result in a right of termination or acceleration
under, any note, bond, mortgage, indenture, license, agreement or other
instrument or obligation to which either any Seller, P1 UK, P1 International, P1
Investments or any of the subsidiaries of P1 UK, P1 International or
P1 Investments is a party or by which it or any of their respective properties
or assets are bound; (iii) result in the creation of any mortgages, claims,
liens, security interests, options pledges or encumbrances ("LIENS") upon the
properties or assets of any Seller, P1 UK, P1 International, P1 Investments or
any of the subsidiaries of P1 UK, P1 International or P1 Investments; or (iv)
violate any material judgment, ruling, order, writ, injunction or decree
applicable to any Seller, P1 UK, P1 International, P1 Investments or any of the
subsidiaries of P1 UK, P1 International or P1 Investments or any of their
respective properties or assets.
4.5 Financial Statements; Undisclosed Liabilities.
(a) Sellers have provided to the Purchaser true and complete copies of
the unaudited income statement, balance sheet and statement of changes in cash
flows as of September 30, 1999 for P1 UK (collectively, the "P1 UK FINANCIAL
STATEMENTS"), and for Compagnie Europeenne de Telesecurite and its subsidiaries
(collectively, the "CET FINANCIAL STATEMENTS"). Except as set forth on Section
4.5(a) of the Disclosure Schedule, the P1 UK Financial Statements and the CET
Financial Statements fairly present, in all material respects, the consolidated
financial position of P1 UK and its subsidiaries and CET and its subsidiaries,
respectively, as of the dates thereof, and the consolidated results of
operations of P1 UK and its subsidiaries and CET and its subsidiaries,
respectively, for the applicable periods then ended, and have been prepared
(except for the associated notes thereto) in accordance with the generally
accepted accounting principles of the United States, applied on a consistent
basis.
(b) To the knowledge of the executive officers of Protection One,
neither P1 UK or any of its subsidiaries nor CET or any of its subsidiaries nor
P1 Investments or any of its subsidiaries has any liabilities or obligations of
any nature, whether absolute, accrued, unmatured, contingent or otherwise,
except (i) the liabilities recorded on the P1 UK Financial Statements and the
CET Financial Statements, (ii) liabilities or obligations incurred in the
ordinary course of business and consistent with past practice since September
30, 1999 and (iii) liabilities and obligations other than liabilities and
obligations contemplated by clauses (i) or (ii) above not exceeding $1 million
in the aggregate.
4.6 Absence or Change of Events. Since September 30, 1999:
(a) There has not been any direct or indirect redemption, purchase or
other acquisition of any shares of capital stock of P1 UK, P1 International, P1
Investments or any of their respective subsidiaries, or any declaration, setting
aside or payment of any dividend or other distribution by P1 UK, P1
International, P1 Investments or any of their respective subsidiaries in respect
of their respective capital stock;
(b) Except as set forth on Section 4.6(b) of the Disclosure Schedule,
there has not been any changes in the financial or accounting methods,
principles or
practices of or applicable to P1 UK, P1 International, P1 Investments or any of
their respective subsidiaries; and
(c) Except as set forth in Section 4.6(c) of the Disclosure Schedule,
except in the ordinary course of business consistent with past practice
involving amounts which are not material, there has not been any revaluation by
P1 UK, P1 International, P1 Investments or any of their respective subsidiaries
of any of their respective assets, including, without limitation, writing down
the value of inventory, customer accounts or accounts receivable.
4.7 Permits. P1 UK, P1 International, P1 Investments and their respective
subsidiaries will have immediately following consummation of the transactions
contemplated by this Agreement and the Seller Documents all of the material
permits, licenses and franchises from governmental entities which they have as
of the date of this Agreement.
4.8 Intellectual Property. P1 UK, P1 International, P1 Investments and
their respective subsidiaries will license or own, directly or indirectly,
immediately following consummation of the transactions contemplated by this
Agreement and the Seller Documents all of the material trademarks (whether or
not registered) and trademark registrations and applications, patent and patent
applications, copyrights and copyright applications, service marks, service xxxx
registrations and applications, trade dress, trade and product names, computer
software and source codes and other intellectual property which they license or
own, directly or indirectly, as of the date of this Agreement.
4.9 Sufficiency of Assets. P1 UK, P1 International, P1 Investments and
their respective subsidiaries immediately following consummation of the
transactions contemplated by this Agreement and the Seller Documents will
license, lease or own or otherwise will have valid rights to use all of the
material assets which they license, lease or own or otherwise have valid rights
to use as of the date of this Agreement. Sellers and their subsidiaries (other
than P1 UK, P1 International and P1 Investments and their subsidiaries) do not
provide any material services to P1 UK, P1 International and P1 Investments and
their subsidiaries.
4.10 Employee Benefits. To the knowledge of the executive officers of
Protection One, the execution and delivery of this Agreement and the Seller
Documents and the consummation of the transactions contemplated hereby and
thereby will not either alone or in connection with any employee's termination
of employment or other event result in an increase in the amount of, or
accelerate the vesting or timing of payments of, any salary, bonus, pension or
welfare benefits, severance or other compensation or benefits payable to or in
respect of any employee of P1 UK, P1 International or P1 Investments or any of
their respective subsidiaries.
4.11 Finders or Brokers. Except as set forth in Section 4.11 of the
Disclosure Schedule, none of the Sellers, P1 UK, P1 International, P1
Investments or any of their respective subsidiaries, or the Board of Directors
or any committee thereof of any Seller,
P1 UK, P1 International, P1 Investments or any of their respective subsidiaries
has employed any investment banker, broker, finder or intermediary in connection
with the transactions contemplated by this Agreement or the Seller Documents who
might be entitled to a fee or any commission in connection with such
transactions, and Section 4.11 of the Disclosure Schedule sets forth the maximum
consideration (present and future) agreed to be paid to each such party.
4.12 Opinion of Financial Advisor. The Special Committee of the Board of
Directors of Protection One has received the opinion of Warburg Dillon Read LLC,
dated the date of this Agreement, to the effect that, as of such date, and
subject to the assumptions and qualifications set forth therein, the
consideration to be received for P1 UK and P1 International is fair, from a
financial point of view, to Protection One.
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants as of the date hereof to
the Sellers as follows:
5.1 Organization and Good Standing. The Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Kansas, and has all requisite corporate power and authority to carry on its
business as it is now being conducted, and to execute, deliver and perform this
Agreement and to consummate the transactions contemplated hereby.
5.2 Authorization of Agreement. The Purchaser has full corporate power and
authority to execute and deliver this Agreement and each other agreement,
document, instrument or certificate contemplated by this Agreement or to be
executed by the Purchaser in connection with the consummation of the
transactions contemplated by this Agreement (all such other agreements,
documents, instruments and certificates required to be executed by the Purchaser
being hereinafter referred to, collectively, as the "PURCHASER DOCUMENTS") and
to perform fully its obligations hereunder and thereunder. The execution,
delivery and performance by the Purchaser of this Agreement and each Purchaser
Document have been duly authorized by all necessary action on the part of the
Purchaser. This Agreement and the Purchaser Documents have been duly executed
and delivered by the Purchaser and (assuming the due authorization, execution
and delivery by the other parties hereto and thereto) this Agreement and the
Purchaser Documents constitute the legal, valid and binding obligations of the
Purchaser, enforceable against the Purchaser in accordance with their respective
terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium
and similar laws affecting creditors' rights and remedies generally and subject,
as to enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity).
5.3 Ownership and Transfer of Debt Consideration. The Purchaser is the
record and beneficial owner of, and has good and valid title to, all Debt
Consideration set forth in Schedule C, free and clear of any and all Liens. At
the Closing, the Purchaser
will transfer to Protection One good and marketable title to all such Debt
Consideration, free and clear of all Liens.
5.4 No Conflicts. Except as set forth on Section 5.4 of the Disclosure
Schedule, neither the execution and delivery by the Purchaser of this Agreement
and the Purchaser Documents, the consummation of the transactions contemplated
hereby or thereby, nor compliance by the Purchaser with any of the provisions
hereof or thereof will (i) conflict with, or result in the breach of, any
provision of the certificate of incorporation or by-laws or comparable
organizational documents of the Purchaser; (ii) conflict with, violate, result
in the breach of, or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under, or result in the
termination or suspension of, or accelerate the performance required by, or
result in a right of termination or acceleration under, any note, bond,
mortgage, indenture, license, agreement or other instrument or obligation to
which the Purchaser is a party or by which it or any of its properties or assets
are bound; (iii) result in the creation of any Liens upon the properties or
assets of the Purchaser; or (iv) violate any material judgment, ruling, order,
writ, injunction or decree applicable to the Purchaser or any of its properties
or assets, except in the case of clauses (ii)-(iv) for such exceptions as are
not reasonably likely to prevent or materially delay the consummation by the
Purchaser of the transactions contemplated hereby and by the Purchaser
Documents. No filing or registration with, notification to or permit,
authorization, consent or approval of any governmental entity is required by the
Purchaser in connection with the execution and delivery by the Purchaser of this
Agreement and Purchaser Documents, the consummation of the transactions
contemplated hereby and thereby or compliance by the Purchaser with any of the
provisions hereof or thereof, except for such exceptions as are not reasonably
likely to prevent or materially delay the consummation by the Purchaser of the
transactions contemplated hereby and by the Purchaser Documents.
5.5 Securities Laws. The Purchaser is acquiring the P1 UK Stock, the P1
International Stock and the P1 Investments Stock for its own account, for
investment, and not with a view to or in connection with any distributions
thereof in contravention of the Securities Act of 1933, as amended, or any state
"blue-sky" laws.
ARTICLE VI - POST-CLOSING COVENANTS
6.1 Right of Clawback.
(a) If during the period from the Closing Date until the fourth
anniversary of the Closing Date (which anniversary date for purposes of this
Agreement shall be deemed to be February 28 of each subsequent calendar year
that is not a leap year), the Purchaser consummates a Sale to any Third Party,
the Purchaser shall pay to Protection One an amount equal to the Applicable
Percentage multiplied by the Sale Amount Difference. Such payment will be in the
same form or forms of consideration (and, in the case of two or more forms of
consideration, in the same relative amounts) as the form or forms of
consideration received by the Purchaser and its affiliates in
connection with the applicable Sale. In the event that all or a portion of the
consideration required to be paid by the Purchaser to Protection One pursuant to
this Section is in the form of securities, the payment by the Purchaser to
Protection One shall include all dividends or other distributions paid with
respect to such securities by the issuer thereof between the date of the
consummation of the applicable Sale and the date of the payment by the Purchaser
to Protection One with respect to such Sale required by this Section. In the
event that all or a portion of the consideration required to be paid by the
Purchaser to Protection One pursuant to this Section is in the form of cash, the
payment by the Purchaser to Protection One shall include an interest payment
equal to the product of (i) the average of the Prime Rates in effect for each
day during the period beginning on the date of the consummation of the
applicable Sale to and including the date prior to the date of payment by the
Purchaser to Protection One with respect to such Sale, (ii) the cash amount
payable by the Purchaser to Protection One exclusive of this interest payment
and (iii) the number of days from and including the date of the consummation of
the applicable Sale to and including the date prior to the date of the payment
by the Purchaser to Protection One with respect to such Sale divided by 365. The
payment contemplated by this Section shall be made on the fifth business day
following the final determination of the Sale Amount Difference in accordance
with this Section.
The Purchaser agrees to furnish Protection One on behalf of the Sellers
written notice promptly following the consummation of any Sale or any sale,
transfer or other disposition (other than the sale, transfer or dispositions of
obsolete equipment, furniture, inventory, accounts receivables, customer
accounts and other assets in the ordinary course of business) of less than 50%
of the assets of P1 UK and its subsidiaries and P1 International and its
subsidiaries. Such notice shall specify all material terms of the transaction
(including, without limitation, the form and amounts of the consideration
received and the identity of the purchaser or transferee).
(b) For purposes of this Section:
"SALE" means (i) any direct or indirect transfer, whether by sale,
merger, consolidation or other business combination, by the Purchaser or any of
its affiliates for cash or other consideration of all or any portion of the P1
UK Stock, the P1 International Stock or the capital stock of any subsidiary of
P1 UK and P1 International beneficially owned by the Purchaser and (ii) any
sale, transfer or other disposition (other than the sale, transfer or
disposition of obsolete equipment, furniture, inventory, accounts receivable,
customer accounts and other assets in the ordinary course of business) in one or
a series of related transactions of assets of P1 UK and its subsidiaries and P1
International and its subsidiaries having an aggregate fair market value equal
to 50% or more of the aggregate fair market value of all of the assets of P1 UK
and its subsidiaries and P1 International and its subsidiaries (satisfaction of
such 50% threshold as determined by mutual agreement of the Purchaser and
Protection One, or in the absence of such agreement by an Investment Banker) of
P1 UK and its subsidiaries and P1 International and its subsidiaries for cash or
other consideration; provided, however, that "Sale" shall not include any
transfer of any of the capital stock of the Purchaser or any of its affiliates
if it is determined by the mutual agreement of the Purchaser and Protection One
(or, in the
absence of such agreement, by an Investment Banker), that the aggregate fair
market of the P1 UK Stock and the P1 International Stock beneficially owned by
the Purchaser at the time of such transfer constitutes less than 75% of the
aggregate fair market value of the entity (the Purchaser or one of its
affiliates) whose capital stock or assets are being transferred (satisfaction of
such 75% threshold as determined by mutual agreement of the Purchaser and
Protection One, or in the absence of such agreement by an Investment Banker).
"INVESTMENT BANKER" means a nationally recognized investment banking
firm selected by mutual agreement of the Purchaser and Protection One (or, in
the absence of such agreement, by the mutual agreement of a nationally
recognized investment banking firm selected by the Purchaser and a nationally
recognized investment banking firm selected by Protection One). The fees and
expenses paid to any Investment Banker engaged for purposes of this Section
shall be borne equally by the Purchaser and Protection One.
"THIRD PARTY" means any person or entity other than an entity that is
directly or indirectly wholly owned by the Purchaser or that directly or
indirectly wholly owns the Purchaser.
"APPLICABLE PERCENTAGE" means 100%, with respect to a Sale consummated
on or before the first anniversary of the Closing Date; 75%, with respect to a
Sale consummated after the first anniversary of the Closing Date and on or
before the second anniversary of the Closing Date; 50%, with respect to a Sale
consummated after the second anniversary of the Closing Date and on or before
the third anniversary of the Closing Date; and 25%, with respect to a Sale
consummated after the third anniversary of the Closing Date and on or before the
fourth anniversary of the Closing Date. In the event of a Sale effected in a
series of related transactions as contemplated by clause (ii) of the definition
of "Sale," for purposes of determining the Applicable Percentage such Sale shall
be deemed to have been consummated on the date of consummation of the first
transaction included in such Sale.
"SALE AMOUNT DIFFERENCE" means the Sale Amount minus the Threshold
Amount.
"SALE AMOUNT" means the Net Proceeds received by the Purchaser and/or
its affiliates in connection with a Sale.
"NET PROCEEDS" means (i) the gross purchase price minus (ii) all
expenses, fees and taxes incurred or reasonably anticipated to be incurred by
the Purchaser or any of its affiliates in connection with a Sale. The amount of
the Net Proceeds resulting from a Sale shall not include the pro rata expenses,
fees and taxes associated with a transfer of assets other than the capital stock
and assets of P1 UK, P1 International and their subsidiaries and shall be
determined by the mutual agreement of the Purchaser and Protection One (or, in
the absence of such agreement, by an Investment Banker).
"THRESHOLD AMOUNT" means (i) the Sale Percentage multiplied by the
Adjusted Base Amount plus (ii) Other Asset Value.
"SALE PERCENTAGE" means (i) in the event of a Sale of all the capital
stock or assets of P1 UK and P1 International, 100%; and (ii) in the event of a
Sale of less than all of the capital stock or assets of P1 UK and P1
International or the Sale of the capital stock of one or more subsidiaries of P1
UK or P1 International, the percentage determined by mutual agreement of the
Purchaser and Protection One (or, in the absence of such agreement, by an
Investment Banker) representing the estimated then current aggregate fair market
value of the capital stock or assets of P1 UK, P1 International and their
subsidiaries transferred directly or indirectly in such Sale by the Purchaser
and its affiliates as a percentage of the estimated then current aggregate fair
market value of all of the capital stock of P1 UK and P1 International
beneficially owned by the Purchaser and its affiliates immediately preceding
such Sale.
"ADJUSTED BASE AMOUNT" means (i) $225 million, plus (ii) the Aggregate
Imputed Carrying Charge, plus (iii) Capital Additions, minus (iv) Capital
Deductions.
"AGGREGATE IMPUTED CARRYING CHARGE" means the sum of the Daily Imputed
Carrying Charges for each day from and including the date of this Agreement
through and including the date of consummation of the applicable Sale.
"DAILY IMPUTED CARRYING CHARGE" means, with respect to any applicable
day, the product of (i) $225 million plus Capital Additions made prior to such
day minus Capital Deductions made prior to such day, (ii) the Prime Rate as of
such date and (iii) 1 divided by 365.
"PRIME RATE" means the prime rate as announced from time to time by
Chase Manhattan Bank, New York, New York.
"CAPITAL ADDITIONS" means the aggregate value of capital contributed to
P1 UK, P1 International or their subsidiaries by the Purchaser and its
affiliates (other than P1 UK, P1 International and their subsidiaries) following
the date of this Agreement and prior to the date of the applicable Sale, as
determined by mutual agreement of the Purchaser and Protection One (or, in the
absence of such agreement, an Investment Banker).
"CAPITAL DEDUCTIONS" means the aggregate value of capital distributed
to the Purchaser and its affiliates (other than P1 UK, P1 International and
their subsidiaries) by P1 UK, P1 International and their subsidiaries following
the date of this Agreement and prior to the date of the applicable Sale, as
determined by mutual agreement of the Purchaser and Protection One (or, in the
absence of such agreement, an Investment Banker).
"OTHER ASSET VALUE" means the aggregate fair market value of the
capital stock and assets, other than the capital stock and assets of P1 UK, P1
International and
their subsidiaries, transferred directly or indirectly by the Purchaser and its
affiliates in such Sale, as determined by mutual agreement of the Purchaser and
Protection One (or, in the absence of such an agreement, an Investment Banker).
(c) Set forth on Schedule 6.1 of the Disclosure Schedule are
illustrative examples of the calculation of payments required under this
Section.
6.2 Confidentiality. The Confidentiality Agreement, dated as of January
21, 2000, between Protection One and the Purchaser is hereby terminated
effective as of the Closing Date.
6.3 Further Assurances. From time to time after the Closing Date, each of
the Sellers and the Purchaser shall use commercially reasonable efforts to take,
or cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable to consummate and make effective as promptly as
practicable the transactions contemplated by this Agreement, the Seller
Documents and the Purchaser Documents, and to cooperate with each other in
connection with the foregoing.
6.4 Public Announcements. Sellers and the Purchaser agree to issue a
mutually agreed upon joint press release with respect to the execution of this
Agreement, the Seller Documents and the Purchaser Documents and the consummation
of the transactions contemplated hereby and thereby.
6.5 Books and Records; Personnel.
(a) From and after the Closing Date, each party hereto shall afford the
other, including its accountants, counsel and other designated representatives,
reasonable access (including using reasonable efforts to give access to persons
or firms possessing information) and duplicating rights during normal business
hours to all records, books, contacts, instruments, computer data and other data
and information in such party's possession relating to the business and affairs
of the others (other than data and information subject to an attorney/client or
other privilege), insofar as such access is reasonably required by the other
parties including, without limitation, for audit, accounting and litigation
purposes, as well as for purposes of fulfilling disclosure and reporting
obligations.
(b) Each party hereto shall use reasonable efforts to make available to
the other parties to this Agreement, upon written request, its officers,
directors, employees and agents as witnesses to the extent that such persons may
reasonably be required in connection with any legal, administrative or other
proceedings arising out of the business of the others in which the requesting
party may from time to time be involved.
(c) Except as otherwise required by applicable law or agreed to in
writing, each party hereto shall, and shall cause each of their respective
subsidiaries to, retain all information relating to the businesses and affairs
of the other parties to this
Agreement in accordance with the past practice of such parties. Notwithstanding
the foregoing, any party may destroy or otherwise dispose of any such
information at any time, providing that, prior to such destruction or disposal,
(a) such party shall provide no less than 30 days' prior written notice to the
other parties, specifying the information proposed to be destroyed or disposed
of, and (b) if the recipient of such notice shall request in writing prior to
the scheduled date for such destruction or disposal that any of the information
proposed to be destroyed or disposed of be delivered to such requesting party,
the party proposing the destruction or disposal shall promptly arrange for the
delivery of such of the information as was requested at the expense of the
requesting party.
(d) Each party providing information or witnesses under this Section
6.5 to the others shall be entitled to receive from the recipients, upon the
presentation of invoices therefor, payment for all reasonable out-of-pocket
costs and expenses incurred in providing such information or witnesses.
6.6 Confidentiality. Sellers shall hold and shall cause their respective
directors, officers, employees, agents, consultants and advisors to hold, in
strict confidence, unless compelled to disclose by judicial or administrative
process or, in the opinion of its counsel, by other requirements of law, all
confidential, proprietary or other non-public information or trade secrets
concerning P1 UK, P1 International, P1 Investments and their respective
subsidiaries except to the extent that such information can be shown to have
been (a) in the public domain through no fault of such party, (b) later lawfully
acquired on a non-confidential basis from other sources by the party to which it
was furnished or (c) developed independently by the representatives of such
recipient. Sellers shall not release or disclose and shall cause their
respective directors, officers, employees, agents, consultants and advisors not
to release or disclose any such information to any other person, except its
auditors, attorneys, financial advisors, bankers and other consultants and
advisors who shall be advised of and comply with the provisions of this Section.
6.7 Cancellation of Intercompany Liabilities. Effective as of the Closing
the parties hereby cancel all liabilities between Sellers and their subsidiaries
(other than P1 UK, P1 International, P1 Investments or their respective
subsidiaries), on the one hand, and P1 UK, P1 International, P1 Investments or
their respective subsidiaries, on the other hand, with the exception of the
liabilities arising pursuant to the express provisions of this Agreement
(including Article VII), the Seller Documents and the Purchaser Documents.
Further, the parties to this Agreement irrevocably covenant to refrain from,
directly or indirectly, asserting any claim or demand, or commencing,
instituting, or causing to be commenced, any proceeding of any kind against the
other parties to this Agreement based upon any matter purported to be released
hereby.
6.8 Use of Names.
(a) Until the one year anniversary of a UK Change of Control Event (as
defined below), P1 UK and its subsidiaries shall have the sole and exclusive
right to
use in the United Kingdom in connection with the ownership and conduct of the
Business and the Multi-Family Monitoring Business (as defined in the
Contribution Agreement) the name Protection One, including each of the
trademarks, trade names, service marks and other proprietary rights related to
the Protection One name and any and all designs, logos and slogans, related to
the Protection One name, and all other rights (whether tangible or intangible,
statutory, at common law or otherwise) in connection therewith, whether alone or
in combination with one or more other words or marks in connection therewith
(the "PROTECTION ONE NAMES"); provided that dealers and marketing affiliates of
P1 UK and its subsidiaries shall be permitted to use the Protection One Names in
the United Kingdom solely on behalf of P1 UK and its subsidiaries and within
their permitted scope of use; and provided further that, any purchaser of any of
the businesses of P1 UK or its subsidiaries (not constituting a UK Change of
Control Event) within the United Kingdom shall also be permitted to use until
the first anniversary of the date of such sale the Protection One Names within
the scope of use of P1 UK and its subsidiaries hereunder. Notwithstanding
anything herein to the contrary, following the one year anniversary of a UK
Change of Control Event, no person other than Protection One shall have any
further ownership or other rights in the United Kingdom with respect to any
Protection One Name. Notwithstanding the foregoing sentence and subject to
Section 6.10(a), until the two year anniversary of a UK Change of Control Event,
the Sellers and each of their affiliates shall be prohibited from using in the
United Kingdom, or transferring to any other person the ownership of or any
right to use in the United Kingdom, in connection with any business whatsoever,
any Protection One Name.
(b) Until the one year anniversary of a Continental Europe Change of
Control Event (as defined below), P1 International and its subsidiaries shall
have the sole and exclusive right to use in all of the countries of continental
Europe ("CONTINENTAL EUROPE" and with the United Kingdom, "EUROPE") in
connection with the ownership and conduct of the Business and the Multi-Family
Monitoring Business the Protection One Names; provided that dealers and
marketing affiliates of P1 International and its subsidiaries shall be permitted
to use the Protection One Names in Continental Europe solely on behalf of P1
International and its subsidiaries and within their permitted scope of use; and
provided further that, any purchaser of any of the businesses of P1
International or its subsidiaries (not constituting a Continental Europe Change
of Control Event) within Continental Europe shall also be permitted to use until
the first anniversary of the date of such sale the Protection One Names within
the scope of use of P1 International and its subsidiaries hereunder.
Notwithstanding anything herein to the contrary, following the one year
anniversary of a Continental Europe Change of Control Event, no person other
than Protection One shall have any further ownership or other rights in
Continental Europe with respect to any Protection One Name. Notwithstanding the
foregoing sentence and subject to Section 6.10(a), until the two year
anniversary of a Continental Europe Change of Control Event, the Sellers and
each of their affiliates shall be prohibited from using in Continental Europe or
transferring to any other person the ownership of or any right to use in
Continental Europe in connection with any business whatsoever, any Protection
One Name.
(c) For purposes of this Agreement, a change of control event shall
mean any sale, merger, consolidation or other business combination or
transaction as a result of which the Purchaser no longer beneficially owns,
directly or indirectly, at least 50% of the outstanding stock of (i) P1 UK or
any successor entity thereto that conducts directly or indirectly the Business
and/or the Multi-Family Monitoring Business in the United Kingdom (a "UK CHANGE
OF CONTROL EVENT") or (ii) P1 International or any successor entity thereto that
conducts directly or indirectly the Business and/or the Multi-Family Monitoring
Business in Continental Europe (a "CONTINENTAL EUROPE CHANGE OF CONTROL EVENT").
(d) Nothing in this Section shall be deemed (i) to grant P1 UK, P1
International and their respective subsidiaries any rights to use the Protection
One Names for any purpose outside of Europe or (ii) to limit in any manner or at
any time the ownership of and all rights of Sellers or any of their affiliates
to use the Protection One Names outside of Europe. The Purchaser and its
affiliates shall use efforts to maintain the integrity and not impair the
goodwill of the Protection One Name and the Sellers, comparable to the efforts
they use to maintain the integrity and not impair the goodwill of the
Purchaser's and its affiliates other trademarks, tradenames, service marks and
other proprietary rights. The Purchaser shall notify the Sellers of any third
party actions of which the Purchaser becomes aware that may infringe the
Protection One Names.
6.9 Mail. Following the Closing Date, each of the parties hereto and their
respective subsidiaries may receive mail, telegrams, packages and other
communications properly belonging to the other parties hereto and their
respective subsidiaries. Accordingly, at all times after the Closing Date, each
of the parties authorizes the other parties hereto and their respective
subsidiaries to receive and open all mail, telegrams, packages and other
communications received by them and not unambiguously intended for the other
parties hereto or their respective subsidiaries or any of the other parties'
officers or directors specifically in their capacities as such, and to retain
the same to the extent that they relate to the business of the receiving parties
or, to the extent that they do not relate to the business of the receiving
parties and do relate to the business of the other parties hereto and their
respective subsidiaries, or to the extent that they relate to both businesses,
the receiving parties shall promptly contact the other parties by telephone for
delivery instructions and such mail, telegrams, packages or other communications
(or, in case the same relate to both businesses, copies thereof) shall promptly
be forwarded to the other parties in accordance with their delivery
instructions. The foregoing provisions of this Section shall constitute full
authorization to the postal authorities, all telegraph and courier companies and
all other persons to make deliveries to the relevant parties addressed to them
or to any of their officers or directors specifically in their capacities as
such. The provisions of this Section are not intended to and shall not be deemed
to constitute an authorization by any party to permit the others to accept
service of process on their behalf, and no party shall be deemed to be the agent
of the others for service of process purposes or for any other purpose.
6.10 Non-Competition and Non-Solicitation.
(a) For a period of four (4) years from the date hereof, Sellers shall
refrain and shall cause their respective subsidiaries to refrain from directly
or indirectly, in any manner whatsoever, engaging in, investing in, acquiring
any equity securities of, or entering into any material business relationship
with, any person which is engaged in Europe in the Business or the Multi-Family
Monitoring Business (as defined in the Contribution Agreement).
(b) For a period of two (2) years from the date hereof, except as may
result from the ordinary course of conduct of the businesses of Sellers and
their respective subsidiaries, Sellers shall refrain and shall cause their
respective subsidiaries to refrain from diverting, taking away or interfering
with or attempting to divert, take away or interfere with any of the former or
existing customers, clients or suppliers of P1 UK, P1 International or any of
their subsidiaries.
(c) For a period of two (2) years from the date hereof, Sellers shall
refrain and cause their respective subsidiaries to refrain from employing,
offering employment to, offering a retainer to or endeavoring to entice away
from P1 UK, P1 International or any of their subsidiaries, any of the employees
of P1 UK, P1 International or any of their subsidiaries, except pursuant to
general advertisements of employment not specifically targeted at such
employees.
ARTICLE VII - INDEMNIFICATION
7.1 Indemnification by Sellers. From and after the Closing, Sellers shall
indemnify the Purchaser and its affiliates and officers, directors, employees,
agents and representatives (each, a "PURCHASER INDEMNIFIED PARTY") against, and
hold them harmless from, against and in respect of any loss, liability, claim,
damage, charge, reasonable cost or expense (including reasonable legal fees and
expenses) ("LOSS"), imposed on, sustained, incurred or suffered by any the
Purchaser Indemnified Party (payable promptly upon written request), to the
extent relating to, arising out of or resulting from any breach of any
representation or warranty or agreement or covenant under this Agreement made by
Sellers.
7.2 Indemnification by the Purchaser. From and after the Closing, the
Purchaser shall indemnify Sellers and their affiliates and each of their
respective officers, directors, employees, agents and representatives (each, a
"SELLER INDEMNIFIED PARTY") against, and hold them harmless from, against and in
respect of any Loss imposed on, sustained, incurred or suffered by any Seller
Indemnified Party (payable promptly upon written request), to the extent
relating to, arising out of or resulting from any breach of any representation
or warranty or agreement or covenant under this Agreement made by the Purchaser.
7.3 Exclusive Remedy. The Purchaser and Sellers acknowledge that, except
for claims alleging fraud, their sole and exclusive remedy after the Closing
with respect to any and all claims relating to this Agreement shall be pursuant
to the indemnification provisions set forth in this Article.
7.4 Continuing Indemnification Obligation. The obligations of any party to
indemnify and hold harmless any other party pursuant to this Article (i) shall
not terminate and (ii) shall survive the sale or other transfer of any assets or
businesses or the assignment of any liabilities, with respect to any Loss
related to such assets, businesses or liabilities.
7.5 Procedures Relating to Indemnification.
(a) In order for a party (the "INDEMNIFIED PARTY") to be entitled to
any indemnification provided for under this Agreement in respect of, arising out
of or involving a claim made by any Person against the Indemnified Party (a
"THIRD PARTY CLAIM"), such Indemnified Party must notify the party with the
obligation to indemnify the Indemnified Party under this Agreement (the
"INDEMNIFYING PARTY") in writing (and in reasonable detail) of the Third Party
Claim promptly (but in no event more than 30 days) following receipt by such
Indemnified Party of notice of the Third Party Claim. The failure by any
Indemnified Party to so notify the Indemnifying Party shall not relieve the
Indemnifying Party from any Liability that it may have to such Indemnified
Party, except to the extent that the Indemnifying Party demonstrates that it has
been actually prejudiced by such failure. Thereafter, the Indemnified Party
shall deliver to the Indemnifying Party, promptly following the Indemnified
Party's receipt thereof, copies of all notices and documents (including court
papers) received by the indemnified party relating to the Third Party Claim.
(b) If a Third Party Claim is made against an Indemnified Party, the
Indemnifying Party shall be entitled to participate in the defense thereof and,
if it so chooses, to assume the defense thereof with counsel selected by the
Indemnifying Party; provided, however, that such counsel is not reasonably
objected to by the Indemnified Party. Should the Indemnifying Party so elect to
assume the defense of a Third Party Claim, the Indemnifying Party shall not be
liable to the Indemnified Party for any legal expenses subsequently incurred by
the Indemnified Party in connection with the defense thereof. If the
Indemnifying Party assumes such defense, the Indemnified Party shall have the
right to participate in the defense thereof and to employ counsel (including (i)
Weil, Gotshal & Xxxxxx LLP in the case Protection One is the Indemnified Party,
(ii) Xxxxxxxx & Xxxxxxxx in the case Purchaser is the Indemnified Party and
(iii) any other counsel not reasonably objected to by the Indemnifying Party) at
its own expense separate from the counsel employed by the Indemnifying Party (it
being understood that the Indemnifying Party shall be liable for and shall
reimburse the Indemnified Party for all costs, fees and expenses (including the
reasonable fees and expenses of counsel employed by the Indemnified Party) for
any period during which the Indemnifying Party has not assumed the defense
thereof (other than during any period in which the Indemnified Party shall have
failed to give notice of the Third Party Claim as provided
above)). If the Indemnifying Party chooses to defend or prosecute a Third Party
Claim, all the Indemnified Parties shall cooperate in the defense or prosecution
thereof. Such cooperation shall include the retention and (upon the Indemnifying
Party's request) the provision to the Indemnifying Party of records and
information that are reasonably relevant to such Third Party Claim, and making
employees available on a mutually convenient basis during normal business hours
to provide additional information and explanation of any material provided
hereunder. Whether or not the Indemnifying Party assumes the defense of a Third
Party Claim, the Indemnifying Party shall not, without the Indemnified Party's
prior written consent, admit any Liability with respect to, or settle,
compromise or discharge, such Third Party Claim on a basis that would result in
(i) the imposition of a judgment that would restrict the future activity or
conduct of the Indemnified Party or any subsidiary or affiliate thereof, or (ii)
any monetary liability of the Indemnified Party that will not be paid or
reimbursed by the Indemnifying Party.
(c) In the event any Indemnified Party should have a claim against any
Indemnifying Party that does not involve a Third Party Claim being asserted
against or sought to be collected from such Indemnified Party, the Indemnified
Party shall deliver notice of such claim promptly (but in no event more than 30
days) following discovery by the Indemnified Party of such claim to the
Indemnifying Party. The failure by any Indemnified Party to so notify the
Indemnifying Party shall not relieve the Indemnifying Party from any liability
that it may have to such Indemnified Party, except to the extent that the
Indemnifying Party demonstrates that it has been actually prejudiced by such
failure. If the Indemnifying Party does not notify the Indemnified Party within
30 calendar days following its receipt of such notice that the Indemnifying
Party disputes its liability to the Indemnified Party, such claim specified by
the Indemnified Party in such notice shall be conclusively deemed a liability of
the Indemnifying Party and the Indemnifying Party shall pay the amount of such
liability to the Indemnified Party on demand or, in the case of any notice in
which the amount of the claim (or any portion thereof) is estimated, on such
later date when the amount of such claim (or such portion thereof) becomes
finally determined. If the Indemnifying Party has timely disputed its liability
with respect to such claim, as provided above, the Indemnifying Party and the
Indemnified Party shall proceed in good faith to resolve the dispute prior to
bringing any proceeding or action in court.
(d) Any claim for indemnification under this Agreement shall describe
the claim in reasonable detail, include copies of any available material written
evidence thereof and indicate the estimated amount of such claim.
7.6 Insurance Proceeds. The amount that any Indemnifying Party is or may
be required to pay to any Indemnified Party pursuant to this Article shall be
reduced (including, without limitation, retroactively) by any insurance proceeds
or other amounts actually recovered by or on behalf of such Indemnified Party in
reduction of the related Loss. If an Indemnified Party shall have received the
full amount of the payment required by this Agreement from an Indemnifying Party
in respect of any Loss and shall subsequently actually receive insurance
proceeds, or other amounts in respect of such Loss as specified above, then such
Indemnified Party shall pay to such Indemnifying
Party a sum equal to the amount of such insurance proceeds or other amounts
actually received after deducting therefrom all of the Indemnified Party's Loss,
costs and expenses associated with the recovery of any such amount.
7.7 Subrogation. In the event of payment by an Indemnifying Party to any
Indemnified Party in connection with any Third-Party Claim, such Indemnifying
Party shall be subrogated to and shall stand in the place of such Indemnified
Party as to any events or circumstances in respect of which such Indemnified
Party may have any right or claim relating to such Third-Party Claim. Such
Indemnified Party shall cooperate with such Indemnifying Party in a reasonable
manner, and at the cost and expense of such Indemnifying Party, in prosecuting
any subrogated right or claim.
7.8 Third Party Beneficiaries. The indemnification provided for by this
Article is for the benefit of the parties hereto and the respective Indemnified
Parties and shall not inure to the benefit of any other third party or parties
and shall not relieve any insurer who would otherwise be obligated to pay any
claim of the responsibility with respect thereto or, solely by virtue of the
indemnification provisions hereof, provide any subrogation rights with respect
thereto and each party agrees to waive such rights against the other to the
fullest extent permitted.
7.9 After-Tax Indemnification Payments. Except as otherwise expressly
provided herein, any indemnification payment made by any Indemnifying Party
under this Article shall be computed by taking into account the value of any and
all applicable deductions, losses, credits, offsets or other items for federal,
state or other tax purposes attributable to the payment of the indemnified
Liability by the Indemnified Party and any Tax incurred by the Indemnified Party
attributable to receipt of the indemnification payment.
7.10 Limits of Indemnification.
(a) No amount shall be payable under this Article VII by Sellers in
respect of any breach of the representations and warranties contained in
Sections 4.1(b), 4.5, 4.6, 4.7, 4.8, 4.9 and 4.10 ("SPECIFIED BREACHES") unless
and until the aggregate amount otherwise payable by Seller in respect of all
Specified Breaches exceeds two million two hundred fifty thousand dollars
($2,250,000) (the "DEDUCTIBLE AMOUNT"), in which event, subject to Section
7.10(b), the Sellers shall be responsible for all amounts payable under this
Article VII in respect of Specified Breaches in excess of the Deductible Amount.
(b) No amount shall be payable under this Article VII by Sellers in
respect of any Specified Breach if the aggregate amount previously paid by
Sellers under this Article VII in respect of Specified Breaches plus the
Deductible Amount shall, in the aggregate, be equal to or exceed eleven million
two hundred fifty thousand dollars ($11,250,000).
(c) Nothing contained in this Section 7.10 shall limit in any manner
Sellers' obligations under this Article VII in respect of breaches by Sellers of
any representations and warranties, other than those contained in Sections
4.1(b), 4.5, 4.6, 4.7, 4.8, 4.9 and 4.10, or of any covenants or agreements of
Sellers contained in this Agreement.
ARTICLE VIII - MISCELLANEOUS
8.1 Entire Agreement. This Agreement (with its Schedules and Exhibits)
contains, and is intended as, a complete statement of all of the terms and the
arrangements between the parties hereto with respect to the matters provided for
herein, and supersedes any and all previous agreements and understandings
between the parties hereto with respect to those matters.
8.2 Termination. This Agreement may be terminated by the written agreement
of the Purchaser and Protection One on behalf of the Sellers; provided that,
from and after the Closing, such agreement to terminate shall have been approved
by an affirmative vote of a majority of the Directors of Protection One not
affiliated with Western or its other subsidiaries. Upon any termination of this
Agreement pursuant to this Section 8.2, no party hereto shall thereafter have
any further liability or obligation hereunder, but no such termination shall
relieve the parties hereto of any liability to the other non-breaching parties
hereto for any breach of this Agreement prior to the date of such termination.
8.3 Governing Law. This Agreement shall be governed by and construed in
accordance with the law of the State of Delaware (without regard to principles
of conflict of laws).
8.4 Nonsurvival of Representation and Warranties. The representations and
warranties contained in Sections 4.1(b), 4.5, 4.6, 4.7, 4.8, 4.9 and 4.10 shall
survive beyond the Closing Date until May 31, 2001, and all other
representations and warranties made herein shall survive beyond the Closing Date
until the expiration of the relevant statutes of limitation, and in each case
only to the extent that any claims arising thereunder are asserted by a party by
written notice given to the other party prior to such expiration. This Section
8.4 shall not limit any covenant or agreement of the parties which by its terms
contemplates performance after the Closing Date.
8.5 Transfer Taxes. The Purchaser and the Sellers each shall be
responsible for and pay one-half of the aggregate amount of (a) all transfer and
documentary taxes and fees imposed with respect to instruments of conveyance in
the transactions contemplated hereby, and (b) all sales, use, gains, excise and
other transfer or similar taxes on the transfer of the P1 UK Stock, the P1
International Stock and the P1 Investments Stock provided for hereunder. The
Purchaser or any Seller, as the case may be, shall execute and deliver to the
other parties at the Closing any certificates or
other documents as the other may reasonably request to perfect any exemption
from any such transfer, documentary, sales, gains, excise or use tax.
8.6 Expenses. Each of the parties hereto shall bear its own expenses
(including, without limitation, fees and disbursements of its counsel,
accountants and other experts), incurred by it in connection with the
preparation, negotiation, execution, delivery and performance of this Agreement,
each of the other documents and instruments executed in connection with or
contemplated by this Agreement and the consummation of the transactions
contemplated hereby and thereby. Sellers shall reimburse P1 UK, P1
International, P1 Investments and their respective subsidiaries for any
out-of-pocket expenses incurred by them prior to the Closing in connection with
the preparation, negotiation, execution, delivery and performance of this
Agreement, each of the other documents and instruments executed in connection
with or contemplated by this Agreement and the consummation of the transactions
contemplated hereby and thereby.
8.7 Table of Contents and Headings. The table of contents and section
headings of this Agreement are for reference purposes only and are to be given
no effect in the construction or interpretation of this Agreement.
8.8 Notices. All notices and other communications under this Agreement
shall be in writing and shall be deemed given when delivered personally or four
days after being mailed by registered mail, return receipt requested, to a party
at the following address (or to such other address as such party may have
specified by notice given to the other party pursuant to this provision):
If to any Seller, to:
Protection One, Inc.
000 Xxxxxxxxx Xxxxx, 00xx Xxxxx
Xxxxxx Xxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Chief Financial Officer
with a copy to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Simeon Gold, Esq.
If to the Purchaser, to:
Westar Capital, Inc.
000 Xxxxx Xxxxxx Xxx.
Xxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: President
with a copy to:
Xxxxxxxx & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
8.9 Severability. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, each of which shall remain in full force and
effect.
8.10 Binding Effect; No Assignment. This Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors and
assigns. Nothing in this Agreement shall create or be deemed to create any third
party beneficiary rights in any person or entity not party to this Agreement. No
assignment of this Agreement or of any rights or obligations hereunder may be
made by any party (by operation of law or otherwise) without the prior written
consent of each of the other parties hereto, and any attempted assignment
without such required consents shall be void provided, however, that (i) the
Purchaser may assign all of its rights and obligations hereunder to any of its
affiliates provided that remains liable for all of its obligations hereunder;
(ii) the Purchaser may assign its rights and obligations under Section 6.8 and
6.9 to any person in connection with the sale of all or substantially all of the
assets of P1 International and P1 UK to such person and (iii) the Purchaser may
assign all of its rights and obligations hereunder to any other person provided
Protection One consents to such assignment, such consent not to be unreasonably
withheld.
8.11 Amendments. This Agreement may be amended, supplemented or modified,
and any provision hereof may be waived, only pursuant to a written instrument
making specific reference to this Agreement signed by each of the parties
hereto; provided that, from and after the Closing, any such amendment,
supplement, modification or waiver entered into by Protection One on behalf of
itself or the other Sellers shall have been approved by an affirmative vote of a
majority of the Directors of Protection One not affiliated with Western or its
other subsidiaries.
8.12 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
[SIGNATURES BEGIN ON NEXT PAGE]
IN WITNESS WHEREOF, the parties hereto have executed this
instrument as of the date and year first above written.
PROTECTION ONE, INC.
By: /s/ Xxxx X. Xxxx III
--------------------------------
Name: Xxxx X. Xxxx III
Title: Chief Executive Officer
PROTECTION ONE ALARM
MONITORING, INC.
By: /s/ Xxxx X. Xxxx III
--------------------------------
Name: Xxxx X. Xxxx III
Title: Chief Executive Officer
WESTAR CAPITAL, INC.
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Treasurer
