1
EXHIBIT 2.2
STOCK PURCHASE AGREEMENT
DATED: June 20, 1997
BETWEEN: Protection One Alarm Monitoring, Inc.,
a Delaware corporation
0000 X.X. Xxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxx 00000 ("Buyer")
AND: Able Alarms of Arizona, Incorporated,
an Arizona corporation
0000 X. Xxxxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000 ("Company")
AND: Xxxxxxxxx Xxxxxxx, Trustee of the Xxxx
Charitable Trust dated May 28, 1997
0000 X. 00xx Xxxxx
Xxxxxxx, Xxxxxxx 00000 ("Stockholder")
RECITALS:
A. Stockholder is the owner of fifty percent (50%) of the issued
and outstanding shares of the capital stock (the "AAA Stock") of the Company;
and
B. Buyer desires to purchase the AAA Stock from Stockholder and
Stockholder desires to sell all such AAA Stock to Buyer, on the terms and
conditions hereinafter set forth.
NOW, THEREFORE, the parties hereto agree as follows:
1. Definitions. The following terms shall be defined as set forth
below:
1.1 Alarm Accounts. The term "Alarm Accounts" is defined as
all installed monitored alarm accounts of the Company set forth on SCHEDULE
1.1(A) for the Alarm Accounts with Contracts (the "Written Alarm Accounts") and
SCHEDULE 1.1(B) for the Alarm Accounts without Contracts (the "Oral Alarm
Accounts") to be attached at the Closing to the Closing Addendum, including all
Equipment and goodwill related thereto, all available records (including,
without limitation, service and installation records), files, computer
information, monitoring codes, upload codes, download codes, master codes,
lock-out codes, communicator identification codes and
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goodwill related thereto, and any and all Contracts and related agreements for
alarm systems and services between the Company and Subscribers.
1.2 Assets. The term "Assets" is defined as all of the Alarm
Accounts, Equipment, the Other Property, the Telephone Lines of the Company as
of the Closing, which will include all of the tangible and intangible assets of
the Company as of the Closing Date.
1.3 Assumed Liabilities. The term "Assumed Liabilities" is
defined as (i) all obligations of Company to Subscribers to provide monitoring,
warranty, repair or other security services pursuant to written contracts
therefor (the "Contracts") and pursuant to oral contracts (the "Other
Contracts") included in the Assets listed in Section 1.2 and all express limited
warranty obligations for alarm systems sold and installed by the Company prior
to Closing and (ii) all other liabilities set forth on SCHEDULE 1.3(A), if any,
to be attached at the Closing to the Closing Addendum, which shall set forth (a)
the liabilities which will not be deducted from the Purchase Price and (b) the
liabilities which will be deducted from the Purchase Price. The Assumed
Liabilities shall not include the liabilities set forth on SCHEDULE 1.3(B) to be
attached at the Closing to the Closing Addendum which the Company transferred to
Stockholder or to Stockholder's designee prior to Closing (the "Excluded
Liabilities").
1.4 Closing and Closing Date. The terms "Closing" and "Closing
Date" are defined as June 30, 1997, or such earlier date as the parties may
mutually agree upon in writing when the Closing of the purchase and sale of the
AAA Stock is consummated. The transfer to Buyer of control and the
responsibility of the Company shall be effective as of 12:01 a.m. Pacific
Daylight Savings Time on the day following the Closing Date.
1.5 Equipment. The term "Equipment" means any and all
installations and equipment owned or leased by the Company at Subscribers'
residences or places of business with respect to the Alarm Accounts.
1.6 Material Adverse Effect. The term "Material Adverse
Effect" is defined as any change, effect or occurrence that has, or is
reasonably likely to have, individually or in the aggregate, a material adverse
impact on (i) the condition (financial or otherwise) or prospects of the
Company, its business or the Assets, or (ii) the operation of the business
before or after the Closing Date or the ownership or other use of the Assets by
Buyer and the Company thereafter.
1.7 Other Property. The term "Other Property" is defined as
Stockholder's trademarks, tradenames and intellectual property rights listed in
SCHEDULE 1.7 to be attached at the Closing to the Closing Addendum.
1.8 Purchase Price. The term "Purchase Price" is defined as an
amount equal to fifty percent (50%) of the QRR of the Alarm Accounts as of the
Closing Date, multiplied by a factor of forty (40).
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1.9 QRR. The term "QRR" is defined as the gross monthly
recurring revenue of the Written Alarm Accounts, as such term is defined herein,
under valid Contracts, as such term is defined in Section 1.3 of this Agreement,
and of the Oral Alarm Accounts, as such term is also defined herein, under valid
Other Contracts, as that term is also defined in Section 1.3 of this Agreement
for the leasing, monitoring and servicing of alarm systems which are in full
force and effect as of the Closing Date, do not contain restrictions or
limitations against assignment to Buyer and which have receivable balances which
are current or no more than ninety (90) days past due. QRR is reduced by: (i)
the total monthly charge paid to third party response agencies for patrol or
alarm response; and (ii) a deduction for leased alarm accounts if ownership of
the alarm system passes to the Subscriber at the end of the lease. QRR does not
include any amounts derived from or which are expected to be derived from: (a)
services to be provided under any Contract or Other Contract which by its terms
is terminable and has been terminated by a Subscriber as a result of the
consummation of the transaction contemplated hereby; (b) services to be provided
under any Contract or Other Contract as to which verbal or written notice of
cancellation, termination or non-renewal has been received prior to the Closing;
(c) time and materials charges or any other like charges for non-recurring,
non-regular services; (d) reimbursement for or prepayment of leased telephone
line charges associated with the Alarm Accounts; (e) reimbursement for or
prepayment of any false alarm assessments; and (f) reimbursement for or
prepayment of any taxes, fees, increased monitoring charges or other charges
imposed by any governmental authority with respect to the furnishing of alarm
services. Quarterly, semi-annual and annual xxxxxxxx shall be divided by three
(3), six (6) and twelve (12), respectively, to determine the monthly recurring
revenue amount.
1.10 Subscriber. The term "Subscriber" is defined as any
person, business, corporation or other entity that has an Alarm Account with the
Company for the provision of alarm and monitoring services.
1.11 Telephone Lines. The term "Telephone Lines" is defined as
the Company's interest in all of the telephone lines, voice service lines, call
back lines and numbers on which the Alarm Accounts are being monitored or which
are otherwise used or owned by the Company in connection with the business. All
of the telephone numbers for the Telephone Lines shall be listed in SCHEDULE
1.11 to be attached at the Closing to the Closing Addendum.
2. Agreement to Purchase and Sell AAA Stock. In reliance upon the
warranties, representations and covenants of Stockholder contained in this
Agreement, and subject to the provisions in this Agreement, Buyer agrees to
purchase from Stockholder at the Closing all of the issued and outstanding
shares of the AAA Stock of the Company of which Stockholder is the owner and
holder. In reliance on the warranties, representations and covenants of Buyer
contained in this Agreement, and subject to the provisions in this Agreement,
Stockholder agrees to sell to Buyer at the Closing all of the AAA Stock of which
Stockholder is the owner and holder.
3. Payment of Purchase Price. On the Closing Date, Buyer shall
pay to Stockholder the Purchase Price by check or wire transfer to Stockholder
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4. Representations, Warranties and Agreements of the Company and
Stockholder. Except as otherwise set forth or described on SCHEDULE 4
("Stockholder's Disclosure Schedule") or any other schedule or exhibit attached
hereto, the Company and Stockholder agree, represent and warrant as follows:
4.1 Corporate Status of the Company. The Company is a
corporation duly organized and validly existing under the laws of the State of
Arizona. The Company does not have any subsidiaries and does not own any
securities of, or have any proprietary interest in, any other entity. The
Company has full corporate power and corporate authority to own, or hold under
lease, the Assets and is qualified to conduct business in all jurisdictions
except where the failure to qualify would not materially adversely affect the
business of the Company.
4.2 Outstanding Stock of the Company. The authorized capital
stock of the Company consists of one hundred thousand (100,000) shares of common
stock, no par value per share, of which three hundred seven and two-tenths (307
2/10) shares are issued and outstanding. All of the Company's issued and
outstanding shares of stock have been validly issued to Stockholder and to
Xxxxxxx X. Xxxx (the "Other Stockholder"), and are fully paid and nonassessable
and are not subject to any preemptive or other similar rights. There are no
accrued and unpaid dividends on the preferred stock. Stockholder and the Other
Stockholder are each the owner, beneficially and of record, of fifty percent
(50%) of the issued and outstanding shares of the Company free and clear of all
restrictions of any kind, nature or description. The Company has not authorized
or issued any securities other than to Stockholder and to the Other Stockholder,
and no person, corporation or entity holds any option, warrant or right to
purchase or otherwise acquire any shares of capital stock of the Company.
Stockholder and the Other Stockholder have not entered into any agreement with
any former stockholder of the Company, if any, regarding the sale, transfer or
disposition of the capital stock or Assets of the Company or in any manner
affecting the capital stock or Assets of the Company.
4.3 Authorization of Stockholder. This Agreement has been duly
executed and delivered by Stockholder and constitutes a valid obligation legally
binding on Stockholder and is enforceable against Stockholder in accordance with
its terms, except as enforceability may be limited or affected by applicable
bankruptcy, insolvency, reorganization or other laws of general application
relating to or affecting the rights of creditors and except as enforceability
may be limited by rules of law governing specific performance, injunctive relief
or other equitable remedies. The execution, delivery and performance of this
Agreement by Stockholder and the consummation of the transactions contemplated
hereby by Stockholder do not and will not conflict with, or result in a breach,
default, violation or loss of a material benefit under any agreement, mortgage,
lease, license or other instrument or obligation of Stockholder or the Company
in connection with the operation of the Company's business or any of the Assets;
do not require the consent or permission of any person or governmental agency;
and will not violate any law, rule or regulation of any agency or governmental
body to which Stockholder or the Company is subject and that is individually or
in the aggregate material to the transactions contemplated hereby. No
registration, declaration or filing
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with any governmental or administrative authority is required on the part of
Stockholder or the Company in connection with the execution, delivery and
performance of this Agreement.
4.4 Title to Stock. Stockholder has good and valid title to
the AAA Stock, free and clear of all liens, claims, charges or other
encumbrances, with full lawful right, power, capacity and authority to sell,
assign, transfer and deliver the certificates for the AAA Stock to Buyer
pursuant to this Agreement and to consummate the transactions contemplated
hereby, and there are no agreements, arrangements or understandings restricting
or otherwise relating to the transfer or voting of the AAA Stock. At the
Closing, Buyer will receive good and valid title to the AAA Stock, free and
clear of all liens, claims, charges or other encumbrances of any nature
whatsoever.
4.5 Brokers. Stockholder has not employed any broker, finder
or agent or dealt with anyone purporting to act in such capacity or agreed to
pay any brokerage fee, finder's fee or commission in connection with the
transactions contemplated by this Agreement.
4.6 Schedules Delivered at Execution. To the best of the
Company's and Stockholder's knowledge, all of the schedules described in this
Agreement and prepared by the Company and Stockholder which are being delivered
to Buyer upon execution hereof are true, accurate and complete as of the date
hereof and have been prepared in conformity with the provisions of this
Agreement.
4.7 No Material Misstatements. To the best of the Company's
and Stockholder's knowledge, no representation or warranty by Stockholder
contained in this Agreement, or in any exhibit or schedule attached hereto,
contains, or will contain, any untrue statement of a material fact or omits, or
will omit, to state a material fact necessary to make the statements contained
herein or therein not misleading.
5. Representations, Warranties and Agreements of Buyer. Except as
set forth on SCHEDULE 5 ("Buyer's Disclosure Schedule"), Buyer agrees,
represents and warrants as follows:
5.1 Corporate Status of Buyer. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Buyer is qualified to conduct business in the State of Arizona as a
foreign corporation. Buyer has full corporate power and corporate authority to
purchase and acquire the AAA Stock as herein provided.
5.2 Authorization of Buyer. This Agreement has been duly
executed and delivered by Buyer and constitutes a valid obligation legally
binding on Buyer and is enforceable against Buyer in accordance with its terms,
except as enforceability may be limited or affected by applicable bankruptcy,
insolvency, reorganization or other laws of general application relating to or
affecting the rights of creditors and except as enforceability may be limited by
rules of law governing specific performance, injunctive relief or other
equitable remedies. No registration,
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declaration or filing with any governmental or administrative authority is
required on the part of Buyer in connection with the execution, delivery and
performance of this Agreement.
5.3 Litigation. There are no claims, litigation, proceedings
or investigations pending or, to the best knowledge of Buyer, threatened against
Buyer which would have a material adverse impact on Buyer's ability to perform
all of its duties and obligations under this Agreement.
5.4 Brokers. Buyer has not employed any broker, finder or
agent or dealt with anyone purporting to act in such capacity or agreed to pay
any brokerage fee, finder's fee or commission in connection with the
transactions contemplated by this Agreement.
5.5 Investment Intent. Buyer is acquiring the AAA Stock for
its own account and not with a view to any public resale or distribution. Buyer
is an "accredited investor" as such term is defined in Regulation D under the
Securities Act of 1933, as amended ("Securities Act"). Buyer acknowledges that
the AAA Stock has not been registered under the Securities Act or registered or
qualified under the securities laws of any state and may not be offered, sold,
pledged, hypothecated or otherwise transferred unless so registered or qualified
or unless an exemption from the registration requirements under the Securities
Act and any applicable state securities laws is available.
6. Covenants and Agreements of the Company and Stockholder
Pending the Closing. The Company and Stockholder covenant and agree as follows:
6.1 Access. Until the earlier of the Closing and the rightful
abandonment or termination of this Agreement pursuant to Section 13 or otherwise
(the "Release Time"), the Company will afford, and Stockholder will cause the
Company to afford, the officers, employees, counsel, agents, investment bankers,
accountants and other representatives of the Buyer and lenders, investors and
prospective lenders and investors free and full access to the plants,
properties, books and records of the Company, will permit them to make extracts
from and copies of such books and records, and will from time to time furnish
Buyer with additional financial and operating data and other information as to
the financial condition, results of operations, businesses, properties, assets,
liabilities or future prospects of the Company as Buyer from time to time may
request.
6.2 Conduct of Business. Until the Release Time, the Company
will, and Stockholder will cause the Company to, conducts its affairs so that at
the Closing no representation or warranty of the Company or Stockholder will be
inaccurate, no covenant or agreement of the Company or Stockholder will be
breached, and no condition in this Agreement will remain unfulfilled by reason
of the actions or omissions of the Company or Stockholder. Except as otherwise
requested by the Buyer in writing, until the Closing, the Company and
Stockholder will cause the Company to use its best efforts to preserve the
business operations of the Company intact to preserve in full force and effect
the contracts and to preserve the goodwill of their suppliers,
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customers and others having business relations with it. Until the Closing, the
Company will, and Stockholder will cause the Company to, conduct their business
and operations in all respects only in the ordinary course.
6.3 Advice of Changes. Until the Release Time, the Company and
Stockholder will immediately advise the Buyer in a detailed written notice of
any fact or occurrence or any pending or threatened occurrence of which any of
them obtains knowledge and which (if existing and known at the date of the
execution of this Agreement) would have been required to be set forth or
disclosed in or pursuant to this Agreement or a schedule hereto, which (if
existing and known at any time prior to or at the Closing) would make the
performance by any party of a covenant contained in this Agreement impossible or
make such performance materially more difficult than in the absence of such fact
or occurrence, or which (if existing and known at the time of the Closing) would
cause a condition to any party's obligations under this Agreement not to be
fully satisfied.
6.4 Confidentiality. The Company and Stockholder shall insure
that all confidential information which the Company, any of their respective
officers, directors, employees, counsel, agents, investment bankers or
accountants, or Stockholder or any of his counsel, agents, investment bankers or
accountants may now possess or may hereafter create or obtain relating to the
financial condition, results of operations, business, properties, assets,
liabilities or future prospects of the Company, Buyer or any affiliate of any of
them, or any customer or supplier of any of them or any such affiliate shall not
be published, disclosed or made accessible by any of them, except pending the
Closing in the business and for the benefit of the Company, in each case without
the prior written consent of Buyer; provided, however, that the restrictions of
this sentence shall not apply (a) with respect to the obligations of the Company
after the Closing takes place, (b) with respect to the obligations of all such
persons and entities after this Agreement is rightfully terminated, but only to
the extent confidential information relates to the financial condition, results
of operations, business, properties, assets, liabilities or future prospect of
the Company, of any affiliate of it or (insofar as such confidential information
was obtained directly by the Company or any such affiliate from any customer or
supplier of if) of any such customer or supplier, (c) as may otherwise be
required by law, (d) as may be necessary or appropriate in connection with the
enforcement of this Agreement, or (e) to the extent the information shall have
otherwise become publicly available. The Company and Stockholder shall, and
shall cause all other such persons and entities to, deliver to Buyer all
tangible evidence of the confidential information to which the restrictions of
the foregoing sentence apply at the Closing or the earlier rightful termination
of this Agreement.
6.5 Public Statements. Before the Company or Stockholder shall
release any information concerning this Agreement or the transactions
contemplated by this Agreement which is intended for or may result in public
dissemination thereof, they shall cooperate with Buyer, shall furnish drafts of
all documents or proposed oral statements to Buyer for comments and shall not
release any information relating thereto without the written consent of Buyer.
Nothing contained
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herein shall prevent the Company or Stockholder from releasing any information
to any governmental authority if required to do so by law.
6.6 Voting by Stockholder. Stockholder agrees that until the
Release Time, Stockholder will vote all securities of the Company which he is
entitled to vote against (a) any merger, consolidation, reorganization other
business combination or recapitalization involving the Company, (b) any sale of
assets of the Company, (c) any stock split, stock dividend or reverse stock
split relating to any class or series of the Company's stock, (d) any issuance
of any shares of capital stock of the Company, any option, warrant or other
right calling for the issuance of any such share of capital stock or any
security convertible into or exchangeable for any such share of capital stock,
(e) any authorization of any other class or series of stock of the Company, (f)
the amendment of the Articles of Incorporation (or other charter document) or
the Bylaws of the Company or (g) any proposition the effect of which may be to
inhibit, restrict or delay the consummation of any of the transactions
contemplated by this Agreement or impair the contemplated benefits to the
Company of the transactions contemplated by this Agreement.
6.7 No Solicitation. Until the Release Time, the Company and
Stockholder shall not, and shall neither authorize nor permit any officer,
director, employee, counselor, agent, investment banker, accountant or other
representative of any of them, directly or indirectly, to initiate contact with
any person or entity in an effort to solicit any Takeover Proposal (as such term
is defined in this Section 6.7); cooperate with or furnish or cause to be
furnished any nonpublic information with respect to the financial condition,
results of operation, business, properties, assets, liabilities or future
prospects of the Company to any person or entity in connection with any Takeover
Proposal; negotiate with any person or entity with respect to any Takeover
Proposal; or enter into any agreement or understanding with respect to any
Takeover Proposal. The Company and Stockholder shall immediately give written
notice to Buyer of the details of any Takeover Proposal of which any of them
becomes aware. As used in this Section 6.7, "Takeover Proposal" shall mean any
proposal, other than as contemplated by this Agreement, for a merger,
consolidation, reorganization, other business combination or recapitalization
which involves the Company; for the acquisition of any of the capital stock of
the Company; for the acquisition of all or substantially all of the assets of
the Company other than in the ordinary course of its business; or the effect of
which may be to prohibit, restrict or delay the consummation of any of the
transactions contemplated by this Agreement or impair the contemplated benefits
to Buyer of any of the transactions contemplated by this Agreement.
7. Post-Closing Covenants of the Buyer.
7.1 Access to Books and Records. For a period of two (2) years
after the Closing Date, Buyer agrees that Stockholder and its representatives
shall have reasonable access to all books and records of the Company to the
extent that such access is lawful and may reasonably be required by the
Stockholder in connection with matters relating to or affected by the operations
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of the Company prior to the Closing Date, including without limitation tax
matters and pending litigation. Such access shall be afforded by Buyer during
normal business hours.
7.2 Assumed Liabilities. Buyer agrees to assume, discharge and
hold Stockholder harmless from any liability for the Assumed Liabilities.
8. Conditions Precedent to Obligations of Buyer. All obligations
of Buyer at the Closing are subject, at Buyer's option, to the fulfillment prior
to or at the Closing by the Stockholder of each of the following:
8.1 Closing Addendum. The execution and delivery by
Stockholder of the Closing Addendum.
8.2 Agreement and Schedules. The execution and delivery by
Stockholder of all schedules and exhibits required by this Agreement to be
delivered on the date hereof and the Closing Date, including the updating of
such schedules and exhibits.
8.3 Corporate Actions of the Company. The receipt by Buyer of
the resignations of all of the directors and officers of the Company as and to
the extent requested by Buyer.
8.4 Authorization of the Company. The Board of Directors and
the stockholders of the Company shall, to the extent required by applicable law,
have approved this Agreement. Certified copies of the Company's Board of
Directors minutes authorizing the transactions contemplated by this Agreement
shall have been delivered to Buyer.
8.5 Good Standing Certificate. Receipt by Buyer of a
certificate from the Corporation Commission of the State of Arizona, dated as
close to the Closing Date as possible, stating that the Company is an existing
Arizona corporation.
8.6 No Pending Litigation. There shall not be pending or
threatened any claim, proceeding, investigation or inquiry, by any person,
governmental body or authority, seeking to prevent or change the terms of, or
obtain damages in connection with, this Agreement or the transaction
contemplated hereby or which questions the validity or legality of the
consummation of the transaction contemplated hereby. No action or proceeding
relating to any item that is not disclosed in SCHEDULE 4, as such schedule may
be updated on the Closing Date in the Closing Addendum, shall have been
instituted or threatened prior to the Closing Date that, if concluded adversely
to the Company, would be materially adverse to Buyer's ownership of the AAA
Stock and operation of the Assets and business of the Company.
8.7 Due Diligence. Buyer shall have completed a due diligence
review of the Assets and the business of the Company satisfactory to Buyer in
its sole discretion.
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8.8 Transfer of Excluded Assets and Excluded Liabilities.
Buyer shall have received evidence satisfactory to Buyer in its sole discretion
that the Excluded Assets and Excluded Liabilities have been transferred to the
Other Stockholder or to the Other Stockholder's designee.
8.9 AAA Stock Certificates. Receipt by Buyer of the AAA Stock
certificates and executed transfer documents.
8.10 Other Stock Purchase Agreement. The Company and the Other
Stockholder shall have executed and delivered to Buyer the Stock Purchase
Agreement dated concurrently herewith (the "Other Stock Purchase Agreement").
8.11 Agreements With JK Alarms of Arizona, Inc. JK Alarms of
Arizona, Inc. and the Other Stockholder shall have executed and delivered to
Buyer the Ongoing Agreement, the License Agreement and the Maintenance and
Monitoring Agreement as defined in and the form of which is attached to the
Other Stock Purchase Agreement.
8.12 Registration Rights Agreement. The Other Stockholder
shall have executed and delivered to Buyer as of the date of this Agreement the
Registration Rights Agreement and Affidavit and Agreement of Prospective
Investor, as defined in and the form of which is attached to the Other Stock
Purchase Agreement.
8.13 Opinion Letter of Stockholder's Legal Counsel. Receipt by
Buyer of the opinion of Stockholder's legal counsel in a form acceptable to
Buyer.
8.14 Stockholder's Certificate. Receipt by Buyer of a
certificate, dated as of the Closing Date, signed by Stockholder, to the effect
that all of the representations and warranties of the Company and Stockholder
set forth in Section 4 are true and correct as of the Closing Date and that
Stockholder, in all material respects, has complied with and performed the
terms, covenants, agreements and conditions required to be performed by
Stockholder as of the Closing Date under this Agreement.
8.15 Miscellaneous. Receipt by Buyer of all consents and such
additional instruments and documents as may reasonably be required by this
Agreement or to consummate the transactions contemplated herein.
9. Conditions Precedent to Obligations of Stockholder. All
obligations of Stockholder at the Closing are subject, at the option of
Stockholder, to the fulfillment prior to or at the Closing by Buyer of each of
the following:
9.1 Closing Addendum. The execution and delivery by Buyer of
the Closing Addendum.
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9.2 Closing Payment. Receipt by Stockholder of the Purchase
Price.
9.3 Closing Date QRR. The QRR as of the Closing Date shall
have equaled at least Ninety Thousand Dollars ($90,000).
9.4 Authorization of Buyer. The Board of Directors of Buyer
shall have approved, to the extent required under applicable law or Buyer's
Certificate of Incorporation and Bylaws, (i) the Agreement and the execution and
delivery hereof by the Buyer and (ii) the performance by Buyer of all of its
obligations pursuant to this Agreement. Certified copies of Buyer's Board of
Directors minutes authorizing the transactions contemplated by this Agreement
shall have been delivered to Stockholder.
9.5 Other Stock Purchase Agreement. Buyer shall have executed
and delivered to the Company and the Other Stockholder the Other Stock Purchase
Agreement.
9.6 Agreements with JK Alarms of Arizona, Inc. Buyer shall
have executed and delivered to the Other Stockholder and JK Alarms of Arizona,
Inc., the Ongoing Agreement, the License Agreement and the Maintenance and
Monitoring Agreement.
9.7 Registration Rights Agreement. Protection One, Inc. (the
"Parent") shall have executed and delivered to the Other Stockholder as of the
date of this Agreement the Registration Rights Agreement.
9.8 Registration Statement. Parent shall have filed the
Registration Statement with the Securities and Exchange Commission for the Pro
One Stock (as defined in the Registration Rights Agreement) pursuant to the
Registration Rights Agreement.
9.9 Buyer's Certificate. Receipt by Stockholder of a
certificate, dated as of the Closing Date, signed by Buyer to the effect that
all of the representations and warranties of Buyer set forth in Section 5 are
true and correct as of the Closing Date and that Buyer, in all material
respects, has complied with and performed the terms, covenants, agreements and
conditions required to be performed by Buyer as of the Closing Date under this
Agreement.
9.10 Miscellaneous. Receipt by Stockholder of all consents and
such additional instruments and documents as may reasonably be required by this
Agreement or to consummate the transactions contemplated herein.
10. Closing.
10.1 Closing Date. The Closing of the transaction contemplated
by this Agreement shall take place at the offices of Xxxxx Xxxx LLP, 0000 X.
Xxxxxxx Xxxxxx, 00xx Xxxxx, Xxxxxxx, Xxxxxxx 00000, at 10:00 a.m., local time,
on June 30, 1997. The Closing may occur at such
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different place, such different time or at such different date or a combination
thereof as Buyer and Stockholder agree in writing.
10.2 Closing Addendum. Buyer and Stockholder shall execute an
addendum to this Agreement at the Closing (the "Closing Addendum") setting forth
the Purchase Price and updating the schedules and exhibits hereto. Except as
otherwise set forth in the Closing Addendum, all covenants, representations,
warranties and agreements made by the parties hereunder shall remain in full
force and effect.
11. Termination.
11.1 Cut-off Date. If Closing does not occur for any reason on
or before July 15, 1997, any party that has been diligent in its efforts to
consummate the transaction contemplated by this Agreement may cancel and
terminate this Agreement.
11.2 Termination for Cause. If, pursuant to the provisions of
Section 8 and 9 of this Agreement, Stockholder or Buyer is not obligated at the
Closing to consummate this Agreement, then the party who is not so obligated may
terminate this Agreement.
11.3 Termination Without Cause. Anything herein or elsewhere
to the contrary notwithstanding, this Agreement may be terminated and abandoned
at any time without further obligation or liability on the part of any party in
favor of any other by mutual consent of Buyer and Stockholder.
11.4 Termination Procedure. Any party having a right to
terminate this Agreement may terminate this Agreement by delivering to the other
parties written notice of the termination, and thereupon, this Agreement shall
be terminated without obligation or liability of any party in favor of any other
party.
12. Expenses. Buyer, the Company and Stockholder shall each pay
all of their own respective expenses incurred by or on behalf of each of them in
connection with this Agreement and the transactions contemplated hereunder,
including, but not limited to, all due diligence, legal and accounting expenses.
13. Nature of Statements and Survival of Representations,
Warranties And Agreements. All statements of fact and only those statements of
facts contained in any written statement, certificate, exhibit, schedule or
other document delivered by or on behalf of the parties pursuant hereto or in
connection with the consummation of the transactions contemplated hereby are
deemed representations and warranties made hereunder. All covenants,
representations, warranties and agreements made by the parties hereunder shall
survive the Closing Date, the delivery of the AAA Stock and the payment of the
Purchase Price therefor and the dissolution and liquidation of any party hereto
and remain effective regardless of any investigation at any time (whether before
or
Page 12 STOCK PURCHASE AGREEMENT
13
after the date of this Agreement) made by or on behalf of any party or of any
information any party may obtain or have (whether before or after the date of
this Agreement) in respect thereof and regardless of any non-exercise by a party
of any rights hereunder.
14. Nonsolicitation and Confidentiality.
14.1 Nonsolicitation Covenants. Stockholder agrees that for
twenty (20) years following the date of this Agreement, Stockholder will not,
individually or as a director, officer, partner, limited partner, member,
employee, agent, representative, stockholder, creditor or consultant or in any
other capacity with any business, in any manner, directly or indirectly, in or
with regard to any Alarm Accounts in the State of Arizona, solicit, divert or
knowingly accept orders for sale or leasing, installation, maintenance or
monitoring of alarm systems or for providing armed response services from any
Subscribers whose Alarm Accounts are owned by the Company as of the Closing
Date. Notwithstanding the foregoing, Stockholder directly or by and through JK
Alarms of Arizona, Inc. may contact any Subscribers whose Alarm Accounts are
owned by the Company as of the Closing Date for a period of six (6) months
following the date of this Agreement to offer for sale and sell to such
Subscribers radio service; provided, however, that such services must be offered
at prices approved by Buyer and upon such other terms and conditions upon which
Stockholder and Buyer initially agree. Stockholder also agrees that, for five
(5) years following the date of this Agreement, Stockholder will not,
individually or as a director, officer, partner, limited partner, member,
employee, agent, representative, stockholder, creditor or consultant or in any
other capacity with any business, recruit, offer to employ, or otherwise solicit
the employment of any person who was at any time within three (3) months prior
to such action an employee of Buyer or to whom the Company has extended an offer
to continue their employment after the Closing Date; provided however, that a
general classified advertisement which is not directed to Buyer's or the
Company's employees shall not violate the restrictions set forth herein so long
as no offer of employment is made to any employee of Buyer or the Company or to
a person who was an employee of Buyer or the Company within the previous three
(3) months.
14.2 Nondisclosure of Confidential Information. Stockholder
agrees to maintain as secret and confidential all "Confidential Information," as
defined herein, and agrees not to use, disclose, transfer, sell or make such
information available to any successors or third parties, except as authorized
in advance and in writing by Buyer or in the following circumstances: (a) as
required in order to comply with any subpoena, court order or applicable law,
provided that the disclosing party shall use its best efforts to give Buyer
prior written notice of such disclosure or (b) if such information becomes
publicly available not due to the fault of Stockholder. The term "Confidential
Information" means any trade secrets, proprietary or other information which is
either reasonably designated in writing to Stockholder as confidential by Buyer
or reasonably known by Stockholder to be confidential relating to the Alarm
Accounts or Assets, including without limitation, any of the following
information, which is hereby designated as confidential: any customer or
Subscriber lists; any lists, notes, or compilations which contain the names,
addresses, telephone numbers or any contract information for or relating to the
Subscribers; monitoring
Page 13 STOCK PURCHASE AGREEMENT
14
information and Subscriber codes and passwords; and copies of contracts,
agreements, and related documents between the Company and the Subscribers under
the Alarm Accounts.
14.3 Enforcement. Stockholder acknowledges and agrees that the
time, scope, geographic area and other provisions of Sections 16.1 and 16.2 have
been specifically negotiated by sophisticated parties and specifically hereby
agree that such time, scope, geographic area and other provisions are reasonable
under the circumstances. Stockholder further agrees that if, at any time,
despite the express agreement of the parties hereto, a court of competent
jurisdiction holds that any portion of Sections 16.1 and 16.2 are unenforceable
for any reason, the maximum restrictions of time, scope or geographic area
reasonable under the circumstances, as determined by such court, will be
substituted for any such restrictions held unenforceable. Stockholder agrees
that Buyer will suffer irreparable harm if any of the Stockholder fails to
comply with the provisions of Section 19 this Agreement and that Buyer will be
entitled to injunctive relief to enforce the terms of this Agreement in addition
to any other remedies available to Buyer.
Page 14 STOCK PURCHASE AGREEMENT
15
15. Miscellaneous.
15.1 Notices. Any and all notices, demands or other
communications required or desired to be given hereunder by any party shall be
in writing and shall be validly given or made to another party if served either
personally or if deposited in the United States mail, certified or registered,
postage prepaid, return receipt requested. If such notice, demand or other
communication is served personally, or by facsimile (with verbal verification of
complete receipt), service shall be conclusively deemed made at the time of such
personal service or facsimile transmission. If such notice, demand or other
communication is given by mail, such notice shall be conclusively deemed given
seventy-two (72) hours after the deposit thereof in the United States mail
addressed to the party to whom such notice, demand or other communication is to
be given as hereinafter set forth:
If to Company or Stockholder: Xxxxxxxxx Xxxxxxx
Trustee
0000 XxXxxx Xxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Telecopier: (000) 000-0000
With a copy to: Xxxxxx X. Xxxxxx
Xxxxx Xxxx LLP
0000 X. Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Telecopier: (000) 000-0000
If to Buyer: Protection One Alarm Monitoring, Inc.
0000 X.X. Xxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxx 00000
Attention: Xxxx X. Xxxxx
Telecopier: (000) 000-0000
and
Protection One Alarm Monitoring, Inc.
0000 Xxxxxxx Xxxxxxx
Xxxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxx III
Telecopier: (000) 000-0000
Page 15 STOCK PURCHASE AGREEMENT
16
With a copy to: Xxxxx X. Xxxxxx
Xxxxxxxx, Wada & Xxxx, P.C.
000 X.X. Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxx 00000
Telecopier: (000) 000-0000
Any party hereto may change its address for the purpose of receiving notices,
demands and other communications as herein provided by a written notice given in
the manner provided hereby to the other party or parties hereto.
15.2 Modifications or Amendments. No amendment, change or
modification of this document shall be valid unless in writing and signed by all
parties hereto.
15.3 Waiver. No reliance upon or waiver of one or more
provisions of this Agreement shall constitute a waiver of any other provisions
hereof. All waivers must be in writing and signed by the party waiving
compliance.
15.4 Knowledge of Parties. Where any representation or
warranty contained in this Agreement is expressly qualified by a reference to
knowledge, information and/or belief of the party making such representation and
warranty, such party shall have made reasonable inquiry as to the matters that
are the subject of such representations and warranties.
15.5 Binding Effect. All of the terms and provisions contained
herein shall inure to the benefit of and shall be binding upon the parties
hereto and their respective heirs, personal representatives, successors and, to
the extent permitted by Section 17.6, assigns.
15.6 Assignment. The Company and Stockholder may not assign
any rights or delegate any duties under the Agreement with the prior written
consent of Buyer.
15.7 Separate Counterparts. This document may be executed in
one or more separate counterparts, each of which, when so executed, shall be
deemed to be an original. Such counterparts shall, together, constitute and
shall be one and the same instrument.
15.8 Further Assurances. Each of the parties hereto shall
execute and deliver any and all additional papers, documents, and other
assurances, and shall do any and all acts and things reasonably necessary in
connection with the performance of their obligations hereunder and to carry out
the intent of the parties hereto.
15.9 Applicable Law; Severability; Attorney's Fees. This
Agreement shall, in all respects, be governed by the laws of the State of
California applicable to agreements executed and to be wholly performed within
the State of California. Nothing contained herein shall be construed so as to
require the commission of any act contrary to law, and wherever there is any
Page 16 STOCK PURCHASE AGREEMENT
17
conflict between any provision contained herein and any present or future
statute, law, ordinance or regulation contrary to which the parties have no
legal right to contract, the latter shall prevail but the provision of this
document which is affected shall be curtailed and limited only to the extent
necessary to bring it within the requirements of the law. In the event any
action or arbitration is instituted by a party hereto to enforce or construe any
term or to recover damages resulting from the breach of any term of this
Agreement, the prevailing party in such action or arbitration shall be entitled
to such reasonable attorney's fees and costs and expenses (including the costs
of the arbitrator) as may be fixed by the court or arbitrator. The jurisdiction
for any arbitration or judicial proceedings brought by either party against the
other party with respect to this Agreement shall be Los Angeles County,
California.
15.10 Arbitration. Either party may elect to require that any
controversy arising out of or relating to this Agreement be determined by
arbitration in accordance with the then effective commercial arbitration rules
of American Arbitration Association. All statutes of limitation which would
otherwise be applicable shall apply to the arbitration proceeding. Any judgment
upon the award rendered pursuant to arbitration may be entered in any court
having jurisdiction. In lieu of using the American Arbitration Association, the
parties may agree to select a single arbitrator who is experienced in the alarm
industry. If any legal action or other proceeding has been brought by either
party to construe, interpret or enforce this Agreement; (i) the party who is the
defendant or respondent in such proceeding shall be deemed to have waived the
option to arbitrate if a general appearance is made in such proceeding prior to
filing a claim in arbitration and (ii) the party who is the plaintiff or
petitioner in such proceeding shall be deemed to have waived the option to
arbitrate if a claim for arbitration is not filed within sixty (60) days after a
general appearance has been made by the adverse party in such proceeding. If
either party exercises the option to arbitrate, arbitration shall be mandatory
and any pending judicial proceeding shall be stayed except to the extent
permitted in this section.
15.11 Provisional Remedies. The following remedies may be
exercised by either party regardless of whether an arbitration proceeding is
then pending and without waiving any right to require arbitration: (i)
injunctive or other equitable relief to the extent such relief does not conflict
with any arbitration award; and/or (ii) set off or recoupment.
15.12 Captions. Any captions to the sections of this Agreement
are solely for the convenience of the parties and are not a part of this
Agreement and shall not be used for the determination of the validity of this
Agreement or any provision therefor.
15.13 Entire Agreement. This document, together with any
exhibits, schedules or documents attached hereto, or delivered and initialed by
the parties in connection herewith, constitutes the entire understanding and
agreement of the parties with respect to the subject matter of this Agreement.
Page 17 STOCK PURCHASE AGREEMENT
18
15.14 No Third Party Beneficiaries. Nothing contained in this
Agreement shall be construed to give any person other than Buyer, the Company
and Stockholder any legal or equitable right, remedy or claim under or with
respect to this Agreement.
15.15 Confidentiality. Each party shall hold in confidence the
fact of the existence of and all economic and other terms of this Agreement and
the transactions contemplated herein (collectively, "Confidential Terms"). The
parties agree that disclosure of any Confidential Terms shall be limited solely
to management of and advisors to Buyer and Stockholder on a "need to know"
basis, and such management and advisors shall be advised of and agree to be
bound by the provisions of this Section 17.15. In furtherance and not in
limitation of the foregoing, no statements shall be issued regarding this
Agreement or the economic or other terms of the transactions contemplated herein
without the prior written consent of Buyer and Stockholder. Notwithstanding
anything to the contrary set forth in this Agreement or any other documents
executed by the parties, Buyer is authorized to disclose the existence of and
all economic and other terms of this Agreement in connection with any state or
federal securities filings, offering circulars, registration statements, or loan
agreements of Buyer or its parent company, Protection One, Inc.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first set forth above.
COMPANY: ABLE ALARMS OF ARIZONA, INCORPORATED
By:
----------------------------------------
Title:
-------------------------------------
STOCKHOLDER: XXXX CHARITABLE TRUST
By:
----------------------------------------
Xxxxxxxxx Xxxxxxx, Trustee
BUYER: PROTECTION ONE ALARM MONITORING, INC.
By:
----------------------------------------
Its:
----------------------------------------
Page 18 STOCK PURCHASE AGREEMENT
19
SCHEDULE 1.3(A)
ASSUMED LIABILITIES
(a) Assumed Liabilities Not Deducted from the Purchase Price - The
obligations of the Company to Subscribers described in Section 1.3.
(b) Assumed Liabilities Deducted from the Purchase Price - None.
Page 19 STOCK PURCHASE AGREEMENT
20
SCHEDULE 4
STOCKHOLDER'S DISCLOSURE SCHEDULE
None.
Page 20 STOCK PURCHASE AGREEMENT
21
SCHEDULE 5
BUYER'S DISCLOSURE SCHEDULE
None.
Page 21 STOCK PURCHASE AGREEMENT
22
ADDENDUM TO STOCK PURCHASE AGREEMENT
DATED: June 30, 1997
BETWEEN: Protection One Alarm Monitoring, Inc.,
a Delaware corporation
0000 X.X. Xxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxx 00000 ("Buyer")
AND: Able Alarms of Arizona, Incorporated,
an Arizona corporation
0000 X. Xxxxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000 ("Company")
AND: Xxxxxxxxx Xxxxxxx, the Trustee of the
Xxxx Charitable Trust dated May 28, 1997
0000 X. 00xx Xxxxx
Xxxxxxx, Xxxxxxx 00000 ("Stockholder")
On June 20, 1997, the parties executed and delivered a Stock
Purchase Agreement (the "Agreement").
NOW THEREFORE, the parties agree as follows:
1. Defined Terms. Unless given a different meaning herein, all
capitalized terms used in this Addendum to Asset Purchase Agreement ("Closing
Addendum") shall have the meanings ascribed to them in the Agreement.
2. Continuing Effectiveness. Except as expressly modified herein,
all of the terms, conditions, covenants and exhibits set forth in the Agreement
remain in full force and effect among the parties.
3. Closing Value. The Closing Value for the shares of Pro One
Stock of Parent issued to Company at Closing is Thirteen and 25/1000 Dollars
($13.025) per share.
4. Closing Date Exhibits. The following Exhibits are attached
hereto and incorporated in this Closing Addendum and the Agreement by this
reference:
a. Schedule 1.1 - Alarm Accounts.
Page 1 ADDENDUM TO STOCK PURCHASE AGREEMENT
23
b. Schedule 1.3(a) - Assumed Liabilities.
c. Schedule 1.3(b) - Excluded Liabilities.
d. Schedule 1.7 - Other Property.
e. Schedule 1.11 - Telephone Lines.
f. Schedule 4 - Stockholder's Disclosure Schedule.
5. Purchase Price. The Purchase Price for the AAA Stock is Two
Million Three Hundred Fifty-Five Thousand Three Hundred Fifty-Seven Dollars
($2,355,357).
6. Payment of Purchase Price. Buyer shall pay to Stockholder the
Purchase Price at the Closing in cash by wire transfer to the account or
accounts designated by Stockholder.
7. Certification of Stockholder. Stockholder certifies that all
representations and warranties of the Company and Stockholder set forth in
Section 4 of the Agreement are true and correct as of the Closing Date and that
the Company and Stockholder has, in all material respects, complied with and
performed the terms, covenants, agreements and conditions required to be
performed by the Company and Stockholder as of the Closing Date under the
Agreement.
8. Certification of Buyer. Buyer certifies that all
representations and warranties of Buyer set forth in Section 5 of the Agreement
are true and correct as of the Closing Date and that Buyer has, in all material
respects, complied with and performed the terms, covenants, agreements and
conditions required to be performed by Buyer as of the Closing Date under the
Agreement.
IN WITNESS WHEREOF, the parties have executed this Closing
Addendum as of the date first written above.
BUYER: PROTECTION ONE ALARM MONITORING, INC.,
a Delaware corporation
By:
--------------------------------------------
Xxxx X. Xxxx III, Executive Vice President
Page 2 -ADDENDUM TO STOCK PURCHASE AGREEMENT
24
STOCKHOLDER: XXXX CHARITABLE TRUST
By:
----------------------------------
Xxxxxxxxx Xxxxxxx, Trustee
COMPANY: ABLE ALARMS OF ARIZONA, INCORPORATED,
an Arizona corporation
By:
----------------------------------
Title:
---------------------------------
Page 3 ADDENDUM TO STOCK PURCHASE AGREEMENT
25
SCHEDULE 1.1
ALARM ACCOUNTS
See attached.
Page 4 ADDENDUM TO STOCK PURCHASE AGREEMENT
26
SCHEDULE 1.3(A)
ASSUMED LIABILITIES
(a) Assumed Liabilities Not Deducted from the Purchase Price -
The obligations of the Company to Subscribers described in Section 1.3 of the
Agreement.
(b) Assumed Liabilities Deducted from the Purchase Price - None.
Page 5 ADDENDUM TO STOCK PURCHASE AGREEMENT
27
SCHEDULE 1.3(B)
EXCLUDED LIABILITIES
1. All real property leases of the Company, including the lease
dated December 1, 1993 for certain real property contiguous to 0000 X. Xxxxxx
Xxxxxx Xxxx, Xxxxxxx, Xxxxxxx.
2. All personal property leases of the Company, including all
leases with Datronic Rental Corporation (assigned to HLC Financial, Inc.),
INTER-TEL (TOTALEASE) Leasing (assigned to Xxxxxx Financial, Inc.), Creative
Communications (assigned to Associates Capital Services Corp.), and Data General
Corporation (assigned to New England Capital Corporation).
3. All loans, notes or other indebtedness of the Company,
including any loans, notes or other indebtedness with Bank One or Bank of
America.
4. All agreements to which the Company is a party, except the
Contracts and related agreements for alarm systems and services between the
Company and Subscribers described in Section 1.1 of the Agreements and the
Assumed Liabilities described in Section 1.3 of the Agreement.
5. All amounts owed to any former employees of the Company or any
other employees of the Company as of the Closing Date, including without
limitation for wages, salary, bonus payments, severance, vacation time, sick
leave, health or pension benefits, medical, life, or disability insurance and
COBRA coverage.
6. The Company's profit-sharing plan.
7. Collection activities of Stockholder or Stockholder's agent in
connection with the Excluded Liabilities.
8. All federal, state and local taxes due for any period though
the Closing Date.
9. Unearned Income.
10. All current liabilities of the Company, including accounts
payable, insurance premiums, sales tax payable, payroll taxes, customer deposits
and unapplied cash.
11. Any other liabilities of the Company not comprising the
Assumed Liabilities described in Section 1.3 of the Agreement.
Page 6 ADDENDUM TO STOCK PURCHASE AGREEMENT
28
SCHEDULE 1.7
OTHER PROPERTY
The names: Able Alarms, Able Alarms of Arizona and Able Alarms of
Arizona, Incorporated.
Page 7 ADDENDUM TO STOCK PURCHASE AGREEMENT
29
SCHEDULE 1.11
TELEPHONE LINES
See attached.
Page 8 ADDENDUM TO STOCK PURCHASE AGREEMENT
30
SCHEDULE 4
STOCKHOLDER'S DISCLOSURE SCHEDULE
None.
Page 9 ADDENDUM TO STOCK PURCHASE AGREEMENT
