STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of July 30, 1999, between VICON
INDUSTRIES, INC., a New York corporation whose address is 00 Xxxxx Xxxxx,
Xxxxxxxxx, Xxx Xxxx 00000 ("Purchaser") and XXXXX XXXXXXXX, whose address is 00
Xxxxxx Xxxxx, Xxxxxxx, Xxx Xxxxxx 00000 ("Seller").
The parties agree as follows:
1. Purchase and Sale of Stock Based upon the representations,
warranties, and agreements contained in this Agreement and subject to the terms
and conditions set forth in this Agreement, at the Closing Date, as defined in
Section 3, Seller shall sell, transfer and deliver to Purchaser, and Purchaser
shall purchase and accept from Seller, all of the issued and outstanding shares
of TeleSite U.S.A., Inc. ("TeleSite"), free and clear of all claims, liens and
encumbrances.
The shares to be sold, transferred and delivered to Purchaser are
referred to as the "TeleSite Stock." TeleSite and Q.S.R. Ltd., an Israeli
corporation ("QSR"), are referred to as the "Acquired Companies."
2. Purchase Price and Method of Payments. The purchase price to
be paid by Purchaser to Seller for the TeleSite Stock shall be $2,000,000
payable and adjusted as follows:
(a) At the Closing, Purchaser will pay $1,000,000 to
Seller, by certified check, or by wire transfer to a bank account in New York
designated by Seller at least 3 days prior to the Closing.
(b) At the Closing, Purchaser will pay $1,000,000, in
escrow, pursuant to an escrow agreement as provided in Section 3B(c), to the
escrow agent specified therein.
(c) Purchaser will also pay to Seller an amount equal to
30% of the Sales Increase for each of the Measuring Periods.
(d) For purposes of Section 2(c):
(i) Sales Increase for any Measuring Period shall
mean the amount by which Consolidated Sales of the Acquired Companies in any
Measuring Period exceeds Consolidated Sales of the Acquired Companies in the
immediately proceeding 12 month period.
(ii) Consolidated Sales shall be the sum of:
(a) Sales of the Acquired Companies
(exclusive of all intercompany sales, and exclusive of sales to Purchaser); and
(b) the amount obtained by multiplying
Purchaser's unit sales of the Acquired Companies' products by 85% of the
Purchaser's best published dealer price for such products (currently Dealer VIP
level).
(iii) The Measuring Periods shall be each of three
successive 12 month periods.
(iv) The first Measuring Period shall start on the
first day of the calendar quarter that begins nearest the date that is six
months after the Closing Date.
(v) Payments in respect of any Measuring Period
shall be made within 90 days after the end of such period.
(vi) Seller has no obligation to pay Purchaser if
the Sales Increase is a negative amount.
3. The Closing.
A. The Closing shall be held on the date hereof
immediately following the execution hereof at the offices of Purchaser's
attorneys, Schoeman, Xxxxxx & Xxxxxxx, LLP, 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, or at such other time and place as may be fixed by mutual written
agreement of Purchaser and Seller. The date and event of closing are
respectively referred to in this Agreement as the "Closing Date" and "Closing."
B. At the Closing:
(a) Seller shall deliver to Purchaser:
(i) the stock certificates for all of the
outstanding stock of TeleSite duly endorsed for transfer to Purchaser and
with all requisite stock transfer stamps attached;
(ii) written resignations, effective as of the
Closing, of all directors of the Acquired Companies;
(iii) employment agreements in the form attached as
Exhibit 3B(a)(iii) executed by Seller and Xxxxx Xxxxx, respectively;
(iv) the certificates, opinions and other matters
required by Section 6.
(b) Purchaser shall deliver to Seller:
(i) option grant letter to be issued pursuant to
Purchaser's 1999 Non-Qualified Stock Option Plan for Seller to purchase
10,000 shares of Purchaser's Common Stock at fair market value on the Closing
Date; and
(ii) the wire transfer or check required by Section
2(a);
(iii) the employment agreement in the form attached
as Exhibit 3(b)(iii) executed by Purchaser; and
(iv) the other matters required by Section 7.
(c) Purchaser and Seller shall deliver to each other an
Escrow Agreement (the "Escrow Agreement") in the form of Exhibit 3B(c)
executed by them and by the Escrow Agent named therein (the "Escrow Agent") and
Purchaser shall deliver the payment required by Section 2(b) to the Escrow
Agent.
4. Representations and Warranties of Seller. To induce Purchaser
to enter into this Agreement, Seller makes the representations and warranties
set forth below in subparagraphs (a) through (ee). Each of such representations
and warranties shall be deemed to be independently material and relied upon by
Purchaser, regardless of any investigation made by, or information known to,
Purchaser. Except as specifically indicated, none of such representations and
warranties is conditioned on or limited by Seller's knowledge or reason to know,
or the its lack of knowledge of reason to know, as to the fact so represented
and warranted.
(a) Corporate Existence and Qualification. TeleSite is
a corporation duly organized validly existing and in good standing under
the laws of the State of New Jersey. QSR is a corporation duly organized,
validly existing and in good standing under the laws of Israel. Each of the
Acquired Companies has all requisite power and authority and all material
governmental licenses, authorizations, consents and approvals required to own
its properties and to conduct its business as presently conducted and as
presently proposed to be conducted. Each of the Acquired Companies is duly
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction where the character of the property owned or leased by it or
the nature of its activities makes such qualification necessary, which
jurisdictions are listed on Exhibit 4(a) to, except for those jurisdictions
where the failure to be so qualified would not, individually or in the
aggregate, have a material adverse effect on its condition (financial or
otherwise), business, assets, results of operation or prospects (a "Material
Adverse Effect"). Seller has delivered to the Purchaser true, correct and
complete copies of the Certificate of Incorporation and the Bylaws of each of
the Acquired Companies.
(b) Capitalization. Except as disclosed in Exhibit 4b(i):
(i) the authorized capital stock of TeleSite
consists solely of 2,500 shares of common stock, no par value, all of which
are issued and outstanding, all of which are owned by Seller, free and clear of
all claims, liens and encumbrances.
(ii) As of the Closing, the authorized capital
stock of QSR shall consist solely of 27,000 Ordinary and 100 Management
Shares, par value NIS1 per share, of which 10 Management Shares and 251 Ordinary
Shares shall be issued and outstanding and 100% of which oustanding shares shall
be owned by TeleSite free and clear of all claims, liens and encumbrances
(except for 1 Ordinary Share owned by Xxxxx Xxxxx free and clear of all claims,
liens and encumbrances).
(iii) TeleSite has not (and as of the Closing, QSR
will not have) issued any securities except as set forth above. All
outstanding shares of TeleSite have been, and, as of the Closing, all
outstanding shares of QSR will be, duly authorized and validly issued and fully
paid and nonassessable and none was or will be issued in violation of any U.S.,
Israeli or state securities law or any other legal requirement. As of the
Closing Date, there will be no outstanding subscriptions, rights, options,
warrants, conversion rights, agreements or other claims for the purchase or
acquisition of any shares of stock of any of the Acquired Companies or any other
securities or obligating any of the Acquired Companies to issue, repurchase or
otherwise acquire any shares of stock or any other securities or any securities
convertible into, exercisable or exchangeable for, or otherwise entitling the
holder to acquire any shares of stock or any other securities of any of the
Acquired Companies, except as disclosed on Exhibit 4b(iii).
(c) Right to Transfer. Seller has good and valid legal
title to the TeleSite Stock and full beneficial ownership thereof and full
legal right and power to transfer and deliver to Purchaser the TeleSite Stock in
the manner provided in this Agreement, and upon delivery of the TeleSite Stock
against payment therefor at the Closing pursuant to the terms of this Agreement,
Purchaser will receive good and valid legal title thereto and full beneficial
ownership thereof, free and clear of all claims, liens or encumbrances.
(d) No Violation. The execution and delivery of this
Agreement by Seller and the consummation of the transactions contemplated
hereby will not violate any provision of law, order or regulation of any
governmental authority, or the corporate charter or by-laws of any of the
Acquired Companies or constitute a default under any judgment, order or decree
of any court of governmental agency or instrumentality, or conflict or
constitute a breach or a default under any agreement to which any of the
Acquired Companies is a party or by which it is bound.
(e) Financial Information. Attached as Exhibit 4(e)
are unaudited balance sheets and statements of income, as of and for the
fiscal year ended December 31, 1998 and the six month period ended June 30, 1999
for TeleSite, and audited balance sheets and statements of loss as of and for
the fiscal years ended December 31, 1998 and 1997, and an unaudited balance
sheet and income statement for the six month period ended June 30, 1999 for QSR
(collectively, the "Financial Statements"). The Financial Statements:
(1) Have been prepared in accordance with the
respective books of account and records of the Acquired Companies.
(2) Fairly present and are true, complete and
correct statements of financial condition and the results of operations of the
respective Acquired Companies, as the case may be, as of and for the periods
therein specified.
(3) Have been prepared in accordance with generally
accepted accounting principles ("GAAP") consistently applied.
(4) Do not include or omit to state any fact which
renders them misleading.
(5) Make full and adequate disclosure of
obligations and liabilities (fixed or contingent, known or unknown) of the
respective Acquired Companies.
(f) Title to Assets, Real Property. Each of the
Acquired Companies owns and has good and marketable title to all of its
assets, in each case, free and clear of liens, claims or restrictions, except as
shown in Exhibit 4(f). Neither of the Acquired Companies owns any real property.
(g) Agreements, Contracts, etc. Exhibit 4(g) lists all
agreements, leases, contracts, commitments and obligations relating to or
affecting the assets or business of any of the Acquired Companies and Seller has
delivered a true copy of each such document to Purchaser. All such agreements,
leases, contracts, commitments and obligations are legally valid and binding and
are in full force and effect and there are no defaults or breaches thereunder,
and Seller is aware of any notice of default relating thereto.
(i) Notes, Loans, etc. Exhibit 4(i) lists all notes,
loans or revolving credit agreements, indentures, mortgages, deeds of
trust, security agreements, guaranty agreements, repurchase agreements, sale and
lease back agreements, installment purchases, capital leases, informal banking
arrangements and any other documents relating to long-term or short-term
indebtedness of each of the Acquired Companies, and Seller has delivered a true
copy of each such document to Purchaser. All such documents are legally valid
and binding and are in full force and effect and there are no defaults or
breaches thereunder, and Seller is aware of any notice of default relating
thereto.
(j) Condition of Assets. All assets of each of the
Acquired Companies conform in all material respects with all applicable
building, zoning, environmental health and safety rules and other governmental
rules and regulations. All assets of each of the Acquired Companies including
all their components and parts, are ready for operation, and taking into account
their ages, are in normal operating condition and good order and repair. There
are no conditions or events, except for normal wear and tear and the age of the
assets of any of the Acquired Companies, which would prevent the continued
normal operation thereof, or would otherwise materially and adversely affect the
operation and/or use of the same as currently used.
(k) Patent and Trade Rights. QSR owns free and clear of
all claims, liens, encumbrances and restrictions the intellectual property
described on Exhibit 4(k). Each of the Acquired Companies owns or has adequate
licenses or other rights to all intangible property which are necessary to
conduct its business as presently conducted. To the best of Seller's knowledge,
no product manufactured or sold by any manufacturing process employed by any of
the Acquired Companies conflicts with or infringes upon any United States or
Israeli or other foreign patent of others. No claim, suit or action is pending,
or to Seller's knowledge and belief threatened, alleging that any of the
Acquired Companies is infringing upon the asserted and tangible rights of
others, or that the use of any intangible companies infringes or conflicts with
the asserted rights of others.
(l) Liabilities; Receivables. The liabilities of each
of the Acquired Companies as of December 31, 1998 are set forth on Exhibit
4(l). The accounts receivable of each of the Acquired Companies as of December
31, 1998 and as of June 30, 1999 are stated in accordance with GAAP. All of the
accounts receivable arose from bona fide sales transactions, and no portion of
such account is subject to counterclaim or offset or is otherwise in dispute.
All of such accounts receivable are good and collectible in full in the ordinary
course of business.
(m) Inventories. The inventories of each of the Acquired
Companies reflected on the Financial Statements are accurately valued in
accordance with GAAP consistently applied. The Inventories, in the aggregate, of
the Acquired Companies are usable and salable in the ordinary course of business
and contain no slow-moving or obsolete items. No inventories have been consigned
to others.
(n) Contracts. Exhibit 4(n) describes all contract
rights to which any of the Acquired Companies is a party or to which it is
bound and which arose out of, or relate to, assets or liabilities of any of the
Acquired Companies, which extend beyond the Closing Date. True and correct
copies of all such documents evidencing the contract rights have been delivered
by Seller to Purchaser.
(o) Litigation. Except as disclosed in Exhibit 4(o), there
are no actions, suits, proceedings or investigations pending or threatened
against Seller or any of the Acquired Companies at law or in equity, or before
any federal, state or municipal or other governmental department, commission,
board, agency or instrumentality, domestic or foreign, which involves a demand
for any judgment or liability, affecting any of the TeleSite Stock or the
transactions contemplated by this Agreement. None of the Acquired Companies is
in default with respect to any order, writ, injunction, or decree of any court
or federal, state, or municipal or other governmental department, commission,
board, agency or instrumentality, domestic or foreign, and that there are no
such orders, decrees, injunctions or regulations issued specifically against
Seller which may affect, limit or control the method or manner of use of the
TeleSite Stock or the assets of any of the Acquired Companies, or any
transactions contemplated by this Agreement.
(p) Compliance with Law. Each of the Acquired Companies
has complied with all applicable laws, orders and regulations of any
federal, state or municipal or other governmental department, commission, board,
agency or instrumentality, domestic or foreign, having jurisdiction, including
but not limited, to laws, orders, and regulations thereof relating to antitrust,
wage, hours, collective bargaining, environmental protection, employee safety,
or legislation pertaining to illegal bribes or kickbacks. To the knowledge of
Seller, no director, officer or employee of any of the Acquired Companies has
engaged in any act which has violated any local rules, regulations or laws
relating to foreign exchange, customs and excise and corporate income tax, and
there has been no misappropriation, fraud, embezzlement or misuse in any way of
company assets or monies by any director, officer or employee of the Acquired
Companies.
(q) Payment of Taxes. Each of the Acquired Companies have
timely filed all required declarations, returns and reports with foreign,
federal, state and local taxing authorities, and all taxes, interest and
penalties required to be paid pursuant to those returns have been or are being
paid when due. The income tax returns of TeleSite have never been audited by the
Internal Revenue Service. There is no tax audit or examination now pending or
threatened with respect to the Acquired Companies.
(r) No Adverse Changes. Since June 30, 1999, there has
been no material adverse change in the condition, financial or otherwise,
of any of the Acquired Companies other than changes (not in the aggregate
adverse) occurring in the ordinary course of business.
(s) Warranties and Product Liability Seller has
previously delivered to Purchaser copies of all outstanding standard
product warranties and guaranties given by any of the Acquired Companies now in
effect with respect to products manufactured or sold by any of the Acquired
Companies. Except as fully described in Exhibit 4(o), there are no pending
claims or actions against any of the Acquired Companies for breach of warranty
or based upon product liability (whether based on tort or contract principles)
and, to the best of Seller's knowledge, no such claims or actions are
threatened. Seller knows of no defects in craftsmanship, design or engineering
with respect to any product now or heretofore sold or manufactured by any of the
Acquired Companies which may constitute the basis for any such claim against any
of the Acquired Companies or Purchaser.
(t) Contingent and Undisclosed Liabilities. None of the
Acquired Companies has any debts, obligations or liabilities in excess of
$1,000, fixed or contingent, of any nature whatsoever, not disclosed in the
Exhibits to this Agreement. Seller knows of no basis for any assertion of any
material claim against Seller or Purchaser for any material liability relating
to the TeleSite Stock, or against any of the Acquired Companies with respect to
its assets, except those disclosed in the Exhibits to this Agreement.
(u) Performance of Contracts. Except as disclosed in
Exhibit 4(u), (i) none of the Acquired Companies is in material default,
nor has it breached any material provision of, any contract, agreement, lease,
obligation or license or permit with regard to all agreements to which it is a
party or by which it is bound; (ii) each of the Acquired Companies has fully
performed each material term, condition and covenant of each such contract,
agreement, lease, obligation, license or permit required to be performed on or
prior to the date thereof; (iii) Seller knows of no state of facts which, with
the giving of notice or the passing of time, or both, would give rise to any
material default or revocation; and (iv) none of the Acquired Companies is
subject to any penalty, discount or liquidated damages due to the delayed
delivery of products, goods or services, nor has it received any notice that any
of the customer relations are in jeopardy because of such late deliveries or
otherwise.
(v) Events Subsequent to December 31, 1998 Except as
disclosed in Exhibit 4(v), none of the Acquired Companies has, since December
31, 1998:
(1) Incurred Liabilities. Incurred any obligation
or liability (absolute, contingent, accrued or otherwise) or guaranteed or
become a surety of any debt, except in connection with the performance of this
Agreement or in the ordinary course of business;
(2) Discharged Debt. Discharged or satisfied any
lien or encumbrance, or paid or satisfied any obligation or liability
(absolute, contingent, accrued or otherwise) other than liabilities incurred
since the date thereof in the ordinary course of business;
(3) Encumbrances. Mortgaged, pledged or subjected
to any lien, charge, security interest or other encumbrance any of its assets;
(4) Disposition of Assets. Sold or transferred
any of its assets or canceled any debts or claims or waived any rights,
except in the ordinary course of business;
(5) Sale of Business. Entered into any contract for
the sale of its TeleSite Stock, or any part thereof, or for the purchase of
another business, whether by merger, consolidation, exchange of capital stock or
otherwise (other than negotiations with respect to this Agreement);
(6) Accounting Procedure. Changed or modified the
accounting methods or practices; or
(7) Capital Expenditure. Purchased or made a
commitment for the purchase of capital assets.
(w) Customer Relations. Seller knows of no state of
facts, nor have any communications been made to it, which would indicate
that (i) any current customer of any of the Acquired Companies which accounted
for more than 5% of each entity's sales for the most recent fiscal year ending
or (ii) any current supplier of any of the Acquired Companies (if such supplier
could not be replaced at comparable cost), will terminate its business relations
with any of the Acquired Companies.
(x) Brokerage. Seller has not made any commitments
for a brokerage finders or similar fee in connection with the transactions
contemplated by this Agreement.
(y) Books and Records. The books of account of each of the
Acquired Companies are complete and correct in all material respects and reflect
all of the transactions entered into by or on behalf of such Acquired Company,
to which it is a party, or by which it is affected.
(z) Binding effect. The Agreement and all related
documents has been duly executed, made and delivered by Seller and
constitute a legal, valid and binding obligation of Seller enforceable against
him in accordance with their respective terms, subject to the laws of general
application affecting creditors' rights.
(aa) Employee Relations. Exhibit 4(aa) sets forth a list
of all of the officers, employees and agents of each of the Acquired
Companies and, for each individual, indicates his or her position, salary or
wage rate and respective fringe benefits and any other remuneration paid or
payable. Except as disclosed on Exhibit 4(aa):
(1) There is not now in existence or pending, nor
has there been within the last three years, any grievance, arbitration,
administrative hearing, claim of unfair labor practice, wrongful discharge,
employment discrimination or sexual harassment or other employment dispute of
any nature pending or, to the best of Seller's knowledge, threatened against any
of the Acquired Companies.
(2) Each of the Acquired Companies is, and
during all applicable limitation periods have been, in material compliance
with all applicable laws, executive orders and regulations respecting
employment, and employment practice, terms and conditions of employment,
occupational safety, wages and hours and there is no existing but unassented
claim for violation of any such laws, executive orders or regulations nor, to
the best of Seller's knowledge, is there any factual basis upon which such a
claim could be asserted.
(3) None of the Acquired Companies has any
collective bargaining agreements or is a party to any written or oral,
express or implied, other contract, agreement or arrangement with any labor
union or any other similar arrangement that is not terminable at will by the
employer without cost, liability or penalty.
(4) None of the Acquired Companies is a party to
any written or oral contract, agreement or arrangement with any of its
present or former directors, officers, employees or agents with respect to
length, duration or conditions of employment (or the termination thereof),
salaries, bonuses, percentage compensation, deferred compensation or any other
form of remuneration, or with respect to any matter not disclosed on Exhibit
4(aa)(4).
(5) There is no pending claim or, to the best of
Seller 's knowledge, threatened or existing but unasserted claim, against
any of the Acquired Companies for violation of any contract, agreement or
arrangement described in Exhibit 4(aa)(5), nor to the best of Seller's
knowledge, is there any factual basis upon which such a claim could be asserted.
(6) The consummation of the transactions
contemplated by this Agreement will not result in any severance or other
employee compensation or benefit obligation coming due and Seller has no reason
to believe that such consummation will result in the termination of any employee
of the Acquired Companies.
(bb) Employee Benefit Plans.
(1) Exhibit 4(bb) sets forth a description of
employee benefit plans, employee welfare benefit plans and multi-employer
plans, all incentive compensation plans, benefit plans for retired employees and
all other employee benefit plans maintained by each of the Acquired Companies or
to which any entity has made payments or contributions on behalf of employees,
including, without limitation, all plans or contracts providing for bonuses,
pensions, profit-sharing, stock options, stock purchase rights, deferred
compensation, insurance and retirement benefits of any nature, whether formal or
informal, and whether legally binding or not (each such plan is referred to
individually as a "Plan", collectively as the Plans").
(2) To the best of Seller's knowledge, and except
for any multi-employer plans, all Plans are, and during all applicable
limitation periods have been, in material compliance with all applicable
governmental regulations and, in the case of TeleSite, all retirement or pension
Plans and welfare benefit plans are qualified plans under the Internal Revenue
Code and each Plan is in material compliance with the applicable provisions of
the Internal Revenue Code.
(3) There has been no transaction in connection
with which any of the Acquired Companies or any of its directors, agents,
officers, or employees could be a subject to either a civil penalty or a tax.
(4) To the best of Seller's knowledge, there are no
payments that have become due from any Plan, the trusts created thereunder,
or from any of the Acquired Companies which have not been paid through normal
administrative procedures to the plan participants or beneficiaries entitled
thereto.
(5) Each of the Acquired Companies has made full
and timely payment of all required and discretionary contributions to the
Plans, and no unfunded liability exists with respect to any Plan.
(6) None of the Acquired Companies nor any of their
respective directors, officers, employees or agents have any outstanding
liabilities of any nature in any way relating to the Plans.
(7) None of the Acquired Companies is a party to or
otherwise subject to any express or implied agreement or plan to provide health
coverage or other benefits to retired or current employees except as set forth
in Exhibit 4(cc).
(8) None of the Acquired Companies is a party to or
otherwise subject to any express or implied agreement or plan to provide any
employee benefits, wages, deferral compensation or any other form of benefit or
enumeration beyond the date of Closing.
(9) With respect to all of its employees, former
employees, and qualified beneficiaries as of the Closing Date, each of the
Acquired Companies has or will comply with all applicable health care
continuation requirements.
(cc) Environmental Matters.Except as disclosed on Exhibit
4(cc):
(1) No hazardous substances have been or are
currently generated, stored, transported, utilized, disposed of, managed,
released or located on, under or from any premises any of the Acquired Companies
has occupied (the "Premises") (whether or not in reportable quantities) by any
of the Acquired Companies or its agents or invites, or in any manner introduced
onto the Premises by any of the Acquired Companies or its agents or invites,
including without limitation, the septic, sewage or other waste disposal systems
except in accordance with all applicable laws relating to the environment.
(2) Seller has no knowledge of any threat of
release of any hazardous substances on, under or from the property of any
of the Acquired Companies.
(3) None of the Acquired Companies has received any
notice from the United States Environmental Protection Agency or any other
domestic or foreign authority claiming that (i) any of its property or any use
thereof violates any of the environmental laws, (ii) none of the Acquired
Companies or of any of its employees or agents have violated any such laws.
(dd) Insurance. Exhibit 4(dd) lists all policies of
liability, property damage, fire, workers' compensation/employer's
liability, title or other forms of insurance owned or carried by each of the
Acquired Companies (the "Policies") and insurance agents or brokers providing
such insurance coverage. None of the Acquired Companies has received notice from
any insurance carrier regarding the possible cancellation of or premium increase
with respect to the Policies. None of the Acquired Companies has any claim
pending or anticipated against any of the insurance carriers under any of the
Policies and there has been no actual or alleged occurrence of any kind which
may give rise to any such claim.
(ee) Representations and Warranties True and Correct. The
representations and warranties contained herein, and all statements or
information disclosed by any of the Exhibits, do not include any untrue
statement or material fact nor omit to state a material fact required to be
stated herein or therein or necessary in order to make the statement herein or
therein, in light of the circumstances under which they are made, not
misleading.
5. Representations and Warranties of Purchaser. To induce Seller
to enter into this Agreement, Purchaser makes the representations and warranties
set forth below in subparagraphs (a) through (e). Each of such representations
and warranties shall be deemed to be independently material and relied upon by
Seller, regardless of any investigation made by, or information known to,
Seller. Except as specifically indicated, each of such representations and
warranties is conditioned on or limited by Purchaser's knowledge or reason to
know, or its lack of knowledge or reason to know, as to the fact so represented
and warranted.
(a) Organization. Purchaser is a corporation validly
existing and in good standing under the laws of the State of New York.
(b) Authorization. The execution and delivery of this
Agreement and the transactions contemplated hereby have been duly
authorized by the Board of Directors of Purchaser and on the Closing Date all of
the necessary corporate action to authorize the execution and delivery of this
Agreement and the purchase hereby will have been taken.
(c) No Violation. The execution and delivery of this
Agreement by the Purchaser and the consummation of the transactions
contemplated hereby, will not violate any law, order or regulation of any
governmental authority, or corporate charter or bylaws of Purchaser or
constitute a default under any judgment, order or decree of any court or
governmental agency or instrumentality, or conflict with or constitute a breach
or default under any agreement to which Purchaser is a party or by which it is
bound.
(d) Brokerage. Purchaser has not made any commitment for
a brokerage, finders or similar fees in connection with the transactions
contemplated by this Agreement.
(e) Binding Effect. This Agreement, and all related
documents have been duly executed, made and delivered by Purchaser, as
appropriate, and constitute a legal, valid and binding obligation of Purchaser
enforceable against Purchaser in accordance with their respective terms, subject
to the laws of general application affecting creditors' rights.
(f) Representations and Warranties True and Correct.
The representations and warranties contained herein do not include any untrue
statement or material fact nor omit to state a material fact required to be
stated herein or therein or necessary in order to make the statements herein or
therein, in light of the circumstances under which they are made, not
misleading.
6. Conditions of Purchaser's Obligation to Close. The obligations
of Purchaser under this Agreement are subject to the following conditions having
been met, or waived in writing by Purchaser, at or prior to the Closing Date:
(a) Representations and Warranties. The representations
and warranties made by Seller in Section 4 shall be true and correct in all
material respects on and as of the Closing Date, and Seller shall has delivered
to Purchaser a certificate to that effect executed by Seller.
(b) Approvals and Consents. All necessary approvals and
consents with respect to the transactions contemplated hereby, the absence of
which would have a material and adverse effect on Purchaser's rights under this
Agreement, or which would result in the forfeiture or breach of any material
rights acquired by the Purchaser pursuant to the provision of any material
contract or agreement assumed by and hereunder. Such approvals shall include,
without limitation, all required approvals by the office of the Chief Scientist
of Israel to the transfer of control to TeleSite and to Purchaser of the
intellectual property described in Exhibit 4(k).
(c) Delivery of Instruments of Conveyance of the TeleSite
Stock. Seller shall has delivered to Purchaser, satisfactory to Purchaser
in form and substance, conveyancing documents to transfer title to the TeleSite
Stock to Purchaser.
(d) No Litigation. No investigation, suit, action or other
proceedings shall be threatened or pending before any court or governmental
agency in which it is sought to restrain, prohibit or obtain damages or other
relief in connection with this Agreement or the consummation of the transactions
contemplated hereby.
(e) No Adverse Change. There shall have been no change or
development related to the TeleSite Stock or the results of operations or in the
condition, financial or otherwise, of any of the Acquired Companies, which has
had or may reasonably be expected to have a material adverse effect on their
condition.
(f) Opinions of Counsel. Purchaser shall have received (i)
an opinion of Seller's counsel, dated the Closing Date, satisfactory in
form and substance to Purchaser and its counsel substantially in the form of
Exhibit 6(f)(i) and (ii) an Opinion of Purchaser's counsel substantially in the
form of Exhibit 6(f)(ii).
(g) Abiri Employment Agreement. Xxxxx Xxxxx and QSR shall
have executed and delivered an employment agreement substantially in the
form of Exhibit 6(g) and such Agreement shall be in full force and effect.
(h) Escrow Agreement. The Escrow Agent named in the
Escrow Agreement shall have executed and delivered the Escrow Agreement.
(i) QSR Shares Abiri and Video Cam, Ltd. shall have
excued and delivered the Representations as to QSR in the form attached as
Exhibit 6(i). Abiri shall have transferred his 1 Ordinary Share of QSR Stock to
such person as Purchaser shall designate at or prior to the Closing, free and
clear of all claims, liens and encumbrances.
(j) Conversion of Shareholder Loans. All shareholder
loans to any of the Acquired Companies shall have been converted to
contributions to capital and Seller and Xxxxx Xxxxx shall have delivered a
Purchaser a certificate dated the Closing Date, to that effect.
7. Conditions to Seller's Obligation to Close. The obligations of
Seller under this Agreement are subject to the following conditions having been
met, or waived in writing by Seller, at or prior to the Closing Date:
(a) Representations and Warranties. The representations
and warranties made by Purchaser in Section 5 shall be true and correct in
all material respects on and as of the Closing Date.
(b) Payment of Purchase Price. Purchaser shall have
delivered to Seller the purchase price payable at Closing as required by
Sections 2(a) and (b).
(c) No Litigation. No investigation, suit, action or
other proceedings shall be threatened or pending before any court or
governmental agency in which it is sought to restrain, prohibit or obtain
damages or other relief in connection with this Agreement or the consummation of
the transactions contemplated hereby.
(d) Opinion of Counsel. Seller shall have received an
opinion of Purchaser's counsel, dated the Closing Date, satisfactory in
form and substance to Seller and its counsel substantially in the form of
Exhibit (d).
(e) Escrow Agreement. The Escrow Agent named in the
Escrow Agreement shall have executed and delivered the Escrow Agreement.
8. Survival of Representations and Indemnification.
(a) Survival of Representations. All representations,
warranties and covenants of Seller (the "Representations") shall survive
the execution and delivery of this Agreement, the Closing Date and any
investigation or audit made by Purchaser, and shall expire upon the third
anniversary of the Closing Date.
(b) Indemnification
(i) Indemnification by Seller. Seller agrees
promptly to indemnify, defend and hold harmless Purchaser from and against
any and all assessments, judgments, debts, obligations, liabilities, losses,
costs, damages or expenses (including interest, penalties and reasonable
out-of-pocket fees, expenses and disbursements in connection with any claim,
action, suit or proceeding) (collectively, "Damages") suffered, paid or incurred
by Purchaser or any of the Acquired Companies resulting from or caused by or
arising out of any one or more of the following:
A. any breach of the representations
and warranties made by Seller to Purchaser in this Agreement or any
certificate delivered hereunder;
B. any failure by Seller to perform any
of his covenants or agreements contained in this Agreement;
C. any claim, contingent or otherwise,
that was in existence on December 30, 1998, whether or not then payable,
that was not recorded in the books and records of TeleSite or QSR and was not
reflected in the Financial Statements;
D. any claim under the Royalty
Agreement referred to in Exhibit 4(t) in excess of $474,000 minus the
amount paid thereunder to the State of Israel since December 31, 1998 to the
Date of Closing.
E. Any claim of Electronics Line, Ltd.,
including without limitation any claim by such company under the
Cooperation Agreement dated February 5, 1997;
F. Any claim of any shareholders or
secured or unsecured creditors, or of part or present employees (other than
for severance pay to the aggregate extent described in Section 8(b)(ii)(C)), of
TeleSite, Ltd.;
G. Any claim of Doron Parianta, as
Receiver or as Permanent Manager of TeleSite, Ltd.'s assets, or any other
entity (including without limitation any governmental official) appointed or
authorized by any court, government or government agency to collect or
administer any assets of TeleSite, Ltd.;
H. Any permanent income tax deduction
disallowance for any period prior to December 31, 1998; or
I. Any claim arising out of any
transfer to TeleSite of shares of QSR.
(ii) Limitation on Indemnification by Seller.
Notwithstanding any other provision of this Agreement, Seller shall not be
liable under Section 8(b) for:
A. Any liabilities included in the
Financial Statements of the Acquired Companies as of December 31, 1998 and
June 30, 1999.
B. Any good faith liability of any of
the Acquired Companies incurred in the normal course of its business
between June 30, 1999 and the Closing Date provided that Seller shall not have
breached away representations and warranties, in Section 4 (r) ;
C. Any liabilities to former employees
of TeleSite, Ltd. for severance pay based on the length of their employment
with TeleSite, Ltd. up to an aggregate maximum of $40,000; or
D. Liabilities of any of the Acquired
Companies not included in paragraphs A, B C or D, up to an aggregate
maximum of $50,000.
In no event will Seller be liable under Section 8 for any Damages
in excess of total of the purchase price under Sections 2(b) and (c) and the
compensation earned, if any, under section 3D of the Employment Agreement
between Purchaser and Seller.
(iii) Indemnification by Purchaser Purchaser
agrees to indemnify and hold harmless Seller from and against any and all
Damages suffered, paid or incurred by Seller resulting from or caused by or
arising out of:
A. any breach of the representations
and warranties made by Purchaser in this Agreement or any certificate delivered
hereunder; or
B. any failure by the Purchaser to
perform any covenant or agreement contained in this Agreement.
(iii) Indemnity Procedure for Third Party Claims.
A. Promptly after receipt by a party
seeking indemnification hereunder (an "Indemnified Party) of notice (a
"Third Party Claim Notice") of any claim, or of the commencement by any third
party of any action, suit or proceeding, which might result in the other party
hereto (the "Indemnifying Party") becoming obligated to indemnify or make any
other payment to the Indemnified Party under this Agreement, the Indemnified
Party shall notify the Indemnifying Party forthwith in writing of the
commencement thereof or of the claim. The failure of the Indemnified Party to so
notify the Indemnifying Party shall not relieve the Indemnifying Party from any
liability which it may have on account of this indemnification or otherwise,
except and only to the extent that the Indemnifying Party is prejudiced thereby.
B. The Indemnifying Party shall have
the right, within thirty (30) days after being so notified, to assume the
defense of such claim, litigation or proceeding with counsel reasonably
satisfactory to the Indemnified Party in good faith and at the Indemnifying
Party's own expense.
C. Unless and until the Indemnifying
Party shall assume such defense pursuant to the foregoing sentence, the
Indemnified Party shall have the right to conduct and control the defense of
such claim, litigation or proceeding (including the settlement thereof) without
the Indemnifying Party's consent and, without limiting any other indemnification
obligation, shall be entitled to payment from the Indemnifying Party of all
reasonable costs of such defense (including attorneys' fees and expenses).
D. In any such claim, litigation or
proceeding the defense of which the Indemnifying Party shall have so
assumed, the Indemnified Party shall have the right to participate therein and
retain its or his own counsel at its or his own expense, unless
(a) the Indemnifying Party and
the Indemnified Party shall have mutually agreed to the retention of the
same counsel, or
(b) the named parties to any such
litigation or proceeding (including impleaded parties) include both the
Indemnifying Party and the Indemnified Party, and representation of such parties
by the same counsel would be inappropriate due to actual or potential differing
interests between them in which case, such separate counsel may be retained by
the Indemnified Party at the expense of the Indemnifying Party.
E. The Indemnifying Party may elect to
settle any claim, action or proceeding defended by it or him without the
written consent of the Indemnified Party provided that such settlement is
limited to payment of monetary damages which are payable in full by the
Indemnifying Party and the Indemnified Party is fully discharged at the time of
the settlement from any liability with respect to the claim, action or
proceeding. The Indemnifying Party may not enter into any settlement that is not
limited to payment of monetary damages without the Indemnified Party's prior
written consent which will not be unreasonably withheld.
F. Seller and Purchaser covenant to use
all reasonable efforts to cooperate fully with respect to the defense of
any claim, action or proceeding covered by this section.
9. Offset. In the event that seller is liable to Purchases
pursuant to Section 8 or Purchaser receives a Third Party Claim Notice,
Purchaser may (but shall not be obligated to) offset all or a portion of such
liability or potential liability against any other payment owing to Seller under
Sections 2(b) and (c) of this Agreement and section 3D of the Employment
Agreement between Purchaser and Seller.
10. Purchaser's Covenants. After the Closing, Purchaser shall
lend to TeleSite the sum of $750,000 in accordance with a future business plan
reasonably satisfactory to Purchaser.
11. Further Assurances. Purchaser and Seller agree that, from
time to time after Closing, and upon request, they shall execute, acknowledge,
and deliver such other instruments as reasonably may be required to more
effectively transfer and vest in Purchaser the TeleSite Stock or to otherwise
carry out the terms and conditions of this Agreement.
12. Expenses. Each party will pay all of his or its own expenses
in connection with the negotiation of this Agreement, the performance of his or
its obligations hereunder and the consummation of the transactions contemplated
hereby.
13. Amendment and Waiver. This Agreement may be amended only in
writing signed by the parties hereto. Any provision of this Agreement may be
waived by the party entitled to the benefit thereof only in a writing executed
by the party against whom such waiver is sought to be enforced. No waiver shall
be deemed a waiver of any other provision of this Agreement, and no waiver of a
breach hereunder shall be deemed a waiver of any other or subsequent breach of
this Agreement.
14. Notice. All notices, demands and other communications to be
given or delivered hereunder shall be in writing and will be deemed to have been
given if personally delivered or sent by overnight courier (in each such case
delivery will be effective upon receipt) to the addresses indicated below or to
such other addresses as the parties may specify or notice as herein provided:
If to Purchaser, to:
Vicon Industries, Inc.
00 Xxxxx Xxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Attention: The President
with a copy to:
Schoeman, Xxxxxx & Xxxxxxx, LLP
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
If to Gershoni to:
Xx. Xxxxx Xxxxxxxx
00 Xxxxxx Xxxxx
Xxxxxxx, Xxx Xxxxxx 00000
with a copy to:
Xxxx Xxxxxx Gold, Esq.
00 Xxxxxx Xxxxxx
Xxxxxxx, Xxx Xxxxxx 00000
15. Survival of Representations, Warranties and Covenants. Each
of the representation and warranties of the parties that are set forth in this
Agreement or in any certificate delivered hereunder shall survive the Closing
Date until the third anniversary of the Closing Date (the "Expiration Date").
Delivery to one party to the other of notice of a breach of any representation
or warranty, specifying the breach in reasonable detail, and making a formal
claim with respect thereto, on or prior to the Expiration Date, or the
expiration of the applicable statute of limitations, as the case may be, shall
be deemed to preserve such party's claim. Those covenants contained in this
Agreement that contemplate or may involve actions to be taken or obligations in
effect after the Closing Date shall survive the Closing Date until the
expiration of the applicable statute of limitations.
16. Binding Agreement; Assignment. This Agreement and all of the
provisions hereof will be binding upon and inure to the benefit of the parties
hereto and their respective successors. Seller may not assign his rights or
delegate his duties hereunder without the prior written consent of the
Purchaser, which consent may be granted, withheld or conditioned in the sole and
absolute discretion of the Purchaser. Purchaser may assign all it part of its
rights under this Agreement, including, without limitation, the right to
purchase the TeleSite Stock, to a wholly owned subsidiary of Purchaser.
17. Severability. Whenever possible, each provision of this
Agreement will be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
prohibited by or invalid under applicable law, such provision will be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provision of this
Agreement.
18. Captions. The captions used in this Agreement are for
convenience of reference only and do not constitute a part of this Agreement and
will not be deemed to limit, characterize or in any way affect any provision of
this Agreement and all provisions of this Agreement will be enforced and
construed as if no captions had been used in this Agreement.
19. Counterparts. This Agreement may be executed in one or more
counterparts, each of which need not contain signatures of more than one party,
but all such counterparts taken together will constitute one and the same
instrument. Signatures may be exchanged by telecopy, with original signatures to
follow. Each party to this Agreement agrees that it will be bound by its own
telecopied signature and that it accepts the telecopied signatures of the other
party to this Agreement.
20. Governing Law. This Agreement shall be governed by, construed
and enforced in accordance with the laws of the State of New York, without
reference to its choice of law provisions. Each party agrees that service of
notice or process in any legal action or proceeding with respect to this
Agreement or any transaction related hereto may be made on such party by
delivery of such process by certified mail, return receipt requested, to such
party at its address for notice pursuant Section 14 of this Agreement with the
same effect as if such process were personally served on such party within the
State of New York. Each of the parties hereto hereby irrevocably waives, to the
extent permitted by applicable law, any objection, including, but not limited
to, any objection to the laying of venue or based on the ground of forum non
conveniens, with it or he may now or hereafter have to the bringing of any
proceeding in respect of this Agreement or any transaction related hereto.
Nothing contained herein shall affect the right of any party hereto serve
process in any other manner permitted by law.
21. Remedies. All rights, remedies or powers hereby conferred
shall, to the extent no prohibited by law, be deemed cumulative and not
exclusive or any other thereof, or of any other rights, remedies or powers
available. No single or partial exercise of any right, remedy or power by a
party shall preclude further exercise thereof. No delay or omission to exercise
any right, power or remedy accruing to a party upon the occurrence of any breach
of any warranty, covenant or agreement contained in this Agreement shall impair
any such right, power or remedy or be construed to be a waiver of any such
breach or any acquiescence therein or to any similar breach thereafter
occurring.
22. Arbitration. Any controversy between the parties, arising
out, in relation to, or in connection with, this Agreement shall be resolved
exclusively by binding arbitration in New York City conducted in accordance with
the then existing commercial arbitration rules of the American Arbitration
Association. The award in such arbitration shall be in writing and shall include
separate finding facts and conclusions of law. Judgment upon the award may be
entered in any court having jurisdiction thereof and for that purpose the
parties consent to the jurisdiction of all state and federal courts located in
the City of New York.
23. Public Announcements. No public announcement concerning the
transactions contemplated hereby may be made by either party without the consent
of the other except as may be required by law or the rules of any applicable
securities exchange.
24. Entire Agreement. This Agreement (including the Exhibits,
documents and instruments referred to herein) constitutes the entire agreement
and understanding of the parties hereto and thereto with respect to the subject
matter hereof and thereof. No party shall be entitled to rely upon any
representation or warranty of the other except to the extent such representation
or warranty is included in this Agreement or any Exhibit hereto or document or
instrument delivered hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed and delivered on their behalf as of the date first above written.
VICON INDUSTRIES, INC.
By:
President
Xxxxx Xxxxxxxx
Third Party Representations, Warranties and Indemnification
To induce Vicon Industries, Inc. ("Purchaser") to enter into the foregoing
Agreement, and in consideration thereof, each of the undersigned, jointly and
severally, agrees as follows:
(a) each of the undersigned represents and warrants to Purchaser
that the representations and warranties set forth in section 4 of the foregoing
Agreement, each of which shall be deemed to be independently material and relied
upon by Purchaser, regardless of any investigation made by, or information known
to, Purchaser, are true and correct on the date of such Agreement and will be
true and correct as of the Closing thereunder, and
(b) each of the undersigned indemnifies Purchaser against all
Damages as defined in section 8(b) thereof to the same extent as if each of the
undersigned were separately defined as Seller in such section
Xxxxx Xxxxx
Xxxxxx Xxxxx
