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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ("Agreement") is made and entered into
this 14th day of April, 1995, by and between MASADA SECURITY, INC., a Delaware
corporation ("Purchaser") and GLOBAL SECURITY, INC. formerly known as Global
Security Systems of Virginia, Inc., a Virginia corporation (collectively
referred to as "Seller").
Recitals
Seller is engaged in the business of operating a security alarm system
monitoring business in Richmond, Virginia and the surrounding area (the
"Business").
Seller desires to sell to Purchaser and Purchaser desires to buy from
Seller all of the customer account contracts and certain other assets of Seller
pertaining to the Business, and Purchaser and Seller desire to make certain
other arrangements between them relating to the purchase and sale of such
assets, all upon the terms and conditions hereinafter set forth.
Agreement
NOW, THEREFORE, the parties hereto, in consideration of the mutual
covenants, agreements and specific considerations set forth below, the
sufficiency and adequacy of which are hereby acknowledged, and intending to be
legally bound, agree as follows:
Section 1. Agreement to Purchase and Sell. In accordance with
the terms and conditions contained herein and in reliance on the respective
representations and warranties of the parties hereto, Seller hereby agrees to
sell, convey, transfer and assign to Purchaser, and Purchaser hereby agrees to
purchase, accept and acquire from Seller in the manner provided herein, the
following assets (collectively referred to as the "Purchased Assets"):
(a) Alarm Accounts. All right, title and
interest of Seller in and to the contracts for the rendering of security
monitoring services to existing customers of Seller which meet all of the
requirements listed in Section 8(i) and are specifically listed on Schedule
1(a) hereto (the "Alarm Accounts");
(b) Inventory. All right, title and interest of
Seller in and to all inventory pertaining to the Business maintained by Seller
at its branch offices, substantially all of which are listed on Schedule 1(b)
hereto (the "Inventory"), with the Inventory, including, without limitation,
items purchased by Seller for resale and all purchase orders relating to the
foregoing;
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(c) Fixed Assets. All right, title and interest
of Seller in and to the fixed assets used in connection with the Business,
substantially all of which are listed on Schedule 1(c) hereto (the "Fixed
Assets");
(d) Equipment. All right, title and interest of
Seller in and to the equipment used in connection with the Business,
substantially all of which are listed on Schedule 1(d) hereto (the
"Equipment");
(e) Vehicles. All right, title and interest of
Seller in and to the vehicles specifically listed on Schedule 1(e) hereto (the
"Vehicles");
(f) Contracts-in-Process. All right, title and
interest of Seller in and to those contracts and benefits of Seller related to
all accepted orders for the sale or installation by Seller of alarm systems
which are not yet installed or not completely installed as of the Closing Date,
substantially all of which are listed on Schedule 1(f) hereto (the
"Contracts-in-Process");
(g) Other Contracts. All right, title and
interest of Seller in and to all executory contracts, agreements and leases,
substantially all of which are listed on Schedule 1(g) hereto (the "Other
Contracts"), the Other Contracts to include, without limitation all
non-competition or non-solicitation agreements accruing to the benefit of the
Seller.
(h) Receivables. The accounts receivable, trade
accounts, notes receivable and other debts owed to Seller for monitoring
services rendered pertaining to the Alarm Accounts and Contracts-in-Process;
provided, however, that all such debts owed to Seller for monitoring services
must be for previously rendered monitoring services and not for future
monitoring services, substantially all of which are listed on Schedule 1(h)
hereto (the "Receivables");
(i) Intangible Personal Property. The unexpired
trademarks (whether registered or unregistered), trade names, logos, copyrights
and licenses owned by or accruing to the benefit of Seller pertaining to the
Business substantially all of which are listed on Schedule 1(i) hereto (the
"Intangible Personal Property");
(j) Telephone Lines and Numbers. All right,
title and interest of Seller in and to the local and long distance telephone
numbers, digital dialer telephone lines that transmit signals from customer
locations to Seller's central station, and "ring-down" lines, substantially
all of which are listed on Schedule 1(j) hereto (the "Telephone Lines and
Numbers"); and
(k) Alarm Account Information. All files,
records and incidental documentation of Seller pertaining to the Alarm Accounts
and Contracts-in-Process (the "Alarm Account Information"), including, without
limitation, all computer lists, contract information,
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accounting history, service records and information, credit records and
information, and purchase and sales records and information,
Section 2. Purchase Price and Payment.
(a) Purchase Price for the Purchased Assets
excluding Vehicles and Receivables. The purchase price for the Purchased
Assets excluding Vehicles and Receivables (the "Purchase Price Excluding
Vehicles and Receivables") shall be the product of 29 times the aggregate of
the Monthly Recurring Revenue of the Alarm Accounts less an amount equal to the
prepaid revenue relating to the Alarm Accounts (as set forth on Schedule 2(a)
hereto) computed on a per diem basis to the Closing Date. For purposes of this
Agreement, the term "Monthly Recurring Revenue" with respect to the Alarm
Accounts acquired from Seller by Purchaser shall be the charge for monitoring
services, (including, without limitation, maintenance and other alarm related
services), exclusive of sales or intangible taxes, if any, and any direct wire
telephone line charges associated with monitoring, payable by the customer for
each applicable billing period expressed in terms of a monthly amount
regardless of whether the billing period is a annual, semi-annual, quarterly or
monthly.
(b) Purchase Price-Vehicles. The purchase price
for the Vehicles (the "Purchase Price - Vehicles") shall be determined in
accordance with the average wholesale price list in the current version of the
Black Book Official Truck and Van Guide published by National Auto Research
Division Hearst Business Media Corporation as of the Closing Date.
(c) Purchase Price-Receivables. The purchase
price for the Receivables (the "Purchase Price - Receivables") shall be equal
to the sum of the amounts associated with the following aging schedule:
85% of face value of Receivables - 30 days or less from the
date of the last invoice prior to the Closing Date
65% of face value of Receivables - 31 to 60 days from the date
of the last invoice prior to the Closing Date
20% of face value of Receivables - 61 to 90 days from the date
of the last invoice prior to the Closing Date;
provided, however, that the maximum purchase price for the Receivables shall in
no instance shall exceed $19,700.00.
(d) Purchase Price-All Purchased Assets. The sum
of the Purchase Price Excluding Vehicles and Receivables, the Purchase
Price-Vehicles and the Purchase Price-Receivables, subject to the adjustments
set forth in Section 2(f), shall hereinafter be referred to as the "Purchase
Price - All Purchased Assets."
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(e) Payment of Purchase Price.
(i) The aggregate of: 90% of the Purchase
Price Excluding Vehicles and Receivables; the Purchase Price - Vehicles; the
Purchase Price - Receivables; and the adjustments calculated in accordance with
Section 2(f) (collectively referred to as the "Initial Payment") shall be paid
by Purchaser to Seller by wire transfer or other mutually agreeable means on
the Closing Date.
(ii) The Purchase Price - All Purchased
Assets less the Initial Payment (the "Deferred Payment Amount") shall be paid
in accordance with Section 3 hereof.
(f) Adjustment to Purchase Price. The Purchase
Price - All Purchased Assets shall be adjusted for items of expense and income
prorated as of the Closing Date in the manner provided below:
(i) Liabilities or credits for personal
property taxes, if any, in respect of the Purchased Assets shall be prorated on
the basis of the current taxable year, to and including the Closing Date;
provided that if the assessed value of any Purchased Asset or rate of tax with
respect thereto shall not have been determined prior to the Closing Date, the
value and rate shall be determined on the basis of the amount of the previous
year in which the same was determined; and
(ii) Other liabilities or credits, prepaid
items and deferred charges relating to the Purchased Assets existing on the
Closing Date shall be adjusted as of the Closing Date by prorating the
aforementioned items for credit to Seller or Purchaser, as the case may be, in
accordance with generally accepted accounting principles.
(g) Allocation of Purchase Price. The Purchase
Price - All Purchased Assets, subject to the adjustments set forth in Section
2(f), shall be allocated as set forth in Schedule 2(g). Purchaser and Seller
agree for income tax purposes they shall report the transactions contemplated
by this Agreement in a manner consistent with such allocation.
Section 3. Deferred Payment Amount.
(a) Escrow Agreement. On or prior to the Closing
Date, Seller and Purchaser agree to execute an Escrow Agreement substantially
in the form attached hereto as Schedule 3(a) (the "Escrow Agreement") and
Purchaser agrees to deposit with SouthTrust Bank of Alabama, N.A. (the "Escrow
Agent"), the Deferred Payment Amount to be held in an escrow account (the
"Escrow Account") pursuant to the terms of the Escrow Agreement (the "Deferred
Payment Amount" together with all earnings thereon shall collectively
hereinafter be referred to as the "Escrow Amount").
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(b) Payment and Escrow Amount. Within 30 days of
the first anniversary of the Closing Date, Purchaser shall submit to Seller
substantially in the form attached hereto as Schedule 3(b) along with all
appropriate supporting documentation, a report reflecting: (i) the Escrow
Amount; (ii) the total Repurchase Amounts, if any, credited to Purchaser
calculated in accordance with Section 6 (the "Total Repurchase Amounts"); (iii)
the Conversion Adjustment, if any, credited to Purchaser calculated in
accordance with Section 17 and (iv) the resulting difference between (i) less
the Purchaser's credits associated with (ii) and (iii) (the "Resulting
Difference"). If Seller does not notify Purchaser of a dispute regarding such
report within ten business days from the date such report is submitted by
Purchaser to Seller or if Seller notifies Purchaser of its acceptance of such
report, such report shall be deemed complete and accurate and Seller and
Purchaser shall notify Escrow Agent to pay the sums computed below to Seller or
Purchaser, as the case may be, and the Escrow Account shall then be closed
after payment by the Escrow Agent of all funds held by it in the Escrow
Account. If the Resulting Difference is a positive amount then Seller and
Purchaser shall instruct the Escrow Agent to first pay the Seller the Resulting
Difference and the remainder of the Escrow Amount shall be paid by Escrow Agent
to Purchaser. If the Resulting Difference is a negative amount, then Seller
and Purchaser shall instruct the Escrow Agent to pay Purchaser the entire
Escrow Amount and Seller shall owe no further amount to Purchaser.
(c) Dispute. All disputes and differences with
respect to the computation of the Resulting Difference and the Escrow Account
shall be determined by binding arbitration under the rules then in effect of
the American Arbitration Association, such arbitration hearing to be held in
Richmond, State of Virginia. The arbitration proceedings shall be heard by
one arbitrator selected from the proposed panel of arbitrators issued by the
American Arbitration Association, Seller, on the one hand, and Purchaser, on
the other hand, shall attempt to select a mutually acceptable arbitrator. If
the parties are unable to select a mutually acceptable arbitrator within five
business days following the issuance of the list of potential arbitrators by
the American Arbitration Association, Seller, on the one hand, and Purchaser,
on the other hand, shall each select one person from the list, and those two
persons selected shall appoint a third person from the list, which person
shall be the arbitrator for the dispute. All arbitration awards shall include
an award of expenses including, but not limited to, legal and accounting fees.
Section 4. The Closing.
(a) Date and Place. The closing of the purchase
and sale of the Purchased Assets shall take place on the later of April 28,
1995 or within five days of completion of the reprogramming of the Alarm
Account to Purchaser's central monitoring station or such other date as shall
be mutually acceptable to Purchaser and Seller (the "Closing Date") and shall
take place at a location mutually acceptable to Purchaser and Seller.
(b) Closing Deliveries. On the Closing Date,
Seller shall make the deliveries specified by Section 9 and Purchaser shall
make the deliveries specified by Section 10.
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(c) Closing Procedure. All proceedings to be
taken and all documents to be delivered and executed on the Closing Date shall
be deemed to have been taken, delivered and executed simultaneously, and no
proceeding shall be deemed taken nor documents deemed executed or delivered
until all have been taken, delivered and executed. On the Closing Date, Seller
and Purchaser shall execute and deliver the instruments and documents
referenced in Sections 9 and 10 and Purchaser shall make the Initial Payment
and shall deposit the Deferred Payment Amount with the Escrow Agent.
(d) Termination. In the event that any of the
conditions set forth in Section 9 are not satisfied or waived in writing prior
to or on the Closing Date, then Purchaser may terminate this Agreement by
written notice to Seller. In the event that any of the conditions set forth in
Section 10 are not satisfied or waived in writing prior to or on the Closing
Date, then Seller may terminate this Agreement by written notice to Purchaser.
In the event that any party hereto exercises such right of termination, this
Agreement thereupon shall become wholly void and be of no further force or
effect, except for the confidentiality provisions contained in Section 14(c)
and there shall be no further liability on the part of Seller or Purchaser or
their respective officers, directors, stockholders, employees or agents with
respect to the transactions contemplated hereby.
Section 5. Assumption of Liabilities.
(a) Generally. Purchaser shall not assume any
liability, debt or obligation of Seller except the responsibility of rendering
security monitoring services pursuant to the Alarm Accounts and Contracts-in-
Process set forth on Schedules 1(a) and 1(f) and those liabilities and
obligations of Seller arising after the Closing Date that are set forth on
Schedule 5 hereto. Purchaser shall not assume any liability, debt or
obligation of Seller except those set forth on Schedules 1(a), 1(f) and 5, and
Seller shall continue to be responsible for, and shall indemnify and save
harmless Purchaser from and against, all of Seller's known and unknown
liabilities, debts and obligations, arising prior to, in connection with, or
subsequent to the Closing Date that are not specifically assumed by Purchaser
as set forth on Schedules 1(a), 1(f) and 5.
(b) Lease. Unless otherwise mutually agreed to
in writing by both parties Purchaser shall assume Seller's current lease of the
property located at 0000 Xxxxxxxxxx Xxxxxxx, Xxxxxxxx, Xxxxxxxx as of the
Closing Date.
Section 6. Seller's Warranty of Alarm Accounts. Seller warrants
that beginning on the Closing Date and for the 12 month period immediately
after the Closing Date (the "Guarantee Period") all Alarm Accounts purchased by
Purchaser pursuant to this Agreement and described on Schedule 1(a) shall
continue to meet the requirements specified in Section 8(i) and that all
payments from customers shall be made in a timely manner. Agreement, payments
by customers shall be considered timely if they are received by Purchaser on
or before the 60th day following the applicable payment due date. For purposes
of this
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Agreement a "Defaulted Contract" shall be defined as: (i) any Alarm Account
that no longer meets the requirements specified in Section 8(i); or (ii) any
Alarm Account in which payments from customers shall not have been made in a
timely manner; provided, however, that a "Defaulted Contract" shall not include
any Alarm Account cancelled due to the following reasons: (i) Purchaser's
negligence; (ii) changes in customer service charges; or (iii) a systemic
failure directly related to Purchaser's central station (except for acts of
God). Purchaser shall give Seller written monthly notice of any and all
Defaulted Contracts as soon as reasonably possible. Seller shall have 30 days
from the receipt of such written notice to return such Defaulted Contracts to
compliance with the requirements of Alarm Accounts as specified in Section 8(i)
and timeliness. If at the end of such 30 day period Purchaser, in its sole
discretion, determines that such Alarm Accounts are still Defaulted Contracts,
then Seller shall repurchase the Defaulted Contract from Purchaser for 29 times
the Monthly Recurring Revenue of the Defaulted Contract as of the Closing Date
(the "Repurchase Amount") or shall replace the Defaulted Contract with another
Alarm Account. If the Seller does not repurchase or replace the Defaulted
Contract within such 30 day period, Seller shall be charged against the Escrow
Account an amount equal to the Repurchase Amount plus the interest accruing
thereon from the Closing Date at the rate then applicable to the Escrow
Account; provided, however, the aggregate Repurchase Amount charged against the
Escrow Account shall only exceed the amount of the Escrow Account in the case
of fraud on behalf of Seller.
Section 7. Representations and Warranties of Purchaser.
Purchaser hereby represents and warrants to Seller that on the date hereof and
on each day thereafter to the Closing Date:
(a) Organization and Standing. Purchaser is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, and Purchaser has all requisite corporate power
and authority to own, operate and lease its properties and carry on its
business as now being conducted and to enter into this Agreement and to perform
its obligations hereunder.
(b) Authority Relative to this Agreement. The
execution, delivery and performance by Purchaser of this Agreement has been
duly authorized by the board of directors and stockholder of Purchaser, and no
further corporate action is necessary on the part of the Purchaser to make this
agreement valid and binding upon Purchaser in accordance with its terms.
(c) No Violation. Neither the execution nor the
delivery of this Agreement by Purchaser nor the consummation of the
transactions contemplated herein, nor compliance by Purchaser with any of the
provisions hereof:
(i) violates or conflicts with or
results in the breach or termination of any term or provision of, nor
constitutes a default or acceleration of the performance required under, the
articles of incorporation, bylaws or resolutions of the
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Purchaser, or any indenture, mortgage, deed, trust or other contract or
agreement to which Purchaser is a party or by which its properties are bound;
(ii) violates any order, writ, injunction
or decree of any court, administrative agency or governmental body; or
(iii) requires the consent of any other person, entity or governmental
authority.
(d) Brokerage Fees. Purchaser is not obligated
nor has it agreed to pay any brokerage commissions, finders fees or other
similar fee or charge in connection with the purchase of the assets pursuant to
this Agreement.
Section 8. Representations and Warranties of Seller. Seller
represents and warrants to Purchaser that on the date hereof and on each day
thereafter to the Closing Date:
(a) Organization and Standing. Seller is a
corporation duly organized, validly existing and in good standing under the
laws of the Commonwealth of Virginia. Seller has all requisite corporate power
and authority to own, operate and lease its properties and carry on its
business as it has been and currently is being conducted and to enter into this
Agreement and to perform its obligations hereunder.
(b) Authority Relative to this Agreement. The
execution, delivery and performance by Seller of this Agreement has been duly
authorized by the board of directors and stockholders of Seller, and no further
corporate action is necessary on the part of Seller to make this Agreement
valid and binding upon the Seller in accordance with its terms.
(c) No Violation. Neither the execution nor the
delivery of this Agreement by Seller nor the consummation of the transactions
contemplated herein, nor compliance by Seller with any of the provisions
hereof:
(i) violates or conflicts with or results in
the breach or termination of any term or provision of, nor constitutes a
default or acceleration of the performance required under, the articles of
incorporation, bylaws or resolutions of Seller, or under any indenture,
mortgage, deed, trust or other contract or agreement to which Seller is a party
or by which its properties are bound;
(ii) violates any order, writ, injunction or
decree of any court, administrative agency or governmental body; or
(iii) requires the consent of any other person, entity or governmental
authority.
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(d) Brokerage Fees. Seller is obligated and has
agreed to pay brokerage commissions in the amount of 10% of the Purchase Price
- All Purchased Assets up to a maximum of $50,000.00 to Xxxxx Capital
Associates, Inc. in connection with the purchase of the Purchased Assets
pursuant to this Agreement. Seller agrees that Purchaser shall cause the
brokerage commission to be paid directly to Xxxxx Capital Associates, Inc., as
a reduction of the Initial Payment due to Seller, via a wire transfer or any
other mutually agreeable means on the Closing Date.
(e) Title to Purchased Assets. Seller warrants
that on the date hereof it has good and marketable title to all of the
Purchased Assets, and the Purchased Assets shall not be subject to any pledge,
option, conditional sale agreement, security interest, consensual lien,
judgment lien, encumbrance or charge of any kind. Seller warrants that the
Alarm Accounts acquired by Purchaser are valid and are binding upon and
enforceable against the customers of Seller executing same in accordance with
their terms, and the obligations of the customers of Seller thereunder are not
subject to set-off or claims resulting from the conduct of Seller's business
prior to their conveyance to Purchaser.
(f) Compliance with the Law. The Business has
been and is being conducted in compliance with all applicable laws, regulations
and requirements of each jurisdiction in which it is carried on and is not in
breach of any such laws, regulations or requirements, and Seller warrants to
hold Purchaser harmless from and against any violations or applicable laws,
regulations or requirements arising out of non-compliance therewith prior to
the Closing Date.
(g) Actions, etc.
(i) There are no actions, suits,
proceedings or investigations pending against or relating to the Business or
the Purchased Assets and Seller has not received any notice or written or oral
communication reflecting an intention or threat to institute any such action,
suite proceeding or investigation.
(ii) There are no actions, suits,
proceedings, or investigations pending before any court or governmental agency
in which it is sought to restrain or prohibit the carrying out of this
Agreement or the consummation of the transactions contemplated herein in
connection therewith and there is no such action, suit, proceeding or
investigation threatened.
(iii) Seller is not subject to any
judgment, order, writ, court decree, governmental decree or injunction relating
to the Business.
(iv) There are no known defects or
deficiencies in the products or services provided by Seller prior to the date
hereof as a result of which any claim or suit may arise.
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(v) Set forth on Schedule 8(g)(v)
attached hereto is a summary and brief description of all pending litigation to
which Seller is a party.
(h) Tax Returns. Seller has timely filed all tax
reports and returns required to be filed and has timely paid all taxes
(including, without limitation, income, payroll withholding, sales and use
taxes) and all other charges due or claimed to be due from it by federal, state
or local taxing authorities in respect of the periods covered by such returns.
(i) Alarm Account Requirements. Each of the Alarm Accounts must:
(i) be evidenced by a valid, enforceable
and properly executed monitoring agreement;
(ii) not been repudiated by the customer.
An Alarm Account shall be deemed repudiated if: (A) the customer has abandoned
the premises at which the security monitoring system has been installed; (B) if
the customer is insolvent; or (C) if the customer has cancelled or issued
notice of termination of an Alarm Account, notwithstanding the fact that an
Alarm Account may remain enforceable against the customer;
(iii) have generated cash receipts
representing service charges for at least one full billing cycle or prepayment
for at least one month's service; and
(iv) have no charges that have been
outstanding and unpaid for more than 60 days from the invoice due date as of
the Closing Date.
(j) Benefit Plans. No profit-sharing, bonus,
stock option, pension, retirement, stock purchase, hospitalization insurance or
similar plan or agreement, formal or informal, providing benefits to any
current or former employee, or any other employee benefit or employee welfare
plan subject to the provisions of the Employee Retirement Income Security Act
of 1974, as amended, maintained by Seller shall obligate Purchaser to make any
contributions thereto or payments in respect thereof with regard to employees
of Seller who may be hired by Purchaser on or after the Closing Date.
(k) Medical Information. Seller has not entered
into any contract or other agreement with any or all of its customers which
would require Purchaser to provide any medical or health information on its
customers to any third party and Seller is not obligated to keep or obtain
medical or health information on any or all of its customers.
(l) Disclosure. No representation or warranty of
Seller, and no statement contained in this Agreement and no information
contained in any schedule furnished to Purchaser by or on behalf of Seller
pursuant to this Agreement, contains any untrue statement of a material fact or
omits to state a material fact necessary to make the statements contained
herein or therein not misleading. Each of the separate representations and
warranties set forth in the various subsections of this Section 8 is intended
to be, and shall be interpreted as, an
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independent representation and warranty as to matters referred to therein, and
the applicability or inapplicability of any particular subsection of this
Section 8 shall not affect the interpretation of any other such subsection.
Section 9. Conditions Precedent to Obligations of Purchaser.
Purchaser's obligation to purchase the Purchased Assets under this Agreement is
subject to the fulfillment, prior to or at the Closing Date of each of the
following conditions:
(a) Representations True on the Closing Date.
The representations and warranties of Seller contained in this Agreement shall
be true on the date hereof, and at the time of the Closing Date as though made
on the Closing Date.
(b) Performance. Seller shall have performed and
complied with all agreements and conditions required by this Agreement to be
performed or complied with by it prior to or on the Closing Date.
(c) Seller's Closing Certificate. Seller shall
have delivered to Purchaser a Closing Certificate of the president or any
authorized representative of Seller dated as of the Closing Date substantially
in the form attached hereto as Schedule 9(c).
(d) Schedules. Seller shall have updated the
Schedules hereto in accordance with Section 14(g) hereof. Purchaser shall have
determined, in good faith, that taking into account the changes to the
information in the updated Schedules, the transactions contemplated by this
Agreement are as beneficial to Purchaser as prior to the updating of the
Schedules.
(e) Consents to Assignments. Seller shall have
taken all action necessary and appropriate, and obtained all necessary
consents, waivers and approvals, including but not limited to assignment of the
Security Alliance Command Center, Inc.'s alarm monitoring agreements, required
under any leases or other agreements to consummate the sale of the Purchased
Assets pursuant to this Agreement in writing on terms reasonably acceptable to
Purchaser, and Purchaser shall reasonably cooperate with Seller in its efforts
to obtain such consents, waivers and approvals.
(f) Litigation. No litigation or proceeding
shall be pending or threatened to restrain, set aside or invalidate the
transactions contemplated by this Agreement or any portion thereof, including,
without limitation, any claims by creditors of Seller against the Purchased
Assets.
(g) Opinion of Seller's Counsel. Seller shall
have delivered to Purchaser an opinion of counsel for Seller, dated as of the
Closing Date and in form satisfactory to Purchaser's counsel, to the effect
that:
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(i) Seller is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Virginia; the location and character of the properties owned or
leased and the business conducted by Seller do not make qualification or
licensing as a foreign corporation necessary in any other state or
jurisdiction; and Seller has the corporate power and authority to own its
properties and to carry on its business as now being conducted;
(ii) This Agreement has been duly executed
and delivered by Seller and constitutes a legal and binding obligation of
Seller, enforceable in accordance with its terms except as enforcement of the
same may be limited by bankruptcy, insolvency, reorganization or other laws
relating to or affecting the enforcement of creditors' rights and by general
equity principles;
(iii) All instruments of transfer and other
documents necessary to effect the transfer to Purchaser of the Purchased Assets
have been duly authorized, executed and delivered by Seller and are in proper
form to transfer to Purchaser all right, title and interest of Seller in and to
the Purchased Assets;
(iv) Except as set forth on Schedule
8(g)(v), such counsel does not know of any litigation, proceeding, governmental
investigation or claim pending or threatened against or relating to the
Business, the Purchased Assets or the transactions contemplated by this
Agreement; and
(v) The execution and delivery of this
Agreement and the consummation by Seller of the transactions contemplated
hereby:
(A) do not and will not violate any
provision of the articles of incorporation or bylaws of Seller;
(B) do not and will not violate, or
result, with the giving of notice or the lapse of time or both, in a violation
of any provision of, or result in the acceleration of or entitle any party to
accelerate (whether after the giving of notice or lapse of time or both) any
obligation under, or result in the creation or imposition of, any lien, lease,
agreement, license, instrument, law, ordinance, regulation, order, arbitration
award, judgment or decree known to such counsel to which Seller is a party or
by which it is bound;
(C) do not and will not constitute an
event permitting termination of any lease, agreement, license or instrument
known to such counsel to which Seller is a party; and
(D) when combined with the execution
of the Xxxx of Sale are sufficient to, and do transfer all right, title and
interest in the Purchased Assets from Seller to Purchaser.
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(h) Certified Resolutions. Seller shall have
delivered to Purchaser copies, certified by the secretary or an assistant
secretary of Seller, of the resolutions of Seller's board of directors and
stockholders authorizing the execution and delivery of this Agreement.
(i) Certificates of Good Standing. Seller shall
have delivered to Purchaser a certificate of good standing of Seller issued by
the Corporations Commission of the Commonwealth of Virginia dated as of a date
within 35 days prior to Closing Date.
(j) Instruments of Transfer. Seller shall have
delivered to Purchaser a Xxxx of Sale, Assignment and Assumption Agreement
substantially in the form attached hereto as Schedule 9(j) (the "Xxxx of Sale")
and other good and sufficient instruments of transfer and conveyance, as in the
reasonable opinion of Purchaser's counsel, shall be effective to vest in
Purchaser good and marketable title to the Purchased Assets.
(k) Non-Solicitation Agreement. Seller shall
have delivered to Purchaser Non-Solicitation Agreements substantially in the
forms attached hereto as Schedule 8(k) executed by Xxx X. Xxxxxxxx and Xxxxx
Xxxxxxxxx, in their individual capacities, and by Seller.
(l) Notice to Subscribers. Seller shall have
mailed on the Closing Date to each customer set forth on Schedules 1(a) and
1(f) hereto a notice in the form attached hereto as Schedule 9(1). Seller
shall be responsible for the costs associated with the creation and mailing of
such notices.
(m) Payment of Accrued Vacation Pay, etc. Seller
shall pay to each of Seller's employees who render services to the Business
that are to be discharged on or after the Closing Date all accrued and unpaid
vacation pay, sick pay and all other accrued obligations to which such
employees are entitled as a result of the termination of their employment with
Seller.
(n) Evidence of Insurance. Seller shall have
provided to Purchaser evidence satisfactory to Purchaser that Seller has
maintained an occurrence based policy of insurance covering the Purchased
Assets which is acceptable to Purchaser prior to and including the Closing
Date and Seller's insurer shall have provided to Purchaser a certificate dated
as of the Closing Date stating that such policy of insurance is in full force
and effect as of the Closing Date and that all premiums for the policy of
insurance which shall be attached to such certificate shall have been paid in
full as of the Closing Date. Further, if any claims shall be outstanding as of
the Closing Date on any insurance policy involving the Purchased Assets then
Seller shall notify Purchaser in writing of such outstanding claims prior to
the Closing Date.
Section 10. Conditions Precedent to Obligations of Seller.
Seller's obligations to sell and transfer the Purchased Assets to Purchaser
under this Agreement are subject to the fulfillment, prior to or on the Closing
Date of each of the following conditions:
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(a) Representations True on the Closing Date.
Purchaser's representations and warranties contained in this Agreement shall be
true at the date hereof, and at the Closing Date as though made on the Closing
Date.
(b) Performance. Purchaser shall have performed
and complied with all agreements and conditions required by this Agreement to
be performed or complied with by it prior to or on the Closing Date.
(c) Assumption Agreement. Purchaser shall have executed and delivered the
Xxxx of Sale.
Section 11. Indemnification. Seller, on the one hand, and
Purchaser, on the other hand, shall indemnify and hold each other harmless from
and against any and all losses, liabilities, damages and expenses, including
reasonable attorneys' fees, that they may suffer or become liable for as a
result of or in connection with any breach of a representation, warranty,
covenant or agreement contained in this Agreement.
Section 12. Bulk Sales Law. The sale and purchase described in
this Agreement will be conducted according to, and in full compliance with, the
requirements of the bulk transfer provisions of the Uniform Commercial Code as
adopted in the Commonwealth of Virginia. In addition to its indemnity under
Sections 5 and 11, Seller hereby agrees to indemnify and hold Purchaser
harmless from any and all liability to anyone arising from its failure to
comply with the provisions of Va. Code Xxx. section 8.6-101 et seq., relating
to bulk transfers. Such indemnity shall survive Closing.
Section 13. Assignment. Purchaser may, without the consent of
Seller, assign its rights and delegate its obligations under this Agreement, to
any corporation, limited liability company partnership, association,
proprietorship or other business entity who acquires all or a substantial part
of the assets of Purchaser in connection with the sale of all or a substantial
part of its business. Upon any such assignment Purchaser shall be relieved and
discharged from any further obligations under this Agreement. Furthermore,
Purchaser may, without the consent of Seller, collaterally assign its rights
under this Agreement to one or more banks, insurance companies or other
financial institution for purposes of financing. Seller shall not assign its
rights or delegate its obligations under this Agreement without the prior
written consent of Purchaser.
Section 14. Agreements Prior to Closing.
(a) Fulfillment of Conditions. Seller shall use
its best efforts to take or cause to be taken all action reasonably necessary
or appropriate to cause each of the
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conditions set forth in Section 9 to be fulfilled prior to or on the Closing
Date. Purchaser shall use its best efforts to take or cause to be taken all
action reasonably necessary or appropriate to cause each of the conditions set
forth in Section 10 to be fulfilled prior to or on the Closing Date.
(b) Access to Information. Between the date of
this Agreement and the Closing, Seller shall allow the officers, directors,
employees, representatives, attorneys and accountants of Purchaser free access
at all reasonable times to the records, files, correspondence, audits and
properties of Seller which pertain to the Business.
(c) Confidentiality. Purchaser agrees to hold
all information it obtains pursuant to its review of the records, files,
correspondence, audits and properties of Seller in confidence and not to
disclose such information to any third party, except for:
(i) information known by Purchaser and obtained from sources other than
Seller;
(ii) disclosure that is authorized by Seller in writing;
(iii) disclosure to Purchaser's
professional advisors and to persons who are expected to be lenders to
Purchaser; or
(iv) disclosure of information where such
information is required to be filed with any governmental agency or required to
be produced before any court or tribunal or otherwise required by law to be
disclosed. Except in connection with Seller's filing of tax returns and as
otherwise required by law, Seller shall not disseminate to any person other
than officers, directors, employees, representatives, attorneys and accountants
of Seller any information relating to the Purchase Price or other consideration
contemplated to be paid under this Agreement.
(d) Conduct of Business. Between the date of
this Agreement and the Closing Date, Seller shall cause the Business to be
conducted in its usual and ordinary course.
(e) Preservation of Existing Relationships.
Between the date of this Agreement and the Closing Date, Seller shall use its
best efforts to continue existing relationships with customers, suppliers,
employees and others having business relations with respect to Seller.
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(f) No Negotiations with Third Parties. So long
as this Agreement is in effect, Seller shall not enter into any negotiations,
arrangements, understandings, commitments, options or other agreements
regarding the sale, transfer or other disposition of any of the shares of stock
of Seller or of all or substantially all of the assets of Seller that relate in
any way to the Business, or regarding any merger or consolidation of Seller
with or into any corporation or other business entity.
(g) Updated Schedules. Seller agrees to update
the Schedules hereto as of the Closing Date to reflect changes occurring after
the date hereof; provided, however, that if any of the Schedules attached
hereto on the date hereof are materially inaccurate or incorrect, Seller may
correct such Schedules only with Purchaser's written consent. Any updated
Schedules shall be attached to this Agreement and for all purposes be deemed to
be a part of this Agreement.
Section 15. No Joint Venture. The relationship between the
parties hereto is that of purchaser/seller and does not constitute a
partnership or joint venture. Both parties agree not to make any
representations or statements to any other person which contradict the
foregoing.
Section 16. Seller's Employees. Purchaser shall be under no
obligation to employ after the Closing Date any of Seller's employees. Prior
to the Closing Date, Purchaser may interview any of Seller's employees
regarding possible employment with Purchaser as of the Closing Date, so long as
Purchaser does not materially interfere with the conduct of Seller's business.
If Purchaser and any of Seller's employees reach agreement as to terms of
employment to commence on or after the Closing Date, no inference shall be
created that Purchaser has assumed any of Seller's obligations to its
employees; provided, however, that if Purchaser hires any of Seller's employees
then Seller shall provide Purchaser a copy of any and all personnel records
relating to such employees. Seller shall furnish to Purchaser on request a
list of all employees of the Business, setting forth their compensation, job
description, hire date and a summary of all benefits provided.
Section 17. Post-Closing Covenants. Seller agrees to use its
best efforts to accommodate the conversion of the Alarm Accounts and
Contracts-in-Process to Purchaser's central station and billing system on or
before the Closing Date or such other date as may be mutually agreed to by
Seller and Purchaser (the "Conversion Date"); provided, however, that during
the period of time between the Closing Date and the Conversion Date the
monitoring and servicing of the Alarm Accounts and the Contracts-in-Process
shall be governed by a Monitoring Agreement entered into between Seller and
Purchaser, substantially in the form attached hereto as Schedule 17. Seller
agrees to transfer to Purchaser all "ring down lines" for fire monitoring of
Alarm Accounts without a change in priority or position. In connection with
the conversion of the Alarm Accounts and the Contracts-in-Process, Seller shall
either (i) at its sole expense, secure new telephone numbers and/or lines for
those Alarm Accounts and Contracts-in-Process,
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which share telephone numbers and/or lines with third parties; or (ii) credit
the Purchase Price - All Purchased Assets in accordance with Section 2(f)(ii)
or credit the Escrow Account (the "Conversion Adjustment"). Such Conversion
Adjustment shall equal $50 per Alarm Account or Contract-in-Process that
requires a post-Closing computer chip change service call by Purchaser.
Additionally, if requested to do so by Purchaser, Seller will assist in the
orderly transition of the Alarm Account and Contracts-in-Process base by
mailing the next scheduled invoices associated with the Alarm Accounts and
Contracts-in-Process.
Section 18. Risk of Loss. The risk of any loss or damage to the
Purchased Assets resulting from fire, theft, explosion, earthquake, windstorm,
flood, accident, act of God, war, seizure, activities of the armed forces or
other casualty, reasonable wear and tear excepted, shall be borne by Seller at
all times prior to the Closing Date, and Seller shall be entitled to all
insurance proceeds resulting from such loss or damage.
Section 19. Miscellaneous.
(a) Pronouns. Whenever used herein and unless
otherwise indicated by the context, the masculine pronoun shall include and
also mean the feminine and the neuter, and the singular shall include and also
mean the plural.
(b) Expenses. Each party shall pay all expenses
incurred by it in connection with the preparation, execution and performance of
this Agreement.
(c) Entire Agreement. This Agreement, together
with the Schedules hereto, sets forth the entire understanding of the parties,
and supersedes all prior agreements, arrangements and communications, whether
oral or written, with respect to the subject matter hereof. This Agreement
shall not be modified or amended except by written agreement of Purchaser and
Seller. Captions appearing in this Agreement are for convenience only and
shall not be deemed to explain, limit or amplify the provisions hereof. All
Schedules to this Agreement are incorporated into and made a part of this
Agreement for all purposes to the same extent as if fully set forth herein.
(d) Severability. The invalidity or
unenforceability of any particular provision of this Agreement shall not affect
the other provisions hereof, and this Agreement shall be construed in all
respects as if the invalid or unenforceable provision was omitted.
(e) Binding Effect; Assignment. All the terms,
provisions, covenants and conditions of this Agreement shall be binding upon
and inure to the benefit of and be enforceable by and against the parties
hereto and their respective successors and assigns.
(f) Notices. Any notice required or permitted to
be delivered pursuant to the terms of this Agreement shall be considered to
have been sufficiently delivered within five
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days after posting, if mailed by U.S. Mail, certified or registered, return
receipt requested, postage prepaid or, upon receipt by overnight courier
maintaining records of receipt by addressee or if delivered by hand or
telecopied with the original notice being mailed the same day by one of
the foregoing methods and addressed as follows:
IF TO PURCHASER AT:
Masada Security, Inc.
000 00xx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xx. Xxxxx X. Xxxxxxx
FACSIMILE: 0-000-000-0000
WITH COPY TO:
Xxxx & Xxxxxx
000 Xxxxx 00xx Xxxxxx
Xxxxx 0000
Xxxxxxxxxx, Xxxxxxx 00000
Attention: W. Xxx Xxxxxxx, Esq.
FACSIMILE: (000) 000-0000
IF TO SELLER AT:
Global Security, Inc.
0000 Xxxxxxxxxx Xxxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xx. Xxx X. Xxxxxxxx
FACSIMILE: (000) 000-0000
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WITH COPY TO:
Xxxxxxxx, Xxxxxx & Xxxxx, P.C.
0000 Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, III, Esq.
FACSIMILE: (000) 000-0000
or at such other address as the party may designate by ten days advance written
notice to the other party. Notice shall be effective when delivered to a
responsible person at the address of the addressee.
(g) Further Assurances. Purchaser and Seller
shall execute such other instruments, documents and other papers and shall take
such further actions as may be reasonably required or desirable to carry out
the provisions hereof and to consummate the transactions contemplated hereby.
(h) Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the State of Alabama,
excluding its conflict of laws principles.
(i) Counterparts. This Agreement may be executed
in counterparts, each of which shall be deemed an original.
(j) Survival. The representations and warranties
of the parties hereto shall survive the date of this Agreement.
(k) Drafting Presumption. Each of the parties
hereto has participated in the negotiation and drafting of this Agreement and
agree that no one party has prepared this document to the exclusion of the
other party and that in construing this agreement there should be no
presumption based upon which party drafted this Agreement.
(l) Intended Beneficiary. Purchaser and Seller
hereby acknowledge that the Purchase Price for the Purchased Assets will be
funded from a loan provided by State Street Bank and Trust Company to
Purchaser; therefore, Purchaser and Seller further acknowledge that State
Street Bank and Trust Company is an intended beneficiary of this Agreement and
shall rely upon the representations, warranties and agreements of Purchaser and
Seller contained herein.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first set forth above.
PURCHASER
MASADA SECURITY, INC.
By: /s/ Xxxxx X. Xxxxxxx
---------------------------------
Its: President
-----------------------------
SELLER
GLOBAL SECURITY, INC.
(f/k/a GLOBAL SECURITY SYSTEMS OF
VIRGINIA, INC.)
By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------------
Its: President
-----------------------------
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LIST OF SCHEDULES
Schedule 1(a) - Alarm Accounts
Schedule 1(b) - Inventory
Schedule 1(c) - Fixed Assets
Schedule 1(d) - Equipment
Schedule 1(e) - Vehicles
Schedule 1(f) - Contracts-in-Process
Schedule 1(g) - Other Contracts
Schedule 1(h) - Receivables
Schedule 1(i) - Intangible Personal Property
Schedule 1(j) - Telephone Lines and Numbers
Schedule 2(a) - Prepaid Revenue
Schedule 2(g) - Allocation of Purchase Price
Schedule 3(a) - Escrow Agreement
Schedule 3(b) - Escrow Account Distribution
Schedule 5 - Assumed Liabilities
Schedule 8(g)(v) - Pending Seller Litigation
Schedule 9(c) - Seller's Closing Certificate
Schedule 9(j) - Xxxx of Sale, Assignment and Assumption
Agreement
Schedule 9(k) - Non-Solicitation Agreement
Schedule 9(l) - Notice to Subscribers
Schedule 17 - Monitoring Agreement
