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EXHIBIT 10.12
ASSET PURCHASE AGREEMENT
Between
SECURITY ASSOCIATES INTERNATIONAL, INC.
as
PURCHASER
and
AMJ CENTRAL STATION CORPORATION
as
SELLER
Dated December 19, 1996
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT, dated as of December 19, 1996, is entered
into by and between Security Associates International, Inc., a Delaware
corporation ("Purchaser"), and AMJ Central Station Corporation, a Florida
corporation ("Seller").
Purchaser and Seller hereby agree as follows:
1. DEFINITIONS AND USE OF TERMS
1.1 DEFINITIONS. The following terms shall have the meanings assigned
below when used in this Agreement:
(a) "Account" shall mean an agreement between a Subscriber and
Seller pursuant to which the Central Monitoring Station monitors
on a remote basis the security alarm system of such Subscriber;
(b) "Adjustment" has the meaning assigned in Section 3.2.2;
(c) "Applicable Law" shall include any law, rule, regulation, order,
injunction, notice, approval or judgment of any federal, state,
or local government or governmental department, agency, board
or the like, which applies to any of the Assets or the Purchased
Business, and any agreement with any such government or
governmental department, agency or board relating to compliance
with any of the foregoing;
(d) "Assets" has the meaning assigned in Section 2.1;
(e) "Assumed Liabilities" has the meaning assigned in Section 2.5;
(f) "Central Monitoring Station" shall mean the
central monitoring station which is owned by Seller as of the
Execution Date and the Closing Date and which monitors on a
remote basis the security alarm systems of the Subscribers;
(g) "Closing" has the meaning assigned in Section 3.1.3;
(h) "Closing Date" has the meaning assigned in Section 3.1.3;
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(i) "Contract" means Assets of the type described in Section 2.1(a),
(b), (e), (i) or (n);
(j) "Contract Assignment Agreement" has the meaning assigned in
Section 4.10;
(k) "Dealer" means a customer of Seller who has designated Seller to
monitor on a remote basis the security alarm systems of those
Subscribers who have contracted with Dealer to obtain such
monitoring services from Dealer or its designee;
(l) "Effective Time" means the opening of business on the Closing
Date;
(m) "Employee" means a person employed by Seller immediately prior
to the Effective Time;
(n) "Execution Date" means the date first written above;
(o) "Income Tax Returns" means Seller's federal income tax returns
for the periods ending December 31, 1993, December 31, 1994 and
December 31, 1995;
(p) "Intellectual Property" means all of the patents, trademarks,
trade names (including "AMJ Central Station" and the corporate
name "AMJ Central Station Corporation"), service marks, trade
secrets, designs, know-how, copyrights, computer programs and
software, registrations and applications and rights relating to
any of the foregoing, and all other proprietary rights and
information relating to or used by Seller;
(q) "Interim Period" means the period beginning on the Execution
Date and ending on the Closing Date;
(r) "License Assignment Agreement" has the meaning assigned in
Section 4.9;
(s) "Loss" shall mean any liability, loss, damage, claim, cost,
deficiency, obligation, or expense (including penalties and
reasonable legal fees and costs) incurred by a party;
(t) "Permits" means all governmental licenses, registrations and
permits, and applications therefor;
(u) "Personal Property Lease Assignment Agreements" has the meaning
assigned in Section 4.8;
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(v) "Promissory Note" has the meaning assigned in Section 2.4.1;
(w) "Purchased Business" means the entire remote alarm monitoring
business conducted by Seller as of the Execution Date and the
Closing Date, including the Central Monitoring Station;
(x) "Purchaser's Accountants" means the independent public accounting
firm of Xxxxxx Xxxxxxxx & Co.
(y) "Real Estate" has the meaning assigned in Section 2.1(b);
(z) "RMR" shall mean the monthly gross revenue earned by the Central
Monitoring Station in consideration for the monitoring services
provided by the Central Monitoring Station to Subscribers;
(aa) "Second Closing" has the meaning assigned in Section 3.1.3.
(bb) "Security Agreement" has the meaning assigned in Section 2.4.2.
(cc) "Second Closing Date" has the meaning assigned in Section 3.1.3.
(dd) "Sublease" has the meaning assigned in Section 4.7;
(ee) "Subscriber" means a customer to whom Seller is entitled by
contract to provide remote monitoring services for the security
alarm system installed on that customer's premises.
(ff) "Unrelated Party" means any person who is not a shareholder, officer
or director of Seller or is not a business entity controlled by or
under common control with any such person(s); and
(gg) "Waste Material" means any pollutant, contaminant, hazardous or
toxic material or other material now or in the past produced,
discharged, stored or emitted by the Purchased Business or on the
Real Estate.
1.2 OTHER TERMS. In this Agreement:
(a) any representation or warranty made "to the knowledge" of a party
shall mean that the party is making the representation on the basis
of the actual knowledge of the party or, in the case of a
corporation, its officers and directors, in either event, after due
inquiry; and
(b) "including" shall indicate examples of a foregoing general statement
and is not a limitation on that general statement.
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2. SALE AND PURCHASE OF ASSETS; PURCHASE PRICE.
2.1 SALE AND PURCHASE OF ASSETS. Upon the terms and subject to the
conditions contained in this Agreement, Seller hereby agrees to sell, and
Purchaser hereby agrees to purchase, all of Seller's assets and properties,
tangible and intangible, real, personal or mixed, of and pertaining to or used
in the Purchased Business, wherever located, whether known or unknown, and
whether or not reflected on the books and records of Seller (the "Assets").
The Assets include, but are not limited to, the following:
(a) all right, title and interest in all of Seller's
Accounts;
(b) all rights of use and occupancy of Seller in the
portion of the real estate leased by Seller occupied by the
Central Monitoring Station, as described on Schedule 4.7 (the
"Real Estate");
(c) all rights of use and occupancy of Seller in the
plant, improvements, appurtenances and fixtures located on or
forming part of the Real Estate;
(d) except for those items listed in Schedule 4.8 as
being retained by Seller, all tangible personal property, all
machinery and equipment, computers, telephone installations,
handling equipment, furniture, furnishings, accessories and
spare parts, owned by Seller;
(e) all leases of, and conditional sales contracts
and title retention agreements relating to tangible personal
property and Intellectual Property, under which Seller is
lessee or conditional buyer;
(f) all accounts receivable;
(g) all prepaid expenses and deposits;
(h) all Intellectual Property;
(i) all other contracts or commitments to which
Seller is a party or by which Seller or any of the Assets is
bound, all of which other than monitoring contracts with
Dealers and Subscribers are described on Schedule 4.10,
including, but not limited to:
(1) all unfilled orders of Seller; and
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(2) all forward commitments to Seller for
supplies or materials entered into the usual and
ordinary course of business, whether or not there are
any written contracts with respect thereto.
(j) all Permits;
(k) all records of sales, Dealer lists, Subscriber
lists, customer lists and supplier lists;
(l) all books, documents, records and files,
including all financial, accounting and personnel records and
all computer programs;
(m) the goodwill of Seller as a going concern;
(n) all assignable contracts and policies of
insurance, if any, including those related to the property or
liability of Seller and/or to the lives or health of Seller's
employees as set forth in Schedule 2.1(n) hereof.
2.2 TITLE. Title to the Assets shall be conveyed to Purchaser free and
clear of all liens, claims, encumbrances or restrictions except for such liens
as are specifically listed on Schedule 2.2 hereto.
2.3 PURCHASE PRICE. The purchase price ("Purchase Price") of the Assets
shall be Three Million Seven Hundred Seventy-one Thousand One Hundred and
Thirty-one ($3,771,131.00). In addition, Purchaser shall assume those (but
only those) liabilities and obligations of Seller stated in Section 2.5.
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2.4 PAYMENT.
2.4.1 The Purchase Price shall be paid by Purchaser to Seller as follows:
(a) Fifty Thousand Dollars ($50,000.00) at closing by means of a
cashier's check or wire transfer of federal funds in accordance with the wire
transfer instructions to be provided by Seller; and
(b) The remaining balance in a promissory note in a form similar to
Exhibit 2.4.1 (the "Promissory Note") executed by Purchaser and payable in one
installment of principal on the Second Closing Date. No prepayment of the
Promissory Note shall be permitted by Purchaser and Seller will be under no
obligation to accept any prepayment. The Promissory Note shall not bear
interest. The Promissory Note will not contain any grace period. The
Promissory Note shall be secured by the collateral described in paragraphs
2.4.2 and 2.4.3 below.
2.4.2 As security for the payment of the Promissory Note referred to in
paragraph 2.4.1(b) above, Purchaser shall execute and deliver, at closing, a
purchase money security agreement in a form similar to Exhibit 2.4.2 (the
"Security Agreement") covering all of the Assets, viz., all of the items of
tangible and intangible personal property purchased by Purchaser from Seller as
more particularly described in paragraph 2.1 of this Agreement. The security
interest evidenced by the Security Agreement shall be a first priority security
interest and shall not be subordinate to any financing obtained by Purchaser in
connection with the acquisition of the Assets or otherwise. Purchaser shall
execute such instruments as requested by Seller to perfect the security
interest in the Assets as provided in Chapter 679 of the Florida Statutes.
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2.4.3 As additional collateral security, Purchaser will assign and deliver
to Seller the Sublease on condition that Purchaser remain in possession of the
leased premises so long as it: fully complies with all of the terms and
conditions of the Sublease, including the prompt payment of rent; is not in
default in the payment of the Promissory Note; and complies with the terms and
conditions of the purchase money security interest referred to in paragraph
2.4.2.
2.4.4 Upon payment in full of the Promissory Note, Seller shall execute
and deliver to Purchaser a release of collateral and termination statement in
such form as may be reasonably required by Purchaser as well as the cancelled
Promissory Note.
2.4.5 Between the Closing Date and the time when Purchaser pays the
Promissory Note in full, Purchaser:
(a) Shall not sell or otherwise dispose of any of the Assets
even in the ordinary course of business;
(b) Shall not remove any of the tangible personal property from
the premises located at 0000 X.X. 00xx Xxxxxx, Xxxxxxx Xxxxx,
Xxxxxxx; and
(c) Shall not take any action which would cause Purchaser to be
in a position so as not to return all of the Assets to Seller
should any of the contingencies listed in paragraph 2.4.6 occur.
2.4.6 In the event Purchaser shall fail to (i) pay the Promissory Note in
full on the Second Closing Date, (ii) pay the liabilities and obligations of
Seller as set forth on Schedule 2.5.1(c) no later than the Second Closing Date
or (iii) pay off the Guaranteed Leases (as defined in paragraph 4.8 hereof) no
later than the Second Closing Date, the following shall occur:
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(a) this Agreement shall terminate and be null and void and of
no legal force and effect whatsoever;
(b) Seller's sole remedy for the termination of this Agreement
and under the Note and Security Agreement shall be limited to
the return of the Assets (including the balance of the accounts
receivable as of the Second Closing Date and the cash (or
undeposited checks) remaining after collection of payments on
accounts receivable and payment of any obligations related to
the Purchased Business that arise in the ordinary course of
business on or before the Second Closing Date) and Seller shall
retain the $50,000 payment made pursuant to paragraph 2.4.1
hereof;
(c) the Sublease shall terminate and be null and void and of no
legal force and effect whatsover; and
(d) neither Seller nor Purchaser shall have any further
liability to each other; except that Purchaser shall indemnify
Seller for (i) any loss suffered by Seller due to a violation by
Purchaser of the provisions of paragraph 2.4.5 above or 2.4.6(b)
or (ii) for any loss to the Assets that occurs from the Closing
Date to the Second Closing Date as a result of Purchaser's
negligence, including all reasonable attorneys' fees and costs
incured by Seller in pursuing Seller's remedies under this
paragraph..
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2.5 ASSUMPTION OF CERTAIN LIABILITIES
2.5.1 Purchaser shall assume, pay, fulfill perform or otherwise
discharge only the following liabilities and obligations of Seller to Unrelated
Parties ("Assumed Liabilities") on the Closing Date:
(a) all of Seller's trade, and other accounts payable
and liabilities reflected or reserved against as of November
25, 1996 and included on Schedule 2.5.1(a), plus additional
expenses or liabilities arising in the usual and ordinary
course of business consistent with past practice after
November 25, 1996 and before the Closing Date, which in the
aggregate do not exceed $130,000.00;
(b) all liabilities and obligations of the Purchased
Business accruing on and after the Closing Date under
contracts, agreements, licenses, leases and similar documents
which are to be transferred to Purchaser, specifically
including the obligation to provide, during the term of each
Subscriber's or Dealer's contract with Seller, continuing
monitoring services of the Central Monitoring Station to all
such Subscribers and Dealers; and
(c) those liabilities and obligations of Seller
otherwise specifically assumed by Purchaser in this Agreement
as set forth on Schedule 2.5.1(c).
2.5.2 Except as provided in Section 2.5.1, Purchaser shall not be
required to assume, pay, perform, defend or discharge any, and Seller shall
retain, pay, perform, defend and discharge all, of Seller's liabilities and
obligations of any and every kind whatsoever, whether disclosed, undisclosed,
direct, indirect, absolute, contingent, secured, unsecured, accrued or
otherwise, whether known or unknown. Further, Purchaser shall not assume or
agree to pay, perform or discharge, nor shall Purchaser be, directly or
indirectly responsible for, any obligation or liability of Seller with respect
to the breach of any contract or commitment prior to the Closing Date, or any
action, suit or proceeding pending at the Closing which is asserted in respect
of the conduct by Seller of its business prior to the Closing Date.
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2.6 SUBSEQUENT DOCUMENTATION. At any time and from time to time after the
Closing, upon the request of Seller or Purchaser and without further
consideration to the other party, but with Purchaser and Seller bearing their
own respective expenses incident thereto, Seller and Purchase shall do,
execute, acknowledge and deliver, or will cause to be done, executed,
acknowledged and delivered, all such further acts, assignments, transfers,
conveyances, assumptions, powers of attorney and assurances:
(a) as may be required for assigning transferring,
granting and conveying to Purchaser or its successors and
assigns, or for aiding and assisting in collecting and
reducing to possession and control of Purchaser or its
successors and assigns, all of the Assets; or
(b) as may be required for the better assigning,
assuming, obligating, assuring and confirming to Seller that
the Assumed Liabilities are assumed and to provide to Seller
evidence of such undertaking and the discharge of such
undertaking by Purchaser.
2.7 ALLOCATIONS. The Purchase Price shall be allocated among the Assets
in accordance with Schedule 2.7. In filing their respective income tax returns
in any jurisdiction, the parties shall use the allocations of the Purchase
Price set out in Schedule 2.7.
2.8 TRANSFER INSTRUMENTS AND TAXES. The sale, transfer, assignment and
delivery of the Assets by Seller to Purchaser shall be effected at the Closing
by instruments of transfer and conveyance (with any necessary transfer and
documentary stamps) sufficient in form and substance to vest in Purchaser good,
valid and marketable title to all of the Assets. Seller shall take all other
steps as may be reasonably necessary to put Purchaser in actual possession and
operating control of the Assets. To the extent any sale, transfer, use or
other similar taxes may be imposed by reason of such sale, transfer, assignment
and delivery of the Assets, Seller shall pay
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all such taxes. Seller shall make any filings required as a result of the
transactions contemplated by this Agreement with the Florida taxing authorities.
2.9 CONSENT TO ASSIGNMENT. To the extent that the assignment of Contract,
Permit or Intellectual Property shall require the consent of another person,
this Agreement shall not constitute an agreement to assign the Contract, Permit
or Intellectual Property if an attempted assignment would constitute a breach
thereof. Seller and Purchaser shall cooperate with each other in obtaining and
shall jointly attempt to obtain the consent of any other party to a Contract,
or the issuer of a Permit for the assignment thereof to Purchaser. If any such
consent is not obtained, to the extent permitted by applicable law, Seller
shall cooperate with Purchaser to provide for Purchaser the benefits under such
Contract, Permit or Intellectual Property, including enforcement, for the
benefit of Purchaser, of any and all rights of Seller against any other party.
Purchaser, at its option, may elect to buy out any personal property lease
where the lessor does not consent to the assignment of such lease to Purchaser
on its then existing terms.
2.10 ORIGINAL DOCUMENTS. Seller shall deliver to Purchaser at Closing and
Purchaser shall thereafter retain all the original books, records, files,
contracts and other documents referred to in Section 2.1 hereof arising out of
or related to Seller's business prior to Closing (collectively, the "Original
Records") except for Seller's corporate minute books and records of
shareholders' and directors' meetings; provided, however, that Seller shall
have the right for a period of four (4) years after Closing, to copy any and
all such Original Records during normal business hours and upon reasonable
notice to Purchaser.
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3. CLOSING AND POST CLOSING ADJUSTMENTS.
3.1 CLOSING. The consummation of the sale and purchase hereunder (the
"Closing") shall be effected by mail in accordance with the following
procedures:
3.1.1 Counsel for Purchaser will prepare and circulate for signature
a complete set of operative documents. Such documents will include this
Agreement, the Employment Agreement, the Xxxx of Sale, the Assumption
Agreements, the Sublease, the Contract Assignment Agreements, the Permit
Assignment Agreements, the License Assignment Agreements and Purchaser's
Opinion of Counsel and all other Closing documents to be delivered by
Purchaser.
3.1.2 Counsel for Seller will prepare and circulate Seller's Opinion
of Counsel and all other Closing documents to be delivered by Seller. Seller's
counsel shall also prepare the Promissory Note and the Security Agreement for
execution and delivery by Purchaser along with Seller's amended certificate of
incorporation indicating that Seller's name has been changed as provided in
Section 4.9.
3.1.3 Upon receipt of executed or final copies of all the documents
referred to in Sections 3.1.1 and 3.1.2, and satisfactory completion of all of
the Schedules and Exhibits thereto, Purchaser shall pay to Seller (by wire
transfer or by certified or cashier's check as the parties may agree) the first
installment of the Purchase Price (the "Closing"). The date of such payment is
referred to herein as the "Closing Date." The payment of the second
installment of the Purchase Price (the "Second Closing") shall occur on January
3, 1997 (the "Second Closing Date"), by wire transfer or by certified or
cashier's check as the parties may agree. Simultaneously with the payment of
the second installment of the Purchase Price, the Note and the Security
Agreement
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shall be canceled and returned to Purchaser and all liens with
respect thereto shall be immediately released.
3.2 ADJUSTMENTS.
3.2.1 Purchaser and Seller agree that the Purchase Price as set
forth in Section 2.3 is to be adjusted for the amount of any liabilities or
obligations of Seller arising before November 25, 1996 but not included on
Schedule 2.5.1(a) and any expenses, liabilities and obligations arising between
November 25, 1996 and the Closing Date in excess of the amount established
pursuant to Section 2.5.1 (a).
3.2.2 Within 60 days after the Closing Date, Purchaser shall present
to Seller a schedule itemizing the actual amount of all of the items set forth
on Schedule 3.2.1. The amounts so determined shall be used to compute and
arrive at a final adjustment to the Purchase Price hereunder (the "Adjustment").
3.3 PAYMENT OF ADJUSTMENT Promptly after the delivery of the finally
determined Adjustment pursuant to Section 3.2, the Adjustment shall be paid by
the Seller to the Purchaser.
4. REPRESENTATIONS WARRANTIES AND COVENANTS OF SELLER.
As of the Execution Date (for all matters arising prior thereto) and as of
the Closing Date, Seller and Xxxxxxx Xxxxxxx represent and warrant to Purchaser
as follows:
4.1 ORGANIZATION. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Florida and has
all requisite corporate power and authority to own its assets and to conduct
its business in the manner in which it is now conducted. Seller duly qualified
to do business in, and is in good standing under the laws of, each jurisdiction
in which the ownership or leasing of the Assets or the conduct of the Purchased
Business requires such qualification, which jurisdiction are listed on Schedule
4.1. Seller has no
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equity interest in and does not control, through stock ownership or otherwise,
any corporation, partnership, joint venture or other business entity. Attached
hereto as Exhibits 4.1A, 4.1B and 4.1C, respectively, are certified copies of
Seller's Certificate of Incorporation and By-Laws, including all amendments
through the Closing Date and a Certificate of Good Standing issued by the
Secretary of State of Florida dated as of a recent date. Xxxxxxx Xxxxxxx is
the sole shareholder of Seller.
4.2 POWER AND AUTHORITY. Seller has the corporate power and authority to
execute and deliver this Agreement and to perform its obligations hereunder.
This Agreement has been duly authorized, executed and delivered by Seller and,
assuming the due authorization, execution and delivery by Purchaser,
constitutes the legal, valid and binding obligation of Seller enforceable
against Seller in accordance with its terms. The President of Seller has been
duly authorized to execute this Agreement on behalf of Seller. Attached hereto
as Exhibit 4.2 is a true and complete copy of the corporate actions taken by
the Seller and its shareholders authorizing the transactions contemplated by
this Agreement.
4.3 FINANCIAL CONDITION.
4.3.1 Seller has delivered to Purchaser its Income Tax Returns for
calendar years 1993, 1994 and 1995, attached as Exhibit 4.3.1. The Income Tax
Returns are correct and complete in all material respects.
4.3.2 The tangible property and Intellectual Property used in the
conduct of Seller's business included in the Assets are not damaged, are fit
for their particular use, and are not defective, such that they are of a
quantity and quality usable in the ordinary course of the
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business of Seller, subject only to changes in the ordinary course of business.
All such property is located at Seller's principal place of business.
4.3.3 The accounts receivable included in the Assets and listed on
Schedule 4.3.3 are valid receivables, collectible to the extent of the excess
thereof over any reserves, discounts and allowances specifically included on
Schedule 4.3.3, and are subject to no defenses, counterclaims or set-offs.
4.4 ABSENCE OF UNDISCLOSED LIABILITIES. Seller has no liabilities or
obligations (whether absolute, accrued, contingent or otherwise and whether due
or to become due, including liabilities for taxes and interest and penalties
thereon) except (a) the Assumed Liabilities and (b) the liabilities and
obligations set forth on Schedule 4.4, all of which will be retained by Seller.
4.5 TAX RETURNS. Seller has filed with the appropriate governmental
agencies all required tax returns, is not in default with respect to any such
filing, is not delinquent in payment of any taxes due to any taxing authority
and has paid or made adequate provision or reserves for all taxes (including
all federal, state and local income taxes, withholding, corporate and excise
taxes, sales taxes, real and personal property taxes, unemployment insurance,
occupation, social security and Medicare taxes, and interest and penalties
thereon) payable by it, or attributable to periods prior to the Closing Date.
Seller has not given any waiver or extension of any period of limitation
governing the time of assessment or collection of any tax. The federal income
tax returns of Seller have never been audited by the United States Internal
Revenue Service. No deficiency in tax payment is claimed by the United States
Internal Revenue Service or any other tax authority for any of Seller's taxable
years. There are no tax audits currently pending with respect to Seller. To
the best of Seller's knowledge, there is no basis for assessment of any
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deficiency in federal or state income taxes or any other taxes or governmental
charges against Seller.
4.6 ABSENCE OF CERTAIN CHANGES. Except as disclosed on Schedule 4.6,
since November 25, 1996 through the Closing Date there has not been and will
not be:
(a) any material adverse change in the financial
condition, assets, liabilities, equity, operations, business
or prospects of Seller;
(b) any obligation or liability incurred by Seller
other than obligations and liabilities incurred in the
ordinary course of business;
(c) any material damage, destruction or loss, whether
or not covered by insurance, adversely affecting any Assets;
(d) any mortgage, encumbrance or lien placed on any
of the Assets;
(e) any purchase or sale or other disposition or any
agreement or other arrangement for the purchase or sale or
other disposition of any material assets;
(f) any change in the compensation or benefits
payable or to become payable by Seller to any of its officers,
employees or agents or any new bonus payment or arrangement or
employee benefit made to or with any of them;
(g) any change with respect to the management or
supervisory personnel of Seller; or
(h) any other event or condition of any character
materially and adversely affecting the financial condition or
business of Seller.
4.7 REAL ESTATE. Seller does not own any real estate and does not lease
any real estate to others. Seller has valid leasehold interests in all Real
Estate that it leases from others and the improvements situated thereon, all of
which are listed and identified on Schedule 4.7 (which includes the facility in
which the Central Monitoring Station is located which is leased to Xxxxxxx
Xxxxxxx and Xxxxxxxxx Xxxxxxx or their assignee (collectively, the "Jacksons")
as lessees). All such improvements and all fixtures are in good repair and
operating condition,
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normal wear and tear and required maintenance (which has heretofore been
regularly performed) excepted, and are suitable and fit for the purposes for
which they are currently being used. The Real Estate on which the Central
Monitoring Station is located complies with all Underwriter's Laboratories
standards for multi-user facilities. True and correct copies of all available
deeds, conveyances, leases and other related instruments have been delivered to
Purchaser. Seller's use and occupation of such Real Estate and the
improvements thereon comply in all material respects with the Lease. Neither
Seller nor xxx Xxxxxxxx are in default under the Lease, nor is there any event
or occurrence which with notice or passage of time will constitute a default
under the Lease. None of the improvements situated on the Real Estate leased
under the Lease encroaches on the property of any other person. The Lease for
the Real Estate on which the Central Monitoring Station is located as currently
in effect (and as to which Xxx Xxxxxxxx are lessees) is attached hereto as
Exhibit 4.7A (the "Lease"). On or prior to the Closing Date, all of Seller's
(and xxx Xxxxxxxx') right, title and interest in that portion of leased Real
Estate comprising the Central Monitoring Station shall have been conveyed to
Purchaser pursuant to a sublease agreement substantially in the form of Exhibit
4.7B hereto (the "Sublease"). In the event that Seller (or Xxx Xxxxxxxx)
exercises its (or their) right to purchase the Real Estate on which the Central
Monitoring Station is located, as provided in the Lease, Seller (or Xxx
Xxxxxxxx) shall then lease the portion of such facility comprising the Central
Monitoring Station to Purchaser on the same terms as are provided in the
Sublease.
4.8 TANGIBLE PERSONAL PROPERTY. Except as disclosed on Schedule 4.8,
Seller has and will transfer to Purchaser good title to all of the tangible
personal property which it owns, as reflected on Schedule 4.8. Seller has
valid leases for all tangible personal property which it leases from others,
all of which are identified on Schedule 4.8. On or prior to the Closing Date,
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all leases with respect to the tangible personal property of Seller shall have
been assigned to Purchaser pursuant to agreements substantially in the form of
Exhibit 4.8 hereto (the "Personal Property Lease Assignment Agreements"). The
machinery, equipment, furniture and fixtures, computer hardware and software
used by Seller are in good operating condition and repair, normal wear and tear
and required maintenance (which has heretofore been regularly performed)
excepted, and are suitable and fit for the purposes for which they are
currently being used. Any personal property lease listed on Schedule 4.8 that
is guaranteed by Xxxxxxx Xxxxxxx ("Guaranteed Leases") where the lessor will
not release Xxxxxxx'x guarantee will be paid off by Purchaser no later than the
Second Closing Date. The payoff amount for all of the personal property leases
does not in the aggregate exceed $189,007.58.
4.9 INTELLECTUAL PROPERTY. Schedule 4.9 lists and briefly describes all
of the Intellectual Property owned or used under license, as well as specifying
whether Seller is owner, licensor or licensee of any Intellectual Property.
All license agreements and all other instruments relating to licenses are
described in Schedule 4.9 and true and complete copies thereof have been
provided to Purchaser. None of the Intellectual Property has been held or
stipulated to be invalid in any litigation which has been concluded and the
validity of none of the Intellectual Property has been questioned in any
litigation currently pending or, to the best knowledge of Seller, threatened.
Seller owns or possesses under lease, license, or otherwise all intellectual
property necessary to sell its services and the performance by Seller of such
services does not infringe any rights of any other person. Seller has not
received any notice of conflict thereof with the asserted rights of others, and
Seller has the right to bring an action for any infringement of the
Intellectual Property. On or prior to the Closing Date, all licenses with
respect to Intellectual Property as to which Seller is Licensee shall be
assigned to Purchaser pursuant to License Assignment
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Agreements in the form of Exhibit 4.9. On or prior to the Closing Date Seller
shall have changed its name from AMJ Central Station Corporation to another
name dissimilar to its present name and do such other things as shall be
necessary or desirable to permit Purchaser to assume and use the Seller's name
from and after the Closing Date.
4.10 CONTRACTS. Schedule 4.10 is a true and complete list of all
Contracts (other than contracts with Dealers and Subscribers, all of which and
the related Accounts are listed on Schedule 4.20), to which the Company is a
party which are not otherwise listed on Schedules 2.1(n), 4.7 or 4.9. All such
Contracts (including those with the parties listed on Schedule 4.20) are
enforceable against the parties thereto in accordance with their respective
terms. Other than defaults of Dealers or Subscribers under monitoring
contracts which are in the aggregate not material, no default exists with
respect to any such Contracts and no event or occurrence exists which with
notice or passage of time will result in a default. On or prior to the Closing
Date, all Contracts to which Seller is a party shall be assigned to Purchaser
pursuant to Contract Assignment Agreements in the form of Exhibit 4.10
("Contract Assignment" Agreements). The contracts with the Dealers and
Subscribers reflected on Schedule 4.20 shall be assigned to Purchaser pursuant
to a single Assignment Agreement assigning all such contracts which shall be
listed on a schedule thereto. Except for the Contracts listed on Schedules
2.1(n), 4.7, 4.9, 4.10 and 4.20, there is no Contract:
(a) extending for a period of time longer than 12
months;
(b) involving expenditures or receipts in excess of
$3,000;
(c) relating to the borrowing of money or guarantying
any obligation for borrowed money or otherwise, other than
endorsements for collection;
(d) with any insider or any affiliate;
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(e) prohibiting or substantially restricting Seller
from freely engaging in business in any part of the world;
(f) with any Dealer; or
(g) any other contract, commitment or lease outside
of the usual and ordinary course of business.
4.11 PERMITS. Seller or Xxxxxxx Xxxxxxx ("Xxxxxxx") holds all of the
Permits required by Applicable Law for Seller to own all of the Assets and to
operate the Purchased Business as now conducted. Schedule 4.11 contains a true
and complete list of all such Permits and the holder thereof. All such Permits
are currently in effect. Seller has received no notice and has no reason to
believe that such Permits will not continue to be in effect and available for
use by Purchaser in operating the Purchased Business immediately following the
Closing. Except as specified on Schedule 4.11, all of the Permits are
renewable in the ordinary course of business, or are assignable to Purchaser
pursuant to this Agreement, or are such that Seller has no reason to believe
that Purchaser will not be granted such Permit upon submission of a proper
application. At or prior to Closing, all assignable Permits will be assigned
to Purchaser pursuant to agreements in the form of Exhibit 4.11 attached hereto
(the "Permit Assignment Agreements"). Xxxxxxx shall remain an employee of
Purchaser, on the terms included in the Employment Agreement attached hereto as
Exhibit 7.1(h), and retain on behalf of Purchaser any Permit held by Xxxxxxx
necessary to operate the Purchased Business for the period provided therein, or
if such Permits are transferable transfer such Permits to a permanent employee
of Purchaser.
4.12 COMPLIANCE WITH APPLICABLE LAW AND PERMITS. To Seller's knowledge,
except as disclosed on Schedule 4.12, Seller is conducting, and has conducted,
the Purchased Business in compliance with all Applicable Laws and Permits, and
has received no notice that it is in breach of any such Applicable Law or
Permit. To Seller's knowledge, Seller (and xxx Xxxxxxxx)
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and its predecessors in possession of the Real Estate have processed, stored,
disposed, transported, handled, emitted, discharged, and released any Waste
Material, whether on or off the Real Estate leased by it, only in compliance
with Applicable Law and Permits, and no such disposal will form the basis for
any claim, demand, or action seeking the clean-up of any site, location, body
of water, surface, or subsurface, wherever located. To Seller's knowledge, no
Waste Material, tanks, containers, cylinders, drums or cans were buried on the
Real Estate leased by Seller (or xxx Xxxxxxxx) or any other party during or
preceding Seller's (or xxx Xxxxxxxx') leasing of the Real Estate. Seller has
delivered to Purchaser copies of all internal or external environmental audit
reports prepared by or for Seller (or xxx Xxxxxxxx).
4.13 NO CONFLICT. Neither the entering into nor the delivery of this
Agreement nor the completion of the transactions contemplated hereby by Seller
will result in the violation of the Certificate of Incorporation or By-Laws of
Seller or any resolutions of its shareholders or board of directors; any
Contract; or any Applicable Law or Permit. Seller is not required to give
prior notice to, or obtain any consent, approval or authorization of, or make
any declaration or filing with, any governmental authority, creditor or other
person in connection with the execution or delivery of this Agreement or the
consummation of the transactions contemplated hereby.
4.14 NO ENCUMBRANCES. Except as set forth in Schedule 2.2, Seller has
good title to all Assets which it owns, free and clear of all liens, charges,
security interests, encumbrances or any other rights or interests of others.
4.15 NO DEFAULTS. Except as set forth in Schedule 4.15, Seller has taken
all actions reasonably necessary to enable it to perform when due all
obligations under any Contracts or Permits, all of which are in full force and
effect, and there has not occurred any default or other
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event which with the lapse of time or giving of notice or both may become a
default under any of the foregoing documents.
4.16 LITIGATION. Except as set forth on Schedule 4.16, there are no
claims, actions, suits or proceedings pending or, to the best knowledge of
Seller, threatened by or against Seller or affecting it in any court or before
any governmental or administrative authority, including but not limited to
claims, actions or suits by Dealers and/or Subscribers. Seller is subject to
no decree, judgment, order or notice of any kind which enjoins or restrains it
from taking any action of any kind.
4.17 EMPLOYEE AND LABOR MATTERS. To the knowledge of Seller, none of
Seller's key Employees, and no group of Employees, plans to terminate his, her
or their employment with Seller or to refuse employment with Purchaser. Seller
has not been, and is not, a party to any collective bargaining or other union
agreement. Seller is in compliance in all material respects with all
Applicable Laws respecting employment and employment practices, immigration
laws, terms and conditions of employment, and wages and hours. None of
Seller's employees is represented by a union nor are there any applications for
certification of a collective bargaining agent pending. Within the last two
years, Seller has experienced no, and there is not presently pending or
existing any, union organization attempts or work stoppages. There has not
been, and there is not presently pending or existing, any unfair labor practice
or discrimination charge or complaint against Seller or, to the knowledge of
Seller, threatened, before the National Labor Relations Board, the Equal
Employment Opportunity Commission or any other similar national, state or local
body. There are no strikes, requests for representation, slowdowns, picketing,
work stoppages, or grievances actually pending or threatened against or
affecting Seller. No question
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concerning representation as defined in the National Labor Relations Act has
been raised with Seller or, to the knowledge of Seller, is threatened against
it.
4.18 EMPLOYEE BENEFITS.
4.18.1 Seller has never been and is not a party to (i) any employee
benefit plans as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or to (ii) any employment,
consulting, agency, commission, retirement, stock, stock option, incentive pay,
severance pay or non-competition agreement or any profit-sharing, vacation,
deferred compensation, excess or pension agreements or plans, or similar
arrangements, whether written or oral, or formal or informal, other than the
health insurance plan identified on Schedule 4.18 and defined herein as the
"Plan" (a true and correct copy of which have been delivered to Purchaser).
All obligations, whether arising by operation of law, by contract or by past
custom, for payments with respect to the Plan or with respect to unemployment
compensation benefits, social security benefits, accrued vacation, or other
benefits for Employees, arising as a result of employment during periods prior
to the Closing Date, other than those included on Schedule 2.5.1(a), have been
or shall be paid by Seller. Any payments in excess of those provided for on
Schedule 2.5.1(a) shall be borne by Seller.
4.18.2 Upon termination by Purchaser of the employment of any Employee,
Purchaser shall not incur any liability for any severance or termination pay or
other similar payment related to that Employee's employment by Seller prior to
the Effective Time (such liability being solely Seller's).
4.18.3 The Plan is in compliance with its terms and with ERISA and
other applicable laws and all agreements and instruments applicable to the
Plan. No violation of
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ERISA has at any time occurred in connection with the administration of the
Plan, and there are no actions, suits, or claims (other than routine,
non-contested claims for benefits) pending or threatened against the Plan, or
any administrator or fiduciary thereof, which could result in any liability.
4.18.4 Full payment as of the Effective Time has been made of all
amounts which Seller is required to have paid under the Plan up to the
Effective Time.
4.18.5 The Seller does not provide, nor has it at any time provided,
coverage under any welfare benefit plan, as defined in Section 3(1) of ERISA
(including, but not limited to, life insurance, disability, medical, dental,
prescription drugs, or accidental death or dismemberment) to any of its
retirees, other than any continuation or conversion coverage which any such
retiree may have purchased at his own expense.
4.19 SUFFICIENT ASSETS. The Assets constitute all of the tangible
property and Intellectual Property and other assets necessary and sufficient
for the conduct of, and used or held by Seller in connection with, the
Purchased Business as it is presently conducted.
4.20 CUSTOMERS, DEALERS, DISTRIBUTORS AND SUPPLIERS. Schedule 4.20
contains a true and complete list of all Dealers and the number of Subscribers
whose Accounts are monitored for each such Dealer. To Seller's knowledge,
there are no problems in Seller's business relations with the foregoing persons
and, except as described in Schedule 4.20, there are no disputes between Seller
and any of such persons pending or, to the knowledge of Seller, threatened.
True and complete copies of all contracts with the foregoing persons in effect
as of the Execution Date have been delivered to Purchaser and are in full force
and effect in accordance with their terms, and there are no defaults or
assertions of default thereunder. True and complete copies of all such
contracts executed between the Execution Date and the Closing Date will be
delivered to
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Purchaser at the Closing and they will be in full force and effect in
accordance with their terms and there will be no defaults or assertions of
default thereunder. Seller is not aware of any Dealer that is planning to
terminate its relationship with Seller or the Purchased Business. One true and
complete copy each of Seller's standard "Alarm Company Monitoring Agreement"
form which it uses with Dealers is included as Exhibit 4.20. Seller has in
force with each Dealer a valid and enforceable contract utilizing said forms.
Seller shall use its best efforts to renew each such contract which expires
during the Interim Period. Seller has neither agreed to modify, nor modified,
the preprinted text of either such form in contracts with any of the Dealers or
Subscribers in the twelve months ended on the Execution Date and shall not
agree to modify either form or use any other form of agreement from the
Execution Date through the Closing Date.
4.21 RELATED PARTY TRANSACTIONS. Except as set forth in Schedule 4.21 or
as contemplated by this Agreement, no shareholder, relative of a shareholder,
partner, officer or director of Seller has any interest in any of the Assets or
is a party to any Contract with Seller affecting the Purchased Business or the
Assets.
4.22 DISCLOSURE. No representation or warranty by Seller in this
Agreement, and no certificate or written statement furnished or to be furnished
to Purchaser pursuant to this Agreement or in connection with the transactions
contemplated hereby, contains or shall contain any untrue statement of material
fact, or omits or shall omit to state a material fact necessary in order to
make the statements contained herein and therein not misleading. There is no
fact known to Seller which materially adversely affects or in the future would
(so far as can now be reasonably foreseen) materially adversely affect the
Purchased Business, its financial condition or
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its business which has not been set forth in this Agreement, any Schedule,
Exhibit, or other information or written materials provided by Seller to Buyer.
4.23 MINIMUM NUMBER OF SUBSCRIBERS. As of the Execution Date the Central
Monitoring Station is monitoring the security alarm systems of a minimum of
50,000 Subscribers and is earning a minimum of One Hundred Ninety Thousand
Dollars ($190,000.00) in RMR from such monitoring activities.
4.24 CONTRACTS AND POLICIES OF INSURANCE. Schedule 2.1(n) includes a true
and complete list of all contracts and policies of insurance which Seller has
in force on the Execution Date and which are assignable either without the need
to obtain the respective insurer's consent or upon obtaining the respective
insurer's consent (which consent shall be obtained at a or prior to the Closing
Date). Seller shall renew each such contract or policy which expires during
the Interim Period or obtain a new contract or policy with the same or another
insurer containing substantially the same terms and conditions.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF PURCHASER.
As of the date hereof and as of the Closing Date, Purchaser represents and
warrants to, and agrees with, Seller as follows:
5.1 ORGANIZATION. Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and
Purchaser has provided or will provide Seller at Closing a photocopy of its
Certificate of Incorporation and a photocopy of its By-Laws.
5.2 POWER OF AUTHORITY. Purchaser has the power and authority to execute
and deliver this Agreement and to perform its obligations hereunder. This
Agreement has been duly authorized, executed, and delivered by Purchaser and,
assuming the due authorization, execution
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and delivery hereof by Seller, constitutes the legal, valid and binding
obligation of Purchaser enforceable against Purchaser in accordance with its
terms. The President of Purchaser has been duly authorized to execute this
Agreement on behalf of Purchaser. Attached on Exhibit 5.2 is a true and
complete copy of the corporate resolutions authorizing the transactions
contemplated by this Agreement.
5.3 NO CONFLICT. Neither the entering into nor the delivery of this
Agreement nor the completion of the transactions contemplated hereby by
Purchaser will result in the violation of or default under:
(a) any of the provisions of the Articles of
Incorporation or By-Laws of Purchaser;
(b) any agreement or other instrument to which
Purchaser is a party or by which Purchaser is bound; or
(c) any law, rule, regulation, order, judgment or
decree applicable to Purchaser.
5.4 DISCLOSURE. No representation or warranty by Purchaser in this
Agreement, and no certificate or written statement furnished or to be furnished
to Seller pursuant to this Agreement or in connection with the transactions
contemplated hereby, contains or shall contain any untrue statement of material
fact, or omits or shall omit to state a material fact necessary in order to
make the statements contained herein and therein not misleading.
6. COVENANTS.
6.1 CONTINUED CONDUCT OF BUSINESS DURING INTERIM PERIOD. During the
period beginning November 25, 1996 and ending on the Closing Date, Seller has
and shall continue to:
(a) conduct the Purchased Business only in the usual
and ordinary course, consistent with past practice;
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(b) refrain from making any material change in
Seller's accounting practices or procedures;
(c) refrain from incurring any obligations or
liabilities other than those that are usual and normal in the
ordinary course of business, consistent with past practice;
(d) refrain from declaring or paying any dividend or
distribution on Seller's stock, or redeeming, purchasing or
obligating Seller to redeem or purchase any of its stock;
(e) refrain from making any change in the
compensation or benefit payable or to become payable to any
Employees or making any new bonus payment or arrangement or
benefit to or with any of them;
(f) refrain from making any loans to any of its
officers, directors, employees or agents;
(g) refrain from making any voluntary capital
expenditures without the prior written consent of Purchaser;
(h) have in effect and maintain at all times all
insurance now in force as described in Schedule 2.1(n),
including third party liability insurance for damages which
may be suffered by any Subscriber, in the amount of at least
two million dollars ($2,000,000) per occurrence;
(i) use its best efforts to preserve the Purchased
Business intact, to preserve and maintain all Intellectual
Property, to keep available the services of the present
officers and employees of Seller and to make no changes
therein, and to preserve the goodwill of all suppliers,
customers, licensors, sales representatives and others having
business relations with Seller;
(j) conduct the Purchased Business in accordance with
Applicable Law; and
(k) be solely responsible for the management of the
Purchased Business; provided however, that during said period
Seller shall permit Purchaser, at Purchaser's sole option and
expense, to locate in Seller's principal place of business
from time to time during normal business hours (on a full or
part-time basis) not more than two (2) administrative and/or
technical managers ("Purchaser's Managers") for the purpose of
consulting with and assisting Seller's management personnel in
the management of the Purchased Business, it being understood
that Purchaser's Managers shall work in an advisory capacity
only. Purchaser shall, to the best of its ability, assist
Seller in the conduct of the Purchased Business during the
Interim Period but shall incur no liability to Seller for
advice given to Seller.
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6.2 ACCESS TO RECORDS. Purchaser's representatives, attorneys and
accountants have had, prior to the date hereof, and shall continue to have
until the Closing Date and thereafter, reasonable access to the records
(including all contracts with Dealers and Subscribers), audits and properties
of Seller as well as to all information relating to taxes, commitments,
contracts, title to properties and the financial condition of, or otherwise
pertaining to, the Seller. From the date hereof, Seller agrees to cause its
accountants to cooperate with Purchaser and its accountants in making available
all financial information concerning Seller, as is requested, and Purchaser and
its accountants shall have the right to examine all working papers pertaining
to examinations of Seller, or preparation of its reports, by its accountants.
Unless and until the purchase contemplated herein is consummated, Purchaser
shall hold in confidence, and shall use its best efforts to cause its
representatives, attorneys and accountants to hold in confidence, all
information obtained as aforesaid. During the Interim Period Purchaser shall
neither reproduce nor remove from Seller's premises, without Seller's prior
consent, any list of Dealers or Subscribers prepared by Seller. If the
purchase contemplated by this Agreement is not consummated, Purchaser shall
return to Seller or destroy (at Seller's option) all copies of documents
received from Seller as Seller may reasonably request.
6.3 ACTION BY SELLER. Seller shall use its best efforts to cause each of
the conditions set forth in Section 6.1 to be fulfilled on or prior to the
Closing Date.
6.4 ACTION BY PURCHASER. Purchaser shall use its best efforts to cause
each of the conditions set forth in Section 7.3 to be fulfilled on or prior to
the Closing Date.
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6.5 EMPLOYEES.
6.5.1 Schedule 6.5.1 is a true and complete list of the Employees and
their respective annual salaries as of the date hereof. Beginning at the
Effective Time, Purchaser shall offer to employ all of the Employees on
substantially the same terms and conditions of employment, taken as a whole, as
are in effect with Seller immediately prior to the Effective Time. Seller
shall use its best efforts to encourage all Employees to accept Purchaser's
offer of employment. Prior to the Effective Time, Purchaser shall not be
deemed an employer of any Employees or be responsible for any damage caused to
any third party or for any liability incurred by Seller or the Purchased
Business. Seller shall be responsible for the health care continuation
requirements of all Employees and former Employees of the Seller who worked in
the Purchased Business (other than those Employees who are subsequently
employed by Purchaser), such continuation to be made in accordance with the
continuation coverage requirements of Part 6 of Subtitle B of Title I of ERISA
and Section 4980B of the Code.
6.5.2 Purchaser shall treat the employment with Seller of all Employees
who accept Purchaser's offer of employment (the "Transferred Employees") as
employment with Purchaser for all seniority-related purposes, including for the
purposes of any of Purchaser's medical, accident and sickness, disability, sick
leave policies and for the purpose of determining eligibility for vacations and
statutory holidays. Purchaser shall use its best efforts to cause the relevant
insurance carriers and other third parties to waive all restrictions and
limitations for any pre-existing medical condition existing at the Effective
Time of any of the Transferred Employees and their eligible dependents for the
purposes of any such plans.
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6.5.3 Purchaser shall grant paid vacation time to any of the
Transferred Employees who had accrued paid vacation time due as of the
Effective Time for any such vacation days to be taken on or after the Closing
Date. Purchaser shall not be responsible for any pay in lieu of vacation that
may be due to any Employee who rejects Purchaser's offer of employment. All
other obligations in respect of the Employees which have been included in
calculating the Adjustment or which have accrued in the ordinary course of
business subsequent to November 25, 1996 shall be paid by Purchaser. All other
obligations in respect of the Employees arising prior to the Closing Date shall
be paid by Seller.
6.6 NO SHOP. From the Execution Date through the Closing Date, neither
Seller nor any of its officers, directors, affiliates, employees,
representatives or agents, shall, directly or indirectly, solicit, initiate or
participate in any way in discussions or negotiations with, or provide any
information or assistance to, any corporation, partnership, individual, person
or other entity or group with respect to the sale of Seller or the Assets
(other than sales of inventory in the ordinary course of business) or assist or
participate in, facilitate or encourage any effort or attempt by any other
person to do or seek any of the foregoing. Seller shall promptly communicate
to Purchaser the terms of any proposal or contact which it may receive in
respect of any such transaction.
6.7 NONCOMPETITION AND NONSOLICITATION. During the period commencing with
the Execution Date and ending on the third (3rd) anniversary of the Closing
Date, neither Seller or any of its principal shareholders agreeing to be bound
by this Section 6.7 shall:
6.7.1 enter into competition with Purchaser by establishing a remote
alarm system monitoring center in Florida providing third party alarm system
monitoring or similar
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services to those provided by the Purchased Business from any location to any
person within twenty five (25) miles of any location where Purchaser or any
subsidiary of Purchaser provides such services;
6.7.2 solicit any Dealer or Subscriber for the purposes of providing
any services similar to those provided by the Purchased Business, either by such
party or by any other person or entity;
6.7.3 reveal the customer list of Seller and the Purchased Business to
any person;
6.7.4 employ any employee of Purchaser or its subsidiaries, or any of
the Employees or solicit or encourage any such employee to terminate his
employment with any of the foregoing; or
6.7.5 take any other action which is intended to, or which would
reasonably be expected to:
(a) adversely affect Purchaser's interest in any Account;
(b) adversely affect Purchaser's contractual relationship with
any Dealer or Subscriber; or
(c) discourage any Dealer, Subscriber or supplier from
continuing its business relationship with Purchaser after the
Closing Date on the same terms as were maintained with Seller.
Notwithstanding any other provision of this Agreement, Seller agrees that
neither money damages nor arbitration would be a sufficient remedy for breach
of this Section 6.7 and that the Purchaser shall be entitled to specific
performance, injunctive relief or other equitable relief as a
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remedy for breach of this Section 6.7. Such remedies shall be in addition to
any other remedies available at law or in equity. The parties agree that the
state and federal courts located in Broward County, Florida are the proper
venue for seeking such relief, and no party shall attempt to have the venue of
any such action changed to any other court.
7. CONDITIONS TO OBLIGATIONS OF PURCHASER AND SELLER.
7.1 CONDITIONS TO OBLIGATIONS OF PURCHASER. All obligations of Purchaser
hereunder are, at its option, subject to the fulfillment of each of the
following conditions on or before the Closing Date and the Second Closing
Date:
(a) The representations and warranties of Seller set
forth in Section 4 shall be true and correct on the Closing
Date with the same force and effect as if made at and as of
such date;
(b) Seller shall have performed or complied with all
of the terms, covenants and conditions of this Agreement to be
performed or complied with by Seller at or prior to the
Closing Date.
(c) No action or proceeding shall be pending by any
person, government, governmental, authority, regulatory body
or agency to enjoin, restrict or prohibit:
(1) the sale and purchase of the Assets contemplated hereby; or
(2) the right of Purchaser to own the Assets or conduct the
Purchased Business;
(d) No material Assets shall have been stolen, damaged or
destroyed and there shall have occurred no event or events
having a material adverse effect on the financial condition,
assets, liabilities, equity, results of operations, business
or prospects of Seller, whether or not in the ordinary
course of business;
(e) Seller shall have delivered to Purchaser the
opinion of Seller's counsel substantially in the form of
Exhibit 7.1(e) (which shall be reconfirmed as of the Second
Closing Date);
(f) Seller (or xxx Xxxxxxxx, in the case of the
Sublease) shall have delivered executed Contract Assignment
Agreements (including but not limited to
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those for the contracts and policies of insurance listed on
Schedule 2.1(n)), the Sublease, the Personal Property Lease
Assignment Agreements, the License Assignment Agreements, and
any and all other authorizations, permits and consents
necessary to lawfully own and operate the Purchased Business,
including executed consents where necessary to accomplish the
assignment in conformity with the underlying agreements, for
all material contracts, leases, agreements, insurance policies
and permits to be acquired by Purchaser pursuant to this
Agreement;
(g) Seller shall have received any and all other
authorizations, permits and consents necessary to validly
sell, assign and transfer the Assets to Purchaser and for
Purchaser's assumption of the Assumed Liabilities; and
(h) Xxxxxxx and Purchaser shall have executed and
delivered an employment agreement, substantially in the form
of Exhibit 7.1(h) (the "Employment Agreement").
7.2 PURCHASER'S OPTION.
7.2.1 In case any condition referred to in Section 7.1 to be performed
or complied with at or prior to the Closing Date shall not have been so
performed or complied with, Purchaser may, without limiting any other right that
Purchaser may have, at its sole option, either:
(a) rescind this Agreement by notice to Seller, and
in such event Purchaser shall be released from all obligations
hereunder; or
(b) waive compliance with any such term, covenant or
condition in whole or in part.
7.2.2 Notwithstanding any provision to the contrary herein contained,
Purchaser may terminate this Agreement at any time prior to the Closing without
being required to give any reason or to demonstrate any cause for such
termination. Purchaser shall notify Seller of such termination in writing. If
Purchaser terminates this Agreement as provided in this Section 7.2.2, this
Agreement shall thereupon terminate, and neither Seller nor Purchaser shall
have further liability to each other. In such event, Purchaser shall, however,
pursuant to Section 6.2, return to
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Seller or destroy (at Seller's option) all copies of documents received from
Seller in contemplation of the purchase described in this Agreement.
7.3 CONDITIONS TO OBLIGATIONS OF SELLER. All Obligations of Seller
hereunder are, at its option, subject to the fulfillment of each of the
following conditions on or before the Closing Date.
(a) The representations and warranties of Purchaser set forth
in Section 5 shall be true and correct at the Closing Date
with the force and effect as if made at and as of such date;
(b) Purchaser shall have performed or complied with all of the
terms, covenants and conditions of this Agreement to be
performed or complied with by Purchaser at or prior to the
Closing Date;
(c) No action or proceeding shall be pending by an person,
government, governmental authority, regulatory body or agency
to enjoin, restrict, or prohibit the sale and purchase of the
Assets contemplated hereby;
(d) Purchaser shall have delivered to Seller opinion of Purchaser's
counsel substantially in the form of Exhibit 7.3(d) (which
shall be reconfirmed at the Second Closing); and
(e) Purchaser shall have received any and all other authorizations,
permits and consents necessary for Purchaser to purchase the
Assets and to assume the Assumed Liabilities.
7.4 SELLER'S OPTION. In case any condition referred to in Section 7.3 to
be performed or complied with as of the Closing Date shall not have been so
performed or complied with, Seller may, without limiting any other right that
Seller may have, at its sole option, either;
(a) rescind this Agreement by notice to Purchaser,
and in such event Seller shall be released from all
obligations hereunder; or
(b) waive compliance with any such term, covenant or
condition in whole or in part.
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8. INDEMNIFICATION
8.1 INDEMNIFICATION BY SELLER.
Seller and its principal shareholder, Xxxxxxx Xxxxxxx, jointly and
severally hereby agree to indemnify and hold Purchaser harmless against any
Loss arising out of or due to:
(a) any material breach of any representation or
warranty by Seller contained herein or in any document
delivered hereunder;
(b) any material breach of any covenant or agreement
by Seller contained herein;
(c) any material breach of any covenant or agreement
by Seller contained herein to be performed prior to or after
the Closing Date.
(d) liabilities of Seller which relate to the
ownership or use of any of the Assets or the conduct of the
Purchased Business prior to the Closing Date which are not
Assumed Liabilities including liabilities arising from or
relating to:
(1) taxes imposed on Seller, the Purchased Business or any
other Assets for any period prior to the Closing Date
unless disclosed, assumed and reserved against;
(2) The litigation set forth on Schedule 4.16, less any
amounts covered by Seller's casualty and liability
insurance.
(3) injuries to, the death of, or the contraction of
diseases by, any person resulting from exposure to
hazardous substances or other materials prior to the
Closing Date without regard to when such injuries or
diseases are first manifested but only to the extent
not covered by Seller's workers' compensation, casualty
or other liability insurance;
(4) the generation, processing, handling, storage or
disposition of or contamination by Waste Material,
whether on or off the Real Estate, prior to the Closing
Date, including costs and penalties incurred in the
monitoring, cleanup or correction of any such event
or condition, but only to the extent not covered
by casualty or other liability insurance;
(5) any pollution or other damage or injury to the
environment, whether on or off the Real Estate, arising
out of events occurring or
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conditions existing prior to the Closing date, and
caused or contributed to by Seller, including costs and
penalties incurred in the monitoring, cleanup or
correction of any such event or condition, but only to
the extent not covered by casualty or other liability
insurance; and
(e) any and all actions, suits, proceedings, demands,
assessments or judgments, costs and expenses incidental to any
of the foregoing matters set forth in Section 8.1(a) through
(d).
8.2 INDEMNIFICATION BY PURCHASER. Purchaser shall indemnify and hold
Seller harmless against any Loss arising out of or resulting from:
(a) any material breach of any representation or
warranty by Purchaser contained herein or in any document
delivered hereunder;
(b) any material breach of any covenant or agreement
by Purchaser contained herein;
(c) any material breach of any covenant or agreement
by Purchaser contained herein to be performed before or after
the Closing Date; or
(d) the Assumed Liabilities and any other liabilities
with respect to the conduct of the Purchased Business on and
after the Closing Date, including liabilities arising from or
relating to:
(1) any taxes imposed on the Assets or
the conduct by the Purchaser of the Purchased Business
for periods on or after the Closing date;
(2) injuries to, the death of or the
contraction of any diseases by, any person resulting
from exposure to hazardous substances or other materials
on or after the Closing Date, but only to the extent not
covered by casualty or other liability insurance;
(3) the generation, processing, handling,
storage or disposition of or contamination by any Waste
Material, whether on or off the Real Estate or other
premises from which the Purchased Business shall be
conducted, on or after the Closing Date, including costs
and penalties incurred in the monitoring, cleanup or
correction of any such event, but only to the extent not
covered by casualty or other liability insurance; and
(4) any pollution or other damage or
injury to the environment, whether on or off the Real
Estate or other premises from which the
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Purchased Business shall be conducted, occurring on or
after the Closing Date, and caused to by Purchaser,
including costs and penalties incurred in the monitoring,
cleanup or correction of any such event, but only to the
extent not covered by casualty or other liability
insurance.
8.3 INDEMNIFICATION PROCEDURES.
8.3.1 For the purposes of this Section 8.3, the term "Indemnitee" shall
refer to the person or persons entitled, or claiming to be entitled, to be
indemnified, pursuant to the provisions of Section 8.1 or 8.2. The term
"Indemnitor" shall refer to the person or persons having the obligation to
indemnify pursuant to such provisions.
8.3.2 An Indemnitee shall promptly give the Indemnitor written notice
of any matter which an Indemnitee has determined has given or could give rise
to a right of indemnification under this Agreement, stating the amount of the
Loss, if known, and method of computation thereof, all with reasonable
particularity and containing a reference to the provisions of this Agreement in
respect of which such right of indemnification is claimed or arises. If an
Indemnitee shall receive notice of any claim by a third party which is or may
be subject to indemnification (a "Third Party Claim"), the Indemnitee shall
give the Indemnitor prompt written notice of such Third Party Claim and shall
permit the Indemnitor, at its option, to participate in the defense of such
Third Party Claim by counsel of its own choice and at its expense. If,
however, the Indemnitor acknowledges in writing its obligation to indemnify the
Indemnitee hereunder against all Losses that may result from such Third Party
Claim (subject to the limitations set forth herein), then the Indemnitor shall
be entitled, at its option, to assume and control the defense of such Third
Party Claim at its expense and through counsel of its choice. In the event the
Indemnitor exercises its right to undertake the defense of any such Third Party
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Claim, the Indemnitee shall co-operate with the Indemnitor in such defense and
make available to the Indemnitor, at the Indemnitor's expense, all witnesses,
pertinent records, materials and information in its possession or under its
control relating thereto as is reasonably required by the Indemnitor.
Similarly, in the event the Indemnitee is, directly or indirectly, conducting
the defense against any such Third Party Claim, the Indemnitor shall co-operate
with the Indemnitee in such defense and make available to it all such
witnesses, records, materials and information in its possession or under its
control relating thereto as is reasonably required by the Indemnitee. No such
Third Party Claim may be settled by the Indemnitor without the written consent
of the Indemnitee, unless the settlement involves only the payment of money by
the Indemnitor. Similarly, no Third Party Claim which is being defended in
good faith by the Indemnitor shall be settled by the Indemnitee without the
written consent of the Indemnitor.
8.4 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND INDEMNITY OBLIGATIONS.
All representations, warranties, covenants and indemnification obligations
contained in this Agreement, shall survive the Closing and any investigation
made at any time by or on behalf of a party, for a period of three years
following the Closing.
8.5 CALCULATION OF LOSSES.
8.5.1 Losses shall be determined after taking into account any
insurance proceeds received by an Indemnitee or its affiliates from a
non-affiliated insurance company on account of such Losses (after taking into
account any costs incurred in obtaining such proceeds and any increase,
determined in the reasonable judgment of the Indemnitee and confirmed by
insurance company, in insurance premiums as a result of a claim with respect to
such proceeds).
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9. MISCELLANEOUS
9.1 BROKERAGE. Purchaser and Seller each represent and warrant to the
other that they have retained no broker or other person entitled to a
commission, finder's fee or other like payment in connection with the
transactions contemplated by this Agreement.
9.2 ASSIGNMENT. The respective rights and obligations of Purchaser and
Seller under this Agreement shall not be assignable by Purchaser or Seller
without the prior written consent of the other; provided however, that
Purchaser shall not be required to obtain Seller's prior written consent for an
assignment of all the assets and liabilities of Purchaser or of this Agreement
in its entirety to a wholly-owned subsidiary of Purchaser, to the parent
company of Purchaser owning all the issued and outstanding shares of stock of
or substantially all of the membership interests (except for qualifying
interests) in Purchaser, to a sister corporation of Purchaser wholly-owned by
Purchaser's parent company, or to a sister limited liability company in which
Purchaser's parent company owns substantially all of the membership interests
except for qualifying interests. Upon such demonstration by Purchaser, all the
rights and powers of Purchaser and remedies available to it hereunder shall
extend to and be enforceable by such subsidiary, parent, or sister company, and
appropriate changes shall be made in all appropriate documents and in
applicable parts of this Agreement, reflecting such assignment but no such
assignment shall release Purchaser from its obligations hereunder. Nothing
herein expressed or implied shall confer upon any person, other than the
parties hereto or their respective successors, assigns, heirs and legal
representatives, any rights, remedies, obligations or liabilities under or by
reason of this Agreement.
9.3 NOTICES. Any notice, consent, request, claim, demand, instruction or
other communication to be given hereunder by Purchaser or Seller shall be in
writing and shall be
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deemed to have been given when actually received. Any such notice, consent,
request, claim, demand, instruction or other communication may be given by
mail, express package service, telex, or telefax, and shall be addressed as
follows:
If to Purchaser, to:
Security Associates International, Inc..
0000 X. Xxxxxxxxx Xxxxxxx Xxxx
Xxxxxxxxx Xxxxxxx, XX 00000-0000
Attention: President
with a copy to:
Xxxxxxxx & Xxxxxx, Ltd.
00 Xxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxxx
If to Seller, to:
Xxxxxxx Xxxxxxx
0000 X.X. 0xx Xxxxxx
Xxxxxxx Xxxxx, XX 00000
with a copy to:
Xxxxx Xxxxxxx
Romanik, Lavin, Xxxx & Paoli
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
or to such other address as a party may from time to time designate by
notice to the other.
9.4 COSTS. The expenses of each party in connection with this Agreement
shall be the sole responsibility of such party.
9.5 INCORPORATION BY REFERENCE. The Schedules, Exhibits, certificates and
other documents attached hereto or referred to herein are deemed to be a part
of this Agreement and are incorporated herein by this reference.
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9.6 ENTIRE AGREEMENT. This Agreement and the other agreements referred to
herein set forth the entire understanding of the parties relating to the
subject matter hereof and supersede all prior agreements, understandings, and
representations, whether oral or written. This Agreement shall not be
modified, amended or terminated except by written agreement of the parties.
Captions appearing in this Agreement are for convenience only and shall not be
deemed to explain, limit or amplify the provisions hereof. Unless and only to
the extent specified in this Agreement, Seller and Purchaser do not intend to
confer any rights or benefits on any third parties arising out of or related to
this Agreement or the transactions contemplated herein.
9.7 SET OFF RIGHTS. In addition to the rights of the parties to
indemnification pursuant to Section 8 hereunder, Seller and Purchaser shall
each have the right to set off against any debt owed to the other party any
damages or losses of any kind suffered as a result of the other party's failure
to perform its obligations under this Agreement, breach of warranty or
covenant, or any other act or failure to act in connection with this Agreement;
provided that such right of set off is not modified or prohibited by an award
in arbitration or a judgment by a court of competent jurisdiction.
Nothwithstanding the foregoing, Purchaser shall not have any right of set-off
with respect to its obligations under the Promissory Note and Sublease.
9.8 COUNTERPARTS. This Agreement may be executed in two or more identical
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same document.
9.9 ARBITRATION. Any controversy or claim arising out of or related to
this Agreement, or the breach thereof, shall be resolved by binding arbitration
administered by the American Arbitration Association in accordance with its
Commercial Arbitration Rules. The award rendered by the arbitrator may
include attorneys' fees. Judgment on the award rendered by
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the arbitrator may be entered in any court having jurisdiction thereof. The
arbitration: (a) if initiated by Purchaser, shall be held in Chicago, Illinois,
(b) if initiated by Seller, shall be held in Broward County, Florida, or at any
other place selected by mutual agreement of Seller and Purchaser; (c) shall be
decided by one neutral arbitrator who has been a member in good standing of the
appropriate state bar for at least 15 years, has expertise in the process of
arbitration and interpreting contracts in mergers and acquisitions and
commercial transactions, and is selected in accordance with the Commercial
Arbitration Rules; and (d) shall proceed under the Expedited Procedures of
those rules, irrespective of the amount in dispute. Except to the extent the
arbitrator may award attorneys' fees to a prevailing party, each party shall
bear its own costs and expenses and an equal share of the arbitrator's fee and
the administrative fees of the arbitration.
9.10 GOVERNING LAW. This Agreement shall be construed in accordance with
the law of the State of Florida excluding its conflict of laws rules.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
ATTEST: Security Associates International, Inc.
By: /s/ Xxxxx X. Xxxxxxx
---------------------------------------
As Its President
ATTEST: AMJ Central Station Corporation
By: /s/ Xxxxxxx Xxxxxxx
---------------------------------------
As Its President
The undersigned, being the sole shareholder of AMJ Central Station
Corporation acknowledges that he will receive substantial economic benefits
upon the consummation of the transactions contemplated by this Agreement. In
order to induce Purchaser to enter into this Agreement and to consummate the
transactions contemplated herein the undersigned hereby agrees to be bound by
Sections 4.7, 6.7, 7.1(h) and 8 hereof.
DATED: December 18, 1996
By: /s/ Xxxxxxx Xxxxxxx
--------------------
Xxxxxxx Xxxxxxx
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The undersigned, being one of the lessees under the Lease agrees to be
bound by Section 4.7 hereof as it relates to the obligation to enter into the
Sublease with Purchaser.
/s/ Xxxxxxxxx Xxxxxxx
---------------------
Xxxxxxxxx Xxxxxxx
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