EXHIBIT 2.9
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT dated as of October 4, 2001
("Agreement") is made by and between Custom Design Security, Inc., and
Central Digital Station Monitoring Service, Inc. (collectively the "Sellers" and
individually each are a "Seller"), each a Florida corporation, having offices at
000-0 Xxxxxxxxxxxx Xxxx., Xxxxx X-0, Xxxxxxxx, Xxxxxxx 00000, and KC Acquisition
Corp. ("Buyer"), New Jersey corporation having Offices at 000 Xxxxx Xxxxx
Xxxxxx, Xxxxxxxxxx, Xxx Xxxxxx 00000. Together, the Sellers and Buyer are the
"Parties" and each is a "Party" hereto.
RECITALS
Sellers own and operate a wholesale security system monitoring
business from their offices at 0000 Xxxxxxxxxxxx Xxxx., Xxxxx X-0, Xxxxxxxx,
Xxxxxxx 00000 ("the Business"). Seller desires to sell specified assets of the
Business to Buyer.
Buyer desires to acquire certain of the assets of the Business owned by
Sellers based upon the terms and conditions set forth herein.
NOW, THEREFORE, intending to be legally bound hereby, the parties agree
as follows:
The Transaction.
1.1. Sale and Purchase of Assets. On and subject to the terms and
conditions contained in this Agreement at the Closing (as hereinafter
defined), Seller shall sell to Buyer, and Buyer shall purchase from Seller, free
and clear of any Liens, except for Permitted Liens, the following assets
(collectively, the "Assets"):
(A). All the contracts for fire and security alarm monitoring services
and all intangible assets used or usable in the Business in relation to those
contracts (including any and all security deposits and advance payments relating
thereto) as of the date of Closing as specifically listed on Exhibit l.1(A)
Contract Assets Schedule.
(B). Custody of all of Seller's records in regard to the Assets.
(C). All of the Sellers rights to and goodwill in connection with the
Assets.
(D). Seller's claims, causes of action and rights of recovery
(including warranty and indemnity claims and the like) against manufacturers
and/or suppliers of any assets included in or usable in connection with the
Assets.
(E). Sellers shall grant and assign to Buyer, its successors and
assigns, the license and unlimited, but not exclusive, right to use the names
"Custom Design Security", "CDS" or any other name including the words "Custom
Design" or otherwise in connection with the administration of the Assets on
and after the date of Closing.
(F.) Sellers shall assign to Buyer all of their rights to the use of
the telephone numbers and telephone lines utilized in connection with the Assets
and shall cooperate with Buyer to have such phone numbers and telephone lines
assigned to the Buyer by the telephone company:
(G). The right to receive and open mail, notes and accounts receivable
remittances and payments and other communications addressed to either Seller.
(H). All rights of Seller arising out of expenses that Seller has
prepaid in connection with any of the Assets and are necessary for Buyer to
secure the benefits of this transaction.
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(I). All office furniture, furnishings, personal property and equipment
listed on Exhibit 1.1(1) Property Assets Schedule.
(J). Seller's lease for premises at 0000 Xxxxxxxxxxxx Xxxx., Xxxxx X-0,
Xxxxxxxx, Xxxxxxx 000000.
(K). Seller's accounts receivable, but subject to re-conveyance
pursuant to article 1.10 hereafter.
1.2 Exclusion of Liabilities. At the Closing, Buyer shall assume none
of the Sellers' liabilities, except as set forth on Exhibit 1.2(A) Assumed
Liabilities Schedule. Buyer does not and shall not assume or become obligated to
pay any liabilities of Sellers, or either of them, of any kind, whether
incurred, accrued, or arising prior to or after the Closing, and all such
liabilities shall remain the sole responsibility of Sellers, which Sellers agree
to pay and satisfy in full and in a timely manner.
Without limiting the generality of the foregoing and notwithstanding
any implication (as opposed to express statement) to the contrary contained in
this Article 1.2 above, the Assumed Liabilities do not encompass any liability
of or to any officer or shareholder of either Seller and also do not encompass
any of Sellers' liabilities or obligations:
(A). under this Agreement;
(B). for any payment of any bank or other loan;
(C). for expenses, taxes or fees incident to or arising out of the
negotiation, preparation, approval or authorization of this Agreement or the
consummation (or preparation for the consummation) of the transactions
contemplated hereby, including any attorneys' and other fees and any sales, use
and transfer taxes;
(D). arising by reason of any violation of federal, state or local law
or any requirement of any governmental authority;
(E) which would not have existed had each of the representations and
warranties of Sellers in Article 2 been true;
(F). which relate to any employment, consulting, retirement, pension,
profit-sharing or other compensation or benefit plan, arrangement or obligation,
including any severance obligations to any employees of any Seller;
(G). in respect of any amount of federal, state or local taxes
(including any interest, penalties, and additions to such taxes), whether
imposed on or measured by the income of any Seller for any period or otherwise
imposed or measured, including any taxes arising from or in connection with the
operation of any Seller's Business prior to the Closing or from or in connection
with the sale of the Assets to Buyer;
(H). for any credits or allowances or for related services, whether
related to warranties, breach of contract or otherwise;
(I). for claims or lawsuits (without regard to when the product or
service involved was sold or performed or alleged to have been sold or
performed, or when any accident, damage or loss occurred or occurs or is alleged
to have occurred, or when any accident, damage or loss was or is discovered or
is alleged to have been discovered); or
(J). which constitute consequential or incidental liability of any kind
or nature whatsoever.
Without limiting the generality of the foregoing, Sellers acknowledge
and agree that, notwithstanding any implication to the contrary, Buyer is not
assuming, and shall have no liability of any kind for any obligations or
liabilities (except expressly Assumed Liabilities) of any Seller of any nature
whatsoever, whether accrued, absolute, contingent or otherwise.
1.3 Purchase Price. The aggregate purchase price for the Assets (the "Purchase
Price") shall be $1,470,358.00, subject to further adjustments as hereinafter
provided, payable at or after Closing as follows:
(A). $1,192,117 payable at Closing by certified, bank or attorney trust
account check or via wire transfer ("Closing Payment"), and
(B). $147,035.00 shall be paid on or after one year from Closing,
subject to adjustment, said sum being the "Attrition Reserve Holdback" as
hereinafter defined.
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In addition to any other adjustments provided hereinafter, the Purchase
Price shall be adjusted and Buyer shall receive a closing credit against the
Purchase Price to be paid at Closing for any and all items which Sellers or
either of them have received as advance payments in regard to any of the Assets
and for any payments or obligations in regard to the Assets which were to have
been paid by Sellers or either of them and which are due and payable in whole or
in part as of the Closing Date.
1.4 Allocation of Purchase Price. The Purchase Price shall be allocated by the
Parties as follows:
$1,405,358 to Customer accounts and contracts.
$65,000,000 to equipment, furniture and office furnishings.
The Parties agree to report the transaction for tax purposes based upon
the allocation of the purchase price as agreed to herein.
1.5 Closing. The Closing of the transactions contemplated by this Agreement (the
"Closing") shall be held at such place as the Parties shall mutually, agree on
or about October 4, 2001. At the Closing:
(A). Sellers shall deliver to Buyer the Xxxx of Sale in the form of
Exhibit 1.5(A)(1) attached hereto effective to vest in Buyer title to the Assets
as warranted in Section 2.3 hereof, corporate resolutions authorizing the
transfers as contemplated herein, signed and approved by all directors and
shareholders of Sellers, a bring down certificate in the form of Exhibit
1.5(A)(2) attached hereto, and all other documents as required by any other
provision herein.
(B) Buyer shall deliver to Sellers the Closing Payment.
1.6 Conditions to Closing-Buyer. The following are conditions precedent to
Buyer's obligations to consummate the transactions on its part contemplated by
this Agreement and to close title to this transaction, any in one or more of
which may be waived in whole or in part by Buyer if set forth in a writing
executed by both the President and one of the vice presidents of Buyer:
(A) Sellers shall pay off and satisfy at or prior to Closing all
liabilities, loans, leases, and claims against Sellers or against any of the
Assets with the exception of the liabilities set forth in Exhibit 1.2(A)
attached hereto and shall deliver to Buyer the Assets sold to Buyer free and
clear of any and all liens and encumbrances.
(B). Sellers and Buyer shall have obtained and secured an
assignment of all leases and contract assets in a form and subject to the
terms and conditions as are agreeable to Buyer and Sellers for any and all
dealers and subscribers of Seller and the Business listed on Exhibit 1.1(A)
Asset Schedule attached.
(C). Sellers, and their principal officers and shareholders, Xxxxxxx
Xxxxxxx and Xxxxx Xxxxx (hereinafter collectively the "Shareholders"), shall
execute an Agreement of Restrictive Covenant in the form attached hereto as
Exhibit 1.6(C). By signing below, said officers and shareholders named herein
agree to be bound by said agreement and to execute same at closing. These
individuals shall be paid by Sellers from the closing proceeds their agreed upon
consideration therefor.
(D). The representations and warranties of Sellers set forth in
Article 2 must be in all respects true and correct at and as of the closing as
though then made and as though the Closing Date or substituted for the date of
this Agreement.
(E). Sellers shall have performed all of the covenants and agreements
required to be performed by either of them under this Agreement prior to the
Closing.
(F). As of the Closing Date, there shall not have been since January 1,
2001 (i) any material adverse
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change in the Business or the Assets: or (ii) any material casualty loss or
damage to any Seller's assets, whether or not covered by insurance.
(G). As of the Closing, no action or proceeding before any court or
government body or agency shall be pending or threatened wherein an unfavorable
judgment, decree or order would prevent the carrying out of this Agreement or
any of the transactions contemplated hereby, declare unlawful any of such
transactions, cause any of such transactions to be rescinded, or adversely
affect any of the Assets, the locations where the Business is operated, any of
the contacts being sold to Buyer or Buyer's use or enjoyment thereof.
(H). At the Closing, Buyer shall have received a certificate, executed
by the Seller and its directors and shareholders, confirming that the conditions
in paragraphs (D), (E), (F) and (G) have been met.
(I). At the Closing, Buyer shall have received from each Seller a
certificate, executed by that Seller's secretary, certifying (i) Seller's
articles of incorporation, (ii) Seller's by-laws, and (iii) the resolutions
adopted by Seller's Board of Directors and stockholders related to this
agreement and the transactions contemplated hereby.
(J). At the Closing, Sellers (and, in the case of Article 1.6(J)(i),
the shareholders of Sellers and Sellers) shall have delivered to Buyer:
(i) instruments of sale, transfer, assignment, conveyance
and delivery relating to the Assets, the original signed contracts and related
property being sold hereunder and the physical possession of all the Assets (it
being agreed by Sellers that in the event any of the Assets is in any location
other than a location where a Seller is operating the Business sold hereunder,
Sellers will, at Sellers' expense, deliver physical possession thereof at a
location designated by Buyer for such purpose):
(ii) any third party consents required for the transfer to
Buyer of Assets, the contracts, and any other property contemplated
hereby or required for the consummation of the transactions on any Seller's
part contemplated hereby, or required in order to prevent such transfer and
transactions from constituting a breach or default under or grounds for
termination of any agreement to which any Seller is a party or by which a
Seller is bound or affected or to which any of the property of a Seller is
Subject:
(iii ) the releases of all liens held by any shareholder or
any third party on the Assets, the contracts or any other property sold
hereunder;
(iv) the release of all liens on the Assets, the
contracts and other property sold hereunder and evidence of the absence of any
liens on the same;
(v) evidence of all proceedings taken by each Seller, and
their respective directors and shareholders, in connection with the
consummation of the Closing;
(vi) a certificate executed by Shareholders and each Seller
confirming that no casualty, loss or damage has occurred to any of the Assets
since the date of this Agreement;
(vii) a certificate executed by Shareholders and each Seller
containing the information required to be set forth in any section of the
Disclosure Schedule as though the date of Closing were substituted for the date
of this Agreement;
(K). Buyer shall have received (i) the complete data transfer to its
computer system for proper monitoring of all subscribers under all the Assets
and contracts, including all dealer contracts being sold and assigned hereunder,
and (ii) the actual transfer of ownership of all telephone numbers and lines
utilized by any Seller to monitor and service all the subscribers under all the
Assets and contracts, and upon any failure to have either or both
of such conditions completed by the time of Closing, at Buyer's option the
Closing may be adjourned or may proceed, and in the event that the Closing
shall proceed then the Closing Payment to Sellers hereto shall be retained
in escrow with counsel for Buyer until such conditions are satisfactorily
completed.
(L). at the Closing, Buyer shall have received an opinion of counsel
to Sellers and the Shareholders as to the matters set forth in paragraph 6.1,
subject to customary qualifications and in a form subject to the review and
approval of counsel for Buyer, addressed to the Buyer and dated as of the
Closing.
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(M). all proceedings taken by Sellers in connection with the
consummation of the Closing and all certificates, instruments,
documents and evidence is delivered to Buyer in such connection shall be
satisfactory in form and substance to Buyer acting in a commercially reasonable
manner.
(N). Buyer shall have satisfactorily completed, within the period of
time beginning with the complete execution of this Agreement and ending thirty
(30) days thereafter (the "Due Diligence Period"), Buyer's due diligence review
of each Seller's Business, including but not limited to the Seller's assets,
contracts, leases, books, records, computers and computer software, hardware and
data, equipment, fixtures, furniture, office equipment and supplies, leasehold
improvements, inventory and other tangible assets used or usable in the Business
relating to the Assets, and Buyer shall not have cancelled this Agreement as
provided herein. Sellers shall provide to Buyer and its assigned agents, at
Sellers' expense, copies as requested by Buyer or assigned agents of all
documents and instruments related to the contracts and other Assets and shall
allow Buyer access during normal business hours to review all of each Seller's
books, records and documentation with respect thereto. If during the said Due
Diligence Period, Buyer finds that any financial or other information on which
Buyer relied in proceeding with entering into this Agreement and concluding this
transaction is not as Buyer expected, for whatever reason and in Buyer's sole
discretion, Buyer may cancel this Agreement upon notice given to Sellers not
later than five days after the end of the Due Diligence Period. Upon such
cancellation, neither of the Parties hereto shall have any further liability to
the other hereunder.
1.7 Conditions to Closing-Sellers. The following are conditions precedent to
Sellers' obligations to consummate the transactions on its part contemplated
by this Agreement and to close title to this transaction, any in one or more of
which may be waived in whole or in part by Sellers if set forth in a writing
executed by both the President and one of the vice presidents of Sellers:
(A). the representations and warranties of Buyer set forth in Article 3
must be true and correct at and as of the Closing as though then made and as
though the date of Closing were substituted for the date of this Agreement;
(B). Buyer shall have performed all of the covenants and agreements
required to be performed by it under this Agreement prior to the Closing;
(C). as of the Closing, no action or proceeding before any court or
government body or agency shall be pending or threatened wherein an
unfavorable judgment, decree or order would prevent the carrying out of
this Agreement or any of the transactions contemplated hereby, declare unlawful
any of such transactions, or cause any of such transactions to be rescinded;
(D). at the Closing, Sellers shall have received from Buyer a
certificate, executed by Buyer's President, Vice President or Secretary
confirming that the conditions in (A), (B), and (C) above have been met;
(E). all proceedings taken by Buyer in connection with the consummation
of the Closing and all certificates, instruments, documents and evidence is
delivered to Seller in such connection shall be satisfactory in form and
substance to Seller acting in a commercially reasonable manner.
1.8 Price Adjustments. The Purchase Price and each element thereof shall be
adjusted upward, pro rata, based upon the actual Wholesale and Retail Recurring
Monthly Revenue of the contracts which are transferred to Buyer at Closing. The
adjustment shall be established based upon a fraction (the denominator of which
is $65,202.00 and the numerator of which is the actual WRMR to be generated by
the contracts transferred to Buyer at Closing) multiplied by the Purchase Price
and each element thereof.
1.9 Attrition Reserve Holdback. Sellers hereby absolutely and unconditionally
guarantee to Buyer all of the payments due Buyer under the Assets, by each
dealer and subscriber of each and every contract being sold to Buyer hereunder,
for twelve months following the Closing. If any dealer's or subscriber's monthly
fee payment is past due or a dealer or subscriber terminates or notifies of an
intention to terminate the respective contract, Buyer shall notify Sellers of
such a delinquency in payment, notice or termination. Within fifteen (15) days
of such notice,
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Sellers shall replace that contract at no cost to Buyer or refund the entire
portion of the Purchase Price paid by Buyer allocable to that contract. If
Sellers want to replace such a contract, (i) the replacement account shall
provide WRMR equal to or greater than the WRMR provided by the replaced account,
(ii) Seller shall pay all accrued monitoring and billing charges outstanding up
to the time of replacement, and (ii) the new account shall be subject to Buyer's
approval in its sole discretion. Any enhanced value created by such a
replacement account shall inure to the benefit of Buyer and shall not be
reimbursed or refunded to Sellers. An account is considered to be canceled as of
the day any monthly fee payment required under a contract or portion thereof is
more than ninety (90) days past due, or the alarm system is disconnected at any
time for any reason, or the subscriber or dealer terminates any contract or
notifies a Seller or Buyer of an intention to terminate any contract for
monitoring services. When a Seller replaces the account or refunds the allocable
portion of the Purchase Price, Buyer shall assign to Seller any collection
rights it may have against the delinquent subscriber or dealer.
A11 Attrition Reserve Holdback amounts are to be held by Buyer or its
assigns for one year from the date of Closing if all contracts sold hereunder
are current and for such additional time required to determine any delinquency,
default, or termination under the guaranty and repayment obligation above. Said
Attrition Reserve Holdback and repayments thereto will be used to cover any
amounts due on any charged back accounts which are not replaced by Sellers in
accordance with this Agreement or to meet other amounts owed by Sellers to
Buyer. This hold back or attrition amount is the limit on the obligations of
Sellers to make payments pursuant to this Article 1.9. Notwithstanding the
foregoing, this limitation relating to the Attrition Reserve Holdback shall not
limit any recourse of Buyer for any other breach of any covenant, representation
or warranty in any paragraph of this Agreement or under any guaranty or
indemnity relating thereto, including the guaranty and indemnity of the
Shareholders herein. During this twelve month guaranty period from the date of
Closing, Seller will be credited (but only to the extent of any Attrition
Reserve Holdback repayment requirement hereunder) in the amount of 50% of any
new WRMR generated by the dealers listed on Exhibit 1.1(A) Asset Schedule in
this Agreement and which are dealer contracts actually transferred to Buyer at
Closing, but said credit shall be used only to satisfy Sellers' guaranty as
defined hereinabove. In no event shall this credit create a separate obligation
to Sellers or either of them from the Buyer. This Article 1.9 shall survive the
termination of this Agreement.
1.10. Sellers' Accounts Receivable. The parties agree that Buyer shall have the
sole and exclusive right to Collect on any and all of Seller's accounts
receivable (the "Accounts Receivable") from the Closing Date and for 120 days
thereafter. The following procedure shall apply. Seller shall assign to Buyer
Seller's Accounts Receivable at Closing. Buyer agrees that after the Closing
Date it will use efforts to collect the Accounts Receivable comparable to those
efforts Buyer uses to collect trade accounts receivable arising out of its
security monitoring business which are similar in amounts and ages; provided
that Buyer will not be required to retain or use legal counsel or any collection
service, or to institute legal proceedings, as a part of its collection efforts.
If Buyer receives any of Seller's accounts receivable during the period of 120
days immediately following the Closing Date, Buyer shall pay to the Seller on
the tenth day after collection in good funds the said accounts receivable
collected by Buyer. At the end of the said 120 day period, Buyer shall assign to
Seller, without recourse, the Seller's accounts receivable which remain
uncollected. Upon Seller's request made within 90 days after the expiration of
such 120 day period, Buyer will provide Seller's accountant with access during
Buyer's normal business hours to Buyer's books and records related to the
accounts receivable. The entire cost of such verification and report (whether
there be one or more often) shall be borne by Seller and the Shareholders. Buyer
may require as a condition to furnishing any information to such independent
accountant that such independent accountant agree to confidentiality agreement
reasonably satisfactory to Buyer.
If an obligor on any of the accounts receivable is also an obligor
on one or more trade accounts receivable of Buyer at the time such obligor makes
a payment to Buyer (a "Double Obligor") to be applied toward the accounts
receivable or toward such obligor's trade account payable to Buyer, such amount
will, unless otherwise indicated by such obligor, be applied to the accounts
receivable or such trade account payable to Buyer in chronological order. An
obligor may indicate an application of the amount paid by it either expressly by
reference to a particular invoice or implicitly because the amount
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paid corresponds to one or more to the unpaid invoices owed to Buyer or
comprising the account receivable. Buyer may undertake to obtain direction from
such obligor if payments are not accompanied by express directions regarding
the application thereof without suggesting to such obligor any particular
application of such payment except application to the accounts receivable and
trade accounts payable to Buyer in chronological order.
2. Representations and Warranties by Sellers. As an inducement to Buyer to enter
into this Agreement and to consummate the transactions on its part contemplated
hereby. Sellers and the Shareholders hereby jointly and severally represent and
warrant to Buyer, which representations and warranties shall survive the Closing
as follows, with the only exceptions thereto being the items set forth on
Exhibit 2 Disclosure Schedule attached hereto and initialed by all parties:
2.1 Corporate Matters. Sellers are each a corporation of the State of
Florida duly organized, validly existing and in good standing under the laws of
Florida. Each Seller has taken all corporate action necessary to consummate the
transactions contemplated by this Agreement. Each Seller has no subsidiaries.
Each Seller does not own any direct or indirect interest in any corporation,
joint venture, limited liability company, partnership, association or other
entity. The Shareholders own all the issued and outstanding stock of the
Sellers. Each Seller is authorized to do business in all states where the
failure to be so qualified would be a violation of law or would have a material
adverse effect on that Seller's Business or the Assets. There are no outstanding
options, warrants, purchase rights, subscription rights, conversion rights,
exchange rights or other contracts or commitments that could require any Seller
to issue or otherwise laws to become outstanding any additional stock of a
Seller. Each Seller's Business is conducted only by Seller.
2.2 Validity and Enforceability. The execution, delivery and
performance of this Agreement and all other agreements to which each Seller is a
party contemplated hereby and the consummation of the transactions on each
Seller's and or the Shareholders' part contemplated hereby have been duly and
unanimously authorized by the Board of Directors of each Seller and unanimously
by the Shareholders, and no other corporate or other proceeding on the part of
Seller, its Board of Directors or its shareholders is necessary to authorize
this Agreement, any such other agreement or the transactions contemplated
hereby. Each of this Agreement and all other agreements to which each Seller
and/or the Shareholders is a party contemplated hereby constitutes, or upon its
execution and delivery will constitute, a valid and binding obligation of the
Seller and/or the Shareholders, as the case may be, enforceable against the
Seller and/or the Shareholders, as the case may be, in accordance with its
terms. Neither the execution or delivery of this Agreement and all such other
agreements contemplated hereby, the consummation of the transactions
contemplated hereby, nor the performance and fulfillment of this Agreement and
all such other agreements contemplated hereby by the Seller and/or the
Shareholders, as the case may be, will (a) conflict with or result in any breach
of any other provisions of, (b) constitute, with or without the giving of
notice, the passage of time, or both, a breach or a default under or result in a
loss of rights under, (c) result in a violation of, (d) result in the creation
of any lien on any of the Assets, the contracts or any other property to be sold
and transferred hereunder, (e) give any third party the right to accelerate any
obligation under, or (f) require any authorization, consents, approval,
exemption or other action of any body or notice to any court, other governmental
entity, or other third party under the provisions of the articles of
incorporation or bylaws or any shareholder agreement of the Seller or any
indenture, mortgage, lease, loan agreement, or other agreement or instrument, or
any judgment, decree, order, or award of any court, governmental body or
arbitrator, to which the Seller or any Shareholder is a party or by which the
Seller or any Shareholder is bound or affected or to which any of the Seller's
or any Shareholder's properties is subject, or any law, statute, rule,
regulation, judgment or decree to which the Seller or any Shareholder is
subject. Each Seller and the Shareholders have full power and authority (in the
case of each Seller, corporate and otherwise) to carry out its and their
obligations hereunder and under the other agreements to which Seller and or the
Shareholders, as the case may be, is or are a party contemplated hereby.
2.3 Title to Assets. Each Seller owns as of the date hereof and has
authority to convey and transfer to Buyer at the Closing and shall convey at the
Closing good and marketable fee title to all of the Assets subject to no
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mortgage, pledge, lien, charge, assignment, restriction, claim, conditional
or other sale agreement, option, encumbrance or security interest. The execution
of this Agreement and the performance of the covenants herein contemplated will
not result in the creation of any lien, charge or encumbrance upon any of the
Assets or the Business pursuant to any indenture, agreement or other instrument
to which a Seller is a party or by which a Seller is bound or by which the
Business or the Assets may be affected. The Assets are owned by Sellers and
are transferred and sold to Buyer at the Closing, free and clear, and exclusive
of any and all liabilities and obligations, liens, claims or encumbrances,
whether absolute, accrued, contingent or otherwise, all of which shall have been
discharged in full on or before the Closing. No other entity or individual has
any right, title or interest in or to the Assets. Except for the contracts to be
assigned and transferred to Buyer hereunder, each Seller has no lease, contract
or commitment of any kind affecting or relating to the Assets. Neither the
execution of this Agreement, nor the Consummation of the transaction
contemplated hereby, will violate or result in a breach of, or constitute a
default under, any instrument to which any Seller or its Shareholders is bound.
2.4 Legal Compliance. Each Seller has complied with all applicable laws
(including rules, regulations, codes, plans, injunctions, judgments, orders,
decrees, rulings and charges thereunder) of all governmental entities. No
investigation, review, inquiry or proceeding by any governmental entity with
respect to any Seller or any of the Shareholders is pending or, to the knowledge
of the Shareholders threatened. Each Seller is not subject to any agreement,
contract or decree with any governmental entity arising out of any current or
previously existing violations or alleged violations of applicable laws except
where any of the foregoing would not be binding on Buyer or prevent Buyer from
conducting that Seller's Business relating to the Assets, as Seller had
heretofore conducted it in the absence of any such agreement, contract or
decree.
2.5 Litigation. There is no action, suit, proceeding, order or
investigation pending, or to the knowledge of any Seller or any Shareholders
threatened, against or affecting any Seller or any of the Shareholders at law or
in equity, or before or by any federal, provincial, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, which might adversely affect any Seller's or any
Shareholder's performance under this Agreement, the consummation of the
transactions on any of their parts contemplated hereby, or any of the Assets,
the contracts, or other property to he transferred or sold hereunder or Buyer's
use or enjoyment thereof.
2.6 Ordinary Course/Contracts with Affiliates. Each Seller's Business
has been conducted by each Seller only in the ordinary course. There are no
agreements or understandings between any Seller and any of the Shareholders or
any other affiliate of a Seller or any of the Shareholders or any member of the
family of any Shareholder.
2.7 Brokers. Each Seller has not made any agreement or taken any action
that may cause anyone to become entitled to a commission, fee or other
compensation in connection with this transaction other than Rooney and
Associates, Inc. Sellers shall satisfy all such claims for commission at
Closing. Sellers and the Shareholders jointly and severally shall hold Buyer
harmless from and against any and all such commissions, fees or compensation,
whether or not such claims are disclosed in this Agreement.
2.8 Leases/Contracts. Each Seller does not own any real property. Each
lease and contract within the listing of contracts is in full force and effect.
Sellers are not in default in any respect under any of the contracts or the
Assets. There are no facts, conditions or circumstances which, with the passage
of time or the giving of notice, will or could constitute a default with respect
to any of the contracts being sold herein. Each of the locations where Sellers
operate any Business and each Seller's use and occupancy of them, conform in all
respects to (a) the requirements of the applicable lease, and, (b) all
applicable zoning, building, health, safety, environmental and/or and other
applicable governmental requirements. With respect to each location where any
Seller operates the Business and in regard to each Seller's operation of the
Business, each Seller is not and has not been in violation of any applicable
zoning ordinance or other law, regulation or requirement relating to the
operation of the property, including applicable environmental protection and
occupational health and safety laws and regulations. During the five years prior
to the date of this agreement, neither Seller has received any notice of any
violation or alleged violation of any of the foregoing which, either
individually or in the aggregate, did or would cost more than
Page -8-
$1.000.00 to cure.
2.9 Government Consent. No permit, consent, approval or authorization
of, or declaration to or filing with, any governmental or regulatory
authority is required to be obtained or made by any Seller or any Shareholder
in connection with the execution, delivery and performance of this Agreement
by any Seller or any Shareholder or the consummation of the transactions on
their parts contemplated hereby.
2.10 Tax Matters/Financial Statements.
(A). Sellers have timely filed, or caused to be filed, all requisite
federal, state and local income, personal, property, estimated tax reports or
returns and all other applicable tax reports and returns required to be filed
with respect to Business and the Assets and have timely paid all taxes, interest
and penalties shown due thereon and waivers or consents to extend periods during
which additional tax assessments may be made.
(B). Each Seller has not entered into any closing agreement or
similar binding agreement with any taxing authority that would affect its tax
liability for any taxable period.
(C). Each Seller has withheld from amounts paid Seller's employees
and, to the extent due, has paid, or will pay, to the appropriate governmental
agencies, all taxes and other amounts required to be withheld and remitted,
including but not limited to social security, federal withholding,
unemployment insurance contributions, state withholding taxes, and other taxes
or amounts which are a part to be collected from any employees and remitted to
any governmental entity.
(D). The financial statements and other financial information of each
Seller previously delivered to Buyer have been prepared in accordance with
generally accepted accounting principles, consistently applied throughout the
periods covered thereby and, subject to the disclosures made in the notes
thereto, present fairly the financial position of the Seller at the dates
thereof and results of its operations and the changes in its financial position
for the periods that ended. Since the date of the financial statements of
Sellers, there have been no material adverse changes in the business, financial
condition or operations of the Business or the Assets.
(E). Sellers and the Shareholders shall indemnify and hold Buyer free
and harmless from and reimburse Buyer for and in respect of any tax, interest or
penalty due or arising from any event or action of any Seller occurring prior to
Closing.
2.11 Employees.
(A). Sellers shall remain solely liable for all obligations or benefits
payable to each Seller's employees which accrue at any time.
(B). Seller is not, as respects its employees, a party to any union,
collective bargaining or similar agreement relating to or affecting any part of
the Business or the Assets sold hereunder. There are no negotiations, demands or
proposals which are pending or have been made which concern matters now covered,
or that would be covered, by the type of agreements listed in this Section. The
Seller and Shareholders have no knowledge of any efforts to unionize any of
Seller's employees. Seller generally enjoys good labor relations.
(C). No person or party (including, but not limited to, governmental
agencies of any kind) has any pending claim or basis for any action or
proceeding, as respects any Seller's employees, against Seller arising out of
any statute, ordinance or regulation relating to occupational safety and health
standards, work environment or discrimination, which, if upheld, would have a
materially adverse effect on the business or condition, financial or otherwise,
of any Seller. Each Seller is not, as respects its employees, in default under
any other similar statute, law, ordinance, rule or regulation which may result
in a materially adverse effect on any Seller's business or condition, financial
or otherwise.
Page -9-
(D). Neither any Seller, nor any of its agents, representatives or
employees, has as respects Seller's employees, committed any unfair labor
practice as defined in the National Labor Relations Act of 1935, as amended, and
there is not now pending or threatened any charge or complaint against Seller,
as respects its employees, by the National Labor Relations Board or any
representative thereof, any employee of Seller or any union representing any
such employee.
(E). Each Seller is not a party to any pension, retirement, profit
sharing, deferred compensation, incentive, wage continuation or any other
material employee benefit plan or arrangement.
(F). Except for wages or salary earned by an employee of a
Seller in the most recent payroll, but not yet paid by the Seller, each Seller
owes no amount to any past or present employee of the Seller.
2.12 Absence of Default. Each Seller is not in default of any terms
or conditions of any indebtedness or liability, including any trade payable.
2.13 No Competition Limitation. Each Seller is not a party to
any written or oral contract which limits its right to freely engage in any
line of business or to freely compete with any person anywhere in the world by
which Buyer would become bound as a result of the transactions on its part
contemplated hereby.
2.14 Books and Records. Each Seller maintains, and will deliver to
the Buyer intact at the closing, accurate and complete records, books, files,
computer data, properly organized, for the efficient operation of Seller's
Business as relating to the Assets, concerning its relationship with those
customers, dealers and others with whom Sellers conduct business, its
purchases, sales, xxxxxxxx, receivables and other related business activities in
that regard. The books and records of account of each Seller relating to that
Seller's Business have been maintained in accordance with generally accepted
accounting principles, consistently applied.
2.15 Licenses and Permits. Each Seller has maintained in full force
and effect all licenses, permits and other governmental (federal, state and
local) authorizations that are required in connection with the business of the
Seller. Such licenses, permits, and authorizations are valid and sufficient for
all business activities presently conducted by the Seller.
2.16 Contractual Obligations. Each Seller is not now, nor on the
Closing date will it be, without the consent of Buyer, a party to (in its own
name or as successor in interest to any predecessor) or bound by any written or
oral: (a) contract not made in the ordinary course of business; (b)
employment, advisory or consulting contracts; (c) contract with any labor or
trade union or association; (d) bonus, pension, profit-sharing, retirement,
stock purchase, hospitalization, insurance or other plan providing for employee
benefits; (e) lease with respect to property, real, personal or mixed,
whether as lessor or lessee; (f) executory contract for the future purchase of
material, supplies, equipment or services not specifically set forth herein in
Exhibit 2.16 attached. As to each such contract or plan, each Seller represents
and warrants that Sellers have fully complied with all of each Seller's
obligations thereunder and there has been no claim threatened nor presented
relating to any such contract or plan.
2.17 Casualty Damages. As of the Closing, there will not have been
with respect to any Seller (a) any destruction, damage by fire, accident or
other casualty or act of God of or to any of the Assets, contracts or other
property being sold to Buyer hereunder exceeding $10,000.00 in value or
affecting in a material and adverse way the operation of its business as ??? now
conducted which was or is not fully covered by insurance; or (b) any damage to,
loss or destruction ??? any Seller's computer data or other vital records.
2.18 Prohibited Events. As of the Closing, each Seller shall not have
(a) failed to fully and completely disclose and secure the required or necessary
consents of all shareholders of the Seller, and others as necessary, to all of
the terms and conditions set forth herein; (b) waived or compromised any rights
in favor of its business as carried on at and prior to the Closing; (c) failed
to pay and fully satisfy any assessments, penalties or interest for federal,
state or local income, sales or other tax relating to income or sales for prior
fiscal years.
Page -10-
2.19 Insurance. Each Seller presently has in effect valid, outstanding
and enforceable insurance policies as to which premiums have been currently paid
to insure against all risks and liabilities to an extent and in a manner
reasonably appropriate and sufficient under sound business practices. Sellers
shall maintain insurance coverage of similar kinds and amounts and will pay the
premiums for such coverage and will assign to Buyer at Closing all claims under
any insurance policies of Seller as relating to any of the Assets.
2.20 Key Employees. All Key Employees of Seller are bound or shall be
at closing bound to a restrictive covenant prohibiting competition against Buyer
in connection with any and all of the accounts, contracts, dealers and
subscribers being sold to Buyer herein, all in a form and manner subject to
Buyer's satisfaction.
2.21. Sales Taxes. Each Seller has fully paid, and at closing will have
fully paid, all sales taxes in every jurisdiction in which sales taxes are
required to be paid by any Seller. Each Seller will deliver to the Buyer at
closing an appropriate clearance certificate from Florida indicating that Seller
is not liable for any taxes, assessments, interest or penalties for any
reporting period prior to the one in which closing occurs.
2.22 Environmental Matters. Each Seller has not caused or permitted any
hazardous wastes or hazardous substances, as defined in any applicable federal,
state or local environmental law or regulation to enter into, contaminate or
pollute the soil within or ground waters, beneath any property occupied by any
Seller. Sellers are unaware of the presence of any such hazardous wastes or
substances in the said soil or ground waters, and Sellers shall take all actions
necessary to remedy any such environmental condition occurring during the term
of its possession.
2.23 Business Names. Sellers have provided to Buyer a list annexed
hereto as Exhibit 2.23 which sets forth a true and accurate list of all names
(including all trade names and fictitious names) and business addresses used by
any Seller within five years last past the date hereof. Neither of the Sellers
nor any of the Shareholders have conducted any part of the Business (regardless
of the size or geographical scope of such other business) under any other name.
2.24 Insolvency. No proceedings have been taken or authorized by a
Seller or any third party with respect to bankruptcy, insolvency, liquidation,
dissolution or winding up of the affairs of a Seller.
2.25 Awareness of Adverse Facts. Neither of the Sellers nor any of its
officers or directors are aware of the existence of any pending or threatened
litigation or proceeding or any pending or threatened development or other state
of facts which would render any of the warranties, representations or
disclosures made herein either untrue, incomplete or misleading, or whose
failure to disclose would render any of the warranties, representations or
disclosures made herein or in any of the exhibits or schedules hereof either
untrue, incomplete or misleading, or which would have a materially adverse
effect upon the business of any Seller, or upon the relations of the Buyer with
any of either Seller's suppliers or customers.
2.26 Truth of Representations as of Closing Date. Each and every
warranty and representation set forth herein and in the exhibits and schedules
hereto, shall be true, accurate and complete in every material respect with the
same force and effect as if each had been made at and as of the Closing Date.
2.27 Guaranty by Officers and Shareholders. By signing below, the
officers and shareholders of Sellers, Xxxxxxx Xxxxxxx and Xxxxx Xxxxx,
individually, jointly and severally guaranty the truth and accuracy of all
Seller representations and warranties herein and the performance of the Sellers
under this Agreement.
3. Representations and Warranties by Buyer. As an inducement to Sellers to
enter into this Agreement and to consummate the transactions on its part
contemplated hereby, Buyer represents and warrants to Seller as follows:
3.l Corporate Matters. Buyer is a corporation of the State of New
Jersey duly organized, validly existing and in good standing under the laws of
New Jersey. Buyer has taken all corporate action necessary to consummate the
transactions contemplated by this Agreement.
Page -11-
3.2 Validity and Enforceability. The execution, delivery end
performance of this Agreement and all other agreements to which Buyer is a Party
contemplated hereby and the consummation of the transactions on Buyer's part
contemplated hereby have been duly and unanimously authorized by the Board of
Directors of Buyer and unanimously by its shareholders; and no other corporate
or other proceeding on the part of Buyer, its Board of Directors or its
shareholders is necessary to authorize this Agreement, any such other agreement
or the transactions contemplated hereby. Each of this Agreement and all other
agreements to which Buyer is a party contemplated hereby constitutes or upon its
execution and delivery will constitute a valid and binding obligation of Buyer
enforceable against it in accordance with its terms. Neither the execution or
delivery of this Agreement and all such other agreements contemplated hereby,
the consummation of the transactions contemplated hereby, nor the performance
and fulfillment of this Agreement and all such other agreements contemplated
hereby by Buyer will (a) conflict with or result in any breach of any other
provisions of, (b) constitute, with or without the giving of notice, the passage
of time, or both, a breach or a default under or result in a loss of rights
under, (c) result in a violation of, (d) result in the creation of any lien on
any of the Assets, the Contracts or any other property to be sold and
transferred hereunder, (e) give any third party the right to accelerate any
obligation under, or (f) require any authorization, consents, approval,
exemption or other action of any body or notice to any court, other governmental
entity, or other third party under the provisions of: the articles of
incorporation or bylaws or any shareholder agreement of Buyer or any indenture,
mortgage, lease, loan agreement, or other agreement or instrument, or any
judgment, decree, order, or award of any court, governmental body or arbitrator,
to which Buyer is a party or by which Buyer is bound or affected or to which any
of Buyer's properties is subject or any law, statute, rule, regulation, judgment
or decree to which Buyer is subject, Buyer has full power and authority,
corporate and otherwise, to carry out its and their obligations hereunder and
under the other agreements to which Buyer is a party contemplated hereby.
3.3 Brokers. Buyer has not made any agreement or taken any action that
may cause anyone to become entitled to a commission in connection with this
transaction.
3.4 Tax Consequences. Buyer makes no representation or warranty as to
the treatment which may be given to the transactions contemplated by this
Agreement or the consummation thereof under the tax laws of the United States or
any state or locality. Both parties will abide by the tax treatment reflected in
this Agreement as such treatment is related to the allocation of the Purchase
Price. Buyer shall satisfy any and all taxes due from Buyer in regard to this
transaction.
3.5 Insolvency. No proceedings have been taken or authorized by Buyer
or any third party with respect to bankruptcy, insolvency, liquidation,
dissolution or winding up of the affairs of Buyer.
3.6 Awareness of Adverse Facts. Neither Buyer nor any of its officers
or directors are aware of the existence of any pending or threatened
litigation or proceeding or any pending or threatened development or other state
of facts which would render any of the warranties, representations or
disclosures made herein by Buyer either untrue, incomplete or misleading, or
whose failure to disclose would render any of the warranties, representations
or disclosures made herein or in any of the exhibits or schedules hereof either
untrue, incomplete or misleading, or which would have a materially adverse
effect upon the business of Buyer, or upon the relations of the Buyer with any
of the Seller's suppliers or customers.
3.7 Truth of Representations as of Closing Date. Each and every
warranty and representation, set forth herein, and in the exhibits and schedules
hereto, shall be true, accurate and complete in every material respect with the
same force and effect as if each had been made at and as of the Closing Date.
4. Obligations of Seller. Between the date hereof and the Closing, Seller agrees
as follows:
4.1 Further Assurance. At each Seller's expense at or after Closing,
Sellers shall execute and deliver such further instruments of transfer and take
such other action as Buyer may reasonably request in order to timely transfer
the Assets, the contracts and other property sold to Buyer hereunder and for
Buyer to fully recover all benefits of all transactions contemplated herein.
Page -12-
4.2 Compliance with Statutes. Sellers shall duty comply with all
applicable laws with which they are each required to comply in order to
validly complete the transactions provided for in this Agreement and all such
other laws as might, on failure of compliance therewith, impose any liability
upon the Buyer. Sellers shall indemnify and hold Buyer harmless from and
against any loss, liability or expense incurred because of either Seller's
failure to comply with any such laws.
4.3 Operation in Ordinary Course. Each Seller shall conduct its
business only in the ordinary course of business as heretofore conducted and
keep and maintain Seller's books related to the Business (including insofar as
such books relate to depreciation, costing of inventory and equipment and the
establishment of reserves for bad debt) in accordance with past practice. Each
Seller shall retain its employees engaged in the Business and preserve Seller's
present business relationships. Each Seller shall maintain all Assets, contracts
and other property in customary state of repair, order and condition.
4.4 Access. Sellers shall permit Buyer and its employees, agents,
accountants and legal representatives to have access before and after the
date of Closing to each Seller's personnel, agents, accounting and legal
representatives, and to the Seller's books, records, invoices, agreements,
premises, assets and other things in regard to that Seller's Business as
relating to the Assets.
4.5 Consents. Each Seller shall use its best efforts to obtain any
consents and/or agreements necessary for Seller to consummate the transactions
contemplated hereby and shall use its best efforts to cause each of the
conditions to Buyer's obligations set forth above to be met.
4.6 Furnishing Information. To the extent that each Seller has not
already furnished the following items directly to Buyer, Seller shall
immediately furnish to Buyer complete and accurate copies of each of the
contracts, all documents relating to the Assets and properties to be transferred
hereunder, and all liabilities relating thereto, if any.
4.7 Representations and Warranties. Sellers shall not take or omit any
action which would result in the inaccuracy at Closing of any of the
representations and warranties contained in Section 2 of this Agreement.
5. Obligations of Buyer. Between the date hereof and the Closing, Buyer
agrees as follows:
5.1 Further Assurance. At Buyer's expense, at or after Closing, Buyer
shall execute and deliver such further instruments of transfer and take such
other action as each Seller may reasonably request in regard to the completion
of the transactions contemplated hereunder.
5.2 Compliance with Statutes. Buyer shall duly comply in all material
respects with all applicable laws with which it is required to comply in order
to validly complete the transaction provided for in this Agreement and all such
other laws as might, on failure of compliance therewith, impose any liability on
Sellers.
5.3 Representations and Warranties. Buyer shall not take or omit or
omit to take any action which would result in the inaccuracy, at Closing of any
of the representations and warranties contained in Section 3 of this agreement.
6. Conditions of Closing as to Buyer. The obligations of Buyer under this
Agreement are subject to the fulfillment before or at Closing by the Sellers of
the following conditions:
6.1 Opinion of Counsel. Sellers shall have delivered to Buyer the
favorable opinion of Seller's counsel, dated the Closing Date and approved as to
scope and substance by Buyer's counsel, whose approval shall not be
unreasonably withheld, to the following effects:
(A). To the same effect as Sections 2.1, 2.2, 2.9 and 2.15, and to the
best of such counsel's knowledge and belief, Section 2.3, 2.4, 2.5, 2.6, 2.7,
2.8, 2.10, 2.11, 2.12, 2.13, 2.20, 2.21, 2.22, 2.23 and 2.24.
Page -13-
(B). That the instruments of sale, assignment, transfer or conveyance
delivered by Sellers at the Closing Date are sufficient to convey and vest in
Buyer all of the Sellers' title to the respective assets and property described
therein, subject to no lien, encumbrance or prior right.
(C). That all acts have been duly and properly taken so that Buyer
shall have no liability in respect of sellers' unpaid sales or other taxes for
reporting periods prior to the current period in which the closing date takes
place.
6.2 Absence of Proceedings. No action of proceedings shall be pending
or, to the knowledge of Sellers or Buyer, threatened before any Court or
governmental body to restrain or prohibit or to obtain substantial damages in
respect of this Agreement; or the consummation of the transactions contemplated
hereby, and there shall be no actions or proceedings of the nature described in
Section 2.5, which are not set forth in an affidavit provided by Sellers at
Closing, pending or threatened that, either separately or in the aggregate,
could materially and adversely affect the business, operations or conditions
(financial or otherwise) of either Seller.
6.3 No Labor Disputes. There shall not be in progress any strike,
lockout, or other work stoppage relating to any labor dispute event.
6.4 Other Instruments. Buyer shall have received certified copies of
each Seller's charter and of resolutions duly approved and adopted unanimously
by the Shareholders and Board of Directors of Sellers, all other certifications,
documents, agreements and other instruments referred to herein or as may be
reasonably requested by Buyer's Counsel.
6.5 Properties and Assets Intact. At the time of Closing, Sellers shall
deliver possession of all of the Assets and contracts, books, records, computer
data, and all other assets being transferred hereunder, and all documents
referred to as required herein, to the Buyer intact, undamaged by fire or other
casualty, in good operating condition and state of repair, all as required by
the terms of this Agreement, and title to all of the purchased property of
Sellers will be conveyed to Buyer free and clear of all claims, security
interests, liens and encumbrances of any and every nature whatsoever.
6.6 Corporate Name. Sellers shall have delivered to Buyer their
unlimited, but non-exclusive license to use the names "Custom Design Security",
"CDS" or any other name including the words "Custom Design" or otherwise in
connection with the administration of the Assets on and after Closing. Sellers
shall have also assigned to the Buyer all of their rights to the use of the
telephone numbers and telephone lines utilized in connection with the Assets.
6.7 Tax Clearance. Sellers shall each have received and delivered to
Buyer a tax clearance certificate and other appropriate documentation from the
State of Florida indicating that there is no liability for taxes in such
jurisdiction.
6.8 Accuracy of Representations and Warranties. The representations and
warranties contained in Section 2 of this Agreement shall be true at Closing
with the same effect as though made on that date.
6.9 Performance by Seller. Sellers shall have in all material respects
performed all obligations and complied with all conditions required to be
performed or complied with by each Seller prior to or at Closing.
6.10 Conditions Unfulfilled. If any of the foregoing conditions set
forth in this Section 6 are not fulfilled in a material respect at Closing,
Buyer may, at its sole option, terminate this Agreement or allow Sellers
additional time to fulfill such Item(s). In the event that Buyer exercises such
option to terminate the Agreement due to the failure to fulfill a material
condition, neither Seller, the Shareholders, nor the Buyer shall have any
further obligation under this Agreement.
7. Conditions of Closing as to Seller. The obligations of Seller under this
Agreement are subject to the
Page -14-
fulfillment before or at Closing by Buyer of the following conditions:
7.1 Accuracy of Representations and Warranties. The representations
and warranties contained in Section 3 of this Agreement shall be true at Closing
with the same effect as though made on that date.
7.2 Performance by Buyer. Buyer shall in all material respects have
performed all obligations and complied with all conditions required to be
performed or complied with by Buyer prior to or at Closing.
7.3 Conditions Unfulfilled. If any of the conditions set forth in
this Section 7 are not fulfilled in a material respect at Closing, Sellers may,
at their sole option, terminate this Agreement or allow Buyer additional time to
fulfill such item(s). In the event that Sellers exercise such option to
terminate the Agreement, neither Seller, the Shareholders, nor Buyer shall have
any further obligation under this Agreement.
8. Other Rights and Obligations.
8.1 Conduct Pending Closing. Sellers shall preserve the Assets in
their present condition and repair, except for normal wear and tear. Sellers
shall not enter into any contract or commitment affecting the Assets nor
otherwise dispose of the Assets in whole or in part, without prior written
approval of Buyer.
8.2 Right to Inspect. Prior to Closing, Buyer shall have the right to
conduct an audit, inspection and inventory of the Assets with mutual agreement
as to the time of such audit, inspection and inventory.
8.3 Taxes. Sellers shall pay all transfer, documentary, sales and
similar taxes and all registration and recording fees and costs payable in
connection with its compliance and performance under this Agreement and the
consummation of the sale of the Assets to Buyer.
8.4 Expenses. Each party will pay all of its own legal, accounting
and other fees, costs and expenses in connection with its compliance and
performance under this Agreement and the consummation of the transaction
contemplated hereunder.
8.6 (A). Indemnification by Sellers: Sellers and the Shareholders
individually, jointly and severally agree to indemnify and hold harmless the
Buyer from and against: (a) any and all liability for any claims based upon any
state of facts in respect to any Seller, its business, properties, assets, or
upon any acts or omissions of its employees, officers, directors, stockholders,
agents or others acting on its behalf, in existence at or prior to the closing;
(b) any and all liabilities, damages and expenses resulting from any regulatory
or legal actions or claims by any federal, state or local governmental agency or
any suits, claims, actions of proceedings by others, if such regulatory or legal
actions, suits, claims or proceedings are founded upon or arise by reason of
events or operations of a Seller occurring or any state of facts in respect of a
Seller's business; (c) any and all damage or deficiency resulting from any
misrepresentation, breach of warranty or nonfulfillment of any condition or
failure to perform any covenant or agreement on the part of a Seller contained
in this Agreement or any other agreement or document to which a Seller or a
Shareholder is a party contemplated hereby, or from any misrepresentation or
omission from any exhibit, certificate or other instrument or copy thereof
required to be furnished or furnished to the Buyer by the terms of this
Agreement or any other agreement or document to which a Seller or a Shareholder
is a party contemplated hereby, or any claim which, if true, would constitute
such a breach or misrepresentation; (d) taxes, assessments, interest or
penalties resulting from adjustments to any tax liability of a Seller or from a
Seller's failure to pay in full its tax liability, for any period prior to the
reporting period in which the closing occurs or in regard to the Closing, in
respect to federal, state or local income, sales or other taxes, as well as
withholding taxes and penalties for underpayment of withholding taxes and
estimated taxes for any period, including the period in which the Closing Date
occurs: (e) any liability of a Seller other than an Assumed Liability: (f) the
costs of investigation, defense, legal fees, disbursements, costs of settling
and discharging any and all judgments and or claims alleging or incident to
the foregoing, regardless of the ultimate responsibility of a Seller for any
such liability to any claimant. Buyer shall have the right to offset any
claims hereunder against any sums due from the Buyer to any party hereto.
Page -15-
(B). Investigation By Buyer. Aay investigation by the Buyer or
knowledge possessed by the Buyer shall not be deemed a waiver of Buyer's rights
nor defense to any claim by Buyer for indemnification hereunder.
(C). Third Party Claims. In each instance where a claim or potential
claim for which Buyer is entitled to or seeks indemnification is asserted
against Buyer by a third party (i.e. a claimant who is not a party to this
Agreement), Buyer shall notify Sellers in writing of such claim, and shall
promptly forward to Sellers copies of all notices, process, pleadings and
pertinent written communications from the third party. Sellers shall promptly
defend, pay, discharge, compromise or settle such third party claim at their
expense, in such manner that neither Buyer nor its business, equipment, property
or other assets shall suffer or be affected by an hindrance, interference,
jeopardy, lien, judgment, attachment, notice of violation, injunction, judicial
or other order. Unless Sellers shall promptly and in a timely manner provide a
full and vigorous defense to Buyer, Buyer shall have the right to assume control
of the claim, its defense, compromise or settlement, at the expense of Sellers,
including reasonable attorney's fees and other costs, all of which shall be
paid or reimbursed by Sellers upon Buyer's demand. In such event, Buyer shall
not settle or compromise any such claim without the consent of Sellers. If Buyer
does not receive such consent in a timely manner, Sellers shall provide Buyer
with a surety bond in the full amount of the claim and assume the defense of the
action. In any event, Buyer shall have the right to be represented by counsel of
its choice, at its own expense, in any proceeding controlled by Sellers.
8.7 Indemnification by Buyer. Buyer shall indemnify, defend and hold
harmless Sellers from and against: (a) any and all liability for any claims
based upon any state of facts in respect to Buyer due to the acts or omissions
of its employees, officers, directors, stockholders, agents or others acting on
its behalf, in regard to Buyer's use of the Assets and which occurs after the
Closing: (b) any and all liabilities, damages and expenses resulting from any
regulatory or legal actions or claims by any federal, state or local
governmental agency or any suits, claims, actions of proceedings by others, if
such regulatory or legal actions, suits, claims or proceedings are founded upon
or arise by reason of events or operations of Buyer in regard to Buyer's use of
the Assets occurring after the Closing; and (c) any damage or deficiency
resulting from any misrepresentation, omission, breach of warranty or
non-fulfillment of any agreement on the part of Buyer contained in this
Agreement or in any statement or certificate furnished or to be furnished to
Sellers pursuant hereto or in connection with the transactions contemplated
hereby and any actions, judgments, costs and expenses incident to the foregoing.
8.8 Entire Agreement. This Agreement sets forth the entire
understanding of the parties with respect to the subject matter hereof. Any
previous agreements or understandings between the parties regarding the
subject matter hereof are merged into and superseded by this Agreement. Nothing
expressed or implied in this Agreement is intended to confer upon any person,
other than the parties hereto or their respective successors and permitted
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Agreement.
8.9 Nature and Survival of Representations. All statements contained in
any Exhibit, certificate or other instrument delivered by or on behalf of Seller
pursuant to this Agreement or in connection with the transaction contemplated
hereby shall be deemed representations and warranties by Sellers hereunder, and
all statements contained in any certificate or other instrument delivered by or
on behalf of Buyer pursuant to this Agreement shall be deemed representations
and warranties by Buyer. All representations, warranties and agreements made by
Sellers or Buyer shall survive the Closing hereunder.
8.10 Notices. If there are any notices to be given in connection with
this Agreement, they must be sent in writing by certified mail, return receipt
requested with full postage prepaid or via reputable overnight delivery service
such as Federal Express or similar. Notices must be addressed to the Buyer or
Sellers at the addresses appearing at the beginning of this Agreement.
However, either party may change its address for notices by sending a notice
to that effect to the other party in the above manner. In addition, in order for
any notice to become legally effective, a copy of the notice must be sent at the
same time and in the same manner to that party's attorney. All notices required
under this Agreement must be given in writing to:
Page -16-
If to Buyer: KC Acquisition Corp. If to Sellers or the Shareholders:
000 Xxxxx Xxxx Custom Design Security, Inc.
Hackensack. N.J. 07601 0000 Xxxxxxxxxxxx Xxxx.,
Xxxxx X-0
Xxxxxxxx, Xxxxxxx 00000
With a copy to: With a copy to:
Attorney for Buyer:
Xxxxx X. Xxxxxxxx. Esq. Attorney for Sellers and the Shareholders:
Xxxxxxx and Xxxxxxx, Esqs. Xxxxxx X. Xxxxxxx, Esq.
Continental Plaza II Xxxxx, Xxxx and Blenner, Esqs.
000 Xxxxxxxxxx Xxx., Xxxxx Xxxxx 0000 Xxx. 19N., Suite 701
Hackensack, N.J. 07601 Xxxx Xxxxxx, XX 00000
8.11 Assignment. This Agreement may not be assigned by any party
without the prior written consent of the other party; provided however, that
Buyer may assign all or any other part of its rights or responsibilities
hereunder to a corporation controlled by, in control of or under common control
with, Buyer, in which event Buyer hereunder shall remain liable for all
obligations of the Buyer. Otherwise, this Agreement shall bind and inure to the
benefit of the parties hereto and their respective heirs, successors and
assigns.
8.12 Governing Law/Counterparts. This Agreement shall be governed by
and construed in accordance with New Jersey law. All disputes shall be
exclusively resolved in the Superior Court of New Jersey in Bergen County.
Buyer, Sellers and each of the Shareholders each hereby consent (i) to the
exercise of personal jurisdiction over them by, and venue in the state courts
located in the state of New Jersey; and (ii) to the service of process for any
of the court paper by any form of mail requiring a signed receipt. The foregoing
consent is not intended to preclude service upon any person or entity by any
other means authorized by the courts of the state of New Jersey. This Agreement
may be executed in counterparts, with each such counterpart being deemed to
constitute an original document and with all such counterparts together being
deemed to constitute one and the same instrument.
8.13 Further Documents and Cooperation. Subsequent to the Closing,
Sellers and Buyer without the necessity of any further consideration whatsoever,
shall each execute and deliver such further instruments of conveyance and
transfer and take such additional actions as the other party may reasonably
request or require to confirm or further evidence the transfer to Buyer of the
Assets, the contracts, and other property to be conveyed hereunder and the
assumption by Buyer of the Assumed Liabilities. In the event of the dissolution,
liquidation or winding out of the affairs of Sellers, Sellers shall take all
actions (including those reasonably requested by Buyer) necessary to ensure that
the shareholders of Sellers shall jointly and severally assume all of the
liabilities and obligations of Sellers resulting from or relating to the
transactions contemplated by this Agreement, including providing for the
payment, discharge or performance of Sellers' liabilities and the performance of
the indemnification provisions of Sellers contained herein; provided however,
that such assumption shall not operate to modify or discharge any of the
obligations of either Seller or the Shareholders under this Agreement. Prior to
any dissolution, liquidation or winding up ????, of the Sellers, Sellers shall
furnish at least three weeks prior notice thereof to Buyer. At all times after
the Closing. Sellers and the Shareholders shall cooperate with Buyer and
support Buyer in its retention of all former employees of Sellers which Buyer
has sought to retain. Sellers and the Shareholders, jointly and severally, shall
???? everything necessary, to insure that, except to the extent of the
Assumed Liabilities, the sale and transfer ???? of the Assets, the
contracts and the other properties conveyed hereunder will not subject Buyer or
the ???? the contracts, and other property conveyed hereunder to any
liability or claim now pending or hereafter brought ???? claimed against
any Seller or any of a Seller's assets, whether by operation of law (including
any bulk sale ???? law), by contract or otherwise, including any claim or
liability resulting from any tax statute, rule or regulation or resulting from
any employee benefit, profit-sharing or pension plan or labor agreement to which
a Seller ???? party or by which it or any of its assets is bound or
affected or resulting from any third party claim base ???? interference with
contractual advantage, prospective business relations or similar causes of
action.
Page -17-
8.14 Severability. Whenever [illegible] each provision of this
Agreement wi11 be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
8.15 No Strict Construction. The language used in this Agreement will
be deemed to be the line which chosen by the parties hereto to express their
mutual intent, and no rule of strict construction will be applied against any
party.
8.16 Captions, Gender and Number. The captions used in this Agreement
are for convenience of reference only, do not constitute a part of this
Agreement, and will not be deemed to limit, characterize or in any way affect
any provision of this Agreement, and all provisions of this Agreement will be
enforced and construed as if no caption had been used in this Agreement. As used
in this Agreement (including any exhibits, schedules, and amendments), the
masculine, feminine, and neuter gender and the singular or pleural number shall
be deemed to include the others whenever the context may so require. References
to "Sections" and "Exhibits" are to sections of or exhibits to this Agreement
unless otherwise stated.
9. Definitions.
"Agreement" has the meaning ascribed to it in the preface.
"Assigned Contracts" means those contracts which the Buyer and Seller have
agreed to set forth on the Asset Schedule.
"Closing" means the closing of the purchase and sale of assets contemplated
under this Agreement.
"Closing Date" means the date and time of the Closing.
"Contracts" means all retail contracts and dealer contracts as contained on the
Asset Schedule.
"Damages" means all liabilities, demands, claims, legal actions or causes of
action, regulatory, legislative or judicial proceedings or investigations,
assessments, levies, losses, fines, penalties, damages, costs and
expenses, including reasonable fees and expenses of attorneys, accounts and
other professionals sustained or incurred in connection with the cooperation in
or with the defense, investigation or cure of any claim.
"Dealer Contract" means Seller's dealer agreement(s) for central station
monitoring of all customers of each dealer, for dealers and dealer agreements
listed on the Asset Schedule.
"Disclosure Schedule" means the schedule entitled "Disclosure Schedule"
delivered by the Sellers and the Shareholders and initialed by the Shareholders,
Sellers and Buyer for identification, which schedule is arranged in sections
corresponding to the letter and numbered subsections contained in Article 2 of
the Agreement.
"Excluded Liabilities" has the meaning ascribed to it in section 1.2 of the
Agreement.
"Including" or any form of it means including without limitation.
"Key Employee" means an employee of Seller who is also a shareholder of either
Seller.
"Knowledge" (or and variation thereof), when referring to any Person, means
the actual knowledge of such Person after due inquiry.
"Lease" means a lease related to a Seller's Business to which a Seller is a
party.
"Lien" means any mortgage, pledge, lean, encumhered, claim, charge, security
interest or other right to claim possession or ownership.
Page -18-
"Location" means the premises which are the subject of a Lease.
"Person" has the meaning ascribed to it in 26 U.S.C. section 7701.
"Purchased Assets" means all properties, assets and rights which Sellers convey,
or purport to convey, to Buyer at the Closing.
"Subscriber" means the end user of monitoring services pursuant to a WRMR
Contract. This person is the owner of the home where monitoring services
are rendered. A person who rents a home does not qualify as a Subscriber.
"Buyer" has the meaning ascribed to it in the preface.
"Sellers" and "Seller" have the meaning ascribed to it in the preface.
"Sellers' Business" means the security alarm monitoring business operations
of either or both Sellers.
"Shareholders" means and includes all individuals and entities having any
ownership interest, directly or indirectly, in Sellers and all officers and
directors of either Seller, which have been represented by Sellers to be only
Xxxxxxx Xxxxxxx and Xxxxx Xxxxx.
"Wholesale and Retail Recurring Monthly Revenue" or "WRMR" means the
monthly recurring income which a subscriber or dealer has contracted to pay
for the monitoring services to be provided to that customer under his or her
contract for monitoring services.
"WRMR Contract" means the subscriber monitoring, agreement(s) which Buyer
has accepted for purchase which fulfill its credit criteria and are: (a) 12, 24,
36, 48 or 60 months contracts with automatic annual renewal thereafter,
none of which have been cancelled, non-renewed, or threatened to be cancelled
or non-renewed, default or breach of any kind; (b) generate between $1.95 and
$25 per months in recurring revenue; and (c) have made at least one monthly
payment within the past ninety (90) days and have no arrearage of sixty (60)
days or more.
IN WITNESS WHEREOF, this Agreement has been executed as of the day and year
first above written.
KC Acquisition Corp.
(the "Buyer")
By: /s/ (illegible)
-------------------------------
/s/ Xxxxxxx Xxxxxxx /s/ Xxxxx Xxxxx
---------------------------------- -----------------------------------
Xxxxxxx Xxxxxxx ("Shareholder") Xxxxx Xxxxx ("Shareholder")
Custom Design Security, Inc., Central Digital Static
("Seller") Monitoring Service, Inc.
("Seller")
By:/s/ (illegible) By: /s/ (illegible)
-------------------------------- ----------------------------------
Its President, and individually Its President, and individually
Page -19-
Exhibit 1.1(A).
Contract Assets Schedule
All dealer and subscriber contracts associated with Assets being sold.
All WRMR Contracts
All telephone lines in connection with the monitoring of any and all
Subscribers under any WRMR Contracts.
All telephone numbers of Seller in connection with the monitoring of any
and all Subscribers under any WRMR Contracts.
All records and computer data relating to any and all Subscribers under any
WRMR Contracts.
Page -20-
CDS RECURRING REVENUE SUMMUNRY
10/02/01
Dealer #: 2 Accounts: 289 Monthly: 4291,000 Yearly: $1499.800
Dealer #: 4 Accounts: 21 Monthly: 138,000 Yearly: 1656.000
Dealer #: 6 Accounts: 1 Monthly: 6,000 Yearly: 72.000
Dealer #: 8 Accounts: 113 Monthly: 529,500 Yearly: 6354.000
Dealer #: 13 Accounts: 273 Monthly: 1154,000 Yearly: 13968.000
Dealer #: 14 Accounts: 301 Monthly: 1355,000 Yearly: 16230.000
Dealer #: 15 Accounts: 965 Monthly: 2524,500 Yearly: 30294.000
Dealer #: 16 Accounts: 438 Monthly: 1117,000 Yearly: 16404.000
Dealer #: 17 Accounts: 348 Monthly: 4823,000 Yearly: 57936.000
Dealer #: 20 Accounts: 45 Monthly: 532,500 Yearly 6390.000
Dealer #: 21 Accounts: 88 Monthly: 620,O00 Yearly: 7440.000
Dealer #: 26 Accounts: 59 Monthly: 366,000 Yearly: 4592.000
Dealer #: 33 Accounts: 541 Monthly: 1878,000 Yearly: 22536.000
Dealer #: 35 Accounts: 259 Monthly: 1079,000 Yearly: 12948.000
Dealer #: 40 Accounts: 72 Monthly: 493,509 Yearly: 5922.000
Dealer #: 48 Accounts: 37 Monthly: 338,000 Yearly: 4056.000
Dealer #: 54 Accounts: 74 Monthly: 452,000 Yearly: 5424.000
Dealer #: 58 Accounts: 1 Monthly: 6,000 Yearly: 72.000
Dealer #: 60 Accounts: 180 Monthly: 1250,000 Yearly: 15000.000
Dealer #: 63 Accounts: 236 Monthly: 2319,000 Yearly: 27834.000
Dealer #: 66 Accounts: 12 Monthly: 168,000 Yearly: 2016.000
Dealer #: 74 Accounts: 16 Monthly: 96,000 Yearly: 1152.000
Dealer #: 82 Accounts: 450 Monthly: 1461,500 Yearly: 17538.000
Dealer #: 88 Accounts: 70 Monthly: 804,000 Yearly: 9648.000
Dealer #: 89 Accounts: 722 Monthly: 4077,000 Yearly: 48930.000
Dealer #: 90 Accounts: 6 Monthly: 49,000 Yearly: 588.000
Dealer #: 91 Accounts: 241 Monthly: 1608,500 Yearly: 19302.000
Dealer #: 97 Accounts: 125 Monthly: 969,006 Yearly 11628.000
Dealer #: 98 Accounts: 310 Monthly. 1637,000 Yearly: 19644.000
Dealer #: 99 Accounts: 62 Monthly: 575,850 Yearly: 6910.000
Dealer #: 103 Accounts: 18O Monthly: 2095,000 Yearly: 25020.000
Dealer #: 107 Accounts: 4 Monthly: 24,000 Yearly: 288.000
Dealer #: 111 Accounts: 2 Monthly: 24,000 Yearly: 288.000
Dealer #: 112 Accounts: 41 Monthly: 267,000 Yearly: 3204.000
Dealer #: 113 Accounts: 15 Monthly: 75,000 Yearly: 900.000
Dealer #: 114 Accounts: 75 Monthly: 191,750 Yearly: 2301.000
Dealer #: 117 Accounts: 28 Monthly: 224,000 Yearly: 2688.000
Dealer #: 124 Accounts: 778 Monthly: 3265,50C Yearly: 39186.000
Dealer #: 125 Accounts: 161 Monthly: 586,000 Yearly: 7032.000
Dealer #: 127 Accounts: 22 Monthly: 182,000 Yearly: 2184.000
Dealer #: 129 Accounts: 24 Monthly: 250,000 Yearly: 3000.000
Dealer #: 130 Accounts: 75 Monthly: 513,250 Yearly: 6159.000
Dealer #: 131 Accounts: 80 Monthly: 500,500 Yearly: 6006.000
Dealer #: 135 Accounts: 1 Monthly: 6,000 Yearly: 72.000
Dealer #: 137 Accounts: 34 Monthly: 705,667 Yearly: 8468.000
Dealer #: 141 Accounts: 3 Monthly: 20,000 Yearly: 240.000
Dealer #: 142 Accounts: 551 Monthly: 2556,300 Yearly: 30675.600
Dealer #: 144 Accounts: 130 Monthly: 1303,000 Yearly: 16636.000
Dealer #: 145 Accounts: 26 Monthly: 381,000 Yearly: 4575.000
Dealer #: 146 Accounts: 17 Monthly: 157,000 Yearly: 1884.000
Dealer #: 147 Accounts: 81 Monthly: 800,000 Yearly: 9600.000
Dealer #: 148 Accounts: 163 Monthly: 1045,000 Yearly: 12552.000
Dealer #: 149 Accounts: 36 Monthly: 428,O00 Yearly: 5136.000
Dealer #: 154 Accounts: 83 Monthly: 414,000 Yearly: 4968.000
Dealer #: 157 Accounts: 58 Monthly: 230,250 Yearly: 3763.000
Dealer #: 159 Accounts: 1 Monthly: 6,000 Yearly: 72.000
Dealer #: 162 Accounts; 18 Monthly: 266,000 Yearly: 3192.000
Dealer #: 166 Accounts: 2 Monthly: 13,500 Yearly: 162.000
Dealer #: 167 Accounts: 151 Monthly: 604,000 Yearly: 7248.000
Dealer #: 168 Accounts: 262 Monthly: 1369,900 Yearly: 16438.000
Dealer #: 169 Accounts: 123 Monthly: 496,O00 Yearly: 5952.000
Dealer #: 170 Accounts: 45 Monthly: 254,000 Yearly: 3048.00
Dealer #: 172 Accounts: 73 Monthly: 255,500 Yearly: 3066.000
Dealer #: 173 Accounts: 1 Monthly: 6,000 Yearly: 69.000
Dealer #: 174 Accoants: 6 Monthly: 86,000 Yearly: 1032.000
Dealer #: 175 Accounts: 1 Monthly: 10,000 Yearly: 120.000
Dealer #: 180 Accounts: 121 Monthly: 1351,000 Yearly: 16213.000
Dealer #: 182 Accounts: 2 Monthly: 10,500 Yearly: 125.000
Dealer #: 183 Accounts: 14 Monthly: 111,500 Yearly: 1338.000
Dealer #: 184 Accounts: 17 Monthly: 69,000 Yearly: 828.000
Dealer #: 185 Accounts: 275 Monthly: 565,5OO Yearly: 6786.000
Dealer #: 187 Accounts: 59 Monthly: 324.50C Yearly: 3894.000
Dealer #: 188 Accounts: 58 Monthly. 580,000 Yearly: 6962.000
Dealer #: 189 Accounts: 238 Monthly. 2130,500 Yearly: 25566.000
Dealer #: 190 Accounts: 116 Monthly: 641,500 Yearly: 7698.000
Dealer #: 191 Accounts: 24 Monthly: 36,000 Yearly: 432.000
Dealer #: 192 Accounts: 14 Monthly: 42,O00 Yearly: 504.000
Dealer #: 193 Accounts: 28 Monthly: 280,000 Yearly: 5350.000
Dealer #: 194 Accounts: 107 Monthly: 1268,000 Yearly: 15216.000
Dealer #: 195 Accounts: 12 Monthly: 72,000 Yearly: 854.000
Dealer #: 196 Accounts: 100 Monthly: 614,500 Yearly: 7374.000
Dealer #: 198 Accounts 237 Monthly: 450,300 Yearly: 5403.000
Dealer #: 199 Accounts: 56 Monthly: 612,000 Yearly: 7344.000
Dealer #: 200 Accounts: 16 Monthly: 184,500 Yearly: 2204.000
Dealer #: 201 Accounts: 7 Monthly: 84,000 Yearly: 1008.000
Dealer #: 202 Accounts: 63 Monthly: 649,700 Yearly: 7797.000
Dealer #: 203 Accounts: 11 Monthly: 90,500 Yearly: 1086.000
Dealer #: 205 Accounts: 5 Monthly: 25,000 Yearly: 300.000
Dealer #: 207 Accounts: 53 Monthly: 402,417 Yearly: 4829.000
Dealer #: 208 Accounts: 1 Monthly: 4,000 Yearly: 48.000
Dealer #: 209 Accounts: 54 Monthly: 432,000 Yearly: 5184.000
Dealer #: 210 Accounts: 2 Monthly: 40,000 Yearly: 480.000
Dealer #: 211 Accounts: 561 Monthly: 2521,000 Yearly: 50252.000
Dealer #: 212 Accounts: 7 Monthly: 65,000 Yearly: 780.000
Dealer #: 213 Accounts: 4 Monthly: 24,030 Yearly: 288.000
Total Gross Monthly Average: $ 70017.0667
Total Number of Accounts: 11969
Gross Yearly Amount: $ 840204.8004
Exhibit 1.1(1).
Property Assets Schedule
Page -21-
(1) Fujitsu Series III BPX w/ 17 Stations ~s a
(2) 4 Drawer Lateral Cabnets
(2) 5 Drawer Lateral Cabnets
(5) Desks
(2) Large Desk Stations
(5) Half Cublicles
Misc Office Furniture
(1) AES UL System
(2) Silent Knight 9000 w/ 9001 expander
(2) Ademco 685
(1) ITI CS-4000
(1) SurGard DLR2
(2) Dell PowerEdge 2300
(1) Compaq 4814
(3) Compaq 4500 series
(1) Compaq 4800
(1) NEC 9010
(5) 286 Computers
(1) HP Laserjet 4 Plus
(1) HP Laserjet 2100
(1) NEC Silentwriter 95
(1) Epson LX 300
(1) Brother Fax
(1) HP Fax
(1) Typewritter
(1) Refriderator
(1) Microwave
Exhibit 1.3(A)
Assumed Liabilities
NONE except the performance of security system monitoring under the
contracts forming a portion of the Assets sold hereunder,
but only after the date of Closing.
Page -22-
Exhibit 1.6(A)(1)
Xxxx of Sale
KNOW ALL MEN BY THESE PRESENT that Custom Design Security, Inc., and
Central Digital Station Monitoring Service, Inc. (collectively the "Seller")
each a Florida corporation, having offices at 0000 Xxxxxxxxxxxx Xxxxxxxxx, Xxxxx
X-0, Xxxxxxxx, Xxxxxxx 00000, for and in consideration of the sum of One Million
Three Hundred Sixty Nine Thousand Two Hundred Forty Two and no/Dollars
($1,369,242.00) and other good and valuable consideration paid to it by KC
Acquisition Corp. ("Buyer"), a New Jersey corporation having offices at 000
Xxxxx Xxxxx Xxxxxx, Xxxxxxxxxx, X.X. 00000, the receipt of which is hereby
acknowledged by Sellere, hereby grants, bargains, sells, coveys, transfers ands
ses over unto Buyer, its successors and assigns, all of Sellere's rights, title
and interests in and to the fixed, intangible and other assets described on
Schedule A attached hereto and made a part hereof (the "Assets").
Seller hereby warrants and represents to Buyer and aits successors and
assigns that Seller has good legal title to, and good and lawful right to sell
the Asseets, that the Assets are free and clear of any and claims, liens,
security interest and other encumbrances of any kind or nature whatsoever, and
that upon the delivery of this Xxxx of Sale to Buyer, Buyer has and will have
good and marketable title to the Assets, free and clear of any and all claims,
liens, security interests and other encumbrances of any kind or nature
whatsoever. Seller covenants that it will defend Buyer's title to the Asset
against the demands of all persons.
All the terms, covenants and conditions herein contained shall be for
and shall insure to the benefit of an shall band the respective parties hereto,
and their legal representatives, successors, and assigns, respectively.
In all references herein to any parties, persons, entities or
corporation, the use of any particular gender or the plural or singular number
is intended to include the appropriate gender or number as the text of the
within instrument may require.
IN WITNESS WHEREOF. Seller has caused this Xxxx of Sale to be duly executed in
its name by its duly authorized officers this ____ day of _____________ 2001.
Custom Design Secuirty, Inc. Central Digital Station Monitoring
Service, Inc.
("Seller") ("Seller")
By: By:
--------------------------------- ------------------------------
Its President Its President
Page -23-
Exhibit 1.6 (A)(2)
Bring Down Certificate
The undersigned hereby certifies that each and every representation and
warranty set forth in any documents relating to the sale and assignment of
property and assets to KC Acquisition Corp. of the undersigneds equipment and
other assetes utilized in connection with the operation of its business known as
Custom Design Secuity, Inc., together with non-exclusive rights to the name
Custom Design Security, CDS, in connection with the operation of the monitoring
of fire and security and use of telephone numbers and telephone lines being
transferred to Buyer, are true and correct today the same as if restated at
length herein.
Custom Design Secuirty, Inc. Central Digital Station Monitoring
Service, Inc.
("Seller") ("Seller")
By: By:
--------------------------------- ------------------------------
Its President, and individually Its President, and individually
Page -24-
Exhibit 1.7 (C)
Restrictive Covenant Agreement
This Agreement is entered into this ___ day of ________, 2001, by and
between KC Acquisition Corp., having offices at 000 Xxxxx Xxxxx Xxxxxx,
Xxxxxxxxxx. X.X. 00000 (hereinafter the "Company"), and Custom Design Security,
Inc., and Central Digital Station Monitoring Service, Inc. (collectively the
"Sellers"), each a Florida corporation, having offices at 0000 Xxxxxxxxxxxx
Xxxx., Xxxxx X-0, Xxxxxxxx, Xxxxxxx 00000, and Xxxxxxx Xxxxxxx and Xxxxx Xxxxx,
residing or located at 0000 Xxxxxxxxxxxx Xxxx., Xxxxx X-0, Xxxxxxxx, Xxxxxxx
00000 (collectively the "Shareholders").
WHEREAS, the Company and the Sellers and Shareholders have agreed to
set forth in this Agreement the relationship of Sellers and Shareholder to the
Company as to the matters addressed herein in connection with the sale of
certain assets by Sellers to the Company and as a condition to the sale.
NOW, Therefore, for and in consideration of one dollar and other good
and valuable consideration, the receipt of which is hereby acknowledged, the
Company and the Sellers and Shareholders agree as fellows:
1. CONFIDENTIALITY AND TRADE SECRETS AGREEMENT: Sellers and Shareholders
covenant and agree that they shall not at any time during this period of five
years from the date hereof, utilize personally or reveal or disclose to any
other firm, person. or entity, nor permit to he revealed or disclosed any
confidential, proprietary, or secret information concerning, the Company's trade
secrets, financial data, customer lists, pricing, discount and sales
information, marketing plans, contracts, assets, compensation of any employees,
vendor agreements, any advertising materials (regardless whether such materials
are copyrighted), or anything else relating to the Company's sales or methods of
operations made known to Sellers or Shareholders and which relate in any way to
the Assets, the Contracts and other property being sold to the Company this day.
2. NON-COMPETITION AGREENLENT: In consideration for entering into this Agreement
and for the sale of specified assets to the Company, the undersigned Sellers and
Shareholders acknowledge and agree that Sellers and the Shareholders have
necessarily had access to the identity of the customers of the Company, the
requirements of those customers for the services as are provided by the Company,
financial data, customer lists, pricing, special pricing, discount and sales
information, marketing, purchasing habits of customers, prospective branch
locations, all personnel information, marketing plans, materials (regardless
whether such materials are copyrighted), or anything else relating to the
Company's sales or methods of operations made known to Sellers and Shareholders.
From and after the date hereof and for a period of five years herefrom,
the undersigned Sellers and Shareholders agree that they shall NOT, without the
prior written consent of the Company, which may be unreasonably withheld, on
his/her their own behalf, on behalf of any other person, or on behalf of or as a
partner, shareholder, officer, director, employee, agent, consultant or trustee
of any entity, as joint venturer, or otherwise, directly or indirectly, (a)
contact any person or entity who is a subscriber or dealer on the list of
Assets. Contracts and other property being sold to the Company this day, or (b)
sell to any Subscriber or dealer on the list of Assets. Contracts and other
property being sold to the Company this day any product or service which the
Company then sells, produces, or has sold or produced for that subscriber or
dealer.
Page -25-
3. REMEDIES: The parties acknowledge that remedies at law for breach of this
Agreement will not adequately protect the Company's rights and, therefore, that
the Company shall be entitled to a preliminary and or permanent injunction to
enforce the provisions of this Agreement in addition to and not to the exclusion
of all other remedies available to the Company.
4. NON-WAIVER: The waiver by the Company or any of the Sellers or the
Shareholders of a breach of any provision of this Agreement by the other shall
not operate or be construed as a waiver of any Subsequent breach. No course of
dealing or any delay on the part of either party in exercising or, enforcing
their rights under this Agreement shall operate as a waiver of such rights.
5. GOVERNING LAW: This Agreement shall be made and delivered in New Jersey and
shall be governed by and construed in accordance with the laws of the State of
New Jersey applicable to Agreements made and to be performed entirely within the
State of New Jersey, excluding any rule or principle of the conflict of laws
that might otherwise refer the interpretation of construction of this Agreement
to the laws of any other jurisdiction. Sellers and the Shareholders consent to
jurisdiction and venue in the Superior Court of New Jersey in Bergen County.
6. SEVERABILITY: If any of the provision of this Agreement, or the application
of any term or provision to any persons or circumstances is invalid or
unenforceable to any extent, then the remainder of this Agreement or the
application of the terms or provisions to persons or circumstances, other than
those to which it is held invalid or unenforceable, shall not be affected
thereby and each term or provision of this Aureement shall be valid and
enforceable to the extent permitted by law.
7. ASSIGNMENTT: This Agreement shall not be assigned without the written
consent of the other party hereto.
8. CONSTRUCTION: Headings in this Agreement are for reference purposes only and
shall not be deemed to have any substantive effect.
9. NOTICES: Any notice to be given under this Agreement shall be sufficient if
it is in writing and delivered in person or sent by certified mail, return
receipt requested, postage pre-paid, to Sellers or any Shareholders at the
address set forth above, or to the President of the Company at the firm's
principal office as set forth above, or as may hereafter be changed by proper
notice hereunder.
Page -26-
10. ADVICE OF COUNSEL: Sellers and the Shareholders acknowledge and agree that
thcy have been afforded an adequate opportunity to have this Agreement and all
of its restrictions and implications reviewed and approved by counsel of each of
the Sellers' and the Shareholders' own choosing prior to Sellers and
Shareholders signing the Agreement. Sellers and Shareholders intend to be bound
by the terms hereof.
11. ENTIRE AGREEMENT: This Agreement contains the entire Agreement of the
parties as to the subject matter hereof and supersedes all prior agreements and
understandings pertaining to the subject matter hereof whether written or oral.
No modification or amendment of this Agreement shall he effective unless in
a written instrument, executed by both of the parties hereto. The Parties hereto
agree to a standard of reasonableness in interpretation of this Agreement.
KC Acquisition Corp.
(the "Company")
By:
-----------------------------
-------------------------------- ----------------------------------
--------------------------------- ----------------------------------
Xxxxxxx Xxxxxxx ("Shareholder") Xxxxx Xxxxx ("Shareholder")
Custom Design Secuirty, Inc. Central Digital Station Monitoring
Service, Inc.
("Seller") "Seller")
By: By:
-------------------------------- ----------------------------
Its President, and individually Its President, and individually
Page -27-
Exhibit 2
Disclosure Schedule
Page -28-
Exhibit 2.16
Executo. y Contracts
None.
Page -29-
Exhibit 2.23
Listing of Names
Custom Design Security
Central Digital Security Monitoring Station
CDS
Page -30-
[INSERT FILE 323328stm27-43
