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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ("Agreement") is made and entered into
this 1st day of September, 1995, by and between MASADA SECURITY, INC., a
Delaware corporation ("Purchaser") and TEL*STAR CELLULAR CORPORATION, a
California corporation ("Seller").
Recitals
Seller is engaged in the business of operating a security alarm system
monitoring business in Irvine, California and the surrounding area (the
"Business").
Seller desires to sell to Purchaser and Purchaser desires to buy from
Seller all of the customer account contracts and certain other assets of Seller
pertaining to the Business, and Purchaser and Seller desire to make certain
other arrangements between them relating to the purchase and sale of such
assets, all upon the terms and conditions hereinafter set forth.
Agreement
NOW, THEREFORE, the parties hereto, in consideration of the mutual
covenants, agreements and specific considerations set forth below, the
sufficiency and adequacy of which are hereby acknowledged, and intending to be
legally bound, agree as follows:
Section 1. Agreement to Purchase and Sell. In accordance with
the terms and conditions contained herein and in reliance on the respective
representations and warranties of the parties hereto, Seller hereby agrees to
sell, convey, transfer and assign to Purchaser, and Purchaser hereby agrees to
purchase, accept and acquire from Seller in the manner provided herein, the
following assets (collectively referred to as the "Purchased Assets"):
(a) Alarm Accounts. All right, title and
interest of Seller in and to the contracts for the rendering of security
monitoring services to existing customers of Seller which meet all of the
requirements listed in Section 8(i) and are specifically listed on Schedule
1(a) hereto (the "Alarm Accounts");
(b) Inventory. All right, title and interest of
Seller in and to all inventory pertaining to the Business maintained by Seller
at its branch offices, all of which are listed on Schedule 1(b) hereto (the
"Inventory"), with the Inventory, including, without limitation, items
purchased by Seller for resale and all purchase orders relating to the
foregoing;
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(c) Furniture and Fixtures. All right, title and
interest of Seller in and to all furniture and fixtures used in connection with
the Business, all of which are listed on Schedule 1(c) hereto (the "Furniture
and Fixtures");
(d) Contracts-in-Process. All right, title and
interest of Seller in and to those contracts and benefits of Seller related to
all accepted orders for the sale or installation by Seller of alarm systems
which are not yet installed or not completely installed as of the Closing Date
(as defined herein), all of which are listed on Schedule 1(d) hereto (the
"Contracts-in-Process");
(e) Other Contracts. All right, title and
interest of Seller in and to all executory contracts, agreements and leases,
all of which are listed on Schedule 1(e) hereto (the "Other Contracts"), the
Other Contracts to include, without limitation all non-competition or
non-solicitation agreements accruing to the benefit of the Seller.
(f) Receivables. The accounts receivable, trade
accounts, notes receivable and other debts owed to Seller for monitoring
services rendered pertaining to the Alarm Accounts and Contracts-in-Process;
provided, however, that all such debts owed to Seller for monitoring services
must be for previously rendered monitoring services and not for future
monitoring services, all of which are listed on Schedule 1(f) hereto (the
"Receivables");
(g) Intangible Personal Property. The unexpired
trademarks (whether registered or unregistered), trade names, logos, copyrights
and licenses owned by or accruing to the benefit of Seller pertaining to the
Business all of which are listed on Schedule 1(g) hereto (the "Intangible
Personal Property");
(h) Telephone Lines and Numbers. All right,
title and interest of Seller in and to the local and long distance telephone
numbers, digital dialer telephone lines that transmit signals from customer
locations to Seller's central station, and "ring-down" lines, all of which are
listed on Schedule 1(h) hereto (the "Telephone Lines and Numbers");
(i) Vehicles. All right, title and interest of
Seller in and to the vehicles specifically listed on Schedule 1(i) hereto (the
"Vehicles");
(j) Equipment Finance Agreements. All right,
title and interest of Seller and Norwest Financial, Inc. in and to equipment
finance agreements all of which are listed on Schedule 1(j) hereto (the
"Equipment Finance Agreements"), such list to include detail by account of (i)
monthly payments for long-term financing of equipment installation (equipment
and other) (such monthly finance charges are hereafter referred to as "MFC"),
(ii) expiration dates of the Equipment Finance Agreements, and (iii) the
Monthly Recurring Revenue associated with each account upon Equipment Finance
Agreement expiration; and
(k) Alarm Account Information. All files,
records and incidental documentation of Seller pertaining to the Alarm Accounts
and Contracts-in-Process (the "Alarm
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Account Information"), including, without limitation, all computer lists,
contract information, accounting history, service records and information,
credit records and information, and purchase and sales records and information.
Section 2. Purchase Price and Payment.
(a) Purchase Price-Ordinary Business Assets. The
purchase price for the Purchased Assets referred to in Section 1(a), 1(b),
1(d), 1(e), 1(f), 1(g), 1(h) and 1(k) (the "Purchase Price Ordinary Business
Assets") shall be the product of 30 times the aggregate of the Monthly
Recurring Revenue of the Alarm Accounts less an amount equal to the prepaid
revenue relating to the Alarm Accounts (as set forth on Schedule 2(a) hereto)
computed on a per diem basis to the Closing Date. For purposes of this
Agreement, the term "Monthly Recurring Revenue" with respect to the Alarm
Accounts acquired from Seller by Purchaser shall be the charge for gross alarm
monitoring services, (including, without limitation, maintenance and other
alarm related services), exclusive of sales or intangible taxes, equipment or
other finance charges, and any direct wire telephone line charges associated
with monitoring, payable by the customer for each applicable billing period
expressed in terms of a monthly amount regardless of whether the billing period
is annual, semi-annual, quarterly or monthly.
(b) Purchase Price-Furniture and Fixtures. The
purchase price for the Furniture and Fixtures (the "Purchase Price-Furniture
and Fixtures") shall be $2,100.00.
(c) Purchase Price-Vehicles. The purchase price
for the Vehicles (the "Purchase Price-Vehicles") shall be determined in
accordance with the average wholesale price list in the current version of the
Black Book Official Truck and Van Guide published by National Auto Research
Division Hearst Business Media Corporation as of the Closing Date.
(d) Purchase Price-Equipment Finance Agreements.
The purchase price for the Finance Agreements (the "Purchase Price-Equipment
Finance Agreements") shall be the sum resultant from the calculation of: the
number of days between the Closing Date and the expiration of the respective
Equipment Finance Agreements (the "Finance Period") multiplied by one-half of
the average daily MFC associated with the respective Equipment Finance
Agreements.
(e) Purchase Price-All Purchased Assets. The sum
of (i) the Purchase Price-Ordinary Business Assets, (ii) the Purchase
Price-Furniture and Fixtures, (iii) the Purchase Price-Vehicles, and (iv) the
Purchase Price-Equipment Finance Agreements shall hereafter be referred to as
the "Purchase Price-All Purchased Assets".
(f) Payment of Purchase Price-All Purchased
Assets.
(i) The aggregate of: (A) 90% of the
Purchase Price-Ordinary Business Assets; (B) the Purchase Price-Furniture and
Fixtures; (C) the Purchase Price-Vehicles; (D) 90% of the Purchase
Price-Equipment Finance Agreements; and (E) the adjustments
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calculated in accordance with Section 2(g) (collectively referred to as the
"Initial Payment") shall be paid by Purchaser to Seller by wire transfer or
other mutually agreeable means on the Closing Date; provided, however, that if
any of the Purchased Assets are owned by third parties or are subject to third
party liens or other encumbrances as of the Closing Date, including without
limitation Norwest Financial, Inc., then such third party rights or liens shall
be terminated or released at Closing due to payment of the full amount due as
of the Closing Date and a UCC-3 termination statement or other release shall be
provided to Purchaser which shall be sufficient to vest Purchaser with full and
complete title in the Purchased Assets.
(ii) The Purchase Price-All Purchased Assets
less the Initial Payment (the "Deferred Payment Amount") shall be paid in
accordance with Section 3 hereof.
(g) Adjustment to Purchase Price. The Purchase
Price-All Purchased Assets shall be adjusted for items of expense and income
prorated as of the Closing Date in the manner provided below:
(i) Liabilities or credits for personal
property taxes, if any, in respect of the Purchased Assets shall be prorated on
the basis of the current taxable year, to and including the Closing Date;
provided that if the assessed value of any Purchased Asset or rate of tax with
respect thereto shall not have been determined prior to the Closing Date, the
value and rate shall be determined on the basis of the amount of the previous
year in which the same was determined; and
(ii) Other liabilities or credits,
prepaid items and deferred charges relating to the Purchased Assets existing on
the Closing Date shall be adjusted as of the Closing Date by prorating the
aforementioned items for credit to Seller or Purchaser, as the case may be, in
accordance with generally accepted accounting principles.
(h) Allocation of Purchase Price-All Purchased
Assets. The Purchase Price-All Purchased Assets, subject to the adjustments
set forth in Section 2(g), shall be allocated as set forth in this Schedule
2(h). Purchaser and Seller agree for income tax purposes they shall report the
transactions contemplated by this Agreement in a manner consistent with such
allocation.
Section 3. Deferred Payment Amount.
(a) Escrow Agreement. On or prior to the Closing
Date, Seller and Purchaser agree to execute an Escrow Agreement substantially
in the form attached hereto as Schedule 3(a) (the "Escrow Agreement") and
Purchaser agrees to deposit with SouthTrust Bank of Alabama, N.A. (the "Escrow
Agent"), the Deferred Payment Amount to be held in an escrow account (the
"Escrow Account") pursuant to the terms of the Escrow Agreement (the "Deferred
Payment Amount" together with all earnings thereon shall collectively
hereinafter be referred to as the "Escrow Amount").
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(b) Payment and Escrow Amount. Within 30 days after
the first year anniversary of the Closing Date, Purchaser shall submit to
Seller substantially in the form attached hereto as Schedule 3(b) along with
all appropriate supporting documentation, a report reflecting: (i) the Escrow
Amount; (ii) the total Repurchase Amounts, if any, credited to Purchaser
calculated in accordance with Section 6 (a) (the "Total Repurchase Amounts");
(iii) the MRR Downward Adjustment, if any, credited to Purchaser calculated in
accordance with Section 6(b); (iv) the Conversion Adjustment, if any, credited
to Purchaser calculated in accordance with Section 17 and (v) the resulting
difference between Schedule 3(b)(i) less the Purchaser's credits associated
with Section 3(b)(ii), (iii) and (iii) (the "Resulting Difference"). If Seller
does not notify Purchaser of a dispute regarding such report within ten
business days from the date such report is submitted by Purchaser to Seller or
if Seller notifies Purchaser of its acceptance of such report, such report
shall be deemed complete and accurate and Seller and Purchaser shall notify
Escrow Agent to pay the sums computed below to Seller or Purchaser, as the case
may be, and the Escrow Account shall then be closed after payment by the Escrow
Agent of all funds held by it in the Escrow Account. If the Resulting
Difference is a positive amount then Seller and Purchaser shall instruct the
Escrow Agent to first pay the Seller the Resulting Difference and the remainder
of the Escrow Amount shall be paid by Escrow Agent to Purchaser. If the
Resulting Difference is equal to zero or is a negative amount, then Seller and
Purchaser shall instruct the Escrow Agent to pay Purchaser the entire Escrow
Amount and Seller shall owe no further amount to Purchaser.
(c) Dispute. All disputes and differences with
respect to the computation of the Resulting Difference and the Escrow Account
shall be determined by binding arbitration under the rules then in effect of
the American Arbitration Association, such arbitration hearing to be held in
Birmingham, Alabama. The arbitration proceedings shall be heard by one
arbitrator selected from the proposed panel of arbitrators issued by the
American Arbitration Association, Seller, on the one hand, and Purchaser, on
the other hand, shall attempt to select a mutually acceptable arbitrator. If
the parties are unable to select a mutually acceptable arbitrator within five
business days following the issuance of the list of potential arbitrators by
the American Arbitration Association, Seller, on the one hand, and Purchaser,
on the other hand, shall each select one person from the list, and those two
persons selected shall appoint a third person from the list, which person shall
be the arbitrator for the dispute. All arbitration awards shall include an
award of expenses including, but not limited to, legal and accounting fees.
Section 4. The Closing.
(a) Date and Place. The closing of the purchase
and sale of the Purchased Assets shall take place on September 7, 1995 or such
other date as shall be mutually acceptable to Purchaser and Seller (the
"Closing Date") and shall take place at a location mutually acceptable to
Purchaser and Seller.
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(b) Closing Deliveries. On the Closing Date,
Seller shall make the deliveries specified by Section 9 and Purchaser shall
make the deliveries specified by Section 10.
(c) Closing Procedure. All proceedings to be
taken and all documents to be delivered and executed on the Closing Date shall
be deemed to have been taken, delivered and executed simultaneously, and no
proceeding shall be deemed taken nor documents deemed executed or delivered
until all have been taken, delivered and executed. On the Closing Date, Seller
and Purchaser shall execute and deliver the instruments and documents
referenced in Sections 9 and 10 and Purchaser shall make the Initial Payment
and shall deposit the Deferred Payment Amount with the Escrow Agent.
(d) Termination. In the event that any of the
conditions set forth in Section 9 are not satisfied or waived in writing prior
to or on the Closing Date, then Purchaser may terminate this Agreement by
written notice to Seller. In the event that Purchaser exercises such right of
termination, this Agreement thereupon shall become wholly void and be of no
further force or effect, except for the confidentiality provisions contained in
Section 14(c) and there shall be no further liability on the part of Seller or
its respective officers, directors, stockholders, employees or agents with
respect to the transactions contemplated hereby.
(e) Specific Performance. In the event that
Purchaser complies with all of the requirements set forth in Schedule 10, then
Purchaser shall have the right of specific performance against the Seller as to
the Purchased Assets.
Section 5. Assumption of Liabilities. Purchaser shall not
assume any liability, debt or obligation of Seller except the responsibility of
rendering security monitoring services pursuant to the Alarm Accounts and
Contracts-in-Process set forth on Schedules 1(a) and 1(d) and those
liabilities and obligations of Seller arising after the Closing Date that are
set forth on Schedule 5 hereto. Seller shall continue to be responsible for,
and shall indemnify and save harmless Purchaser from and against, all of
Seller's known and unknown liabilities, debts and obligations, arising prior
to, in connection with, or subsequent to the Closing Date that are not
specifically assumed by Purchaser as set forth on Schedules 1(a), 1(d) and 5.
Section 6. Special Warranties.
(a) Alarm Accounts and Finance Agreements.
Seller warrants that beginning on the Closing Date and for the 12 month period
immediately after the Closing Date (the "Guarantee Period") all Alarm Accounts
purchased by Purchaser pursuant to this Agreement and described on Schedule
1(a) shall continue to meet the requirements specified in Section 8(i) and that
all payments from customers shall be made in a timely manner. Seller also
warrants that during the Guarantee Period all payments from Finance Agreement
customers described on Schedule 1(j) shall be made in a timely manner. For
purposes of this Agreement, payments by
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customers shall be considered timely if they are received by Purchaser on or
before the 60th day following the applicable date of billing. For purposes of
this Agreement a "Defaulted Contract" shall be defined as: (i) any Alarm
Account that no longer meets the requirements specified in Section 8(i); or
(ii) any Alarm Account or Finance Agreement in which payments from customers
shall not have been made in a timely manner. Purchaser shall give Seller
written monthly notice of any and all Defaulted Contracts as soon as reasonably
possible. Seller shall have 30 days from the receipt of such written notice to
return such Defaulted Contracts to compliance with the requirements of Alarm
Accounts as specified in Section 8(i) and timeliness; provided, however, that
Seller shall not, either directly or indirectly, make payments to or provide
other assistance to or on the behalf of the customers who have Defaulted
Contracts. If at the end of such 30 day period Purchaser, in its sole
discretion, determines that any or all such Alarm Accounts or Finance
Agreements are still Defaulted Contracts, then Seller shall repurchase such
Alarm Accounts from Purchaser for 30 times the Monthly Recurring Revenue of
such Defaulted Contracts as of the Closing Date or shall repurchase such
Finance Agreements for the product of the Finance Period multiplied by one-half
of the average daily MFC (collectively referred to as the "Repurchase Amount")
or shall replace the Defaulted Contracts with other contracts that meet all of
the requirements listed in Section 8(i) and have Monthly Recurring Revenue or
MFC, as appropriate, greater than or equal to that of such Defaulted Contracts.
If the Seller does not repurchase or replace the Defaulted Contracts within
such 30 day period, Seller shall be charged against the Escrow Account an
amount equal to the Repurchase Amount plus the interest accruing thereon from
the Closing Date at the rate then applicable to the Escrow Account; provided,
however, the aggregate Repurchase Amount charged against the Escrow Account
shall only exceed the amount of the Escrow Account in the case of fraud on
behalf of Seller.
(b) Monthly Recurring Revenue and MFC Downward
Adjustment. Seller warrants that (i) the Monthly Recurring Revenue used in
computing the Purchase Price-Ordinary Business Assets shall equal or exceed the
actual Monthly Recurring Revenue of the Alarm Accounts at the expiration of the
Guarantee Period and (ii) the MFC used in computing the Purchase Price-Finance
Agreements shall equal or exceed the actual MFC of the Finance Agreements at
the expiration of the Guarantee Period. A charge shall be made against the
Escrow Account for the benefit of Purchaser for each (i) Alarm Account for
which it is determined the Monthly Recurring Revenue used in computing the
Purchase Price-Ordinary Business Assets exceeded the actual Monthly Recurring
Revenue for such Alarm Accounts at the expiration of the Guarantee Period and
(ii) Finance Agreement for which it is determined the MFC used in computing the
Purchase Price-Finance Agreements exceeded the actual MFC for such Finance
Agreement at the expiration of the Guarantee Period. The amount of such charge
shall be determined by (i) computing the amount by which the Monthly Recurring
Revenue of the Alarm Accounts used in computing the Purchase Price-Ordinary
Business Assets exceeds the actual Monthly Recurring Revenue of such Alarm
Accounts at the expiration of the Guarantee Period and multiplying such sum by
30 and (ii) computing the amount by which the average daily MFC used in
computing the Purchase Price-Finance Agreements exceeds the actual average
daily MFC of such Finance Agreements as of the expiration of the Guarantee
Period and
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multiplying such sum by the Finance Period of the respective Finance Agreement
(collectively referred to as the "MRR Downward Adjustment").
Section 7. Representations and Warranties of Purchaser.
Purchaser hereby represents and warrants to Seller that on the date hereof and
on each day thereafter to the Closing Date:
(a) Organization and Standing. Purchaser is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, and Purchaser has all requisite corporate power
and authority to own, operate and lease its properties and carry on its
business as now being conducted and to enter into this Agreement and to perform
its obligations hereunder.
(b) Authority Relative to this Agreement. The
execution, delivery and performance by Purchaser of this Agreement has been
duly authorized and no further corporate action is necessary on the part of the
Purchaser to make this agreement valid and binding upon Purchaser in accordance
with its terms.
(c) No Violation. Neither the execution nor the
delivery of this Agreement by Purchaser nor the consummation of the
transactions contemplated herein, nor compliance by Purchaser with any of the
provisions hereof:
(i) violates or conflicts with or
results in the breach or termination of any term or provision of, nor
constitutes a default or acceleration of the performance required under, the
certificate of incorporation, bylaws or resolutions of the Purchaser, or any
indenture, mortgage, deed, trust or other contract or agreement to which
Purchaser is a party or by which its properties are bound;
(ii) violates any order, writ, injunction
or decree of any court, administrative agency or governmental body; or
(iii) requires the consent of any other
person, entity or governmental authority.
(d) Brokerage Fees. Purchaser is not obligated
nor has it agreed to pay any brokerage commissions, finders fees or other
similar fees or charges in connection with the purchase of the Purchased Assets
pursuant to this Agreement.
(e) Compliance with Laws. Purchaser's business
has been and is being conducted with all applicable laws, regulations and
requirements of each jurisdiction in which it is carried on and is not in
material breach of any such laws, regulations or requirements. Purchaser
warrants to hold Seller harmless from and against any violations of applicable
laws, regulations or requirements arising out of non-compliance therewith after
the Closing Date.
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Section 8. Representations and Warranties of Seller. Seller
represents and warrants to Purchaser that on the date hereof and on each day
thereafter to the Closing Date:
(a) Organization and Standing. Seller is a
corporation duly organized, validly existing and in good standing under the
laws of the State of California. Seller has all requisite corporate power and
authority to own, operate and lease its properties and carry on its business as
it has been and currently is being conducted and to enter into this Agreement
and to perform its obligations hereunder.
(b) Authority Relative to this Agreement. The
execution, delivery and performance by Seller of this Agreement has been duly
authorized by the board of directors and stockholders of Seller, and no further
corporate action is necessary on the part of Seller to make this Agreement
valid and binding upon the Seller in accordance with its terms.
(c) No Violation. Neither the execution nor the
delivery of this Agreement by Seller nor the consummation of the transactions
contemplated herein, nor compliance by Seller with any of the provisions
hereof:
(i) violates or conflicts with or
results in the breach or termination of any term or provision of, nor
constitutes a default or acceleration of the performance required under, the
articles of incorporation, bylaws or resolutions of Seller, or under any
indenture, mortgage, deed, trust or other contract or agreement to which Seller
is a party or by which its properties are bound;
(ii) violates any order, writ, injunction
or decree of any court, administrative agency or governmental body; or
(iii) requires the consent of any other
person, entity or governmental authority.
(d) Brokerage Fees. Seller is obligated and has
agreed to pay brokerage commissions to Xxxx Xxxxx in connection with the
purchase of the Purchased Assets pursuant to this Agreement as detailed on
Schedule 8(d). Seller agrees that Purchaser shall cause the brokerage
commission to be paid directly to Xxxx Xxxxx as a reduction of the Initial
Payment due to Seller, via a wire transfer or any other mutually agreeable means
on the Closing Date.
(e) Title to Purchased Assets. Seller warrants
that as of the Closing Date it will have good and marketable title to all of
the Purchased Assets, and the Purchased Assets shall not be subject to any
pledge, option, conditional sale agreement, security interest, consensual lien,
judgment lien, encumbrance or charge of any kind. Seller warrants that the
Alarm Accounts acquired by Purchaser are valid and are binding upon and
enforceable against the customers of Seller executing same in accordance with
their terms, and the obligations of the customers of Seller thereunder are not
subject to set-off or claims resulting from the conduct of Seller's business
prior to their conveyance to Purchaser.
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(f) Compliance with the Law. The Business has
been and is being conducted in compliance with all applicable laws, regulations
and requirements of each jurisdiction in which it is carried on and is not in
breach of any such laws, regulations or requirements. Seller warrants to hold
Purchaser harmless from and against any violations of applicable laws,
regulations or requirements arising out of non-compliance therewith prior to
the Closing Date.
(g) Actions, etc. Except as set forth on
Schedule 8(g):
(i) there are no actions, suits,
proceedings or investigations pending against or relating to the Business or
the Purchased Assets and Seller has not received any notice or written or oral
communication reflecting an intention or threat to institute any such action,
suite proceeding or investigation;
(ii) there are no actions, suits,
proceedings, or investigations pending before any court or governmental agency
in which it is sought to restrain or prohibit the carrying out of this
Agreement or the consummation of the transactions contemplated herein in
connection therewith and there is no such action, suit, proceeding or
investigation threatened;
(iii) Seller is not subject to any
judgment, order, writ, court decree, governmental decree or injunction relating
to the Business;
(iv) there are no known defects or
deficiencies in the products or services provided by Seller prior to the date
hereof as a result of which any claim or suit may arise.
(h) Tax Returns. Seller has timely filed all tax
reports and returns required to be filed and has timely paid all taxes
(including, without limitation, income, payroll withholding, sales and use
taxes) and all other charges due or claimed to be due from it by federal, state
or local taxing authorities in respect of the periods covered by such returns.
(i) Alarm Account Requirements. Each of the Alarm
Accounts must:
(i) be evidenced by a valid, enforceable
and properly executed written monitoring agreement which is in compliance with
all laws, rules and regulations including without limitation all
truth-in-lending requirements;
(ii) not been repudiated by the customer.
An Alarm Account shall be deemed repudiated if: (A) the customer has abandoned
the premises at which the security monitoring system has been installed; (B)
the customer is insolvent; or (C) the customer has cancelled or issued notice
of termination of an Alarm Account, notwithstanding the fact that an Alarm
Account may remain enforceable against the customer;
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(iii) have generated cash receipts
representing service charges for at least one full billing cycle or prepayment
for at least one month's service; and
(iv) have no charges that have been
outstanding and unpaid for more than 60 days from the invoice due date as of
the Closing Date.
(j) Benefit Plans. No profit-sharing, bonus,
stock option, pension, retirement, stock purchase, hospitalization insurance or
similar plan or agreement, formal or informal, providing benefits to any
current or former employee, or any other employee benefit or employee welfare
plan subject to the provisions of the Employee Retirement Income Security Act
of 1974, as amended, maintained by Seller shall obligate Purchaser to make any
contributions thereto or payments in respect thereof with regard to employees
of Seller who may be hired by Purchaser on or after the Closing Date.
(k) Product Warranties and Medical Information.
Except for the standard warranty of three years on parts and labor, there are
no written warranties or oral warranties given by Seller applicable to any of
the Alarm Accounts or Contracts-in-Process. Seller has not entered into any
contract or other agreement with any or all of its customers which would
require Purchaser to provide any medical or health information on its customers
to any third party and Seller is not obligated to keep or obtain medical or
health information on any or all of its customers.
(l) Insurance. Seller has "occurrence basis"
general liability insurance coverage covering the Purchased Assets in an amount
equal to or greater than one million dollars ($1,000,000.00) per single
occurrence and workers compensation insurance coverage equal to or greater than
that required by law. Attached hereto as Schedule 8(l) is (i) a list of all of
the insurance policies covering the Purchased Assets, and (ii) a list of all
insurance claims related to the Purchased Assets for the three previous years.
All such policies are in full force and effect and Seller has not received
notice of cancellation with respect thereto. For purposes of this Agreement,
"occurrence basis" means if a claim arose after the Closing Date for an event
which occurred prior to the Closing Date, Seller's applicable insurance policy
in existence on the date such event occurred would cover such claim.
(m) Right of Rescission. Seller has provided
each residential customer with the three-day right of rescission in strict
compliance with the provisions of 16 C.F.R. Part 429 (Cooling-Off Period for
Door-to Door Sales) and any applicable state laws. Seller acknowledges that
any failure on its behalf to strictly comply with such regulation and laws in
connection with the execution and delivery of any contract involving a
residential customer may result in such customer having the right to rescind or
cancel any such contract. Seller further acknowledges that Buyer desires not
to assume any risk for any liability that might arise as a result of any such
rescission or cancellation.
(n) Business Position. The Business has at least
500 Alarm Accounts and $14,500 of Monthly Recurring Revenue. Seller's gross
attrition rate over the last two (2)
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years has not exceeded four percent (4%) per year. There has been no general,
overall increase in Seller's rates in the last six months.
(o) Disclosure. No representation or warranty of
Seller, and no statement contained in this Agreement and no information
contained in any schedule furnished to Purchaser by or on behalf of Seller
pursuant to this Agreement, contains any untrue statement of a material fact or
omits to state a material fact necessary to make the statements contained
herein or therein not misleading. Each of the separate representations and
warranties set forth in the various subsections of this Section 8 is intended
to be, and shall be interpreted as, an independent representation and warranty
as to matters referred to therein, and the applicability or inapplicability of
any particular subsection of this Section 8 shall not affect the interpretation
of any other such subsection.
Section 9. Conditions Precedent to Obligations of Purchaser.
Purchaser's obligation to purchase the Purchased Assets under this Agreement is
subject to the fulfillment, prior to or at the Closing Date of each of the
following conditions:
(a) Representations True on the Closing Date.
The representations and warranties of Seller contained in this Agreement shall
be true on the date hereof, and at the time of the Closing Date as though made
on the Closing Date.
(b) Performance. Seller shall have performed and
complied with all agreements and conditions required by this Agreement to be
performed or complied with by it prior to or on the Closing Date.
(c) Seller's Closing Certificate. Seller shall
have delivered to Purchaser a Closing Certificate of the president or any
authorized representative of Seller dated as of the Closing Date substantially
in the form attached hereto as Schedule 9(c).
(d) Schedules. Seller shall have updated the
Schedules hereto in accordance with Section 14(g) hereof. Purchaser shall have
determined, in good faith, that taking into account the changes to the
information in the updated Schedules, the transactions contemplated by this
Agreement are as beneficial to Purchaser as prior to the updating of the
Schedules.
(e) Consents. Seller shall have taken all
action necessary and appropriate, and obtained all necessary consents, waivers
and approvals required under any leases or other agreements to consummate the
sale of good and marketable title to all the Purchased Assets free of all
claims, liens or encumbrance of any type, pursuant to this Agreement in writing
on terms acceptable to Purchaser in its sole discretion, including, without
limitation, (i) the written consent by Norwest Financial, Inc. to transfer any
and all interest it might have in the Purchased Assets to Purchaser no later
than the Closing Date and (ii) the written consent of the landlord to the
sublease of approximately 700 square feet at $.75 per
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square foot located at 0000 X.X. Xxxxxx, Xxx Xxxxxxxxxx, Xxxxxxxxxx 00000,
which consent is attached hereto as Schedule 9(e).
(f) Litigation. No litigation or proceeding
shall be pending or threatened to restrain, set aside or invalidate the
transactions contemplated by this Agreement or any portion thereof, including,
without limitation, any claims by creditors of Seller against the Purchased
Assets.
(g) Opinion of Seller's Counsel. Seller shall
have delivered to Purchaser an opinion of counsel for Seller, dated as of the
Closing Date and in form satisfactory to Purchaser's counsel, to the effect
that:
(i) Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California; the location and character of the properties owned or leased and
the business conducted by Seller do not make qualification or licensing as a
foreign corporation necessary in any other state or jurisdiction; and Seller
has the corporate power and authority to own its properties and to carry on its
business as now being conducted;
(ii) This Agreement has been duly
executed and delivered by Seller and constitutes a legal and binding obligation
of Seller, enforceable in accordance with its terms except as enforcement of
the same may be limited by bankruptcy, insolvency, reorganization or other laws
relating to or affecting the enforcement of creditors' rights and by general
equity principles;
(iii) All instruments of transfer and
other documents necessary to effect the transfer to Purchaser of the Purchased
Assets have been duly authorized, executed and delivered by Seller and are in
proper form to transfer to Purchaser all right, title and interest of Seller in
and to the Purchased Assets;
(iv) Except as set forth on Schedule
8(g), such counsel does not know of any litigation, proceeding, governmental
investigation or claim pending or threatened against or relating to the
Business, the Purchased Assets or the transactions contemplated by this
Agreement; and
(v) The execution and delivery of this
Agreement and the consummation by Seller of the transactions contemplated
hereby:
(A) do not and will not violate any
provision of the articles of incorporation or bylaws of Seller;
(B) do not and will not violate, or
result, with the giving of notice or the lapse of time or both, in a violation
of any provision of, or result in the
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acceleration of or entitle any party to accelerate (whether after the giving of
notice or lapse of time or both) any obligation under, or result in the
creation or imposition of, any lien, lease, agreement, license, instrument,
law, ordinance, regulation, order, arbitration award, judgment or decree known
to such counsel to which Seller is a party or by which it is bound; and
(C) do not and will not constitute an
event permitting termination of any lease, agreement, license or instrument
known to such counsel to which Seller is a party.
(h) Certified Resolutions. Seller shall have
delivered to Purchaser copies, certified by the secretary or an assistant
secretary of Seller, of the resolutions of Seller's board of directors and
stockholders authorizing the execution and delivery of this Agreement.
(i) Certificates of Good Standing. Seller shall
have delivered to Purchaser a certificate of good standing of Seller issued by
the Secretary of State of the State of California dated as of a date within 30
days prior to Closing Date.
(j) Instruments of Transfer. Seller shall have
delivered to Purchaser a Xxxx of Sale, Assignment and Assumption Agreement
substantially in the form attached hereto as Schedule 9(j) (the "Xxxx of Sale")
and other good and sufficient instruments of transfer and conveyance, as in the
reasonable opinion of Purchaser's counsel, shall be effective to vest in
Purchaser good and marketable title to the Purchased Assets.
(k) Non-Solicitation Agreement. Seller shall
have delivered to Purchaser a Non-Solicitation Agreement substantially in the
form attached hereto as Schedule 9(k) executed by Xxx X. Xxxxxx, Xxxx X.
Xxxxxxxx, Xxxx XxXxxxx, Xxxxx Xxxxxxxx and Xxx Xxxxxx in their individual
capacities, and by Seller.
(l) Notice to Subscribers. Within five business
days of Closing, Seller shall have mailed on the Closing Date to each customer
set forth on Schedules 1(a) and 1(d) hereto a notice in the form attached
hereto as Schedule 9(1). Seller shall be solely responsible for the costs
associated with the creation and mailing of such notices.
(m) Payment of Accrued Vacation Pay, etc. Seller
shall pay to each of Seller's employees who render services to the Business
that are to be discharged on or after the Closing Date all accrued and unpaid
vacation pay, sick pay and all other accrued obligations to which such
employees are entitled as a result of the termination of their employment with
Seller.
Section 10. Conditions Precedent to Obligations of Seller.
Seller's obligations to sell and transfer the Purchased Assets to Purchaser
under this Agreement are subject to the fulfillment, prior to or on the Closing
Date of each of the following conditions:
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(a) Representations True on the Closing Date.
Purchaser's representations and warranties contained in this Agreement shall be
true at the date hereof, and at the Closing Date as though made on the Closing
Date.
(b) Performance. Purchaser shall have performed
and complied with all agreements and conditions required by this Agreement to
be performed or complied with by it prior to or on the Closing Date.
(c) Xxxx of Sale. Purchaser shall have executed
and delivered the Xxxx of Sale.
Section 11. Indemnification. Seller, on the one hand, and
Purchaser, on the other hand (the "Indemnitor") shall indemnify, hold harmless,
defend and bear all costs of defending the other party (the "Indemnitee"),
together with its successors and assigns, from, against and with respect to any
and all damage, loss, deficiency, expense (including any reasonable attorney
and accountant fees, legal costs or expenses), action, suit, proceeding,
demand, assessment or judgment to or against the Indemnitee arising out of or
in connection with any breach or violation of, or nonperformance by, the
Indemnitor of any of its representations, warranties, covenants or agreements
contained in this Agreement or in any document, certificate or schedule
required to be furnished pursuant to this Agreement.
Section 12. Bulk Sales Law. If applicable, the sale and purchase
described in this Agreement will be conducted according to, and in full
compliance with, the requirements of the bulk transfer provisions of the
Uniform Commercial Code as adopted in the State of California. In addition to
its indemnity under Sections 5 and 11, Seller hereby agrees to indemnify and
hold Purchaser harmless from any and all liability to anyone arising from its
failure to comply with the provisions of the bulk transfer provisions of the
Uniform Commercial Code as adopted in the State of California. Such indemnity
shall survive Closing.
Section 13. Assignment. Purchaser may, without the consent of
Seller, assign its rights and delegate its obligations under this Agreement in
writing, to any corporation, limited liability company, partnership,
association, proprietorship or other business entity who acquires all or a
substantial part of the assets of Purchaser in connection with the sale of all
or a substantial part of its business. Upon any such assignment Purchaser
shall be relieved and discharged from any further obligations under this
Agreement. Furthermore, Purchaser may, without the consent of Seller,
collaterally assign its rights under this Agreement to one or more banks,
insurance companies or other financial institution for purposes of financing.
Seller shall not assign its rights or delegate its obligations under this
Agreement without the prior written consent of Purchaser.
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Section 14. Agreements Prior to Closing.
(a) Fulfillment of Conditions. Seller shall use
its best efforts to take or cause to be taken all action reasonably necessary
or appropriate to cause each of the conditions set forth in Section 9 to be
fulfilled prior to or on the Closing Date. Purchaser shall use its best
efforts to take or cause to be taken all action reasonably necessary or
appropriate to cause each of the conditions set forth in Section 10 to be
fulfilled prior to or on the Closing Date.
(b) Access to Information. Between the date of
this Agreement and the Closing, Seller shall allow the officers, directors,
employees, representatives, attorneys and accountants of Purchaser free access
at all reasonable times to the records, files, correspondence, audits and
properties of Seller which pertain to the Business.
(c) Confidentiality. Purchaser agrees to hold
all information it obtains pursuant to its review of the records, files,
correspondence, audits and properties of Seller in confidence and not to
disclose such information to any third party, except for:
(i) information known by Purchaser and
obtained from sources other than Seller;
(ii) disclosure that is authorized by
Seller in writing;
(iii) disclosure to Purchaser's
professional advisors and to persons who are expected to be lenders to
Purchaser; or
(iv) disclosure of information where such
information is required to be filed with any governmental agency or required to
be produced before any court or tribunal or otherwise required by law to be
disclosed. Except in connection with Seller's filing of tax returns and as
otherwise required by law, Seller shall not disseminate to any person other
than officers, directors, employees, representatives, attorneys and accountants
of Seller any information relating to the Purchase Price or other consideration
contemplated to be paid under this Agreement.
(d) Conduct of Business. Between the date of
this Agreement and the Closing Date, Seller shall cause the Business to be
conducted in its usual and ordinary course including, but not limited to, not
increasing the price and/or rate of any product or service relating to the
Alarm Accounts and Contracts-in-Process without the prior written consent of
Purchaser.
(e) Preservation of Existing Relationships.
Between the date of this Agreement and the Closing Date, Seller shall use its
best efforts to continue existing relationships with customers, suppliers,
employees and others having business relations with respect to Seller.
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(f) No Negotiations with Third Parties. So long
as this Agreement is in effect, Seller shall not enter into any negotiations,
arrangements, understandings, commitments, options or other agreements
regarding the sale, transfer or other disposition of any of the shares of stock
of Seller or of all or substantially all of the assets of Seller that relate in
any way to the Business, or regarding any merger or consolidation of Seller
with or into any corporation or other business entity.
(g) Updated Schedules. Seller agrees to update
the Schedules hereto as of the Closing Date to reflect changes occurring after
the date hereof; provided, however, that if any of the Schedules attached
hereto on the date hereof are materially inaccurate or incorrect, Seller may
correct such Schedules only with Purchaser's prior written consent. Any
updated Schedules shall be attached to this Agreement and for all purposes be
deemed to be a part of this Agreement.
Section 15. No Joint Venture. The relationship between the
parties hereto is that of purchaser/seller and does not constitute a
partnership or joint venture. Both parties agree not to make any
representations or statements to any other person which contradict the
foregoing.
Section 16. Seller's Employees. Purchaser shall be under no
obligation to employ after the Closing Date any of Seller's employees. After
this Agreement is signed and prior to the Closing Date, Purchaser may interview
any of Seller's employees regarding possible employment with Purchaser as of
the Closing Date, so long as Purchaser does not materially interfere with the
conduct of Seller's business. If Purchaser and any of Seller's employees reach
agreement as to terms of employment to commence on or after the Closing Date,
no inference shall be created that Purchaser has assumed any of Seller's
obligations to its employees; provided, however, that if Purchaser hires any of
Seller's employees then Seller shall provide Purchaser a copy of any and all
personnel records relating to such employees. Seller shall furnish to
Purchaser on request a list of all employees of the Business, setting forth
their compensation, job description, hire date and a summary of all benefits
provided.
Section 17. Post-Closing Covenants. Seller agrees to use its
best efforts to cooperate to make preparation for the conversion of the Alarm
Accounts and Contracts-in-Process to Purchaser's central station and billing
system on or before the Closing Date. Seller agrees to transfer to Purchaser
all "ring down lines" for fire monitoring of Alarm Accounts without a change in
priority or position. In connection with the conversion of the Alarm Accounts
and the Contracts-in-Process, Seller shall either (i) at its sole expense,
secure new telephone numbers and/or lines for those Alarm Accounts and
Contracts-in-Process, which share telephone numbers and/or lines with third
parties; or (ii) credit the Purchase Price in accordance with Section 2(h) or
credit the Escrow Account (the "Conversion Adjustment"). Such Conversion
Adjustment shall equal $50 per Alarm Account or Contract-in-Process that
requires a post-Closing alarm panel "chip change" service call by Purchaser.
Additionally, if requested to do so by Purchaser,
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Seller will assist in the orderly transition of the Alarm Account and
Contracts-in-Process base by updating customer account information and mailing
the September 1995 invoices associated with the Alarm Accounts and
Contracts-in-Process.
Section 18. Risk of Loss. The risk of any loss or damage to the
Purchased Assets resulting from fire, theft, explosion, earthquake, windstorm,
flood, accident, act of God, war, seizure, activities of the armed forces or
other casualty, reasonable wear and tear excepted, shall be borne by Seller at
all times prior to the Closing Date, and Seller shall be entitled to all
insurance proceeds resulting from such loss or damage.
Section 19. Miscellaneous.
(a) Pronouns. Whenever used herein and unless
otherwise indicated by the context, the masculine pronoun shall include and
also mean the feminine and the neuter, and the singular shall include and also
mean the plural.
(b) Expenses. Each party shall pay all expenses
incurred by it in connection with the preparation, execution and performance of
this Agreement.
(c) Entire Agreement. This Agreement, together
with the Schedules hereto, sets forth the entire understanding of the parties,
and supersedes all prior agreements, arrangements and communications, whether
oral or written, with respect to the subject matter hereof. This Agreement
shall not be modified or amended except by written agreement of Purchaser and
Seller. Captions appearing in this Agreement are for convenience only and
shall not be deemed to explain, limit or amplify the provisions hereof. All
Schedules to this Agreement are incorporated into and made a part of this
Agreement for all purposes to the same extent as if fully set forth herein.
(d) Severability. The invalidity or
unenforceability of any particular provision of this Agreement shall not affect
the other provisions hereof, and this Agreement shall be construed in all
respects as if the invalid or unenforceable provision was omitted.
(e) Binding Effect; Assignment. All the terms,
provisions, covenants and conditions of this Agreement shall be binding upon
and inure to the benefit of and be enforceable by and against the parties
hereto and their respective successors and assigns.
(f) Notices. Any notice required or permitted to
be delivered pursuant to the terms of this Agreement shall be considered to
have been sufficiently delivered within five days after posting, if mailed by
U.S. Mail, certified or registered, return receipt requested, postage prepaid
or, upon receipt by overnight courier maintaining records of receipt by
addressee or if delivered by hand or telecopied with the original notice being
mailed the same day by one of the foregoing methods and addressed as follows:
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IF TO PURCHASER AT:
Masada Security, Inc.
000 00xx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xx. Xxxxx X. Xxxxxxx
FACSIMILE: 0-000-000-0000
WITH COPY TO:
Xxxx & Xxxxxx
3100 SouthTrust Tower
000 Xxxxx 00xx Xxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attention: W. Xxx Xxxxxxx, Esq.
FACSIMILE: (000) 000-0000
IF TO SELLER AT:
Tel*Star Cellular Corporation
00000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxx X. Xxxxxx
FACSIMILE: _______________
WITH COPY TO:
Stradling, Yocca, Xxxxxxx & Xxxxx
Suite 1600, Xxxxx Fargo Building
000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxxxx X. Xxxxx
FACSIMILE: (000) 000-0000
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or at such other address as the party may designate by ten days advance written
notice to the other party. Notice shall be effective when delivered to a
responsible person at the address of the addressee.
(g) Further Assurances. Purchaser and Seller
shall execute such other instruments, documents and other papers and shall take
such further actions as may be reasonably required or desirable to carry out
the provisions hereof and to consummate the transactions contemplated hereby.
(h) Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the State of Alabama,
excluding its conflict of laws principles.
(i) Counterparts. This Agreement may be executed
in counterparts, each of which shall be deemed an original.
(j) Survival. The representations and warranties
of the parties hereto shall survive the date of this Agreement.
(k) Drafting Presumption. Each of the parties
hereto has participated in the negotiation and drafting of this Agreement and
agree that no one party has prepared this document to the exclusion of the
other party and that in construing this agreement there should be no
presumption based upon which party drafted this Agreement.
(l) Intended Beneficiary. Purchaser and Seller
hereby acknowledge that the Purchase Price for the Purchased Assets may be
funded from a loan provided by State Street Bank and Trust Company to
Purchaser; therefore, in the event that State Street Bank and Trust Company
participates in the funding of this transaction, Purchaser and Seller further
acknowledge that State Street Bank and Trust Company is an intended beneficiary
of this Agreement and shall rely upon the representations, warranties and
agreements of Purchaser and Seller contained herein.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first set forth above.
PURCHASER
MASADA SECURITY, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx
-------------------------------
Its: VP Corporate Development
------------------------------
SELLER
TEL*STAR CELLULAR CORPORATION
By: /s/ Xxx Xxxxxx
--------------------------------
Its: CEO
----------------------------
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LIST OF SCHEDULES
Schedule 1(a) - Alarm Accounts
Schedule 1(b) - Inventory
Schedule 1(c) - Furniture and Fixtures
Schedule 1(d) - Contracts-in-Process
Schedule 1(e) - Other Contracts
Schedule 1(f) - Receivables
Schedule 1(g) - Intangible Personal Property
Schedule 1(h) - Telephone Lines and Numbers
Schedule 1(i) - Vehicles
Schedule 1(j) - Finance Agreement
Schedule 2(a) - Prepaid Revenue
Schedule 2(h) - Allocation of Purchase Price
Schedule 3(a) - Escrow Agreement
Schedule 3(b) - Escrow Account Distribution
Schedule 5 - Assumed Liabilities
Schedule 8(d) - Broker Fees
Schedule 8(g) - Pending Seller Litigation
Schedule 8(l) - Insurance
Schedule 9(c) - Seller's Closing Certificate
Schedule 9(e) - Landlord's Consent
Schedule 9(j) - Xxxx of Sale, Assignment and Assumption Agreement
Schedule 9(k) - Noncompetition, Nonsolicitation and Nondisclosure Agreement
Schedule 9(l) - Notice to Subscribers