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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ("Agreement") is made and entered into
this 30th day of June, 1995, by and between MASADA SECURITY, INC., a Delaware
corporation ("Purchaser") and DELTRON, INC. D/B/A SAN ANTONIO ALARM, a Texas
corporation (collectively referred to as "Seller").
Recitals
Seller is engaged in the business of operating a security alarm system
monitoring business in San Antonio, Texas 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 inventory pertaining to the Business maintained by Seller at
its branch offices, all of which are
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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;
(c) Fixed Assets. All right, title and interest
of Seller in and to selected fixed assets used in connection with the Business,
all of which are listed on Schedule 1(c) hereto (the "Fixed Assets");
(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), substantially 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,
substantially 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
(excluding the accounts receivable related to one time installations and
add-ons accruing before Closing and listed on Schedule 2(j)), trade accounts,
notes receivable and other debts owed to Seller for monitoring services
rendered pertaining to the Alarm Accounts and Contracts-in-Process; provided,
however, that all such debts owed to Seller for monitoring services must be for
previously rendered monitoring services and not for future monitoring services,
substantially all of which are listed on Schedule 1(f) hereto (the
"Receivables");
(g) Intangible Personal Property. The unexpired
trademarks (whether registered or unregistered), trade names, logos and
copyrights owned by or accruing to the benefit of Seller pertaining to the
Business substantially 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: (i) the local and long distance
telephone numbers (the "Voice Lines"); (ii) digital dialer telephone lines that
transmit signals from customer locations to Seller's central station, and
"ring-down" lines (the "Alarm Account Communication Lines"); and (iii)
facsimile and other data lines (the "Data Lines"), all of which are listed as
being either Voice Lines, Alarm Account Communication Lines or Data Lines on
Schedule 1(h) hereto (collectively referred to as 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"); and
(j) 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 for the Purchased Assets
Excluding Vehicles. The purchase price for the Purchased Assets excluding
Inventory, Fixed Assets, Receivables and Vehicles (the "Purchase Price
Excluding Vehicles") shall be the product of 28 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, if any, and
any direct wire telephone line charges associated with monitoring, payable by
the customer for each applicable billing period expressed in terms of a monthly
amount regardless of whether the billing period is annual, semi-annual,
quarterly or monthly.
(b) Purchase Price-Inventory. The purchase price
for the Inventory shall be $5,215.00.
(c) Purchase Price-Fixed Assets. The purchase
price for the Fixed Assets shall be $10,109.00.
(d) Purchase Price-Receivables. The purchase
price for the Receivables shall be $7,866.00.
(e) Purchase Price-Vehicles. The purchase price
for the Vehicles (the "Purchase Price- Vehicles") shall be $4,750.00 per
Vehicle.
(f) Purchase Price-All Purchased Assets. The sum
of (i) the Purchase Price Excluding Vehicles, (ii) the Purchase Price-Fixed
Assets, (iii) the Purchase Price-Receivables, and (iv) the Purchase Price-
Vehicles shall hereafter be referred to as the "Purchase Price-All Purchased
Assets".
(g) Payment of Purchase Price-All Purchased
Assets.
(i) The aggregate of: (A) 95% of the
Purchase Price-Excluding Vehicles; (B) the Purchase Price-Inventory; (C) the
Purchase Price-Fixed Assets; (D) the Purchase Price-Receivables; (E) the
Purchase Price-Vehicles; and (F) the adjustments calculated in accordance with
Section 2(e) (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.
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(ii) The Purchase Price-All Purchased Assets
less the Initial Payment (the "Deferred Payment Amount") shall be paid in
accordance with Section 3 hereof.
(h) Adjustment to Purchase Price. The Purchase
Price-All Purchased Assets shall be adjusted as of the Closing Date in the
manner provided below:
(i) A credit for the benefit of
Purchaser based upon $110.00 per monitored Alarm Account and $60.00 per
non-monitored Alarm Account as listed on Schedule 2(h)(i) that requires a site
visit by Purchaser to correct any fire code violations, related to the Official
Order of the State of Texas Fire ▇▇▇▇▇▇▇▇ dated March 16, 1994, remaining as of
the Closing Date (the "Fire Code Violation Credit"); and
(ii) 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.
(i) Allocation of Purchase Price-All Purchased
Assets. The Purchase Price-All Purchased Assets, subject to the adjustments
set forth in Section 2(h), shall be allocated as set forth on Schedule 2(i).
Purchaser and Seller agree for income tax purposes they shall report the
transactions contemplated by this Agreement in a manner consistent with such
allocation.
(j) Services Other Than Monitoring. Purchaser
shall forward to Seller, within 30 days after the receipt thereof, all revenue
for installations and add-ons provided by Seller to the Alarm Account customers
or the Contracts-in-Process customers, provided in the ordinary course of
Seller's business, consistent with past practices and pricing during the period
prior to the Closing Date for those individual accounts receivable listed on
Schedule 2(j).
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").
(b) Payment and Escrow Amount. Within 30 days of
six months after the Closing Date, Purchaser shall submit to Seller
substantially in the form attached hereto as
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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 RMR 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
16, and (v) the resulting difference between Section 3(b)(i) less the
Purchaser's credits associated with Section 3(b)(ii), (iii) and (iv) (the
"Resulting Difference"). If Seller does not notify Purchaser of a dispute
regarding such report within ten business days from the date such report is
submitted by Purchaser to Seller or if Seller notifies Purchaser of its
acceptance of such report, such report shall be deemed complete and accurate
and Seller and Purchaser shall notify Escrow Agent to pay the sums computed
below to Seller or Purchaser, as the case may be, and the Escrow Account shall
then be closed after payment by the Escrow Agent of all funds held by it in the
Escrow Account. If the Resulting Difference is a positive amount then Seller
and Purchaser shall instruct the Escrow Agent to first pay the Seller the
Resulting Difference and the remainder of the Escrow Amount shall be paid by
Escrow Agent to Purchaser. If the Resulting Difference is a negative amount,
then Seller and Purchaser shall instruct the Escrow Agent to pay Purchaser the
entire Escrow Amount and Seller shall owe no further amount to Purchaser.
(c) Dispute. All disputes and differences with
respect to the computation of the Resulting Difference and the Escrow Account
shall be determined by binding arbitration under the rules then in effect of
the American Arbitration Association, such arbitration hearing to be held in
San Antonio, Texas. 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 June 30, 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.
(b) Closing Deliveries. On the Closing Date,
Seller shall make the deliveries specified by Section 9 and Purchaser shall
make the deliveries specified by Section 10.
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(c) Closing Procedure. All proceedings to be
taken and all documents to be delivered and executed on the Closing Date shall
be deemed to have been taken, delivered and executed simultaneously, and no
proceeding shall be deemed taken nor documents deemed executed or delivered
until all have been taken, delivered and executed. On the Closing Date, Seller
and Purchaser shall execute and deliver the instruments and documents
referenced in Sections 9 and 10 and Purchaser shall make the Initial Payment
and shall deposit the Deferred Payment Amount with the Escrow Agent.
(d) Termination. In the event that any of the
conditions set forth in Section 9 are not satisfied or waived in writing prior
to or on the Closing Date, then Purchaser may terminate this Agreement by
written notice to Seller. In the event that 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 Section 10, then
Purchaser shall have the right of specific performance against the Seller as to
the Purchased Assets. In the event that Seller complies with all of the
requirements of Section 9, then Seller shall have the right of specific
performance against Purchaser.
Section 5. Assumption of Liabilities. Purchaser shall not
assume any liability, debt or obligation of Seller except for: (i) 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); (ii)
any liabilities and obligations related to the Alarm Accounts and
Contracts-in-Process set forth on Schedules 1(a) and 1(d) arising in the
ordinary course of business which become performable or payable on, or
subsequent to, the Closing Date; and (iii) 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: (i) that arise prior to the Closing Date;
or (ii) in connection with, or subsequent to the Closing Date that are not in
the ordinary course of business and not related to the Alarm Accounts and
Contracts-in-Process; or (iii) that are not specifically assumed by Purchaser
as set forth on Schedules 1(a), 1(d) and 5. Except as provided in other
sections hereof, Purchaser covenants and agrees to indemnify, defend, and hold
harmless Seller from and against any and all claims, debts, suits, losses,
judgments, damages, and liabilities, including any legal and other expenses
incurred in connection with and arising out of the operation of the Purchased
Assets arising after the Closing Date.
Section 6. Warranty of Alarm Accounts and Recurring Monthly Revenue.
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(a) Alarm Accounts. Seller warrants that beginning
on the Closing Date and for the 6 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). For purposes of this
Agreement a "Defaulted Contract" shall be defined as any Alarm Account from
which Purchaser has not received a payment related to services provided after
the Closing Date. 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 are still Defaulted Contracts, then Seller shall
repurchase the Defaulted Contracts from Purchaser for 28 times the Monthly
Recurring Revenue of the Defaulted Contracts as of the Closing Date (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 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; 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) Recurring Monthly Revenue Downward
Adjustment. Seller warrants that the Recurring Monthly Revenue used in
computing the Purchase Price Excluding Vehicles shall equal or exceed the
actual Recurring Monthly Revenue of the Alarm Accounts as of the Closing Date.
A charge shall be made against the Escrow Account for the benefit of Purchaser
for each Alarm Account that it is determined the Recurring Monthly Revenue used
in computing the Purchase Price Excluding Vehicles exceeded the actual
Recurring Monthly Revenue for such Alarm Accounts as of the Closing Date. The
amount of such charge shall be determined by computing the amount by which the
Recurring Monthly Revenue of the Alarm Accounts used in computing the Purchase
Price Excluding Vehicles exceeds the actual Recurring Monthly Revenue of such
Alarm Accounts as of the Closing Date and multiplying such sum by 28 (the "RMR
Downward Adjustment"); provided, however, that no charge shall be made against
the Escrow Account if the Recurring Monthly Revenue is reduced because
Purchaser has reduced the monthly charges to its customers, except for
reductions promised in writing by Seller prior to Closing.
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
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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.
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 Texas. 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.
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(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 not obligated nor
has it agreed to pay brokerage commissions, finders fees, or other similar fees
or charges in connection with the purchase of the Purchased Assets pursuant to
this Agreement.
(e) Title to Purchased Assets. Seller warrants
that on the date hereof it has good and marketable title to all of the
Purchased Assets, and the Purchased Assets shall not be subject to any pledge,
option, conditional sale agreement, security interest, consensual lien,
judgment lien, encumbrance or charge of any kind. Seller warrants that the
Alarm Accounts acquired by Purchaser are valid and are binding upon and
enforceable against the customers of Seller executing same in accordance with
their terms, and the obligations of the customers of Seller thereunder are not
subject to set-off or claims resulting from the conduct of Seller's business
prior to their conveyance to Purchaser.
(f) Compliance with the Law. To the best of
Seller's knowledge except for the violations set forth on Schedule 8(f), 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. Except
for the violations set forth on Schedule 8(f) 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;
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(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 properly executed
written monitoring agreement which to the best of Seller's knowledge is valid
and enforceable;
(ii) as of the Closing Date not have been
repudiated by the customer. An Alarm Account shall be deemed repudiated if to
the best of Seller's knowledge: (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;
(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) except for the Alarm Accounts that
have accounts receivable balances over 60 days past due from the invoice due
date that are specifically reviewed and approved by Purchaser prior to the
Closing Date, 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.
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(k) Medical Information. To the best of Seller's
knowledge, except for ▇▇. ▇▇▇▇ ▇▇▇▇▇▇ who has a heart condition and
specifically requested a hand held medical panic pendant, Seller has not
entered into any contract or other agreement with any or all of its customers
which would require Purchaser to provide any specific 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.
Medical alert buttons on the monitoring keypads and hand held medical pendants
that do not require specific medical information relating to the Alarm Account
customers are exempt from this representation.
(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 a list of all of the
insurance policies covering the Purchased Assets. 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) 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.
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(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 13(g) hereof. Purchaser shall have
determined, in good faith, that taking into account the changes to the
information in the updated Schedules, the transactions contemplated by this
Agreement are as beneficial to Purchaser as prior to the updating of the
Schedules.
(e) Consents to Assignments. Seller shall have
taken all action necessary and appropriate, and obtained all necessary
consents, waivers and approvals required under any leases or other agreements
to consummate the sale of the Purchased Assets pursuant to this Agreement in
writing on terms acceptable to Purchaser in its sole discretion.
(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
Texas; 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
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against or relating to the Business, the Purchased Assets or the transactions
contemplated by this Agreement; and
(v) The execution and delivery of this
Agreement and the consummation by Seller of the transactions contemplated
hereby:
(A) do not and will not violate any
provision of the articles of incorporation or bylaws of Seller;
(B) do not and will not violate, or
result, with the giving of notice or the lapse of time or both, in a violation
of any provision of, or result in the acceleration of or entitle any party to
accelerate (whether after the giving of notice or lapse of time or both) any
obligation under, or result in the creation or imposition of, any lien, lease,
agreement, license, instrument, law, ordinance, regulation, order, arbitration
award, judgment or decree known to such counsel to which Seller is a party or
by which it is bound;
(C) do not and will not constitute
an event permitting termination of any lease, agreement, license or instrument
known to such counsel to which Seller is a party; and
(D) when combined with the execution
of the ▇▇▇▇ of Sale (as defined herein) are sufficient to, and do transfer all
right, title and interest in the Purchased Assets from Seller to Purchaser.
(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 Comptroller of the State of Texas dated as of a date within 45 days prior
to Closing Date.
(j) Instruments of Transfer. Seller shall have
delivered to Purchaser a ▇▇▇▇ of Sale, Assignment and Assumption Agreement
substantially in the form attached hereto as Schedule 9(j) (the "▇▇▇▇ of Sale")
and other good and sufficient instruments of transfer and conveyance, as in the
reasonable opinion of Purchaser's counsel, shall be effective to vest in
Purchaser good and marketable title to the Purchased Assets.
(k) Non-Solicitation Agreement. Seller shall
have delivered to Purchaser Non-Solicitation Agreements substantially in the
forms attached hereto as Schedule 9(k) executed by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ in his
individual capacity, and by Seller.
(l) Notice to Subscribers. Seller shall have
mailed on the Closing Date to each customer set forth on Schedules 1(a) and
1(d) hereto a notice in the form attached hereto
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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:
(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) ▇▇▇▇ of Sale. Purchaser shall have executed
and delivered the ▇▇▇▇ of Sale.
(d) Minimum Purchase Price. If the total
Purchase Price-All Purchased Assets less the Fire Code Violation Credit as
described in Section 2(e)(i) (collectively referred to as the "Seller
Proceeds") is less than $740,000.00, then Seller shall not be obligated to
consummate the transaction proposed according to this Agreement; provided,
however, that Purchaser, in its sole discretion, can enforce this transaction
by making a lump sum payment to Seller of $740,000.00 less the Seller Proceeds.
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.
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Section 12. Assignment. Purchaser may, without the consent of
Seller, collaterally assign its rights under this Agreement to one or more
banks, insurance companies or other financial institution for purposes of
financing. Seller shall not assign its rights or delegate its obligations
under this Agreement without the prior written consent of Purchaser.
Section 13. 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 (i) to
hold all information it obtains pursuant to its review of the records, files,
correspondence, audits and properties of Seller in confidence; (ii) to only use
such information in connection with the transactions contemplated by this
Agreement; and (iii) not to disclose such information to any third party,
except for:
(A) information known by Purchaser and
obtained from sources other than Seller;
(B) disclosure that is authorized by
Seller in writing;
(C) disclosure to Purchaser's
professional advisors and to persons who are expected to be lenders to
Purchaser; or
(D) 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
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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.
(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 14. 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 15. 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 16. Post-Closing Covenants. Seller agrees to use its
best efforts to cooperate in the conversion of the Alarm Accounts and
Contracts-in-Process to Purchaser's central station
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and billing system within 90 days after the Closing Date by providing
information to Purchaser related to the Alarm Accounts (e.g. panel programming,
billing history) on an as needed basis. Seller agrees to transfer to Purchaser
all Alarm Account Communication Lines for fire monitoring of Alarm Accounts
without a change in priority or position. After Closing and upon compilation
of Alarm Account monitoring data in Purchaser's central monitoring station
("CMS"), Seller will remote call forward the Alarm Account Communication Lines
to Purchaser's CMS. In connection with this conversion of monitoring the Alarm
Accounts and to the extent that any of the Alarm Accounts are not included in
the remote call forwarding to Purchaser's CMS, 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(e)(iii) or credit the Escrow Account (the "Conversion Adjustment").
The Conversion Adjustment shall equal $50 per each Alarm Account that requires
a post-Closing panel reprogramming service call by Purchaser because the
respective Alarm Account panel does not dial to the Alarm Account Communication
Lines.
Section 17. 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 18. 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.
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(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:
IF TO PURCHASER AT:
Masada Security, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
FACSIMILE: ▇-▇▇▇-▇▇▇-▇▇▇▇
WITH COPY TO:
▇▇▇▇ & ▇▇▇▇▇▇
3100 SouthTrust Tower
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: W. ▇▇▇ ▇▇▇▇▇▇▇, Esq.
FACSIMILE: (▇▇▇) ▇▇▇-▇▇▇▇
IF TO SELLER AT:
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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WITH COPY TO:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
FACSIMILE: (▇▇▇) ▇▇▇-▇▇▇▇
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 Texas,
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/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------------
Its: VP Corporate Development
------------------------------
SELLER
DELTRON, INC.
d/b/a San Antonio Alarm
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
Its: President
------------------------------
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LIST OF SCHEDULES
Schedule 1(a) - Alarm Accounts
Schedule 1(b) - Inventory
Schedule 1(c) - Fixed Assets
Schedule 1(d) - 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 2(a) - Prepaid Revenue
Schedule 2(h)(i) - Fire Code Violation Credit
Schedule 2(i) - Allocation of Purchase Price
Schedule 2(j) - Receivables from Installations and Add-Ons
Schedule 3(a) - Escrow Agreement
Schedule 3(b) - Escrow Account Distribution
Schedule 5 - Assumed Liabilities
Schedule 8(f) - Violations
Schedule 8(g) - Pending Seller Litigation
Schedule 8(l) - Insurance
Schedule 9(c) - Seller's Closing Certificate
Schedule 9(j) - ▇▇▇▇ of Sale, Assignment and Assumption Agreement
Schedule 9(k) - Non-Solicitation Agreement
Schedule 9(l) - Notice to Subscribers
