STOCK PURCHASE AND SALE AGREEMENT*
THIS AGREEMENT (the "Agreement") is made as of this 20th day of
December, 1996, by and between Xxxxxx Xxxxxx, an individual, ("Xxxxxx") Xxxxxxx
Xxxxxx, an individual, Xxxxxx Xxxxxx as trustee of The Xxxx Xxxxxx Xxxxxxxx
Trust, (the "Xxxx Trust") and Xxxxxx Xxxxxx as trustee of The Xxxxxx Xxxxxx
Oxfeld Trust (the "Xxxxxx Trust") (each a "Seller" and collectively "Sellers"),
on the one hand, and Security Systems Holdings, Inc., a Delaware corporation
("Purchaser"), on the other hand. The Xxxx Xxxxxx Xxxxxxxx Trust and the Xxxxxx
Xxxxxx Oxfeld Trust are herein referred to as the "Trusts." Xxxxxx and Xxxxxxx
Xxxxxx are sometimes referred to herein collectively as the "Principal Sellers."
W I T N E S S E T H:
WHEREAS, the Sellers collectively own 100% of the issued and
outstanding capital shares of Protective Alarms, Inc., a Connecticut
corporation, which owns two subsidiaries, Interstate Central Systems, Inc., a
Connecticut corporation, d/b/a Central Alert Center, Inc., and Protective Alarms
of Canada, Inc., an Ontario corporation (collectively the "Subsidiaries") (the
Subsidiaries and Protective Alarms, Inc. are collectively referred to herein as
"Protective");
WHEREAS, Protective is engaged in the burglar and fire alarm
business in the tri-state, metropolitan New York area; and
WHEREAS, Sellers desire to sell to Purchaser, and Purchaser desires
to purchase from Sellers, all of the issued and outstanding shares of
Protective.
NOW, THEREFORE, in consideration of the mutual agreements set forth
herein, and for other good and valuable consideration, the parties hereto agree
as follows:
1. Shares to be Sold; Purchase Price and Payment.
1.1. Shares. Each Seller agrees to sell, assign and deliver to Purchaser,
and Purchaser agrees to purchase from each Seller free and clear of all
restrictions or encumbrances, the number of shares set forth opposite their
respective names which, in the aggregate, constitute all of the issued and
outstanding shares of Protective Alarms, Inc.'s capital stock (the "Shares").
Seller Number of Shares Percent
------ ---------------- -------
Xxxxxx Xxxxxx 50 50%
Xxxxxxx Xxxxxx 40 40%
Xxxx Trust 5 5%
Xxxxxx Trust 5 5%
* Restated to reflect the Amendment to Stock Purchase and Sale
Agreement dated as of February 28, 1997.
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1.2. Purchase Price.
1.2.1. Amount of Purchase Price. The Purchase Price is to be based,
in part, upon, (a) Protective's Net Monthly Recurring Revenue (as defined in
Section 1.2.2(a) except that it may include up to 10% recurring revenue which
would be Net Monthly Recurring Revenue as defined in Section 1.2.2(a) but for
the fact that it is not billed under Customer Contracts); and including no more
than $6,500 of recurring revenue for monitoring customers of other alarm dealers
("Wholesale Services") as of the Closing Date ("Existing Revenue") (b)
additional Net Monthly Recurring Revenue installed after the Closing Date under
certain contracts for such installations which are or will be in effect with
national customers, ("1997 National Account Revenue"), (c) additional Net
Monthly Recurring Revenue under Customer Contracts associated with work in
process existing prior to the Closing Date and installed after the Closing Date
("WIP NMRR") and (d) additional Net Monthly Recurring Revenue as defined in
Section 1.2.2 (b) under Customer Contracts for extended service, which are more
fully defined below. The Purchase Price shall be less the amount of (i) the
obligation to State Street Bank & Trust Company evidenced by a secured
promissory Note (the "State Street Note") and (ii) the obligation to Mortgage
Invest Group III, both reflected on the Financial Statements (including all
accrued interest, penalties and late-payment fees and all prepayment penalties,
if any) outstanding at the Closing Date which equal $1,712,000 as of September
30, 1996.
(a) Purchaser shall pay 45 times the Existing Revenue, plus or
less, as the case may be, Protective's Working Capital (as defined in
Section 1.2.3), all as of the Closing Date. If the Existing Revenue
includes any customer accounts acquired by the Company in purchasing
accounts from any of Knight Security of Norwalk, CT (with approximately
$6,000 of Net Monthly Recurring Revenue), Guardian Systems of Danbury, CT
(with approximately $40,000 of Net Monthly Recurring Revenue), Reliant
Security of New Haven, CT (with approximately $7,000 of Net Monthly
Recurring Revenue) or Nortech Security of Westchester County, NY (with
approximately $2,500 of Net Monthly Recurring Revenue), then Purchaser
shall not pay 45 times such net recurring revenue, but instead shall pay
one-half the difference between the multiple of Net Monthly Recurring
Revenue paid by Protective for such customer accounts and 45. If the
Existing Revenue includes any other customer accounts acquired from other
alarm dealers between September 1, 1996 and the Closing Date, Sellers and
Purchaser shall reach separate agreement on the purchase price to be paid
for those accounts. Customer accounts acquired from Knight Security,
Guardian Systems, Reliant Security or Nortech Security or from other
sources between September 1, 1996 and the Closing Date agreed to by
Sellers and Purchaser are referred to as "Newly Acquired Accounts".
(b) Sellers hereby represent and warrant the following to
Purchaser: (i) Protective currently has, or will have at Closing, Customer
Contracts to provide security systems and services for the primary
national accounts referred to on the list attached hereto as Exhibit A
("National Accounts") and (ii) the National Accounts have, or prior to the
Closing Date will have, signed contracts for the installation of a total
of approximately
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1,788 additional locations, of which approximately 842 are expected to
be scheduled to be installed in the twelve months following the Closing
Date ("1997 National Account Locations") with a corresponding additional
Net Monthly Recurring Revenue by the end of such twelve month period of
approximately $50,000 (which together with Net Monthly Recurring Revenue
to be received from additional national accounts which exist today or may
be added in the future prior to the Closing (to be identified and agreed
to by Sellers and Purchaser and thereupon included in the "National
Accounts" are referred to as "1997 National Account Revenue")). Purchaser
will pay 36 times the 1997 National Account Revenue installed on or before
the date twelve months after the Closing Date, up to a maximum of $80,000
(a maximum additional purchase price of $2,880,000), less losses, if any,
incurred in installing the 1997 National Account Locations (installation
revenues less cost of materials, direct labor and any applicable sales
commissions)."
(c) At Closing, Sellers will deliver to Purchaser a schedule
of Protective's work in process as of the Closing Date, which schedule
shall set forth in reasonable detail, the name, address, the purchase
price and/or installation fee, deposit received, work performed the WIP
NMRR, and anticipated installation completion date for each account
included in the work in process (each a "WIP Account") (but excluding the
National Accounts), the Purchase Price will be increased by an amount
equal to 45 times the WIP NMRR less losses, if any, incurred by Purchaser
in installing the WIP Accounts (installation revenues less cost of
materials, direct labor and any applicable sales commissions) and payable
as set forth in Section 1.3.
(d) At Closing, Sellers will deliver to Purchaser a schedule
of Protective's extended service contracts under which Net Monthly
Recurring Revenue as defined in Section 1.2.2(b) will be billable when
effective which contracts are signed contracts as of the Closing Date and
the Purchase Price shall be increased by 45 times the amount of such Net
Monthly Recurring Revenue, adjusted and payable as set forth in Section
1.3.
1.2.2. Net Monthly Recurring Revenue. (a) "Net Monthly Recurring
Revenue" means the total recurring regular monthly amounts billed under Customer
Contracts to Protective's customers with installed systems as of a given date
(xxxxxxxx made other than on a monthly basis shall be adjusted to the equivalent
monthly amount) for electrical protection, monitoring, repair service, extended
repair service, key-holder service, closed circuit television, access control
services, fire and police panel charges and equipment lease rental and charges
and fire testing, and related recurring services, less all monthly charges
incurred by Protective as of such date (charges billed to Protective other than
on a monthly basis shall be adjusted to the equivalent monthly amount)
(collectively, "Charges") for signal-circuit ("private") telephone lines used to
transmit alarm signals, antenna rental charges for radio frequency alarm
systems, third party monitoring, answering services, false alarm charges, city
franchise and police panel fees, and charges paid by Protective for receiving
alarms applicable to such accounts. Charges for third party monitoring for the
accounts listed on Exhibit N shall not be deducted from Net Monthly Recurring
Revenue, provided such accounts are reprogrammed to annunciate at Purchaser's
central station within 45 days after the Closing Date (at Sellers' expense) and
any
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third party monitoring fees incurred until such reprogramming are paid by
Sellers. (b) Net Monthly Recurring Revenue shall also include the total
recurring regular monthly amounts, less applicable Charges, billable under
written extended service contracts which are Customer Contracts with a term of
not less than 3 years, entered into with customers prior to the Closing Date and
which become effective within 1 year after the Closing Date. (c) The following
shall be excluded from Net Monthly Recurring Revenue as defined in subparts (a)
and (b) of this Section 1.2.2: pending cancellations of which Protective
received either written notice before the Closing Date or oral notice, provided
such has been noted in Protective's records, and which cancellations shall be
effective prior to the Adjustment Date. For purposes of this Section, charges
shall be determined (i) under contracts in existence on the date as of which
determined and (ii) from invoices to pay Charges received by Purchaser or
Protective, as the case may be, prior the date as of which determined for the
monthly period (or greater period including the monthly period) in which such
date occurs.
1.2.3. Working Capital.
(a) The "Working Capital" of Protective shall mean the amount
by which "Current Assets" of Protective as of the Closing Date are greater
or less than its "Liabilities" as of the Closing Date. Current Assets and
Liabilities shall, except as otherwise provided herein, be determined in
accordance with generally accepted accounting principles from Protective's
books and records consistently applied. Current Assets shall mean the
following Assets: cash and cash equivalents, marketable securities,
deposits with third parties, accounts receivable (without deduction for
any bad debt reserve reflected on Protective's Financial Statements);
inventory as agreed by Purchaser and Sellers, determined by physical
count, valued at 100% of Protective's cost for new useable inventory, in
appropriate quantities, and at the value agreed by Purchaser and Sellers
for used but useable inventory; prepaid expenses and prepaid taxes.
Liabilities shall mean all liabilities including, but not limited to,
Deferred Service Revenue (meaning billing for customer services that are
to be performed after the date as of which determined), deposits by
customers with Protective, accounts payables, lease obligations, income
and other taxes and other accrued liabilities, but shall not include
certain leases and installment sale contracts listed on Schedule 1.2.3, or
as agreed by Sellers and Purchaser on the Closing Date.
(b) For purposes of determining Working Capital, personal
property taxes and assessments for the current tax year, utility services
and all other expenses incurred by Protective in the ordinary course of
the operation of its business (collectively "Expenses") shall be prorated
between the parties as of the Closing Date on the basis of actual days
elapsed. For amounts which are not able to be precisely calculated on the
Closing Date, Sellers shall use their best estimates, which shall be
updated on the Adjustment Date. At Closing Sellers will deliver to
Purchaser a closing balance sheet as of January 31, 1997 and the Working
Capital shall be determined from such balance sheet, except for items
readily ascertainable at closing.
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1.3. Payment of Purchase Price. All payments on account of the Purchase
Price shall be made to the Sellers in proportion to their share ownership as set
forth in Section 1.1.
1.3.1. Deposit. Purchaser has previously made a good faith deposit
payment to Sellers of $100,000 and has made, upon signing this Agreement, an
additional deposit of $150,000 for a total deposit on account of the Purchase
Price of $250,000 (the "Deposit").
1.3.2. Payments Based on Existing Revenue. On the Closing Date,
Purchaser shall pay to Sellers 90% of the portion of the Purchase Price
determined under Section 1.2.1(a) using values of Protective's Net Monthly
Recurring Revenue and 100% of the estimated Working Capital certified by Sellers
(including the value of inventory as agreed by Purchaser and Sellers in
accordance with Section 1.2.3) on the Closing Date, less the amount of the
Deposit, by wire transfer of immediately available funds. Payment of the balance
of the portion of the Purchase Price determined under Sections 1.2.1(a) (the
"Deferred Payment") shall be either: (i) evidenced by a promissory note
substantially in the form of Exhibit B attached with interest at 10% (the
"Note") and secured by an irrevocable letter of credit in a form satisfactory to
Sellers' counsel, or (ii) placed in an interest bearing escrow account with a
bank or other institutional escrow holder, pursuant to an escrow agreement in a
form satisfactory to Sellers' counsel, and will be due after adjustment in
accordance with Sections 1.4.1, 1.4.3 and 1.4.4 below. Purchaser shall notify
Sellers at least one month prior to the Closing Date which means of payment for
the Deferred Payment will be used. If the adjustments called for under Section
1.4 result in a decrease in the portion of the Purchase Price determined under
Section 1.2.1(a) by an amount which is greater than the Deferred Payment,
Sellers shall promptly repay the difference. Any reduction in the portion of the
Purchase Price determined under Section 1.2.1(a) shall be retroactive to the
Closing Date and shall result in a credit to the Purchaser in the amount of
interest earned on the amount of such reduction.
1.3.3. Payments Based on 1997 National Account Revenue. On the
Closing Date, Purchaser shall pay Sellers, on account of the portion of the
Purchase Price determined under Section 1.2.1(b), $1,300,000. The balance shall
be paid in 4 installments, starting 3 months and 10 days after the Closing Date.
The first installment shall be in the amount of $395,000. The second, third and
fourth installments (each 3 months after the preceding payment) shall be based
upon the actual installations of 1997 National Account Locations and
corresponding 1997 National Account Revenue. The second installment shall be
$250,000, plus or less 36 times the amount by which National Account Revenue
installed by 6 months after the Closing Date is more or less than $25,000.
Provided, that if the amount of National Account Revenue installed by such date
is less than $20,000, no installment payment shall be due. The third installment
shall be $250,000, plus or less 36 times the amount by which National Account
Revenue installed by 9 months after the Closing Date is more or less than
$47,000. Provided, that if the amount of National Account Revenue installed by
such date is less than $42,000, no installment payment shall be due. Provided
also, that if the amount of National Account Revenue installed by such date is
at least $42,000 but was less than $20,000 on the date 6 months after the
Closing Date, an additional $250,000 shall be paid. The final installment shall
be 36 times the National Account Revenue (not in excess of $80,000) installed by
one year after the Closing Date, less the amount
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of all prior payments. If the payments made prior to that date for payment of
the last installment exceed the amount due, Sellers will promptly refund the
excess.
1.3.4. Payment Based on WIP NMRR. Payment for WIP NMRR described in
Section 1.2.1(c) shall be made within 10 business days after the end of each
month between the Closing Date and the Adjustment Date as to accounts which have
been installed and activated during each of such months.
1.3.5. Payment Based on Extended Service Contracts. Payment for Net
Monthly Recurring Revenue described in Section 1.2.1 (d) for extended service
contracts shall be made 50% on the Closing Date (based on the schedule provided
by Sellers under Section 1.2.1(d)) and the balance on the date 15 business days
after the Extended Service Adjustment Date, adjusted as provided in Section
1.4.2.
1.3.6. Payment of State Street Note. Prior to Closing, Sellers shall
cause Purchaser to have received from the holder of the State Street Note a
"payoff letter" or equivalent documentation, pursuant to which such holder shall
have agreed to accept from Protective or Purchaser for the account of
Protective, at the Closing payment in full of all amounts owed with respect to
such State Street Note and to release all collateral and guarantees, if any, for
such obligation. At the Closing, Purchaser shall cause Protective to have paid,
or Purchaser shall have paid for the benefit of Protective, in full the State
Street Note obligations (including all accrued interest, penalties and
late-payment fees and all prepayment penalties, if any) and to obtain the
releases contemplated by the previous sentence. Purchaser acknowledges that the
Shares are pledged as collateral to State Street Bank and payment of the State
Street Note is a condition precedent to Purchaser acquiring such Shares.
1.4. Post-Closing Adjustment of Purchase Price. (a) The actual portion of
the Purchase Price determined under Section 1.2.1(a) shall be determined 9
months after the Closing Date (the "Adjustment Date") in accordance with the
provisions of this Section 1.4. Purchaser shall initially calculate the amount
of the Revenue Adjustment, the Asset Adjustment and the Revenue Guarantee
Adjustment, using information as of the Closing Date. Sellers or their
designated representatives shall have the right to review originals and make
copies of such books and records and other documents or information which are
reasonably necessary in order to verify Purchaser's calculations of the Revenue
Adjustment, Asset Adjustment, and Revenue Guarantee Adjustment.
(b) The actual portion of the Purchase Price determined under
Section 1.2.1(d) shall be determined one year after the Closing Date (the
"Extended Service Adjustment Date") in accordance with the provisions of this
Section 1.4. Purchaser shall initially calculate the amount of the Extended
Service Contract Adjustment. Sellers or their designated representatives shall
have the right to review originals and make copies of such books and records and
other documents or information which are reasonably necessary in order to verify
Purchaser's calculations of the Extended Service Contract Adjustment.
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1.4.1. Revenue Adjustment. The Purchase Price shall be adjusted (the
"Revenue Adjustment") upward or downward by $45 (or the applicable lesser
multiple of Net Monthly Recurring Revenue paid for Newly Acquired Accounts) for
each $1 that Net Monthly Recurring Revenue (as used in Section 1.2.1(a)) from
active customers of Protective on the Closing Date was more or less than the
amount of Net Monthly Recurring Revenue (as used in Section 1.2.1(a)) certified
by Sellers on the Closing Date. A customer shall be considered active on the
Closing Date only if either (i) it is not more than 90 days past due as to any
invoice from Protective for Net Monthly Recurring Revenue or (ii) it is more
than 90 days past due as to any invoice from Protective for Net Monthly
Recurring Revenue and at least one payment of Net Monthly Recurring Revenue has
been received from such customer between the Closing Date and the Adjustment
Date.
1.4.2. Extended Service Contract Adjustment. The Purchase Price
shall be reduced (the "Extended Service Contract Adjustment") by $45 for each $1
that Net Monthly Recurring Revenue (as used in Section 1.2.1(d)) under contracts
with customers which are still customers of Protective on the date one year
after the Closing Date was less than the amount of Net Monthly Recurring Revenue
(as used in Section 1.2.1(d)) certified by Sellers on the Closing Date.
1.4.3. Asset Adjustment. The Purchase Price shall be adjusted upward
or downward, as the case may be, by the amount by which the "Working Capital"
(as defined below) of Protective on the Closing Date is greater or less than the
amount of Working Capital certified on the Closing Date for purposes of
calculating the payment on account to be made on that date (the "Asset
Adjustment"). The determination of the Working Capital by Purchaser shall be
done on a consistent basis with the determination used by Sellers on the Closing
Date except that accounts receivable shall be determined on the Adjustment Date
based upon the amounts actually collected between the Closing Date and the
Adjustment Date. The agreed-upon amounts determined by the parties as of the
Closing Date for inventory shall not be subject to adjustment pursuant to this
Section 1.4.3 or otherwise after the Closing Date. Payments received from
customers after the Closing shall be applied to the oldest outstanding invoice
unless different instructions are received in writing from the customer.
1.4.4. Revenue Guarantee Adjustment. The portion of the Purchase
Price determined under Sections 1.2.1(a) shall be reduced by $45 (or the
applicable lesser multiple of Net Monthly Recurring Revenue paid for Newly
Acquired Accounts) times the amount by which Net Monthly Recurring Revenue (as
used in Section 1.2.1(a)) from customers purchased from Protective as of the
date 8 months after the Closing Date is less than 92% of the Net Monthly
Recurring Revenue (as used in Section 1.2.1(a)) from customers as of the Closing
Date, as finally determined under Section 1.4.1. Customers which terminate
service between the Closing Date and the date 8 months after the Closing Date
due to (i) a move out of the monitored location and which are replaced as
customers by the new occupant of such location prior to the end of the 8 month
period; (ii) price increases instituted by Purchaser; or (iii) unacceptable
service by Protective or Purchaser under normal industry standards (which shall
include service interruptions due to relocation of central station facilities)
shall not be counted as reductions in Net Monthly Recurring Revenue for purposes
of this Section 1.4.4. Purchaser shall not cancel or
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terminate service with any customer for non-payment unless (a) the customer is
more than 120 days past due in the payment of Net Monthly Recurring Revenue, (b)
Xxxxxx, so long as he is still employed as the President of Protective (or
comparable position with respect to the customer accounts of Protective if
Protective should be merged with Purchaser or any affiliate of Purchaser after
the Closing Date), shall have oversight over collections and cancellations of
Protective's customers and (c) Purchaser has given Xxxxxx not less than 3
business day's prior notice of Purchaser's or Protective's decision to terminate
the customer and has given Xxxxxx an opportunity to save the customer by having
the customer cure the delinquency. No such notice to Xxxxxx shall be required as
long as Xxxxxx is employed as the President of Protective (or comparable
position with respect to the customer accounts of Protective if Protective
should be merged with Purchaser or any affiliate of Purchaser after the Closing
Date). Such efforts by Xxxxxx shall not include paying or offering to pay any
portion of the customer's xxxx, or making any concession or offering any credit
to the customer that is not reasonable and reasonably acceptable to Purchaser.
Customers who are terminated for non-payment and are resigned or reinstated by
Purchaser or Protective within the 8 month period following the Closing Date
shall not be counted as reductions in Net Monthly Recurring Revenue for purposes
of this Section 1.4.4. The Revenue Guaranty Adjustment under this Section 1.4.4
shall terminate and be of no further force or effect if Purchaser shall fail to
make any payment due under Section 1.3.3 or 1.3.4 when due and shall not cure
such failure within 5 days after receiving written notice from Sellers of such
failure and in such an event Seller shall immediately have the right to draw an
amount under the letter of credit, or withdraw any amount from escrow, as the
case may be, equal to the amount which Purchaser failed to pay, as set forth in
the Letter of Credit or escrow agreement as the case may be.
1.4.5. Adjustment Procedure.
(a) Within 15 business days after the Adjustment Date (the
"Initial Claim Date") Purchaser shall provide Sellers with written notice
of the amount of each claim for adjustment under this Section 1.4 (the
"Claim Notice") and evidence in reasonable detail specifically supporting
each claim for which adjustment is sought. In addition, Purchaser shall
pay to Sellers or authorize the escrow holder to pay to Sellers, as the
case may be, that portion of the Deferred Payment for which Purchaser does
not claim an adjustment, subject to the provisions of Section 9.1.2.
Sellers shall have up to 30 business days after the Claim Notice is sent
(the "Final Claim Date") to provide written notice to Purchaser of any
claims, and evidence in reasonable detail specifically supporting each
claim for which adjustment is sought, and to provide Purchaser notice of
any dispute of Purchaser's claims. In making a claim, Purchaser or
Sellers, as the case may be, shall be referred to as a "Claiming Party."
If the Claiming Party fails, by the applicable Claim Date, to provide such
notice and evidence with respect to any claim, such claim shall be deemed
waived by the "Claiming Party."
(b) Purchaser and Sellers shall use their best efforts and
good faith to settle any disputes regarding post-closing adjustments to
the Purchase Price as expeditiously as possible. Upon resolution of all
such disputes, Purchaser shall promptly pay Sellers the balance of the
Purchase Price, adjusted in accordance with this Section
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1.4. If the adjustments called for in this Section 1.4 reduce the Purchase
Price below the amount paid to Sellers on or prior to the Closing Date,
the difference shall promptly be repaid to Purchaser by Sellers.
(c) If Sellers contest Purchaser's calculation of the final
Purchase Price and it cannot be resolved pursuant to sub-section (b)
above, the matter shall be referred to the Certified Public Accountants of
Sellers and Purchaser, who shall jointly review Purchaser's calculations
and determine the correct amounts of the final Purchase Price, which
determination shall be final and binding on the parties. If the
accountants can not so agree, they shall appoint a third Certified Public
Accountant to make such determination, which determination shall be final
and binding on the parties. Such determination shall be delivered to the
parties within sixty (60) days from the date of Sellers' notice of
objection.
2. Closing Date. The closing of the purchase and sale of the Shares provided
for in this Agreement shall take place at the Purchaser's offices in
Greenwich, CT, on April 4, 1997, but not later than April 30, 1997, at 10:00
a.m., local time, or at such other date, time and place as the parties shall
mutually agree (the "Closing Date").
3. Individual Representations of Sellers.
In order to induce Purchaser to consummate the transactions
contemplated herein each Seller, in his, her or its individual capacity and not
on behalf of any other Shareholder, severally represents and warrants to
Purchaser (except as set forth on Schedule 4 attached hereto, identified by
applicable Section number or in any other schedule attached hereto which
Schedules may be updated at Closing) that as of the Execution Date and the
Closing Date.
3.1. Ownership of Stock.
Such Seller as of the Closing Date will be the owner, beneficially
and of record, of, and have good title to, all shares of the Stock to be
transferred by such Seller hereunder, free and clear of all liens, encumbrances,
security agreements, equities, options, claims, charges or restrictions. The
shares of Protective's Stock are, or on the Closing Date will be, owned by the
persons and in the amounts indicated in Section 1.1.
3.2. Capacity and Authority, No Violations; Consents
3.2.1. Such Seller has the requisite trust or individual (as the
case may be) power, legal capacity and authority and the right to execute and
deliver this Agreement and to carry out the terms and conditions applicable to
such Seller under this Agreement, including, but not limited to, the trust or
individual (as the case may be) power, legal capacity, legal authority and right
to sell, convey and transfer to Purchaser at the Closing the Shares to be sold
to Purchaser by such Seller. Upon consummation of the Closing, Purchaser will
acquire from such Seller legal and beneficial ownership of, good and marketable
title to, and all rights to vote the Shares
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to be sold to Purchaser by such Seller, free and clear of all liens,
encumbrances, security agreements, equities, options, claims, charges or
restrictions.
3.2.2. The execution, delivery and performance of this Agreement by
such Seller have been duly authorized by all requisite action on the part of
such Seller, and this Agreement has been duly executed and delivered by such
Seller.
3.2.3. This Agreement constitutes, and each other agreement and
instrument to be executed and delivered pursuant to the terms of this Agreement
(collectively, the "Transaction Documents") by any Seller will constitute, the
legal, valid and binding obligation of such Seller enforceable in accordance
with such Transaction Document's terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally or by general equitable principles.
3.2.4. The execution and delivery of this Agreement and the other
Transaction Documents by such Seller, and such Seller's consummation of the
transactions contemplated hereby and thereby and the performance of such
Seller's obligations hereunder and thereunder, will not (a) conflict with or
result in the violation of any material applicable law or rule or regulation
affecting such Seller or the Shares owned by such Seller; (b) conflict with or
result in the violation of any judgment, order, decree or award of any court,
arbitrator, mediator or governmental agency or instrumentality to which such
Seller is a party or by which such Seller or the Shares owned by such Seller is
bound or affected; or (c) conflict with, result in the violation or termination
of, or accelerate the performance required by, any contract, indenture,
instrument or other agreement to which such Seller is a party or by which such
Seller or the Shares owned by such Seller may be bound or affected.
3.2.5. No consent, approval, authorization or other action by, or
filing or registration with, any federal, state or local governmental authority,
or any other person or entity, is required in connection with the execution and
delivery by such Seller of this Agreement and the other Transaction Documents,
the consummation by such Seller of the transactions contemplated hereby and
thereby or the performance of such Seller's obligations hereunder and
thereunder, except for (ii) filings required by the FCC related to Company's
radio licenses and arising out of the change of control of the Company and (iv)
such other consents and approvals as may be set forth on Schedule 4.
3.3. Litigation. Such Seller is not a party to, or, to the best of the
knowledge of such Seller threatened with, any litigation, governmental or other
proceeding, investigation or other controversy which might affect the validity
or consummation of this Agreement.
3.4. Disclosure. Except as may be required by law, regulation, rule, court
order or decree, such Seller has not and will not at any time disclose to any
third party the material terms upon which Purchaser has agreed to purchase the
Shares hereunder. Such Seller acknowledges that Purchaser is in the business of
acquiring companies or assets used in businesses similar to Protective and that
any such disclosure could have a material adverse impact on Purchaser. Purchaser
understands and agrees that Seller will be excused from performing this covenant
after
10
the Closing in the event Purchaser defaults under the terms of this Agreement so
as to give rise to such Seller legal excuse from performing hereunder.
4. Representations and Warranties of Xxxxxx. In order to induce Purchaser to
consummate the transactions contemplated herein, Xxxxxx represents and warrants
the following to Purchaser (except as set forth on Schedule 4 attached hereto,
identified by applicable Section number or in any other schedule attached hereto
which Schedules may be updated at Closing).
4.1. Incorporation, Powers and Qualification. Protective Alarms, Inc. is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Connecticut, and is duly qualified to do business in the States
of New York and New Jersey and is duly qualified to do business as a foreign
corporation in each state in which the nature of such corporation's business or
the character or location of such corporation's assets requires such
qualification, except where the failure to be so qualified has not had and would
not be reasonably expected to have a material adverse effect on its business.
Protective has all requisite corporate power to own its assets and to carry on
its business as now being conducted. Protective has no subsidiaries other than
the Subsidiaries. Each of the Subsidiaries is duly organized, validly existing
and in good standing under the laws of the state or province of its
incorporation, and is duly qualified to do business as a foreign corporation in
each state in which the nature of such corporation's business or the character
or location of such corporation's assets requires such qualification, except
where the failure to be so qualified has not had and would not be reasonably
expected to have a material adverse effect on its business.
4.2. Financial Information.
(a) Exhibit C contains financial statements with balance
sheets and statements of results of operations for Protective for the
periods ending September 30, 1995, and September 30, 1996 (the "Financial
Statements"). The Financial Statements present fairly the financial
position of Protective and the results of its operations as at the dates
thereof and for the periods covered thereby in conformity with generally
accepted accounting principles ("GAAP") applied on a consistent basis. The
Financial Statements attached to this Agreement are the auditor's drafts.
(b) Protective did not have liabilities or obligations of any
nature, fixed or contingent, matured or unmatured, which were not
reflected or adequately reserved against in the Financial Statements or
discussed in the notes thereto, other than liabilities and obligations not
required to be included in the Financial Statements in accordance with
GAAP. The Deferred Service Revenue has been accounted for on Protective's
books without discounts for prompt payment which may be granted to
customers.
4.3. Absence of Changes. Since the date of the 1996 Financial Statement
the business of Protective has been operated only in the ordinary course and
there has not been:
(a) any material adverse change in Protective's condition,
financial or otherwise, or its assets, liabilities, earnings, book value,
business or prospects;
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(b) any sale, transfer or other disposition of any asset of
Protective to any party except for payments of third party obligations
incurred in the ordinary course of business in accordance with
Protective's regular payment practices, sales of inventory at normal
prices, dispositions of surplus or used equipment or other dispositions in
the ordinary course of business;
(c) any termination or waiver of any rights of material value
to the business of Protective;
(d) any increase in the compensation of employees, officers or
directors of Protective or any increase in any compensation payable to any
consultant or agent of Protective, other than salary or wage raises in the
ordinary course of business;
(e) any expenditure or commitment in excess of $50,000 for
additions to or replacements of Protective's property, plant or equipment;
(f) any change in the accounting methods or practices followed
by Protective;
(g) any declaration, payment or setting aside for any dividend
or other distribution to shareholders; or
(h) any increase in liabilities except those incurred in the
ordinary course of business.
4.4. Tax Matters. All federal, state, local and foreign tax returns and
tax reports, if any, including but not limited to all sales, use, income and
withholding tax returns for states in which Protective has or monitors
customers, required to be filed at any time prior to the date of this Agreement
with respect to the business and assets of Protective have been filed with the
appropriate governmental agencies in all jurisdictions in which such returns and
reports are required to be filed, all of the foregoing are, to Xxxxxx'x best
knowledge, true, correct and complete, and all amounts shown as owing thereon
have been paid.
4.5. Ownership of Property.
(a) Protective has good and marketable title to its assets
free and clear of all mortgages, liens, pledges, restrictions, charges or
encumbrances of any nature whatsoever except for the security interest in
favor of the State Street Bank.
(b) Protective owns no real estate.
(c) All of Protective's accounts receivable included in the
Working Capital are validly created obligations of each of the obligors
who incurred the same in bona fide transactions in the ordinary course of
Protective's business.
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(d) Protective owns (but has not registered) all copyrights,
trademarks, tradenames, service marks, service names, licenses and rights
therein which are reasonably necessary for the conduct of its business in
the manner in which it has been or is being conducted. Xxxxxx has no
knowledge of any infringement or unauthorized use by Protective of any
copyright, patent, trademark, tradename, service xxxx, service name,
license or rights therein belonging to any third party. Xxxxxx has no
knowledge of any infringement or unauthorized use by any third party of
any copyright, patent, trademark, tradename, service xxxx, service name,
license or right therein belonging to Protective. All such marks and names
are listed on Schedule 4.
4.6. Litigation. Protective is not a party to, or, to the best of the
knowledge of Xxxxxx threatened with, any litigation, governmental or other
proceeding, investigation, strike or other labor disputes or other controversy.
4.7. Brokers' and Finders' Fees. No agent, broker, person or firm acting
on behalf of Protective or Sellers is or will be entitled to any commission or
broker's or finder's fee from Purchaser in connection with the transaction
contemplated herein.
4.8. Labor Disputes. There is not pending, or to the best of Xxxxxx'x
knowledge, threatened, any labor dispute, strike or work stoppage which affects
or which may affect the business of Protective or which may disrupt its
operations.
4.9. Copies of Documents. Xxxxxx has made available (or shall make
available upon request or shall cause Protective to make available upon request)
for inspection and copying by Purchaser true and correct copies of all documents
referred to in this Section 4. All such documents and written material furnished
to Purchaser as part of its due diligence investigation of Protective is an
original or is a true and complete copy of the original of the document of which
it purports to be a copy and, to the best of Xxxxxx'x knowledge, the information
contained therein is true, correct and complete in all material respects.
4.10. Alarm Systems.
(a) All of the alarm systems designed, installed, repaired,
partially installed, or installed by Protective prior to the Closing Date,
and each supervisory alarm panel owned or operated by Protective as of the
Closing Date, has been, and will, as of the Closing Date, (where
applicable) be in good working order and condition, ordinary wear and
tear, routine service needs, subscriber negligence or mis-use and
subscriber non-use excepted, and (where applicable) will have been
installed and serviced in accordance with good and workmanlike practices
prevailing in the security alarm industry in the locality where the
installation is located at the time of installation or service, and with
respect to those alarm systems and panels where applicable, substantially
in accordance with the specifications or standards of the Insurance
Services Office, Underwriters Laboratories, Factory Mutual Insurance
Company, local authorities which are applicable to the system and, to the
best of Xxxxxx'x knowledge, in substantial compliance with applicable
local telephone operating requirements. Substantially all alarm systems
installed or partially installed
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prior to the Closing Date will conform in all material respects to the
contracts pursuant to which they were installed and no installation,
repair or partial installation will have been made by Protective which was
in material violation of any material applicable law, code or regulation
when, repaired or installed.
(b) Xxxxxx does not know of any plans for changes to area codes in
areas in which Protective monitors customers.
4.11. Work in Process
All work in process in connection with the installation of alarm
systems for new customers has been sold, and through the Closing Date, will be
sold in a commercially reasonable manner and priced in accordance with
Purchaser's standard pricing policies and sales practices now in effect.
4.12. Agreements.
(a) Protective is not in material default under any contract
used in the operation of its business and, to Xxxxxx'x knowledge, no other
party to any such contract is in material default thereunder other than
payment defaults by customers.
(b) Protective is not a party to any partnership or joint
venture and is not a guarantor of or otherwise liable for the obligations
of any third party.
(c) Schedule 4 describes, and Xxxxxx has delivered to
Purchaser complete and correct copies of all currently effective contracts
to which Protective is a party or by which Protective or any of its
properties or assets is bound or affected which (i) involve the payment or
receipt by Protective of more than $10,000 (other than customer
contracts); (ii) are financing documents, loan agreements or promissory
notes, (iii) are distributorship or other agreements relating to the
marketing of products, (iv) are stockholder or registration rights
agreements, (v) are leases of real property, or (vi) are employment,
consulting or non-compete agreements.
4.13. Locations; Acquisitions.
(a) Protective maintains offices or other locations at the
addresses listed on Schedule 4 and has maintained no other offices or
other locations in the past 5 years.
(b) Protective has, during the past 5 years, acquired the
capital stock of, or assets from, the persons or entities listed on
Schedule 4 showing as to each: name, address, date of acquisition and
assets or stock purchased. Protective has the benefit of the agreements
not to compete listed on Schedule 4, showing as to each: name of party,
name of business with which affiliated and nature and expiration date(s)
of non-compete obligations.
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(c) All contracts or letters of intent or memoranda or term
sheets, whether binding or not, for prospective acquisitions are listed on
Schedule 4 and identify the seller, Net Monthly Recurring Revenue,
location and payment terms for each.
4.14. Compliance; Hazardous Substances.
(a) Protective is in substantial compliance with, and has
operated its business in substantial compliance with, all federal and
state laws (including alarm company licensing or permit laws), ordinances,
regulations and orders, the failure of which would have a material adverse
effect on Protective's business. Protective is in substantial compliance
with all employment and employee benefit laws the failure of which would
have a material adverse effect on Protective's business. Protective is
licensed under applicable alarm company licensing laws in all states in
which the business it conducts or into which the goods or services it
provides requires such licensing, except as listed on Schedule 4. There
are less than 350 accounts with locations outside of Connecticut, New York
or New Jersey. Attached as Exhibit D are copies of all material licenses
or permits held by Protective and none of such licenses or permits will be
terminated or affected by, nor will any fees be payable as a result of,
the execution or consummation of this Agreement.
(b) Other than the routine storage and use of petroleum
products in its vehicles, and natural gas products for its heating
systems, and in its central station's back-up generators, neither
Protective nor any third party has engaged in the generation, use,
manufacture, treatment, transportation, storage or disposal of any
Hazardous Substance (as defined below) on or from any site owned or
occupied (now or previously) by Protective and neither Protective, nor any
third party nor any Seller has received, nor is Protective or any Seller
aware of any basis for, any notice of violation of any Applicable
Environmental Laws (as defined below) with respect to any site owned or
operated, now or previously, by Protective.
(c) "Hazardous Substance" means any substance, chemical or
waste that is listed as hazardous, toxic or dangerous under any Applicable
Environmental Law.
(d) "Applicable Environmental Law" means any federal, state or
local law, regulation or ordinance which prohibits, regulates or limits
the use of hazardous, toxic, dangerous materials, pollution of air or
water or the destruction of natural resources.
(e) There is an abandoned oil storage tank on the premises
occupied and controlled by Protective, which storage tank was not placed
on the premises by Protective and which is, to Xxxxxx'x best knowledge,
empty.
4.15. Shares. Sellers are the record and beneficial holders of 100% of
Protective's issued and outstanding capital stock and no person other than
Sellers has any community property or other right to obtain any shares of
Protective's capital stock, any payment with respect to any
15
such stock or otherwise with respect to the sale of Shares contemplated herein.
Protective has authorized 5,000 shares of common, no par value stock, of which
100 are issued and outstanding, none are held in Protective's treasury. All
issued and outstanding shares are fully-paid and non-assessable. There are no
options, warrants, scrip, preemptive or other rights to subscribe to or calls or
other commitments of any nature relating to Protective's securities. There are
no agreements, arrangements or understandings pursuant to which any limitation
is imposed on the voting or dividend rights of any shares of Protective's
capital stock.
4.16. Customer Lists; National Accounts.
(a) The document identified as Exhibit E dated the date of
this Agreement which was prepared by Protective and Xxxxxx and initialed
by Xxxxxx and Purchaser (for identification only) is a true and correct
list of all Protective's customers as of December 19, 1996, all of which
are being billed for services rendered by Protective. Exhibit E shows as
to each customer: name, recurring rate and billing frequency. Protective's
Net Monthly Recurring Revenue (as used in Section 1.2.2(a)) (which for
purposes of this Section 4.16 shall include recurring revenue which would
be Net Monthly Recurring Revenue as defined in Section 1.2.2(a) but for
the fact that it is not billed under Customer Contracts) , as shown
thereon, is not less than $325,000 and no less than 90% of the Net Monthly
Recurring Revenue shown thereon is billed under Customer Contracts.
Exhibit E shall identify customers from whom Protective is receiving Net
Monthly Recurring Revenue for (i) key holder services, (ii) Wholesale
Services and (iii) extended repair services and shall summarize the amount
of Net Monthly Recurring Revenue billable to each category. There has not
been an increase in customer rates since April, 1996 other than increases
to reflect changes in services or equipment or increases imposed as a
result of a contract renewal or extension or mandated by contract. Exhibit
E shall be attached to this Agreement upon the earlier of the Closing or
satisfaction or waiver of every condition precedent to the obligations of
Sellers contained in Section 7.2. Until such time, Exhibit E shall be held
in escrow by Xxxxxxxx, Xxxxxxxxxx & Xxxxx, LLP pursuant to the Escrow
Agreement attached hereto as Exhibit F. Newly Acquired Accounts shall be
listed separately or otherwise identified to facilitate proper calculation
and adjustment of the portion of the Purchase Price determined under
Section 1.2.1(a).
(b) "Customer Contracts" mean written contracts calling for
recurring payments for alarm system leasing, monitoring or maintenance or
other services, to the best knowledge of Xxxxxx duly executed by at least
one of the occupants or owners of the premises, and having either (i) an
original term of at least 3 years and month to month renewal or (ii) an
original and renewal terms of at least one year, and which will not
terminate, give rise to a right to terminate or otherwise be adversely
affected by the sale of stock contemplated by this Agreement. Copies of
the contract forms in use with Protective's customer are attached hereto
as Exhibit G. No more than 5% of all Customer Contracts in effect with
Protective's customers have month to month renewals.
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(c) Each of the contracts with the National Accounts in
existence or which will be in existence on the Closing Date is due to
expire no sooner than December 31, 1999 except for Sports Authority, which
is due to expire on or about November 3, 1998.
(d) Exhibit O attached is a list of the dealers providing
third party monitoring to Protective's customers and the monthly charges
therefor.
4.17. Customer Claims; Insurance. Protective maintains in effect insurance
covering its assets and business, and maintains in effect general liability
(including errors & omissions) and automobile liability insurance in amounts
customarily carried by persons or organizations conducting similar businesses.
There have been no unresolved material customer claims against Protective during
the past 5 years not scheduled herein, nor to Xxxxxx'x best knowledge are any
pending. Xxxxxx is not aware of any circumstances or events which could give
rise to a customer claim which has not yet been asserted which would have a
material adverse effect on Protective's assets or the Shares.
4.18. Absence of Preferential Agreements. Neither Protective nor any
Sellers has entered into or agreed to enter into any agreement or arrangement
granting any preferential rights to purchase any of Protective's assets,
properties, services or rights, including inventories, or requiring the consent
of any party to the transfer and assignment of any of such assets, properties,
services or rights.
4.19. Personnel. Exhibit H attached comprises a complete and correct list
of Protective's employees. Protective has furnished Purchaser with complete and
correct copies of, (i) all employment, deferred compensation, bonus or
commission agreements, plans or programs respecting or affecting any directors,
officers or employees of Protective; (ii) the names and current salaries or
hourly rates of all directors, officers and employees of Protective and (iii)
the date and amount of the last increase in compensation for each such person.
4.20. Product Warranties. Except as set forth in Protective's standard
forms of contract and sales literature, copies of which have been delivered to
Purchaser, Protective has not made any warranties or guaranties relating to any
product it has sold, leased or installed other than those implied by law.
4.21. Employee Plans.
(a) Protective neither maintains, sponsors nor contributes to
any program or arrangement that is an "employee pension benefit plan," an
"Employee welfare benefit plan," or a "multiemployer plan" as such terms
are defined in Section 3(2), 3(1) and 3(37), respectively, of the Employee
Retirement Income Security Act of 1974, as amended or any other incentive
or benefit arrangement not listed on Exhibit H.
(b) Protective has never completely or partially withdrawn
from a "multiemployer plan".
17
4.22. Minutes; Stock Records. Xxxxxx has delivered to Purchaser for review
the originals or complete and correct copies of the minute books and stock
records of Protective. Such items contain a complete and correct record of all
proceedings and actions taken at all meetings of, and all actions taken by
written consent by, the holders of capital stock of Protective and its boards of
directors, and all original issuances, subsequent transfers and any repurchases
of capital stock of Protective.
4.23. Material Misstatement or Omissions. No representation or warranty by
Sellers contained in this Agreement or the Exhibits to this Agreement and no
document or certificate furnished or to be furnished to Purchaser by Sellers in
connection herewith or with the transactions contemplated hereby, contains an
untrue statement of a material fact or omits to state a material fact necessary
to make any statement of fact contained therein not misleading.
5. Representations and Warranties of Purchaser. Purchaser hereby represents and
warrants the following to Seller:
5.1. Organization and Good Standing. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Purchaser has all requisite corporate power to carry on its business
as it is now conducted and is entitled to own, lease or operate the properties
and assets it now owns, leases or operates.
5.2. Authority. The execution and delivery of this Agreement by Purchaser
and the performance by Purchaser of its obligations hereunder have been approved
by all necessary corporate action and no further proceedings on the part of
Purchaser will be necessary to effect or approve the transactions contemplated
by this Agreement. This Agreement and the other Transaction Documents have been
duly executed and delivered by Purchaser. This Agreement constitutes, and each
other agreement or instrument to be executed and delivered by Purchaser pursuant
to the terms of this Agreement will constitute, the legal, valid and binding
obligations of Purchaser, enforceable against Purchaser in accordance with their
terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally or by general equitable principles.
5.3. No Conflict. Neither the execution nor the delivery of this
Agreement, nor the consummation of the transactions covered hereby, nor the
fulfillment of the terms hereof, nor compliance with the terms and provisions
hereof, will conflict with, or result in a breach of the terms, conditions or
provisions of, or constitute a default under any agreement or instrument,
including any judgment, order, decree, or award of any court, arbitrator,
mediator, or governmental agency to which Purchaser is a party or by which it is
bound.
5.4. Effect of Agreement. The execution of this Agreement does not, and
the consummation of this Agreement will not, violate any law, statute,
regulation, injunction, order or decree of any governmental agency or authority
or court, or conflict with or result in a material breach of or constitute a
material default under any of the terms and provisions of any commitment,
contract, instrument or obligation including any judgment, order, decree, or
award
18
of any court, arbitrator, mediator, or governmental agency to which Purchaser is
a party or by which Purchaser or any of its properties may be bound.
5.5. Litigation. Purchaser is not a party to, or, to the best of the
knowledge of Purchaser, threatened with, any litigation, governmental or other
proceeding, investigation, strike or other labor disputes or other controversy
which might affect the validity or consummation of this Agreement or Purchaser's
ability to perform its obligations hereunder or under any Transaction Document.
5.6. Brokers' and Finders' Fees. No agent, broker, person or firm acting
on behalf of Purchaser is or will be entitled to any commission or broker's or
finder's fee from Sellers in connection with any of the transactions
contemplated herein.
5.7. Investment Intent. Purchaser is purchasing the Shares for its own
investment and not with a view to sale or distribution of the Shares to other
persons.
5.8. Xxxx Xxxxx Xxxxxx Act. No filing with the Federal Trade Commission by
Sellers or Purchaser is required under the Xxxx Xxxxx Xxxxxx Anti-Trust
Improvement Act of 1976.
5.9. Material Misstatements or Omissions. No representation or warranty by
Purchaser contained in this Agreement or in any document, statement or
certificate furnished or to be furnished to Sellers in connection with the
transactions contemplated hereby, contain an untrue statement of material fact
or omits to state a material fact necessary to make the statement of fact
contained therein not misleading.
6. Conduct Prior to Closing.
6.1. No Material Changes. From the date of this Agreement to the Closing,
the business of Protective will be operated only in the ordinary course (other
than as necessitated or permitted by this Agreement), and, in particular,
Sellers shall not permit Protective, without the prior written consent of
Purchaser, to:
6.1.1. be in material default under any material contract,
agreement, commitment or undertaking of any kind;
6.1.2. violate or fail to comply in any material respect with all
material laws applicable to it or its properties or business;
6.1.3. sell, transfer or otherwise dispose of, or agree to sell,
transfer or otherwise dispose of (other than in the ordinary course of
business), any of its assets, properties, services or rights, including
inventories, or cancel or otherwise terminate, or agree to cancel or otherwise
terminate, any debts or claims (other than ordinary course credits or
adjustments to accounts receivable), except the foregoing shall not prohibit the
disposition to Sellers of accounts of terminated customers which have been
turned over to collection, the stock of Security Network of
19
America owned by Protective Alarms, Inc., a one year term life insurance policy
on the life of Xxxxxx in the face amount of $3,000,000 and the distribution to
Xxxxxx described in Schedule 4;
6.1.4. make or permit any amendment or termination of any material
contract, agreement or license to which it is a party or by which it or any of
its assets or properties are subject;
6.1.5. increase or agree to increase the rate of compensation
payable or to become payable to any of its shareholders, officers, directors,
consultants or employees, or adopt any new, or make any increase in any employee
benefit plan, payment or arrangement made to, for or with any of such employees
(other than routine scheduled increases to employees in the ordinary course of
Protective's business);
6.1.6. make any expenditure, commitment or accrual for the purchase,
acquisition, construction or improvement of a capital asset, which in any event,
equals or exceeds individually or in the aggregate $25,000;
6.1.7. make any change in the relationship or course of dealing
between Protective and its major suppliers or customers which could have a
material and adverse effect on the business of Protective;
6.1.8. increase or decrease any customer rates other than increases
or decreases related to (a) adjustments in the ordinary course of business or
(b) changes in service or equipment;
6.1.9. fail to maintain and repair any tangible assets (other than
equipment located at customer locations) included in its assets in accordance
with good standards of maintenance and as required in any leases or other
agreements pertaining thereto;
6.1.10. fail to provide repair service for alarm systems in
accordance with Protective's standard repair service policies and procedures;
6.1.11. merge, consolidate or agree to merge or consolidate with or
into any other corporation or entity; or
6.1.12. amend its certificate of incorporation or issue or authorize
for issuance any shares of the capital stock of Protective or any warrants,
options or rights therefor.
6.2. Insurance. Protective shall maintain or cause to be maintained, in
full force and effect, through the Closing Date, all of its insurance policies
unless replaced by substantially comparable insurance coverage. Protective shall
promptly advise Purchaser of any fire, accident or other casualty occurring on
or before the Closing Date which individually or in the aggregate affects the
value of the Assets in excess of $25,000.
20
6.3. Access to Properties. Purchaser, by authorized representatives
designated by Purchaser, shall, through the Closing Date, have the right to
examine the properties, books and accounts of Protective's business at times and
places reasonably acceptable to Xxxxxx. Purchaser agrees to keep confidential
all information regarding the Assets that is obtained through such examination
in accordance with the terms of the confidentiality provisions set forth in
Section 6.4 herein. Purchaser agrees to conduct such examination in a manner so
as not to disclose this transaction to Protective's employees (other than
employee specifically identified to Purchaser by Xxxxxx) and in a manner that
will not disrupt Protective's business.
6.4. Confidentiality. All information furnished by any Seller or
Protective to Purchaser pursuant to this Agreement shall be treated as the
property of such Seller or Protective and shall be kept confidential by
Purchaser until the Closing Date. In the event the Closing shall not occur,
Purchaser shall return to Sellers or Protective all documents and other
materials containing, reflecting or referring to such information, retain no
copies, summaries, compilations or notes regarding such information, shall keep
confidential all such information, and shall not directly or indirectly use such
information for any competitive or other commercial purpose. Purchaser's
obligation to keep such information confidential and not to use such information
shall continue for a period of 5 years from the date the transactions
contemplated by this Agreement are abandoned and shall extend to the directors,
officers, employees and agents of Purchaser and Parent. Purchaser shall take all
necessary action to inform such persons of the obligation of confidentiality set
forth in this Section and shall take all necessary action to obtain their
acknowledgment of and agreement to comply with this Section. The obligation to
keep such information confidential shall not apply to any information which
Purchaser can demonstrate (a) was already in its possession prior to the
disclosure thereof by any Seller or Protective, (b) was then generally known to
the public, (c) became known to the public through no fault of Purchaser or
Parent or any of their respective directors, officers, employees or agents, or
(d) is required by Federal or state law, rule or regulation, or judicial process
to be disclosed.
7. Conditions Precedent to the Closing.
7.1. Conditions Precedent to the Obligations of Purchaser. The obligations
of Purchaser under this Agreement are subject to the satisfaction of each of the
following conditions except to the extent that any of such conditions may be
waived by Purchaser.
7.1.1. Representations and Warranties True as of Closing. The
representations and warranties of Sellers contained in Sections 3 and 4 shall be
true and correct in all material respects when made and on and as of the Closing
Date as if then made, except to the extent that such representations and
warranties are expressly made as of a specified date and, as to such
representations and warranties, the same shall be true and correct as of such
specified date. At the Closing, Purchaser shall have been furnished with a
certificate executed by Sellers with respect to the accuracy of such
representations and warranties as of the Closing Date as if then made and to the
fulfillment of the conditions stated in this Section 7 to the extent that such
conditions are precedent to the obligations of Purchaser.
21
7.1.2. Obligations, Covenants, Agreement and Conditions Performed.
Sellers shall have performed all obligations required to be performed by them
under this Agreement at or prior to the Closing Date, and Purchaser shall have
received a certificate signed by Sellers, to that effect.
7.1.3. Deliveries. At the Closing, Purchaser shall have received:
(i) Schedules updating the information on any Schedule
or Exhibit to this Agreement which has changed between the date of
this Agreement and the Closing Date, as of a date no more than 2
days prior to the Closing Date, certified by Sellers as to its
accuracy and completeness.
(ii) Sellers' Certificates as to the values of Net
Monthly Recurring Revenue, WIP NMRR and Working Capital, as called
for in Section 1.3.2;
(iii) Releases in recordable form, together with fees
necessary for recording, of the security interests in favor of State
Street Bank in the assets of Protective;
(iv) Certificates, duly endorsed for transfer to
Purchaser, representing all the Shares, with signatures guaranteed
or signatures witnessed by representatives of Purchaser;
(v) Agreements Not To Compete in the form of Exhibit I
attached hereto, duly executed by each of Sellers;
(vi) An opinion of Sellers' counsel in form and
substance satisfactory to Purchaser in the form of Exhibit J
attached hereto and as to such other matters as are reasonably
requested by Purchaser;
(vii) A 5 year lease of Protective's main offices in
Greenwich, CT which conforms to the terms of the term sheet attached
hereto as Exhibit K and containing such other provisions as are
customary for a commercial lease in the Greenwich, CT area, together
with estoppel certificates from the Landlord, Condominium
Association and any mortgagee indicating that there are no defaults
then in existence, that the leasing of such offices to Protective
will not constitute any such default and a non-disturbance agreement
from any mortgagee, all in form reasonably acceptable to Purchaser.
If the lease is executed by Protective, Purchaser shall guarantee
said lease. The parties shall execute the term sheet
contemporaneously with the execution of this Agreement;
(viii)Consents of government agencies and third parties
necessary to consummate this transaction other than consents
required to be obtained by
22
Purchaser (e.g., FCC approval of radio licenses) and either not
obtained by Purchaser or waived by Purchaser;
(ix) The minute books and stock records of Protective;
and
(x) Such other documents from Sellers as are reasonably
necessary or appropriate to complete the transactions herein
contemplated.
7.1.4. Adverse Change. There shall have been no material adverse
change to the business, property or affairs of Protective since the date of this
Agreement.
7.2. Conditions Precedent to the Obligations of Seller. The obligations of
Sellers under this Agreement are subject to the satisfaction of each of the
following conditions except to the extent that any of such conditions may be
waived by Sellers.
7.2.1. Representation and Warranties True as of Closing. The
representations and warranties of Purchaser contained in Section 5 shall be true
and correct when made and on and as of the Closing Date as if then made, except
to the extent that such representations and warranties are expressly made as of
a specified date and, as to such representations and warranties, the same shall
be true and correct as of such specified date. At the Closing, Sellers shall
have been furnished with a certificate executed by Purchaser with respect to the
accuracy of such representations and warranties as of the Closing Date as if
then made and to the fulfillment of the conditions stated in this Section 7 to
the extent that such conditions are precedent to the obligations of Seller.
7.2.2. Performance of Covenants and Agreements. Purchaser shall have
performed all obligations required to be performed by it under this Agreement at
or prior to the Closing Date, and Sellers shall have received a certificate
signed by Purchaser to that effect.
7.2.3. Deliveries to Sellers. On the Closing Date, Purchaser shall
have delivered the following to Sellers:
(i) 90% of the portion of the Purchase Price
attributable to Net Monthly Recurring Revenue and 100% of the
portion of the Purchase Price attributable to the Working Capital as
provided in Section 1.3.2, by wire transfer pursuant to wire
instructions furnished to Purchaser by Sellers;
(ii) $1,300,000 on account of portion of the Purchase
Price determined under Section 1.2.1(b) as provided in Section
1.3.3, by wire transfer pursuant to wire instructions furnished to
Purchaser by Sellers;
(iii) The payment due under Section 1.3.5;
(iv) A promissory note and irrevocable letter of credit
or payment into escrow, as provided in Section 1.3.2;
23
(v) Agreements Not to Compete in the form of Exhibit I
attached hereto, duly executed by Purchaser.
(vi) An Employment Agreement for Xxxxxx Xxxxxx in the
form of Exhibit L, duly executed by Purchaser;
(vii) A 5 year lease of Protective's main offices in
Greenwich, CT which conforms to the terms of the term sheet attached
hereto as Exhibit K; and
(viii) An opinion of Purchaser's counsel in form and
substance satisfactory to Sellers in the form of Exhibit M attached
hereto and as to such other matters as are reasonably requested by
Sellers;
(ix) Such other documents as are necessary to complete
the transactions herein contemplated.
7.2.4. Pay-off of State Street Bank. Payment of the obligation to
State Street Bank described in Section 4.5(a) and release of Sellers' guarantees
or other obligations arising out of such indebtedness.
7.2.5. Adverse Change. There shall have been no material adverse
change to the business, property or affairs of Purchaser since the date of this
Agreement which in the aggregate have had, or are reasonably likely to have, a
materially adverse effect on Purchaser's ability to perform its obligations
under this Agreement and the Transaction Documents.
8. Warranties and Representations. The respective representations and warranties
of Sellers and Purchaser contained herein shall survive the Closing Date to
extent set forth in Section 9.
9. Indemnification.
9.1. Indemnification by Principal Sellers.
9.1.1. Claims. Subject to the limitations set forth in Section
9.1.3, Principal Sellers (but not the Trusts), jointly and severally, hereby
agree to indemnify Purchaser against and to hold Purchaser and Protective
harmless from any and all damages, losses, liabilities, costs and expenses,
including, without limitation, reasonable attorneys' fees (collectively
"Damages") incurred or suffered by Purchaser or Protective, arising out of or
related to:
(a) any material inaccuracy or breach of any representation or
warranty made hereunder (as set forth in Articles 3 and 4) by any of
Sellers;
(b) any failure of Sellers to duly perform or observe any
covenant or agreement hereunder on the part of Sellers to be performed or
observed;
24
(c) any federal, state, local or other tax of any nature
imposed on Protective with respect to any period of time prior to the
Closing Date, arising out of actions or omission by Protective prior to
the Closing (but excluding any such taxes that arise as of result of
actions, omissions or elections made by Protective or Purchaser after the
Closing, unless such actions or elections are required to be made by
Protective or Purchaser pursuant to any tax law, ruling or regulation)
including, but not limited to, any sales, excise or use tax due on
services provided or equipment purchased, sold or leased by Protective, or
any tax on income received by Protective, prior to the Closing Date, any
penalty assessed against Protective, and/or any interest assessed on
deficiencies but excluding any tax liabilities in the amounts set forth on
the Closing Financials;
(d) any penalty imposed by any governmental authority on
Protective on or after the Closing Date and before the Date nine months
after the Closing Date, arising out of Protective's not having been
qualified to do business as a foreign corporation or failure to have been
properly licensed under applicable alarm company licensing laws in effect
on or prior to the Closing Date which are imposed after Protective's
application during such period of time, for any such qualification or
license (the cost of such applications themselves shall not be damages for
which Purchaser shall be entitled to seek indemnity);
(e) any claim against Protective by, or liability of
Protective to, a third party, (including without limitation, employees,
brokers, customers and suppliers of Protective) of any nature arising out
of an event or occurrence wherein the loss or damage asserted by the third
party occurred prior to the Closing Date, other than claims or
liabilities: (i) in the amounts set forth in the Working Capital, or (ii)
as to which Purchaser expressly agrees in writing that it will not be
entitled to indemnification. The disclosure of any liability or
circumstance which may give rise to a liability in this Agreement, any
Schedule or Exhibit hereto or any written material furnished to Purchaser
by Sellers for due diligence purposes shall not be deemed to be such an
express agreement by Purchaser.
Any claim for indemnification by Purchaser or Protective pursuant to this
Section 9.1.1 shall hereinafter be referred to as a "Purchaser's Claim."
9.1.2. Notice; Offset. Purchaser agrees to give prompt notice to
Sellers of the assertion of any claim or the commencement of any suit, action or
proceeding, in respect of which indemnity may be sought hereunder. Either of
Principal Sellers may, in his or her sole discretion, assume the defense of any
such claim, suit, action or proceeding at his or her own expense and may dispose
of any such claim, suit, action or proceeding in his or her sole discretion
without any liability or expense to Purchaser. In any event, Purchaser shall
have the right to participate in or with respect to any such claim, suit, action
or proceeding with counsel of its own choice and at its own expense. If any
indemnifiable claim exists at the time payment of the Deferred Payment is due,
Purchaser shall have the right to withhold payment of a reasonable amount of the
principal until such claim is satisfied. Purchaser's rights under the
25
indemnity provided for in this Agreement shall not be limited to the rights
stated in the preceding two sentences.
9.1.3. Purchaser's Claim Basket and Liability Cap.
Other than with respect to Purchaser's Claims (a) asserting a
Seller's fraud, (b) challenging any Seller's title to the Stock, (c) asserting a
claim which should have been included in the Working Capital or (d) brought
under subsection 9.1.1(c) or 9.1.1(d), Principal Sellers' obligations with
respect to indemnity pursuant to this Section 9.1 shall be limited to the extent
that the aggregate of such obligation must first exceed $75,000.00 after giving
credit for any insurance proceeds received by Protective or Purchaser as a
result of coverage by insurance of Purchaser or Protective ("Purchaser's Claim
Basket"). Except as provided hereinafter, in no event shall the total liability
of all Sellers for all Purchaser's Claims exceed $9,000,000.00 (the "Liability
Cap"). Notwithstanding the limitation of liability set forth above, any
Purchaser's Claim asserting a Seller's fraud, asserting a claim as to the title
of the Stock or asserting a claim which should have been included in the Working
Capital shall not be included in the Liability Cap described in this Section.
9.1.4. Other Limitations
After the Closing, Purchaser will not be entitled to indemnification
with respect to any matter which arises after the date of this Agreement (i) if
Purchaser expressly agrees in writing that it will not be entitled to
indemnification therefor, (ii) for those matters set forth on Exhibit P, or
(iii) if Purchaser was fully compensated for such matter pursuant to an
adjustment in the Purchase Price pursuant to Section 1.4.
9.1.5. Sole and Exclusive Remedy
After the Closing, the indemnification provided in this Section 9.1
shall be the sole and exclusive remedy of Purchaser with respect to the matters
described in this Section 9.1 without regard to whether such matter involves
claims framed in contract, tort, equity or otherwise.
9.1.6. Survivability of a Purchaser's Claim
In order for Purchaser to be entitled to indemnification for a
Purchaser's Claim as provided for in Sections 9.1.1 a notice of a Purchaser's
Claim(s) must be submitted to the Sellers' Representatives within 9 months after
the Closing Date; except that a Purchaser's Claim asserting a claim under
Section 9.1.1(c) or 9.1.1(e), a Seller's fraud, related to a Seller's title to
the Stock must be submitted to Sellers prior to the expiration of the applicable
statute of limitations.
9.2. Indemnification by Purchaser.
26
9.2.1. Claims. Purchaser hereby agrees to indemnify Sellers against
and to hold them harmless from any and all damages in connection with any claim,
action, suit or proceeding incurred or suffered by Sellers arising out of or
related to (a) any misrepresentation made, or breach of any warranty, covenant
or agreement made or to be performed, by Purchaser in or pursuant to this
Agreement or (b) or the operation of the business of Protective from and after
the Closing Date.
9.2.2. Notice. Sellers agree to give prompt notice to Purchaser of
the assertion of any claim, or the commencement of any suit, action or
proceeding in respect of which indemnity may be sought hereunder. Purchaser may,
in its sole discretion, assume the defense of any such claim, suit, action or
proceeding at its own expense and may dispose of any such claim, suit, action or
proceeding, at its sole discretion without any liability or expense to Sellers.
In any event, Sellers shall have the right to participate in or with respect to
any such claim, suit, action or proceeding with counsel of their own choosing
and at their own expense.
9.2.3. Sole and Exclusive Remedy. After the Closing, the
indemnification provided in this shall be the sole and exclusive remedy of
Sellers with respect to the matters described in this Section 9.2 without regard
to whether such matter involves claims framed in contract, tort, equity or
otherwise.
10. Payment of Expenses; Taxes.
10.1. Expenses. Each party to this Agreement shall bear and pay all fees,
costs and expenses incurred by it in connection with the preparation of this
Agreement and the consummation of the transactions contemplated hereunder.
10.2. Taxes. Purchaser shall not be responsible for or be required to pay
any sales, income or other taxes imposed upon or made with respect to the
operation of Seller's business prior to the Closing Date.
11. Breach; Termination of Agreement.
11.1. Breach by Sellers.
11.1.1. Sellers acknowledge that the business of Protective is
unique and that, in the event of Sellers' breach of this Agreement, Purchaser's
damages would be difficult or impossible to determine. Therefore, Sellers agree
that, in addition to any other remedies available to Purchaser, Purchaser shall
be entitled to injunctive relief and to specific performance of this Agreement
by Sellers.
11.1.2. In addition to any other remedies available to Purchaser as
a result of Sellers' breach of this Agreement (without legal excuse) resulting
in the transactions contemplated herein not being consummated, Purchaser shall
be entitled to have the Deposit returned to it promptly upon demand therefor.
Except in the event of a breach by Sellers without legal excuse, the Deposit
shall be non-refundable.
27
11.2. Breach by Purchaser. The parties agree that damages for Purchaser's
failure to consummate the transactions contemplated in this Agreement would be
difficult or impossible to ascertain either in advance or at the time of the
breach, and wish to establish agreement on liquidated damages in such event. In
the event of the Purchaser's breach of this Agreement resulting in the
transactions contemplated herein not being consummated, Sellers shall be
entitled to $250,000 as liquidated damages and not as a penalty and nothing
more. The foregoing shall not apply to a post closing breach by Purchaser.
Sellers shall retain the Deposit in payment of such liquidated damages.
Thereafter Purchaser shall have no further liability or obligation to Sellers
hereunder. Purchaser acknowledges and agrees that said amount of liquidated
damages is reasonable and does not constitute a penalty or forfeiture.
11.3 Termination. The foregoing notwithstanding, if Protective's Net
Monthly Recurring Revenue as used in Sections 1.2.1(a), 1.2.1(c) and 1.2.1(d) on
the Closing Date is less than $360,000, Sellers may elect not to consummate the
sale of stock contemplated in this Agreement, provided it gives notice to that
effect to Purchaser on or prior to the Closing Date together with the return of
the Deposit. Such action by Sellers shall not be considered a breach of this
Agreement unless, within 5 days of receipt of such notice, Purchaser shall give
Sellers notice that it will consummate the transaction contemplated in this
Agreement by paying the sum of the amounts called for in Sections 1.2.1(c) and
1.2.1(d) based on the levels of Net Monthly Recurring Revenue applicable and the
amount called for in Section 1.2.1(a) as though the Existing Revenue was an
amount equal to $360,000 less the amounts of Net Monthly Recurring Revenue used
to determine the portions of the Purchase Price under Sections 1.2.1 (c) and
1.2.1(d). If Purchaser gives such a notice to Sellers therein, which shall be no
more than 5 days after the date such notice is given.
12. Protective's Release
12.1. Effective as of the Closing, Protective agrees not to xxx and fully
releases and discharges Sellers and each of them, in their respective capacities
as such, and including, without limitation, each of their respective trustees,
representatives, agents, assigns and successors, past and present, in their
respective capacities as such (collectively "Seller Releasees"), with respect to
and from any and all claims, demands, rights, liens, agreements, contracts,
covenants, actions, suits, causes of action, obligations, debts, costs,
expenses, damages, judgments, orders and liabilities of whatever kind or nature
in law, equity or otherwise, whether now known or unknown, and whether or not
concealed or hidden, all of which Protective now owns or holds or has at any
time owned or held against the Seller Releasees.
12.2. It is the intention of Protective that the release contained in
Section 12.1 be effective as a bar to each and every claim, demand and cause of
action herein above specified. In furtherance of this intention Protective
expressly agrees that this release shall be given full force and effect
according to each and all of its express terms and provisions, including as
well, those related to unknown and unsuspected claims, demands and causes of
action, if any, as those relating to any other claims, demands and causes of
action herein above specified.
28
13. Post Closing Employment Matters. Protective shall not, during the first 90
days after the Closing Date, reduce the compensation (cash or non-cash benefits)
payable to any employee from the compensation in effect immediately prior to the
Closing Date, except that it may change medical coverage plans so long as such
change does not result in a lapse of coverage for any affected employee. The
foregoing shall not prevent Protective from terminating any employee at any
time.
14. Miscellaneous.
14.1. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given when sent by overnight courier or by
registered or certified mail, deposited in the United States mail, postage
prepaid, return receipt requested, to the appropriate party at its or his
address below or at such other address for such party (as shall be specified by
written notice):
If to Sellers, at:
Mr. Xxxxxx Xxxxxx
%Protective Alarms, Inc.
0 Xxxxx Xxxx
Xxx Xxx, Xx 00000
With a copy to:
Xxxx X. Xxxxxx, Esq.
Xxxxxxxx, Xxxxxxxxxx & Xxxxx, LLP
00000 Xxxx Xxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, XX 00000-0000
If to Purchaser, at:
Xx. Xxxxxxx X. XxxXxxxxxx
Security Systems Holdings, Inc.
000 Xxxxxxxx Xxxx
Xxxxxx, Xxxxxxxxxxx 00000
With a copy to: if by courier:
Xxxxx X. Xxxxxx, Esq. Xxxxx X. Xxxxxx, Esq.
X.X. Xxx 000 9 Church Hill Road
Xxxxxxx Ridge, CT 06876-0435 Xxxx Xxxxxxx, XX 00000
14.2. Headings. The headings in this Agreement are intended solely for the
convenience of reference and shall be given no effect in the construction or
interpretation of this Agreement.
29
14.3. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Connecticut, without regard to the
application of conflicts of law principles.
14.4. Assignment. This Agreement shall not be assignable by any party
hereto except with the written consent of the other party. Any other attempted
assignment shall be void. The foregoing notwithstanding, Purchaser may assign
its rights and delegate its obligations hereunder, and under any agreement or
document entered into or received hereunder, to any affiliated entity and/or as
collateral to any lender providing funds to be used in acquiring or operating
the business of Protective by Purchaser. No such delegation of obligations shall
relieve Purchaser of such obligation, however, without the express written
consent of Sellers.
14.5. Severability. If any term or provision of this Agreement or any
application thereof shall be invalid or unenforceable, the remainder of this
Agreement and any other application of such provision shall not be affected
thereby.
14.6. Entire Agreement. This Agreement and the Schedules and Exhibits
attached hereto, represent the entire agreement of the parties hereto with
respect to the subject matter hereof superseding all prior agreement,
understanding, discussions, negotiations and commitments of any kind.
14.7. Attorneys' Fees. If any action or proceeding is brought to enforce
or interpret any provision of this Agreement the prevailing party shall be
entitled to recover reasonable attorneys' fees to be fixed by the court.
14.8. Publicity. All notices to third parties and all other publicity
concerning the transactions contemplated by this Agreement shall be jointly
planned and coordinated by and between Purchaser and Xxxxxx. All such notices or
other publicity shall, prior to publication, be approved in writing by Purchaser
and Xxxxxx, which approvals shall not be unreasonably withheld. Notices and
other publicity concerning the transactions contemplated by this Agreement shall
not include the dissemination of proxy statements, registration statements,
prospectuses and similar documents which are required to include information
concerning such transactions under state and federal securities laws.
14.9. Execution in Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute the same Agreement.
14.10. Amendment of Agreement; Waivers. This Agreement may be amended in
writing by all of the parties hereto. Any party hereto may waive, in writing,
compliance by the other party with any of the covenants and conditions contained
in this Agreement (except such as may be imposed by law).
14.11. Further Assurances. After the Closing Date, without further
consideration, the parties hereto shall each execute and deliver such further
instruments and documents and take
30
such further actions as the other party shall reasonably request to consummate,
or in furtherance of, the transactions contemplated by this Agreement and to
perfect Purchaser's title to the Shares.
31
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement as
of the date first above written.
SELLERS: PURCHASER:
Security Systems Holdings, Inc.
/s/ Xxxxxx Xxxxxx
------------------------------------
Xxxxxx Xxxxxx
By /s/ Xxxxxxx X. XxxXxxxxxx
----------------------------
Xxxxxxx X. XxxXxxxxxx
/s/ Xxxxxxx Xxxxxx Chairman
------------------------------------
Xxxxxxx Xxxxxx
The Xxxx Xxxxxx Xxxxxxxx Trust
By /s/ Xxxxxx Xxxxxx
----------------------------------
Xxxxxx Xxxxxx, trustee
The Xxxxxx Xxxxxx Oxfeld Trust
By /s/ Xxxxxx Xxxxxx
----------------------------------
Xxxxxx Xxxxxx, trustee
32
List of Exhibits and Schedule
Exhibits:
---------
A National Accounts
B Form of Promissory Note
C Financials
D Copies of Material Licenses
E Customer List
F Customer List Escrow Agreement
G Sample Customer Contracts
H Compensation Plans/Employees/Compensation Rates
I Non-Compete Agreement
J Opinion of Seller's Counsel
K Term sheet for Lease of Greenwich Offices
L Employment Agreement for Xxxxxx Xxxxxx
M. Opinion of Purchaser's Counsel
N. Third Party Fire Monitoring Accounts
O. Dealers Providing Monitoring to Protective
P. Claims Not Subject to Indemnification
Schedule:
1.2.3 List of equipment leases and installment sale contracts not included in
Working Capital
4. Exceptions to or expansions upon representations in Sections 3 and 4
33
