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Exhibit 10.8
SECURITY ASSOCIATES INTERNATIONAL, INC.
PURCHASE OF STOCK OF MCAP INVESTORS, INC.
This Agreement is made as of August 29, 1996, between the persons
identified on Schedule ___ (the "Sellers" or individually, the "Seller"), duly
represented by their respective attorneys in fact, pursuant to the special
irrevocable powers of attorney attached hereto as Exhibit A (the "Powers of
Attorney"); and Security Associates International, Inc., a Delaware corporation
(the "Purchaser").
WHEREAS, the Sellers are the owners of all of the issued and outstanding
capital stock of MCAP Investors, Inc., a Delaware corporation ("MCAP") and have
been the only owners of the capital stock of MCAP since its organization in
1993; and
WHEREAS MCAP is the owner of twenty four and eight tenths percent (24.8%)
of the outstanding membership interests of Monitor Service Group, LLC, an
Illinois limited liability company ("MSG"); Winnetka Investors, Inc., a
Delaware corporation ("Winnetka") is the owner of fifteen and two tenths
percent (15.2%) of the outstanding membership interests of MSG; and Purchaser
is the indirect owner of the remaining sixty percent (60%) of such membership
interests; and
WHEREAS, each seller is the owner of the number of shares of MCAP set
forth opposite such Seller's name on Schedule ____ ("Seller's MCAP Shares");
and
WHEREAS, Sellers wish to sell and Purchaser wishes to purchase all of
Sellers' shares in MCAP (the "MCAP Shares");
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NOW THEREFORE, in consideration of the mutual promises and covenants set
forth below, the parties do hereby agree as follows:
SECTION 1
1.1. Sale. Each Seller shall sell to Purchaser and Purchaser shall
purchase from Each Seller on the Closing Date (as hereinafter defined) all of
such Seller's right, title and interest in and to such Seller's MCAP Shares.
1.2. Payment of Purchase Price. The aggregate purchase price of the
aforesaid sale of the MCAP Shares owned by all the Sellers ("Aggregate Purchase
Price") shall be (i) One Hundred Twenty-Four Thousand dollars ($124,000.00),
(One Hundred dollars ($100.00) per MCAP Share), payable on the Closing Date by
certified checks or by wire transfers of immediately available funds, and (ii)
the aggregate principal amount set forth on Schedule 1.2 of the Security
Associates International, Inc. 6.25% Subordinated Convertible Debentures (the
"Convertible Debentures"), in the form of Exhibit 1.2 hereto. That portion of
the Aggregate Purchase Price allocable and payable to each Seller is set forth
in Schedule 1.2.
1.3. Escrow.
1.3.1 Deposit in Escrow of Documents by Sellers. No later than one
(1) day prior to the Closing Date each Seller shall deposit in escrow (the
"Escrow") with Monitor Service Group, LLC as the escrow agent (the "Escrow
Agent"), pursuant to the escrow agreement attached as Exhibit 1.3.2 (the
"Escrow Agreement"), the following documents:
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(i) a stock certificate and a duly executed,
undated stock transfer power in the form of Exhibit 1.3.1A
representing such Seller's MCAP Shares (the "MCAP Certificate
and Stock Power") and evidencing the transfer of ownership
and legal title to such Seller's MCAP Shares to Purchaser;
(ii) a duly executed and undated power of attorney
in the form of Exhibit A; and
(iii) instructions from each Seller electing to
receive payment by wire transfer ("Wire Transfer
Instructions").
(iv) instructions from each Seller electing to
receive payment by certified check ("Certified Check
Instructions").
In addition, there shall be deposited in Escrow on behalf of all the
Sellers, the "MCAP Certificate" in the form of Exhibit 5.4.
1.3.2 Deposit in Escrow by Purchaser. On or before the Closing,
Purchaser shall deliver to the Escrow Agent (i) certified checks payable to
those Sellers electing to receive payment in the form of certified checks in
the amount set forth opposite each such Seller's name on Schedule 1.2 (the
"Seller Certified Checks") or, at the option of each Seller, immediately
available funds deposited to the account of the Escrow Agent or to the account
of such other person as the Escrow Agent may designate ("Escrow Deposit") in
the amount set forth opposite each such Seller's name on Schedule 1.2; and (ii)
the Convertible Debentures, issued to each of the Sellers in the principal
amount set forth on Schedule 1.2 opposite such Seller's name.
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1.3.3 The Escrow shall terminate and be of no further force or effect and
the documents specified in Section 1.3.1 shall be returned by the Escrow Agent
forthwith to the Sellers, if all of the items specified in Section 1.3.2 have
not been delivered to the Escrow Agent by Purchaser on or before the Closing
and any items theretofore delivered pursuant to Section 1.3.2 shall forthwith
be returned to Purchaser.
SECTION 2
Closing Date
2.1. Closing Date. The closing of the purchase and sale of the MCAP
Shares and the other transactions to be consummated hereunder shall be held at
the offices of the Purchaser's counsel at ______ p.m., local time on
__________, 1996 (the "Closing") or at such other time and place upon which the
Sellers and the Purchaser shall agree (the date of the Closing is hereinafter
referred to as the "Closing Date").
2.2. Delivery: Consideration. At the Closing, the Escrow Agent shall
deliver (i) to each Seller, each such Seller's Certified Check in the amount
set forth on Schedule 1.2 opposite each such Seller's name or at the option of
each Seller shall remit such amount by wire transfer in immediately available
funds to such Seller's account as specified in the Wire Transfer Instructions;
and (ii) the principal amount of Convertible Debentures to be issued to each
such Seller as set forth on Schedule 1.2; and (iii) to Purchaser, the MCAP
Certificates and Stock Powers and the Powers of Attorney of all the Sellers,
and the MCAP Certificate.
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SECTION 3
Representations and Warranties of Seller
Each Seller represents and warrants with respect to itself only, and not
with respect to any other Seller:
3.1. Organization and Standing: Articles and By-Laws. If Seller is a
corporation, or other governmentally sanctioned entity, such Seller is duly
organized and existing under, and by virtue of, the laws of the jurisdiction of
its formation and is in good standing under such laws. Seller has requisite
power and authority to own and operate its properties and assets, and to carry
on its business as presently conducted.
3.2. Power and Authority. Seller will have at all times prior to and on
the Closing Date all requisite legal power and authority necessary to execute
and deliver this agreement, to sell Seller's MCAP Shares to Purchaser, to grant
the Power of Attorney to MCAP Investors to execute the Seller's Release and to
deliver said documents to the Escrow Agent.
3.3. Authorization. All action on the part of Seller necessary for the
authorization, execution, delivery and performance of this Agreement and of the
documents specified in Section 1.3.1 to be executed by Seller has been taken or
will be taken prior to the Closing. This Agreement, and said documents, when
executed and delivered by Seller, shall constitute a valid and binding
obligation of Seller, enforceable in accordance with its terms.
3.4. Good Title to MCAP Shares. Seller has, and upon consummation of the
purchase and sale of such Seller's MCAP Shares as provided in this Agreement,
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Purchaser will obtain, good and marketable title to such Seller's MCAP Shares,
free and clear of any liens, charges, claims or encumbrances (other than those
that may result form Purchaser's actions); Seller has continuously owned its
MCAP Shares since they were issued in 1993 and will continue to own them until
the Closing; Seller owns no options, warrants, convertible instruments and is
entitled to no pre-emptive rights that would entitle Seller to acquire any
interest in Winnetka.
3.5. Brokers or Finders. Seller has not incurred and will not incur, as a
result of any action taken by Seller, any liability for brokerage or finders'
fees or agents' commissions or any similar charges in connection herewith.
3.6. Litigation. There are no actions, suits, proceedings or
investigations pending against Seller or its assets before any court or
governmental agency (nor, to the best of the Seller's knowledge, is there any
reasonable basis therefor).
3.7. Validity of Certain Documents. The documents specified in Section
1.3.1 to be executed by Seller will be valid and binding on Seller in
accordance with their terms upon their delivery to Purchaser, will accomplish
the purpose for which they are intended, and will have been duly authorized by
Seller and executed by the persons authorized by Seller to do so.
3.8. Compliance with Other Instruments. The execution, delivery and
performance of and compliance with this Agreement, and the sale to Purchaser of
Seller's MCAP Shares, will not result in any material violation of, or conflict
with, or constitute a material default under, the Articles or By-Laws (or other
organizational documents), if any, of Seller (if Seller is a corporation or
other governmentally sanctioned entity), or of
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any agreement of Seller, or result in the creation of any mortgage,
pledge, lien, encumbrance or charge upon Seller's MCAP Shares; and there is no
such violation or default which materially adversely affects the Seller.
3.9. Tax Matters. Seller has timely paid all taxes owed by it and is
unaware of any pending matter which would result in the assertion by any taxing
authority of any valid deficiency in any material amount for taxes due from
Seller.
3.10. Securities Laws Matters. The following representations and
warranties are made by Seller in connection with its acceptance of the
Convertible Debentures as part of the consideration for the sale of its MCAP
Shares to Purchaser:
3.10.1. The Seller has read the Risk Factors and the SAI Pro Forma
Financial Projections (collectively, the "Disclosure Documents") attached
hereto as Exhibit 3.10.1A and 3.10.1B and understands the risks presented by
its investment in the Purchaser, and understands and is familiar with the
business of the Purchaser and confirms that all documents, records and books
pertaining to the investment in the Convertible Debentures requested by it have
been made available.
3.10.2. Seller understands and acknowledges that the projections of future
performance contained in the Disclosure Documents may not in fact be achieved
because of many possible factors including, but not limited to, those included
in the Risk Factors, as well as future events that have not been anticipated by
Purchaser or its management.
3.10.3. Seller has had an opportunity to ask questions of and receive
answers from the Purchaser, its founders and managers or a person or persons
acting on their behalf, concerning the Disclosure Documents, the business of
the Purchaser and the
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terms and conditions of the Convertible Debentures and all such questions
have been answered to its satisfaction.
3.10.4. Seller understands that the Convertible Debentures have not
been registered under the Securities Act of 1933 (the "Act"), or any state
securities acts, and are being offered and sold in reliance on exemptions from
registration pursuant to Section 4(2) of the Act and/or Regulation D
promulgated under the Act, and applicable exemptions under pertinent state
securities acts.
3.10.5. The Convertible Debentures are being acquired solely for
Seller's own account for investment and are not being purchased with a view to
or for the resale, distribution, subdivision or fractionalization thereof and
Seller has no present plans to enter into any such contract, undertaking,
agreement or arrangement.
3.10.6. Seller acknowledges and is aware of the following:
(a) That the Purchaser has a very limited history of
operations; that there are competitors capable of serving
the market the Purchaser operates in, some of which have
greater financial and professional resources than does the
Purchaser; and that the Convertible Debentures are
speculative investments which involve a high degree of risk
of loss by the undersigned of his entire investment.
(b) That there are substantial restrictions on the
transferability of the Convertible Debentures, including a
restriction against transfer without registration under
federal and state securities laws or an
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exemption therefrom; the Seller has no rights to
require that the Convertible Debentures be registered
under the Act or any state securities laws; there will be
no public market for the Convertible Debentures; and the
Seller may have to hold the Convertible Debentures until
maturity and it may not be possible for the undersigned to
liquidate his investment in the Purchaser.
SECTION 4
Representations and Warranties of Purchaser
4.1. Organization and Standing; Articles and By-Laws. Purchaser is a
corporation duly organized and existing under, and by virtue of, the laws of
the State of Delaware and is in good standing under such laws. Purchaser has
the requisite corporate power and authority to own and operate its properties
and assets, and to carry on its business as presently conducted and as proposed
to be conducted.
4.2. Corporate Power. Purchaser will have at the Closing Date all
requisite power and authority to execute and deliver this Agreement, to
purchase the MCAP Shares and to carry out and perform its obligations under the
terms of this Agreement.
4.3. Authorization. All action on the part of Purchaser necessary for the
authorization, execution, delivery and performance of this Agreement by
Purchaser has been taken or will be taken prior to the Closing. This
Agreement, when executed and
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delivered by Purchaser, shall constitute a valid and binding obligation of
Purchaser, enforceable in accordance with its terms.
SECTION 5
Purchaser's Conditions to Closing
Purchaser's obligation to purchase the MCAP Shares and to perform its
other obligations hereunder are subject to the fulfillment of the following
conditions, the waiver of which shall not be effective unless it is provided in
writing:
5.1. Correctness of Representations and Warranties. The representations
and warranties made by each Seller in Section 3 hereof shall be true and
correct when made and shall be true and correct on the Closing Date.
5.2. Covenants. All covenants, agreements and conditions contained in
this Agreement to be performed by each Seller on or prior to the Closing Date
shall have been performed or complied with in all material respects, including
but not limited to the establishment of the Escrow pursuant to Section 1.3 and
the delivery to the Escrow Agent by Seller of all the documents specified in
Section 1.3.1 on or before the date therein specified.
5.3. Consummation of Related Transactions. On or before the Closing Date,
all of the transactions contemplated by that certain Security Associates
International, Inc. Common Stock Subscription and Purchase Agreement, dated
__________, 1996, among Security Associates International, Inc., TJS Partners
and the Security Associates International, Inc., Purchase of Stock of Winnetka
Investors, Inc. Agreement, dated ___________, 1996, shall have been
consummated.
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5.4. MCAP Certificate. Purchaser shall have received at or prior to the
Closing a certificate from MCAP, in the form of Exhibit 5.4 ( the "MCAP
Certificate").
SECTION 6
Sellers' Conditions to Closing
Sellers' obligation to sell the MCAP Shares to Purchaser and to perform
their other obligations hereunder is subject to the fulfillment as of the
Closing Date of the following conditions, the waiver of which shall not be
effective unless it is provided in writing.
6.1. Representations. The representations made by the Purchaser in
Section 4 hereof shall be true and correct when made, and shall be true and
correct on the Closing Date.
6.2. Covenants. All covenants, agreements and conditions contained in
this Agreement to be performed by Purchaser on or prior to the Closing Date
shall have been performed or complied with in all material respects, including
but not limited to the establishment of the Escrow pursuant to Section 1.3 and
the delivery to the Escrow Agent by Purchaser of the items specified in Section
1.3.2 or before the date therein specified.
6.3. Legal Matters. All material matters of a legal nature which pertain
to this Agreement, and the transactions contemplated hereby, shall have been
reasonably approved by counsel to each of the Sellers.
6.4. Consummation of Related Transactions. On or before the Closing Date,
all of the transactions contemplated by that certain Security Associates
International, Inc.
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Common Stock Subscription and Purchase Agreement, dated ___________, 1996,
among Seller and TJS Partners shall have been consummated.
SECTION 7
Affirmative Covenants of Sellers
Each of the Sellers hereby covenants and agrees as follows:
7.1. Assistance from Sellers in Transferring Seller's MCAP Shares to
Purchaser. Each Seller shall after the Closing take all action reasonably
requested by Purchaser to assist Purchaser in obtaining good title to and
ownership of such Seller's MCAP Shares. Sellers shall provide Purchaser with
such corporate filings and other corporate documents as Purchaser may
reasonably request.
SECTION 8
Miscellaneous
8.1. Governing Law. This Agreement shall be governed in all respects by
the laws of the State of Illinois, excluding its conflicts of laws rules.
8.2. Survival. The representations and warranties, covenants and
agreements made herein shall survive this Agreement and the closing of the
transactions contemplated hereby.
8.3. Successors and Assigns. Except as otherwise provided herein, the
provisions hereof shall be binding upon the successors, assigns, heirs,
executors and
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administrators of the parties hereto. Neither the Sellers nor the
Purchaser may assign its (his/her) obligations hereunder without the written
consent of the other party.
8.4. Entire Agreement: Amendment. This Agreement and the other
documents delivered pursuant hereto on or before the Closing constitute the
full and entire understanding and agreement between the parties with regard to
the subject matters hereof and thereof, and no party shall be liable or bound
to any other party in any manner by any warranties, representations or
covenants except as specifically set forth herein or therein. Except as
expressly provided herein, neither this Agreement nor any term hereof may be
amended, waived, discharged or terminated other than by a written instrument
signed by the party against whom enforcement of any such amendment, waiver,
discharge or termination is sought.
8.5. Notices, etc. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by registered or
certified mail, postage prepaid, or otherwise delivered by hand or by
messenger, if to Purchaser, at Xxxxx X. Xxxxxxx, President, Security Associates
International, Inc., 0000 X. Xxxxxxxxx Xxxxxxx Xxxx, Xxxxxxxxx Xxxxxxx,
Xxxxxxxx 00000-0000, or at such other address Purchaser shall have furnished to
the Sellers in writing; or if to Sellers, at Xxxxxxx X. Xxxxxxx, 00 Xxxxxxx
Xx., Xxxxxxxx, Xxxxxxxx, or at such other address that any of the Sellers shall
have furnished to Purchaser in writing. Each such notice or other communication
shall for all purposes of this Agreement be treated as effective or having been
given when delivered if delivered personally, or if sent by mail, at the
earlier of its receipt or seventy-
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two (72) hours after the same has been deposited in a regularly
maintained receptacle for the deposit of the United States mail, addressed and
mailed as aforesaid.
8.6. Counterparts. This Agreement may be executed in one or more
identical counterparts each of which shall be enforceable against the parties
actually executing such counterparts and all of which shall together constitute
one instrument.
8.7. Delays or Omissions. Except as expressly provided herein, no delay
or omission to exercise any right, power or remedy accruing to either party
hereunder upon any breach or default by either party under this Agreement,
shall impair any such right, power or remedy of the party not in default nor
shall it be construed to be a waiver of any such breach or default, or an
acquiescence therein, or of or in any similar breach or default be deemed a
waiver of any other breach or default theretofore or thereafter occurring. Any
waiver, permit, consent or approval of any kind or character on the part of
either party of any breach or default of the other party under this Agreement,
or any waiver on the part of either party of any provisions or conditions of
this Agreement, must be in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this
Agreement or by law or otherwise afforded to any holder, shall be cumulative
and not alternative.
8.8. Expenses. The Sellers and the Purchaser shall each bear their own
expenses, including their own legal fees, incurred on their behalf with respect
to this Agreement and the transactions contemplated hereby.
8.9. Severability. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void,
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this Agreement shall continue in full force and effect without said provision;
provided that no such severability shall be effective if it materially changes
the economic benefit of this Agreement to either party.
8.10. Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not considered in construing or
interpreting this Agreement.
8.11. Exclusive Jurisdiction of Courts in Illinois. Each of the parties
hereto agrees to submit to the exclusive jurisdiction of the federal or state
courts in the state of Illinois and consents to service of process with respect
to all such courts by registered mail to it at its addresses set forth herein.
8.12. Waiver of Jury Trial. The Parties hereby expressly waive any right
they may have to a jury trial in any suit, action or proceeding existing under
or relating to this Agreement or any of the other related documents.
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The foregoing Agreement is hereby executed as of the first day written
above.
SELLERS:
Xxxxxx Xxxxx
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------
Xxxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxxxx
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------
Xxxxxxx X. Xxxxxxx
Xxxxxx Xxxxxx
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------
Xxxxxxx X. Xxxxxxx
Xxxxxxxx X. Small
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------
Xxxxxxx X. Xxxxxxx
Inversiones Xxxxxxxx, C.A.
By: MCAP Investors, Inc.
Attorney-in-fact
By: /s/ Xxxx X. Xxxxxxx
------------------------
Xxxx X. Xxxxxxx,
President
Inversiones Alanje, C.A.
By: MCAP Investors, Inc.
Attorney-in-fact
By: /s/ Xxxx X. Xxxxxxx
------------------------
Xxxx X. Xxxxxxx,
President
Inversiones Erlanger, C.A.
By: MCAP Investors, Inc.
Attorney-in-fact
By: /s/ Xxxx X. Xxxxxxx
------------------------
Xxxx X. Xxxxxxx,
President
PURCHASER:
SECURITY ASSOCIATES INTERNATIONAL, INC.
By: /s/ Xxxxx X. Xxxxxxx
------------------------
Name: Xxxxx X. Xxxxxxx
Title: President
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