SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
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Date of Report (Date of earliest event reported): March 9, 1998
GUARDIAN INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
NEVADA 0-28490 58-1799634
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
3880 N. 28TH TERRACE
HOLLYWOOD, FLORIDA 33020-1118
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (954) 926-5200
NOT APPLICABLE
(Former name or former address, if changed since last report)
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FORWARD-LOOKING STATEMENTS. In connection with the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995 (the "Reform Act"), the Company
is hereby providing cautionary statements identifying important factors that
could cause the Company's actual results to differ materially from those
projected in forward-looking statements (as such term is defined in the Reform
Act) made by or on behalf of the Company herein or orally, whether in
presentations, in response to questions or otherwise. Any statements that
express, or involve discussions as to, expectations, beliefs, plans, objectives,
assumptions or future events or performance (often, but not always, identified
through the use of words or phrases such as the Company or management
"believes," "expects," "anticipates," "hopes," words or phrases such as "will
result," "are expected to," "will continue," "is anticipated,"
"estimated,""projection" and "outlook," and words of similar import) are not
historical facts and may be forward-looking.
Such forward-looking statements involve estimates, assumptions, and
uncertainties, and, accordingly, actual results could differ materially from the
those expressed in the forward-looking statements. Such uncertainties include,
among others, the following: (i) the ability of the Company to add additional
customer accounts to its account base through acquisitions from third parties,
to generate new accounts internally and to form strategic alliances; (ii) the
level of subscriber attrition, (iii) the availability of capital to the Company
relative to certain larger companies in the security alarm industry which have
significantly greater capital and resources, and (iv) increased false alarm
fines and/or the possibility of reduced public response to alarm signals and (v)
other risk factors described in the Company's reports filed with the Securities
and Exchange Commission (the "SEC") from time to time.
The Company cautions that the factors described above could cause actual results
or outcomes to differ materially from those expressed in any forward-looking
statements made by or on behalf of the Company. Any forward-looking statement
speaks only as of the date on which such statement is made, and the Company
undertakes no obligation to update any forward-looking statement or statements
to reflect events or circumstances after the date on which such statement is
made or to reflect the occurrence of unanticipated events. New factors emerge
from time to time, and it is not possible for management to predict all of such
factors. Further, management cannot assess the impact of each such factor on the
business or the extent to which any factor, or combination of factors, may cause
actual results to differ materially from those contained in any forward-looking
statements.
ITEM 5. OTHER EVENTS.
Guardian International, Inc., a Nevada corporation, ("Guardian"), announced the
acquisition on March 9, 1998, of all the assets of Gator Telecom, Inc., a
Florida corporation ("Gator"), for $1.4 million in cash and approximately 95,000
shares of restricted Guardian Class A Voting Common Stock, par value $.001 per
share. Guardian funded the cash portion of the acquisition by using its existing
credit facility, as amended, with Heller Financial, Inc. Guardian purchased
Gator from Dan Lawrence and Cindy Lawrence, sole shareholders of Gator.
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Gator provides security installation, monitoring, structured wiring, and home
automation to over 125 active residential builders in the Tampa Bay area. The
company was founded in 1981.
Guardian will continue to operate Gator from its 5,000 square foot service
facility in Tampa. Dan Lawrence has been named Guardian's Central Florida
Regional Manager and will also oversee service for Guardian's pre-existing 1,500
Tampa customers that are presently serviced by dealers.
The acquisition, which included a significant number of corporate assets such as
accounts receivable, inventory, vehicles, and other fixed assets, will also add
1,800 monitored subscribers to Guardian's current monthly recurring income
("MRI") base and increase MRI by more than $37,000.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
EXHIBITS
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10(a) Asset Purchase Agreement
10(b) Warranty Bill of Sale
10(c) Assignment and Assumption Agreement
10(d) Guaranty Agreement
10(e) Escrow Agreement
10(f) Employment Agreement
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: March 23, 1998 Guardian International, Inc.
/s/ RICHARD GINSBURG
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Richard Ginsburg
President and Chief Executive Officer
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EXHIBIT INDEX
10(a) Asset Purchase Agreement
10(b) Warranty Bill of Sale
10(c) Assignment and Assumption Agreement
10(d) Guaranty Agreement
10(e) Escrow Agreement
10(f) Employment Agreement
Exhibit 10(a)
ASSET PURCHASE AGREEMENT
By and Among
GUARDIAN INTERNATIONAL, INC.,
a Nevada corporation, as Buyer,
GATOR TELECOM, INC.
a Florida corporation, as Seller,
and
Dan Lawrence and Cindy Lawrence,
Florida residents, in their
capacity as the sole Shareholders of Seller
March 9, 1998
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "AGREEMENT") is effective as of
March 9, 1998 by and among Guardian International, Inc., a Nevada corporation
("BUYER"), Gator Telecom, Inc., a Florida corporation ("Seller"), and Dan
Lawrence and Cindy Lawrence, Florida residents (collectively, "SHAREHOLDERS").
Buyer, Seller and Shareholders are sometimes referred to individually herein as
a "PARTY" and collectively herein as the "PARTIES."
Seller provides burglar alarm, fire alarm, closed circuit television
and electronic access and control and central station monitoring services to
residential and commercial customers. Buyer desires to purchase, and Seller
desires to sell, substantially all of the assets of the Seller on the terms and
subject to the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties hereby agree as follows:
ARTICLE 1 - DEFINITIONS
"ACCOUNTS RECEIVABLE" means all accounts receivable of Seller relating
to the Alarm Service Assets (as hereinafter defined), including, without
limitation, all trade, billed, unbilled, and miscellaneous accounts receivable,
evidencing or representing indebtedness or obligations due to the Seller
relating to the Alarm Service Assets, or rights to payment in existence for or
on account of goods or other properties sold, licensed or leased or for services
rendered by the Seller in the operation of the Alarm Service Assets, all sums of
money or other proceeds due thereon, all customer guarantees and security with
respect thereto, including, but not limited to, the right of stoppage in
transit, replevin and reclamation, together with all right, title and interest
of the Seller in and to all instruments, agreements and documents covering or
relating to any of the foregoing, and all rights, remedies and claims of the
Seller under, or in respect of, any of the foregoing.
"ALARM SERVICE ASSETS" means the assets, operations and activities of
the Seller as conducted on the date hereof, pursuant to which the Seller
provides Services (as hereinafter defined).
"BASIS" means any past or present fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction that forms or could form the basis for
any specified consequence.
"CLOSING" has the meaning set forth in Section 2.7 below.
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"CODE" means the Internal Revenue Code of 1986, as amended, and all
rules and regulations promulgated thereunder.
"CONFIDENTIALITY AGREEMENT" means that certain Nondisclosure Agreement,
dated as of August 21, 1997, between Buyer and Seller.
"COVERED PERSON" means, collectively, Buyer, its affiliates, and their
respective accounting and legal representatives, as well as their respective
officers, directors, shareholders, employees and agents.
"CUSTOMER CONTRACT" means any contract, agreement, commitment or
arrangement between Seller and any of its customers with respect to the
provision of Services which is listed on the Customer Contract Schedule attached
hereto.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and all rules and regulations promulgated thereunder.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time, consistently applied.
"INDEBTEDNESS" of any entity means all obligations of such entity which
in accordance with GAAP should be classified upon a balance sheet as liabilities
of such entity, and in any event, regardless of how classified in accordance
with GAAP, shall include, without limitation or duplication: (i) all obligations
of such entity for borrowed money or which has been incurred in connection with
the acquisition of property, assets or services, (ii) obligations secured by any
lien or other charge upon property or assets owned by such entity, even though
such entity has not assumed or become liable for the payment of such
obligations, (iii) obligations created or arising under any conditional sale or
other title retention agreement with respect to property acquired by such
entity, whether or not the rights and remedies of the Seller, lender or lessor
under such agreement in the event of default are limited to repossession or sale
of the property, and (iv) capitalized rentals under any capitalized lease (as
defined under GAAP).
"INTELLECTUAL PROPERTY" means all (i) patents, patent applications,
patent disclosures, and improvements thereto, (ii) trademarks, service marks,
trade dress, logos, trade names, and corporate names and registrations and
applications for registration therefor, (iii) copyrights and registrations and
applications for registration thereof, (iv) mask works and registrations and
applications for registration thereof, (v) web sites, computer software, data
and documentation including, without limitation, ownership or rights to use,
source code and object code, (vi) trade secrets and confidential business
information (including ideas, formulas, compositions, inventions (whether
patentable or unpatentable and whether or not reduced to practice), know-how,
research and development information, software products in development,
drawings, specifications, designs, plans, proposals, technical data,
copyrightable works, financial (excluding employee benefit plans), marketing,
and business data, pricing and cost information,
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business and marketing plans, and customer and supplier lists and information),
and (vii) copies and tangible embodiments thereof (in whatever form or medium).
"KNOWLEDGE" or any variant thereof, means the actual knowledge of a
person, together with whatever knowledge a reasonable person under similar
circumstances would have had after reasonable investigation and inquiry.
References herein to Seller's Knowledge, or any variant thereof, shall include
any Knowledge of the Shareholders. In the case of a statutory interpretation, a
Party shall not be deemed to having knowingly violated such statute if the act
or omission ultimately determined to have been in violation of such statute did
not, at the time taken or omitted, violate any outstanding judicial or
administrative order, ruling or regulation with respect to such statute.
"LIABILITY" means any liability (whether known or unknown, whether
absolute or contingent, whether accrued or unaccrued, whether liquidated or
unliquidated, and whether due or to become due), including any liability for
Taxes (as hereinafter defined).
"LOSS" means any damage (including, but not limited to, consequential
damages and punitive damages) obligation, payment, cost, expense, injury,
judgment, penalty, fine, interest, or other loss (including, but not limited to,
the cost and expense of defending or prosecuting any and all charges, claims,
complaints, actions, demands, assessments, litigation, proceedings, hearings,
investigations, notices, judgments, orders, decrees and settlements relating
thereto, expenses of preparation and investigation thereof and attorneys',
experts', consultants' and accountants' fees in connection therewith).
"MATERIAL ADVERSE CHANGE" means any change, event or occurrence which
has, or could reasonably be expected to have, a material adverse effect upon the
assets, business, operations, financial condition or prospects of the Seller or
the Alarm Service Assets.
"ORDINARY COURSE OF BUSINESS" means the ordinary course of business of
the Seller consistent with past custom and practice of the Seller (including
with respect to quantity and frequency).
"PASS THROUGH CHARGES" shall mean direct connect phone line expense;
cellular phone back-up service expense; direct inward dial telephone line
expense; third party municipal monitoring expense; back-up radio expense,
commissions to municipalities; and any other charges that are not of a regular
and recurring nature.
"PERSON" means an individual, a partnership, a corporation, an
association, a limited liability company, a joint stock company, a trust, a
joint venture, an unincorporated organization, a governmental entity or any
department, agency or political subdivision thereof or any other entity.
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"QUALIFIED MRI" means (a) the total monthly recurring income ("MRI")
billed to the alarm system customers by Seller under written and fully executed
Customer Contracts for the provision of Services with original terms of not less
than one year containing annual renewal provisions calculated as of the Closing
Date, including Customer Contracts whose initial billing commences after the
Closing Date and that provide for not more than 12 months of monitoring at no
charge, that meet the following criteria: (i) as of the Closing Date, the
account does not have a receivable balance in excess of 90 days past due as of
the applicable Service Date for such account, and (ii) as of or prior to the
Closing Date, the account has not cancelled or provided notice of cancellation
(whether orally or in writing), and the Seller has no Knowledge that the account
will be cancelled prior, at, or subsequent to the Closing Date, LESS (b) all
Pass Through Charges associated with all Customer Contracts which meet the
criteria outlined in clauses (i) and (ii) above.
"SECURITY INTEREST" means any lien, claim, mortgage, pledge, security
interest, charge or other encumbrance of any nature.
"SERVICE DATE" means the first day of any calendar month in which
Services are provided.
"SERVICES" means burglar alarm services, fire alarm services, closed
circuit television and electronic access control services, all central station
monitoring services, maintenance services, leases, fire testing and all other
services provided to commercial, residential and other customers of the Seller.
"TAX" or "TAXES" means any federal, state, local, or foreign income,
gross receipts, license, payroll, employment, excise, communications, severance,
stamp, occupation, premium, windfall profits, environmental (including taxes
under Code Section 59A), customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability, real
property, personal property, sales, use, transaction, transfer, registration,
value added, alternative or add-on minimum, estimated, or other tax of any kind
whatsoever, including any interest, penalty, or addition thereto, whether
disputed or not.
"TAX RETURN" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
ARTICLE 2 - THE TRANSACTION
2.1 ACQUIRED ASSETS. On and subject to the terms and
conditions of this Agreement at the Closing, Buyer shall purchase from Seller,
and Seller shall sell, transfer, convey and deliver to Buyer, free and clear of
all Security Interests, all of Seller's right, title and interest in and to all
of the Alarm Service Assets set forth on the ACQUIRED ASSETS SCHEDULE, together
with all of the other Alarm Service Assets other than the Excluded Assets (as
defined in
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Section 2.2). Except to the extent that they constitute Excluded Assets, the
Acquired Assets shall include, without limitation, all of Seller's right, title
and interest in the following assets:
(a) prepaid costs and prepaid expenses listed on the ACQUIRED
ASSETS SCHEDULE attached hereto;
(b) raw materials and supplies, manufactured and purchased
parts (including without limitation motion, smoke and heat detectors and alarm
control panels and wiring, whether or not held on Seller's premises, its
customers' premises or elsewhere), work- in-process, finished goods, spare parts
and other items of inventory including, without limitation, the inventory listed
on the ACQUIRED ASSETS SCHEDULE attached hereto (the "Inventory");
(c) machinery, equipment, furniture and other tangible
personal property including, without limitation, that listed on the ACQUIRED
ASSETS SCHEDULE, attached hereto;
(d) Intellectual Property, any goodwill associated therewith,
licenses and sublicenses granted and obtained with respect thereto (including,
without limitation, any and all other proprietary software developed by or for
Seller for use in connection with the Alarm Service Assets) to the extent
permitted the licenses and sublicenses granted and obtained by Seller with
respect to the Intellectual Property, and rights thereunder, remedies against
infringements thereof, and rights to protection of interests therein under the
laws of all jurisdictions; the name "Gator Telecom, Inc." and all other trade
names, trade dress, and logos as more fully described on the INTELLECTUAL
PROPERTY SCHEDULE attached hereto.
(e) Customer Contracts;
(f) rights under agreements, contracts, purchase orders,
commitments, contractual rights and other similar arrangements that are set
forth on the ASSUMED CONTRACTS SCHEDULE attached hereto (the "ASSUMED
CONTRACTS");
(g) all claims, refunds, rights of recovery, rights of set off
and rights of recoupment of any kind arising out of the Alarm Service Assets
from and after the Closing Date;
(h) all franchises, approvals, permits, licenses, orders,
registrations, certifi cates, variances and similar rights obtained from
governments and governmental agencies to the extent transferable to Buyer
relating to the Alarm Service Assets;
(i) rights to the following telephone numbers for Hillsborough
County, Florida: line 1 - (813) 874-7474; line 2 - (813) 876-9796; line 3 -
(813) 870-1401; line 4 - (813) 876-1562; line 5 - (813) 873-1814; fax - (813)
870-1522; toll free - (800) 329-5647, and any other telephone number(s) used in
the operation of the Alarm Service Assets; and rights to receive mail and other
communications addressed to Seller regarding the Alarm Service Assets
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(including mail and communications from customers, suppliers, distributors,
agents and others and payments regarding the Alarm Service Assets);
(j) books, records, ledgers, files, documents, correspondence,
lists, drawings, specifications, advertising and promotional materials, studies,
reports and other printed or written materials regarding the Alarm Service
Assets; and
(k) all Accounts Receivable.
2.2 EXCLUDED ASSETS. Notwithstanding the foregoing, the
Acquired Assets shall not include the following assets of Seller (collectively,
the "EXCLUDED ASSETS"):
(a) those assets set forth on the EXCLUDED ASSETS SCHEDULE
attached hereto;
(b) all rights to receive mail and other communications
addressed to Seller relating to any of the Excluded Assets or the Excluded
Liabilities, or any matter other than the Alarm Service Assets;
(c) all contracts and agreements other than Customer Contracts
and Assumed Contracts;
(d) cash and cash equivalents as of March 6, 1998;
(e) prepaid costs and prepaid expenses not listed on the
Acquired Assets Schedule;
(f) Seller's and Shareholders' interest in this Agreement and
any proceeds to be paid to the Seller pursuant to the transactions contemplated
by this Agreement;
(g) all claims for refunds, rights of recovery, rights of
setoff and rights of recoupment, except to the extent they relate directly to
the Acquired Assets of the Assumed Liabilities (as hereinafter defined); and
(h) any loans made by Seller to its employees or the
Shareholders, whether or not reflected on the books and records of the Seller.
2.3 ASSUMED LIABILITIES. On and subject to the terms and
conditions of this Agreement, Buyer shall assume, solely and exclusively, the
obligations and liabilities of Seller (including obligations and liabilities
arising in connection with warranties extended by Seller in the Normal Course of
Business in connection with the installation of alarm systems and maintenance of
alarm systems) with respect to the Assumed Contracts and Customer Contracts
(excluding liabilities arising by reason of any breach or alleged breach by
Seller under any
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Assumed Contract or Customer Contract on any Basis prior to the Closing Date
(regardless of when any such liability is asserted)) (collectively, the "ASSUMED
LIABILITIES").
2.4 EXCLUDED LIABILITIES. Notwithstanding anything to the
contrary contained in this Agreement, Buyer shall not assume nor be liable for
any Liability of Seller, the Alarm Service Assets or the Shareholders other than
the Assumed Liabilities (collectively, the "EXCLUDED LIABILITIES") and, without
limiting the generality of the foregoing, each of the following liabilities or
obligations shall be Excluded Liabilities for purposes of this Agreement:
(a) all of Seller's and Shareholders' liabilities and
obligations in connection with the transactions contemplated by this Agreement;
(b) all of Seller's and Shareholders' liabilities and
obligations for expenses, Taxes or fees incident to or arising out of the
negotiation, preparation, approval or authorization of this Agreement or the
consummation (or preparation for the consummation) of the transactions
contemplated hereby (including, without limitation, all attorneys' and
accountants' fees and brokerage fees);
(c) all of Seller's and Shareholders' liabilities and
obligations with respect to any income Taxes or with respect to any other Taxes
for any period;
(d) all of Seller's and Shareholders' liabilities and
obligations (i) arising by reason of any violation or alleged violation of any
federal, state, local or foreign statute, law, rule or regulation or any
requirement of any governmental authority, or (ii) arising by reason of any
breach or alleged breach by Seller of any agreement, contract, lease, license,
commitment, instrument, judgment, order or decree (regardless of when any such
liability or obligation is asserted and regardless of whether any such liability
arises under any Assumed Contract or Customer Contract);
(e) all liabilities and obligations under any Assumed
Contracts and Customer Contracts for product or service liability occurrences
with respect to products manufactured or services rendered on or prior to the
Closing Date;
(f) all of Seller's liabilities and obligations, if any, which
Buyer may become liable for as a result of or in connection with the failure by
Buyer or Seller to comply with any bulk sales or transfer laws;
(g) all of Seller's liabilities and obligations relating to
legal actions and proceedings arising out of or in connection with Seller's
conduct of its business (including its operation of the Alarm Service Assets),
any other conduct of Seller and any conduct of Seller's officers, directors,
shareholders, employees, consultants, agents or advisors as of or prior to the
Closing Date, whether or not disclosed on the Schedules hereto;
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(h) all of Seller's liabilities and obligations under any Plan
(as defined in Section 3.1(1)) including, without limitation, severance and
stay-thru bonus arrangements, or for workers' compensation claims, health care
claims or similar claims;
(i) all other liabilities and obligations of Seller not
expressly assumed by Buyer under Section 2.3 (including liabilities and
obligations arising out of transactions entered into at or prior to the Closing,
action and inaction at or prior to the Closing and any state of facts existing
at or prior to the Closing, regardless of when asserted).
Seller hereby acknowledges that it is retaining the Excluded Liabilities and
Seller shall have the sole responsibility to pay, discharge and perform all
liabilities and obligations relating to the Excluded Liabilities promptly when
due. For purposes of this Section 2.4, references to the Seller shall be deemed
to include the Shareholders as well.
2.5 PURCHASE PRICE; ALLOCATION SCHEDULE.
(a) The aggregate purchase price (the "PURCHASE PRICE") for
the Acquired Assets is $1,700,000 and the other covenants, agreements and
conditions contained herein, payable to Seller as follows: $1,400,000 in
immediately available funds at Closing and 94,937 shares (the "Escrow Shares")
of Class A Common Stock of Buyer, par value $.001 per share (the "Common
Stock"), to be held in escrow pursuant to an Escrow Agreement in the form of
EXHIBIT A-6 until the first anniversary of the Closing Date subject to the terms
of Section 2.6.
(b) For all purposes (including, without limitation,
financial, accounting and Tax purposes), the Parties agree to allocate the
Purchase Price (including the Assumed Liabilities) among the Acquired Assets
identified on the PRICE ALLOCATION SCHEDULE in accordance with the PRICE
ALLOCATION SCHEDULE. Buyer and Seller shall each promptly file Form 8594,
prepared in accordance with this Section 2.5(d), with its federal income Tax
Return for its tax period including the Closing Date. The Parties shall work
together to agree upon the PRICE ALLOCATION SCHEDULE prior to the Closing and
Seller and the Shareholders shall not unreasonably withhold their consent to any
PRICE ALLOCATION SCHEDULE proposed by Buyer. All allocations made pursuant to
this Section 2.5(d) shall be binding upon the Parties and upon each of their
successors and assigns, and the Parties shall report the transaction herein in
accordance with such allocations.
2.6 GUARANTEE.
(a) The Escrow Shares shall be paid to Seller no later than 30
days after the first anniversary of the Closing Date (the "ANNIVERSARY DATE"),
subject to the following adjustments:
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(i) If the Anniversary MRI (as defined in
Section 2.6(c) below) is greater than the
Closing MRI, Buyer shall pay the full number
of Escrow Shares to Seller.
(ii) If the Anniversary MRI is less than the
Closing MRI and the difference of the
Closing MRI less Anniversary MRI is greater
than $7,700, no Escrow Shares shall be
payable to Seller.
(iii) If the difference between the Closing MRI
and the Anniversary MRI is greater than $0
but less than $7,700, the difference shall
be subtracted from $7,700, the resulting
value shall be divided by $7,700 and the
quotient shall be multiplied by the number
of Escrow Shares, the product of which shall
be the number of Escrow Shares to be
retained by Buyer (the "Retained Shares").
Buyer shall pay to Seller the number of
Escrow Shares equal to the difference
between the Escrow Shares and the Retained
Shares.
(b) REDUCTION IN ESCROW SHARES. In all cases, the number of
Escrow Shares due Seller under this Section shall be reduced by the amount of
all fines and other sums due to Seller's customers (collectively, "Fines") that
are paid by Buyer with respect to Seller's operation of the business on or
before the Closing Date. The number of Escrow Shares to be retained by Buyer
pursuant to this subsection shall be determined by dividing the Fines by the
average closing price for the Common Stock for the five trading days prior to
the date on which Buyer pays such Fines.
(c) ANNIVERSARY MRI. Anniversary MRI shall include all
Qualified MRI from Customer Contracts in force prior to and as of the Closing
Date and all Qualified MRI from Customer Contracts created during the 12 months
after the Closing Date from Seller's customers or referrals or from Seller's
employees who become Buyer's employees or representatives. Anniversary MRI shall
not include MRI acquired via acquisitions or Qualified MRI for which the
associated system installation revenue is less than the direct equipment and
labor costs of the system installation unless costs exceed revenue as a result
of sales promotions conducted by Buyer.
(d) VOLUME RESTRICTION ON SALE OF ESCROW SHARES. For the eight
calendar quarters following the Anniversary Date, neither Seller nor any
Permitted Transferee (as defined below) of Seller shall sell more than 11,867
shares (the "Volume Cap") of the Escrow Shares in any single calendar quarter.
In the event Transfers (as defined below) in any calendar quarter exceed the
Volume Cap, such Transfers shall be null and void and Buyer shall not record
such Transfer on its books or treat any purported Transferee (as defined below)
of such Escrow Shares as the owner of such Escrow Shares for any purpose. The
restrictions set forth in this subsection shall not restrict any Transfer of
Escrow Shares by a Seller or a Shareholder pursuant to applicable laws of
descent and distribution or among his Family Group (as defined below).
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(e) TRANSFER RESTRICTIONS ON ESCROW SHARES. The Seller shall
not transfer, assign, pledge or otherwise dispose of (whether with or without
consideration and whether voluntarily or involuntarily) any interest in the
Escrow Shares to a third party ("Transfer"), except in compliance with this
subsection and any other restrictions on Transfer contained in this Agreement.
(i) FIRST OFFER RIGHT OF BUYER. At least 15 days
prior to effecting any sale (a "Private
Sale") of the Escrow Shares other than to
the public pursuant to an offering
registered under the Securities Act of 1933,
as amended (the "Securities Act"), or to the
public through a broker, dealer or market
maker pursuant to the provisions of Rule 144
promulgated under the Securities Act of any
Escrow Shares to a third party, the Seller
(the "Transferring Shareholder") shall
deliver a written notice (an "Offer Notice")
to the President of Buyer who shall forward
it to an independent committee established
by the Board of Directors of Buyer (a
"Committee"). The Offer Notice shall
disclose in reasonable detail the proposed
number of Escrow Shares to be transferred,
the proposed terms and conditions of the
Transfer and the identity of the prospective
transferee(s) (if known). Buyer may, by
recommendation of the Committee, elect to
purchase all, but not less than all, of the
number of Escrow Shares specified in the
Offer Notice at the price and on the terms
specified therein by delivering written
notice of such election to the Transferring
Shareholder as soon as practicable but in
any event within 15 days after the delivery
of the Offer Notice (the "Election Period").
(ii) TRANSFERS TO THIRD PARTIES. If Buyer has not
elected to purchase all of such Escrow
Shares being offered in the Offer Notice,
the Transferring Shareholder may, within 90
days after the expiration of the Election
Period, Transfer all such Escrow Shares to
one or more third parties at a price not
less than 100% of the price offered to Buyer
and on other terms no more favorable to the
transferee(s) thereof than offered to Buyer
in the Offer Notice. Any Escrow Shares not
transferred within such 90-day period shall
be re- offered to Buyer under this
subsection prior to any subsequent Transfer.
(iii) PURCHASE PRICE. The purchase price specified
in any Offer Notice shall be payable solely
in cash at the closing of the transaction
or, if provided in the Offer Notice, in
installments over time.
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(iv) PERMITTED TRANSFERS. The restrictions set
forth in this subsection shall not apply
with respect to any Transfer of Escrow
Shares by the Seller to the Shareholders or
by the Shareholders pursuant to applicable
laws of descent and distribution or among
the Shareholders' Family Group ("Permitted
Transferees"). For purposes of this
Agreement, "Family Group" means an
individual's spouse and descendants (whether
natural or adopted) and spouses of
descendants and any trust, family limited
partnership or similar entity solely for the
benefit of the individual and/or the
individual's spouse and/or descendants
and/or spouses of their descendants.
(f) RESTRICTIVE LEGEND. Each certificate evidencing the Escrow
Shares and each certificate issued in exchange for or upon the Transfer of any
such securities (a "Certificate" or "Certificates") shall be stamped or
otherwise imprinted with a legend in substantially the following form (the
"Restrictive Legend"):
Some or all of the securities represented by this
certificate may be subject to transfer restrictions
and/or certain other restrictions and obligations set
forth in an Asset Purchase Agreement effective as of
March 9, 1998 by and among the issuer of such
securities (the "Company"), Gator Telecom, Inc., and
the shareholders of Gator Telecom, Inc. (the "Asset
Purchase Agreement"). A copy of the Asset Purchase
Agreement shall be furnished without charge by the
Company to the holder hereof upon written request to
the Company at its principal executive office.
Buyer shall imprint the Restrictive Legend on Certificates outstanding as of the
Closing Date, in addition to imprinting on such Certificates a legend stating
that the Escrow Shares evidenced by such Certificate are not registered under
the Securities Act (the "Securities Law Legend").
(g) REMOVAL OF SECURITIES LAW LEGEND. In connection with the
Transfer of any Escrow Shares (other than a Transfer in a public offering
registered under the Securities Act), a Transferring Shareholder shall deliver
(a) written notice to Buyer describing in reasonable detail the Transfer or
proposed Transfer (the "Notice of Transfer") and (b) an opinion (the "Opinion")
of counsel, which (to Buyer's reasonable satisfaction) is knowledgeable in
securities laws matters, to the effect that such Transfer of Escrow Shares may
be effected without registration of such Escrow Shares under the Securities Act.
Upon delivery of the Notice of Transfer and the Opinion to Buyer by a
Transferring Shareholder, Buyer shall instruct its transfer agent to remove the
Securities Law Legend from the Certificate(s) evidencing such Escrow Shares.
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(h) REMOVAL OF RESTRICTIVE LEGEND. Removal of the Restrictive
Legend shall be governed in accordance with the terms of this Agreement.
(i) TRANSFERS IN VIOLATION OF AGREEMENT. Any Transfer or
attempted Transfer of any Escrow Shares in violation of any provision of this
Agreement shall be void, and Buyer shall not record such Transfer on its books
or treat any purported Transferee of such Escrow Shares as the owner of such
Escrow Shares for any purpose.
2.7 CLOSING OF TRANSACTIONS
(a) CLOSING. Subject to the conditions set forth in this
Agreement, the closing of the transactions contemplated by this Agreement (the
"CLOSING") will take place at the offices of Steel Hector & Davis LLP, 1900
Phillips Point West, 777 South Flagler Drive, West Palm Beach, Florida
commencing at 10:00 A.M. local time on March 9, 1998 (the "CLOSING DATE"), or
such other time and place as the Parties may agree. The Closing and the
transactions contemplated by this Agreement shall be effective as of the close
of business on the Closing Date.
(b) DELIVERIES AT CLOSING. Subject to the conditions set forth
in this Agreement, the Parties agree to consummate the following transactions at
the Closing:
(i) Seller shall deliver to Buyer (A) a warranty
bill of sale in the form of EXHIBIT A-1, (B)
an assumption and assignment agreement in
the form of EXHIBIT A-2, (C) UCC-3
termination statements terminating all
Security Interests existing on the Acquired
Assets; (D) a lease (the "Lease") in the
form of EXHIBIT A-3 relating to Buyer's use,
after the Closing, of the facilities
occupied by the Alarm Service Assets,
together with any necessary consent or
estoppel letters from the lessor of the
facility (if applicable), which lease or
sublease shall be at a fair market rate as
established in consultation with a reputable
real estate brokerage firm; (E) an agreement
in the form of EXHIBIT A-4 relating to
Buyer's use after the Closing of certain
telephone lines of Seller used by the Alarm
Service Assets; (F) such other instruments
of sale, transfer, conveyance and assignment
as Buyer may reasonably request in form
satisfactory to Buyer and consistent with
the provisions of this Agreement; (G)
possession of the premises at which Seller
is located; (H) a Guaranty Agreement in the
form of EXHIBIT A-5; and (I) an Escrow
Agreement in the form of EXHIBIT A-6; and
(ii) Buyer shall deliver to Seller (A) an
assumption and assignment agreement in the
form attached hereto as EXHIBIT A-2, (B) the
Lease; (C) an Escrow Agreement in the form
of EXHIBIT A-6; (D)
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an Employment Agreement in the form of
EXHIBIT A-7; and (E) such other instruments
of assumption as Seller may reasonably
request in form satisfactory to Seller and
consistent with the provisions of this
Agreement.
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(c) DELIVERIES AT ANNIVERSARY DATE CLOSING. Buyer shall
deliver to Seller certificates evidencing the Escrow Shares to be transferred,
if any, no later than 30 days after the Anniversary Date.
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF SELLER. As a material
inducement to Buyer to enter into this Agreement and to consummate the
transactions contemplated hereby, Seller (and when expressly set forth
hereafter, Shareholders) represents and warrants to Buyer that the statements
contained in this Section 3.1 are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date.
(a) ORGANIZATION, QUALIFICATION AND CORPORATE POWER.
(i) Seller is a corporation duty organized,
validly existing, and in good standing under
the laws of the State of Florida. The Seller
has full corporate power end authority to
carry on its business and to own and use the
properties owned and used by the Seller in
the operation of the Alarm Service Assets.
(ii) The Seller is qualified to conduct business
and is in good standing under the laws of
each other jurisdiction wherein the nature
of its business or its ownership of property
requires it to be so qualified.
(iii) The Articles of Incorporation and Bylaws of
Seller, all of which have been previously
delivered to Buyer, reflect all amendments
currently in effect made thereto at any time
prior to the date of this Agreement and are
correct and complete.
(b) AUTHORIZATION OF TRANSACTION. The Seller has full
corporate power and authority, and each Shareholder has full power and
authority, to execute and deliver this Agreement and the other agreements
contemplated hereby to which each is a party and to perform its obligations
hereunder and thereunder. Without limiting the generality of the foregoing, the
board of directors and Shareholders of Seller have duly authorized the
execution, delivery, and performance of this Agreement and the other agreements,
contemplated hereby to which it is a party. This Agreement and the other
agreements contemplated hereby to which Seller or the Shareholders is a party
constitute the valid and legally binding obligations of Seller and the
Shareholders, enforceable against each of them in accordance with their
respective terms, except as enforceability may be limited by bankruptcy, similar
laws of debtor relief and general principles of equity.
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(c) NONCONTRAVENTION. Except as disclosed on the CONSENTS
SCHEDULE or GOVERNMENTAL CONSENT SCHEDULE attached hereto, neither the execution
and the delivery of this Agreement and the other agreements contemplated hereby,
nor the consummation of the transactions contemplated hereby or thereby will
violate, conflict with, result in a breach of, constitute a default under,
result in the acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel, or require any authorization, consent, approval,
execution or other action by or notice to any third party under, the Articles of
Incorporation and Bylaws of Seller, any contract (including without limitation,
any Customer Contract or Assumed Contract), lease, sublease, license,
sublicense, franchise, permit, indenture, agreement, instrument of Indebtedness,
Security Interest, or other arrangement by which Seller, the Alarm Service
Assets or the Shareholders is bound or affected or, any law, statute, rule,
regulation, order, judgment, decree, stipulation, injunction, charge or other
restriction, to which Seller, the Alarm Service Assets or the Shareholders is
subject.
(d) GOVERNMENTAL CONSENT. Except as set forth on the
GOVERNMENTAL CONSENT SCHEDULE attached hereto, neither Seller nor the
Shareholders is required to make any declaration to or registration or filing
with, or to obtain any permit, license, consent, accreditation, exemption,
approval or authorization from, any governmental or regulatory authority
(including, without limitation, the Federal Communications Commission or any
state telecommunications regulatory bodies) in connection with the execution,
delivery or performance of this Agreement or the other agreements contemplated
hereby, or the consummation of any of the transactions contemplated hereby or
thereby.
(e) FINANCIAL DATA. Attached hereto as EXHIBIT B are true and
correct copies of unaudited consolidated balance sheets and statements of
income, changes in shareholders' equity, and cash flows dated as of December 31,
1995, December 31, 1996 and December 31, 1997 (collectively the "FINANCIAL
STATEMENTS") for the Company. The Financial Statements have been prepared in
accordance with GAAP throughout the periods covered thereby, and fairly present
the financial condition and results of operations as of December 31, 1995,
December 31, 1996 and December 31, 1997 and for the periods covered thereby.
(f) RECENT EVENTS. Since September 30, 1997, the Alarm Service
Assets have not experienced any Material Adverse Change.
(g) TITLE AND CONDITION OF PROPERTIES.
(i) TITLE TO PERSONAL PROPERTY ASSETS. The
Seller owns good and marketable title, free
and clear of all Security Interests and
other restrictions, to all of the Acquired
Assets.
(ii) CONDITION AND SUFFICIENCY OF ASSETS. All of
the Acquired Assets are in good condition
and repair, except for ordinary wear and
tear not caused by neglect and are useable
in the Ordinary Course of
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Business. The Acquired Assets include all
assets necessary to the conduct of the Alarm
Service Assets consistent with the past
custom and practices of Seller.
(h) INTELLECTUAL PROPERTY. Except as set forth on the
INTELLECTUAL PROPERTY SCHEDULE attached hereto:
(i) The Seller owns or has the right to use all
Intellectual Property necessary for the
operation of the Alarm Service Assets as
currently used by Seller. Each item of
Intellectual Property owned or used by
Seller with respect to the Alarm Service
Assets immediately prior to the Closing will
be owned and, to Seller's Knowledge, be
available for use by the Buyer on identical
terms and conditions immediately subsequent
to the Closing. Seller has taken all
necessary or desirable action to protect
each item of Intellectual Property that it
owns or uses in connection with the Alarm
Service Assets.
(ii) With respect to the Alarm Service Assets, to
the Seller's and Shareholders' Knowledge,
neither Seller nor the Shareholders has
interfered with, infringed upon,
misappropriated, or otherwise become engaged
in a controversy or dispute arising out of
any Intellectual Property rights of third
parties, and neither Seller, the
Shareholders nor any of the directors and
officers (and employees with responsibility
for Intellectual Property matters) of Seller
is aware of any charge, complaint, claim, or
notice alleging any such interference,
infringement, misappropriation, or
violation. To the Seller's and the
Shareholders' Knowledge, no third party has
interfered with, infringed upon,
misappropriated, or otherwise become engaged
in a controversy or dispute arising out of
any Intellectual Property rights of Seller
with respect to the Alarm Service Assets.
(i) CONTRACTS. The Seller has delivered or otherwise made
available to Buyer a correct and complete copy of each Customer Contract and
each Assumed Contract (including in each case all amendments thereto). With
respect to each Customer Contract and each Assumed Contract: (A) the contract is
legal, valid, binding, enforceable, and in full force and effect; (B) the
contract will, assuming that any required third party consent identified on the
CONTRACT CONSENT SCHEDULE with respect to such contract has been obtained,
continue to be legal, valid, binding, and enforceable and in full force and
effect on identical terms immediately after the Closing; (C) the Seller is not
and no other party is in breach or default (including, without limitation, with
respect to any express or implied warranty), and no event has occurred which
with notice or lapse of time would constitute a breach or default or permit
termination,
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modification, or acceleration, under the contract; (D) no party has repudiated
any provision of the contract; (E) the contract is in writing, has been fully
executed by all parties thereto, has been delivered to Buyer and has not been
modified of amended in any way other than through a written amendment signed by
all parties to such contract and delivered to Buyer, (F) in the case of Customer
Contracts, relates only to a security system for which installation has been
fully completed, billed and paid for prior to the Closing and (G) in the case of
Customer Contracts, is in substantially the form of the form customer contract
attached as EXHIBIT C hereto.
(j) LITIGATION. The LITIGATION SCHEDULE attached hereto sets
forth each instance in which Seller or the Shareholders (i) is subject to any
unsatisfied judgment, order, decree, stipulation, injunction, or charge that
relates in any way to the Seller or the Alarm Service Assets or (ii) is a party
or has been threatened to be made a Party to any charge, complaint, action,
suit, proceeding, hearing, or investigation of or in any court or quasi-judicial
or administrative agency of any federal, state, local, or foreign jurisdiction
or before any arbitrator, in each case which relates in any way to the Seller or
the Alarm Service Assets. None of the charges, complaints, actions, suits,
proceedings, hearings, and investigations set forth in the LITIGATION SCHEDULE
could result in a Material Adverse Change. Neither Seller, the Shareholders nor
the directors and officers (and employees with responsibility for litigation
matters) of Seller has Knowledge of any Basis on which any such charge,
complaint action, suit, proceeding, hearing, or investigation may be brought or
threatened which relates in any way to the Seller or the Alarm Service Assets.
(k) EMPLOYEES. The EMPLOYEE SCHEDULE attached hereto sets
forth the names, position and annual salaries (or hourly wage, as the case may
be) of each employee of Seller (the "EMPLOYEES"). To Seller's Knowledge, no
Employee or group of Employees has any plans to cease working for the Seller.
Seller is not a party to or bound by any employment agreement or understanding
or collective bargaining agreement relating to the Alarm Service Assets, and
Seller has not experienced any strikes, grievances, other collective bargaining
disputes or claims of unfair labor practices relating to Employees. There is no
organizational effort presently being made or threatened by or on behalf of any
labor union with respect to the Employees.
(l) EMPLOYEE BENEFITS. The EMPLOYEE BENEFITS SCHEDULE attached
hereto contains an accurate and complete list of all Plans (as defined below)
maintained or sponsored by Seller and made available to the Employees, including
all Plans contributed to, maintained or sponsored by each member of the
controlled group of companies, within the meaning of Sections 414(b), (c) and
(m) of the Code, of which Seller is a member. For purposes of this Agreement,
the term "PLANS" shall mean: (i) "employee benefit plans," as such term is
defined in Section 3(3) of ERISA, whether or not funded and whether or not
terminated and (ii) personnel policies, and fringe benefit plans, policies,
programs and arrangements, whether or not subject to ERISA, whether or not
funded, and whether or not terminated, including without limitation, stock
bonus, deferred compensation, pension, severance, bonus, vacation, travel,
incentive, and health, disability and welfare plans.
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(m) COMPLIANCE WITH LAWS: CERTAIN OPERATIONS.
(i) Except as disclosed in the LEGAL COMPLIANCE
SCHEDULE attached hereto, Seller and the
Shareholders are in compliance with and have
not violated any applicable statute law,
rule or regulation of any federal, state,
local or foreign government or agency
thereof which affects the Seller or the
Alarm Service Assets, and no notice, claim,
charge, complaint, action, suit proceeding,
investigation or hearing has been received
by Seller or the Shareholders or filed,
commenced or threatened in writing against
Seller or the Shareholders alleging any such
violation.
(ii) Except as disclosed in the LEGAL COMPLIANCE
SCHEDULE attached hereto, neither Seller nor
the Shareholders has been charged with, and
is not aware of any investigation with
respect to, any possible violation of any
Federal, state, local or foreign statute,
law, rule or regulation relating to the
Seller or the Alarm Service Assets, its
business practices, its employment practices
or the safety of working conditions in its
facilities, its Plans, or environmental
matters.
(iii) Except as set forth on the LEGAL COMPLIANCE
SCHEDULE attached hereto, with respect to
its operation of the Alarm Service Assets,
Seller is in compliance with all terms and
conditions of all required permits,
licenses, certificates, accreditations or
other authorizations of foreign, federal,
state and local government agencies required
for the legal conduct of the Seller or the
Alarm Service Assets, and is also in
compliance with all other limitations,
restrictions, conditions, standards,
prohibitions, requirements, obligations,
schedules and timetables contained in any
foreign, federal, state or local statute,
rule, law, or any regulation, code, plan,
order, decree or judgment, or any notice or
demand letter issued, entered, promulgated
or approved thereunder applicable to the
operation of the Alarm Service Assets.
(n) INVENTORIES. All of the Inventory consists only of items
of a quality and quantity usable or saleable by the Seller in the Ordinary
Course of Business at the amount reflected on the INVENTORY SCHEDULE attached
hereto.
(o) QUALIFIED MRI. The Qualified MRI for the residential and
commercial Customer Contracts is not less than $36,000.
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(p) ACQUIRED ASSETS. The book value (as calculated according
to GAAP) of the Acquired Assets listed in Section 2.1 is not less than $300,000.
(q) INSURANCE. The INSURANCE SCHEDULE attached hereto lists
and accurately describes each insurance policy maintained by Seller and the loss
history for all lines of insurance coverage maintained by the Seller with
respect to the Seller and the Alarm Service Assets. Complete and correct copies
of all such policies (or summary descriptions thereof) have been previously made
available to Buyer. All such insurance policies are in full force and effect,
and Seller is not in default with respect to its obligations under any of such
insurance policies.
(r) ILLEGAL OR IMPROPER PAYMENTS. Seller and its directors,
officers, employees, partners, Shareholders and agents, each have not:
(i) made any illegal political contributions
which relate in any way to the Alarm Service
Assets;
(ii) been involved in the disbursement or receipt
of corporate funds outside the normal
internal control systems of accountability
which relates in any way to the Alarm
Service Assets;
(iii) made or received payments, whether direct or
indirect, to or from foreign or domestic
governments, officials, employees or agents
which relate in any way to the Alarm Service
Assets for purposes other than the
satisfaction of lawful obligations, or been
involved in any transaction which relates in
any way to the Alarm Service Assets that has
or had as its intended effect the transfer
of funds or assets in the manner described;
or
(iv) been involved in the improper or inaccurate
recording of payments and receipts on the
accounting books of the applicable entity or
any other matters of a similar nature
involving disbursements of funds or assets
which relate in any way to the Alarm Service
Assets.
(s) AFFILIATE TRANSACTIONS. Except for the matters disclosed
on the AFFILIATE TRANSACTIONS SCHEDULE attached hereto (none of which will
survive the Closing without Buyer's express written consent), neither the
Shareholders, nor any of the directors, officers or other affiliates of Seller
is a party to any agreement, contract, commitment or transaction with Seller or
which pertains to the Alarm Service Assets or has any interest in any property
used in or pertaining to the Alarm Service Assets.
(t) PRODUCT WARRANTY. Each product or service sold, licensed
or delivered by Seller with respect to the Alarm Service Assets has been in
conformity with all applicable contractual commitments and all express and
implied warranties (including, without limitation,
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any warranty of merchantability or fitness for a particular purpose), and Seller
does not have any Liability (and there is no Basis for any present or future
charge, complaint, action, suit, proceeding, hearing, investigation, claim or
demand against Seller giving rise to any Liability) for replacement or repair
thereof or other damages in connection therewith.
(u) ALARM SYSTEMS. To Seller's Knowledge, each of the alarm
systems installed or serviced by Seller pursuant to Customer Contracts, and all
alarm systems owned by Seller are in good working order and condition (except to
the extent not in such order and condition and not reported as such by the
subscriber to Seller and to the extent requiring services and repairs in the
Ordinary Course of Business), and have been installed and maintained in
accordance with good and workmanlike practices and with respect to those alarm
systems and panels where applicable, substantially in accordance with the
specifications or standards of the Insurance Services Offices, Underwriters
Laboratories, Factory Mutual Insurance Company and local authorities. No such
installation or maintenance has been performed in violation of any applicable
statute, law, code or regulation.
(v) BROKERS' FEES. Neither Seller nor the Shareholders have
any Liability or obligation to pay any fees or commissions to any broker,
finder, or agent with respect to the transactions contemplated by this Agreement
for which Buyer or any other Party could become liable or otherwise obligated.
(w) TAXES. All federal, state, local and foreign Tax Returns
and reports of the Seller applicable to the Alarm Service Assets required by law
to be filed have been duly filed, and all federal, state, local, foreign and any
other Taxes, assessments, fees and other governmental charges with respect to
the employees, properties, assets, income or franchises of the Seller shown on
such Tax Returns and reports to be due and payable have been paid or will be
paid by Seller prior to the Closing Date. Seller has received no written notice
of, nor do the Seller or the Shareholders have any knowledge of, any notice of
deficiency or assessment, or proposed deficiency or assessment, from any taxing
authority with respect to the Seller's business. There are no Tax audits pending
with respect to the Seller's business. There are no unpaid Taxes which are or
could become a lien on the Alarm Service Assets.
(x) RECEIVABLES. All Accounts Receivable are good and valid
receivables arising from the sale of goods and/or services in the Ordinary
Course of Business, and to Seller's Knowledge, such Accounts Receivable will be
collectible by Buyer within 90 days of the invoice date therefore for the full
amount thereof.
(y) DISCLOSURE. Neither this Section 3.1 nor any of the
information in the disclosure schedules attached hereto contains any untrue
statement of a material fact or omits a material fact necessary to make the
statements contained herein or therein, in light of the circumstances in which
they were made, not misleading. There is no material fact which has not been
disclosed to Buyer herein or in the disclosure schedules which would, or could
reasonably be anticipated to, result in a Material Adverse Change.
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(z) ABSENCE OF UNDISCLOSED LIABILITIES. The Seller has no
Liabilities (whether known or unknown and whether absolute, accrued, contingent,
or otherwise) (and there is no Basis for any present or future charge,
complaint, action, suit, proceeding, hearing, investigation, claim or demand
against the Companies giving rise to any Liability) except for liabilities or
obligations incurred in the Ordinary Course of Business.
(aa) NO DISTRIBUTION. Seller is acquiring the Escrow Shares
for its own account with the present intention of holding such securities for
purposes of investment, and it has no intention of selling such securities in a
public distribution in violation of the federal securities laws or any
applicable state securities laws. Seller understands that the Escrow Shares are
"restricted securities" as defined in Rule 144 under the Securities Act, and
have not been registered pursuant to the provisions of the Securities Act, in as
much as the proposed purchase of the Escrow Shares is taking place in a
transaction not involving any public offering.
(bb) SOPHISTICATION. Seller is knowledgeable, experienced and
sophisticated in financial and business matters and is able to evaluate the
risks and benefits of the investment in the Escrow Shares.
(cc) ECONOMIC RISK. Seller is able to bear the economic risk
of its investment in the Escrow Shares for an indefinite period of time because
the Escrow Shares have not been registered under the Securities Act and,
therefore, cannot be sold unless subsequently registered under the Securities
Act or an exemption from such registration is available.
(dd) ACCESS TO INFORMATION. Seller has been furnished or
otherwise had full access to such other information concerning Buyer and its
subsidiaries as it has requested and that was necessary to enable the Seller to
evaluate the merits and risks of an investment in Buyer, and after a review of
this information, has had an opportunity to ask questions and receive answers
concerning the financial condition and business of Buyer and the terms and
conditions of the securities purchased hereunder, and has had access to and has
obtained such additional information concerning Buyer and the securities as the
Seller has deemed necessary.
(ee) ACCREDITED INVESTOR. Seller represents and warrants that
it is an "accredited investor" as defined in Rule 501(a) of Regulation D
promulgated under the Securities Act.
3.2 REPRESENTATIONS AND WARRANTIES OF BUYER. As a material
inducement to Seller and the Shareholders to execute this Agreement and
consummate the transactions contemplated hereby, Buyer hereby represents and
warrants to Seller and the Shareholders that the statements contained in this
Section 3.2 are correct and complete as of the date of this Agreement and will
be correct and complete as of the Closing Date.
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(a) ORGANIZATION. Buyer is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Nevada and
is qualified to conduct business and is in good standing under the laws of the
State of Florida.
(b) AUTHORIZATION OF TRANSACTION. Buyer has full corporate
power and authority to execute and deliver this Agreement and to perform its
obligations hereunder. This Agreement constitutes the valid and legally binding
obligation of Buyer, enforceable against Buyer in accordance with its terms,
except as enforceability may be limited by bankruptcy, similar laws of debtor
relief and general principles of equity.
(c) NONCONTRAVENTION. Assuming the accuracy of the
representations of Seller and the Shareholders in Section 3.1, neither the
execution and the delivery of this Agreement, nor the consummation of the
transactions contemplated hereby will, to Buyer's Knowledge, violate any
judgment, order, decree, injunction, or charge of any government, governmental
agency, or court to which Buyer is subject or any provision of the Certificate
of Incorporation or Bylaws of Buyer.
(d) GOVERNMENTAL CONSENT. Except for disclosures which may be
required under the federal securities laws, Buyer is not required to make any
declaration to or filing with, or to obtain any permit, license, consent,
accreditation, approval or authorization from, any governmental or regulatory
authority in connection with the execution, delivery or performance of this
Agreement or the consummation of any of the transactions contemplated hereby.
(e) BROKERS' FEES. Except for Buyer's obligations to Castle
Ventures, Inc., Buyer has no Liability or obligation to pay any fees or
commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement for which Seller or Shareholders could become
liable or obligated.
(f) DISCLOSURE. This Section 3.2 does not contain any untrue
statement of a material fact or omit a material fact necessary to make the
statements contained herein, in light of the circumstances in which they were
made, not misleading. There is no material fact which has not been disclosed to
Seller or the Shareholders herein which materially and adversely affect, or
could reasonably be anticipated to, materially and adversely affect Buyer's
ability to perform its obligations under this Agreement.
ARTICLE 4 - CERTAIN COVENANTS OF BUYER AND SELLER
4.1 COOPERATION. Buyer and Seller each agree to reasonably
cooperate in order to effectuate a smooth transition. Seller shall reasonably
cooperate with Buyer in taking any steps reasonably requested by Buyer to
facilitate a smooth transition of the Alarm Service Assets to Buyer.
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4.2 FURTHER ASSURANCES. Each of the parties hereby covenants
and agrees, from time to time after the Closing, to execute and deliver such
other instruments and to take such other action (including obtaining any
required consents and approvals) as the other party may reasonably request in
order to more fully effectuate the transactions contemplated by this Agreement.
4.3 CONSENTS AND FRANCHISE APPROVALS. Seller and Buyer shall
exercise all commercially-reasonable efforts to obtain all consents and
approvals prior to Closing; provided, however, that Seller shall not, without
the prior written consent of Buyer (which shall not unreasonably be withheld),
agree to any modification of any Assumed Contract in connection with procuring
any consent or approval.
4.4 CONFIDENTIALITY.
(a) Buyer or Seller, as the case may be (the "Receiving
Party"), shall use any information, written or oral, furnished to it by or on
behalf of Seller or Buyer, as the case may be (the "Delivering Party"),
concerning the transactions contemplated by this Agreement ("Confidential
Information") solely in connection with the transactions contemplated by this
Agreement, and shall keep the Confidential Information confidential, except that
the Receiving Party may disclose the Confidential Information or portions
thereof to those directors, officers, affiliates and employees of the Receiving
Party and representatives of any advisors of Receiving Party or its affiliates
(the persons to whom such disclosure is permissible, collectively
"Representatives") who need to know such information for purposes of the
transactions contemplated by this Agreement. Before disclosing the Confidential
Information or any portion thereof to such Representatives, the Receiving Party
will inform them of the confidential nature of the Confidential Information and
obtain their agreement to be bound by the provisions of this Section 4.4 and not
to disclose the Confidential Information to any other person. In any event, the
Receiving Party shall be responsible for any breach of this Section 4.4
(pursuant to the indemnity provisions under Article 9) by any person or entity
to whom the Receiving Party or its Representatives shall have furnished
Confidential Information.
(b) If the Receiving Party or any of its Representatives
become legally compelled (by deposition, interrogatory, request for documents,
subpoena, civil investigative demand or similar process) or shall be advised by
counsel to disclose any of the Confidential Information, the Receiving Party
shall provide the Delivering Party with prompt prior written notice of such
requirement or advice so that the Delivering Party may seek a protective order
or other appropriate remedy. If such protective order or other remedy is not
obtained or the Delivering Party does not seek a protective order or other
remedy, the Receiving Party agrees to furnish only that portion of the
Confidential Information which the Receiving Party is legally required to so
furnish and, at the request of the Delivering Party, to use reasonable efforts
to obtain assurance that confidential treatment will be accorded such
Confidential Information, it being understood that such reasonable efforts shall
be at the cost and expense of the Delivering Party.
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(c) The term "Confidential Information" does not include any
information that (i) at the time of disclosure or thereafter is generally
available to the public (other than as a result of the disclosure directly or
indirectly by the Receiving Party or its Representatives), (ii) was or becomes
available to the Receiving Party or its Representatives from a source other than
the Delivering Party or its advisors, or any affiliates or representatives
thereof, provided that the Receiving Party or its Representatives have no
reasonable basis for concluding that such information was available in violation
of a confidentiality agreement with the Delivering Party.
(d) If this Agreement is terminated and the Delivering Party
so requests in writing, the Receiving Party will return to the Delivering Party
within 30 business days after such request all copies of written Confidential
Information in the Receiving Party's possession or in the possession of the
Receiving Party's Representatives and shall destroy any materials or notes the
Receiving Party or its Representatives may have prepared that incorporate any
Confidential Information.
(e) In the event of any breach or threatened breach of the
provisions of this Section 4.4, the parties acknowledge and agree that the
Delivering Party would suffer irreparable harm for which monetary damages would
be inadequate and, accordingly, the Delivering Party shall be entitled to
equitable relief, including in the form of injunctions and orders for specific
performance, in addition to all of the remedies available at law or in equity.
4.5 RISK OF LOSS.
(a) The risk of any loss or damage to the Acquired Assets
resulting from fire, theft or any other casualty (except reasonable wear and
tear) shall be borne by Seller at all times prior to Closing. If any such loss
or damage shall be sufficiently substantial so as to preclude and prevent
resumption of normal operations or the replacement or restoration of the lost or
damaged property within five days after the occurrence of the event resulting in
such loss or damage (a "Material Loss"), Seller shall immediately notify Buyer
in writing of its inability to resume normal operations or to replace or restore
such lost or damaged property. Buyer, at any time within ten days after receipt
of such notice, may elect by written notice to Seller to either (i) not waive
such defect and proceed toward consummation of the transactions in accordance
with terms of this Agreement, or (ii) terminate this Agreement.
(b) If Buyer elects to consummate the transactions
contemplated hereby notwithstanding a Material Loss and does so, or if there
occurs any loss or damage to the Acquired Assets that is not a Material Loss but
Seller cannot with reasonable diligence repair or replace the affected Acquired
Assets prior to Closing, there shall be no diminution of the Purchase Price on
account of such loss or damage, but all insurance proceeds payable as a result
of the occurrence of the event resulting in such loss or damage shall be
delivered by Seller to Buyer, or the rights thereto shall be assigned by Seller
to Buyer if not yet paid over to Seller, and at Closing Seller shall pay to
Buyer the amount of any difference between such proceeds and the
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full replacement cost of the lost or damaged Acquired Assets (including, but not
limited to, any deductible associated with the insurance claim).
4.6 CONDUCT OF BUSINESS. Except as otherwise contemplated
herein, from and after the date of this Agreement and until the Closing, Seller
shall:
(a) continue to conduct its business in the usual and ordinary
manner in which it has been conducted in the past;
(b) maintain the Acquired Assets in their current state of
repair and operating efficiency, normal wear and tear excepted, and maintain in
effect, to the extent commercially available, insurance against property damage
in an amount equal to the replacement value of the Acquired Assets and provide
written notice to Buyer if such insurance ceases to be commercially available;
(c) comply in all material respects with all applicable legal
requirements and the terms of the Assumed Contracts and all applicable
franchises and licenses;
(d) not modify any franchises or licenses applicable to the
operation of the business of the Seller or the Assigned Contracts other than in
the Ordinary Course of Business or with Buyer's prior written consent;
(e) not dispose of any assets except in the Ordinary Course of
Business; and
(f) collect subscriber accounts only in accordance with past
practices.
4.7 ACCESS. Upon prior request by Buyer to a designated
officer of Seller, Seller will cause Buyer to be afforded reasonable access to
the offices, properties, books, contracts and nonprivileged records, including
Tax Returns, of Seller after the date of this Agreement at all reasonable times
during normal business hours and will furnish Buyer with such additional
financial and operating data and other information as Buyer shall from time to
time reasonably request; provided that all such access and information shall be
supplied in such a way as to minimize disruption of Seller's business. Buyer
shall notify promptly Seller in writing of its determination (whether or not the
result of such investigation) that a breach of a representation or warranty made
by Seller herein or alleged default under any covenant has occurred.
4.8 ANNIVERSARY MRI. In connection with the calculation of
Anniversary MRI in Section 2.6 above, Buyer agrees not to take any actions, such
as raising the price of the Services, that could have an adverse impact on
attrition of Customer Contracts.
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4.9 ACCOUNTS RECEIVABLE. Seller hereby covenants and agrees
that, in the event that it shall receive on or after the Closing payments on any
Accounts Receivable, it shall [weekly] remit such payments to Buyer by check.
4.10 UPDATING OF SCHEDULES. Seller will update and revise, if
necessary, and deliver to Buyer the Schedules attached hereto and such other
schedules as may become necessary at least two business days prior to the
Closing Date in order to maintain, and to enable Buyer to confirm, the continued
material accuracy of the representations and warranties contained herein.
Seller's compliance with Article 3 shall be determined based upon the Schedules
delivered on the date of this Agreement.
4.11 POST-CLOSING ASSISTANCE. In case at any time after the
Closing Date any further action is necessary or desirable to carry out the
purposes of this Agreement and to effect, consummate, confirm or evidence the
consummation of the transactions contemplated hereby (including, without
limitation, with respect to obtaining all licenses, permits, authorizations,
accreditations and consents necessary in connection therewith), each of the
Parties will take such further action (including, without limitation, the
execution and delivery of such further instruments and documents) as any other
Party reasonably may request, at the sole cost and expense of the requesting
Party (unless the requesting Party is entitled to indemnification therefor under
Article 9).
4.12 EMPLOYEES. Buyer shall provide offers of employment with
Buyer to Seller's employees (other than Dan Lawrence) on terms comparable to the
terms of employment with Seller, provided that Seller's terms of employment are
similar to the terms offered to comparably-situated employees of Buyer.
4.13 SHAREHOLDERS' NO-SHOP COVENANT. From the date hereof
until the Closing Date, the Shareholders agree (a) to vote all shares of Seller
beneficially owned by them against any other transaction relating to the
issuance of equity securities by, the sale of any of the assets of Seller, a
change of control of or any other transactions not in the Ordinary Course Of
Business of, Seller and to grant proxies to Buyer's designees to that effect,
and (b) not to sell or otherwise dispose of any interest in any shares of Seller
beneficially owned by them.
4.14 SELLER'S AND SHAREHOLDERS' NONCOMPETITION AND
NONSOLICITATION COVENANTS.
(a) In consideration of the Purchase Price, Seller and the
Shareholders each agree that during the period beginning on the Closing Date and
ending on the fifth anniversary of the Closing Date (the "NONCOMPETE PERIOD"),
it, he or she, as the case may be, shall not, directly or indirectly, either for
itself, himself or herself, as the case may be, or for any other Person, permit
its, his or her name, as the case may be, to be used by or Participate (as
defined below) in any business or enterprise which provides Services in the
Hillsborough County or Pinellas County, Florida. For purposes of this Agreement,
the term "PARTICIPATE" includes any direct or
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indirect interest in any enterprise, whether as an officer, director, employee,
partner, sole proprietor, agent, representative, independent contractor,
consultant, franchisor, franchisee, creditor, owner or otherwise; provided that
such term shall not include ownership of less than one percent of the stock of a
publicly-held corporation whose stock is traded on a national securities
exchange or in the over-the-counter market.
(b) During the Noncompete Period, neither Seller nor the
Shareholders shall (A) induce or attempt to induce any customer under any
Customer Contract to cease doing business or to decrease its business with
Buyer, (B) induce or attempt to induce any Employee to leave their employ with
Buyer or in any way interfere with the relationship between Buyer or its
affiliates and any of their employees or (C) induce or attempt to induce any
supplier, agent, licensee, licensor, franchisee, or other business relation of
Buyer or its affiliates to cease doing business with them or in any way
interfere with the relationship between Buyer or its affiliates and any customer
or business relation.
(c) The Parties agree that Buyer may suffer irreparable harm
from a breach by Seller or the Shareholders of any of the covenants or
agreements contained in this Section 4.14. In the event of an alleged or
threatened breach by Seller or the Shareholders of any of the provisions of this
Section 4.14, Buyer or its successors or assigns may, in addition to all other
rights and remedies existing in its favor, apply to any court of competent
jurisdiction for specific performance and/or injunctive or other relief in order
to enforce or prevent any violations of the provisions hereof (including the
extension of the Noncompete Period by a period equal to the length of the
violation of this Section 4.14). In the event of an alleged breach or violation
by Seller or the Shareholders of any of the provisions of this Section 4.14, the
Noncompete Period shall be tolled until such alleged breach or violation is
resolved. Seller and the Shareholders agree that these restrictions are
reasonable.
(d) If, at the time of enforcement of any of the provisions of
this Section 4.14, a court holds that the restrictions stated herein are
unreasonable under the circumstances then existing, the Parties agree that the
maximum period, scope or geographical area reasonable under such circumstances
shall be substituted for the maximum period of time, scope and geographical area
as to which it may be enforceable.
(e) Seller and the Shareholders agree that the covenants made
in this Section 4.14 shall be construed as an agreement independent of any other
provision of this Agreement and shall survive any order of a court of competent
jurisdiction terminating any other provision of this Agreement.
4.15 Seller shall file documents necessary to change its
corporate name from Gator Telecom, Inc. to another name reasonably acceptable to
Buyer no later than five business days after the Closing Date.
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4.16 Buyer shall obtain a surety bond in favor of the City of
Tampa, Florida within 60 days after the Closing to substitute for the surety
bond posted with the City of Tampa, Florida by Seller and on which Dan Lawrence
is a guarantor.
4.17 Buyer shall provide Seller access to all books, records,
ledgers, files, documents, correspondence, lists, drawings, specifications,
advertising and promotional materials, studies, reports and other printed or
written information regarding the Alarm Service Assets that were in existence on
or prior to the Closing Date during normal business hours upon reasonable notice
by Seller to Buyer of its desire to review any of the foregoing.
4.18 Seller shall pay for all vacation due its employees up to
and including the Closing Date, and Buyer shall permit all employees to take
vacations scheduled for after the Closing Date that are scheduled with Seller on
or before the Closing Date.
ARTICLE 5
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER AND SELLER
Unless waived in writing by both Buyer and Seller, the respective
obligations of each of Buyer and Seller set forth herein shall be subject to the
fulfillment of the following mutual conditions at or prior to the Closing Date:
5.1 NO INJUNCTION, ETC. No preliminary or permanent injunction
or other order issued by any federal or state court of competent jurisdiction in
the United States nor any statute, rule, regulation or executive order
promulgated by any federal or state governmental authority which restrains,
enjoins or otherwise prohibits the transactions contemplated hereby shall be in
effect.
5.2 NO PROCEEDING OR LITIGATION. No suit, action or
governmental proceeding (other than orders, actions, proceedings or
investigations relating to the alarm service industry in general) before any
court or any governmental or regulatory authority shall have been (i) commenced
by a third party and be pending or (ii) "overtly threatened" by a third party
against Buyer, Seller, Shareholders or any of their affiliates, associates,
officers or directors (the "Threatened Party") seeking in either case to
restrain, prevent or change in any material respect the transactions
contemplated hereby or seeking material damages in connection with any of such
transactions. Administrative proceedings before the Federal Trade Commission
("FTC") and actions by the U.S. Department of Justice ("DOJ") where a request
for a temporary restraining order and/or preliminary injunction has been denied,
no appeal is pending and the time for filing an appeal has expired, or such
request or appeal has been withdrawn, are expressly excluded from this Section
5.2. "Overtly threatened" means that a potential claimant has manifested to the
Threatened Party an awareness of, and present intention to, assert a possible
claim or assessment, unless the likelihood of litigation could reasonably be
considered remote or slight.
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5.3 VALUE OF QUALIFIED MRI. The Parties shall have agreed on
the value of the Qualified MRI calculated as of the Closing Date.
ARTICLE 6
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
The obligations of Seller set forth herein shall be subject to the
fulfillment of the following conditions:
6.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Buyer contained in this Agreement shall be true and correct in all
material respects on the date hereof and shall also be true and correct in all
material respects on and as of the Closing Date, except for changes contemplated
by this Agreement, with the same force and effect as if made on and as of the
Closing Date.
6.2 PERFORMANCE OF AGREEMENT. Buyer shall have performed, and
complied with, in all material respects, all obligations, agreements and
covenants contained in this Agreement to be performed or complied with by it
prior to or at the Closing Date including, without limitation, the deliveries
listed in Section 2.7(b)(ii).
ARTICLE 7
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
Buyer's obligations set forth herein shall be subject to the
fulfillment of the following conditions:
7.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Seller contained in this Agreement shall be true and correct in
all material respects on the date hereof and shall also be true and correct in
all material respects on and as of the Closing Date, except for changes
contemplated by this Agreement, with the same force and effect as if made on and
as of the Closing Date.
7.2 PERFORMANCE OF AGREEMENT. Seller shall have performed, and
complied with, in all material respects, all obligations, agreements and
covenants contained in this Agreement to be performed or complied with by it
prior to or at the Closing Date including, without limitation, the deliveries
listed in Section 2.7(b)(i).
7.3 CONSENTS. All of the consents and approvals shall have
been obtained.
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ARTICLE 8
SURVIVAL PERIOD
8.1 COVENANTS AND AGREEMENTS. Unless otherwise specifically
limited by this Agreement, all of the covenants and agreements made by the
Parties in this Agreement shall survive the Closing and continue in full force
and effect after the Closing without any time limitation.
8.2 REPRESENTATIONS AND WARRANTIES. Unless incorporated in any
instrument of conveyance delivered at or as of the Closing and expressly limited
therein, all of the representations and warranties provided in this Agreement
shall survive the Closing for two years and be unaffected by any investigations
made by or on behalf of any Party hereto, provided that: (i) those matters
described in Sections 3.1(b) (Authorization), 3.1(g)(i) (Title to Personal
Property Assets), 3.1(v) (Brokers' Fees), 3.2(b) (Authorization), and 3.2(e)
(Brokers' Fees) shall survive indefinitely, and (ii) those matters described in
Section 3.1(w) (Taxes) and claims arising out of product liability, product
warranty, strict liability and product recall claims, shall survive until
expiration of the applicable statute of limitations and other extensions
thereof.
ARTICLE 9
INDEMNIFICATION
9.1 INDEMNIFICATION BY SELLER. Seller agrees that,
notwithstanding the Closing and regardless of any investigation made at any time
by or on behalf of Buyer, Seller will indemnify and save and hold each Covered
Person harmless from and against all claims, costs expenses, damages,
liabilities, losses and deficiencies suffered or incurred by each Covered Person
(including, without limitation, reasonable attorneys' fees and other reasonable
costs and expenses incident to any claim, suit, action or proceeding) arising
out of or relating to, and will pay each Covered Person on demand the full
amount of any sum which any such Covered Person may pay or may become obligated
to pay in respect of:
(a) INACCURACY OF REPRESENTATION. Any inaccuracy in any
representation or the breach of any warranty made by Seller or the Shareholders
pursuant to this Agreement.
(b) FAILURE TO PERFORM. Any failure by Seller or Shareholders
to duly perform or observe any term, provision, covenant, agreement or condition
in this Agreement to be performed or observed by it including, without
limitation, all liabilities and obligations with respect to the Excluded
Liabilities.
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9.2 INDEMNIFICATION BY BUYER. Buyer agrees that,
notwithstanding the Closing and regardless of any investigation made at any time
by or on behalf of Seller or Shareholders, Buyer will indemnify and save and
hold Seller and the Shareholders harmless from and against all claims, costs,
expenses, damages, liabilities, losses and deficiencies suffered or incurred by
Seller or Shareholders (including, without limitation, reasonable attorneys'
fees and other reasonable costs and expenses incident to any claim, suit, action
or proceeding) arising out of or resulting from, and will pay Seller and the
Shareholders on demand the full amount of any sum which Seller or Shareholders
may pay or may become obligated to pay in respect of:
(a) INACCURACY OF REPRESENTATION. Any inaccuracy in any
representation or the breach of any warranty made by Buyer pursuant to this
Agreement.
(b) FAILURE TO PERFORM. Any failure by Buyer to duly perform
or observe any term, provision, covenant, agreement or condition in this
Agreement to be performed or observed by it including, without limitation, all
liabilities and obligations with respect to the Assumed Liabilities.
(c) PERSONAL GUARANTIES. Any liability of Dan Lawrence or
Cindy Lawrence arising from and after the Closing Date as personal guarantors
with respect to the Assumed Liabilities and any performance, surety and warranty
bonds entered into in Seller's Ordinary Course of Business.
9.3 COOPERATION. A Party (the "INDEMNIFIED PARTY") will give
prompt written notice to the other Party (the "INDEMNIFYING PARTY") of any claim
which the Indemnified Party discovers or of which notice is received after the
Closing and which might give rise to a claim by the Indemnified Party against
the Indemnifying Party under Sections 4.3(a) or 4.3(b) hereof, stating the
nature, basis and amount thereof. In case of any claim by a third party, any
suit, any claim by any governmental body, or any legal, administrative or
arbitration proceeding with respect to which the Indemnifying Party may have
liability under the indemnity agreements contained in Sections 4.3(a) and 4.3(b)
hereof, the Indemnifying Party shall be entitled to participate therein, and to
the extent desired to assume the defense thereof, and after notice to the
Indemnified Party of its election so to assume the defense thereof, the
Indemnifying Party will not be liable to the other for any legal or other
expenses subsequently incurred by the Indemnified Party in connection with the
defense thereof, other than reasonable costs of investigation, unless the
Indemnifying Party does not actually assume the defense thereof following notice
of such election. The Indemnified Party shall make available to the Indemnifying
Party and its attorneys and accounts, at all reasonable times, all books and
records relating to such suit, claims or proceedings, and the Parties will
render to each other such assistance as may reasonably be required of each other
in order to insure proper and adequate defense of any such suit, claim or
proceeding. No Party will make any settlement of any claim which might give rise
to liability of the other under the indemnity agreements contained in Sections
4.3(a) or 4.3(b) hereof without the consent of the other. If a Party shall
desire and be able to effect a compromise or settlement of any such suit, claim
or proceeding and the other
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Party shall refuse to consent to such compromise or settlement, then the
liability of the Party desiring to settle or compromise to the Party which
refuses to consent with respect to settlement or compromise of such suit, claim
or proceeding shall be limited to the amount so offered in compromise or
settlement.
9.4 DETERMINATION OF LOSS. With respect to any Loss, the
Indemnifying Party shall indemnify the Indemnified Party against the time value
of money (using the discount rate applicable at the time of the Loss) associated
with such Loss, for the period of time the Loss remained uncompensated. In the
event of any breach or inaccuracy in Sections 3.1 (o) or (p) because the
Qualified MRI or the book value of the Acquired Assets referred to therein is
not at least equal to the amount set forth therein, the Loss arising as a result
thereof shall be deemed to be 39 multiplied by the shortfall in such Qualified
MRI or book value.
9.5 RISK ALLOCATION. The representations, warranties,
covenants and agreements made herein are intended among other things to allocate
the risks inherent in the transaction contemplated hereby between the Parties,
and accordingly, a Party shall be entitled to the remedies prescribed by this
Agreement by reason of breach of any such representation, warranty, covenant or
agreement by another Party notwithstanding whether any employee, representative
or agent of the Party seeking to enforce a remedy knew or had reason to know of
such breach.
9.6 SPECIAL RULE FOR FRAUD. Notwithstanding anything in
Section 4.2(b) to the contrary, in the event of any breach of a representation
or warranty by a Party that is intentional or constitutes fraud, the
representation or warranty shall survive consummation of the transactions
contemplated in this Agreement and continue in full force and effect forever
thereafter.
9.7 GUARANTY AGREEMENT. Each Shareholder shall execute and
deliver at the Closing a Guaranty Agreement pursuant to which the Shareholders
will agree to guarantee the payment to the Buyer pursuant to any indemnification
claims made under this Agreement.
ARTICLE 10
INTENTIONALLY OMITTED.
ARTICLE 11
MISCELLANEOUS
11.1 PRESS RELEASE; DISCLOSURE. Simultaneous with the
execution of the Agreement, Buyer may, at its discretion, issue a press release
with respect to the execution of this Agreement in a form mutually acceptable to
Buyer and Seller. Except with respect to such press release and the information
contained therein, neither Party shall disclose to any Person, other
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than its financial and legal advisors and primary lenders and to the extent
disclosure is otherwise required by law, the terms and provisions contained in
this Agreement without the prior written consent of the other Party.
Notwithstanding the above, a Party required by law to disclose the existence of
the terms and provisions of this Agreement shall use its best efforts to provide
prior notice to the other Party giving the other Party an opportunity to comment
on the content of such disclosure.
11.2 NO THIRD PARTY BENEFICIARIES. This Agreement (other than
Section 4.3 to the extent it purports to confer rights upon the Covered Persons)
shall not confer any rights or remedies upon any Person other than the Parties
and their respective successors and permitted assigns.
11.3 ENTIRE AGREEMENT. This Agreement (including the documents
referred to herein) constitutes the entire agreement between the Parties and
supersedes any prior or contemporaneous understandings, agreements, or
representations by or between the Parties, written or oral, that may have
related in any way to the subject matter hereof excluding the Confidentiality
Agreement.
11.4 SUCCESSION AND ASSIGNMENT. This Agreement shall be
binding upon and inure to the benefit of the Parties named herein and their
respective successors and permitted assigns. No Party may assign either this
Agreement or any of its rights, interests, or obligations hereunder without the
prior written approval of the other Parties hereto; provided, that prior to
Closing, Buyer may, without the consent of, but with notice to, Seller, assign
this Agreement and the right to acquire the Acquired Assets to one of its
subsidiaries or affiliates.
11.5 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
11.6 HEADINGS. The section headings contained in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
11.7 NOTICES. All notices, requests, demands, claims, and
other communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given (i) when
delivered, if personally delivered, (ii) when receipt is electronically
confirmed, if faxed (with hard copy to follow via first class mail, postage
prepaid) or (iii) one day after deposit with a reputable overnight courier, in
each case addressed to the intended recipient as set forth below:
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IF TO THE SELLER OR THE SHAREHOLDERS:
Dan Lawrence
Cindy Lawrence
Gator Telecom, Inc.
4040 West Cypress Street
Tampa, Florida 33607
Telephone: (813) 874-7474
Facsimile: (813) 870-1522
WITH A COPY (WHICH SHALL NOT CONSTITUTE NOTICE) TO:
Denis Cohrs, Esq.
Kass Hodges, P.A.
Centre Square
1505 North Florida Avenue
Tampa, Florida 33602
Telephone: (813) 229-0900
Facsimile: (813) 229-3323
IF TO BUYER:
Guardian International, Inc.
3880 N. 28th Terrace
Hollywood, FL 33020
Attn: Richard Ginsburg, President and Chief Executive Officer
Telephone: (954) 926-1800, Ext. 203
Facsimile: (954) 926-1822
WITH A COPY (WHICH SHALL NOT CONSTITUTE NOTICE) TO:
Harvey Goldman, Esq.
Steel Hector & Davis LLP
200 South Biscayne Boulevard, 41st Floor
Miami, Florida 33131-2398
Telephone: (305) 577-7011
Facsimile: (305) 577-7001
11.8 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of Florida, without
giving effect to any choice of law or conflict of law provision or rule (whether
of the State of Florida or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Florida. No
Party, solely by virtue of executing this Agreement shall be deemed to have
submitted to the
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personal jurisdiction of any forum or waived any objection such Party may have
as to proper venue of any forum.
11.9 AMENDMENTS AND WAIVERS. No amendment of any provision of
this Agreement shall be valid unless the same shall be in writing and signed by
each Party. No waiver by any Party of any default misrepresentation, or breach
of warranty or covenant hereunder, whether intentional or not, shall be deemed
to extend to any prior or subsequent default, misrepresentation, or breach of
warranty or covenant hereunder or affect in any way any rights arising by virtue
of any prior or subsequent such occurrence.
11.10 SEVERABILITY. Any term or provision of this Agreement
that is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction. If the final judgment of a
court of competent jurisdiction declares that any term or provision hereof is
invalid or unenforceable, the Parties agree that the court making the
determination of invalidity or unenforceability shall have the power to reduce
the scope, duration, or area of the term of provision, to delete specific words
or Phrases, or to replace any invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, and
this Agreement shall be enforceable as so modified after the expiration of the
time within which the judgment may be appealed.
11.11 EXPENSES. Except as otherwise provided in Sections 4.3,
4.6 or 4.7(c), each Party will bear its own costs and expenses (including legal
and broker fees and expenses) incurred in connection with, or arising out of,
this Agreement or the transactions contemplated hereby.
11.12 TRANSFER TAXES. All documentary, sales, use,
registration and other transfer taxes (including, but not limited to, all
applicable real estate transfer or stock transfer Taxes) and fees incurred in
connection with the sale of the Acquired Assets and the other transactions
contemplated hereby shall be paid by Buyer.
11.13 CONSTRUCTION. The Parties have jointly participated in
the negotiation and drafting of this Agreement. In the event of an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumptions or burdens of proof
shall arise favoring any Party by virtue of the authorship of any of the
provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise.
Nothing in the disclosure schedules shall be deemed adequate to disclose an
exception to a representation or warranty made herein unless the disclosure
schedules identifies the exception with reasonable particularity and describes
the relevant facts in reasonable detail. Without limiting the generality of the
foregoing, the mere listing (or inclusion of a copy) of a document or other item
shall not be deemed adequate to disclose an exception to a
36
<PAGE>
representation or warranty made herein (unless the representation or warranty
relates solely to the existence of the document or other items itself). The
Parties intend that each representation, warranty, and covenant contained herein
shall have independent significance. If any Party has breached any
representation, warranty, or covenant relating to the same subject matter
(regardless of the relative levels of specificity) which the Party has not
breached shall not detract from or mitigate the fact that the Party is in breach
of the first representation, warranty, or covenant.
11.14 INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits
and Schedules identified in this Agreement are incorporated herein by reference
and made a part hereof.
11.15 NUMBER AND GENDER. Each defined term used in this
Agreement has a comparable meaning when used in its plural or singular form.
Each gender-specific term used herein has a comparable meaning whether used in a
masculine, feminine or gender-neutral form.
11.16 REMEDIES. In the absence of fraud or an intentional
breach of any provision hereof, no Party shall be liable or responsible in any
manner whatsoever to any other Party, whether for indemnification or otherwise,
with respect to any matter arising out of the representations, warranties or
covenants of this Agreement or any Schedule hereto or any opinion or certificate
delivered in connection herewith, except for (i) equitable relief as described
below, (ii) indemnity as provided in Article 9, or (iii) pursuant to other
remedies expressly provided for in this Agreement all of which provide the
exclusive remedies of the parties. Each of the Parties acknowledges and agrees
that each other Party would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the Parties agrees that
each other Party shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in any action instituted in any
court of the United States or any state thereof having jurisdiction over the
Parties and the matter, in addition to any other remedy to which it may be
entitled, at law or in equity. Each Party shall have the right to set off
against any obligation of such Party (or such Party's affiliates) to make
payment to any other Party (under this Agreement or otherwise), any amount owed
to the first Party by such other Party (or such Party's affiliates) (under this
Agreement or otherwise). In no event shall any Party's liability to another for
any claim arising under this Agreement or arising out of this transaction exceed
the Purchase Price.
11.17 DIRECTLY OR INDIRECTLY. Where any provision in this
Agreement refers to action to be taken by any person or entity, or which such
person or entity is prohibited from taking, such provision shall be applicable
whether the action in question is taken directly or indirectly by such person or
entity.
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<PAGE>
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on
the date first above written.
GUARDIAN INTERNATIONAL, INC.
By: /s/ RICHARD GINSBURG
----------------------------------
Richard Ginsburg, President and
Chief Executive Officer
GATOR TELECOM, INC.
By: /s/ DAN LAWRENCE
----------------------------------
Dan Lawrence, President
Shareholders:
/s/ DAN LAWRENCE
-------------------------------------
Dan Lawrence
/s/ CINDY LAWRENCE
-------------------------------------
Cindy Lawrence
38
EXHIBIT 10(B)
WARRANTY BILL OF SALE
THIS WARRANTY BILL OF SALE dated as of March 5, 1998 (the "Bill of
Sale") is given by Gator Telecom, Inc., a Florida corporation ("Grantor"), to
Guardian International, Inc., a Nevada corporation ("Grantee").
RECITALS
A. Grantor, Grantee, Dan Lawrence and Cindy Lawrence have entered into
an Asset Purchase Agreement (the "Asset Agreement") dated as of March 5, 1998
which provides, among other things, for the assignment and transfer of the
Acquired Assets from Grantor to Grantee.
B. Capitalized terms not otherwise defined in this Bill of Sale shall
have the meanings given to them in the Asset Agreement.
BILL OF SALE
1. Grantor hereby sells, transfers and delivers to Grantee and
Grantee's legal representatives, successors and assigns the Acquired Assets.
2. Grantor represents and warrants as follows:
(a) Grantor is the lawful owner of the Acquired Assets;
(b) The Acquired Assets are free from all encumbrances
except as specified in this Bill of Sale;
(b) Grantor has an unfettered right to sell the Acquired
Assets; and
(c) Grantor will defend the sale of the Acquired Assets
to the Grantee and its legal representatives,
successors and assigns against the lawful claims and
demands of all Persons.
3. Except as expressly set forth herein, the Acquired Assets are sold,
transferred and delivered in "As Is" condition and Grantor makes no warranties
regarding the Acquired Assets and expressly disclaims all warranties of
merchantability or fitness for a particular purpose.
<PAGE>
IN WITNESS WHEREOF, the Grantor has executed this Warranty Bill of Sale
as of the day and year first written above.
In the presence of:
GATOR TELECOM, INC.
/s/ DANIA BLANKENSHIP
- -----------------------
Name: Dania Blankenship By: /s/ DAN LAWRENCE
----------------------------
Dan Lawrence, President
/s/ JOSEPH ECKEBRECHT
- -----------------------
Name: Joseph Eckebrecht
STATE OF FLORIDA
COUNTY OF HILLSBOROUGH
On this 9 day of March, 1998, before me personally appeared Dan
Lawrence, as President of Gator Telecom, Inc., who is personally known to me or
produced a driver's license as identification, and he acknowledged before me
that he executed the above Warranty Bill of Sale, in his capacity as President
of Gator Telecom, Inc., as his free act and deed and that he did take an oath.
/s/ JAMES SHEPPARD
--------------------------------
Notary Public
Printed Name: James W. Sheppard
My Commission Expires: 3/10/98
Exhibit 10(c)
ASSIGNMENT AND ASSUMPTION AGREEMENT
ASSIGNMENT AND ASSUMPTION AGREEMENT made as of the 5th day of March,
1998 (the "Agreement") between Gator Telecom, Inc., a Florida corporation (the
"Assignor"), and Guardian International, Inc., a Nevada corporation (the
"Assignee"). All terms not otherwise defined in this Agreement shall have the
meanings assigned to them in the Asset Purchase Agreement (the "Asset
Agreement") dated as of March 5, 1998 among the Assignor, the Assignee, Dan
Lawrence and Cindy Lawrence.
RECITALS
A. Pursuant to the Asset Agreement, Assignor agreed to sell, convey,
and assign to Buyer the Acquired Assets, including the Assumed Liabilities.
B. Assignee has agreed to accept assignment of the Acquired Assets and
to assume the obligations of the Assignor under the Assumed Liabilities.
AGREEMENT
1. ASSIGNMENT. Assignor hereby sells, assigns, transfers, conveys, and
sets over to Assignee all of its rights, benefits, privileges, title and
interest in and to the Acquired Assets.
2. ASSUMPTION. The Assignee hereby fully and completely succeeds to,
assumes and agrees to pay, perform and discharge, in accordance with their
terms, all liabilities and obligations of Assignor under the Assumed Liabilities
after the Closing Date of the transactions contemplated by the Asset Agreement
(including obligations and liabilities arising in connection with the
installation of alarm systems and maintenance of alarm systems) and to indemnify
and hold Assignor harmless from all liabilities and obligations of Assignor
under the Assumed Liabilities after the Closing Date.
3. BENEFITS; BINDING EFFECT. This Agreement shall inure to the benefit
of, and shall be binding upon, the parties hereto and their respective
successors and assigns. Nothing expressed or implied in this Agreement is
intended, or shall be construed, to confer upon or give any person other than
the parties hereto and their respective personal representatives, legal
representatives, successors, and assigns, any rights or remedies under or by
reason of this Agreement.
<PAGE>
4. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida without regard to conflicts of
law principles.
IN WITNESS WHEREOF, Assignor and Assignee have executed this Agreement
as of the day and year first above written.
GATOR TELECOM, INC.
By: /s/ DAN LAWRENCE
---------------------------------
Dan Lawrence, President
GUARDIAN INTERNATIONAL, INC.
By: /s/ RICHARD GINSBURG
---------------------------------
Richard Ginsburg, President
and Chief Executive Officer
2
Exhibit 10(d)
GUARANTY AGREEMENT
GUARANTY AGREEMENT ("GUARANTY"), dated as of March 9, 1998, by
Dan Lawrence and Cindy Lawrence (collectively, the "GUARANTORS") in favor of
Guardian International, Inc., a Nevada corporation ("GUARDIAN"). Capitalized
terms used herein and not otherwise defined have the meaning ascribed to them in
the Asset Purchase Agreement (the "ASSET PURCHASE AGREEMENT") dated as of March
5, 1998, by and between Guardian and Gator Telecom, Inc., a Florida corporation
("SELLER").
W I T N E S S E T H :
WHEREAS, Seller and Guardian have entered into the Asset
Purchase Agreement providing for the sale by Seller to Guardian of substantially
all of the assets of Seller; and
WHEREAS, in order to provide Guardian further assurance as to
the payment and performance by Seller of its obligations under the Asset
Purchase Agreement and as a condition precedent to the obligations of Guardian
to consummate the Closing under the Asset Purchase Agreement, Guarantors,
simultaneously with the execution and delivery of the Asset Purchase Agreement,
have executed and delivered to Guardian this Guaranty;
NOW THEREFORE, as an essential inducement to Guardian to enter
into the Asset Purchase Agreement and in consideration of its so doing,
Guarantors hereby covenant and agree as follows:
ARTICLE 1
GUARANTY
Section 1.01 GUARANTY. (a) Guarantors hereby guarantee the
full and faithful performance by Seller of Seller's obligations under Article 9
of the Asset Purchase Agreement (the "GUARANTEED OBLIGATIONS").
(b) It is understood and agreed that the Guaranty by
Guarantors in clause (a) above is an unconditional and irrevocable guaranty of
payment and performance of the Guaranteed Obligations (not a guarantee of
collection) and may be enforced directly against Guarantors as a primary
obligation of Guarantors, and that any waiver by Guardian of any of the terms,
provisions or conditions of the Asset Purchase Agreement or any amendment or
modification of the Asset Purchase Agreement, or the granting of indulgences or
extension of time to Seller, may be made and done from time to time without
notice to Guarantors, and
<PAGE>
Guarantors' obligations under this Guaranty will continue subject to such
waiver, amendment or modification, indulgence or extension of time.
Section 1.02 PAYMENT AND PERFORMANCE OF THE GUARANTEED
OBLIGATIONS. (a) If the Guaranteed Obligations are not paid or performed by
Seller when due (an "EVENT OF DEFAULT"), Guarantors will, upon written demand
made by Guardian upon Guarantors, immediately pay or cause the performance of
the same in accordance with the terms of the Asset Purchase Agreement. Payment
to Guardian will be made at such place and in such manner as directed by
Guardian, without any deduction whatsoever whether for counterclaim, setoff or
otherwise. In addition, Guarantors will be liable for, and will pay to Guardian,
all costs and expenses (including reasonable attorneys' fees and expenses) that
may be incurred in connection with the collection, or obtaining the performance,
of any of the Guaranteed Obligations or this Guaranty.
(b) Guarantors agree that all payments by Guarantors hereunder
will be without withholding of or deduction for any Taxes of any nature now or
hereafter imposed by any political jurisdiction or taxing authority to which
Guarantors are subject. Should any such payment made hereunder be subject to any
such Tax, Guarantors will pay such Tax to the appropriate taxing authority. Upon
the request of Guardian, Guarantors shall deliver to Guardian Tax receipts or
other documents evidencing payment in full of the applicable Taxes. If
Guarantors do not pay the appropriate Tax such that the Tax obligation is
imposed upon the payment Guardian receives hereunder, Guarantors shall pay to
Guardian such additional amount as may be necessary to enable Guardian to
receive an amount after payment of such Taxes on behalf of Guarantors equal to
the full payment obligation due from Guarantors hereunder; PROVIDED, HOWEVER,
the preceding provisions of this subparagraph (b) shall not be interpreted to
impose upon Guarantors an obligation for payment of Taxes properly assessed to
Guardian with respect to payments made by Guarantors which constitute income to
Guardian under applicable law.
Section 1.03 GUARANTY NOT DEPENDENT ON OTHER MATTERS. The
obligations of Guarantors hereunder will not be dependent upon or affected by:
(a) any change in the time, manner or place of payment of, or
in any other term of, the Guaranteed Obligations, or any other amendment,
modification or waiver of, or any consent to departure from, any provision of
the Asset Purchase Agreement or any agreement or document relating thereto;
(b) any other action or failure to take action by Guardian
with respect to the Guaranteed Obligations, the Asset Purchase Agreement or any
agreement or document relating thereto;
(c) any proceeding, voluntary or involuntary, involving the
bankruptcy, insolvency, receivership, reorganization or arrangement of
Guarantor;
2
<PAGE>
(d) any provision of the law of any jurisdiction which
prevents Guarantors from performing the Guaranteed Obligations, or any event of
force majeure which might excuse the performance by Guarantors of the Guaranteed
Obligations; or
(e) any circumstances, whether or not referred to above, which
might otherwise constitute a defense available to, or a discharge of, Guarantors
in respect of this Guaranty.
Section 1.04 WAIVER BY GUARANTORS. Guarantors hereby
irrevocably waive:
(a) the right to assert in any action or proceeding upon this
Guaranty any set-off, counterclaim or other claim which Guarantors may have
against Seller or any other Person;
(b) except for matters of public policy which by law cannot be
waived by Guarantors, the benefit of all other principles or provisions of law,
statutory or otherwise, which are or might be in conflict with the terms hereof;
and
(c) any right to invoke the defense of force majeure in the
event that any event of force majeure might otherwise, under applicable law,
prevent Guarantors from performing, or excuse Guarantors from performing, any of
Guarantors' obligations under this Guaranty.
Section 1.05 CONTINUING LIABILITY OF GUARANTORS. In the event
the Guaranteed Obligations are paid in whole or in part by Guarantors, the
liability of Guarantors pursuant to this Guaranty will continue and remain in
full force and effect in the event that all or any part of any such payment is
recovered from Guardian as a preference, fraudulent transfer or similar payment
under any bankruptcy, insolvency or similar law. Guardian agrees to take all
actions which are reasonably appropriate to defend against any such attempt to
recover all or part of any such payment.
Section 1.06 SUBROGATION. Any and all rights of subrogation or
similar rights which Guarantors may have against Seller will be subordinate to
any and all rights which Guardian may have against Seller, and Guarantors will
not enforce any such right of subrogation or any similar right, and will not,
after a claim has been made pursuant hereto, claim from Seller any sum (whether
under any right of subrogation or otherwise) which may be owing to Guarantor or
have the benefit of any set-off or counterclaim against Seller, until all of the
Guaranteed Obligations and other obligations of Seller to Guardian have been
paid and performed in full.
ARTICLE 2
MISCELLANEOUS
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<PAGE>
Section 2.01 NOTICES. All notices and other communications
required or permitted hereunder will be in writing and will be delivered
personally, sent by facsimile transmission or sent by certified, registered or
express mail, postage prepaid. Any such notice will be deemed given when so
delivered personally, or sent by facsimile transmission or, if mailed, five days
after the date of deposit in the United States mails, as follows:
(A) If to Guardian, to:
Guardian International, Inc.
3880 N. 28th Terrace
Hollywood, FL 33020
Attn: Richard Ginsburg, President and Chief Executive
Officer
Telephone: (954) 926-1800, Ext. 203
Facsimile: (954) 926-1822
with a copy (which shall not constitute notice) to:
Harvey Goldman, Esq.
Steel Hector & Davis LLP
200 South Biscayne Boulevard, 41st Floor
Miami, Florida 33131-2398
Telephone: (305) 577-7011
Facsimile: (305) 577-7001
(B) if to Guarantors, to:
Dan Lawrence
Cindy Lawrence
818 Sandringham Lane
Lutz, FL 33549
Telephone: (813) ____________
Facsimile: (813) ____________
with a copy (which shall not constitute notice) to:
Dennis Cohrs, Esq.
Kass Hodges, P.A.
Centre Square
1505 North Florida Avenue
Tampa, Florida 33602
Telephone: (813) 229-0900
Facsimile: (813) 229-3323
4
<PAGE>
Any party may by notice given in accordance with this Section to the other
parties designate another address or person for receipt of notices hereunder.
Section 2.02 WAIVERS AND AMENDMENTS; NON-CONTRACTUAL REMEDIES;
PRESERVATION OF REMEDIES. This Guaranty may be amended, superseded, canceled,
renewed or extended, and the terms hereof may be waived, only by a written
instrument signed by the parties hereto or, in the case of a waiver, by the
party waiving compliance. No delay on the part of any party in exercising any
right, power or privilege hereunder will operate as a waiver thereof, nor will
any waiver on the part of any party of any such right, power or privilege, nor
any single or partial exercise of any such right, power or privilege, preclude
any further exercise thereof or the exercise of any other such right, power or
privilege. The rights and remedies herein provided are cumulative and are not
exclusive of any rights or remedies that any party may otherwise have at law or
in equity.
Section 2.03 BINDING EFFECT; NO ASSIGNMENT. This Guaranty will
be binding upon and inure to the benefit of the parties and their respective
successors and legal representatives. This Guaranty is not assignable except by
operation of law, except that Guardian may assign its rights hereunder to any of
its affiliates that acquires the Alarm Service Assets.
Section 2.04 GOVERNING LAW. This Guaranty will be governed by
and construed in accordance with the laws of the State of Florida applicable to
agreements made and to be performed entirely within such State.
Section 2.05 SEVERABILITY OF PROVISIONS. If any provision or
any portion of any provision of this Guaranty or the application of any such
provision or any portion thereof to any person or circumstance, are held invalid
or unenforceable, the remaining portion of such provision and the remaining
provisions of this Guaranty, and the application of such provision or portion of
such provision as is held invalid or unenforceable to persons or circumstances
other than those as to which it is held invalid or unenforceable, will not be
affected thereby.
Section 2.06 SETOFF. In addition to any rights now or
hereafter granted under applicable law, and not by way of limitation of any such
rights, upon and after the occurrence of an Event of Default, Guardian is hereby
authorized by Guarantors, at any time or from time to time, without notice to
Guarantors or to any other Person, any such notice being hereby expressly
waived, (a) to setoff and to appropriate and to apply any and all indebtedness
or obligations at any time held or owing by Guardian to or for the credit or the
account of Guarantors against and on account of the obligations and liabilities
of Guarantors to Guardian under this Guaranty including, but not limited to, all
claims of any nature or description arising out of or in connection with this
Guaranty, even though said obligations and liabilities, or any of them, will be
contingent or unmatured, and (b) pending any such setoff, appropriation or
application, to hold such amounts as collateral to secure such obligations and
liabilities and to refuse to pay any or all, as Guardian in its sole discretion
may select.
5
<PAGE>
Section 2.07 COUNTERPARTS. This Guaranty may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered will be an original, but all such counterparts shall together
constitute one and the same instrument. Each counterpart may consist of a number
of copies hereof each signed by less than all, but together signed by all of the
parties hereto.
Section 2.08 HEADINGS. The headings in this Guaranty are for
reference only, and will not affect the interpretation of this Guaranty.
IN WITNESS WHEREOF, the parties hereto have executed this
Guaranty as of the day and year first above written.
GUARDIAN INTERNATIONAL, INC.
By:/s/ RICHARD GINSBURG
-------------------------------------
Richard Ginsburg, President and
Chief Executive Officer
Guarantors:
/s/ DAN LAWRENCE
----------------------------------------
Dan Lawrence
/s/ CINDY LAWRENCE
----------------------------------------
Cindy Lawrence
6
Exhibit 10(e)
ESCROW AGREEMENT
ESCROW AGREEMENT ("Agreement") dated March 9, 1998 among Gator Telecom,
Inc. ("Seller"), Dan Lawrence and Cindy Lawrence (collectively, the
"Shareholders"), Guardian International, Inc. (the "Buyer") and Steel Hector &
Davis LLP, as Escrow Agent.
RECITALS
A. Seller, the Shareholders and Buyer have entered into an Asset
Purchase Agreement (the "Asset Agreement") effective as of March 9, 1998 which
provides for the purchase by Buyer of substantially all of the assets of Seller.
B. Section 2.5 of the Asset Agreement provides that the Escrow Shares
are to be held in escrow in accordance with the terms of this Agreement.
C. Seller, the Shareholders and the Buyer desire that the Escrow Agent
hold and dispose of the Escrow Shares in accordance with the terms and
conditions of this Agreement, and the Escrow Agent is willing to do so.
D. All terms not otherwise defined in this Agreement shall have the
meanings given them in the Asset Agreement.
AGREEMENT
1. APPOINTMENT OF ESCROW AGENT. The Escrow Agent is hereby constituted
and appointed as escrow agent, and hereby accepts its appointment and agrees to
act as escrow agent pursuant to the terms and conditions of this Agreement.
2. ESCROW DEPOSIT. Buyer hereby delivers the Escrow Shares to the
Escrow Agent pursuant to Section 2.5 of the Asset Agreement. The Escrow Shares
will be held by the Escrow Agent until disbursed to Seller pursuant to the terms
of this Agreement. The Escrow Agent acknowledges receipt of the Escrow Shares
and agrees to hold them in escrow pursuant to the terms of this Agreement.
3. RELEASE OF ESCROW SHARES.
3.1. RELEASE OF ESCROW SHARES TO SELLER. Upon a determination
by Seller and Buyer that Seller is entitled to receive all of the Escrow Shares
pursuant to Section 2.6(a)(i) of the Asset Agreement or a portion of the Escrow
Shares pursuant to Section 2.6(a)(iii) of the Asset Agreement, Buyer and Seller
shall jointly submit to the Escrow Agent a notice stating the number of Escrow
Shares to be released to Seller and requesting release of the Escrow Shares.
<PAGE>
3.2. RELEASE OF ESCROW SHARES TO BUYER. Upon a determination
by Seller and Buyer that Buyer is entitled to receive all of the Escrow Shares
pursuant to Section 2.6(a)(ii) of the Asset Agreement or a portion of the Escrow
Shares pursuant to Section 2.6(a)(iii) of the Asset Agreement, Buyer and Seller
shall jointly submit to the Escrow Agent a notice stating the number of Escrow
Shares to be released to Seller and requesting release of the Escrow Shares.
4. DUTIES OF ESCROW AGENT.
4.1. IN GENERAL. It is agreed that the duties of the Escrow
Agent are only those that are specifically provided in this Agreement, and are
purely ministerial in nature. The Escrow Agent shall incur no liability, except
for liability arising from the Escrow Agent's willful misconduct or gross
negligence, provided the Escrow Agent acts in good faith. The Escrow Agent has
no responsibility in respect of the Escrow Shares deposited with it, other than
to use due care in holding the Escrow Shares and faithfully to follow the
instructions relating to it contained in this Agreement. The Escrow Agent may
consult with counsel and shall be fully protected from liability arising from
actions taken in good faith in accordance with the advice of counsel.
4.2. LEGAL PROCEEDINGS; INDEMNIFICATION. The Escrow Agent
shall not be required to institute legal proceedings of any kind. If any action
is threatened or instituted against the Escrow Agent, it may interplead the
parties to this Escrow Agreement and may deposit the Escrow Shares with the
court. In this event, the Escrow Agent shall be relieved of and discharged from
all further obligations and liabilities under this Escrow Agreement. The parties
jointly and severally agree to indemnify the Escrow Agent from and against all
claims, actions, losses, liabilities, damages, deficiencies, costs and expenses
(including interest, penalties and reasonable attorneys' fees and disbursements)
in acting in accordance with any written instruction from them, individually or
collectively.
5. VOTING OF SHARES; DIVIDENDS. During the period in which the Escrow
Shares are held in escrow under this Agreement, the Seller is entitled with
respect to the Escrow Shares:
(a) to vote the Escrow Shares at meetings of
shareholders of the Buyer and to execute consents in respect thereof, and to
consent to, ratify or waive notice of meetings of the shareholders of the Buyer;
and
(b) to receive and collect or to have paid over to
it all dividends or other distributions declared or paid on the Escrow Shares,
except (i) dividends or redistributions constituting stock dividends, (ii)
dividends or distributions in property other than cash or stock of the Buyer,
and (iii) liquidation dividends (either partial or complete) (collectively,
"Excepted Dividends"). All Excepted Dividends shall be paid over and pledged and
deposited with the Escrow Agent. Seller shall have all of the powers and rights
to all Excepted Dividends as it has with respect of the Escrow Shares.
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<PAGE>
6. EXPENSES. The Escrow Agent shall be entitled to be reimbursed for
all reasonable expenses, disbursements and advances, including reasonable
attorneys' fees, incurred or made by the Escrow Agent in connection with the
carrying out of its duties under this Agreement. The Escrow Agent's expenses,
disbursements and advances shall be paid directly to the Escrow Agent and shall
be borne equally by the Seller and the Buyer.
7. COOPERATION. The parties agree to execute, acknowledge, deliver and
file, or cause to be executed, acknowledged, delivered and filed, all further
instruments, agreements or documents as may be necessary to consummate the
transactions provided for in this Agreement and to do all further acts necessary
to carry out the purpose and intent of this Agreement.
8. WAIVER. No term or condition of this Agreement shall be deemed to
have been waived, nor shall there be any estoppel against the enforcement of any
provision of this Agreement, except by written instrument of the party charged
with the waiver or estoppel. No written waiver shall be deemed a continuing
waiver unless specifically stated therein, and each waiver shall operate only as
to the specific term or condition waived and shall not constitute a waiver of
the term or condition for the future or as to any act other than that
specifically waived. The waiver by any party of any other party's breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach, and the failure of any party to exercise any right or remedy
shall not operate or be construed as a waiver or bar to the exercise of such
right or remedy upon the occurrence of any subsequent breach. No delay on the
part of a party in exercising a right, power or privilege hereunder shall
operate as a waiver thereof. No waiver on the part of a party of a right, power
or privilege, or a single or partial exercise of a right, power or privilege,
shall preclude further exercise thereof or the exercise of any other right,
power or privilege. The rights and remedies of this Agreement are cumulative and
are not exclusive of the rights or remedies that a party may otherwise have at
law or in equity.
9. GOVERNING LAW; VENUE AND JURISDICTION. This Agreement shall be
governed by and construed in accordance with the laws of the State of Florida
without reference to conflicts of law principles. Venue and jurisdiction of all
actions relating to the performance or interpretation of this Agreement may be
brought only in the courts of the State of Florida located in Broward County or
in the United States District Court for the Southern District of Florida. The
parties consent to personal jurisdiction in the courts described in this Section
for the purpose of all actions, and waive all objections to venue and the right
to assert that a court chosen under this Section is improper based on the
doctrine of forum non conveniens.
10. ATTORNEYS' FEES. If litigation is brought concerning this
Agreement, the prevailing party shall be entitled to receive from the
non-prevailing party, and the non-prevailing party shall upon final judgment and
expiration of all appeals immediately pay upon demand all reasonable attorneys'
fees and expenses of the prevailing party.
11. NOTICES. Notices required or permitted to be given under this
Agreement shall be in writing and effective upon delivery (i) in person, (ii) by
facsimile with written confirmation of receipt, (iii) by certified mail, return
receipt requested or (iv) by overnight courier (such as
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<PAGE>
Federal Express) to the parties at the addresses appearing on the signature page
or to another address as a party shall direct by notice to the other parties as
provided in this Section.
12. ENTIRE AGREEMENT. This Agreement and the Asset Agreement constitute
the entire understanding of the parties with respect to the Escrow Shares and
supersede all prior discussions, negotiations, agreements and understandings,
whether oral or written, with respect to their subject matter. This Agreement
may be modified only by a written instrument properly executed by all of the
parties.
13. SEVERABILITY. If any one or more of the provisions of this
Agreement is held invalid, illegal or unenforceable, the remaining provisions of
this Agreement shall be unimpaired, and the invalid, illegal or unenforceable
provision shall be replaced by a mutually acceptable valid, legal and
enforceable provision which comes closest to the intent of the parties.
14. SUCCESSORS AND ASSIGNS. This Agreement shall be for the benefit of,
and shall be binding upon, the parties and their respective heirs, personal
representatives, executors, legal representatives, successors and permitted
assigns.
15. PAYMENT OF EXPENSES. Except as otherwise provided in this
Agreement, each party shall pay its own legal fees and disbursements and other
expenses incurred in connection with this Agreement.
16. COUNTERPARTS. This Agreement may be executed by the parties in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute one and the same
instrument.
The parties have executed this Agreement effective as of the
day and year first written above.
GUARDIAN INTERNATIONAL, INC.
By:/s/ RICHARD GINSBURG
-----------------------------------------
Richard Ginsburg, President and
Chief Executive Officer
Address: 3880 North 28th Terrace
Hollywood, FL 33020
Facsimile: (954) 929-1822
4
<PAGE>
GATOR TELECOM, INC.
By:/s/ DAN LAWRENCE
-----------------------------------------
Dan Lawrence, President
Address: 4040 West Cypress Street
Tampa, FL 33607
Facsimile: (813) 870-1522
Shareholders:
/s/ DAN LAWRENCE
--------------------------------------------
Dan Lawrence
Address: 4040 West Cypress Street
Tampa, FL 33607
Facsimile: (813) 870-1522
/s/ CINDY LAWRENCE
--------------------------------------------
Cindy Lawrence
Address: 4040 West Cypress Street
Tampa, FL 33607
Facsimile: (813) 870-1522
STEEL HECTOR & DAVIS LLP
By:/s/ KIM A. PRINE
-----------------------------------------
Kim A. Prine
Address: 1900 Phillips Point West
777 South Flagler Drive
West Palm Beach, FL 33401
Facsimile: (561) 655-1509
5
Exhibit 10(f)
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made and entered into
this 9th day of March, 1998, by and between Guardian International, Inc., a
Nevada corporation ("Employer"), and Dan Lawrence ("Employee").
WITNESSETH
WHEREAS, the Board of Directors of Employer (the "Board") recognizes
that Employee will contribute to the future growth and success of the security
business of Employer, consisting of burglar alarm, fire alarm, closed circuit
television and electronic access and control and central station monitoring
services to residential and commercial customers (the "Business"), and the Board
therefore desires to assure Employer of Employee's services as an employee of,
and for the benefit of, Employer; and
WHEREAS, in order to induce Employee to remain in the employ of
Employer, this Agreement sets forth employment and other benefits which Employer
shall pay to Employee in connection with his employment, provides for Employee's
employment for a term of three years and provides for Employee's agreement not
to compete with the Business in the event of his termination of employment on
the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, the receipt and sufficiency of which
are mutually acknowledged, the parties hereto hereby agree as follows:
1. EMPLOYMENT. Employer hereby employs Employee, and Employee hereby
accepts such employment, upon the terms and conditions set forth in this
Agreement.
2. TERM. Subject to the provisions for termination contained in Section
10 hereof, the term of this Agreement, and the employment of Employee hereunder,
shall commence on March 9, 1998 and continue for a three-year term ending on
March 8, 2001. Thereafter, this Agreement shall renew automatically for one-year
terms unless one month advance written notice of termination is given by either
party.
3. DUTIES. During the term of his employment hereunder, Employee shall
serve as Regional Manager of Employer in the region of Florida comprising the
metropolitan Tampa area and, at Employer's option, the metropolitan Orlando area
of Florida. In such capacity, Employee (i) shall perform those reasonable duties
as directed by the President of Employer, (ii) shall report to the President of
Employer, and (iii) shall perform such other duties as shall be usual and
customary for such officer in accordance with the Bylaws of Employer. During the
term of his employment hereunder, the Employee agrees to maintain his status as
the "qualifier" for the licenses
<PAGE>
listed on Acquired Assets Schedule of the Asset Purchase Agreement effective as
of March 9, 1998 by and among Employer, Employee, Cindy Lawrence and Gator
Telecom, Inc., a Florida corporation, which require an individual to serve as a
"qualifier" and not to do anything that would disqualify Employee from acting as
a "qualifier" under the applicable Licenses; provided, however, the Employee may
terminate his status as a "qualifier" under the applicable Licesnes upon breach
of this Agreement by the Employer. The place of Employee's employment shall be
Tampa, Florida and Employee shall travel as is necessary in the furtherance of
his duties under this Agreement.
4. EXCLUSIVITY OF SERVICES. Employee shall devote his full business
time, energy and ability exclusively to the business, affairs and interests of
Employer and matters related thereto, shall use Employee's best efforts and
abilities to promote Employer's interests, and shall perform the services
contemplated by this Agreement in accordance with policies established by and
under the direction of the Board. During the term hereof, Employee shall not
serve as an officer, director, employee, consultant or advisor to any other
business, and shall not engage in any other business activities other than the
Permitted Activities, as herein defined. The Employee may (i) make and manage
personal business investments of his choice, provided, that the Employee shall
hold no investment in any entity which competes in any way with Employer or its
subsidiaries, other than an investment representing less than a 5% interest in
any publicly held entity; and (ii) serve in any capacity with any civic,
educational or charitable organization without seeking or obtaining approval by
the Board, provided, that the activities and services described in clauses (i)
and (ii) (collectively, the "Permitted Activities") do not interfere or conflict
with the performance of duties hereunder or create any conflict of interest with
such duties. Employee hereby confirms that he is under no contractual
commitments inconsistent with his obligations set forth in this Agreement.
5. COMPENSATION.
a. During the term of his employment hereunder, Employee shall
receive a salary of Seventy-Two Thousand Dollars ($72,000) per annum (the
"Salary"), payable in equal installments no less frequently than semi-monthly.
Salary increases may be considered annually by the President of Employer.
b. Employee shall be entitled to a bonus from time to time
during the Term pursuant to Schedule 5(b).
c. During the term of the Employee's employment hereunder, the
Employer shall pay an automobile allowance of $500 per month to the Employee.
d. Employee shall be entitled, in addition to the above, to
any benefits and perquisites to which officers of Employer may be or may
generally become entitled to receive under any present or future employment
benefit and perquisite plans or programs, or contingent compensation plans, of
Employer, and Employee shall be eligible to receive, during the period of his
employment under this Agreement, benefits and emoluments for which officers are
eligible under every plan or program to the extent permissible under the general
terms and provisions thereof. The
2
<PAGE>
foregoing notwithstanding, Employer may change or discontinue any such benefits
in its sole discretion.
6. EXPENSE REIMBURSEMENT. During the term of Employee's employment
hereunder, Employer, upon the submission of proper proof by Employee, shall
promptly reimburse Employee for reasonable business expenses actually and
necessarily paid or incurred by him in the Employee's discretion in connection
with the discharge of his duties hereunder.
7. VACATION. During the term of his employment hereunder, Employee,
during each year of the term of this Agreement, shall be entitled to three weeks
of vacation time as selected in consecutive or nonconsecutive periods or any
combination thereof by Employee in his reasonable discretion consistent with his
duties and responsibilities hereunder, during which vacation time Employee shall
be paid the applicable portion of his Salary provided, however, Employee shall
not take a vacation for longer than one week without the prior consent of his
direct supervisor. Vacation shall not accumulate or carry over from year to
year.
8. INSURANCE. During the term of his employment hereunder, Employer
shall at all times pay the reasonable premiums of medical insurance policies for
Employee and his immediate family and shall further provide and pay the premiums
of group term life insurance and group disability insurance.
9. TERMINATION.
a. Notwithstanding anything contained in this Agreement,
Employer by written notice to Employee shall at all times in its sole discretion
have the right to terminate this Agreement, and Employee's employment hereunder,
"for cause" effective upon delivery of such notice to Employee. For purposes of
this Agreement, "for cause" shall mean: (i) any conviction of Employee of a
felony or any conduct which if proved would support conviction of a felony; (ii)
conduct amounting to a material act of fraud, misconduct or dishonesty involving
Employer; (iii) a material act of fraud or dishonesty not involving Employer
which has a material adverse effect upon the Business or reputation of Employer;
(iv) material violation by Employee of his obligations under this Agreement
after written notice thereof to Employee and failure to cure such violation
within fifteen (15) days following such notice; (v) misuse of alcohol that
materially impairs Employee's ability to perform the duties of his employment as
determined by a physician retained by Employer or, if Employee refuses to submit
to appropriate examinations by such physician at the request of the Board, then
by at least three members of the Board of Directors of Employer; or (vi) the
unlawful use of drugs or other controlled substances.
b. Employer by written notice to Employee shall have the right
to terminate this Agreement and Employee's employment upon Employee's lack of
capacity to perform the essential functions of his duties under this Agreement,
with or without reasonable accommodation, because of physical or mental
disability ("Disability") of Employee (i) for a period of 90 or more days if
such disability occurs as a result of Employee's performance of his duties under
this Agreement or (ii) for
3
<PAGE>
a period 30 or more days if such disability occurs as a result of Employee's
activities outside the scope of this Agreement, either consecutively or in the
aggregate during any six-month period, as determined by an impartial reputable
physician agreed upon by the Board and Employee (or his representative, as the
case may be).
c. If Employee dies during the term of his employment
hereunder, this Agreement shall terminate automatically upon the date of
Employee's death.
10. PAYMENTS UPON TERMINATION OR EXPIRATION.
a. In the event that this Agreement, and Employee's employment
hereunder, is terminated pursuant to Section 9 hereof, then, in such event, (i)
Employer shall have no obligation whatsoever to make any payment including,
without limitation, any payment of Salary, Bonus, or any insurance premium, to
or on behalf of Employee for any period subsequent to the date of such
termination; and (ii) Employer may, subject to the terms of such plans and
applicable law, remove Employee from coverage under any medical, life,
disability or other insurance plans or programs made available to Employee by
Employer.
b. In the event that this Agreement, and Employee's employment
hereunder, is terminated by Employer without cause during the term set forth in
Section 2 hereof, then, in such event, in addition to such amounts as have
accrued prior to the date of termination and have not previously been paid,
Employer shall pay to Employee, payable at such time as such payments would
otherwise be payable hereunder, Employee's Salary and benefits that would have
accrued to him, and any Bonus the Board has otherwise approved prior to
termination, for the remaining term of this Agreement; provided, however, that
if the Employee is terminated not for cause, the Employer shall pay to Employee
any Bonus to which the Employee is entitled pursuant to Schedule 5(b) pro rated
for the period in which the Employee was employed by the Company.
11. CONFIDENTIALITY.
a. For good consideration and as an inducement for Employer to
employ Employee, Employee agrees that, both during the term of this Agreement
and after the termination of this Agreement, Employee will hold in a fiduciary
capacity for the benefit of Employer, and shall not, directly or indirectly, use
or disclose, except as authorized by Employer in connection with the performance
of his duties, any Confidential Information (as defined below) that Employee may
have or acquire (whether or not developed or compiled by Employee and whether or
not Employee has been authorized to have access to such Confidential
Information) prior to or during the term of this Agreement. The term
"Confidential Information" as used in this Agreement shall mean and include any
material information, data and know-how relating to the Business of Employer
that is disclosed to Employee by Employer or known by him as a result of his
relationship with Employer (or a company acquired by Employer) and not generally
within the public domain (whether constituting a trade secret or not) including,
without limitation, the following: financial information, supply and
4
<PAGE>
service information, marketing information, personnel information, customer
information and information with respect to any corporate affairs that Employer
treats as confidential.
The term "Confidential Information" does not include information that
has become generally available to the public by the act of Employer or by the
act of one who has the right to disclose such information without violating any
right of Employer or the customer to which such information pertains.
Nothing in this Section 11 shall prevent Employee from disclosing any
Confidential Information to the extent such disclosure is required by law or any
order of a court or government authority with jurisdiction, provided, however,
that Employee agrees to give Employer advance written notice as soon as possible
of the Confidential Information required to be disclosed, and at Employer's
request, to use his best efforts to obtain assurances that the Confidential
Information required to be disclosed will be maintained on a confidential basis
and will not be disclosed to a greater degree than required by law.
b. The covenant contained in this Section 11 shall survive the
termination of Employee's employment with Employer for any reason for a period
of two (2) years; provided, however, that with respect to those items of
Confidential Information which constitute trade secrets under applicable law,
Employee's obligations of confidentiality and non-disclosure as set forth in
this Section 11 shall continue to survive after said two (2) year period to the
greatest extent permitted by applicable law. These rights of Employer are in
addition to those rights Employer has under the common law or applicable
statutes for the protection of trade secrets.
12. COVENANT NOT TO COMPETE. For good consideration and as an
inducement for Employer to employ Employee, Employee agrees that he will not
engage or participate, directly or indirectly, in any business that competes
with the Business of Employer in any county in which the Employee has
supervisory responsibility over the business, affair and operations of the
Employer in such county, whether as employee, employer, consultant, agent,
principal, partner, stockholder, corporate officer, director, or other
representative capacity, at any time during Employee's employment with Employer
and for a period of two (2) years after the date of termination (for any reason)
of Employee's employment with Employer. Notwithstanding the foregoing, Employee
may (i) hold an investment representing less than a 5% interest in any publicly
held entity engaging in a business that competes with the Business and (ii) be
an employee, employer, consultant, agent, principal, partner, stockholder,
corporate officer, director or other representative of an entity that does not
engage in burglar alarm, fire alarm, closed circuit television and electronic
access and control and central monitoring services; provided, however, that
Employee agrees to refer customers seeking monitoring services to Employer In
the event any court shall refuse to enforce any portion of the covenant set
forth in this Section 12, then such unenforceable portion shall be deemed
eliminated and severed from said contract for the purposes of said court's
proceedings to the extent necessary to permit the remaining portions of the
covenant to be enforced.
5
<PAGE>
13. COVENANTS AGAINST OTHER ACTIONS DAMAGING TO EMPLOYER. Employee
agrees that he will not, at any time during his employment with Employer and
forever thereafter, for himself or on behalf of or in conjunction with any third
party solicit any employee of Employer or its subsidiaries to leave such
employment; provided that the posting by Employee or any entity with which
Employee is involved of general advertisements soliciting employees shall not
constitute the solicitation of any employee of Employer or its subsidiaries.
Employee further agrees that, during his employment with Employer and for an
unlimited period thereafter, he will not directly or indirectly, on his own
behalf or in the service of or on behalf of others, solicit, divert or
appropriate, or attempt to solicit, divert or appropriate, to any competing
business, any customers of Employer or its subsidiaries existing as of the date
of termination. If, during the term of this Agreement, Employee is engaged in or
associated with the planning or implementing of any project, program or venture
involving Employer and a third party or parties (a "Venture"), or any
discussions, analysis or negotiations with respect to an investment in, merger,
acquisition or purchase, directly or indirectly, of the stock, assets, or
business of any entity (an "Acquisition"), all rights in the Venture and the
Acquisition and any opportunity to make any investment in the entity to be so
acquired (the "Target") shall belong to Employer and shall constitute a
corporate opportunity belonging exclusively to Employer. Except as approved by
the Board, Employee shall not be entitled to any interest in any such Venture or
to invest or solicit any third party to invest in the Target or consummate the
Acquisition, or to any commission, finder's fee or other compensation in
connection therewith other than any Salary paid to Employee for performance of
his duties in the ordinary course of business. In the event any court shall
refuse to enforce any portion of the covenants set forth in this Section 13,
then such unenforceable portion shall be deemed eliminated and severed from said
contract for the purposes of said court's proceedings to the extent necessary to
permit the remaining portions of the covenant to be enforced.
14. ARBITRATION. All disputes or controversies between the parties
arising from or related to any matter that pertains to this Agreement, to the
employment of Employee by Employer, or to the termination Employee's employment
which otherwise would allow or require resort to a court, administrative, or
other governmental dispute resolution forum (whether the claim is legal or
equitable in nature, whether it is based on any tort, contract, or common law
theory of recovery, and whether it is based on any federal, state, or local
employment discrimination or civil rights statute, executive order, law,
regulation, or ordinance including, without limitation, the Age Discrimination
in Employment Act of 1967, the Americans with Disabilities Act, Title VII of the
Civil Rights Act of 1964 and the Florida Civil Rights Act of 1992) shall be
referred to binding, non-appealable arbitration in accordance with the
procedures set forth in Exhibit A hereto and without recourse to any litigation
except as set forth in Exhibit A. Each party hereby submits to personal
jurisdiction in Broward County, Florida for the purpose of such arbitration
proceedings, and/or any suits to confirm same. Pending completion of any
arbitration proceedings, payments not in dispute shall continue to be made and
obligations not in dispute shall continue to be performed.
15. ASSIGNMENT. This Agreement is personal to Employee, and Employee
may not assign or transfer any of its benefits or obligations. Upon written
notice by Employer to Employee, Employer may assign its rights under this
Agreement to any entity (i) that controls or acquires
6
<PAGE>
control of Employer, (ii) that is controlled by, is under common control with,
or acquires an interest in Employer, or (iii) in which Employer acquires a
financial interest, provided that such entity assumes Employer's obligations
under this Agreement or that Employer remains liable for its obligations under
the Agreement. Upon written notice by Employer to Employee, Employer may assign
its rights to any entity that acquires substantially all of Employer's assets,
provided that such entity assumes Employer's obligations under this Agreement.
16. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida, without reference to the
conflicts of laws principles thereof.
17. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto and supersedes all prior agreements, understandings
and arrangements, both oral and written, between the parties hereto with respect
to the subject matter hereof. This Agreement may not be modified in any way
unless in writing signed by both Employer and Employee.
18. NOTICES. Any notices required or permitted to be given under this
Agreement shall be in writing and shall be deemed to have been duly given when
delivered by hand and receipted or when received or refused if delivered by
United States mail, by registered or certified mail, return receipt requested,
postage prepaid, as follows:
If to Employer: Guardian International, Inc.
3880 North 28th Terrace
Hollywood, Florida 33020
If to Employee: Dan Lawrence
818 Sandringham Lane
Lutz, FL 33549
or to such other addresses as either party hereto may from time to time give
notice of to the other on five days prior notice in the manner aforesaid.
19. BENEFITS; BINDING EFFECT. This Agreement shall be for the benefit
of and binding upon the parties hereto and their respective legal
representatives, successors and, where applicable, assigns.
20. SEVERABILITY. The invalidity of any one or more of the words,
phrases, sentences, clauses or sections contained in this Agreement shall not
affect the enforceability of the remaining portions of this Agreement or any
part hereof, all of which are inserted conditionally on their being valid in
law, and, in the event that anyone or more of the words, phrases, sentences,
clauses or sections contained in this Agreement declared invalid, this Agreement
shall be construed as if such invalid word or words, phrase or phrases, sentence
or sentences, clause or clauses, or section or sections had not been inserted.
7
<PAGE>
21. WAIVERS. The waiver by either party hereto of a breach of any
provision of this Agreement shall not be construed as a waiver of any subsequent
breach.
22. SECTION HEADINGS. The section headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
23. EQUITABLE REMEDIES. Employee acknowledges that Employer would not
have an adequate remedy at law for money damages if Employee breaches Sections
11, 12 or 13. Therefore, in addition to all other remedies to which Employer may
be entitled for a breach or threatened breach of this Agreement, Employer will
be entitled to specific enforcement of this Agreement and to injunctive or other
equitable relief as a remedy for a breach or threatened breach. In the event of
legal proceedings in connection with this Agreement, the non-prevailing party
shall pay all reasonable attorneys' fees and costs of the prevailing party at
trial and on appeal.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the day and year first above written.
EMPLOYER:
GUARDIAN INTERNATIONAL, INC.,
a Nevada corporation
By: /s/ RICHARD GINSBURG
---------------------------------
Richard Ginsburg, President and
Chief Executive Officer
EMPLOYEE:
/s/ DAN LAWRENCE
-------------------------------------
Dan Lawrence, Individually
8
<PAGE>
SCHEDULE 5(B)
BONUS
The Employee shall receive a bonus upon achievement of the performance
goals and in the amounts described below.
ATTRITION
Overall Performance Goal: Maintain or reduce current customer
attrition rate
Base Line: Maximum attrition permitted is 10%
Attrition Calculation: Total MRI for the applicable calendar year
divided by average MRI for the applicable
calendar year
Specific Targets and Applicable Annual Bonus Amount:
TARGET BONUS AMOUNT
------ ------------
(% of Attrition)
6.1%-7.0% $20,000
7.1%-8.0% $15,000
8.1%-9.0% $10,000
Date Payable: Not later than January 31 in the year following the year
in which the bonus is earned
ACQUISITIONS
Overall Performance Goal: Introduce the Employer to as many third
party companies as possible
Base Line: N/A
Specific Target: Acquire additional MRI each quarter
Annual Bonus Amount:
2.5% of first $1,000,000 of purchase price
2.0% of second $1,000,000 of purchase price
1.5% of third $1,000,000 of purchase price
<PAGE>
1.0% of fourth $1,000,000 of purchase price
.5% of balance of purchase price
Date Payable: In the same consideration and proportions and at the
same time as seller receives consideration from the
Employer.
MANAGEMENT FEE
A management fee of $1.00 per monitored account (under contract) at the
end of each month in excess of the number of monitored accounts as of
the Closing Date. Eligible monitored accounts shall be those monitored
accounts under the direct supervision of Employee, including
pre-existing monitored accounts assigned to Employee's supervision and
monitored accounts acquired during the term of Employee's employment.
The management fee shall be added to payroll and shall be paid at the
same intervals as the Employee is paid the Salary.
MRI
Overall Performance Goal: Increase MRI at a faster rate than
historically increased while at the same
time maintaining paybacks on customer
premise equipment
Base Line: Based on the largest monthly increase in MRI for the months
prior to the applicable month
Specific Target: N/A
Annual Bonus Amount: 100% of the increase in MRI each month up to
$25,000 commencing March 1, 1998 and each month
thereafter during the term of the Agreement. The
increase shall be based on the largest monthly
increase in MRI achieved during the preceding
months. For example, to calculate the increase in
MRI for the month ended June 30, 1998, the MRI as
of May 31, 1998 will be used as the base line,
unless the month end MRI in a preceding month
exceeded the May 1998 MRI.
Date Payable: No later than the 15th day of the month following the
month for which the increase in MRI is calculated
HOMEOWNERS ASSOCIATION CONTRACTS
<PAGE>
Employee shall be entitled to a commission on multi-year contracts
between the Employer and any Homeowners Associations to the extent the
contract is obtained through the efforts of Employee as follows:
Year 1 of Applicable Contract: 100% of MRI as of January 31
Year 2 of Applicable Contract: 75% of MRI as of January 31
Year 3 of Applicable Contract
and each year thereafter: 50% of MRI as of January 31
BONUS ELECTION FOR YEAR 1 OF EMPLOYMENT AGREEMENT
During the first year of the Agreement, Employee may elect to receive
an incentive equal to two times the MRI fee calculated under "MRI"
above instead of the incentives described under "MANAGEMENT FEE"and
"MRI" described above. Employee must make this election in writing and
deliver it to the Employer not later than December 31, 1998.
<PAGE>
EXHIBIT A
ARBITRATION PROCEDURES
a. If a dispute or controversy arises, the parties hereto shall attempt
in good faith to resolve such dispute or controversy promptly by negotiation.
Any such dispute or controversy which has not been resolved by negotiation
within thirty (30) days after the initiation of discussions shall be resolved by
binding arbitration in accordance with the then current CPR Rules for
Non-Administered Arbitration of Business Disputes. Unless the parties agree
otherwise, the arbitration shall be conducted in Broward County, Florida, by a
panel of three arbitrators. The disputing parties shall each select one
arbitrator, and the arbitrators so selected shall select an attorney as the
third arbitrator. If the arbitrators selected by the disputing parties fail to
agree on the third arbitrator within thirty (30) days of the date this
arbitration provision becomes operative, any person involved may request CPR to
make the appointment in accordance with its applicable rules.
b. The arbitrators shall decide the issues submitted to them in
accordance with the provisions and commercial purposes of this Agreement;
provided that, all substantive questions of law shall be determined under the
laws of the State of Florida (without regard to its principles of conflicts of
laws).
c. The arbitration shall be governed by the United States Arbitration
Act, 9 U.S.C. Section 1, ET SEQ., and judgment upon the award rendered by the
arbitrators may be entered by any court having jurisdiction thereof. The
arbitrators may grant any remedy or relief which is just and equitable,
including injunctive relief or specific performance.
d. The parties hereto agree to facilitate the arbitration by: (i)
making available to one another and to the arbitrators for examination,
inspection and extraction all documents, books, records and personnel under
their control if determined by the arbitrators to be relevant to the dispute;
(ii) participating in reasonable discovery, including oral depositions; (iii)
conducting arbitration hearings to the greatest extent possible on successive
days; and (iv) observing strictly the time periods established by the Rules or
by the arbitrators for submission of evidence or briefs.
e. Initially, the disputing parties shall each pay one-half of the
costs (excluding attorneys' fees) of any arbitration; provided, however, that
the arbitrators shall divide all costs (excluding attorneys' fees) incurred in
conducting the arbitration in their final award in accordance with what they
deem just and equitable under the circumstances, and any party who is allocated
in excess of one-half of such costs shall reimburse the other for such excess
costs.
f. Notwithstanding the exclusivity of the dispute resolution procedures
specified herein, a party hereto, without prejudice to such procedures, may file
a complaint or seek a preliminary injunction or other provisional judicial
relief if in its sole judgment such action is necessary to avoid irreparable
damage or to preserve the status quo. Despite any such action, the parties shall
continue to participate in good faith in the procedures specified herein.
