SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(a) of
the Securities Exchange Act of 1934
Date of Report
July 25, 1996
COMPUDYNE CORPORATION
(Exact name of registrant as specified in its charter)
NEVADA
(State or other jurisdiction of incorporation)
1-4245 23-1408659
(Commission File Number) (IRS Employer Identification No.)
120 Union Street
Willimantic, Connecticut 06226
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code
(860) 456-4187
Item 2. Acquisition or Disposition of Assets.
Acquisition of Shorrock Electronic Systems, Inc. Common Stock.
Pursuant to the terms of a certain Stock Purchase Agreement entered into
by and between CompuDyne Corporation ("the Company") and SES Corp. USA (the
"Seller"), dated July 11, 1996, the Company acquired on that date all of the
capital stock of Shorrock Electronic Systems, Inc. ("SES") from the Seller.
The Seller is an indirect subsidiary of BET Public Limited Company. SES,
located in Hanover, Maryland, is engaged in the sale, installation and
maintenance of physical security systems for correctional and other
facilities.
The consideration paid to the Seller for the stock of SES was $290,000 in
immediately available funds, representing the adjusted net asset value of SES
as of June 29, 1996 less $550,000.
The Company reviewed the recent financial performance of SES, visited
SES' facilities, evaluated management, and considered SES' current backlog
and future business potential in coming to the determination of the
consideration to be paid. The Company also considered the ability of SES'
business to complement CompuDyne's other security-related business lines
consistent with CompuDyne's strategic direction.
In order to provide the cash required to purchase the stock of SES and
provide working capital for SES, the Company's chairman and Mr. Alan
Markowitz, a director of the Company, purchased 600,000 additional shares of
the Company's common stock for $600,000. In addition, in order to reduce
Company debt and interest charges, these same individuals converted the
Company's $400,000 Senior Convertible Notes held by them into 400,000 shares
of the Company's common stock.
Concurrently with the purchase of the stock of SES, the name of SES was
changed to Quanta SecurSystems, Inc.
Item 7. Financial Statements and Exhibits
(a) Audited financial statements of Shorrock Electronic Systems,
Inc. are not currently available, and will be filed as soon as practicable,
but within 60 days from the date of this report.
(b) Pro-forma financial statements to reflect the acquisition of
Shorrock Electronic Systems, Inc. are not currently available, and will be
filed as soon as practicable, but within 60 days of the date of this report.
(c) Exhibit (99.1) Stock Purchase Agreement dated July 11, 1996
by and between CompuDyne Corporation and SES Corp. USA.
Exhibit (99.2) Notice and Agreement of Conversion with
respect to Senior Convertible Promissory Note by and between CompuDyne
Corporation and Martin Roenigk.
Exhibit (99.3) Notice and Agreement of Conversion with respect
to Senior Convertible Promissory Note by and between CompuDyne Corporation and
Alan Markowitz.
Exhibit (99.4) Stock Purchase Agreement, dated as of July 11,
1996 by and among CompuDyne Corporation, Martin Roenigk and Alan Markowitz.
____________________
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 hereunto duly authorized.
COMPUDYNE CORPORATION
Date: July 25, 1996 By: /s/ Martin A. Roenigk
Martin A. Roenigk, Chairman and
Chief Executive Officer
INDEX TO EXHIBITS
Exhibit (99.1) Stock Purchase Agreement dated July 11, 1996 by and
between CompuDyne Corporation and SES Corp. USA.
Exhibit (99.2) Notice and Agreement of Conversion with respect
to Senior Convertible Promissory Note by and between CompuDyne Corporation and
Martin Roenigk.
Exhibit (99.3) Notice and Agreement of Conversion with respect
to Senior Convertible Promissory Note by and between CompuDyne Corporation and
Alan Markowitz.
Exhibit (99.4) Stock Purchase Agreement, dated as of July 11,
1996 by and among CompuDyne Corporation, Martin Roenigk and Alan Markowitz.
EXHIBIT 99.1
STOCK PURCHASE AGREEMENT
BETWEEN
SES CORP. USA
AND
COMPUDYNE CORPORATION
July 11, 1996
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS
Definitions....................................... 1
ARTICLE II
PURCHASE AND SALE OF SHARES
2.1 Purchase and Sale................................. 4
2.2 Payment of Purchase Price......................... 4
2.3 Expenses.......................................... 4
2.4 Preparation of Effective Date Balance
Sheet; Settlement Statement....................... 4
2.5 Brokerage......................................... 5
ARTICLE III
CLOSING DATE AND PLACE OF CLOSING;
CERTAIN TRANSACTIONS TO BE EFFECTED
AT OR PRIOR TO CLOSING
3.1 Closing Date...................................... 5
3.2 Place of Closing.................................. 5
3.3 Certain Transactions to be Effected
at or Prior to Closing............................ 5
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SELLER
4.1 Due Organization and Authority.................... 7
4.2 Agreement Authorized; Binding and Enforceable..... 7
4.3 No Conflict....................................... 7
4.4 Required Consents................................. 8
4.5 Title to Shares................................... 8
4.6 Capitalization.................................... 8
4.7 Taxes............................................. 8
4.8 Litigation........................................ 9
4.9 Carry on in the Ordinary Course................... 9
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
5.1 Due Organization and Authority.................... 9
5.2 Agreement Authorized; Binding and Enforceable..... 9
5.3 No Required Consents.............................. 10
5.4 Investment........................................ 10
ARTICLE VI
POST PRE-CLOSING COVENANTS OF THE SELLER
6.1 Noncompetition.................................... 10
6.2 Nonsolicitation of Employees...................... 11
6.3 Breach of Provisions.............................. 11
6.4 Preparation of Tax Returns........................ 11
6.5 Section 338(h)(10) Election....................... 12
ARTICLE VII
POST-CLOSING COVENANTS OF THE PURCHASER
7.1 Preparation of Tax Returns........................ 12
7.2 Access to Records................................. 12
7.3 Section 338(h)(10) Election....................... 13
7.4 Bonding Obligations............................... 13
7.5 Elimination of "Shorrock" Name.................... 14
7.6 Certain Receivables............................... 14
ARTICLE VIII
INDEMNIFICATION
8.1 Agreement to Indemnify............................ 14
8.2 Conditions of Indemnification..................... 16
ARTICLE IX
MISCELLANEOUS
9.1 The Contract Claim............................... 18
9.2 The Harassment Claim............................. 18
9.3 Name Change...................................... 19
9.4 Survival of Representations and Warranties....... 19
9.5 Publicity........................................ 19
9.6 Notices.......................................... 19
9.7 Schedule Disclosure, Etc......................... 20
9.8 Complete Agreement............................... 20
9.9 Further Assurances............................... 21
9.10 Governing Law.................................... 21
9.11 Binding Effect; Assignment....................... 21
9.12 Separability..................................... 21
9.13 401(k) Plan Matters.............................. 21
9.14 Counterparts..................................... 21
9.15 Captions......................................... 22
STOCK PURCHASE AGREEMENT
Stock Purchase Agreement, dated the 11th day of July, 1996,
between SES Corp. USA, a Delaware corporation with offices at 17
Executive Park, Atlanta, GA (the "Seller"), and CompuDyne
Corporation, a Nevada corporation having an address at 120 Union
Street, Willimantic, CT 06226 (the "Purchaser").
RECITALS
A. The Seller is an affiliate of BET Public Limited
Company ("PLC").
B. The Seller owns of record and beneficially all of the
issued and outstanding shares of common stock of Shorrock
Electronic Systems Inc., a Maryland corporation ("SES").
C. The Purchaser desires to acquire all of the shares of
common stock of SES and the Seller desires to sell and transfer
such shares to the Purchaser, all upon the terms and conditions
hereinafter set forth.
D. To accomplish such purposes and in consideration of
the premises and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
Definitions
For purposes of this Agreement, the following terms shall
have the following meanings:
"Affiliate" of a person or entity shall mean a person or
entity controlling, controlled by or under common control with
such person or entity.
"Agreement" shall mean this Stock Purchase Agreement, as
the same may be amended from time to time, including all
exhibits and schedules attached hereto and the Disclosure
Schedule.
"Bonds" shall mean any and all performance bonds,
guarantees and related financial assurances relating to SES
and/or its contracts and operations and in respect of which
Seller or any Affiliate of Seller has any liability or
obligation, direct or indirect, including, but not limited to,
those Bonds set forth on Schedule 1 of the Disclosure Schedule.
"Claim" shall have the meaning set forth in Section 8.1.1
hereof.
"Closing" shall mean the consummation of the transactions
contemplated by this Agreement.
"Closing Date" shall mean the date of this Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Contract Claim" shall mean the contract claim against SES
described in Schedule 9.1.1 of the Disclosure Schedule.
"Disclosure Schedule" shall mean the disclosure document
delivered contemporaneously with the execution and delivery of
this Agreement, containing the exhibits and schedules required
to be included therein pursuant to this Agreement.
"Distribution Agreement" shall mean the distribution
agreement between Shorrock Limited and SES, a copy of which is
set forth in the Disclosure Schedule as Exhibit A.
"Effective Date" shall mean June 29, 1996.
"Effective Date Balance Sheet" shall mean the balance
sheet, a copy of which is set forth in the Disclosure Schedule
as Exhibit B, delivered to the Purchaser pursuant to Section
2.4.1 hereof, setting forth the calculation of Net Asset Value.
"Form 8023A" shall have the meaning set forth in Section
6.7 hereof.
"Guarantor" shall mean BET Public Limited Company, a
corporation organized under the laws of England.
"Harassment Claim" shall mean the sexual harassment claim
described in Schedule 9.2 of the Disclosure Schedule.
"Indemnified Party" shall mean the party or parties
entitled to indemnity under Article VIII hereof.
"Indemnifying Party" shall mean the party or parties
obligated to indemnify the Indemnified Party under Article VIII
hereof.
"Interim Period" shall mean the period from the Effective
Date to and including the date immediately preceding the Closing
Date.
"Liens" shall mean any and all liens, mortgages, pledges,
conditional sale agreements, security interests, restrictions,
claims, options, encumbrances or rights of third parties of
every kind and nature.
"Losses" shall have the meaning set forth in Section 8.1.1
hereof.
"Net Asset Value" shall mean, as of the Effective Date, an
amount equal to $840,000, the calculation of which is set forth
on the Effective Date Balance Sheet, representing (i) all assets
of SES, less (ii) all liabilities of SES, determined in
accordance with the procedures and assumptions used by SES in
accordance with past practice in the preparation of its monthly
financial statements, or as otherwise mutually agreed upon by
the parties.
"Purchase Price" shall mean $290,000, representing (i) the
Net Asset Value of SES less (ii) $550,000.
"Purchaser" shall mean CompuDyne Corporation, a Nevada
corporation.
"Responsible Officers" shall mean Mr. J.K. Robison and Mr.
William Rock.
"Section 338(h)(10) Election" shall have the meaning set
forth in Section 6.5 hereof.
"Seller" shall mean SES Corp. USA.
"Settlement Statement" shall mean the statement of cash
receipts and disbursements of SES, including cash advances from
affiliates of the Seller to SES, during the Interim Period,
together with relevant bank reconciliations, as agreed to by the
parties (excluding transaction costs of the Seller relating to
the Closing), a copy of which is set forth in the Disclosure
Schedule as Exhibit C.
"Shares" shall mean all of the issued and outstanding
shares of common stock, without par value, of SES.
"Tax" shall mean any federal or state income tax, including
any interest or penalties.
"Tax Returns" shall mean returns, declarations, reports,
claims for refund and information returns or statements relating
to Taxes, including any schedules or attachments thereto.
"Territory" shall have the meaning set forth in Section
6.1.1 hereof.
ARTICLE II
Purchase and Sale of Shares
2.1. Purchase and Sale. Upon the terms and subject
to the conditions set forth in this Agreement, the Seller hereby
sells, assigns, conveys, transfers and delivers the Shares to
the Purchaser on the Closing Date, and the Purchaser hereby
purchases the Shares, in consideration of the payment by the
Purchaser to the Seller of the Purchase Price in accordance with
the provisions of Section 2.2 hereof.
2.2. Payment of Purchase Price. The Purchase Price
shall be paid by the Purchaser to the Seller by wire transfer of
immediately available federal funds at the Closing.
2.3. Expenses.
2.3.1 Whether or not the transactions contemplated
by this Agreement shall be consummated, except as otherwise
expressly provided in this Agreement, the Seller and the
Purchaser shall each pay their own expenses (including, without
limitation, attorneys' and accountants' fees and disbursements)
incident to this Agreement and the transactions contemplated
hereby.
2.3.2 Notwithstanding anything in Section 2.3.1
hereof to the contrary, the Seller shall be solely responsible
for any sales, use, transfer or other similar taxes imposed in
respect of the sale of the Shares.
2.4 Preparation of Effective Date
Balance Sheet; Settlement Statement.
2.4.1. The Seller has prepared and delivered to the
Purchaser, and the Purchaser has reviewed and accepted, the
Effective Date Balance Sheet, setting forth the Net Asset Value
of SES.
2.4.2 The parties acknowledge that (a) the business
of SES has been operated for the account of the Purchaser during
the Interim Period; and that (b) details of cash receipts and
disbursements of SES, including cash advances from Affiliates of
the Seller to SES, during the Interim Period are set forth in
the Settlement Statement. Accordingly, at the Closing, the
Purchaser shall pay to the Seller an amount equal to the net
amount of cash advances made by Affiliates of SES to SES during
the Interim Period, less (i) any disbursements made by SES in
respect of the Contract Claim and (ii) any costs incurred by SES
in connection with the transactions contemplated by this
Agreement, as set forth on the Settlement Statement.
2.5. Brokerage. The Seller and the Purchaser each
represents and warrants to the other that it has not directly or
indirectly engaged any broker, finder, agent or intermediary of
any kind to bring about the transactions contemplated by this
Agreement and that no person or entity is entitled to any
brokerage commission, finder's fee, agent's commission or other
similar compensation in connection with the transactions
contemplated by this Agreement. Each party agrees to indemnify
the other against any claims for any such commissions, fees or
similar compensation by any person or entity claiming to have
been retained by such first party or any Affiliate thereof.
ARTICLE III
Closing Date and
Place of Closing; Certain Transactions
to be Effected at or Prior to Closing
3.1. Closing Date. The Closing shall take place at
10:00 A.M., New York time, on the Closing Date or at such other
time or date as the Seller and the Purchaser may mutually agree.
3.2. Place of Closing. The Closing shall take
place at the offices of Gratch Jacobs & Brozman, P.C., 950 Third
Avenue, New York, New York 10022, or at such other place as the
Seller and the Purchaser may mutually agree upon in writing.
3.3. Certain Transactions to be Effected at or
Prior to Closing. Subject in each case to the terms and
conditions contained in this Agreement, the following steps
shall be taken concurrently at the Closing, except as otherwise
expressly stated:
3.3.1. The Seller shall deliver, or cause to be
delivered, to the Purchaser, the following:
(a) Stock certificates representing the
Shares, duly endorsed in blank or accompanied by stock
powers duly executed in blank and bearing all
necessary stock transfer tax stamps affixed thereto,
sufficient to transfer the Shares on the books of SES;
(b) Corporate resolutions duly adopted by
the Board of Directors of the Seller, authorizing the
execution and delivery by the Seller of this Agreement
and the performance by the Seller of the transactions
contemplated hereby and thereby, duly certified by the
Secretary or an Assistant Secretary of the Seller, and
an incumbency certificate, certifying the names and
true signatures of the officers of the Seller
authorized to execute and deliver this Agreement;
(c) All corporate minute and stock transfer
books of SES;
(d) A copy of the Certificate of Incorpora-
tion of SES and any amendments thereto, certified by
the Secretary of State of the State of Maryland as of
a date not more than thirty (30) days prior to the
Closing Date;
(e) A copy of the By-Laws of SES, certified
by a duly authorized officer thereof to be true,
correct and complete as of the Closing Date;
(f) A certificate of good standing for the
Seller and SES, issued as of a date not more than
thirty (30) days prior to the Closing Date by the
Secretaries of State of their respective states of
incorporation, and certificates of good standing of
SES in each state where it is qualified to do business
on the date hereof;
(g) A copy of the Distribution Agreement,
duly executed by Shorrock Limited;
(h) A written certification reasonably
satisfactory to the Purchaser evidencing that all
amounts due and owing from SES to any of SES'
Affiliates have been contributed to the capital of SES
or otherwise cancelled; and
(i) A waiver from PHH Vehicle Management
Services Corporation with respect to lease defaults
caused by the sale of the Shares contemplated hereby.
3.3.2. The Purchaser shall deliver, or cause to be
delivered, to the Seller, the following:
(a) A wire transfer of immediately available
federal funds in the amount of the Purchase Price to
such account or accounts as the Seller may designate
prior to the Closing;
(b) Corporate resolutions duly adopted by
the Board of Directors of the Purchaser authorizing
the execution and delivery by the Purchaser of this
Agreement and the performance by the Purchaser of the
transactions contemplated hereby and thereby, duly
certified by the Secretary or an Assistant Secretary
of the Purchaser, and an incumbency certificate,
certifying the names and true signatures of the
officers of the Purchaser authorized to execute and
deliver this Agreement;
(c) A copy of the Certificate of
Incorporation of the Purchaser and any amendments
thereto, certified by a duly authorized officer of the
Purchaser to be true, correct and complete as in
effect on and as of the Closing Date;
(d) A copy of the By-Laws of the Purchaser,
certified by a duly authorized officer of the
Purchaser to be true, correct and complete as of the
Closing Date;
(e) A certificate of good standing for the
Purchaser issued as of a date not more than thirty
(30) days prior to the Closing Date by the Secretary
of State of the State of Nevada; and
(f) A copy of the Distribution Agreement,
duly executed by the Purchaser.
ARTICLE IV
Representations and Warranties of the Seller
The Seller represents and warrants to the Purchaser as
follows:
4.1. Due Organization and Authority. Each of SES,
the Guarantor and the Seller is a corporation duly organized,
validly existing and in good standing under the laws of the
state of its incorporation, and has full power and authority to
own, lease and operate its properties and assets and to carry on
its business as now conducted. SES is qualified to do business
in the states listed on Schedule 4.1 of the Disclosure Schedule.
4.2. Agreement Authorized; Binding and Enforceable.
The execution, delivery and performance of this Agreement by the
Seller and the Guarantor have been duly authorized by all
required corporate action (including any required director
and/or stockholder approvals). This Agreement is a legal, valid
and binding obligation of the Seller and the Guarantor
enforceable against them in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium or
similar laws affecting creditors' rights and by equitable
principles of general application which may limit the
availability of certain equitable remedies (such as specific
performance).
4.3. No Conflict. The execution and delivery by
the Seller and the Guarantor of this Agreement, the sale,
transfer, assignment and delivery by the Seller of the Shares
under this Agreement, and the performance by the Seller and the
Guarantor of their respective obligations under this Agreement
do not conflict with, result in the breach of or default under
the terms of, the Certificate of Incorporation or By-Laws of the
Seller or the Guarantor, any material agreement to which the
Seller or the Guarantor is a party, or any statute, ordinance,
judgment, order, decree, regulation or rule of any court or
governmental body affecting or relating to the Seller or the
Guarantor.
4.4. Required Consents. No consent of, waiver from
or notice to any party, which has not been obtained by the
Seller or the Guarantor, as the case may be, is required in
order for the Seller and the Guarantor to execute, deliver and
perform their respective obligations under this Agreement or to
consummate the transactions contemplated hereby.
4.5. Title to Shares. The Seller is the sole
record and beneficial owner of the Shares, free and clear of
Liens, and subject to no proxies, contracts, calls or other
commitments.
4.6. Capitalization. The entire authorized capital
stock of SES consists of 1,000 shares of common stock, without
par value, of which 770 shares are issued and outstanding and
are owned of record and beneficially as of the date hereof by
the Seller. The Shares have been duly authorized and are
validly issued, fully paid and non-assessable, with no liability
attaching to the ownership thereof. There are no authorized,
outstanding or existing (i) voting trusts or other agreements or
understandings with respect to the voting of SES's capital stock
or securities convertible into or exchangeable for such stock;
(ii) options, warrants or other rights (including, without
limitation, preemptive rights) to purchase, repurchase or
subscribe for SES's capital stock, any authorized but unissued
shares of SES's capital stock or any securities convertible into
or exchangeable for such shares; (iii) agreements of any kind
relating to the issuance of capital stock of SES, any such
convertible or exchangeable securities or any such options,
warrants or rights; or (iv) agreements of any kind which may
obligate SES to issue or purchase any of its securities.
4.7. Taxes.
4.7.1. All Tax Returns relating to state and federal
corporate income Taxes required to be filed prior to the Closing
Date in respect of SES with respect to periods ended on or prior
to the Closing Date ("Pre-Closing Periods") have been timely
filed. To the actual knowledge of the Responsible Officers,
each such Tax Return has been, and each Tax Return to be
prepared by the Seller pursuant to Section 6.4 will be, prepared
in material compliance with all applicable laws and regulations
and to the actual knowledge of the Responsible Officers, all
Taxes due and owing by SES for all Pre-Closing Periods have been
paid or accrued for.
4.7.2. Except as set forth on Schedule 4.7 of the
Disclosure Schedule, to the actual knowledge of the Responsible
Officers, there is no action, suit, proceeding, audit or
investigation now in progress, pending or threatened against or
with respect to SES with respect to any Taxes.
4.8. Litigation. Except as set forth on Schedule
4.8 of the Disclosure Schedule, as of the Closing Date, PLC's
Company Secretary at PLC's chief executive office located at
Stratton House, Piccadilly, London, England W1X6AS has not
received written notice of any claims, actions, suits,
proceedings, orders or investigations pending against SES.
4.9. Carry on in Ordinary Course. During the
period from May 30, 1996 through the Closing Date, SES' business
policies and practices have been carried on in the ordinary
course consistent with recent practice of SES. Other than with
respect to the bonuses contemplated by (i) a letter, dated
May 7, 1996, from Shorrock Integrated Systems to Mr. J.K.
Robison and (ii) a letter, dated May 7, 1996, from Shorrock
Integrated Systems to Mr. W. Rock, copies of which have been
delivered to the Purchaser, there have been no raises,
promotions, bonuses, termination agreements, severance
agreements or employment contracts entered into by employees of
SES during such period, other than in the ordinary course of
business consistent with past practice of SES, and there has
been no transfer of assets, real or intellectual, from SES to
the Seller or its Affiliates other than in the ordinary course
of business, consistent with past practices of SES.
ARTICLE V
Representations and Warranties of the Purchaser
The Purchaser hereby represents and warrants to the
Seller as follows:
5.1. Due Organization and Authority. The Purchaser
is a corporation duly organized, validly existing and in good
standing under the laws of the State of Nevada, and has full
corporate power and authority to own, lease and operate its
properties and assets and to carry on its business as now
conducted and in each state in which the nature of its
activities requires it to be qualified.
5.2. Agreement Authorized; Binding and Enforceable.
The execution, delivery and performance of this Agreement by the
Purchaser has been duly authorized by all required corporate
action (including any required director and/or stockholder
approvals). This Agreement is legal, valid and binding
obligations of the Purchaser enforceable against it in
accordance with their respective terms, except as enforceability
may be limited by applicable bankruptcy, insolvency, reorgani-
zation, moratorium or similar laws affecting creditors' rights
and by equitable principles of general application which may
limit the availability of certain equitable remedies (such as
specific performance).
5.3. No Required Consents. No consent of, waiver
from or notice to any party, which has not been obtained by the
Purchaser, is required in order for the Purchaser to execute,
deliver and perform its obligations under this Agreement or to
consummate the transactions contemplated hereby.
5.4. Investment. The Purchaser is acquiring the
Shares for investment for its own account and not with a view
to, or for resale in connection with, any distribution within
the meaning of the Securities Act of 1933, as amended, and the
Purchaser will not sell or offer to sell or otherwise dispose of
all or any portion of the Shares except in accordance with the
provisions of such Act. The Purchaser acknowledges that it has
been afforded the opportunity to ask questions of, and to
receive answers and information from, the Seller, SES and
persons acting on their behalf concerning the financial
condition of SES, the Shares and the transactions contemplated
hereby, and that the Seller is making no representations or
warranties concerning any of the foregoing except for those
expressly contained in Article IV of this Agreement.
ARTICLE VI
Post-Closing Covenants of the Seller
6.1. Noncompetition.
6.1.1. For a period of three (3) years after the
Closing Date, the Seller shall not, and shall cause its
Affiliates not to, directly or indirectly operate or otherwise
engage in business under the "Shorrock" name anywhere in the
territory described on Schedule 6.1(a) of the Disclosure
Schedule (the "Territory"), except with respect to the marketing
of "Shorrock" products under the Distribution Agreement. If the
Purchaser becomes aware that a third party is using the
"Shorrock" name in the Territory in connection with the
provision of security services, the Purchaser shall promptly
notify the Seller in writing and provide the Seller with a
description of the circumstances surrounding such use of the
"Shorrock" name. Upon receipt of such notice by the Seller, the
Seller shall use its reasonable best efforts to enjoin such use,
provided, however that the Seller shall not be obligated to
initiate legal proceedings to enjoin such usage, except as may
be set forth on Schedule 6.1(b) of the Disclosure Schedule or
otherwise on terms mutually agreeable to the Seller and the
Purchaser. In addition, the Seller shall not, and shall cause
its Affiliates not to, (a) solicit business in competition with
SES with respect to those specific projects set forth on
Schedule 6.1 of the Disclosure Schedule in which SES is engaged
as of the Closing Date, or with respect to which SES is actively
engaged in discussions with prospective customers as of the
Closing Date, as set forth on Schedule 6.1.1 of the Disclosure
Schedule; or (b) use the pre-qualification experience record of
SES in procuring business in the Territory.
6.2. Nonsolicitation of Employees. For a period of
three (3) years after the Closing Date, neither the Seller nor
any of its Affiliates shall actively recruit or hire any persons
who were employees of SES as of the Closing Date or who are
employees of SES during such three (3) year period, unless such
employees were previously terminated by SES.
6.3. Breach of Provisions. In the event that the
Seller or any of its Affiliates shall breach any of the
provisions of Sections 6.1 or 6.2, or in the event that any such
breach is threatened, in addition to and without limiting or
waiving any other remedies available to the Purchaser at law or
in equity, the Purchaser shall be entitled to seek immediate
injunctive relief in any court, domestic or foreign, having the
capacity to grant such relief, to restrain any such breach or
threatened breach and to enforce the provisions of said
Sections 6.1 and 6.2. The Seller acknowledges and agrees that
there is no adequate remedy at law for any such breach or
threatened breach and, in the event that any proceeding is
brought seeking injunctive relief, agree not to use as a defense
thereto that there is an adequate remedy at law. The parties
further acknowledge that the restrictions provided for in
Sections 6.1 and 6.2 are, under all of the circumstances,
reasonable and necessary. If any provisions of Section 6.1 or
6.2 are determined by a court of competent jurisdiction to be
too broad so as to be unenforceable, such provisions shall be
deemed to have been modified to be only so broad as is
enforceable.
6.4. Preparation of Tax Returns. After the
Closing, the Seller will prepare and timely file (or cause to be
prepared and timely filed) with the appropriate taxing
authorities Tax Returns with filing due dates after the Closing
Date relating to federal and state corporate income Taxes which
are required to be filed by SES in respect of all Pre-Closing
Periods and will pay all Taxes due with respect thereto. The
Purchaser will, and will cause SES to, cooperate with the Seller
in the preparation and filing by the Seller of such Tax Returns.
Such cooperation will include, without limitation, furnishing
the Seller with such information and the assistance of such
personnel as may be reasonably necessary for the Seller to
prepare such Tax Returns and to respond to any audits thereof.
Within ten (10) days of receipt by the Purchaser or SES, the
Purchaser will pay to the Seller the amount of any federal and
state income Tax refund attributable to any Pre-Closing Period.
6.5. Section 338(h)(10) Election. The Purchaser
will elect, and the Seller and SES will join with the Purchaser
in making an election, pursuant to Sections 338(g) and
338(h)(10) of the Code, to treat the acquisition of the Shares
as an acquisition of the assets of SES effective as of the
Effective Date (the "Section 338(h)(10) Election"). The
Purchaser, the Seller and SES will comply with all of the
requirements and conditions imposed on such party by Sections
338(g) and 338(h)(10) of the Code, the related Treasury
Regulations, and all other Code sections and regulations related
thereto, including, without limitation, the timely filing of
Department of Treasury Form 8023A entitled Corporate Qualified
Stock Purchases (or any successor form) (including all
information and attachments required to be submitted in
connection with the Section 338(h)(10) Election) and any
analogous state and local forms (collectively, the "Form
8023A"). The Purchaser, the Seller and SES will cause to be
prepared and duly execute sufficient copies of Form 8023A and
such state and local forms no later than five (5) days prior to
the last date on which the Purchaser would be permitted under
the Code and the related Treasury Regulations to file the Form
8023A. Each party hereto will also provide any other assistance
reasonably requested by the other in making the Section
338(h)(10) Election.
ARTICLE VII
Post-Closing Covenants of the Purchaser
7.1. Preparation of Tax Returns. After the Closing,
the Purchaser will cause SES to prepare and timely file (or
cause to be prepared and timely filed) with the appropriate
taxing authorities all local, state and federal tax returns,
other than those Tax Returns to be prepared by the Seller
referred to in Section 6.4 hereof which are required to be filed
by SES in respect of all periods through the Closing.
7.2. Access to Records. For a period of seven (7)
years after the Closing, the Purchaser will, and will cause SES
to, (a) maintain such books and records relating to SES which
may be reasonably necessary in order for the Seller to satisfy
the requirements of local, state and/or federal tax auditors and
other tax obligations imposed upon the Seller or any Affiliate
thereof by law (including, without limitation, responding to
audits of tax returns) and (b) cooperate with and afford the
Seller (and Purchaser shall cause SES to afford the Seller), or
will use its best efforts to cause any other appropriate person
to cooperate with and afford the Seller, at the Seller's sole
cost and expense, reasonable access to and the ability to copy,
during normal business hours, such books and records (as well as
access to and reasonable assistance of personnel) on any other
matter relating to SES which are reasonably necessary, for tax
purposes (including, without limitation, responding to audits of
tax returns) in order for the Seller to satisfy the requirements
of local, state, and federal tax auditors and other tax
obligations imposed upon any of them by law.
7.3. Section 338(h)(10) Election. The Purchaser
will make the Section 338(h)(10) Election. The Purchaser will
comply with all of the requirements and conditions imposed on it
by Sections 338(g) and 338(h)(10) of the Code, the related
Treasury Regulations, and all other Code sections and
regulations related thereto, including, without limitation, the
timely filing of Form 8023A and any analogous state and local
Tax forms. The Purchaser will cause to be prepared and duly
executed sufficient copies of Form 8023A and such state and
local forms no later than five (5) days prior to the last date
on which the Purchaser would be permitted under the Code and the
related Treasury Regulations to file the Form 8023A (unless the
Purchaser's failure to deliver such forms shall arise out of or
result from any act or omission of a person other than the
Purchaser or its Affiliates), and will also provide any other
assistance reasonably requested by the Seller in making the
Section 338(h)(10) Election. The Purchaser will attach Form
8023A and such state and local forms to the return of SES for
its first Tax year ending after the Closing Date.
7.4. Bonding Obligations.
7.4.1. No later than thirty (30) days after the date
hereof, the Purchaser shall, or shall cause SES to, either
(a) replace, or, if replacement is not possible, cause to be
issued performance bonds of equal value to secure, in either
event by a bonding company reasonably acceptable to the Seller,
the "evergreen" bonds listed on Schedule 7.4.1 annexed hereto,
and shall, in either case, provide the Seller with written
evidence of same. In the event that such bonds are not timely
replaced or secured in the manner set forth above, the Purchaser
shall pay to the Seller, on demand, liquidated damages in the
amount of Five Hundred Dollars ($500) for each week, or any part
thereof, beyond the thirty day period during which any of the
foregoing "evergreen" bonds are not replaced or secured by the
Purchaser, which the parties agree is reasonable under the
circumstances, and which payment shall not release the Purchaser
from the foregoing evergreen bond replacement or issuance
obligations.
7.4.2. So long as any Bond remains outstanding, the
Purchaser shall, and shall cause SES to provide the Seller with
(i) immediately upon receipt by the Purchaser or SES, copies of
all notices and written communications relating to default or
nonperformance or any event which, with the passage of time or
giving of notice, or both, could result in liability to or
increase the exposure of the Seller or any Affiliate of the
Seller in connection with any project for which a Bond has been
issued and (ii) promptly upon request by the Seller or any
Affiliate of the Seller, any other information relating to an
outstanding Bond. Upon the occurrence of a default, event of
default or action or failure to act which, with the passage of
time or giving of notice, or both, would constitute a default
under any project secured by a Bond, the Seller shall have the
right, but not the obligation, to assume control of such project
and perform or engage a third party to perform SES' obligations
with respect thereto, at the sole cost and expense of the
Purchaser and SES, unless the Purchaser or SES (i) has commenced
to cure such default or event of default within the time
permitted by the relevant project contract and is continuing in
good faith to cure such default or event of default in a manner
reasonably satisfactory to the Seller or (ii) is actively and in
good faith contesting such allegations of default in a manner
reasonably satisfactory to the Seller. In the event the
Purchaser or SES takes the actions contemplated by either (i) or
(ii) above, the Purchaser or SES shall keep Seller reasonably
informed with respect to Seller's or SES's efforts.
7.5. Elimination of "Shorrock" Name. Immediately
following Closing, the Purchaser shall remove all "BET"
identification marks and logos from SES business and product
literature. Within three (3) months of Closing, the Purchaser
shall eliminate the use of the word "Shorrock" from all SES
business and product literature and remove all signage with the
name "Shorrock". Within (1) year of Closing, the Purchaser
shall remove all references to "Shorrock" displayed on any
equipment owned by, or leased to, SES. Notwithstanding the
foregoing, except as otherwise provided in the Distribution
Agreement, for a period of twenty four (24) months after
Closing, the Purchaser may utilize the phrase "formerly Shorrock
Electronic Systems" when referring to SES in promotional
literature.
7.6. Certain Receivables. The parties shall allocate
proceeds with respect to the receivables described in Schedule
7.6 of the Disclosure Schedule in the manner set forth therein.
ARTICLE VIII
Indemnification
8.1. Agreement to Indemnify.
8.1.1. Upon the condition that the Closing be
effected, the Purchaser agrees to indemnify and hold the Seller
and each of its officers, directors, employees, agents and
Affiliates harmless from and against any and all loss,
liability, obligation, damage, cost or expense (including,
without limitation, reasonable attorneys' fees and disburse-
ments) (collectively, "Losses"), incurred or suffered by or
asserted against the Seller or any of its officers, directors,
employees, agents and Affiliates directly or indirectly as a
result of or in connection with (a) the breach by the Purchaser
of any representation or warranty made in this Agreement; (b)
the breach by the Purchaser of, or the failure of the Purchaser
to perform, any of its covenants or obligations contained in
this Agreement; or (c) any claim, action, cause of action, suit,
proceeding, debt, demand or liability of any kind,
(collectively, "Claim") directly or indirectly relating to the
business, operations, assets, liabilities or financial condition
of SES, including, without limitation, Claims made for any
liability under outstanding Bonds, other than those Losses or
Claims related to the Contract Claim or the Harassment Claim.
8.1.2. Upon the condition that the Closing be
effected, the Seller agrees to indemnify and hold the Purchaser
and its officers, directors, employees and agents harmless from
and against any and all Losses incurred or suffered by or
asserted against the Purchaser and its officers, directors,
employees and agents directly or indirectly as a result of or in
connection with (a) the breach by the Seller of any
representation or warranty made in this Agreement; (b) the
breach by the Seller, or failure of the Seller to perform, any
of its covenants, conditions or obligations contained in this
Agreement; (c) the Contract Claim; or (d) the Harassment Claim.
8.1.3. Notwithstanding the foregoing, the indemnity
obligations of the Purchaser pursuant to Section 8.1.1. and the
Seller pursuant to Section 8.1.2 hereof shall be subject to the
following terms and conditions:
(a) The Purchaser shall not be obligated to
indemnify or hold harmless the Seller pursuant to
Section 8.1.1 unless the aggregate Losses for which
the Seller is entitled to indemnification under
Section 8.1.1 shall exceed an aggregate of FIFTY
THOUSAND DOLLARS ($50,000) (the "Purchaser Basket
Amount") in which event the Seller shall be entitled
to recover the full amount of such Losses without
regard to such limitation; provided, however, that the
Purchaser Basket Amount shall not apply to the
Purchaser's indemnification obligation with respect to
Losses or Claims related to outstanding Bonds. The
amount of Losses for which the Purchaser shall be
obligated to indemnify the Seller pursuant to Section
8.1.1 shall not exceed the principal amount of the
outstanding Bonds as of the date hereof.
(b) The Seller shall not be obligated to
indemnify or hold harmless the Purchaser pursuant to
Section 8.1.2 unless the aggregate Losses for which
the Purchaser is entitled to indemnification under
Section 8.1.2 shall exceed an aggregate of FIFTY
THOUSAND DOLLARS ($50,000) in which event the
Purchaser shall be entitled to recover the full amount
of such Losses without regard to such limitation. The
amount of Losses for which the Seller shall be
obligated to indemnify the Purchaser pursuant to
Section 8.1.2 shall not exceed the Purchase Price;
provided, however, that the limitations of this
Section 8.1.3(b) shall not apply to the Seller's
indemnification obligations with respect to the
Contract Claim, the Harassment Claim and Taxes.
8.2. Conditions of Indemnification. The obliga-
tions and liabilities of the Indemnifying Party with respect to
any Claim asserted or instituted by any third party on account
of any matter giving rise to a claim of indemnity by an Indemni-
fied Party shall be subject to the following terms and condi-
tions:
8.2.1. The Indemnified Party will give the Indemnify-
ing Party prompt written notice of a Claim. Prior to the giving
of any such notice of a Claim, and after the giving of any such
notice if the Indemnifying Party assumes the defense of the
Claim as provided below, without the prior written consent of
the Indemnifying Party, the Indemnified Party (i) will not
waive, and will cause its Affiliates not to waive, any defense
(including the waiver of a statute of limitations), cause of
action or counterclaim, and (ii) will not effect, and will cause
its Affiliates not to effect, any compromise or settlement of
any such Claim.
8.2.2. In the case of a Tax audit of any Tax Return
with respect to which the Seller might be an Indemnifying Party
hereunder, the Purchaser will request the auditor to conduct a
separate audit of such Tax Return from any other Tax Returns
also then subject to audit.
8.2.3. Upon receipt of notice of a Claim from an
Indemnified Party, the Indemnifying Party will be entitled, at
its sole cost and expense, to assume the sole defense thereof by
representatives chosen by it (provided, in the case of a Tax
audit, that the auditor so permits); provided that the
Indemnified Party shall be entitled to participate in the
defense of such Claim and to employ counsel at its own expense
to assist in the handling of such Claim. The Indemnifying Party
shall have the right to assert any defenses, causes of action or
counterclaims arising from the subject of the Claim available to
the Indemnified Party and its Affiliates, and shall also have
the right (subject to the provisions of Section 8.2.5 hereof) to
effect a compromise or settlement of the Claim. In the event an
Indemnifying Party is not permitted by an auditor to assume the
defense or control the conduct of an audit of Tax Returns, no
settlement with respect to any assessment may be effected
without the prior written consent of the Indemnifying Party.
8.2.4. If the Indemnifying Party, within thirty (30)
days after receipt of notice of any such Claim, fails to assume
the defense thereof, the Indemnified Party shall (upon further
notice to the Indemnifying Party) have the right to undertake
the defense or, with the consent of the Indemnifying Party not
to be unreasonably withheld or delayed, the compromise or
settlement of such Claim on behalf of and for the account and
risk of the Indemnifying Party, subject to the right of the
Indemnifying Party to assume the defense of such Claim at any
time prior to the settlement, compromise or final determination
thereof.
8.2.5. Anything in this Section 8.2 to the contrary
notwithstanding, the Indemnifying Party shall not, without the
written consent of the Indemnified Party (which consent shall
not be unreasonably withheld or delayed), settle or compromise
any Claim or consent to the entry of any judgment if such
settlement, compromise or judgment imposes any obligation on the
Indemnified Party or does not include as an unconditional term
thereof giving to the Indemnified Party a release from all
liability in respect of such Claim. Furthermore, the
Indemnified Party shall reasonably assist the Indemnifying Party
with the mitigation of any Losses in connection with the
indemnification obligations set forth herein.
8.2.6. The Indemnified Party shall, and shall cause
its Affiliates to, provide the Indemnifying Party with such
assistance (without charge except as otherwise contemplated by
Section 9.1) as may reasonably be requested by the Indemnifying
Party in connection with any indemnification or defense provided
for herein, including, without limitation, providing the
Indemnifying Party with such information, documents and records
and reasonable access to the services of and consultations with
such personnel of the Indemnified Party or its Affiliates as the
Indemnifying Party shall deem necessary (provided that such
access shall not unreasonably interfere with the performance of
the duties performed by or responsibilities of such personnel).
8.2.7. An Indemnified Party's (a) omission promptly
to notify an Indemnifying Party of a Claim, (b) failure to
cooperate and provide requisite access to books and records or
personnel as provided above, (c) failure to obtain the prior
written consent of an Indemnifying Party as required above with
respect to waivers of defenses, causes of actions or
counterclaims or with respect to compromises or settlements or
(d) failure to allow an Indemnifying Party to control a tax
audit as provided above, shall release the Indemnifying Party
from any liability arising from such Claim.
8.2.8. Upon satisfaction by the Seller of its
indemnity obligations with respect to any Claim as to which the
Purchaser or SES has or may have any indemnity, reimbursement or
similar rights against third parties (including, without
limitation, insurers), the Purchaser shall assign all such
rights to the Seller. In the event such rights shall not be
assignable, the Purchaser shall enforce (or cause SES to
enforce) such rights for the benefit and account of the Seller
at the sole cost and expense of the Seller.
8.2.9. Upon satisfaction by the Purchaser of its
indemnity obligations with respect to any Claim as to which the
Seller has or may have any indemnity, reimbursement or similar
rights against third parties (including, without limitation,
insurers), the Seller shall assign all such rights to the
Purchaser. In the event such rights shall not be assignable,
the Seller shall enforce such rights for the benefit and account
of the Purchaser at the sole cost and expense of the Purchaser.
ARTICLE IX
Miscellaneous
9.1. The Contract Claim. The Purchaser
acknowledges and agrees that, from and after the Closing Date,
the Seller and its Affiliates shall be entitled to prosecute the
Contract Claim in the name of SES, but at the expense of, and
for the sole and exclusive benefit of, the Seller or its
Affiliates. The Purchaser agrees that it shall cause SES to
cooperate with the Seller and its Affiliates in connection with
such prosecution, including, without limitation, making
available to the Seller and its representatives (a) employees of
SES having knowledge of facts relating to the Contract Claim and
(b) the books and records of SES relating to the Contract Claim.
The Purchaser shall, upon reasonable request of the Seller, make
SES personnel contemplated by Section 9.1(a) available to the
Seller in connection with the Contract Claim at the rates set
forth on Schedule 9.1 in the Disclosure Schedule. The
Purchaser's reimbursement of any other costs relating to the
foregoing use of SES personnel by the Seller with respect to the
Contract Claim shall be agreed to in advance by the Seller and
the Purchaser. Any funds payable to SES arising out of the
adjudication of the Contract Claim shall be the sole property of
the Seller and shall be remitted to BET Inc., an Affiliate of
the Seller, or its designee, in accordance with the provisions
of the assignment agreement set forth as Exhibit E in the
Disclosure Statement. If the Purchaser receives any such funds,
it shall immediately notify the Seller in writing and hold such
funds in trust for, and remit such funds immediately to, the
Seller in accordance with the Seller's instructions.
9.2. The Harassment Claim. The Purchaser
acknowledges and agrees that, from and after the Closing Date,
the Seller and its Affiliates shall be entitled to prosecute the
Harassment Claim in the name of SES, but at the expense of, and
for the sole and exclusive benefit of, the Seller or its
Affiliates. The Purchaser agrees that it shall cause SES to
cooperate with the Seller and its Affiliates in connection with
such prosecution, including, without limitation, making
available to the Seller and its representatives (a) employees of
SES having knowledge of facts relating to the Harassment Claim
and (b) the books and records of SES relating to the Harassment
Claim. The Purchaser shall, upon reasonable request of the
Seller, make SES personnel contemplated by Section 9.2(a)
available to the Seller in connection with the Harassment Claim
at the rates set forth on Schedule 9.1 of the Disclosure
Schedule. The Purchaser's reimbursement of any other costs
incurred by the Purchaser with respect to the Harassment Claim
shall be agreed to by the Seller and the Purchaser in advance.
9.3. Name Change. The Purchaser hereby consents to
(a) the change of the name of SES to Quanta SecurSystems, Inc.
as set forth in the Certificate of Amendment set forth as
Exhibit D in the Disclosure Schedule and (b) the filing thereof
by SES immediately prior to or at Closing.
9.4. Survival of Representations and Warranties.
The representations and warranties of the Seller and the
Purchaser contained in Articles IV and V, respectively, shall
survive for a period of twelve (12) months after the Closing
Date; except for (a) the representations and warranties set
forth in Section 4.9, which shall not survive the Closing, and
(b) the representations and warranties set forth in Section 4.7,
which shall survive until the date upon which the time to assess
any Tax relating to the operations of SES prior to Closing ends.
9.5. Publicity. Neither the Seller nor the
Purchaser shall make any public announcement of the transactions
contemplated by this Agreement unless so advised by opinion of
their respective counsel, and then only upon prior notice to the
other. Subject to the foregoing, each party will take all
reasonable measures to ensure that the transactions contemplated
hereby are kept confidential.
9.6. Notices. All notices, requests, demands and
other communications required or permitted to be given hereunder
shall be in writing and shall be deemed to have been given (a)
when received, if delivered in person, or (b) when sent, if sent
by telecopier and confirmed within five (5) Days by letter
mailed or delivered to the party to be notified at its address
set forth herein or (c) five (5) Days following the mailing
thereof, if mailed by certified first class mail, postage
prepaid, return receipt requested, in any such case as follows:
(a) If to the Seller, to:
SES CORP. USA c/o BET INC.
17 Executive Park South
Atlanta, GA 30329
Attention: President
Telecopier: (404) 248-1782
with a copy to:
Gratch Jacobs & Brozman, P.C.
950 Third Avenue
New York, New York 10022
Attention: Alan S. Jacobs, Esq.
Telecopier: (212) 319-0856
(b) If to the Purchaser, to:
CompuDyne Corporation
120 Union Street
Willimantic, CT 06226
Attention: Mr. Martin A. Roenigk
Telecopier No: (860) 456-1187
with a copy to:
Tyler Cooper & Alcorn
City Place
35th Floor,
Hartford, CT 06103
Attention: Robert J. Metzler II, Esq.
Telecopier No.: (860) 278-3802
or at such other address or addresses as any party may have
advised the other in the manner provided in this Section.
9.7. Schedule Disclosure, Etc.. Disclosure of a
specific item in the Disclosure Schedule shall not be deemed
applicable only to the section of the Agreement to which the
disclosure of such specific item relates, but shall be deemed a
disclosure for all provisions and purposes of this Agreement.
The specification of any dollar amount in the representations
and warranties contained in this Agreement or the inclusion of
any specific item in the Disclosure Schedule is not intended and
shall not be deemed to be an admission or acknowledgment of the
materiality of such amounts or items, nor shall the same be used
in any dispute or controversy between the parties to determine
whether any obligation, item or matter (whether or not described
herein or included in the Disclosure Schedule) is or is not
material for purposes of this Agreement.
9.8. Complete Agreement. This Agreement, together
with the Disclosure Schedule and the Distribution Agreement,
sets forth the entire agreement of the parties with respect to
the subject matter hereof and supersedes all prior agreements,
contracts, promises, representations, warranties, statements,
arrangements and understandings, if any, between the parties
hereto or their representatives. No waiver, modification or
amendment of any provision, term or condition hereof shall be
valid unless in writing and signed by the party to be charged
therewith, and any such waiver, modification or amendment shall
be valid only to the extent therein set forth.
9.9. Further Assurances. Each of the parties hereto
shall, from time to time after the Closing, upon the request of the
other party hereto and at the expense of such requesting party, duly
execute, acknowledge and deliver or cause to be duly executed,
acknowledged and delivered, all such further instruments and documents
reasonably requested by the other party to effectuate further the
intents and purposes of this Agreement.
9.10. Governing Law. The validity, performance,
construction and effect of this Agreement shall be governed by the
substantive laws of the State of New York, without regard to the
provisions for choice of law thereunder.
9.11. Binding Effect; Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided that, without the prior
written consent of the other party, neither the Purchaser nor the
Seller shall have the right to assign this Agreement or any of its
respective rights hereunder to any other person or entity, except that
(a) the Seller shall be entitled to assign this Agreement or any of
its rights hereunder to any of its Affiliates and (b) nothing herein
shall prevent the Seller from merging with or into any Affiliate of
the Seller after the date hereof. By its execution of this Agreement,
the Guarantor acknowledges that no such assignment or merger shall
modify in any manner the Guarantor's obligations hereunder.
9.12. Separability. Any provision of this Agreement which
may be determined by competent authority to be prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability
without invalidating the remaining provisions hereof, and any such
prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
9.13. 401(k) Plan Matters.
(a) Seller hereby agrees that employees of SES who are
members of the BET 401(k) Profit Sharing Plan (the "BET Plan") on the
Closing Date (the "Shorrock Members") shall be fully vested in their
accounts under the BET Plan as of such date and that the amounts
credited to the accounts of the Shorrock Members under the BET Plan
shall be transferred from the BET Inc. Defined Contribution Master
Trust to the trust maintained in connection with the CompuDyne
Corporation 401(k) Retirement Savings Plan, Defense Electronics Group,
as soon as administratively feasible following the Closing Date.
(b) The Seller shall indemnify and hold the Purchaser
harmless from, against and in respect of any taxes, including interest
and penalties thereon, arising out of plan terminations in accordance
with Schedule 9.13 of the Disclosure Schedule.
9.14. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original and all of
which taken together shall constitute a single agreement.
9.15. Captions. The captions appearing in this
Agreement are inserted only as a matter of convenience and for
reference and shall in no way affect the interpretation or
construction of this Agreement or any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed and delivered as of the date
first above written.
COMPUDYNE CORPORATION
By: /s/ Martin A. Roenigk
Name: Martin A. Roenigk
Title: Chairman and Chief
Executive Officer
SES CORP. USA
By: /s/ Graham Turner
Name: Graham Turner
Title: Vice President
GUARANTEE
The undersigned, an Affiliate of the Seller, hereby
irrevocably and unconditionally guarantees the timely
performance by the Seller of its obligations under this
Agreement, subject, however, to such defenses as the Seller is
entitled to assert against the Purchaser hereunder.
Dated: July 11, 1996 BET PUBLIC LIMITED COMPANY
By: /s/ Graham Bremner Foote
Name: Graham Bremner Foote
Title: Director
EXHIBIT 99.2
NOTICE AND AGREEMENT
The undersigned, pursuant to Section 7(c) of a Senior Convertible
Promissory Note, dated August 21, 1995 (the "Note"), in the aggregate
principal amount of $300,000, hereby elects to convert the entire principal
amount of the Note into 300,000 fully paid and nonassessable shares of Common
Stock of CompuDyne Corporation, a Nevada corporation ("CompuDyne") (formerly
a Pennsylvania corporation), at the conversion rate of $1.00 per share.
CompuDyne hereby agrees that the Conversion Rate of $1.50 per share set forth
in the Note is lowered to $1.00 to induce the undersigned to convert the
entire principal amount of the Note and in consideration of this conversion.
Pursuant to Section 7(a) of the Note, the undersigned shall be entitled to
$29,342.48 of accrued and unpaid interest on the Note through the Conversion
Date (as defined in the Note). Accompanying this Notice is the Note
surrendered to CompuDyne for conversion duly endorsed to Maker. CompuDyne
hereby waives the requirement set forth in Section 7(c) of the Note to give
at least 30 days' notice to CompuDyne prior to conversion. The stock
certificate for 300,000 shares should be issued to the undersigned. The
undersigned understands and agrees that the stock certificate for the Shares
will bear a legend with respect to the the Shares not having been registered
under the Securities Act of 1933, as amended, or any state securities laws
and the restrictions on transferability as a result thereof.
/s/ Martin Roenigk
AGREED TO:
COMPUDYNE CORPORATION
By /s/ Martin Roenigk
Martin Roenigk
President
EXHIBIT 99.3
NOTICE AND AGREEMENT
The undersigned, pursuant to Section 7(c) of a Senior Convertible
Promissory Note, dated August 21, 1995 (the "Note"), in the aggregate
principal amount of $100,000, hereby elects to convert the entire principal
amount of the Note into 100,000 fully paid and nonassessable shares of Common
Stock of CompuDyne Corporation, a Nevada corporation ("CompuDyne") (formerly
a Pennsylvania corporation), at the conversion rate of $1.00 per share.
CompuDyne hereby agrees that the Conversion Rate of $1.50 per share set forth
in the Note is lowered to $1.00 to induce the undersigned to convert the
entire principal amount of the Note and in consideration of this conversion.
Pursuant to Section 7(a) of the Note, the undersigned shall be entitled to
$9,790.53 of accrued and unpaid interest on the Note through the Conversion
Date (as defined in the Note). Accompanying this Notice is the Note
surrendered to CompuDyne for conversion duly endorsed to Maker. CompuDyne
hereby waives the requirement set forth in Section 7(c) of the Note to give
at least 30 days' notice to CompuDyne prior to conversion. The stock
certificate for 100,000 shares should be issued to the undersigned. The
undersigned understands and agrees that the stock certificate for the Shares
will bear a legend with respect to the the Shares not having been registered
under the Securities Act of 1933, as amended, or any state securities laws
and the restrictions on transferability as a result thereof.
/s/ Alan Markowitz
AGREED TO:
COMPUDYNE CORPORATION
By /s/ Martin Roenigk
Martin Roenigk
President
EXHIBIT 99.4
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (the "Agreement") is made as of this 11th
day of July, 1996, by and among COMPUDYNE CORPORATION, a Nevada corporation
("CompuDyne"), MARTIN ROENIGK, a Connecticut resident ("Roenigk"), and ALAN
MARKOWITZ, a Pennsylvania resident ("Markowitz") (Roenigk and Markowitz are
collectively referred to herein as the "Purchasers").
WITNESSETH:
WHEREAS, Sellers desire to sell shares of newly issued stock to
Purchasers and Purchasers desire to purchase the same.
NOW THEREFORE, in consideration of the premises, the parties hereto
agree as follows:
1.1 Purchase of Shares. On the basis of the representations, warranties and
agreements, and upon the terms and conditions herein set forth,
Purchasers, severally and not jointly, agree to purchase from CompuDyne,
and CompuDyne agrees to sell and deliver to Purchasers on the Closing
Date (as defined in Section 1.2) the respective number of shares (the
"Shares") of CompuDyne common stock, par value $.75 per share
(CompuDyne Common Stock"), set forth opposite the name of each
Purchaser on Schedule A hereto, at the purchase price of $1.00 per share.
1.2 Closing. The purchase shall take place on such date as the parties may
agree upon in writing, but in no event, later than July 31, 1996 (the
"Closing Date").
1.3 Delivery of Stock Certificates. On the Closing Date, upon receipt of the
full purchase price for the Shares from the Purchasers, CompuDyne shall
deliver certificates for the Shares to be purchased to the Purchasers
registered in the names of the Purchasers as they may designate at least
5 days prior to the Closing Date.
Article II
CompuDyne represents and warrants to each Purchaser as follows:
2.1 Organization and Standing of CompuDyne. CompuDyne is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Nevada.
2.2 Shares. The Shares, upon issuance and payment, will be duly authorized,
validly issued and outstanding, fully paid and nonassessable.
Article III
Each Purchaser, severally and not jointly based upon the percentage of
Shares each Seller owns, represents and warrants to CompuDyne, as follows:
3.1 Investment. Each Seller is acquiring the Shares for his own account as
principal and not with a view to, or for, distribution or
fractionalization thereof, in whole or in part, and no other person has a
direct or indirect beneficial interest in the Shares.
3.2 No Distributive Intent. Neither Purchaser will sell or otherwise
transfer any Shares without registration under the Securities Act of
1933, as amended (the "Act"), and under applicable state securities or
"blue sky" laws, or pursuant to an exemption therefrom. Each Purchaser
fully understands and agrees that he must bear the economic risk of the
Shares for an indefinite period of time because, among other reasons,
the Shares have not been registered under the Act or under the
securities laws of any state and, therefore, they cannot be resold,
pledged, assigned or otherwise disposed of unless they are subsequently
registered under the Act and under the applicable securities laws of
such states or an exemption from such registration is available. Each
certificate for the Shares will be imprinted with a legend in
substantially the following form:
The security evidenced hereby has not been registered under the
Securities Act of 1933, as amended, or any state securities laws and
may not be sold, transferred, assigned, pledged or otherwise
distributed for value unless (a) there is an effective registration
statement under such act and applicable state securities laws
covering such securities or (b) the Corporation receives an opinion
of counsel for the holder of these securities acceptable to the
Corporation (concurred in by counsel for the corporation) stating
that such sale, transfer, assignment, pledge or distribution is
exempt from the registration and prospectus delivery requirements of
such Act and such state laws and that such sale, transfer,
assignment, pledge or distribution will not cause the original
issuance of such securities by the Corporation to be in violation of
the registration and prospectus delivery requirements of such Act of
such state laws.
3.3 Information. Each Purchaser has received and reviewed a copy of
CompuDyne's Annual Reports filed on Form 10-K, Quarterly Reports filed on
Form 10-Q and Current Reports filed on Form 8-K for the past two years.
3.4 Accredited Investor. Each Purchaser has read the text of Rule 501(a)(1)-
(8) of Regulation D under the Act, and confirms that he is an "accredited
investor" as described thereby.
3.5 Experience. Each Purchaser has such knowledge and experience in
financial and business matters that he is capable of evaluating the
merits and risks of the purchase of the Shares.
Article IV
4.1 Amendment and Modification. This Agreement may be amended, modified or
supplemented only by written agreement of the parties hereto at any time
prior to the Closing Date.
4.2 Governing Law. This Agreement shall be governed by the laws of the State
of Connecticut, without giving effect to the principles of conflicts of
laws thereof, as to all matters.
4.3 Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together
shall constitute one and the same instrument.
4.4 Headings. Articles and section headings contained in this Agreement are
solely for the purpose of reference, are not part of the agreement of the
parties and shall not affect in any way the meaning or interpretation of
this Agreement.
IN WITNESS WHEREOF, CompuDyne has caused this Agreement to be signed by
its duly authorized officer, and each Purchaser has signed this Agreement, as
of the date first above written.
COMPUDYNE CORPORATION
By /s/ Martin Roenigk
Martin Roenigk
President
PURCHASERS:
/s/ Martin Roenigk
/s/ Alan Markowitz
SCHEDULE A
Martin Roenigk 450,000 Shares
Alan Markowitz 150,000 Shares
