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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
June 30, 1997 July 15, 1997
(Date of earliest event reported)
RURAL/METRO CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation)
0-22056 86-0746929
(Commission File Number) (IRS Employer Identification Number)
8401 EAST INDIAN SCHOOL ROAD
SCOTTSDALE, ARIZONA
85251
(Address of principal executive offices)
(Zip Code)
(602) 994-3886
(Registrant's telephone number, including area code)
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RURAL/METRO CORPORATION
FORM 8-K
CURRENT REPORT
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Pursuant to an Agreement of Purchase and Sale dated February 25, 1997
between Registrant as buyer and Robert E. Ramsey, Jr. and Barry Landon as
Trustee of the Employee Stock Ownership Plan for the benefit of the Company's
employees, the Purchaser acquired all of the issued and outstanding stock of SW
General, Inc. ("SWG"), an Arizona corporation. SWG provides ambulance, emergency
response and medical transport service primarily in the metropolitan Phoenix,
Arizona area. The Registrant intends to continue the operations of the company.
The purchase price consisted of 439,394 shares of the Registrant's
common stock and liabilities assumed of approximately $5.4 million. The
acquisition will be accounted for as a purchase in accordance with APB No. 16.
Pursuant to an Agreement of Purchase and Sale dated February 25, 1997
between Registrant as buyer and Robert E. Ramsey, Jr., the Registrant acquired
all of the issued and outstanding stock of Southwest Ambulance of Casa Grande,
Inc. ("Casa Grande"), an Arizona corporation. Casa Grande provides ambulance,
emergency response and medical transport service primarily in southern and
eastern Arizona, including Pinal and Graham counties. The Registrant intends to
continue the operations of the company.
The purchase price consisted of cash of $5,000 and 408,940 shares of
the Registrant's common stock and liabilities assumed of approximately $3.3
million. The acquisition will be accounted for as a purchase in accordance with
APB No. 16.
Pursuant to an Agreement of Purchase and Sale dated February 25, 1997
between Registrant as buyer and Robert E. Ramsey, Jr., Patrick McGroder, Barry
Landon and Gary Ramsey, the Registrant acquired all of the issued and
outstanding stock of Southwest General Services, Inc. ("Services"), an Arizona
corporation. Services provides billing services for SWG and Casa Grande and
municipal ambulance service providers. The Registrant intends to continue the
operations of the company.
The purchase price consisted of cash of $6,500,000. The acquisition
will be accounted for as a purchase in accordance with APB No. 16.
Pursuant to an Agreement of Purchase and Sale dated February 25, 1997
between Registrant as buyer and Robert E. Ramsey, Jr., the Registrant acquired
all of the issued and outstanding stock of Medical Emergency Devices and
Services, Inc. ("MEDS"), an Arizona corporation. MEDS provides supply
procurement and fleet maintenance services primarily for SWG and Casa Grande.
The Registrant intends to continue the operations of the company.
The purchase price consisted of cash of $13,300,000 and liabilities
assumed of approximately $0.8 million. The acquisition will be accounted for as
a purchase in accordance with APB No. 16.
The registrant financed the cash portion of the purchase prices for the
acquisitions described above from cash from operations and its revolving credit
facility.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Audited combined financial statements of SW General, Inc.,
Southwest Ambulance of Casa Grande, Inc., Southwest
General Services, Inc. and Medical Emergency Devices
and Services, Inc. will be filed no later than
September 15, 1997.
(b) Pro Forma Financial Statements to be filed no later than
September 15, 1997.
(c) EXHIBIT 10.49 Agreement of Purchase and Sale between
Rural/Metro Corporation and Robert E. Ramsey, Jr. and
Barry Landon, as trustee of the Employee Stock
Ownership Plan for the benefit of the Company's
employees, with respect to the stock of SW General,
Inc., as amended.
EXHIBIT 10.50 Agreement of Purchase and Sale between
Rural/Metro Corporation and Robert E. Ramsey, Jr.
with respect to the stock of Southwest Ambulance of
Casa Grande, Inc., as amended.
EXHIBIT 10.51 Agreement of Purchase and Sale between
Rural/Metro Corporation and Robert E. Ramsey, Jr.,
Patrick McGroder, Barry Landon and Gary Ramsey, the
vendors, with respect to the stock of Southwest
General Services, Inc., as amended.
EXHIBIT 10.52 Agreement of Purchase and Sale between
Rural/Metro Corporation and Robert E. Ramsey, Jr.,
with respect to Medical Emergency Devices and
Services, Inc., as amended.
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SIGNATURES
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.
RURAL/METRO CORPORATION
Date: July 15, 1997 By: /s/ Dean P. Hoffman
------------------------------------
Dean P. Hoffman, Vice President
and Principal Accounting Officer
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EXHIBIT 10.49
AGREEMENT OF PURCHASE AND SALE
THIS AGREEMENT OF PURCHASE AND SALE ("Agreement") is made as of this
25th day of February, 1997
BETWEEN:
Rural/Metro Corporation, a Delaware corporation
("Purchaser")
-and-
Robert E. Ramsey, Jr., an individual ("Ramsey"), and
Barry Landon, as trustee of the Employee Stock Ownership Plan
for the benefit of the Company's employees (the "ESOP")
(collectively, the "Vendors"
and individually a "Vendor")
RECITALS:
WHEREAS, the Vendors, as a group, beneficially own and control all the
issued and outstanding shares of the stock of SW General, Inc., an Arizona
corporation (the "Company");
AND WHEREAS, the Vendors desire to sell and the Purchaser desires to
purchase all of the said issued and outstanding shares of the stock of the
Company owned by the Vendors all upon and subject to the terms and conditions
hereinafter set forth;
NOW THEREFORE, in consideration of the premises and the mutual
agreements and covenants herein contained (the adequacy of which consideration
as to each of the parties hereto is hereby mutually admitted), the parties
hereto hereby covenant and agree as follows:
ARTICLE 1
DEFINITIONS AND PRINCIPLES OF INTERPRETATION
1.1 DEFINITIONS - Whenever used in this Agreement, unless there is something in
the subject matter or context inconsistent therewith, the following words and
terms shall have the respective meanings ascribed to them as follows:
(a) "Agreement" means this Agreement of Purchase and Sale and all
instruments supplemental hereto or in amendment or
confirmation hereof;
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(b) "Business" means the business presently carried on by the
Company consisting of the provision of emergency and
non-emergency medical transportation services and related
billing and management services;
(c) "Business Day" means a day other than a Saturday, Sunday or
any day on which the principal commercial banks located in
Phoenix, Arizona are not open for business during normal
banking hours;
(d) "Closing" means the completion of the sale to and purchase by
the Purchaser of the Purchased Shares hereunder by the
transfer and delivery of documents of title thereto and the
payment of the purchase price therefore as contemplated
herein;
(e) "Closing Date" means the earlier of April 15, 1997 or five (5)
business days following the satisfaction or waiver of all
conditions precedent to this transaction, or such other date
as the Parties may mutually agree in writing;
(f) "Closing Time" means 10 o'clock a.m., Phoenix, Arizona local
time, on the Closing Date, or such other time on the Closing
Date as the Parties may agree;
(g) "ESOP Shares" means the 194,650.770 common shares of the
Company owned by the ESOP as of the date of this Agreement;
(h) "Financial Statements" means the audited financial statements
of the Company, including a balance sheet as of March 31,
1996, and an operating statement for the twelve (12) month
period then ended; and unaudited financial statements of the
Company, including a balance sheet as of December 31, 1996,
and an operating statement for the nine (9) month period then
ended; copies of which are annexed as Schedule "A" hereto;
(i) "Parties" means, collectively, the Vendors and the Purchaser,
and "Party" means any one of them;
(j) "Person" means any individual, corporation, partnership,
limited liability company, trust or unincorporated association
or similar entity, and pronouns have a similarly extended
meaning;
(k) "Purchase Price" means the purchase price to be paid by the
Purchaser to the Vendors for the Purchased Shares as provided
in Section 2.1 hereof;
(l) "Purchased Shares" means all the issued and outstanding common
shares of the stock of the Company;
(m) "Southwest Companies" means, collectively, the Company,
Southwest Ambulance of Casa Grande, Inc., Medical Emergency
Devices and Services (MEDS), Inc., and Southwest General
Services, Inc.
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Terms defined in the preamble, recitals and body of this Agreement shall have
the same meanings herein as are ascribed thereto in the preamble, recitals and
body.
1.2 GENDER AND NUMBER - Words importing the singular include the plural and vice
versa; words importing gender include all genders.
1.3 ENTIRE AGREEMENT - This Agreement, including the Schedules and Exhibits
hereto, together with the agreements, certificates, and other documents and
instruments to be delivered pursuant hereto, constitute the entire agreement
between the Parties pertaining to the subject matter hereof and supersede all
prior agreements, understandings, negotiations and discussions, whether oral or
written, of the Parties and there are no warranties, representations or other
agreements between the Parties in connection with the subject matter hereof
except as specifically set forth herein and therein.
1.4 WAIVERS, ETC. - No supplement, modification, waiver or termination of this
Agreement shall be binding unless executed in writing by the Party to be bound
thereby. No waiver of any of the provisions of this Agreement, in whole or in
part, shall be deemed or shall constitute a waiver of any other provisions
hereof (whether or not similar), nor shall such waiver constitute a continuing
waiver unless otherwise expressly provided.
1.5 OTHER WORDS AND PHRASES - In this Agreement, unless otherwise expressly
provided (i) the words "hereof", "herein", "hereto" and "hereunder" and words of
similar import refer to this Agreement as a whole and not to the particular
Article, Section, Subsection, paragraph or other subdivision, and (ii) all
references to designated "Articles", "Sections", "Subsections", "paragraphs" or
other subdivisions are to the designated Articles, Sections, Subsections,
paragraphs and other subdivisions of this Agreement.
1.6 HEADINGS - The Article and Section headings contained herein are included
solely for convenience of reference, are not intended to be full or accurate
descriptions of the content thereof and shall not be considered part of this
Agreement.
1.7 APPLICABLE LAW - This Agreement and the rights, obligations and relations of
the Parties shall be governed by and construed in accordance with the laws of
the State of Arizona and the federal laws of the United States applicable
therein.
1.8 ACCOUNTING TERMS - All accounting terms shall have the meanings ascribed to
them in accordance with generally accepted accounting principles consistently
applied, and all references to "generally accepted accounting principles" shall
be deemed to be, unless otherwise specified, reference to accounting principles
which are generally accepted in the United States.
1.9 SCHEDULES AND APPENDICES - The following are the schedules and appendices
attached to and incorporated in this Agreement by reference and deemed to be an
integral part hereof:
<TABLE>
<CAPTION>
<S> <C> <C>
Schedule "A" - Financial Statements
Schedule "B" - Authorized and Issued Share Capital, Share
Ownership, and Purchase Price Allocation for each
of the Vendors
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C>
Schedule "C" - [Intentionally Omitted]
Schedule "D" - Employment Agreement
Schedule "E" - Operating Licenses
Schedule "F" - Undisclosed Liabilities, Guaranties and Indemnities
Schedule "G" - Absence of Changes
Schedule "H" - Unusual Transactions
Schedule "I" - Liens, Charges and Encumbrances
Schedule "J" - Real Property Leases and Owned Real Property
Schedule "K" - Vehicular Equipment Owned or Leased
Schedule "L" - Revenue Contracts
Schedule "M" - Contracts to Purchase Goods/Services
Schedule "N" - Employment Contracts, Collective Agreements, Pension or Similar
Plans, Unfair Labor Practice Complaints
Schedule "O" - Litigation
Schedule "P" - Employees over $40,000
Schedule "Q" - Insurance Policies
Schedule "R" - Intellectual Property
Schedule "S" - Third Party Approvals
Schedule "T" - Environmental Matters
Schedule "U" - Subsidiaries and Affiliates
Schedule "V" - Bank Accounts
Schedule "W" - Purchaser's Disclosure Schedule
Schedule 2.6 - Artwork Owned by Ramsey
Appendix "J" - Certain Real Estate Representations and Warranties
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C>
Appendix 4.1(j) - Investment Agreement
</TABLE>
ARTICLE 2
PURCHASE AND SALE
2.1 PURCHASE PRICE - At the Closing Time, the Vendors shall sell and the
Purchaser shall purchase the Purchased Shares for an aggregate purchase price of
Fourteen Million, Five Hundred Thousand Dollars ($14,500,000) all of which shall
be paid by Purchaser's delivery at Closing of Four Hundred Thirty-Nine Thousand,
Three Hundred Ninety-Four (439,394) shares of the Common Stock, par value $.01
per share, of Purchaser (the "Rural/Metro Stock"), all issuable as hereinafter
set forth. For purposes of determining the number of shares of Common Stock of
Purchaser to be delivered to the Vendors as provided in this Section 2.1, the
Rural/Metro Stock has a value of $33.00 per share by agreement of the Parties.
The Rural/Metro Stock shall be allocated amongst the Vendors as set forth in
Schedule "B" hereto.
2.2 ACTION BY VENDORS AND PURCHASER AT THE CLOSING TIME -
(a) Delivery of Certificates by the Vendors, etc. - The Vendors
shall transfer and deliver to the Purchaser at the Closing
stock certificates representing all the Purchased Shares duly
endorsed in blank for transfer or accompanied by irrevocable
stock transfer powers of attorney duly executed in blank, in
either case by the holders of record thereof, free and clear
of all liens, claims, rights, charges, encumbrances and
security interests of whatsoever kind and nature. The Vendors
shall take such steps as shall be necessary to cause the
Company to enter the Purchaser or its nominee upon the books
of the Company as the holder of the Purchased Shares and to
issue one or more share certificates to the Purchaser
representing the Purchased Shares;
(b) Delivery of Certificates by Purchaser, etc. - The Purchaser
shall cause to be transferred and delivered to the Vendors at
the Closing stock certificates or such other evidence of stock
ownership representing the Rural/Metro Stock as duly
authorized, validly issued, fully paid and nonassessable,
which, at the time of delivery by the Purchaser to Vendors,
shall be free and clear of all liens, claims, rights, charges,
encumbrances and security interests of whatsoever kind and
nature. Such Rural/Metro Stock shall be delivered to the
Vendors as set forth in Schedule "B". At or prior to the
Closing, the Rural/Metro Stock shall have been registered for
issuance pursuant to Purchaser's "shelf registration" in
effect on the Form S-4 Registration Statement No. 33-95518, or
such other appropriate registration statement as determined by
Purchaser, filed pursuant to the Securities Act of 1933, as
amended (the "Act"). The certificates evidencing the Ru-
ral/Metro Stock shall bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ISSUED PURSUANT TO A TRANSACTION SUBJECT TO RULE 145
OF THE SECURITIES ACT OF
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1933, AS AMENDED (THE "ACT") AND PURSUANT TO
EXEMPTIONS FROM REGISTRATION UNDER STATE SECURITIES
LAWS. THE SHARES MAY NOT BE OFFERED, SOLD,
TRANSFERRED, HYPOTHECATED OR OTHERWISE DISPOSED OF
EXCEPT (i) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT, (ii) PURSUANT TO THE PROVISIONS OF RULE
145 UNDER THE ACT, OR (iii) PURSUANT TO OTHER
EXEMPTIONS FROM REGISTRATION UNDER THE ACT OR ANY
APPLICABLE STATE SECURITIES LAWS, WHICH, IN THE
OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION,
ARE AVAILABLE.
As of the Closing, the Rural/Metro Stock shall be traded on
The NASDAQ National Market.
(c) Delivery of Other Documents - The Vendors and Purchaser shall
deliver all such other documents at the Closing as
contemplated herein.
2.3 EMPLOYMENT AGREEMENT - At the Closing, the appropriate Parties shall execute
and deliver an Employment Agreement for Ramsey substantially in the form
attached hereto as Schedule "D" (the "Employment Agreement").
2.4 PLACE OF CLOSING - The Closing shall take place at the Closing Time at the
offices of O'Connor, Cavanagh, Anderson, Killingsworth & Beshears, P.A., One E.
Camelback Road, Suite 1100, Phoenix, Arizona or at such other place as may be
agreed upon by the Vendors and the Purchaser.
2.5 TAX TREATMENT - The acquisition of the Company is intended to be treated as
a tax free reorganization within the meaning of section 368(a)(1)(B) of the
Internal Revenue Code of 1986, as amended (the "Code").
2.6 ACKNOWLEDGEMENT REGARDING CERTAIN ASSETS - The Purchaser acknowledges that
the items of art work set forth in Schedule 2.6 are owned by Ramsey individually
and are not assets of the Company.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF VENDORS - To induce Purchaser to enter
into this Agreement and to perform its obligations hereunder, and with full
knowledge that Purchaser will rely thereon, the Vendors hereby represent and
warrant, jointly and severally, to the Purchaser the truth, accuracy and
completeness of the following:
(a) Enforceability of Obligations - This Agreement and each of the
other agreements referenced herein to which one or more
Vendors is a party have been duly executed and delivered by
each of such Vendors, and each of the Agreement and
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such other agreements constitutes a valid and binding
obligation of each of the Vendors enforceable against each of
them in accordance with its terms.
(b) Right to Sell - The Vendors:
(i) are the sole beneficial owners of the Purchased
Shares (which shares constitute all of the issued
and outstanding shares of the stock of the Company);
and
(ii) are the holders of record of all the Purchased
Shares (which shares constitute all of the issued
and outstanding shares of the stock of the Company)
and have good and marketable title to, and rightful
possession of, all of the Purchased Shares free and
clear of any liens, claims, rights, charges,
encumbrances, security interests of whatsoever kind
and nature or rights of others (other than the
rights of the Purchaser hereunder) and no Person
(other than the Purchaser hereunder) has any
agreement, option or any rights capable of becoming
an agreement or option for the acquisition of the
Purchased Shares or any other shares in the Company.
(c) Licenses, Registrations and Compliance - The Company is
registered, licensed or otherwise qualified as a corporation
to do business in each jurisdiction in which the nature of its
business or the property owned or leased by it makes such
registration, licensing or other qualification necessary, and
such registrations, licenses or qualifications (as the case
may be) are in good standing. The Company is not in violation
in any material respect of any applicable laws, regulations,
orders, rules, decrees, ordinances, licenses or operating
authorities. The licenses and operating authorities issued by
federal, state or local authorities to the Company, copies of
which are attached hereto as Schedule "E" (the "Operating
Licenses"), comprise all the material licenses, permits and
operating authorities held in respect of the Business. The
Operating Licenses are all of the material operating
authorities necessary or reasonably required for the carrying
on of the Business as presently conducted and the ownership
and use of its assets, property, and premises. Except as
described in Schedule "E" and subject to applicable
regulations and policies of the Arizona Department of Health
Services, the Operating Licenses are not subject to review or
notification and there is no litigation, arbitration or other
proceeding pending or threatened which would materially and
adversely affect the use of the Operating Licenses by the
Business or which may result in the revocation, cancellation,
suspension or any materially adverse modification of any of
such Operating Licenses.
(d) Organization and Valid Existence - The Company is duly
incorporated and organized, validly existing and in good
standing under the laws of the State of Arizona, and has all
necessary corporate power, authority and capacity to own and
lease its property and assets and to carry on the Business as
presently conducted by it. Each of the Vendors has the full
right, power, authority and capacity to execute and deliver
this Agreement and the other agreements referenced herein to
which any such Vendor is a party, to consummate the
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transactions contemplated hereby and thereby, and to fully and
timely perform its obligations hereunder and thereunder.
(e) Capitalization - The authorized capital stock of the Company
and the total number of shares of the Company's capital stock
presently issued and outstanding are as set forth on Schedule
"B". All issued and outstanding common shares of the Company
have been duly authorized and validly issued, are fully paid
and non-assessable, and are free of pre-emptive rights.
(f) Financial Statements - Copies of the Financial Statements are
each true, complete and correct and have been prepared on an
accrual basis from the books and records of the Company, in
accordance with generally accepted accounting principles
applied on a basis consistent with that of the preceding
periods. The Financial Statements each fairly present in all
material respects a true, accurate and complete statement of
the financial condition, assets, liabilities and results of
operations of the Company as of the dates and for the periods
set forth therein.
(g) Absence of Undisclosed Liabilities - Except as fully disclosed
on Schedule "F" hereto, the Company has no liabilities or
obligations, fixed or contingent, accrued or unaccrued that
are not fully and properly reflected, or adequately reserved
against, on the December 31, 1996 balance sheet of the Company
included in the Financial Statements, excepting only those
liabilities and obligations incurred by the Company in the
ordinary course of its business between the date of such bal-
ance sheet and the Closing Date, none of which liabilities is
individually or are collectively material, incurred in
violation of this Agreement, or would require accrual and/or
disclosure under generally accepted accounting principles.
(h) Guaranties and Indemnities - Schedule "F" hereto contains a
true, complete and correct list of all contracts and
agreements pursuant to which the Company has guaranteed or
indemnified any debt, liability or obligation of any other
person or entity, including, without limitation, any Vendor
(including, without limitation, the execution of any document
obligating the Company with respect to any performance or
other bond), or pursuant to which the Company has pledged or
otherwise encumbered any of its assets. Except as disclosed in
Schedule "F" hereto, the Company is not indebted to any
Vendor, nor is any Vendor indebted to the Company in any
amount for any purpose. Except as disclosed in Schedule "F"
hereto, the Company has not agreed to give any guaranty of
indebtedness or other obligations of third parties or made any
other commitment by which the Company is, or is contingently,
responsible for such indebtedness or other obligation.
(i) Tax Matters - The Company has duly and timely filed all
federal, state, county and local income, franchise, capital,
sales or use, excise, fuel, escheatment, property or other tax
returns, reports or filings required by any law or regulation
to be filed by it and has duly paid all taxes, assessments and
reassessments, and all other taxes, duties, governmental
charges, penalties, interest and fines due and payable by it
on or before the date hereof.
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The federal, state, county and local income tax returns of the
Company provided to Purchaser are accurate in all respects.
There are no actions, suits, proceedings, inquiries,
investigations or claims of any nature or kind whatsoever now
pending or, to the best knowledge of Vendors, after due
inquiry, threatened, against the Company with respect to any
such returns or reports, or any such taxes, or any matters
under discussion with any federal, state, county, local or
other authority relating to such taxes.
The Company has not received from any authority any
assessment, reassessment or notice of underpayment of any
taxes or other penalty or charges and no such notice is
reasonably to be expected.
There is no misrepresentation that is attributable to wilful
default or fraud in tax returns of the Company previously
filed.
No consents extending or waiving the time limited for
reassessment of any taxes, duties, governmental charges,
penalties, interest or fines, or any statutes of limitations
related thereto have been filed with respect to the Company
for any fiscal year.
The Company has withheld from each payment made to any of its
officers, directors, former directors, and employees and
former employees the amount of all taxes and other deductions
(including without limitation, income taxes, unemployment,
disability, and other required taxes and contributions)
required to be withheld and has paid the same together with
the employer's share of same, if any (to the extent required
to be paid so no such amount is past due), to the proper tax
or other receiving officers within the prescribed times and
has filed, in complete and accurate form, all information and
other returns required pursuant to any applicable legislation
within the prescribed times.
The provision made for current and deferred taxes included in
the Financial Statements is sufficient for the payment of all
accrued and unpaid federal, state, county and local income,
franchise, capital, sales or use, excise, fuel, escheatment,
property or other taxes, assessments and reassessments,
duties, governmental charges, penalties, interest and fines
of, and payable by, the Company, whether or not disputed, for
the period ended the date thereof and for all periods prior
thereto.
(j) Absence of Changes - Except as disclosed on Schedule "G"
hereto, since December 31, 1996 there has not been:
(i) any change in the condition or operations of the
business, assets, financial condition, or otherwise
of the Company other than changes in the ordinary
and normal course of business, none of which has
been materially adverse; or
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(ii) any damage, destruction or loss, labor trouble or
other event, development or condition of any
character (whether or not covered by insurance)
materially and adversely affecting the business,
financial condition, assets, properties or business
prospects of the Company.
(k) Absence of Unusual Transactions - Except as disclosed on
Schedule "H", the Company has not, other than with respect to
affiliated entities of the Company being acquired by the
Purchaser on the Closing Date, since December 31, 1996:
(i) transferred, assigned, sold or otherwise disposed of
any assets, granted a lien, security interest,
mortgage or other encumbrance in any assets, or
cancelled any debts or claims except only in each
case in the ordinary and usual course of business or
to the extent such assets, liens, security
interests, mortgages, encumbrances, debts or claims
do not individually or in the aggregate exceed
$20,000 (when added to any dispositions, grants, or
cancellations by the other Southwest Companies);
(ii) incurred or assumed any obligation or liability
which individually or in the aggregate exceeds
$100,000 (fixed or contingent), except those listed
in Schedule "F" hereto and except unsecured current
obligations and liabilities incurred in the ordinary
and normal course of business which individually or
in the aggregate do not exceed $100,000;
(iii) discharged or satisfied any lien or encumbrance, or
paid any obligation or liability (fixed or
contingent) other than liabilities included in the
Financial Statements and liabilities incurred since
the date thereof in the ordinary and normal course
of business;
(iv) declared or made any payment of any dividend or
other distribution in respect of any shares of its
stock as applicable, or purchased or redeemed any
such shares thereof, or effected any subdivision,
consolidation or reclassification of any such
shares;
(v) suffered or been threatened with any material
adverse change in its business or financial
condition, business activities, or business
prospects, including, without limiting the
generality of the foregoing, the existence or threat
of any labor dispute, or any material adverse change
in, or loss of, any material relationship between
the Company and any of its customers, suppliers or
key employees, or entered into any commitment or
transaction not in the ordinary and usual course of
business where such commitment or transaction is or
would be material in relation to the Company;
(vi) made any general wage or salary increases in respect
of personnel which it employs, other than increases
in the ordinary and normal course of business, nor
hired any employee who shall have an annual salary
in excess of $70,000; or
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(vii) authorized or agreed or otherwise become committed
to do any of the foregoing.
(l) Title to Properties - Except as disclosed in Schedules "I" and
"J" hereto, the Company has good and marketable title to all
its respective properties, interests in properties and assets,
real and personal, including without limitation those
reflected in the Financial Statements or acquired since the
date of the Financial Statements, free and clear of all
mortgages, pledges, liens, claims, rights, encumbrances or
charges of any kind or nature.
(m) Equipment and Condition of Assets - All non-vehicular
equipment, assets, personal property and fixtures in the
possession or custody of the Company which, as of the date
hereof, are owned, leased or held under license or similar
arrangement by the Company and are necessary for the conduct
of the Business are in good condition, repair and proper
working order, reasonable wear and tear excepted. Copies of
all leases, licenses, agreements and other documentation
relating thereto have been provided or made available to
Purchaser.
(n) Leases of Real Property - The Company is not a party to or
bound by any leases of real property other than those
disclosed in Schedule "J" hereto, and all interests held by
the Company as lessee under such leases are free and clear of
any and all liens, charges and encumbrances of any nature and
kind whatsoever. All rental and other payments required to be
paid by the Company, as lessee, pursuant to such leases have
been duly paid. Such leases are in full force and effect
without amendment thereto and the Company is not otherwise in
default in any material respect in meeting its obligations
contained in any such lease. The representations or warranties
set forth in Appendix "J" hereto with respect to any real
property owned by NRM Properties, Inc. or Chaparral
Properties, Inc. that is subject to a lease to which the
Company is a party or by which it is bound are true and
correct.
(o) Real Property - The Company does not own any interest in real
property, except as disclosed on Schedule "J" hereto.
(p) Vehicular Equipment - Schedule "K" contains a list of all
vehicular equipment owned or leased by the Company and copies
of all motor vehicle certificates of title with respect to
such vehicular equipment have been provided to the Purchaser.
Such vehicular equipment is, in all material respects, in good
condition, repair and proper working order, reasonable wear
and tear excepted, and each vehicle complies in all material
respects with all laws and regulations affecting its operation
and each vehicle bears a current safety standards certificate.
(q) Revenue Contracts - Except as disclosed in Schedule "L", the
Company is not a party to any contract pursuant to which it is
to provide transportation or other services. Each of the
contracts set out in Schedule "L" is in full force and effect
and enforceable in accordance with its respective terms and
conditions, and there
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is not existing any default, or event or condition which, with
the giving of notice or the passage of time, or both, would
constitute an event of default, by the Company or any other
party thereto under any of such contracts, that could have a
material adverse effect on any of such contracts.
(r) Contracts to Purchase - Except as set out in Schedule "M", the
Company is not a party to any contract to purchase any goods
and/or services with a value in excess of $20,000/year. Each
of the contracts set out in Schedule "M" is in full force and
effect and enforceable in accordance with its respective terms
and conditions, and there is not existing any default, or
event or condition which, with the giving of notice or the
passage of time, or both, would constitute an event of
default, by the Company or any other party thereto under any
of such contracts, that could have a material adverse effect
on any of such contracts.
(s) Employment Contracts - Except as set out in Schedule "N", the
Company neither has any written employment contracts, union or
collective labor, pension, deferred profit sharing,
retirement, employee benefit, stock option or other similar
agreements or plans nor has it had any such plan or agreement
in the past, nor does it have any written contracts of
employment with any employees or, to the best of Vendors'
knowledge, any oral contracts of employment which are not
terminable on the giving of reasonable notice in accordance
with applicable law. The Company has not, in the last four (4)
years, experienced any labor disputes which were of a material
nature, work stoppages or strikes. There is not now any
circumstances or conduct which could result in the filing of
an unfair labor practice complaint against the Company; any
such complaints previously raised and currently ongoing and
the current status thereof are particularized in Schedule "N".
(t) Material Contracts - Except for the material contracts and
commitments disclosed herein, including the Schedules attached
hereto, the Company is not a party to or bound by any material
contract or commitments whether oral or written. True, correct
and complete copies of all such written contracts and
commitments either have been delivered to the Purchaser or
will be delivered prior to Closing. Each of such contracts and
commitments is in full force and effect and enforceable in
accordance with its respective terms and conditions, and there
is not existing any default, or event or condition which, with
the giving of notice or the passage of time, or both, would
constitute an event of default, by either of the Company or
any other party thereto under any of such contracts or
commitments, that could have a material adverse effect on any
of such contracts or commitments. The Company has the
capacity, including the necessary personnel, equipment and
supplies, to perform all its obligations thereunder in all
material respects.
(u) Pension/Benefit/Health Plans - The only pension, benefit or
health plans established by or for the Company for its
employees are those disclosed in Schedule "N" hereto; such
plans are duly registered where required by, and are in good
standing under all, applicable legislation; all required
employer contributions thereunder to the date hereof have been
made and the respective
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pension funds are funded in accordance with the rules of the
pension plans and no past service funding liabilities exist
thereunder. Except as disclosed on Schedule "N" hereto, there
is no employee benefit or health plan established or
maintained for employees of the Company, or to which
contributions have been made by the Company with respect to
such employees, which is subject to Title IV of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA").
The Company is in compliance in all material respects with all
provisions of ERISA, and the Company is not subject to any
liability or obligation arising under ERISA or any other
applicable law or the provisions of any other employee benefit
plan, including but not limited to liability owed to the
Pension Benefit Guaranty Corporation on account of a
termination or partial termination of any employee benefit
plan, any liability resulting from a "prohibited transaction",
any liability for failure to meet minimum funding
requirements, any liability related to the termination of a
multi-employer pension plan, and any liability caused by the
non-qualification of any plan under section 401 of the Code.
No pension plan, no employee benefit plan, no "disqualified
person" (as such term is used in Section 4975(c)(1) of the
Code) has engaged, and no Vendor has engaged, in any
transaction in violation of Section 406 of ERISA or any
"prohibited transaction" (as defined in Section 4975(c)(1) of
the Code) other than any such transaction which is exempt
under Section 408 of ERISA or Section 4975(d) of the Code. The
401k plan of the Company meets in all material respects the
requirements of section 401(a) of the Code. The Company does
not have any obligation to provide material post-retirement
benefits of any nature to its employees, former employees or
their survivors, dependents or beneficiaries, except as may be
required by the Consolidated Omnibus Budget Reconciliation Act
of 1986 ("COBRA") or any other applicable state medical
benefits continuation laws, nor will any such obligation to
provide such post-retirement benefits be incurred solely as a
result of the consummation of the within transactions. The
Company has not caused there to occur a "mass lay-off", as
defined in section 693.3 of the regulations issued under the
Worker Adjustment and Retention Notification Act (20 CFR 639)
at any time in the past.
(v) Absence of Conflicting Agreements - Neither the Company nor
any Vendor is a party to, bound or affected by or subject to
any indenture, mortgage, lease, agreement, instrument, charter
or by-law provision, or, to the best of Vendors' knowledge,
any statute, regulation, order, judgment, decree or law which
would be in any material respect violated, contravened,
breached by or under which a material default would occur, as
a result of the execution and delivery of this Agreement or
the consummation of any of the transactions provided for
herein.
(w) Litigation - Except for the items disclosed in Schedule "O"
hereto, all of which are fully insured against, there is no
suit, action, litigation, arbitration proceeding or private or
governmental proceeding, hearing before an administrative
tribunal, including appeals and applications for review, in
progress, pending or to the knowledge of Vendors threatened
against the Company or materially and adversely affecting its
properties, business, financial condition or business
prospects. Except as shown in Schedule "O", there is not
presently outstanding
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<PAGE> 14
against the Company any adverse judgment, decree, injunction,
rule or order of any court, governmental department,
commission, agency, instrumentality or arbitrator.
(x) Employees - There are set forth in Schedule "P" hereto the
names and titles of all personnel employed or engaged by the
Company whose annual base salary exceeds $40,000, including
rates of remuneration, positions held and date of commencement
of employment. The employment records of the Company are true,
complete and correct in all material respects. Except as
disclosed in Schedule "P" hereto, the Company does not owe any
past or present employee any sum other than for accrued wages
or salaries for the current payroll period, reimbursable
expenses, accrued vacation and holiday pay (none of which is
for a period in excess of two (2) weeks' pay with respect to
any single employee), sick leave rights and amounts payable
under employee benefit plans, and all of such sums that accrue
from the date hereof until the Closing shall be timely paid by
the Company on or prior to the Closing Date. There is not
pending or, to the best knowledge of Vendors, after due
inquiry, threatened, any charge or complaint against or
involving the Company or any of its officers or employees by
the National Labor Relations Board, the Occupational Health &
Safety Administration, the Department of Labor, or any similar
federal, state or local board of agency, or any representative
thereof.
(y) Insurance - The Company currently has in force the policies of
insurance set out in Schedule "Q" hereto. Such policies are
appropriate to its Business, property and assets, are in such
amounts and against such risks as are customarily carried and
insured against by owners of comparable businesses, properties
and assets, and, to the knowledge of Vendors, are issued by
responsible insurers. All such policies of insurance are in
full force and effect and the Company is not in default,
whether as to the payment of premium or otherwise, under the
terms of any such policy. Such policies can be cancelled
without penalty or premium, and such cancellation would
trigger a full pro rata refund of prepaid premiums. The
Company has no liability for retrospective insurance premiums
or costs.
(z) Intellectual Property - Attached as Schedule "R" is a true and
correct schedule identifying all material patents, patent
rights or licenses, patent applications, trademarks, trademark
registrations and applications, trademark rights, trade names,
trade secrets, service marks and applications therefore,
copyrights and copyright registrations and copyright
applications used in whole or in part in or required for the
proper carrying on of the Business of the Company (the
"Intellectual Property"). None of the matters covered by the
Intellectual Property, nor any of the products or services
sold or provided by the Company, nor any of the processes used
or the business practices followed by the Company, infringes
or has infringed upon any trademark, trade name, fictitious
name, service mark, trade secrets, patent or copyright owned
by any person or entity (or any application with respect
thereto), or constitutes unfair competition. The Company is
not obligated to pay any royalty or other payment with respect
to any of the Intellectual Property, except as disclosed in
Schedule "R". Except as
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<PAGE> 15
disclosed in Schedule "R" hereto, to the best of Vendors'
knowledge, no person or entity is producing, providing,
selling or using products, services, names, or marks that
would constitute an infringement of any of the Intellectual
Property.
(aa) Corporate Records - The corporate records and minute books of
the Company have been delivered to the Purchaser and contain
complete and accurate copies of the Company's Articles of
Incorporation, as amended, by-laws, minutes of all meetings,
and resolutions of its directors and shareholders. All such
meetings were duly called and held, all such by-laws and
resolutions were duly passed and the share certificate books,
registers of shareholders and members, registers of transfers
and registers of directors of the Company are complete and
accurate in all material respects. In all material respects,
the books and records of the Company with respect to its
assets, businesses, operations, properties and prospects have
been maintained in accordance with generally accepted
accounting principles and in the usual, regular and ordinary
manner, and all entries with respect thereto have been made
and all transactions have been properly accounted for. All
applicable corporate and other laws and all applicable
generally accepted accounting principles relating to the
maintenance of such books and records have been complied with
by the Company.
(bb) Third Party Approvals - Except for approvals required by the
Federal Trade Commission or other agencies for purposes of
complying with the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and the rules and regulations
promulgated thereunder (the "Hart Act") and required by the
Arizona Department of Health Services, and except as disclosed
in Schedule "S", there are no approvals, consents or waivers
required to be obtained or applications required to be filed
from or with governmental authorities or from any other Person
whatsoever, including pursuant to any leases or contracts
containing prohibitions or pre-consent provisions pertinent to
this Agreement in order to permit the transactions
contemplated herein or to preserve the Business and/or assets
of the Company.
(cc) Compliance with Environmental Laws - Except as disclosed in
Schedule "T" hereto, the Company and the Business are in all
material respects in compliance with all, and do not violate
in any material respect, and have not violated in any material
respect any, applicable federal, state, municipal or local
laws, regulations, orders, certificates of approval, licenses,
permits, governmental decrees, ordinances or any and all other
applicable legislation or regulatory requirements with respect
to environmental, health or safety matters. There has been no
storage, treatment, generation, discharge, transportation or
disposal of industrial, toxic or hazardous substances or solid
or hazardous waste by, or on behalf of, the Company, in
violation of any federal, state or local law, statute, rule or
regulation or any decree, order, arbitration award or
agreement with or any license or permit from any federal,
state or local governmental authority. There has been no
spill, discharge, leak, emission, injection, escape, dumping,
or release of any kind by, or on behalf of, the Company, into
the environment (including, without limitation, into air,
water or ground water) of any materials
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<PAGE> 16
including, without limitation, industrial, toxic or hazardous
substances or solid, medical or hazardous waste, as defined
under any federal, state or local law, statute, rule or
regulation other than those releases permissible under such
law, statute, rule or regulation or allowable under applicable
permits.
(dd) Compliance - The Company is not in violation in any material
respect of any laws, regulations, decrees or ordinances
applicable to the Business, assets, properties, financial
condition or business prospects of the Company.
(ee) Subsidiaries and Affiliates - Except as disclosed in Schedule
"U" hereto, the Company has no subsidiaries or any other
equity investment in any entity engaged in any aspect of the
medical or transportation industry. Except as disclosed in
Schedule "U" hereto, no Vendor has any equity interest in any
"Affiliates." For purposes of this Agreement, the term
"Affiliates" shall mean all entities engaged in any aspect of
the medical or transportation industry in which the applicable
Vendor is either an officer or director, or in which the
applicable Vendor, directly or indirectly, owns or controls
ten percent (10%) or more of the equity securities of the
entity.
(ff) Accounts Receivable - The accounts receivable existing on the
books of the Southwest Companies at the Closing Time (net of
contractual allowance) (the "Closing Accounts Receivable")
shall be at least $6,040,000 (the "Minimum Accounts
Receivable") and an amount at least equal to the Minimum
Accounts Receivable or the Closing Accounts Receivable,
whichever amount is greater (the "Target Accounts
Receivable"), is good and collectible within 365 calendar days
thereafter. None of the Closing Accounts Receivable are
subject to the return of the merchandise or other property the
selling price of which is represented thereby, or to offsets
or counterclaims, the extent of which is in excess of any
reserves for collectibility thereof reflected in the books of
the Southwest Companies at the Closing.
(gg) Bank Accounts - Schedule "V" hereto sets forth the name and
location of each bank in which the Company has an account,
lock box or safe deposit box, the number of each such account
or box, the names of all signatories thereto and the persons
authorized to draw thereon or have access thereto. No power of
attorney exists from the Company.
(hh) Accuracy of Documents, Representations and Warranties - The
copies of all documents furnished to Purchaser, or any of
its representatives by or on behalf of any Vendor or the
Company, or any one or more of them, or their representatives,
are true, complete and correct in all material respects. No
representation or warranty of any Vendor contained in this
Agreement or the other agreements to be executed by any Vendor
pursuant hereto, and no statement contained in the exhibits,
the schedules or the other documents delivered by or on behalf
of any Vendor, or his or its representatives pursuant to or in
connection with this Agreement or the other agreements to be
executed by any Vendor pursuant hereto or any of the
transactions contemplated hereby or thereby, contains any
untrue
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<PAGE> 17
statement of a material fact, or omits to state any material
fact required to be stated herein or therein in order to make
the statements contained herein or therein not misleading.
3.2 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER - To induce the Vendors to
enter into this Agreement and to perform Vendors' obligations hereunder, and
with full knowledge that Vendors will rely thereon, the Purchaser hereby
represents and warrants to the Vendors the truth, accuracy and completeness of
the following, except as disclosed in Schedule "W" hereto:
(a) Organization and Valid Existence - The Purchaser is a
corporation duly incorporated and organized, validly
existing and in good standing under the laws of the State of
Delaware and has all necessary corporate power, authority and
capacity to execute and deliver the Agreement and the other
agreements referenced herein to which the Purchaser is a
party, to consummate the transactions contemplated hereby and
thereby, and to fully and timely perform its obligations
hereunder and thereunder. The execution and delivery by
Purchaser of this Agreement and the other agreements
referenced herein to which Purchaser is a party, and the
consummation of the transactions contemplated hereby and
thereby, have been duly authorized and approved by Purchaser's
board of directors, and no other corporate proceedings on the
part of Purchaser are required to authorize the execution and
delivery of this Agreement, the other agreements referenced
herein to which Purchaser is a party, or the consummation of
the transactions contemplated hereby or thereby.
(b) Enforceability - This Agreement and the other agreements
referenced herein to which Purchaser is a party have been duly
executed and delivered by Purchaser and constitute legal,
valid and binding obligations of Purchaser, enforceable
against Purchaser in accordance with their respective terms.
(c) Absence of Conflicting Agreements - The Purchaser is not a
party to, bound or affected by or subject to any indenture,
mortgage, lease, agreement, instrument, charter or by-law
provision, statute, regulation, order, judgment, decree or law
which would be violated, contravened or breached by, or under
which any default would occur, as a result of the execution
and delivery of this Agreement or the consummation of any of
the transactions provided for herein.
(d) Litigation - There is no suit, action, litigation, arbitration
proceeding or governmental proceeding, including appeals and
applications for review, in progress, pending or, to the best
of the knowledge, information and belief (after due inquiry)
of the senior officers of the Purchaser, threatened against or
involving the Purchaser or any judgment, decree, injunction,
rule or order of any court, governmental department,
commission, agency, instrumentality or arbitrator which, in
any such case, would materially and adversely affect the
ability of the Purchaser to enter into this Agreement or to
consummate the transactions contemplated hereby.
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(e) No Liens - At the time of delivery by the Purchaser to
Vendors, the Rural/Metro Stock shall be free and clear of any
liens, charges, encumbrances or rights of others.
(f) Third Party Approvals - Except for approvals required by the
Federal Trade Commission or other agencies for purposes of
complying with the Hart Act and those required by the Arizona
Department of Health Services, and except as disclosed in
Schedule "W", there are no approvals, consents or waivers
required to be obtained or applications required to be filed
from or with governmental authorities or from any other Person
whatsoever, including pursuant to any leases or contracts
containing prohibitions or pre-consent provisions pertinent to
this Agreement, in order to permit the transactions
contemplated herein.
(g) Restrictions on Transfer - Other than as provided by federal
and state securities laws, rules and regulations, including,
without limitation, Rule 145 promulgated under the Act, and
the window policies established by Purchaser's Board of
Directors concerning the purchase and sale of Purchaser's
securities by insiders of the Purchaser, there are no
restrictions on transfer of the Rural/Metro Stock by Vendors.
(h) Accuracy of Documents, Representations and Warranties - The
copies of all documents furnished to the Vendors and their
representatives by or on behalf of Purchaser and its
representatives are true, complete and correct in all material
respects. No representation or warranty of Purchaser contained
in this Agreement or the other agreements referenced herein to
which Purchaser is a party, and no statement contained in the
exhibits, the schedules or the other documents delivered by
or on behalf of Purchaser or its representatives pursuant to
or in connection with this Agreement or any of the
transactions contemplated hereby contains any untrue statement
of a material fact, or omits to state any material fact
required to be stated herein or therein in order to make the
statements contained herein or therein not misleading.
3.3 NO BROKER - Each of the Parties represents and warrants to the others that
all negotiations relating to this Agreement and the transactions contemplated
hereby have been carried on between them directly and without the intervention
of any other party in such manner as to give rise to any valid claims against
any of the Parties for a brokerage commission, finder's fee or other like
payment.
3.4 NON-WAIVER - No investigations made by or on behalf of a Party at any time
shall have the effect of waiving, diminishing the scope of or otherwise
affecting any representation or warranty made by the other Party herein or
pursuant hereto.
3.5 NATURE AND SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS - All
statements contained in any certificate or other instrument delivered by or on
behalf of a Party pursuant to or in connection with the transactions
contemplated by this Agreement shall be deemed to be made by such Party
hereunder.
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ARTICLE 4
CONDITIONS PRECEDENT TO THE PERFORMANCE
BY THE PURCHASER AND THE VENDORS OF
THEIR OBLIGATIONS UNDER THIS AGREEMENT
4.1 PURCHASER'S CONDITIONS - The obligation of the Purchaser to complete the
purchase of the Purchased Shares hereunder shall be subject to the satisfaction
of, or compliance with, in all material respects, at or before the Closing Time,
each of the following conditions precedent (each of which is hereby acknowledged
to be inserted for the exclusive benefit of the Purchaser and may be waived by
it in whole or in part):
(a) Truth and Accuracy of Representations of Vendors at the
Closing Time - All of the representations and warranties of
Vendors made in or pursuant to this Agreement shall be true
and correct in all material respects as at the Closing Time
and with the same effect as if made at and as of the Closing
Time (except as such representations and warranties may be
affected by the occurrence of events or transactions expressly
contemplated and permitted hereby), and the Purchaser shall
have received a certificate from each of the Vendors
confirming the truth and correctness in all material respects
of their representations and warranties contained herein;
(b) Performance of Obligations - The Vendors shall have performed
or complied with all of their obligations, covenants and
agreements hereunder;
(c) Receipt of Closing Documentation - All documentation relating
to the due authorization and completion of the sale and
purchase hereunder of the Purchased Shares and all actions and
proceedings taken on or prior to the Closing in connection
with the performance by the Vendors of their obligations under
this Agreement shall be reasonably satisfactory to the
Purchaser and the Purchaser shall have received copies of all
such documentation or other evidence as it may reasonably
request in order to establish the consummation of the
transactions contemplated hereby and the taking of all
corporate proceedings in connection therewith in compliance
with these conditions, in form (as to certification and
otherwise) and substance reasonably satisfactory to the
Purchaser;
(d) Consents, Authorizations and Registrations - All consents,
approvals, orders and authorizations of any Persons or
governmental authorities (or registrations, declarations,
filings or recordings with any such authorities) required in
connection with the completion of any of the transactions
contemplated by this Agreement (including, without limitation,
any notifications, approvals or consents required by the
Arizona Department of Health Services) shall have been
obtained on or before the Closing Time; the Vendors shall have
obtained and delivered by Closing to the Purchaser written
consents, in form and substance satisfactory to the Purchaser,
to the transaction contemplated herein which are required (if
any) pursuant to the real property leases referred to in
Schedule "J" (and any customer contracts where approval or
consent is required), including, without limiting the
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<PAGE> 20
generality of the foregoing, such acknowledgements and
confirmations of good standing from the lessors in respect of
the real property leases referred to in Schedule "J" hereto as
may be reasonably requested by the Purchaser;
(e) Directors and Officers of Company - Subject to the terms of
the Employment Agreement, there shall have been delivered to
the Purchaser on or before the Closing Date the resignations
of such persons as the Purchaser shall direct who are
presently directors and/or officers of the Company.
(f) No Damage - No substantial damage by fire or other hazard to
the assets of the Company shall have occurred from the date
hereof to the Closing Date which is not fully and adequately
insured against;
(g) Litigation - On the Closing Date, there shall be no
litigation, governmental investigation or proceeding pending
or threatened for the purpose of enjoining or preventing the
consummation of any of the transactions contemplated by this
Agreement or otherwise claiming that such consummation is
improper;
(h) Hart-Scott-Rodino Filing - The applicable waiting period under
the Hart Act shall have expired or terminated.
(i) Management - Rural/Metro's Board of Directors shall have
confirmed the appointment of Ramsey to the Board of Directors
of Rural/Metro and to a senior executive position with
Rural/Metro.
(j) Investment Agreement - Vendors shall have each executed and
delivered to Purchaser an Investment Agreement in form and
content substantially as attached hereto as Appendix 4.1(j).
(k) Environmental Reports - Purchaser shall have received reports,
in form and content satisfactory to Purchaser, in the exercise
of its sole discretion, from independent environmental
consultants acceptable to Purchaser in its sole discretion,
and from legal counsel to Purchaser, concerning the real
properties owned or leased by the Company, which reports shall
be based, in part, on the results of environmental site
assessments which Purchaser may cause to be completed for and
on behalf of Purchaser prior to the Closing Date on all such
real or leased properties, which reports, if any, shall be
prepared at Purchaser's expense.
(l) Due Diligence - Purchaser shall, in the exercise of its sole
discretion, be entirely satisfied with the business,
operations, financial condition, assets and liabilities of the
Company.
(m) Schedules - Purchaser shall have received from Vendors the
Schedules referred to herein and all amendments and
modifications thereto, and Purchaser shall, in the exercise of
its sole discretion, be entirely satisfied with the nature and
extent
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<PAGE> 21
of the disclosures made therein and the representations and
warranties of Vendors as modified by the disclosures contained
in the Schedules.
(n) Simultaneous Closings - On the Closing Date, the share
purchases and other transactions contemplated in each of the
Agreements of Purchase and Sale executed of even date herewith
for the sale of Southwest Ambulance of Casa Grande, Inc.,
Medical Emergency Devices and Services (MEDS), Inc., and
Southwest General Services, Inc. shall be consummated
simultaneously with the transactions contemplated herein.
4.2 VENDORS' CONDITIONS - The obligations of the Vendors to complete the sale of
the Purchased Shares hereunder shall be subject to the satisfaction of or
compliance with, at or before the Closing Time, each of the following conditions
precedent (each of which is hereby acknowledged to be inserted for the exclusive
benefit of the Vendors and may be waived by them in whole or in part):
(a) Truth and Accuracy of Representations of Purchaser at Closing
Time - All of the representations and warranties of the
Purchaser made in or pursuant to this Agreement shall be true
and correct in all material respects as at the Closing Time
and with the same effect as if made at and as of the Closing
Time and the Vendors shall have received a certificate from a
duly authorized senior officer of the Purchaser confirming the
truth and correctness in all material respects of the
representations and warranties of the Purchaser contained
herein;
(b) Performance of Obligations - The Purchaser shall have
performed or complied with all of its obligations, covenants
and agreements hereunder;
(c) Receipt of Closing Documentation - All documentation relating
to the due authorization and completion of the sale and
purchase hereunder of the Purchased Shares and all actions and
proceedings taken on or prior to the Closing in connection
with the performance by the Purchaser of its obligations under
this Agreement shall be reasonably satisfactory to the Vendors
and the Vendors shall have received copies of all such
documentation or other evidence as they may reasonably request
in order to establish the consummation of the transactions
contemplated hereby and the taking of all corporate
proceedings in connection therewith in compliance with these
conditions, in form (as to certification and otherwise) and
substance satisfactory to the Vendors;
(d) Release of Vendors' Guaranties - Purchaser shall have secured
the release of Vendors from liability for any personal
guarantees issued by Vendors as the shareholders of the
Company with respect to any liability of the Company for
borrowed money, and shall have provided to Vendors written
evidence thereof, or, in the alternative, Purchaser shall
deliver an agreement of assumption and indemnification, in
form and content mutually satisfactory to Purchaser and
Vendors, pursuant to which Purchaser will indemnify Vendors
for any such personal guaranty;
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(e) Litigation - On the Closing Date, there shall be no
litigation, governmental investigation or proceeding pending
or threatened for the purpose of enjoining or preventing the
consummation of any of the transactions contemplated by this
Agreement or otherwise claiming that such consummation is
improper;
(f) Hart-Scott-Rodino Filing - The applicable waiting period under
the Hart Act shall have expired or terminated;
(g) Management - The Board of Directors of Rural/Metro shall have
confirmed the appointment of Ramsey to the Board of Directors
of Rural/Metro and to a senior executive position with
Rural/Metro and approved certain existing management contracts
of the Company;
(h) Investment Agreement - Purchaser shall have executed and
delivered to Vendors an Investment Agreement in form and
content substantially as attached hereto as Appendix 4.1(j).
(i) Simultaneous Closings - On the Closing Date, the share
purchases and other transactions contemplated in each of the
Agreements of Purchase and Sale executed of even date herewith
for the sale of Southwest Ambulance of Casa Grande, Inc.,
Medical Emergency Devices and Services ("MEDS"), Inc., and
Southwest General Services, Inc. shall be consummated
simultaneously with the transactions contemplated herein.
ARTICLE 5
OTHER COVENANTS OF THE PARTIES
5.1 CONDUCT OF BUSINESS PRIOR TO CLOSING - During the period from the date of
this Agreement to the Closing Time, the Vendors will have the following
obligations and will cause the Company to do the following:
(a) Access to Records - Vendors shall, and shall cause the Company
and its employees, officers, agents, representatives and
accountants to, fully cooperate with Purchaser to allow the
officers, employees, attorneys, consultants and accountants of
Purchaser free and unrestricted access (but only through Barry
Landon, as representative of the Vendors and without
interference to the ordinary conduct of the Business) during
normal business hours to all of the properties, books,
contracts, documents and records of the Company and furnish to
Purchaser such information as Purchaser may at any time and
from time to time reasonably request until the Closing Time.
(b) Business in Ordinary Course - Vendors shall cause the Company
to carry on its business and affairs as heretofore carried on,
and neither the Company nor any Vendor will order, purchase or
lease any products, inventory, equipment, leased personalty,
or other items, or dispose of any of its assets or leased
property, or issue any quotations, or prepay any of its
material obligations, incur any liabilities
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or obligations, hire or discharge any employee or officer or,
without limitation by specific enumeration of the foregoing,
enter into any other transaction, except in the usual and
ordinary course of its business in accordance with the past
practices of the Company and except as provided herein.
Without limiting the generality of the foregoing, Vendors
shall not permit the Company, without the prior written
consent of Purchaser, to:
(i) create or suffer to exist any liens or encumbrances
with respect to any of the assets or properties of
the Company which shall not be discharged at or
prior to the Closing Date, other than liens for
nondelinquent taxes;
(ii) incur any indebtedness for borrowed money other than
borrowings under the Company's existing Revolving
Credit Line with First National Bank of Arizona,
which borrowings shall be in the usual and ordinary
course of its business and the balance of which
shall not exceed $2,045,000 in the aggregate as at
the Closing Time;
(iii) sell or transfer any material assets or properties
(including, without limitation, sales and transfers
to Affiliates, other than Affiliates of the Company
the stock of which is to be acquired by Purchaser or
an Affiliate of Purchaser on the Closing Date);
(iv) acquire or enter into any agreement or understanding
(oral or written) to acquire the stock or assets of
any other person, firm, corporation or other entity;
(v) make any material change in the conduct or nature of
any aspect of its business, whether in the ordinary
course of business or not, or whether or not the
change has or will have a material adverse affect on
the business activities, financial condition, or
business prospects of the Company;
(vi) waive any material rights;
(vii) pay any Affiliate, other than Affiliates of the
Company the stock of which is to be acquired by
Purchaser or an Affiliate of Purchaser on the
Closing Date, or be charged by any Affiliate, other
than Affiliates of the Company the stock of which is
to be acquired by Purchaser or an Affiliate of
Purchaser on the Closing Date, for goods sold or
services rendered or be charged by any Affiliate,
other than Affiliates of the Company the stock of
which is to be acquired by Purchaser or an Affiliate
of Purchaser on the Closing Date, for corporate
overhead expenses, management fees, legal or
accounting fees, capital charges, or similar charges
or expenses, except for any payments made by the
Company pursuant to leases with NRM Properties, Inc.
or Chaparral Properties, Inc.;
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(viii) incur or commit to incur any individual capital
expenditures except in the ordinary course of its
business;
(ix) amend employment contracts or the terms and
conditions of employment of any officer, director or
employee earning total annual compensation in excess
of $70,000, other than normal merit and cost of
living increases to employees in accordance with the
general prevailing practices of the Company existing
prior to the date of this Agreement;
(x) pay or incur any management or consulting fees;
(xi) hire any employee who shall have an annual salary in
excess of $70,000;
(xii) enter into any transaction other than in the usual
and ordinary course of business; or
(xiii) issue or sell any shares of the stock or other
securities of the Company, including any of the
Purchased Shares, or make or become obligated to
make any dividend or other distribution or payment
to Vendors or any former shareholder of the Company
in respect of any stock or other security of the
Company at any time held by Vendor or such other
former shareholders.
(c) Employees - Vendors shall use their reasonable efforts to
retain, and shall cause the Company to each retain its
business intact, preserve all its goodwill and customer and
employee relations, including keeping available the services
of each of its present employees, representatives and agents.
(d) Continue Insurance - Vendors shall cause the Company to
continue in force all existing policies of insurance presently
maintained by the Company.
(e) Perform Obligations - Vendors shall cause the Company to
comply in all material respects with all laws affecting the
operation of the Business and to pay all required taxes and
tax installments.
(f) Confidentiality - Until the Closing, and at all times
thereafter as provided in Section 6.1(d) hereof, Vendors will
maintain as confidential their discussions with Purchaser, and
the terms and conditions of this Agreement, and the other
agreements to be executed in connection herewith, and except
as reasonably necessary to fulfill Vendors' obligations
hereunder or as required by law, will not make any trade press
or other announcement or disclosure in relation to such
discussions whether before or after Closing without the prior
written consent of Purchaser.
(g) Exclusivity - Until the earlier of the Closing or the
termination of this Agreement in accordance with the terms
hereof, Vendors will negotiate the sale of the stock, assets
and properties of the Company only with Purchaser, and no
Vendor will permit the Company to, directly or indirectly,
enter into any discussion with, or
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disclose any information in relation to the Purchased Shares
or the assets of the Company to any other person, firm, or
other entity, other than Purchaser.
(h) Equitable Relief - Each Vendor acknowledges and agrees that
the covenants contained in each of paragraphs (f) and (g) of
this Section 5.1 are a material inducement for Purchaser to
execute and deliver this Agreement and to consummate the
transactions contemplated hereby. Accordingly, Vendor acknowl-
edges and agrees that the restrictions contained in each of
paragraphs (f) and (g) of this Section 5.1 are reasonable and
necessary for the protection of the business of Purchaser and
its subsidiaries, the Company, and the investment of Purchaser
in the Company, and that a breach of any such restriction
could not adequately be compensated by damages in an action at
law. In the event of a breach or threatened breach by any
Vendor of any of the provisions of any of paragraphs (f) or
(g) of this Section 5.1, Purchaser shall be entitled to
obtain, without the necessity of posting bond therefor, an
injunction (preliminary or permanent, or a temporary
restraining order) restraining such Vendor from the activity
or threatened activity constituting, or which would
constitute, a breach, as well as damages and an equitable
accounting of all earnings, profits and other benefits arising
from a violation, which right shall be cumulative and in
addition to any other rights or remedies to which Purchaser
may be entitled.
(i) Severability - Each and every provision set forth in each of
paragraphs (f) and (g) of this Section 5.1 is independent and
severable from the others, and no provision shall be rendered
unenforceable by virtue of the fact that, for any reason, any
other or others of them may be unenforceable in whole or in
part. The parties hereto agree that if any provision of
paragraphs (f) or (g) of this Section 5.1 shall be declared by
a court of competent jurisdiction to be unenforceable for any
reason whatsoever, the court may appropriately limit or modify
such provision, and such provision shall be given effect to
the maximum extent permitted by applicable law.
(j) Consents - Vendors shall use their reasonable efforts and make
every good faith attempt to obtain any and all consents and
estoppel letters reasonably requested by Purchaser to or in
connection with the assignment of, or alternate arrangements
satisfactory to Purchaser with respect to, any contract,
lease, license, permit, agreement, or other instrument, which
is to be an asset of the Company, or which may be necessary,
appropriate, or required in order to permit the conduct of the
Business and operations of the Company after the Closing to be
in all respects the same as the conduct of the Business and
operations of the Company, prior to the Closing.
5.2 OBLIGATIONS OF PURCHASER - During the period from the date of this Agreement
to the Closing Time, or such other period as provided by this Agreement, the
Purchaser will have the following obligations:
(a) Confidentiality - Purchaser will maintain as confidential its
discussions with Vendors, and the terms and conditions of this
Agreement, and the other agree-
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ments to be executed in connection herewith, and except as
reasonably necessary to fulfill its obligations hereunder or
as required by law, will not make any trade press or other
announcement or disclosure in relation to such discussions
without the prior written consent of Vendors. In the event of
the termination of this Agreement without consummation of the
transactions contemplated hereby, Purchaser will keep
confidential any information (unless readily available from
public or published information sources) obtained from the
Company or the Vendors. If this Agreement is so terminated,
promptly after such termination, all documents, work papers
and other written material obtained from Vendors'
representative in connection with this Agreement and not
theretofore made public (including all copies thereof), shall
be returned to the Person that provided such material.
Purchaser shall provide Vendors with a list of representatives
of Purchaser involved in the due diligence, and said
representatives shall refrain from discussing the transaction
and its due diligence activities with any other employee or
representative of Purchaser not disclosed on the list.
(b) Nonsolicitation - In the event of termination of this
Agreement without consummation of the transactions
contemplated hereby, Purchaser agrees that for a period of
three (3) years following such termination, Purchaser will
not, directly or indirectly, solicit or cause others to
solicit any person who, on the date hereof, is an employee of
the Company and whose annual compensation from the Company
exceeds $25,000, for employment or as an independent
contractor with any person or entity, unless first authorized
in writing by Vendors, which authorization may be withheld in
the sole and absolute discretion of Vendors.
(c) Trade Secrets and Other Information - In the event of
termination of this Agreement without consummation of the
transactions contemplated hereby, Purchaser agrees that after
the Closing Purchaser will not communicate or divulge to, or
use for the benefit of, any person, firm or corporation any of
the trade secrets, methods, formulas, business and/or
marketing plans, processes or any other proprietary or
confidential information with respect to the Company and its
business, financial condition, business operations or methods,
or business prospects. The preceding sentence shall not apply
to information which (i) is, was or becomes generally known or
available to the public or the industry other than as a result
of a disclosure by Purchaser in violation of this Agreement,
or (ii) is required to be disclosed by law. Purchaser will
advise Vendors, in writing, of any request, including a
subpoena or similar legal inquiry, to disclose any such
confidential information, such that Vendors can seek
appropriate legal relief.
(d) Equitable Relief - Purchasers acknowledge that the covenants
contained in each of paragraphs (a), (b), and (c) of this
Section 5.2 are a material inducement for Vendors to execute
and deliver this Agreement and to consummate the transac-
tions contemplated hereby. Accordingly, Purchaser acknowledges
and agrees that the restrictions contained in each of
paragraphs (a), (b), and (c) of this Section 5.2 are
reasonable and necessary for the protection of the business of
the Company, and Vendors' investment in the Company, and that
a breach of any such restriction could not adequately be
compensated by damages in an action at
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<PAGE> 27
law. In the event of a breach or threatened breach by
Purchaser of any of the provisions of any of paragraphs (a),
(b), or (c) of this Section 5.2, Vendors shall be entitled to
obtain, without the necessity of posting bond therefor, an
injunction (preliminary or permanent, or a temporary
restraining order) restraining Purchaser from the activity or
threatened activity constituting, or which would constitute, a
breach of this Agreement, as well as damages and an equitable
accounting of all earnings, profits and other benefits arising
from such a violation, which right shall be cumulative and in
addition to any other rights or remedies to which Vendors may
be entitled.
(e) Severability - Each and every provision set forth in each of
paragraphs (a), (b), and (c) this Section 5.2 is independent
and severable from the others, and no provision shall be
rendered unenforceable by virtue of the fact that, for any
reason, any other or others of them may be unenforceable in
whole or in part. The parties hereto agree that if any
provision of any of paragraphs (a), (b), or (c) of this
Section 5.2 shall be declared by a court of competent
jurisdiction to be unenforceable for any reason whatsoever,
the court may appropriately limit or modify such provision,
and such provision shall be given effect to the maximum extent
permitted by applicable law.
(f) Consents - Purchaser shall use its reasonable efforts and make
every good faith attempt to obtain any and all consents and
estoppel letters which may be necessary, appropriate, or
required in order to permit consummation of the transactions
contemplated herein.
5.3 JOINT OBLIGATIONS OF VENDORS AND PURCHASER - During the period from the date
of this Agreement to the Closing Time, the following shall apply with equal
force to Vendors and Purchaser:
(a) Notice - Each Party shall promptly give the other parties
written notice of the existence or occurrence of any condition
that would make any representation or warranty of the
notifying Party untrue or that might reasonably be expected to
prevent the consummation of the transactions herein
contemplated.
(b) Performance - No Party shall intentionally perform or omit to
perform any act which, if performed or omitted, would prevent
or excuse the performance of this Agreement by any Party
hereto or that would result in any representation or warranty
contained herein of that Party being untrue in any material
respect as of the date hereof and as if originally made on and
as of the Closing Date.
(c) Hart-Scott-Rodino Filings - Each party shall take whatever
steps are necessary to make any filings required under the
Hart Act not later than ten days after the date of execution
of this Agreement.
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ARTICLE 6
POST CLOSING OBLIGATIONS
6.1 OBLIGATIONS OF VENDORS - Following the Closing, Vendors shall each be
subject to the following obligations:
(a) Covenant Not to Compete - In consideration of the execution
and delivery of this Agreement by Purchaser, and in
consideration of the Purchase Price, and as additional
consideration therefor, each of the Vendors unconditionally
agrees that during the Restricted Period (as defined below) no
Vendor will, directly or indirectly (including, without
limitation, as a partner, shareholder, director, officer or
employee of, or lender or consultant to, any other person or
entity), for himself, herself or itself, or on behalf of, or
in conjunction with, any other Person or governmental entity,
in any manner whatsoever, or in any other capacity within,
into or from the Restricted Territory (as defined below)
engage or cause others to engage in the Business, or any
aspect thereof, unless first authorized in writing by
Purchaser, which authorization may be withheld in the sole and
absolute discretion of Purchaser. For purposes of this
Agreement, the term "Restricted Period" shall mean the period
ending three (3) years from the Closing Date. For purposes of
this Agreement, the term "Restricted Territory" shall mean the
State of Arizona. If any Vendor violates his, her or its
obligations under this Section 6.1(a), then the Restricted
Period shall be extended by the period of time equal to that
period beginning when the activities constituting such
violation commenced and ending when the activities
constituting such violation terminated. Notwithstanding the
foregoing, the obligations of the Vendors under this Section
6.1(a) shall terminate if Ramsey is terminated by Purchaser
without Cause as defined and described in the Employment
Agreement. The Purchaser agrees that no breach of this
covenant not to compete will occur as a result of Ramsey's
formation of and activities with respect to any 501(c)(3)
foundation, his continued association with the International
Association of Firefighters, his continued ownership and
operation of an ambulance service company in Pima County under
the name Kords Southwest, or his continued service as
President of the Arizona Ambulance Association.
(b) Nonsolicitation - In consideration of the execution and
delivery of this Agreement by Purchaser, and in consideration
of the Purchase Price, each of the Vendors agrees that for a
period of three (3) years following the Closing Date no Vendor
will, directly or indirectly, solicit or cause others to
solicit, (i) in respect of the Business, any Person or other
entity that is, or was within the twelve (12) month period
immediately prior to the Closing, a customer or supplier of
the Company, or (ii) any person who, on the date hereof, is an
employee of the Company and whose annual compensation from the
Company exceeds $25,000, for employment or as an independent
contractor with any Person or entity, unless first authorized
in writing by Purchaser, which authorization may be withheld
in the sole and absolute discretion of Purchaser. If any
Vendor violates his, her or its obligations under this Section
6.1(b), then the time periods hereunder shall be extended by
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<PAGE> 29
the period of time equal to that period beginning when the
activities constituting such violation commenced and ending
when the activities constituting such violation terminated.
Notwithstanding the foregoing, the obligations of the Vendors
under this Section 6.1(b) shall terminate if Ramsey is
terminated by Purchaser without Cause as defined and described
in the Employment Agreement.
(c) Trade Secrets and Other Information - In consideration of the
execution and delivery of this Agreement by Purchaser, and in
consideration of the Purchase Price, each of the Vendors
agrees that after the Closing no Vendor will communicate or
divulge to, or use for the benefit of, any Person other than
Purchaser or the Company, or its or their agents and
representatives, any of the trade secrets, methods, formulas,
business and/or marketing plans, processes or any other
proprietary or confidential information with respect to the
Company and its business, financial condition, business
operations or methods, or business prospects. The preceding
sentence shall not apply to information which (i) is, was or
becomes generally known or available to the public or the
industry other than as a result of a disclosure by a Vendor in
violation of this Agreement, or (ii) is required to be
disclosed by law. Vendors will advise Purchaser, in writing,
of any request, including a subpoena or similar legal inquiry,
to disclose any such confidential information, such that
Purchaser can seek appropriate legal relief.
(d) Confidentiality - At all times after the Closing, Vendors will
maintain as confidential the discussions between Vendors and
Purchaser, and the terms and conditions of this Agreement, and
the other agreements to be executed in connection herewith,
and except as required by law, will not make any trade press
or other announcement or disclosure in relation to such
discussions whether before or after Closing without the prior
written consent of Purchaser.
(e) Equitable Relief - Vendors acknowledge that the covenants
contained in each of paragraphs (a), (b), (c), and (d) of this
Section 6.1 are a material inducement for Purchaser to execute
and deliver this Agreement and to consummate the transactions
contemplated hereby. Accordingly, Vendors acknowledge and
agree that the restrictions contained in each of paragraphs
(a), (b), (c), and (d) of this Section 6.1 (including, without
limitation, the Restricted Period and the Restricted
Territory) are reasonable and necessary for the protection of
the business of the Company, and Purchaser's investment in the
Company, and that a breach of any such restriction could not
adequately be compensated by damages in an action at law. In
the event of a breach or threatened breach by any Vendors of
any of the provisions of any of paragraphs (a), (b), (c), or
(d) of this Section 6.1, Purchaser shall be entitled to
obtain, without the necessity of posting bond therefor, an
injunction (preliminary or permanent, or a temporary
restraining order) restraining that Vendor from the activity
or threatened activity constituting, or which would
constitute, a breach of this Agreement, as well as damages and
an equitable accounting of all earnings, profits and other
benefits arising from such a violation, which right shall be
cumulative and in addition to any other rights or remedies to
which Purchaser may be entitled.
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(f) Severability - Each and every provision set forth in each of
paragraphs (a), (b), (c), and (d) this Section 6.1 is
independent and severable from the others, and no provision
shall be rendered unenforceable by virtue of the fact that,
for any reason, any other or others of them may be
unenforceable in whole or in part. The parties hereto agree
that if any provision of any of paragraphs (a), (b), (c) or
(d) of this Section 6.1 shall be declared by a court of
competent jurisdiction to be unenforceable for any reason
whatsoever, the court may appropriately limit or modify such
provision, and such provision shall be given effect to the
maximum extent permitted by applicable law.
(g) Consents - Vendors shall use their reasonable efforts and make
every good faith attempt to obtain any and all consent and
estoppel letters, if any, reasonably requested by Purchaser to
or in connection with the assignment of, or alternate
arrangements satisfactory to Purchaser with respect to, any
contract, lease, license, permit, agreement, or other
instrument, which is to be an asset of the Company, or which
may be necessary, appropriate, or required in order to permit
the conduct of the business and operations of the Company
after the Closing to be in all respects the same as the
conduct of the business and operations of the Company prior to
the Closing.
(h) Nonpayment of Accounts Receivable - In the event that the
Southwest Companies collect from Closing Accounts Receivable
(as defined in Section 3.1(ff) hereof) an amount less than the
Target Accounts Receivable within 365 calendar days after the
Closing Date, Purchaser may, at its option, cause the Company
to tender such uncollected Accounts Receivable (the "Unpaid
Account(s) Receivable") to Vendors for the immediate payment
therefor by Vendors in cash, check, bank check or certified
funds, in the face amount or the unpaid portion thereof. If
payment is not made as provided herein then, without
limitation of any other remedy available to it, Purchaser may
offset such unpaid amount against any amount owed by Purchaser
to any Vendor under this Agreement, any promissory note issued
pursuant hereto, or otherwise. Any Unpaid Accounts Receivable
tendered by Purchaser for payment by Vendors pursuant to this
Section 6.1(h) shall become, upon payment therefor, the
property of Vendors.
6.2 OBLIGATIONS OF PURCHASER - Following the Closing, Purchaser shall be subject
to the following obligations:
(a) Tax Amendments - The Purchaser agrees that the Company shall
not, and the Purchaser shall not cause the Company to, amend
the Company's tax returns for 1995 or earlier without the
prior consent of Ramsey. In the event the Company and/or the
Purchaser amends such tax returns without Ramsey's consent,
the Purchaser agrees to indemnify the Vendors for any
liabilities that any of them may occur as a result of any such
amendment; provided, however, that Vendors agree jointly and
severally to indemnify, defend and hold harmless the Purchaser
and the Company for any liabilities, costs, penalties, fines
and interest that either of them may incur as the result of
any refusal to grant the consent referred to above.
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(b) Trade Name - Purchaser agrees that all ambulance services
conducted in Arizona by the Southwest Companies as of the date
hereof shall be operated under the trade name "Southwest
Ambulance" for a period from and after the Closing of not less
than five (5) years. If Purchaser or the Southwest Companies
breach this Section 6.2(b), Purchaser or the Southwest
Companies shall pay to Ramsey as liquidated damages, and not
as a penalty, the amount of $2,000,000, except that no
liquidated damages will be payable unless and until the
Vendors have provided written notice to the Purchaser or the
Southwest Companies of a breach of this Section 6.2(b) and
such breach has not been cured within 30 days after such
written notice.
(c) Non Interference With Leases - Purchaser acknowledges the
existence of certain real property leases between the Company
and NRM Properties, Inc. and Chaparral Properties, Inc.
(collectively the "Landlords"), and agrees not to interfere
with such leases and to cause the Company to abide by such
leases. In the event that the Company and/or the Purchaser
reaches this Agreement, the Purchaser shall pay to the
appropriate Landlord the full amount of all unpaid monetary
obligations of the Company through the lease period in effect
at the time of the Closing and agrees that such remedy is in
addition to all other remedies that the Landlords or the
Vendors may have at law or in equity.
6.3 OBLIGATIONS OF VENDORS AND PURCHASER - Following the Closing, Vendors and
Purchaser shall execute such further documents, and perform such further acts,
as may be necessary to transfer and convey the Purchased Shares to Purchaser, on
the terms herein contained, and to otherwise comply with the terms of this
Agreement and consummate the transactions herein provided.
ARTICLE 7
INDEMNIFICATION
7.1 INDEMNIFICATION BY VENDORS
(a) General - Subject to Section 7.4 hereof, Vendors jointly and
severally covenant and agree to defend, indemnify and hold
Purchaser and the Company, its and their officers, directors,
shareholders and subsidiaries, harmless for, from and against
any and all damages, losses, liabilities (absolute and
contingent), fines, penalties, costs and expenses (including,
without limitation, reasonable counsel fees and costs and
expenses incurred in the investigation, defense or settlement
of any claim covered by this indemnity) with respect to or
arising out of any demand, claim, inquiry, investigation,
proceeding, action or cause of action that Purchaser and/or
the Company, its and their officers, directors, shareholders
and subsidiaries, may suffer or incur by reason of: (a) the
inaccuracy of any of the representations or warranties of
Vendors contained in this Agreement, or any of the agreements,
certificates, documents, exhibits or schedules delivered in
connection with this Agreement; (b) the failure to comply
with, or the breach or default by any Vendor of any of the
covenants, warranties or agreements made
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by that Vendor contained in this Agreement, or any of the
agreements, certificates, documents, exhibits or schedules
delivered in connection with this Agreement; (c) any pending
or threatened litigation, claims, investigations, inquiries,
regulatory audits or assessments, or other similar proceedings
against Purchaser and/or the Company and/or its or their
directors, officers, shareholders, employees, agents or
representatives, as well as any future litigation, claims,
investigations, inquiries, regulatory audits or assessments,
or other similar proceedings against the Purchaser and/or the
Company and/or its or their directors, officers, shareholders,
employees, agents or representatives that arise from a state
of facts existing prior to the Closing, and which are not
fully covered and reimbursed by insurance; or (d) any
liability or obligation of the Company not reflected, provided
for, or adequately reserved against on the balance sheets
included in the Financial Statements. Purchaser and/or the
Company shall be entitled to offset against any amount owed by
Purchaser and/or the Company to Vendors, (or any of them) any
amount owed to Purchaser and/or the Company by Vendor, (or any
of them) or any of their Affiliates.
(b) Environmental - Subject to Section 7.4 hereof, Vendors jointly
and severally covenant and agree to defend, indemnify and hold
Purchaser and/or the Company, and their officers, directors
and shareholders harmless for, from and against any and all
damages, losses, liabilities (absolute and contingent), fines,
penalties, costs and expenses (including, without limitation,
reasonable counsel fees and costs and expenses incurred in the
investigation, defense or settlement of any claim covered by
this indemnity and costs associated with any environmental
assessments and/or remediation expenses) by reason of any
inaccuracy of any of the representations or warranties set
forth in Section 3.1(cc) hereof, or with respect to or arising
out of any demand, claim, inquiry, investigation, proceeding,
action, or cause of action brought by any governmental agency
or instrumentality or any Person other than Purchaser, which
Purchaser and/or the Company, or any of their officers,
directors or shareholders may suffer or incur by reason of:
(i) any generation, transportation, storage, treatment
or disposal of industrial, toxic or hazardous
substances or solid or hazardous wastes occurring on
or prior to the Closing Date including, without
limitation, any waste or other disposal activities
or discharges that occurred at a facility on which
any portion of the Company's (or its predecessors')
business was conducted, any waste or other disposal
activities or discharges that occurred off of any
such facility with regard to wastes and other
substances generated on such facility, and any waste
or other disposal activities or discharges that
occurred on real estate at any time whether or not
the Company (or its predecessors) owned or leased
such real estate at the time such waste or other
disposal activities or discharges were engaged in,
where the Company or Persons at the direction of the
Company performed such waste or other disposal
activities or discharges;
32
<PAGE> 33
(ii) any spills, discharges, leaks, emissions,
injections, escapes, dumping, or any releases as
defined now or in the future under the Comprehensive
Environmental Response, Compensation, and Liability
Act of 1980, P.L. 96-510, as amended or reauthorized
from time to time, or any other similar federal,
state or local laws, statutes, rules or regulations,
occurring on or prior to the Closing Date,
including, but not limited to, both those releases
or incidents involving environmental contamination
that required notification or reporting to
appropriate federal, state or local officials or
agencies, or clean-up or remedial activities and
those releases or incidents which occurred prior to
the effective date of any requirements imposing such
notification or reporting obligations or clean-up
or remedial activities, but which would have been
subject to such obligations if they had occurred
subsequent to the effective date of such
requirements;
(iii) any discharges to surface waters or groundwaters
occurring on or prior to the Closing Date;
(iv) any air emissions occurring on or prior to the
Closing Date;
(v) the exposure of and resulting consequences to any
persons, including, but not limited to, employees of
the Company (or any of its predecessors), to any
mineral, chemical or industrial product, raw
material intermediate, by-product or waste, or
substance created, generated, processed, handled or
originating at a facility at which the Company (or
any of its predecessors) conducted business on or
prior to the Closing Date or otherwise used by the
Company (or any of its predecessors) in the conduct
of its business;
(vi) any violations by the Company (or any of its
predecessors) occurring on or prior to the Closing
Date of federal, state or local (A) environmental
laws, or (B) occupational or employee health and
safety laws;
(vii) any and all actions, failures to act and negligence
in monitoring, maintaining and upkeep of on-site
storage, treatment and disposal facilities on or
prior to the Closing Date;
(viii) any misuse, removal, failure to properly maintain
and/or monitor storage tanks on or prior to the
Closing Date; or
(ix) any violations, fees, obligations or failures to
comply with any and all environmental permit
requirements on or prior to the Closing Date.
33
<PAGE> 34
7.2 INDEMNIFICATION BY PURCHASER
(a) General - Subject to Section 7.4 hereof, Purchaser covenants
and agrees to defend, indemnify and hold each Vendor harmless
for, from and against any and all damages, losses, liabilities
(absolute and contingent), fines, penalties, costs and
expenses (including, without limitation, reasonable counsel
fees and costs and expenses incurred in the investigation,
defense or settlement of any claim covered by this indemnity)
with respect to or arising out of any demand, claim, inquiry,
investigation, proceeding, action and/or cause of action that
any Vendor may suffer or incur by reason of: (a) the
inaccuracy of any of the representations or warranties of
Purchaser contained in this Agreement, or any of the
agreements, certificates, documents, exhibits or schedules
delivered by Purchaser in connection with this Agreement; and
(b) the failure to comply with, the breach or the default by
Purchaser of any of the covenants, warranties or agreements
made by Purchaser in this Agreement, or any of the agreements,
certificates, documents, exhibits or schedules delivered by
Purchaser in connection with this Agreement.
(b) Environmental - Subject to Section 7.4 hereof, Purchaser
covenants and agrees to defend, indemnify and hold each Vendor
harmless for, from and against any and all damages, losses,
liabilities (absolute and contingent), fines, penalties, costs
and expenses (including, without limitation, reasonable
counsel fees and costs and expenses incurred in the
investigation, defense or settlement of any claim covered by
this indemnity) with respect to or arising out of any demand,
claim, inquiry, investigation, proceeding, action or cause of
action brought by any governmental agency or instrumentality
or any Person other than Vendors which any Vendor may suffer
or incur by reason of:
(i) any generation, transportation, storage, treatment
or disposal of industrial, toxic or hazardous
substances or solid or hazardous wastes occurring
after the Closing Date including, without
limitation, any waste or other disposal activities
or discharges that occur after the Closing Date at a
facility on which any portion of the business of the
Company is conducted, any waste or other disposal
activities or discharges that occur after the
Closing Date off of any such facility with regard to
wastes and other substances generated after the
Closing Date on such facility, and any waste or
other disposal activities or discharges that occur
after the Closing Date on real estate owned or
leased by the Company, at any time after the Closing
Date whether or not the Company owns or leases such
real estate at the time such waste or other disposal
activities or discharges are engaged in, and
whether or not the Company performs such waste or
other disposal activities or discharges;
(ii) any spills, discharges, leaks, emissions,
injections, escapes, dumping, or any releases as
defined now or in the future under the Comprehensive
Environmental Response, Compensation, and Liability
Act of 1980, P.L. 96-510, as amended or reauthorized
from time to time, or any other
34
<PAGE> 35
similar federal, state or local laws, statutes,
rules or regulations occurring after the Closing
Date, including, but not limited to, both those
releases or incidents involving environmental
contamination which require notification or
reporting to appropriate federal, state or local
officials or agencies, or clean-up or remedial
activities and those releases or incidents which
occurred prior to the effective date of any
requirements imposing such notification or reporting
obligations or clean-up or remedial activities, but
which would have been subject to such obligations if
they had occurred subsequent to the effective date
of such requirements;
(iii) any discharges to surface waters or groundwaters
occurring after the Closing Date;
(iv) any air emissions occurring after the Closing Date;
(v) the exposure after the Closing Date of and resulting
consequences to any persons, including, but not
limited to, employees of Purchaser to any mineral,
chemical or industrial product, raw material
intermediate, by-product or waste, or substance
created, generated, processed, handled or originated
after the Closing Date at a facility at which
Purchaser, or the Company conducts business after
the Closing Date or otherwise used after the Closing
Date by Purchaser or the Company in the conduct of
its business or contained in or constituting a part
of merchandise which is sold by Purchaser or the
Company after the Closing Date;
(vi) any violations by Purchaser or the Company occurring
after the Closing Date of federal, state or local
(A) Environmental Laws, or (B) occupational or
employee health and safety laws;
(vii) any and all actions, failures to act and negligence
in monitoring, maintaining and upkeep of on-site
storage, treatment and disposal facilities after the
Closing Date;
(viii) any misuse, removal, failure to properly maintain
and/or monitor storage tanks after the Closing Date;
and
(ix) any violations, fees, obligations or failure to
comply with any and all environmental permit
requirements after Closing Date.
7.3 NOTICE AND RIGHT TO DEFEND THIRD-PARTY CLAIMS - Promptly upon receipt of
notice of any claim, demand or assessment or the commencement of any suit,
action or proceeding with respect to which indemnity may be sought pursuant to
this Agreement, the party seeking to be indemnified or held harmless (the
"Indemnitee") shall notify in writing, if possible, within sufficient time to
respond to such claim or answer or otherwise plead in such action (but in any
event within thirty (30) days), the party from whom indemnification is sought
(the "Indemnitor"). In case any claim, demand or assessment shall be asserted,
or suit, action or proceeding
35
<PAGE> 36
commenced against the Indemnitee, the Indemnitor shall be entitled, at the
Indemnitor's expense, to participate therein, and, to the extent that it may
wish, to assume the defense, conduct or settlement thereof, at its own expense,
with counsel satisfactory to the Indemnitee, whose consent to the selection of
counsel shall not be unreasonably withheld or delayed, provided that the
Indemnitor confirms to the Indemnitee that it is a claim to which Indemnitee's
rights of indemnification apply. The Indemnitor shall have the right to settle
or compromise monetary claims; however, as to any other claim, the Indemnitor
shall first obtain the prior written consent from the Indemnitee, which consent
shall be exercised in the sole discretion of the Indemnitee. After notice from
the Indemnitor to the Indemnitee of Indemnitor's intent so to assume the
defense, conduct, settlement or compromise of such action, the Indemnitor shall
not be liable to the Indemnitee for any legal or other expenses (including,
without limitation, settlement costs) subsequently incurred by the Indemnitee in
connection with the defense, conduct, settlement or compromise of such action
while the Indemnitor is diligently defending, conducting, settling or
compromising such action. The Indemnitor shall be afforded at least thirty (30)
days, at its sole cost and expense, to resist, defend and compromise any claim
for which indemnification is sought. The Indemnitor shall keep the Indemnitee
promptly apprised of the status of the suit, action or proceeding and shall make
Indemnitor's counsel available to the Indemnitee, at the Indemnitor's expense,
upon the request of the Indemnitee. The Indemnitee shall reasonably cooperate
with the Indemnitor in connection with any such claim and shall make personnel,
books and records and other information relevant to the claim available to the
Indemnitor during normal business hours to the extent that such personnel, books
and records and other information are in the possession and/or control of the
Indemnitee. If the Indemnitor decides not to participate, the Indemnitee shall
be entitled, at the Indemnitor's expense, to defend, conduct, settle and/or
compromise such matter with counsel satisfactory to the Indemnitor, whose
consent to the selection of counsel shall not be unreasonably withheld or
delayed.
7.4 SURVIVAL OF OBLIGATIONS - The liability of Vendors and Purchaser for
indemnification pursuant to this Article 7 shall (i) survive until terminated by
the applicable statute of limitations as to matters relating to: (a) ownership
and title to any of the assets of the Company; (b) ownership and title to the
capital stock of the Company; (c) competency to execute and deliver documents to
effect the transactions contemplated thereby and hereby, and the legal, binding
and enforceable nature thereof and hereof; (d) the environment; and (e) taxes;
(ii) expire three (3) years from the Closing Date with respect to claims not
made prior thereto relating to any price or reimbursement adjustment under any
contract or arrangement with the United States Government, any state government,
or any insurer or healthcare provider organization involving any liability,
claim and/or fraud with respect to billings or reimbursement under either
Medicare or Medicaid for services provided by the Company prior to the Closing
Date (collectively, a "Third Party Claim"); and (iii) expire two (2) years from
the Closing Date with respect to claims not made prior thereto relating to all
other matters not referenced in this Section 7.4. This Section in no way limits
any claims that an Indemnitee may have against an Indemnitor for fraud or for
the breach of any direct covenant made by the Indemnitor to the Indemnitee
contained in this Agreement or the other agreements delivered in connection
therewith.
7.5 INDEMNIFICATION THRESHOLD FOR THIRD PARTY CLAIMS - Purchaser shall not be
entitled to indemnification pursuant to this Agreement with respect to any Third
Party Claim (as defined in Section 7.4 hereof) until the total amount for which
Purchaser shall be entitled to such indemnification, including any
indemnification owing to Purchaser arising from Third Party
36
<PAGE> 37
Claims against any one or more of the other Southwest Companies, but for this
Section 7.5, exceeds Fifty Thousand Dollars ($50,000) in the aggregate;
provided, however, that once such amount exceeds Fifty Thousand Dollars
($50,000), then in that event, Purchaser shall be entitled to indemnification
for the total amount for which indemnification may be owing, less the first
Fifty Thousand Dollars ($50,000). Such indemnification threshold will be
increased in an amount equal to the amount by which the Closing Accounts
Receivable actually collected by the Southwest Companies during the Collection
Period exceeds the Target Accounts Receivable. Nothing contained in this Section
7.5 shall in any manner constitute or be deemed to limit any claim by Purchaser
arising out of a claim of fraud.
ARTICLE 8
TERMINATION
8.1 RIGHT TO TERMINATE - Notwithstanding anything to the contrary contained
herein, this Agreement and the transactions contemplated hereby may be
terminated at any time prior to the Closing: (a) by Purchaser if the conditions
precedent set forth in Section 4.1 are not satisfied or waived in writing by
Purchaser; or (b) by Vendors if the conditions precedent set forth in Section
4.2 are not satisfied or waived in writing by Vendors. In addition, this
Agreement shall terminate if the Closing has not occurred by April 15, 1997,
unless extended by written agreement of the Parties hereto.
8.2 RIGHT TO DAMAGES - Except as otherwise provided in this Agreement, if this
Agreement is terminated, no party hereto shall have any liability or obligation
to the other; provided, however, that Vendors agree to pay the Purchaser, as
liquidated damages, and not as a penalty, the sum of $2,000,000 in cash, bank or
wire transfer of immediately available funds in the event Vendors breach any of
the restrictive covenants contained in paragraphs (f) or (g) of Section 5.1 of
this Agreement or of any of the other Agreements of Purchase and Sale of even
date herewith pertaining to the other Southwest Companies.
ARTICLE 9
GENERAL
9.1 DISCLOSURE SCHEDULES - The Schedules referred to in Section 3.1 and Section
3.2 of this Agreement reflect information supplied to Purchaser and Vendors,
respectively, in the course of their investigation of the Company and Purchaser,
respectively. Vendors may supplement or amend any Schedule from time to time
prior to or at the Closing, by notice in accordance with the terms of this
Agreement, including by delivering one or more supplements or amendments to
correct any matter which would constitute a breach of any representation or
warranty contained herein. All references to any Schedule hereto which is
supplemented or amended as provided in this Section 9.1 shall, for all purposes,
whether or not the transactions contemplated hereby occur, be deemed to be a
reference to such Schedule as so supplemented or amended.
9.2 PUBLIC NOTICES - All public notices to third parties and all other publicity
concerning the transactions contemplated by this Agreement shall be jointly
planned and coordinated by the
37
<PAGE> 38
Vendors and the Purchaser and no Party shall act unilaterally in this regard
without the prior approval of the Vendors and the Purchaser or the other of
them.
9.3 EXPENSES - The expenses incurred by each party hereto in connection with
this Agreement and the transactions provided herein shall be borne by such
party. Notwithstanding the foregoing, all professional fees incurred by the
Vendors in connection with the transactions contemplated by this Agreement shall
be borne by the Vendors and all expenses incurred in connection with the
preparation of any environmental reports after the date of execution of this
Agreement with respect to the real property owned or leased by the Company shall
be borne by the Purchaser (which reports shall remain the property of the
Purchaser following the Closing).
9.4 TIME - Time shall be of the essence hereof.
9.5 NOTICES - Any notice, direction or other document required or permitted to
be given hereunder or for the purposes hereof (hereinafter in this Section 9.5
called a "notice") to any Party shall be in writing and shall be sufficiently
given if delivered personally, or if sent by prepaid registered mail or if
transmitted by telex, facsimile or other form of recorded communication tested
prior to transmission to such Party:
(a) in the case of a notice to the Vendors to:
Robert E. Ramsey, Jr.
222 Main Street East
Mesa, Arizona 85201
with a copy to the Vendors' Counsel at
Gallagher & Kennedy, P.A.
2600 North Central Avenue
Phoenix, AZ 85004-3020
Attention: Terence W. Thompson, Esq.
with a facsimile number of (602) 257-9459.
(b) in the case of a notice to the Purchaser at
8401 E. Indian School Road
Scottsdale, Arizona 85251
Attention: Warren S. Rustand
with a facsimile number of (602) 481-3328
38
<PAGE> 39
with a copy to Purchaser's Counsel at
O'Connor Cavanagh Anderson
Killingsworth & Beshears, P.A.
One E. Camelback Road, Suite 1100
Phoenix, Arizona 85012
Attention: John B. Furman, Esq.
with a facsimile number of (602) 263-2900
or at such other address as the Party to whom such writing is to be given shall
have last notified the Party giving the same in the manner provided in this
section. Any notice delivered in person to the Party to whom it is addressed as
hereinbefore provided shall be deemed to have been given and received on the day
it is so delivered at such address, provided that if such day is not a Business
Day then the notice shall be deemed to have been given and received on the first
Business Day next following such day. Any notice mailed as aforesaid shall be
deemed to have been given and received on the seventh Business Day following the
date of its mailing. Any notice transmitted by telex, facsimile or other form of
recorded communication shall be deemed given and received on the Business Day of
its transmission.
9.6 ASSIGNMENT - Neither this Agreement nor any rights or obligations hereunder
shall be assignable by any Party without the prior written consent of the other
Party hereto; provided, however, that the Vendors shall be entitled to assign
their rights to receive payments hereunder (or under any related documents) to
any person without the consent of the Purchaser. Subject thereto, this Agreement
shall enure to the benefit of and be binding upon the Parties and their
respective heirs, executors, administrators and successors (including any
successor by reason of amalgamation of the Purchaser) and permitted assigns.
9.7 FURTHER ASSURANCES - The Parties hereto shall with reasonable diligence do
all such things and provide all such reasonable assurances as may be required to
consummate the transactions contemplated hereby, and each Party shall provide
such further documents or instruments required by any other Party as may be
reasonably necessary or desirable to effect the purpose of this Agreement and
carry out its provisions, whether before or after the Closing.
9.8 SEVERABILITY - If any covenant or provision of this Agreement (other than
the provisions pertaining to payments to be made to the Vendors) is prohibited
in whole or in part in any jurisdiction, such covenant or provision shall, as to
such jurisdiction, be ineffective to the extent of such prohibition without
invalidating the remaining covenants and provisions hereof and shall, as to such
jurisdiction, be deemed to be severed from this Agreement to the extent of such
prohibition.
9.9 COUNTERPARTS - This Agreement may be executed by the Parties in separate
counterparts (and by facsimile transmission) each of which when so executed and
transmitted or delivered shall be an original, but all such counterparts shall
together constitute one and the same instrument.
9.10 MEDIATION AND ARBITRATION - Any dispute, controversy or claim (including
without limitation tort claims, requests for provisional remedies or other
interim relief, and issues as to
39
<PAGE> 40
the arbitrability of any matter) arising out of or relating to this Agreement,
or breach thereof, (a) shall be settled by negotiation at a meeting between the
Vendors and the chief executive officer of the Purchaser held in Phoenix,
Arizona within 5 days after notice given by any party hereto to the other
parties hereto, and (b) if within that 5 day period settlement cannot be
achieved through negotiation, it shall be settled (i) first, by the parties
trying in good faith to settle the dispute by mediation under the Commercial
Mediation Rules of the American Arbitration Association ("AAA") (such mediation
session to be held in Phoenix, Arizona and to commence with 10 days of the
appointment of the mediator by the AAA), and (ii) if the controversy, claim or
dispute cannot be settled by mediation, then by arbitration administered by the
AAA under its Commercial Arbitration Rules and in accordance with its expedited
hearing procedures (such arbitration to be held in Phoenix, Arizona before a
single arbitrator by the AAA), and judgment on the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof.
9.11 ATTORNEYS' FEES - If any action is necessary to enforce the terms of this
Agreement, the prevailing party shall be entitled to recover from the other
party all costs, expenses and fees incurred by the prevailing party (including
reasonable attorneys' fees, costs and disbursements) in addition to other relief
to which the prevailing party may be entitled.
IN WITNESS WHEREOF, the Parties have set their hand this 25th day of
February, 1997, through our trust in God and our service to others. . . . for
life.
Rural/Metro Corporation, a Delaware corporation
By:_______________________________________________
James H. Bolin, President
__________________________________________________
Robert E. Ramsey, Jr., individually
__________________________________________________
Barry Landon, as trustee of the ESOP
40
<PAGE> 41
CONSENT OF SPOUSE
The undersigned spouse of Robert E. Ramsey, Jr., who is a
party to the above Agreement of Purchase and Sale, pertaining to the sale of the
stock of SW General, Inc., an Arizona corporation (the "Agreement"), hereby
declares, contemporaneously with the execution of the Agreement, that she has
read the Agreement in its entirety, and being fully convinced of the wisdom and
equity of the terms of the Agreement, and in consideration of the premises and
of the provisions of the Agreement, hereby expresses her consent to the
execution and consummation of the Agreement by Robert E. Ramsey, Jr.
The undersigned further agrees that in the event of the death
of Robert E. Ramsey, Jr., the dissolution of their marriage, or any occurrence
contemplated by the Agreement that gives rise to any liability or obligation of
Robert E. Ramsey, Jr., the provisions of the Agreement shall be binding upon her
to the extent of any community property she may now have or hereafter acquire,
and any and all separate property that she may hereafter possess which arises
(directly or indirectly) from any consideration given to Robert E. Ramsey, Jr.
pursuant to the Agreement or any agreement executed in connection thereto.
The undersigned further agrees that she will, at any and all
times, make, execute and deliver such instruments and documents as may be
reasonably necessary to carry out the provisions of the Agreement, provided that
no such documents require the incurring of any liabilities in excess of that
already provided in the Agreement.
Dated this 25th day of February, 1997.
________________________________________
Virginia (Jenny) L. Norton
<PAGE> 42
APPENDIX J
(i) All real property leased by the Company from NRM
Properties, Inc. or Chaparral Properties, Inc. (the "Leased Properties") is set
forth in Schedule "J" and is zoned as set forth on Schedule "J", pursuant to the
ordinances of the applicable cities, towns, villages or townships identified on
such Schedule "J", and is not located in an area that has been identified by the
Secretary of Housing and Urban Development as an area of special flood hazard.
The uses to which such real property are presently put do not violate or
conflict with the applicable provisions of such zoning ordinances, or other
zoning laws of such cities, towns, villages or townships or any other
governmental body.
(ii) The Company does not sublease any of its Leased
Properties. The Company does not lease any of its owned real property.
(iii) Neither the Company nor any Vendor, nor any one
or more of them, has retained or engaged any real estate broker, commission
agent or other person who is or may be entitled to payment of a commission or
finder's fee or other compensation in connection with any of the Leased
Properties.
(iv) As to the Leased Properties, the present use and
operation of the real property is authorized by and in compliance with all
applicable building, fire, health, labor and safety laws, ordinances, rules and
regulations applicable to the real property, including, without limitation,
OSHA, and the Americans with Disabilities Act, and there is no litigation,
action, proceeding or any present plan or study by any governmental authority or
any private person or entity which in any way would affect the present use and
operation of the real property. There are in existence all licenses, permits and
approvals that are required for the use and operation of the Leased Properties,
and no Vendor has any reason to believe that any of the same are in jeopardy of
being revoked or not being reissued upon expiration.
(v) No Vendor has any knowledge of any fact or
condition existing which would result or could result in the termination or
reduction of the current access from the Leased Properties to existing public
roads and highways, or of any reduction in sewer or other utility services
presently serving the Leased Properties. Leased Properties have direct access to
dedicated roads and highways and all utility services to the Leased Properties
are furnished through dedicated or perpetual easements.
(vi) As to the Leased Properties, no Vendor has
received notice from any insurance company of any defects or inadequacies in
such real property or any part thereof which would materially and adversely
affect the insurability of the real property or the premiums for the insurance
thereof.
(vii) As to the Leased Properties, no Vendor has
failed to disclose any material conditions of disrepair or other adverse
conditions or defects with respect to such
Appendix J-1
<PAGE> 43
real property or any portion thereof of which that Vendor has knowledge or
which, with the exercise of reasonable diligence, that Vendor should have known.
(viii) As to the Leased Properties, no Vendor has any
knowledge of any planned public improvement which might result in a special
assessment levied against such real property. If any Vendor becomes aware of any
of the foregoing (whether arising before or after the date hereof) after the
date hereof, but prior to Closing, that Vendor shall give prompt written notice
thereof to Purchaser prior to Closing.
Appendix J-2
<PAGE> 44
SCHEDULE D
FORM OF EMPLOYMENT AGREEMENT
See attached.
<PAGE> 45
APPENDIX 4.1(j)
FORM OF INVESTMENT AGREEMENT
See attached.
<PAGE> 46
DRAFT APRIL 18, 1997
AMENDMENT TO AGREEMENT OF PURCHASE AND SALE
WHEREAS, RURAL/METRO CORPORATION, a Delaware corporation ("Purchaser"), ROBERT
E. RAMSEY, JR., an individual ("Ramsey"), and BARRY LANDON, AS TRUSTEE of the
Employee Stock Ownership Plan for the benefit of the Company's employees (the
"ESOP") (Ramsey and the ESOP may be hereinafter referred to together as the
"Vendors"), signed that certain Agreement of Purchase and Sale, made as of
February 25, 1997 (the "Agreement"), with respect to the purchase of all the
issued and outstanding shares of the stock of SW GENERAL, INC., an Arizona
corporation (the "Company").
WHEREAS, Purchaser and Vendors desire to extend the Closing Date (as defined in
the Agreement), and amend the Agreement as set forth in this Amendment.
NOW, THEREFORE, in consideration of the premises and the mutual agreements and
covenants herein contained (the adequacy of which consideration as to each of
the parties hereto is hereby mutually admitted), the parties hereto hereby amend
the Agreement as follows:
1. Section 1.1(e) of the Agreement is hereby modified to read as
follows:
"Closing Date" means the earlier of May 30, 1997 or
five (5) business days following the satisfaction or
waiver of all conditions precedent to the
transactions contemplated by this Agreement, or such
other date as the Parties may mutually agree in
writing;"
2. The last sentence of Section 8.1 of the Agreement is hereby amended
to read as follows:
"In addition, this Agreement shall terminate if the
Closing has not occurred by May 30, 1997, unless
extended by written agreement of the Parties hereto."
3. This Amendment shall constitute a written extension as contemplated
by the original Section 8.1 of the Agreement.
4. The terms and conditions set forth in the letter agreement, dated
April 15, 1997, by and among Purchaser, Bob Ramsey and Barry Landon, Trustee for
the Southwest
<PAGE> 47
ESOP, a copy of which letter agreement is attached hereto as Exhibit A, shall
constitute amendments and supplemental provisions to the Agreement, as
applicable.
5. This Amendment may be executed by the parties hereto in separate
counterparts (and by facsimile transmission) each of which when so executed and
transmitted or delivered shall be an original, but all such counterparts shall
together constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have set their hand as of the
15th day of April, 1997, through our trust in God and our service to others ...
for life.
RURAL/METRO CORPORATION, a
Delaware corporation
By:
-----------------------------------
James H. Bolin, President
-----------------------------------
Robert E. Ramsey, Jr., individually
-----------------------------------
Barry Landon, as Trustee of the ESOP
I HEREBY CONSENT TO THE TERMS
OF THIS AMENDMENT as of the 15th day
of April, 1997:
- ---------------------------
Virginia (Jenny) L. Norton
2
<PAGE> 48
SECOND AMENDMENT TO AGREEMENT OF PURCHASE AND SALE
WHEREAS, RURAL/METRO CORPORATION, a Delaware corporation ("Purchaser"), ROBERT
E. RAMSEY, JR., an individual ("Ramsey"), and BARRY LANDON, AS TRUSTEE of the
Employee Stock Ownership Plan for the benefit of the Company's employees (the
"ESOP") (Ramsey and the ESOP may be hereinafter referred to together as the
"Vendors"), signed that certain Agreement of Purchase and Sale, made as of
February 25, 1997, and that certain Amendment to Agreement of Purchase and Sale,
made as of April 15, 1997 (together, the "Agreement"), with respect to the
purchase of all the issued and outstanding shares of the stock of SW GENERAL,
INC., an Arizona corporation (the "Company"). All defined terms used herein but
not otherwise defined shall have the meaning set forth in the Agreement.
WHEREAS, Purchaser and Vendors desire to extend the Closing Date (as defined in
the Agreement), and amend the Agreement as set forth in this Amendment.
NOW, THEREFORE, in consideration of the premises and the mutual agreements and
covenants herein contained (the adequacy of which consideration as to each of
the parties hereto is hereby mutually admitted), the parties hereto hereby amend
the Agreement as follows:
1. Section 1.1(e) of the Agreement is hereby modified to read as
follows:
"Closing Date" means the earlier of July 31, 1997 or
five (5) business days following the satisfaction or
waiver of all conditions precedent to the
transactions contemplated by this Agreement, or such
other date as the Parties may mutually agree in
writing;"
2. The last sentence of Section 8.1 of the Agreement is hereby amended
to read as follows:
"In addition, this Agreement shall terminate if the
Closing has not occurred by July 31, 1997, unless
extended by written agreement of the Parties hereto."
3. This Second Amendment shall constitute a written extension as
contemplated by the original Section 8.1 of the Agreement.
4. The terms and conditions set forth in the letter agreement, dated
May 30, 1997, by and among Purchaser, Bob Ramsey and Barry Landon, Trustee for
the Southwest
<PAGE> 49
ESOP, a copy of which letter agreement is attached hereto as Exhibit A (the
"Letter Agreement"), shall constitute amendments and supplemental provisions to
the Agreement, as applicable, subject to the following: Paragraph 5 of the
Letter Agreement shall be interpreted as a $277,000 indemnification threshold
with respect to claims other than Third Party Claims, in the same manner as the
$50,000 indemnification threshold for Third Party Claims in Section 7.5 of the
Agreement of Purchase and Sale regarding SW General, Inc., and the $277,000
indemnification threshold shall be an aggregate threshold against the liability
of the Vendors for indemnification arising from any of the Agreements of
Purchase and Sale pertaining to the Southwest Companies.
5. This Second Amendment may be executed by the parties hereto in
separate counterparts (and by facsimile transmission) each of which when so
executed and transmitted or delivered shall be an original, but all such
counterparts shall together constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have set their hand as of the
30th day of May, 1997, through our trust in God and our service to others ...
for life.
RURAL/METRO CORPORATION, a
Delaware corporation
By:
------------------------------
James H. Bolin, President
------------------------------
Robert E. Ramsey, Jr., individually
------------------------------
Barry Landon, as Trustee of the ESOP
I HEREBY CONSENT TO THE TERMS OF THIS SECOND AMENDMENT as of the 30th day of
May, 1997:
- -------------------------------
Virginia (Jenny) L. Norton
2
<PAGE> 50
THIRD AMENDMENT TO AGREEMENT OF PURCHASE AND SALE
A. WHEREAS, RURAL/METRO CORPORATION, a Delaware corporation,
("Purchaser"), ROBERT E. RAMSEY, JR., an individual ("Ramsey"), BARRY LANDON, as
trustee of the Employee Stock Ownership Plan for the benefit of SW General,
Inc.'s employees (the "ESOP") (Ramsey and the ESOP may be hereinafter referred
to collectively as the "Vendors"), signed that certain Agreement of Purchase and
Sale, made as of February 25, 1997, that certain Amendment to Agreement of
Purchase and Sale, made as of April 15, 1997, and that certain Second Amendment
to Agreement of Purchaser and Sale, made as of May 30, 1997 (together, the
"Agreement"), with respect to the purchase of all of the issued and outstanding
shares of stock of SW General, Inc., an Arizona corporation (the "Company"). All
defined terms used herein but not otherwise defined shall have the meaning set
forth in the Agreement.
B. WHEREAS, the Agreement incorrectly states the number of Purchased
Shares owned by Vendors,
C. WHEREAS, the stock certificates representing the Rural/Metro Stock
were incorrectly issued based on the incorrect number of Purchased Shares (the
"Incorrect Stock Certificates");
D. WHEREAS, the actual and correct ownership of Purchased Shares is as
set forth below.
E. WHEREAS, the Incorrect Stock Certificates will be voided and new
stock certificates will be issued to Vendors and reflecting the correct number
of shares of Rural/Metro stock.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements and covenants herein contained (the adequacy of which consideration
as to each of the parties hereto is hereby mutually admitted), the parties
hereby amend the Agreement:
1. The correct number of Purchased Shares owned by Vendors is as
follows:
Robert E. Ramsey, Jr. 820,906.53
Barry Landon, as Trustee of the ESOP 179,093.47
2. The Incorrect Stock Certificates shall be returned to Purchaser's
transfer agent and voided.
<PAGE> 51
3. New stock certificates shall be issued to Vendors representing the
following number of shares of Rural/Metro stock:
Robert E. Ramsey, Jr. 360,701
Barry Landon, as Trustee of the ESOP 78,693
4. Purchaser shall deliver such New Stock Certificates to Vendors upon
Purchaser's receipt thereof from Purchaser's transfer agent and against delivery
from Vendors of the Incorrect Stock Certificates.
5. This Third Amendment may be executed by the parties hereto in
separate counterparts (and by facsimile transmission) each of which when so
executed and transmitted or delivered shall be an original, but all such
counterparts shall together constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have set their hand as of the
30th day of June, 1997, through our trust in God and our service to others ...
for life.
WE HEREBY CONSENT TO THE
TERMS OF THIS THIRD
AMENDMENT as of the 30th day
of June, 1997:
RURAL/METRO CORPORATION, a
Delaware corporation
By:
-----------------------------------
William R. Crowell, Vice President
-----------------------------------
Robert E. Ramsey, Jr.,
-----------------------------------
Barry Landon, as Trustee of the
ESOP
2
<PAGE> 1
EXHIBIT 10.50
AGREEMENT OF PURCHASE AND SALE
THIS AGREEMENT OF PURCHASE AND SALE ("Agreement") is made as of this
25th day of February, 1997
BETWEEN:
Rural/Metro Corporation, a Delaware corporation
("Purchaser")
-and-
Robert E. Ramsey, Jr., an individual
("Ramsey", and also referred to herein as "Vendors" and "Vendor")
RECITALS:
WHEREAS, the Vendor owns and controls all the issued and outstanding
shares of the stock of Southwest Ambulance of Casa Grande, Inc., an Arizona
corporation (the "Company");
AND WHEREAS, the Vendor desires to sell and the Purchaser desires to
purchase all of the said issued and outstanding shares of the stock of the
Company owned by the Vendor all upon and subject to the terms and conditions
hereinafter set forth;
NOW THEREFORE, in consideration of the premises and the mutual
agreements and covenants herein contained (the adequacy of which consideration
as to each of the parties hereto is hereby mutually admitted), the parties
hereto hereby covenant and agree as follows:
ARTICLE 1
DEFINITIONS AND PRINCIPLES OF INTERPRETATION
1.1 DEFINITIONS - Whenever used in this Agreement, unless there is something in
the subject matter or context inconsistent therewith, the following words and
terms shall have the respective meanings ascribed to them as follows:
<PAGE> 2
(a) "Agreement" means this Agreement of Purchase and Sale and all
instruments supplemental hereto or in amendment or
confirmation hereof;
(b) "Business" means the business presently carried on by the
Company consisting of the provision of emergency and
non-emergency medical transportation services and related
billing and management services;
(c) "Business Day" means a day other than a Saturday, Sunday or
any day on which the principal commercial banks located in
Phoenix, Arizona are not open for business during normal
banking hours;
(d) "Closing" means the completion of the sale to and purchase by
the Purchaser of the Purchased Shares hereunder by the
transfer and delivery of documents of title thereto and the
payment of the purchase price therefore as contemplated
herein;
(e) "Closing Date" means the earlier of April 15, 1997 or five (5)
business days following the satisfaction or waiver of all
conditions precedent to this transaction, or such other date
as the Parties may mutually agree in writing;
(f) "Closing Time" means 10 o'clock a.m., Phoenix, Arizona local
time, on the Closing Date, or such other time on the Closing
Date as the Parties may agree;
(g) "Employment Agreement" means the employment agreement to be
entered into by and between Ramsey and Purchaser at the
Closing, as contemplated by the Agreement of Purchase and Sale
of even date herewith pertaining to SW General, Inc., an
Arizona corporation.
(h) "Financial Statements" means the unaudited financial
statements of the Company, including a balance sheet as of
December 31, 1996, and an operating statement for the twelve
(12) month period then ended; copies of which are annexed as
Schedule "A" hereto;
(i) "Parties" means, collectively, the Vendors and the Purchaser,
and "Party" means any one of them;
(j) "Person" means any individual, corporation, partnership,
limited liability company, trust or unincorporated association
or similar entity, and pronouns have a similarly extended
meaning;
(k) "Purchase Price" means the purchase price to be paid by the
Purchaser to the Vendors for the Purchased Shares as provided
in Section 2.1 hereof;
(l) "Purchased Shares" means all the issued and outstanding common
shares of the stock of the Company;
2
<PAGE> 3
(m) "Southwest Companies" means, collectively, the Company, SW
General, Inc., Medical Emergency Devices and Services (MEDS),
Inc., and Southwest General Services, Inc.
Terms defined in the preamble, recitals and body of this Agreement shall have
the same meanings herein as are ascribed thereto in the preamble, recitals and
body.
1.2 GENDER AND NUMBER - Words importing the singular include the plural and vice
versa; words importing gender include all genders.
1.3 ENTIRE AGREEMENT - This Agreement, including the Schedules and Exhibits
hereto, together with the agreements, certificates, and other documents and
instruments to be delivered pursuant hereto, constitute the entire agreement
between the Parties pertaining to the subject matter hereof and supersede all
prior agreements, understandings, negotiations and discussions, whether oral or
written, of the Parties and there are no warranties, representations or other
agreements between the Parties in connection with the subject matter hereof
except as specifically set forth herein and therein.
1.4 WAIVERS, ETC. - No supplement, modification, waiver or termination of this
Agreement shall be binding unless executed in writing by the Party to be bound
thereby. No waiver of any of the provisions of this Agreement, in whole or in
part, shall be deemed or shall constitute a waiver of any other provisions
hereof (whether or not similar), nor shall such waiver constitute a continuing
waiver unless otherwise expressly provided.
1.5 OTHER WORDS AND PHRASES - In this Agreement, unless otherwise expressly
provided (i) the words "hereof", "herein", "hereto" and "hereunder" and words of
similar import refer to this Agreement as a whole and not to the particular
Article, Section, Subsection, paragraph or other subdivision, and (ii) all
references to designated "Articles", "Sections", "Subsections", "paragraphs" or
other subdivisions are to the designated Articles, Sections, Subsections,
paragraphs and other subdivisions of this Agreement.
1.6 HEADINGS - The Article and Section headings contained herein are included
solely for convenience of reference, are not intended to be full or accurate
descriptions of the content thereof and shall not be considered part of this
Agreement.
1.7 APPLICABLE LAW - This Agreement and the rights, obligations and relations of
the Parties shall be governed by and construed in accordance with the laws of
the State of Arizona and the federal laws of the United States applicable
therein.
1.8 ACCOUNTING TERMS - All accounting terms shall have the meanings ascribed to
them in accordance with generally accepted accounting principles consistently
applied, and all references to "generally accepted accounting principles" shall
be deemed to be, unless otherwise specified, reference to accounting principles
which are generally accepted in the United States.
3
<PAGE> 4
1.9 SCHEDULES AND APPENDICES - The following are the schedules and appendices
attached to and incorporated in this Agreement by reference and deemed to be an
integral part hereof:
Schedule "A" - Financial Statements
Schedule "B" - Authorized and Issued Share Capital, Share
Ownership, and Purchase Price Allocation for each of
the Vendors
Schedule "C" - [Intentionally Omitted]
Schedule "D" - [Intentionally Omitted]
Schedule "E" - Operating Licenses
Schedule "F" - Undisclosed Liabilities, Guaranties and Indemnities
Schedule "G" - Absence of Changes
Schedule "H" - Unusual Transactions
Schedule "I" - Liens, Charges and Encumbrances
Schedule "J" - Real Property Leases and Owned Real Property
Schedule "K" - Vehicular Equipment Owned or Leased
Schedule "L" - Revenue Contracts
Schedule "M" - Contracts to Purchase Goods/Services
Schedule "N" - Employment Contracts, Collective Agreements,
Pension or Similar Plans, Unfair Labor Practice
Complaints
Schedule "O" - Litigation
Schedule "P" - Employees over $40,000
Schedule "Q" - Insurance Policies
Schedule "R" - Intellectual Property
Schedule "S" - Third Party Approvals
Schedule "T" - Environmental Matters
4
<PAGE> 5
Schedule "U" - Subsidiaries and Affiliates
Schedule "V" - Bank Accounts
Schedule "W" - Purchaser's Disclosure Schedule
Appendix "J" - Certain Real Estate Representations and Warranties
Appendix 4.1(j) - Investment Agreement
ARTICLE 2
PURCHASE AND SALE
2.1 PURCHASE PRICE - At the Closing Time, the Vendors shall sell and the
Purchaser shall purchase the Purchased Shares for an aggregate purchase price of
Thirteen Million, Five Hundred Thousand Dollars ($13,500,000), Five Thousand
Dollars ($5,000) of which shall be paid at Closing in immediately available
funds and Thirteen Million Four Hundred Ninety-Five Thousand Dollars
($13,495,000) of which shall be paid by Purchaser's delivery at Closing to
Vendors of Four Hundred Eight Thousand, Nine Hundred Forty (408,940) shares of
the Common Stock, par value $.01 per share, of Purchaser (the "Rural/Metro
Stock"), all payable and issuable as hereinafter set forth. For purposes of
determining the number of shares of Common Stock of Purchaser to be delivered to
the Vendors as provided in this Section 2.1, the Rural/Metro Stock has a value
of $33.00 per share by agreement of the Parties.
2.2 ACTION BY VENDORS AND PURCHASER AT THE CLOSING TIME -
(a) Delivery of Certificates by the Vendors, etc. - The Vendors
shall transfer and deliver to the Purchaser at the Closing
stock certificates representing all the Purchased Shares duly
endorsed in blank for transfer or accompanied by irrevocable
stock transfer powers of attorney duly executed in blank, in
either case by the holders of record thereof, free and clear
of all liens, claims, rights, charges, encumbrances and
security interests of whatsoever kind and nature. The Vendors
shall take such steps as shall be necessary to cause the
Company to enter the Purchaser or its nominee upon the books
of the Company as the holder of the Purchased Shares and to
issue one or more share certificates to the Purchaser
representing the Purchased Shares;
(b) Delivery of Certificates by Purchaser, etc. - The Purchaser
shall cause to be transferred and delivered to the Vendors at
the Closing stock certificates or such other evidence of stock
ownership representing the Rural/Metro Stock as duly
authorized, validly issued, fully paid and nonassessable,
which, at the time of
5
<PAGE> 6
delivery by the Purchaser to Vendors, shall be free and clear
of all liens, claims, rights, charges, encumbrances and
security interests of whatsoever kind and nature. Such
Rural/Metro Stock shall be delivered to the Vendors as set
forth in Section 2.1. At or prior to the Closing, the
Rural/Metro Stock shall have been registered for issuance
pursuant to Purchaser's "shelf registration" in effect on the
Form S-4 Registration Statement No. 33-95518, or such other
appropriate registration statement as determined by Purchaser,
filed pursuant to the Securities Act of 1933, as amended (the
"Act"). The certificates evidencing the Rural/Metro Stock
shall bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ISSUED PURSUANT TO A TRANSACTION SUBJECT TO RULE 145
OF THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT") AND PURSUANT TO EXEMPTIONS FROM REGISTRATION
UNDER STATE SECURITIES LAWS. THE SHARES MAY NOT BE
OFFERED, SOLD, TRANSFERRED, HYPOTHECATED OR
OTHERWISE DISPOSED OF EXCEPT (i) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT, (ii) PURSUANT TO
THE PROVISIONS OF RULE 145 UNDER THE ACT, OR (iii)
PURSUANT TO OTHER EXEMPTIONS FROM REGISTRATION UNDER
THE ACT OR ANY APPLICABLE STATE SECURITIES LAWS,
WHICH, IN THE OPINION OF COUNSEL SATISFACTORY TO THE
CORPORATION, ARE AVAILABLE.
As of the Closing, the Rural/Metro Stock shall be traded on
The NASDAQ National Market.
(c) Payment to Vendors - At the Closing, the Purchaser shall pay
to the Vendors the sum of Five Thousand Dollars ($5,000),
constituting a portion of the Purchase Price, by wire transfer
according to the wire instructions provided to the Purchaser
by the Vendors prior to the Closing.
(d) Delivery of Other Documents - The Vendors and Purchaser shall
deliver all such other documents at the Closing as
contemplated herein.
2.3 PAYMENT OF OBLIGATIONS TO VENDORS - At the Closing, Purchaser shall pay by
wire transfer to Vendors the aggregate amount of $969,918.88, and all interest
accrued thereon from February 11, 1997, through the Closing Date, which interest
accrues at the rate of $155.30 per day. This will constitute repayment of all
outstanding principal and accrued interest owed to Ramsey by the Company as of
the Closing Date for outstanding loans.
6
<PAGE> 7
2.4 [INTENTIONALLY OMITTED]
2.5 PLACE OF CLOSING - The Closing shall take place at the Closing Time at the
offices of O'Connor, Cavanagh, Anderson, Killingsworth & Beshears, P.A., One E.
Camelback Road, Suite 1100, Phoenix, Arizona or at such other place as may be
agreed upon by the Vendors and the Purchaser.
2.6 TAX TREATMENT - The acquisition of the Company shall be a purchase of stock
which is intended to be treated as a purchase of assets pursuant to an election
under Section 338(h)(10) of the Internal Revenue Code of 1986, as amended (the
"Code").
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF VENDORS - To induce Purchaser to enter
into this Agreement and to perform its obligations hereunder, and with full
knowledge that Purchaser will rely thereon, the Vendors hereby represent and
warrant, jointly and severally, to the Purchaser the truth, accuracy and
completeness of the following:
(a) Enforceability of Obligations - This Agreement and each of the
other agreements referenced herein to which one or more
Vendors is a party have been duly executed and delivered by
each of such Vendors, and each of the Agreement and such other
agreements constitutes a valid and binding obligation of each
of the Vendors enforceable against each of them in accordance
with its terms.
(b) Right to Sell - The Vendors:
(i) are the sole beneficial owners of the Purchased
Shares (which shares constitute all of the issued
and outstanding shares of the stock of the Company);
and
(ii) are the holders of record of all the Purchased
Shares (which shares constitute all of the issued
and outstanding shares of the stock of the Company)
and have good and marketable title to, and rightful
possession of, all of the Purchased Shares free and
clear of any liens, claims, rights, charges,
encumbrances, security interests of whatsoever kind
and nature or rights of others (other than the
rights of the Purchaser hereunder) and no Person
(other than the Purchaser hereunder) has any
agreement, option or any rights capable of becoming
an agreement or option for the acquisition of the
Purchased Shares or any other shares in the Company.
(c) Licenses, Registrations and Compliance - The Company is
registered, licensed or otherwise qualified as a corporation
to do business in each jurisdiction in which
7
<PAGE> 8
the nature of its business or the property owned or leased by
it makes such registration, licensing or other qualification
necessary, and such registrations, licenses or qualifications
(as the case may be) are in good standing. The Company is not
in violation in any material respect of any applicable laws,
regulations, orders, rules, decrees, ordinances, licenses or
operating authorities. The licenses and operating authorities
issued by federal, state or local authorities to the Company,
copies of which are attached hereto as Schedule "E" (the
"Operating Licenses"), comprise all the material licenses,
permits and operating authorities held in respect of the
Business. The Operating Licenses are all of the material
operating authorities necessary or reasonably required for the
carrying on of the Business as presently conducted and the
ownership and use of its assets, property, and premises.
Except as described in Schedule "E" and subject to applicable
regulations and policies of the Arizona Department of Health
Services, the Operating Licenses are not subject to review or
notification and there is no litigation, arbitration or other
proceeding pending or threatened which would materially and
adversely affect the use of the Operating Licenses by the
Business or which may result in the revocation, cancellation,
suspension or any materially adverse modification of any of
such Operating Licenses.
(d) Organization and Valid Existence - The Company is duly
incorporated and organized, validly existing and in good
standing under the laws of the State of Arizona, and has all
necessary corporate power, authority and capacity to own and
lease its property and assets and to carry on the Business as
presently conducted by it. Each of the Vendors has the full
right, power, authority and capacity to execute and deliver
this Agreement and the other agreements referenced herein to
which any such Vendor is a party, to consummate the
transactions contemplated hereby and thereby, and to fully and
timely perform its obligations hereunder and thereunder.
(e) Capitalization - The authorized capital stock of the Company
and the total number of shares of the Company's capital stock
presently issued and outstanding are as set forth on Schedule
"B". All issued and outstanding common shares of the Company
have been duly authorized and validly issued, are fully paid
and non-assessable, and are free of pre-emptive rights.
(f) Financial Statements - Copies of the Financial Statements are
each true, complete and correct and have been prepared on an
accrual basis from the books and records of the Company, in
accordance with generally accepted accounting principles
applied on a basis consistent with that of the preceding
periods. The Financial Statements each fairly present in all
material respects a true, accurate and complete statement of
the financial condition, assets, liabilities and results of
operations of the Company as of the dates and for the periods
set forth therein.
8
<PAGE> 9
(g) Absence of Undisclosed Liabilities - Except as fully disclosed
on Schedule "F" hereto, the Company has no liabilities or
obligations, fixed or contingent, accrued or unaccrued that
are not fully and properly reflected, or adequately reserved
against, on the December 31, 1996 balance sheet of the Company
included in the Financial Statements, excepting only those
liabilities and obligations incurred by the Company in the
ordinary course of its business between the date of such bal-
ance sheet and the Closing Date, none of which liabilities is
individually or are collectively material, incurred in
violation of this Agreement, or would require accrual and/or
disclosure under generally accepted accounting principles.
(h) Guaranties and Indemnities - Schedule "F" hereto contains a
true, complete and correct list of all contracts and
agreements pursuant to which the Company has guaranteed or
indemnified any debt, liability or obligation of any other
person or entity, including, without limitation, any Vendor
(including, without limitation, the execution of any document
obligating the Company with respect to any performance or
other bond), or pursuant to which the Company has pledged or
otherwise encumbered any of its assets. Except as disclosed in
Schedule "F" hereto, the Company is not indebted to any
Vendor, nor is any Vendor indebted to the Company in any
amount for any purpose. Except as disclosed in Schedule "F"
hereto, the Company has not agreed to give any guaranty of
indebtedness or other obligations of third parties or made any
other commitment by which the Company is, or is contingently,
responsible for such indebtedness or other obligation.
(i) Tax Matters - The Company has duly and timely filed all
federal, state, county and local income, franchise, capital,
sales or use, excise, fuel, escheatment, property or other tax
returns, reports or filings required by any law or regulation
to be filed by it and has duly paid all taxes, assessments and
reassessments, and all other taxes, duties, governmental
charges, penalties, interest and fines due and payable by it
on or before the date hereof.
The federal, state, county and local income tax returns of the
Company provided to Purchaser are accurate in all respects.
There are no actions, suits, proceedings, inquiries,
investigations or claims of any nature or kind whatsoever now
pending or, to the best knowledge of Vendors, after due
inquiry, threatened, against the Company with respect to any
such returns or reports, or any such taxes, or any matters
under discussion with any federal, state, county, local or
other authority relating to such taxes.
The Company has not received from any authority any
assessment, reassessment or notice of underpayment of any
taxes or other penalty or charges and no such notice is
reasonably to be expected.
9
<PAGE> 10
There is no misrepresentation that is attributable to wilful
default or fraud in tax returns of the Company previously
filed.
No consents extending or waiving the time limited for
reassessment of any taxes, duties, governmental charges,
penalties, interest or fines, or any statutes of limitations
related thereto have been filed with respect to the Company
for any fiscal year.
The Company has withheld from each payment made to any of its
officers, directors, former directors, and employees and
former employees the amount of all taxes and other deductions
(including without limitation, income taxes, unemployment,
disability, and other required taxes and contributions)
required to be withheld and has paid the same together with
the employer's share of same, if any (to the extent required
to be paid so no such amount is past due), to the proper tax
or other receiving officers within the prescribed times and
has filed, in complete and accurate form, all information and
other returns required pursuant to any applicable legislation
within the prescribed times.
The provision made for current and deferred taxes included in
the Financial Statements is sufficient for the payment of all
accrued and unpaid federal, state, county and local income,
franchise, capital, sales or use, excise, fuel, escheatment,
property or other taxes, assessments and reassessments,
duties, governmental charges, penalties, interest and fines
of, and payable by, the Company, whether or not disputed, for
the period ended the date thereof and for all periods prior
thereto.
(j) Absence of Changes - Except as disclosed on Schedule "G"
hereto, since December 31, 1996 there has not been:
(i) any change in the condition or operations of the
business, assets, financial condition, or otherwise
of the Company other than changes in the ordinary
and normal course of business, none of which has
been materially adverse; or
(ii) any damage, destruction or loss, labor trouble or
other event, development or condition of any
character (whether or not covered by insurance)
materially and adversely affecting the business,
financial condition, assets, properties or business
prospects of the Company.
(k) Absence of Unusual Transactions - Except as disclosed on
Schedule "H", the Company has not, other than with respect to
affiliated entities of the Company being acquired by the
Purchaser on the Closing Date, since December 31, 1996:
(i) transferred, assigned, sold or otherwise disposed of
any assets, granted a lien, security interest,
mortgage or other encumbrance in any assets,
10
<PAGE> 11
or cancelled any debts or claims except only in each
case in the ordinary and usual course of business or
to the extent such assets, liens, security
interests, mortgages, encumbrances, debts or claims
do not individually or in the aggregate exceed
$20,000 (when added to any dispositions, grants, or
cancellations by the other Southwest Companies);
(ii) incurred or assumed any obligation or liability
which individually or in the aggregate exceeds
$100,000 (fixed or contingent), except those listed
in Schedule "F" hereto and except unsecured current
obligations and liabilities incurred in the ordinary
and normal course of business which individually or
in the aggregate do not exceed $100,000;
(iii) discharged or satisfied any lien or encumbrance, or
paid any obligation or liability (fixed or
contingent) other than liabilities included in the
Financial Statements and liabilities incurred since
the date thereof in the ordinary and normal course
of business;
(iv) declared or made any payment of any dividend or
other distribution in respect of any shares of its
stock as applicable, or purchased or redeemed any
such shares thereof, or effected any subdivision,
consolidation or reclassification of any such
shares;
(v) suffered or been threatened with any material
adverse change in its business or financial
condition, business activities, or business
prospects, including, without limiting the
generality of the foregoing, the existence or threat
of any labor dispute, or any material adverse change
in, or loss of, any material relationship between
the Company and any of its customers, suppliers or
key employees, or entered into any commitment or
transaction not in the ordinary and usual course of
business where such commitment or transaction is or
would be material in relation to the Company;
(vi) made any general wage or salary increases in respect
of personnel which it employs, other than increases
in the ordinary and normal course of business, nor
hired any employee who shall have an annual salary
in excess of $70,000; or
(vii) authorized or agreed or otherwise become committed
to do any of the foregoing.
(l) Title to Properties - Except as disclosed in Schedules "I" and
"J" hereto, the Company has good and marketable title to all
its respective properties, interests in properties and assets,
real and personal, including without limitation those
reflected in the Financial Statements or acquired since the
date of the Financial
11
<PAGE> 12
Statements, free and clear of all mortgages, pledges, liens,
claims, rights, encumbrances or charges of any kind or nature.
(m) Equipment and Condition of Assets - All non-vehicular
equipment, assets, personal property and fixtures in the
possession or custody of the Company which, as of the date
hereof, are owned, leased or held under license or similar
arrangement by the Company and are necessary for the conduct
of the Business are in good condition, repair and proper
working order, reasonable wear and tear excepted. Copies of
all leases, licenses, agreements and other documentation
relating thereto have been provided or made available to
Purchaser.
(n) Leases of Real Property - The Company is not a party to or
bound by any leases of real property other than those
disclosed in Schedule "J" hereto, and all interests held by
the Company as lessee under such leases are free and clear of
any and all liens, charges and encumbrances of any nature and
kind whatsoever. All rental and other payments required to be
paid by the Company, as lessee, pursuant to such leases have
been duly paid. Such leases are in full force and effect
without amendment thereto and the Company is not otherwise in
default in any material respect in meeting its obligations
contained in any such lease. The representations or warranties
set forth in Appendix "J" hereto with respect to any real
property owned by NRM Properties, Inc. or Chaparral
Properties, Inc. that is subject to a lease to which the
Company is a party or by which it is bound are true and
correct.
(o) Real Property - The Company does not own any interest in real
property, except as disclosed on Schedule "J" hereto.
(p) Vehicular Equipment - Schedule "K" contains a list of all
vehicular equipment owned or leased by the Company and copies
of all motor vehicle certificates of title with respect to
such vehicular equipment have been provided to the Purchaser.
Such vehicular equipment is, in all material respects, in good
condition, repair and proper working order, reasonable wear
and tear excepted, and each vehicle complies in all material
respects with all laws and regulations affecting its operation
and each vehicle bears a current safety standards certificate.
(q) Revenue Contracts - Except as disclosed in Schedule "L", the
Company is not a party to any contract pursuant to which it is
to provide transportation or other services. Each of the
contracts set out in Schedule "L" is in full force and effect
and enforceable in accordance with its respective terms and
conditions, and there is not existing any default, or event or
condition which, with the giving of notice or the passage of
time, or both, would constitute an event of default, by the
Company or any other party thereto under any of such
contracts, that could have a material adverse effect on any of
such contracts.
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<PAGE> 13
(r) Contracts to Purchase - Except as set out in Schedule "M", the
Company is not a party to any contract to purchase any goods
and/or services with a value in excess of $20,000/year. Each
of the contracts set out in Schedule "M" is in full force and
effect and enforceable in accordance with its respective terms
and conditions, and there is not existing any default, or
event or condition which, with the giving of notice or the
passage of time, or both, would constitute an event of
default, by the Company or any other party thereto under any
of such contracts, that could have a material adverse effect
on any of such contracts.
(s) Employment Contracts - Except as set out in Schedule "N", the
Company neither has any written employment contracts, union or
collective labor, pension, deferred profit sharing,
retirement, employee benefit, stock option or other similar
agreements or plans nor has it had any such plan or agreement
in the past, nor does it have any written contracts of
employment with any employees or, to the best of Vendors'
knowledge, any oral contracts of employment which are not
terminable on the giving of reasonable notice in accordance
with applicable law. The Company has not, in the last four (4)
years, experienced any labor disputes which were of a material
nature, work stoppages or strikes. There is not now any
circumstances or conduct which could result in the filing of
an unfair labor practice complaint against the Company; any
such complaints previously raised and currently ongoing and
the current status thereof are particularized in Schedule "N".
(t) Material Contracts - Except for the material contracts and
commitments disclosed herein, including the Schedules attached
hereto, the Company is not a party to or bound by any material
contract or commitments whether oral or written. True, correct
and complete copies of all such written contracts and
commitments either have been delivered to the Purchaser or
will be delivered prior to Closing. Each of such contracts and
commitments is in full force and effect and enforceable in
accordance with its respective terms and conditions, and there
is not existing any default, or event or condition which, with
the giving of notice or the passage of time, or both, would
constitute an event of default, by either of the Company or
any other party thereto under any of such contracts or
commitments, that could have a material adverse effect on any
of such contracts or commitments. The Company has the
capacity, including the necessary personnel, equipment and
supplies, to perform all its obligations thereunder in all
material respects.
(u) Pension/Benefit/Health Plans - The only pension, benefit or
health plans established by or for the Company for its
employees are those disclosed in Schedule "N" hereto; such
plans are duly registered where required by, and are in good
standing under all, applicable legislation; all required
employer contributions thereunder to the date hereof have been
made and the respective pension funds are funded in accordance
with the rules of the pension plans and no past service
funding liabilities exist thereunder. Except as disclosed on
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<PAGE> 14
Schedule "N" hereto, there is no employee benefit or health
plan established or maintained for employees of the Company,
or to which contributions have been made by the Company with
respect to such employees, which is subject to Title IV of the
Employee Retirement Income Security Act of 1974, as amended
("ERISA"). The Company is in compliance in all material
respects with all provisions of ERISA, and the Company is not
subject to any liability or obligation arising under ERISA or
any other applicable law or the provisions of any other
employee benefit plan, including but not limited to liability
owed to the Pension Benefit Guaranty Corporation on account of
a termination or partial termination of any employee benefit
plan, any liability resulting from a "prohibited transaction",
any liability for failure to meet minimum funding
requirements, any liability related to the termination of a
multi-employer pension plan, and any liability caused by the
non-qualification of any plan under section 401 of the Code.
No pension plan, no employee benefit plan, no "disqualified
person" (as such term is used in Section 4975(c)(1) of the
Code) has engaged, and no Vendor has engaged, in any
transaction in violation of Section 406 of ERISA or any
"prohibited transaction" (as defined in Section 4975(c)(1) of
the Code) other than any such transaction which is exempt
under Section 408 of ERISA or Section 4975(d) of the Code. The
401k plan of the Company meets in all material respects the
requirements of section 401(a) of the Code. The Company does
not have any obligation to provide material post-retirement
benefits of any nature to its employees, former employees or
their survivors, dependents or beneficiaries, except as may be
required by the Consolidated Omnibus Budget Reconciliation Act
of 1986 ("COBRA") or any other applicable state medical
benefits continuation laws, nor will any such obligation to
provide such post-retirement benefits be incurred solely as a
result of the consummation of the within transactions. The
Company has not caused there to occur a "mass lay-off", as
defined in section 693.3 of the regulations issued under the
Worker Adjustment and Retention Notification Act (20 CFR 639)
at any time in the past.
(v) Absence of Conflicting Agreements - Neither the Company nor
any Vendor is a party to, bound or affected by or subject to
any indenture, mortgage, lease, agreement, instrument, charter
or by-law provision, or, to the best of Vendors' knowledge,
any statute, regulation, order, judgment, decree or law which
would be in any material respect violated, contravened,
breached by or under which a material default would occur, as
a result of the execution and delivery of this Agreement or
the consummation of any of the transactions provided for
herein.
(w) Litigation - Except for the items disclosed in Schedule "O"
hereto, all of which are fully insured against, there is no
suit, action, litigation, arbitration proceeding or private or
governmental proceeding, hearing before an administrative
tribunal, including appeals and applications for review, in
progress, pending or to the knowledge of Vendors threatened
against the Company or materially and adversely affecting its
properties, business, financial condition or business
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<PAGE> 15
prospects. Except as shown in Schedule "O", there is not
presently outstanding against the Company any adverse
judgment, decree, injunction, rule or order of any court,
governmental department, commission, agency, instrumentality
or arbitrator.
(x) Employees - There are set forth in Schedule "P" hereto the
names and titles of all personnel employed or engaged by the
Company whose annual base salary exceeds $40,000, including
rates of remuneration, positions held and date of commencement
of employment. The employment records of the Company are true,
complete and correct in all material respects. Except as
disclosed in Schedule "P" hereto, the Company does not owe any
past or present employee any sum other than for accrued wages
or salaries for the current payroll period, reimbursable
expenses, accrued vacation and holiday pay (none of which is
for a period in excess of two (2) weeks' pay with respect to
any single employee), sick leave rights and amounts payable
under employee benefit plans, and all of such sums that accrue
from the date hereof until the Closing shall be timely paid by
the Company on or prior to the Closing Date. There is not
pending or, to the best knowledge of Vendors, after due
inquiry, threatened, any charge or complaint against or
involving the Company or any of its officers or employees by
the National Labor Relations Board, the Occupational Health &
Safety Administration, the Department of Labor, or any similar
federal, state or local board of agency, or any representative
thereof.
(y) Insurance - The Company currently has in force the policies of
insurance set out in Schedule "Q" hereto. Such policies are
appropriate to its Business, property and assets, are in such
amounts and against such risks as are customarily carried and
insured against by owners of comparable businesses, properties
and assets, and, to the knowledge of Vendors, are issued by
responsible insurers. All such policies of insurance are in
full force and effect and the Company is not in default,
whether as to the payment of premium or otherwise, under the
terms of any such policy. Such policies can be cancelled
without penalty or premium, and such cancellation would
trigger a full pro rata refund of prepaid premiums. The
Company has no liability for retrospective insurance premiums
or costs.
(z) Intellectual Property - Attached as Schedule "R" is a true and
correct schedule identifying all material patents, patent
rights or licenses, patent applications, trademarks, trademark
registrations and applications, trademark rights, trade names,
trade secrets, service marks and applications therefore,
copyrights and copyright registrations and copyright
applications used in whole or in part in or required for the
proper carrying on of the Business of the Company (the
"Intellectual Property"). None of the matters covered by the
Intellectual Property, nor any of the products or services
sold or provided by the Company, nor any of the processes used
or the business practices followed by the Company, infringes
or has infringed upon any trademark, trade name, fictitious
name,
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<PAGE> 16
service mark, trade secrets, patent or copyright owned by any
person or entity (or any application with respect thereto), or
constitutes unfair competition. The Company is not obligated
to pay any royalty or other payment with respect to any of the
Intellectual Property, except as disclosed in Schedule "R".
Except as disclosed in Schedule "R" hereto, to the best of
Vendors' knowledge, no person or entity is producing,
providing, selling or using products, services, names, or
marks that would constitute an infringement of any of the
Intellectual Property.
(aa) Corporate Records - The corporate records and minute books of
the Company have been delivered to the Purchaser and contain
complete and accurate copies of the Company's Articles of
Incorporation, as amended, by-laws, minutes of all meetings,
and resolutions of its directors and shareholders. All such
meetings were duly called and held, all such by-laws and
resolutions were duly passed and the share certificate books,
registers of shareholders and members, registers of transfers
and registers of directors of the Company are complete and
accurate in all material respects. In all material respects,
the books and records of the Company with respect to its
assets, businesses, operations, properties and prospects have
been maintained in accordance with generally accepted
accounting principles and in the usual, regular and ordinary
manner, and all entries with respect thereto have been made
and all transactions have been properly accounted for. All
applicable corporate and other laws and all applicable
generally accepted accounting principles relating to the
maintenance of such books and records have been complied with
by the Company.
(bb) Third Party Approvals - Except for approvals required by the
Federal Trade Commission or other agencies for purposes of
complying with the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and the rules and regulations
promulgated thereunder (the "Hart Act") and required by the
Arizona Department of Health Services, and except as disclosed
in Schedule "S", there are no approvals, consents or waivers
required to be obtained or applications required to be filed
from or with governmental authorities or from any other Person
whatsoever, including pursuant to any leases or contracts
containing prohibitions or pre-consent provisions pertinent to
this Agreement in order to permit the transactions
contemplated herein or to preserve the Business and/or assets
of the Company.
(cc) Compliance with Environmental Laws - Except as disclosed in
Schedule "T" hereto, the Company and the Business are in all
material respects in compliance with all, and do not violate
in any material respect, and have not violated in any material
respect any, applicable federal, state, municipal or local
laws, regulations, orders, certificates of approval, licenses,
permits, governmental decrees, ordinances or any and all other
applicable legislation or regulatory requirements with respect
to environmental, health or safety matters. There has been no
storage, treatment, generation, discharge, transportation or
disposal of
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<PAGE> 17
industrial, toxic or hazardous substances or solid or
hazardous waste by, or on behalf of, the Company, in violation
of any federal, state or local law, statute, rule or
regulation or any decree, order, arbitration award or
agreement with or any license or permit from any federal,
state or local governmental authority. There has been no
spill, discharge, leak, emission, injection, escape, dumping,
or release of any kind by, or on behalf of, the Company, into
the environment (including, without limitation, into air,
water or ground water) of any materials including, without
limitation, industrial, toxic or hazardous substances or
solid, medical or hazardous waste, as defined under any
federal, state or local law, statute, rule or regulation other
than those releases permissible under such law, statute, rule
or regulation or allowable under applicable permits.
(dd) Compliance - The Company is not in violation in any material
respect of any laws, regulations, decrees or ordinances
applicable to the Business, assets, properties, financial
condition or business prospects of the Company.
(ee) Subsidiaries and Affiliates - Except as disclosed in Schedule
"U" hereto, the Company has no subsidiaries or any other
equity investment in any entity engaged in any aspect of the
medical or transportation industry. Except as disclosed in
Schedule "U" hereto, no Vendor has any equity interest in any
"Affiliates." For purposes of this Agreement, the term
"Affiliates" shall mean all entities engaged in any aspect of
the medical or transportation industry in which the applicable
Vendor is either an officer or director, or in which the
applicable Vendor, directly or indirectly, owns or controls
ten percent (10%) or more of the equity securities of the
entity.
(ff) Accounts Receivable - The accounts receivable existing on the
books of the Southwest Companies at the Closing Time (net of
contractual allowance) (the "Closing Accounts Receivable")
shall be at least $6,040,000 (the "Minimum Accounts
Receivable") and an amount at least equal to the Minimum
Accounts Receivable or the Closing Accounts Receivable,
whichever amount is greater (the "Target Accounts
Receivable"), is good and collectible within 365 calendar days
thereafter. None of the Closing Accounts Receivable are
subject to the return of the merchandise or other property the
selling price of which is represented thereby, or to offsets
or counterclaims, the extent of which is in excess of any
reserves for collectibility thereof reflected in the books of
the Southwest Companies at the Closing.
(gg) Bank Accounts - Schedule "V" hereto sets forth the name and
location of each bank in which the Company has an account,
lock box or safe deposit box, the number of each such account
or box, the names of all signatories thereto and the persons
authorized to draw thereon or have access thereto. No power of
attorney exists from the Company.
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<PAGE> 18
(hh) Accuracy of Documents, Representations and Warranties - The
copies of all documents furnished to Purchaser, or any of
its representatives by or on behalf of any Vendor or the
Company, or any one or more of them, or their representatives,
are true, complete and correct in all material respects. No
representation or warranty of any Vendor contained in this
Agreement or the other agreements to be executed by any Vendor
pursuant hereto, and no statement contained in the exhibits,
the schedules or the other documents delivered by or on behalf
of any Vendor, or his or its representatives pursuant to or in
connection with this Agreement or the other agreements to be
executed by any Vendor pursuant hereto or any of the
transactions contemplated hereby or thereby, contains any
untrue statement of a material fact, or omits to state any
material fact required to be stated herein or therein in order
to make the statements contained herein or therein not
misleading.
3.2 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER - To induce the Vendors to
enter into this Agreement and to perform Vendors' obligations hereunder, and
with full knowledge that Vendors will rely thereon, the Purchaser hereby
represents and warrants to the Vendors the truth, accuracy and completeness of
the following, except as disclosed in Schedule "W" hereto:
(a) Organization and Valid Existence - The Purchaser is a
corporation duly incorporated and organized, validly
existing and in good standing under the laws of the State of
Delaware and has all necessary corporate power, authority and
capacity to execute and deliver the Agreement and the other
agreements referenced herein to which the Purchaser is a
party, to consummate the transactions contemplated hereby and
thereby, and to fully and timely perform its obligations
hereunder and thereunder. The execution and delivery by
Purchaser of this Agreement and the other agreements
referenced herein to which Purchaser is a party, and the
consummation of the transactions contemplated hereby and
thereby, have been duly authorized and approved by Purchaser's
board of directors, and no other corporate proceedings on the
part of Purchaser are required to authorize the execution and
delivery of this Agreement, the other agreements referenced
herein to which Purchaser is a party, or the consummation of
the transactions contemplated hereby or thereby.
(b) Enforceability - This Agreement and the other agreements
referenced herein to which Purchaser is a party have been duly
executed and delivered by Purchaser and constitute legal,
valid and binding obligations of Purchaser, enforceable
against Purchaser in accordance with their respective terms.
(c) Absence of Conflicting Agreements - The Purchaser is not a
party to, bound or affected by or subject to any indenture,
mortgage, lease, agreement, instrument, charter or by-law
provision, statute, regulation, order, judgment, decree or law
which would be violated, contravened or breached by, or under
which any default
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<PAGE> 19
would occur, as a result of the execution and delivery of this
Agreement or the consummation of any of the transactions
provided for herein.
(d) Litigation - There is no suit, action, litigation, arbitration
proceeding or governmental proceeding, including appeals and
applications for review, in progress, pending or, to the best
of the knowledge, information and belief (after due inquiry)
of the senior officers of the Purchaser, threatened against or
involving the Purchaser or any judgment, decree, injunction,
rule or order of any court, governmental department,
commission, agency, instrumentality or arbitrator which, in
any such case, would materially and adversely affect the
ability of the Purchaser to enter into this Agreement or to
consummate the transactions contemplated hereby.
(e) No Liens - At the time of delivery by the Purchaser to
Vendors, the Rural/Metro Stock shall be free and clear of any
liens, charges, encumbrances or rights of others.
(f) Third Party Approvals - Except for approvals required by the
Federal Trade Commission or other agencies for purposes of
complying with the Hart Act and those required by the Arizona
Department of Health Services, and except as disclosed in
Schedule "W", there are no approvals, consents or waivers
required to be obtained or applications required to be filed
from or with governmental authorities or from any other Person
whatsoever, including pursuant to any leases or contracts
containing prohibitions or pre-consent provisions pertinent to
this Agreement, in order to permit the transactions
contemplated herein.
(g) Restrictions on Transfer - Other than as provided by federal
and state securities laws, rules and regulations, including,
without limitation, Rule 145 promulgated under the Act and the
window policies established by Purchaser's Board of Directors
concerning the purchase and sale of Purchaser's securities by
insiders of the Purchaser, there are no restrictions on
transfer of the Rural/Metro Stock by Vendors.
(h) Accuracy of Documents, Representations and Warranties - The
copies of all documents furnished to the Vendors and their
representatives by or on behalf of Purchaser and its
representatives are true, complete and correct in all material
respects. No representation or warranty of Purchaser contained
in this Agreement or the other agreements referenced herein to
which Purchaser is a party, and no statement contained in the
exhibits, the schedules or the other documents delivered by
or on behalf of Purchaser or its representatives pursuant to
or in connection with this Agreement or any of the
transactions contemplated hereby contains any untrue statement
of a material fact, or omits to state any material fact
required to be stated herein or therein in order to make the
statements contained herein or therein not misleading.
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<PAGE> 20
3.3 NO BROKER - Each of the Parties represents and warrants to the others that
all negotiations relating to this Agreement and the transactions contemplated
hereby have been carried on between them directly and without the intervention
of any other party in such manner as to give rise to any valid claims against
any of the Parties for a brokerage commission, finder's fee or other like
payment.
3.4 NON-WAIVER - No investigations made by or on behalf of a Party at any time
shall have the effect of waiving, diminishing the scope of or otherwise
affecting any representation or warranty made by the other Party herein or
pursuant hereto.
3.5 NATURE OF REPRESENTATIONS, WARRANTIES AND COVENANTS - All statements
contained in any certificate or other instrument delivered by or on behalf of a
Party pursuant to or in connection with the transactions contemplated by this
Agreement shall be deemed to be made by such Party hereunder.
ARTICLE 4
CONDITIONS PRECEDENT TO THE PERFORMANCE
BY THE PURCHASER AND THE VENDORS OF
THEIR OBLIGATIONS UNDER THIS AGREEMENT
4.1 PURCHASER'S CONDITIONS - The obligation of the Purchaser to complete the
purchase of the Purchased Shares hereunder shall be subject to the satisfaction
of, or compliance with, in all material respects, at or before the Closing Time,
each of the following conditions precedent (each of which is hereby acknowledged
to be inserted for the exclusive benefit of the Purchaser and may be waived by
it in whole or in part):
(a) Truth and Accuracy of Representations of Vendors at the
Closing Time - All of the representations and warranties of
Vendors made in or pursuant to this Agreement shall be true
and correct in all material respects as at the Closing Time
and with the same effect as if made at and as of the Closing
Time (except as such representations and warranties may be
affected by the occurrence of events or transactions expressly
contemplated and permitted hereby), and the Purchaser shall
have received a certificate from each of the Vendors
confirming the truth and correctness in all material respects
of their representations and warranties contained herein;
(b) Performance of Obligations - The Vendors shall have performed
or complied with all of their obligations, covenants and
agreements hereunder;
(c) Receipt of Closing Documentation - All documentation relating
to the due authorization and completion of the sale and
purchase hereunder of the Purchased Shares and all actions and
proceedings taken on or prior to the Closing in connection
with the performance by the Vendors of their obligations under
this
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<PAGE> 21
Agreement shall be reasonably satisfactory to the Purchaser
and the Purchaser shall have received copies of all such
documentation or other evidence as it may reasonably request
in order to establish the consummation of the transactions
contemplated hereby and the taking of all corporate
proceedings in connection therewith in compliance with these
conditions, in form (as to certification and otherwise) and
substance reasonably satisfactory to the Purchaser;
(d) Consents, Authorizations and Registrations - All consents,
approvals, orders and authorizations of any Persons or
governmental authorities (or registrations, declarations,
filings or recordings with any such authorities) required in
connection with the completion of any of the transactions
contemplated by this Agreement (including, without limitation,
any notifications, approvals or consents required by the
Arizona Department of Health Services) shall have been
obtained on or before the Closing Time; the Vendors shall have
obtained and delivered by Closing to the Purchaser written
consents, in form and substance satisfactory to the Purchaser,
to the transaction contemplated herein which are required (if
any) pursuant to the real property leases referred to in
Schedule "J" (and any customer contracts where approval or
consent is required), including, without limiting the
generality of the foregoing, such acknowledgements and
confirmations of good standing from the lessors in respect of
the real property leases referred to in Schedule "J" hereto as
may be reasonably requested by the Purchaser;
(e) Directors and Officers of Company - Subject to the terms of
the Employment Agreement, there shall have been delivered to
the Purchaser on or before the Closing Date the resignations
of such persons as the Purchaser shall direct who are
presently directors and/or officers of the Company.
(f) No Damage - No substantial damage by fire or other hazard to
the assets of the Company shall have occurred from the date
hereof to the Closing Date which is not fully and adequately
insured against;
(g) Litigation - On the Closing Date, there shall be no
litigation, governmental investigation or proceeding pending
or threatened for the purpose of enjoining or preventing the
consummation of any of the transactions contemplated by this
Agreement or otherwise claiming that such consummation is
improper;
(h) Hart-Scott-Rodino Filing - The applicable waiting period under
the Hart Act shall have expired or terminated.
(i) Management - Rural/Metro's Board of Directors shall have
confirmed the appointment of Ramsey to the Board of Directors
of Rural/Metro and to a senior executive position with
Rural/Metro.
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<PAGE> 22
(j) Investment Agreement - Vendors shall have each executed and
delivered to Purchaser an Investment Agreement in form and
content substantially as attached hereto as Appendix 4.1(j).
(k) Environmental Reports - Purchaser shall have received reports,
in form and content satisfactory to Purchaser, in the exercise
of its sole discretion, from independent environmental
consultants acceptable to Purchaser in its sole discretion,
and from legal counsel to Purchaser, concerning the real
properties owned or leased by the Company, which reports shall
be based, in part, on the results of environmental site
assessments which Purchaser may cause to be completed for and
on behalf of Purchaser prior to the Closing Date on all such
real or leased properties, which reports, if any, shall be
prepared at Purchaser's expense.
(l) Due Diligence - Purchaser shall, in the exercise of its sole
discretion, be entirely satisfied with the business,
operations, financial condition, assets and liabilities of the
Company.
(m) Schedules - Purchaser shall have received from Vendors the
Schedules referred to herein and all amendments and
modifications thereto, and Purchaser shall, in the exercise of
its sole discretion, be entirely satisfied with the nature and
extent of the disclosures made therein and the representations
and warranties of Vendors as modified by the disclosures
contained in the Schedules.
(n) Simultaneous Closings - On the Closing Date, the share
purchases and other transactions contemplated in each of the
Agreements of Purchase and Sale executed of even date herewith
for the sale of SW General, Inc., Medical Emergency Devices
and Services (MEDS), Inc., and Southwest General Services,
Inc. shall be consummated simultaneously with the transactions
contemplated herein.
4.2 VENDORS' CONDITIONS - The obligations of the Vendors to complete the sale of
the Purchased Shares hereunder shall be subject to the satisfaction of or
compliance with, at or before the Closing Time, each of the following conditions
precedent (each of which is hereby acknowledged to be inserted for the exclusive
benefit of the Vendors and may be waived by them in whole or in part):
(a) Truth and Accuracy of Representations of Purchaser at Closing
Time - All of the representations and warranties of the
Purchaser made in or pursuant to this Agreement shall be true
and correct in all material respects as at the Closing Time
and with the same effect as if made at and as of the Closing
Time and the Vendors shall have received a certificate from a
duly authorized senior officer of the Purchaser confirming the
truth and correctness in all material respects of the
representations and warranties of the Purchaser contained
herein;
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(b) Performance of Obligations - The Purchaser shall have
performed or complied with all of its obligations, covenants
and agreements hereunder;
(c) Receipt of Closing Documentation - All documentation relating
to the due authorization and completion of the sale and
purchase hereunder of the Purchased Shares and all actions and
proceedings taken on or prior to the Closing in connection
with the performance by the Purchaser of its obligations under
this Agreement shall be reasonably satisfactory to the Vendors
and the Vendors shall have received copies of all such
documentation or other evidence as they may reasonably request
in order to establish the consummation of the transactions
contemplated hereby and the taking of all corporate
proceedings in connection therewith in compliance with these
conditions, in form (as to certification and otherwise) and
substance satisfactory to the Vendors;
(d) Release of Vendors' Guaranties - Purchaser shall have secured
the release of Vendors from liability for any personal
guarantees issued by Vendors as the shareholders of the
Company with respect to any liability of the Company for
borrowed money, and shall have provided to Vendors written
evidence thereof, or, in the alternative, Purchaser shall
deliver an agreement of assumption and indemnification, in
form and content mutually satisfactory to Purchaser and
Vendors, pursuant to which Purchaser will indemnify Vendors
for any such personal guaranty;
(e) Litigation - On the Closing Date, there shall be no
litigation, governmental investigation or proceeding pending
or threatened for the purpose of enjoining or preventing the
consummation of any of the transactions contemplated by this
Agreement or otherwise claiming that such consummation is
improper;
(f) Hart-Scott-Rodino Filing - The applicable waiting period under
the Hart Act shall have expired or terminated;
(g) Management - The Board of Directors of Rural/Metro shall have
confirmed the appointment of Ramsey to the Board of Directors
of Rural/Metro and to a senior executive position with
Rural/Metro and approved certain existing management contracts
of the Company;
(h) Investment Agreement - Purchaser shall have executed and
delivered to Vendors an Investment Agreement in form and
content substantially as attached hereto as Appendix 4.1(j).
(i) Simultaneous Closings - On the Closing Date, the share
purchases and other transactions contemplated in each of the
Agreements of Purchase and Sale executed of even date herewith
for the sale of SW General, Inc., Medical Emergency Devices
and Services ("MEDS"), Inc., and Southwest General
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Services, Inc. shall be consummated simultaneously with the
transactions contemplated herein.
ARTICLE 5
OTHER COVENANTS OF THE PARTIES
5.1 CONDUCT OF BUSINESS PRIOR TO CLOSING - During the period from the date of
this Agreement to the Closing Time, the Vendors will have the following
obligations and will cause the Company to do the following:
(a) Access to Records - Vendors shall, and shall cause the Company
and its employees, officers, agents, representatives and
accountants to, fully cooperate with Purchaser to allow the
officers, employees, attorneys, consultants and accountants of
Purchaser free and unrestricted access (but only through Barry
Landon, as representative of the Vendors and without
interference to the ordinary conduct of the Business) during
normal business hours to all of the properties, books,
contracts, documents and records of the Company and furnish to
Purchaser such information as Purchaser may at any time and
from time to time reasonably request until the Closing Time.
(b) Business in Ordinary Course - Vendors shall cause the Company
to carry on its business and affairs as heretofore carried on,
and neither the Company nor any Vendor will order, purchase or
lease any products, inventory, equipment, leased personalty,
or other items, or dispose of any of its assets or leased
property, or issue any quotations, or prepay any of its
material obligations, incur any liabilities or obligations,
hire or discharge any employee or officer or, without
limitation by specific enumeration of the foregoing, enter
into any other transaction, except in the usual and ordinary
course of its business in accordance with the past practices
of the Company and except as provided herein. Without limiting
the generality of the foregoing, Vendors shall not permit the
Company, without the prior written consent of Purchaser, to:
(i) create or suffer to exist any liens or encumbrances
with respect to any of the assets or properties of
the Company which shall not be discharged at or
prior to the Closing Date, other than liens for
nondelinquent taxes;
(ii) incur any indebtedness for borrowed money other than
in the usual and ordinary course of its business;
(iii) sell or transfer any material assets or properties
(including, without limitation, sales and transfers
to Affiliates, other than Affiliates of the Company
the stock of which is to be acquired by Purchaser or
an Affiliate of Purchaser on the Closing Date);
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<PAGE> 25
(iv) acquire or enter into any agreement or understanding
(oral or written) to acquire the stock or assets of
any other person, firm, corporation or other entity;
(v) make any material change in the conduct or nature of
any aspect of its business, whether in the ordinary
course of business or not, or whether or not the
change has or will have a material adverse affect on
the business activities, financial condition, or
business prospects of the Company;
(vi) waive any material rights;
(vii) pay any Affiliate, other than Affiliates of the
Company the stock of which is to be acquired by
Purchaser or an Affiliate of Purchaser on the
Closing Date, or be charged by any Affiliate, other
than Affiliates of the Company the stock of which is
to be acquired by Purchaser or an Affiliate of
Purchaser on the Closing Date, for goods sold or
services rendered or be charged by any Affiliate,
other than Affiliates of the Company the stock of
which is to be acquired by Purchaser or an Affiliate
of Purchaser on the Closing Date, for corporate
overhead expenses, management fees, legal or
accounting fees, capital charges, or similar charges
or expenses, except for any payments made by the
Company pursuant to leases with NRM Properties, Inc.
or Chaparral Properties, Inc.;
(viii) incur or commit to incur any individual capital
expenditures except in the ordinary course of its
business;
(ix) amend employment contracts or the terms and
conditions of employment of any officer, director or
employee earning total annual compensation in excess
of $70,000, other than normal merit and cost of
living increases to employees in accordance with the
general prevailing practices of the Company existing
prior to the date of this Agreement;
(x) pay or incur any management or consulting fees;
(xi) hire any employee who shall have an annual salary in
excess of $70,000;
(xii) enter into any transaction other than in the usual
and ordinary course of business; or
(xiii) issue or sell any shares of the stock or other
securities of the Company, including any of the
Purchased Shares, or make or become obligated to
make any dividend or other distribution or payment
to Vendors or any
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former shareholder of the Company in respect of any
stock or other security of the Company at any time
held by Vendor or such other former shareholders.
(c) Employees - Vendors shall use their reasonable efforts to
retain, and shall cause the Company to each retain its
business intact, preserve all its goodwill and customer and
employee relations, including keeping available the services
of each of its present employees, representatives and agents.
(d) Continue Insurance - Vendors shall cause the Company to
continue in force all existing policies of insurance presently
maintained by the Company.
(e) Perform Obligations - Vendors shall cause the Company to
comply in all material respects with all laws affecting the
operation of the Business and to pay all required taxes and
tax installments.
(f) Confidentiality - Until the Closing, and at all times
thereafter as provided in Section 6.1(d) hereof, Vendors will
maintain as confidential their discussions with Purchaser, and
the terms and conditions of this Agreement, and the other
agreements to be executed in connection herewith, and except
as reasonably necessary to fulfill Vendors' obligations
hereunder or as required by law, will not make any trade press
or other announcement or disclosure in relation to such
discussions whether before or after Closing without the prior
written consent of Purchaser.
(g) Exclusivity - Until the earlier of the Closing or the
termination of this Agreement in accordance with the terms
hereof, Vendors will negotiate the sale of the stock, assets
and properties of the Company only with Purchaser, and no
Vendor will permit the Company to, directly or indirectly,
enter into any discussion with, or disclose any information in
relation to the Purchased Shares or the assets of the Company
to any other person, firm, or other entity, other than
Purchaser.
(h) Equitable Relief - Each Vendor acknowledges and agrees that
the covenants contained in each of paragraphs (f) and (g) of
this Section 5.1 are a material inducement for Purchaser to
execute and deliver this Agreement and to consummate the
transactions contemplated hereby. Accordingly, Vendor acknowl-
edges and agrees that the restrictions contained in each of
paragraphs (f) and (g) of this Section 5.1 are reasonable and
necessary for the protection of the business of Purchaser and
its subsidiaries, the Company, and the investment of Purchaser
in the Company, and that a breach of any such restriction
could not adequately be compensated by damages in an action at
law. In the event of a breach or threatened breach by any
Vendor of any of the provisions of any of paragraphs (f) or
(g) of this Section 5.1, Purchaser shall be entitled to
obtain, without the necessity of posting bond therefor, an
injunction (preliminary or permanent, or a temporary
restraining order) restraining such Vendor from the activity
or
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<PAGE> 27
threatened activity constituting, or which would constitute, a
breach, as well as damages and an equitable accounting of all
earnings, profits and other benefits arising from a violation,
which right shall be cumulative and in addition to any other
rights or remedies to which Purchaser may be entitled.
(i) Severability - Each and every provision set forth in each of
paragraphs (f) and (g) of this Section 5.1 is independent and
severable from the others, and no provision shall be rendered
unenforceable by virtue of the fact that, for any reason, any
other or others of them may be unenforceable in whole or in
part. The parties hereto agree that if any provision of
paragraphs (f) or (g) of this Section 5.1 shall be declared by
a court of competent jurisdiction to be unenforceable for any
reason whatsoever, the court may appropriately limit or modify
such provision, and such provision shall be given effect to
the maximum extent permitted by applicable law.
(j) Consents - Vendors shall use their reasonable efforts and make
every good faith attempt to obtain any and all consents and
estoppel letters reasonably requested by Purchaser to or in
connection with the assignment of, or alternate arrangements
satisfactory to Purchaser with respect to, any contract,
lease, license, permit, agreement, or other instrument, which
is to be an asset of the Company, or which may be necessary,
appropriate, or required in order to permit the conduct of the
Business and operations of the Company after the Closing to be
in all respects the same as the conduct of the Business and
operations of the Company, prior to the Closing.
5.2 OBLIGATIONS OF PURCHASER - During the period from the date of this Agreement
to the Closing Time, or such other period as provided by this Agreement, the
Purchaser will have the following obligations:
(a) Confidentiality - Purchaser will maintain as confidential its
discussions with Vendors, and the terms and conditions of this
Agreement, and the other agreements to be executed in
connection herewith, and except as reasonably necessary to
fulfill its obligations hereunder or as required by law, will
not make any trade press or other announcement or disclosure
in relation to such discussions without the prior written
consent of Vendors. In the event of the termination of this
Agreement without consummation of the transactions
contemplated hereby, Purchaser will keep confidential any
information (unless readily available from public or published
information sources) obtained from the Company or the Vendors.
If this Agreement is so terminated, promptly after such
termination, all documents, work papers and other written
material obtained from Vendors' representative in connection
with this Agreement and not theretofore made public (including
all copies thereof), shall be returned to the Person that
provided such material. Purchaser shall provide Vendors with a
list of representatives of Purchaser involved in the due
diligence, and said representatives shall refrain
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<PAGE> 28
from discussing the transaction and its due diligence
activities with any other employee or representative of
Purchaser not disclosed on the list.
(b) Nonsolicitation - In the event of termination of this
Agreement without consummation of the transactions
contemplated hereby, Purchaser agrees that for a period of
three (3) years following such termination, Purchaser will
not, directly or indirectly, solicit or cause others to
solicit any person who, on the date hereof, is an employee of
the Company and whose annual compensation from the Company
exceeds $25,000, for employment or as an independent
contractor with any person or entity, unless first authorized
in writing by Vendors, which authorization may be withheld in
the sole and absolute discretion of Vendors.
(c) Trade Secrets and Other Information - In the event of
termination of this Agreement without consummation of the
transactions contemplated hereby, Purchaser agrees that after
the Closing Purchaser will not communicate or divulge to, or
use for the benefit of, any person, firm or corporation any of
the trade secrets, methods, formulas, business and/or
marketing plans, processes or any other proprietary or
confidential information with respect to the Company and its
business, financial condition, business operations or methods,
or business prospects. The preceding sentence shall not apply
to information which (i) is, was or becomes generally known or
available to the public or the industry other than as a result
of a disclosure by Purchaser in violation of this Agreement,
or (ii) is required to be disclosed by law. Purchaser will
advise Vendors, in writing, of any request, including a
subpoena or similar legal inquiry, to disclose any such
confidential information, such that Vendors can seek
appropriate legal relief.
(d) Equitable Relief - Purchasers acknowledge that the covenants
contained in each of paragraphs (a), (b), and (c) of this
Section 5.2 are a material inducement for Vendors to execute
and deliver this Agreement and to consummate the transac-
tions contemplated hereby. Accordingly, Purchaser acknowledges
and agrees that the restrictions contained in each of
paragraphs (a), (b), and (c) of this Section 5.2 are
reasonable and necessary for the protection of the business of
the Company, and Vendors' investment in the Company, and that
a breach of any such restriction could not adequately be
compensated by damages in an action at law. In the event of a
breach or threatened breach by Purchaser of any of the
provisions of any of paragraphs (a), (b), or (c) of this
Section 5.2, Vendors shall be entitled to obtain, without the
necessity of posting bond therefor, an injunction (preliminary
or permanent, or a temporary restraining order) restraining
Purchaser from the activity or threatened activity
constituting, or which would constitute, a breach of this
Agreement, as well as damages and an equitable accounting of
all earnings, profits and other benefits arising from such a
violation, which right shall be cumulative and in addition to
any other rights or remedies to which Vendors may be entitled.
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<PAGE> 29
(e) Severability - Each and every provision set forth in each of
paragraphs (a), (b), and (c) this Section 5.2 is independent
and severable from the others, and no provision shall be
rendered unenforceable by virtue of the fact that, for any
reason, any other or others of them may be unenforceable in
whole or in part. The parties hereto agree that if any
provision of any of paragraphs (a), (b), or (c) of this
Section 5.2 shall be declared by a court of competent
jurisdiction to be unenforceable for any reason whatsoever,
the court may appropriately limit or modify such provision,
and such provision shall be given effect to the maximum extent
permitted by applicable law.
(f) Consents - Purchaser shall use its reasonable efforts and make
every good faith attempt to obtain any and all consents and
estoppel letters which may be necessary, appropriate, or
required in order to permit consummation of the transactions
contemplated herein.
5.3 JOINT OBLIGATIONS OF VENDORS AND PURCHASER - During the period from the date
of this Agreement to the Closing Time, the following shall apply with equal
force to Vendors and Purchaser:
(a) Notice - Each Party shall promptly give the other parties
written notice of the existence or occurrence of any condition
that would make any representation or warranty of the
notifying Party untrue or that might reasonably be expected to
prevent the consummation of the transactions herein
contemplated.
(b) Performance - No Party shall intentionally perform or omit to
perform any act which, if performed or omitted, would prevent
or excuse the performance of this Agreement by any Party
hereto or that would result in any representation or warranty
contained herein of that Party being untrue in any material
respect as of the date hereof and as if originally made on and
as of the Closing Date.
(c) Hart-Scott-Rodino Filings - Each party shall take whatever
steps are necessary to make any filings required under the
Hart Act not later than ten days after the date of execution
of this Agreement.
ARTICLE 6
POST CLOSING OBLIGATIONS
6.1 OBLIGATIONS OF VENDORS - Following the Closing, Vendors shall each be
subject to the following obligations:
(a) Covenant Not to Compete - In consideration of the execution
and delivery of this Agreement by Purchaser, and in
consideration of the Purchase Price, and as additional
consideration therefor, each of the Vendors unconditionally
agrees that
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<PAGE> 30
during the Restricted Period (as defined below) no Vendor
will, directly or indirectly (including, without limitation,
as a partner, shareholder, director, officer or employee of,
or lender or consultant to, any other person or entity), for
himself, herself or itself, or on behalf of, or in conjunction
with, any other Person or governmental entity, in any manner
whatsoever, or in any other capacity within, into or from the
Restricted Territory (as defined below) engage or cause others
to engage in the Business, or any aspect thereof, unless first
authorized in writing by Purchaser, which authorization may be
withheld in the sole and absolute discretion of Purchaser. For
purposes of this Agreement, the term "Restricted Period" shall
mean the period ending three (3) years from the Closing Date.
For purposes of this Agreement, the term "Restricted
Territory" shall mean the State of Arizona. If any Vendor
violates his, her or its obligations under this Section
6.1(a), then the Restricted Period shall be extended by the
period of time equal to that period beginning when the
activities constituting such violation commenced and ending
when the activities constituting such violation terminated.
Notwithstanding the foregoing, the obligations of the Vendors
under this Section 6.1(a) shall terminate if Ramsey is
terminated by Purchaser without Cause as defined and described
in the Employment Agreement. The Purchaser agrees that no
breach of this covenant not to compete will occur as a result
of Ramsey's formation of and activities with respect to any
501(c)(3) foundation, his continued association with the
International Association of Firefighters, his continued
ownership and operation of an ambulance service company in
Pima County under the name Kords Southwest, or his continued
service as President of the Arizona Ambulance Association.
(b) Nonsolicitation - In consideration of the execution and
delivery of this Agreement by Purchaser, and in consideration
of the Purchase Price, each of the Vendors agrees that for a
period of three (3) years following the Closing Date no Vendor
will directly or indirectly solicit or cause others solicit
(i) in respect of the Business, any Person or other entity
that is, or was within the twelve (12) month period
immediately prior to the Closing, a customer or supplier of
the Company, or (ii) any person who, on the date hereof, is an
employee of the Company and whose annual compensation from the
Company exceeds $25,000, for employment or as an independent
contractor with any Person or entity, unless first authorized
in writing by Purchaser, which authorization may be withheld
in the sole and absolute discretion of Purchaser. If any
Vendor violates his, her or its obligations under this Section
6.1(b), then the time periods hereunder shall be extended by
the period of time equal to that period beginning when the
activities constituting such violation commenced and ending
when the activities constituting such violation terminated.
Notwithstanding the foregoing, the obligations of the Vendors
under this Section 6.1(b) shall terminate if Ramsey is
terminated by Purchaser without Cause as defined and described
in the Employment Agreement.
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<PAGE> 31
(c) Trade Secrets and Other Information - In consideration of the
execution and delivery of this Agreement by Purchaser, and in
consideration of the Purchase Price, each of the Vendors
agrees that after the Closing no Vendor will communicate or
divulge to, or use for the benefit of, any Person other than
Purchaser or the Company, or its or their agents and
representatives, any of the trade secrets, methods, formulas,
business and/or marketing plans, processes or any other
proprietary or confidential information with respect to the
Company and its business, financial condition, business
operations or methods, or business prospects. The preceding
sentence shall not apply to information which (i) is, was or
becomes generally known or available to the public or the
industry other than as a result of a disclosure by a Vendor in
violation of this Agreement, or (ii) is required to be
disclosed by law. Vendors will advise Purchaser, in writing,
of any request, including a subpoena or similar legal inquiry,
to disclose any such confidential information, such that
Purchaser can seek appropriate legal relief.
(d) Confidentiality - At all times after the Closing, Vendors will
maintain as confidential the discussions between Vendors and
Purchaser, and the terms and conditions of this Agreement, and
the other agreements to be executed in connection herewith,
and except as required by law, will not make any trade press
or other announcement or disclosure in relation to such
discussions whether before or after Closing without the prior
written consent of Purchaser.
(e) Equitable Relief - Vendors acknowledge that the covenants
contained in each of paragraphs (a), (b), (c), and (d) of this
Section 6.1 are a material inducement for Purchaser to execute
and deliver this Agreement and to consummate the transactions
contemplated hereby. Accordingly, Vendors acknowledge and
agree that the restrictions contained in each of paragraphs
(a), (b), (c), and (d) of this Section 6.1 (including, without
limitation, the Restricted Period and the Restricted
Territory) are reasonable and necessary for the protection of
the business of the Company, and Purchaser's investment in the
Company, and that a breach of any such restriction could not
adequately be compensated by damages in an action at law. In
the event of a breach or threatened breach by any Vendors of
any of the provisions of any of paragraphs (a), (b), (c), or
(d) of this Section 6.1, Purchaser shall be entitled to
obtain, without the necessity of posting bond therefor, an
injunction (preliminary or permanent, or a temporary
restraining order) restraining that Vendor from the activity
or threatened activity constituting, or which would
constitute, a breach of this Agreement, as well as damages and
an equitable accounting of all earnings, profits and other
benefits arising from such a violation, which right shall be
cumulative and in addition to any other rights or remedies to
which Purchaser may be entitled.
(f) Severability - Each and every provision set forth in each of
paragraphs (a), (b), (c), and (d) this Section 6.1 is
independent and severable from the others, and no provision
shall be rendered unenforceable by virtue of the fact that,
for any
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<PAGE> 32
reason, any other or others of them may be unenforceable in
whole or in part. The parties hereto agree that if any
provision of any of paragraphs (a), (b), (c) or (d) of this
Section 6.1 shall be declared by a court of competent
jurisdiction to be unenforceable for any reason whatsoever,
the court may appropriately limit or modify such provision,
and such provision shall be given effect to the maximum extent
permitted by applicable law.
(g) Consents - Vendors shall use their reasonable efforts and make
every good faith attempt to obtain any and all consent and
estoppel letters, if any, reasonably requested by Purchaser to
or in connection with the assignment of, or alternate
arrangements satisfactory to Purchaser with respect to, any
contract, lease, license, permit, agreement, or other
instrument, which is to be an asset of the Company, or which
may be necessary, appropriate, or required in order to permit
the conduct of the business and operations of the Company
after the Closing to be in all respects the same as the
conduct of the business and operations of the Company prior to
the Closing.
6.2 OBLIGATIONS OF PURCHASER - Following the Closing, Purchaser shall be subject
to the following obligations:
(a) Tax Amendments - The Purchaser agrees that the Company shall
not, and the Purchaser shall not cause the Company to, amend
the Company's tax returns for 1995 or earlier without the
prior consent of Ramsey. In the event the Company and/or the
Purchaser amends such tax returns without Ramsey's consent,
the Purchaser agrees to indemnify the Vendors for any
liabilities that any of them may occur as a result of any such
amendment; provided, however, that Vendors agree jointly and
severally to indemnify, defend and hold harmless the Purchaser
and the Company for any liabilities, costs, penalties, fines
and interest that either of them may incur as the result of
any refusal to grant the consent referred to above.
(b) Non Interference With Leases - Purchaser acknowledges the
existence of certain real property leases between the Company
and NRM Properties, Inc. and Chaparral Properties, Inc.
(collectively the "Landlords"), and agrees not to interfere
with such leases and to cause the Company to abide by such
leases. In the event that the Company and/or the Purchaser
reaches this Agreement, the Purchaser shall pay to the
appropriate Landlord the full amount of all unpaid monetary
obligations of the Company through the lease period in effect
at the time of the Closing and agrees that such remedy is in
addition to all other remedies that the Landlords or the
Vendors may have at law or in equity.
6.3 OBLIGATIONS OF VENDORS AND PURCHASER - Following the Closing, Vendors and
Purchaser shall execute such further documents, and perform such further acts,
as may be necessary to transfer and convey the Purchased Shares to Purchaser, on
the terms herein contained, and to
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otherwise comply with the terms of this Agreement and consummate the
transactions herein provided.
6.4 SECTION 338(h)(10) ELECTION
(a) Making the Section 338(h)(10) Election; Form 8023-A - Vendors
shall timely join with the Purchaser in making an election
pursuant to Section 338(h)(10) of the Code (and any
corresponding election under state law) (the "Section
338(h)(10) Election"). After Closing, Purchaser will promptly
prepare IRS Form 8023-A ("Form 8023-A") and any related
schedules required to be included with such form and Vendors
shall provide the Purchaser with all necessary information to
timely prepare such schedules (the "Election Schedules").
Purchaser shall submit the Form 8023-A and the Election
Schedules to the Vendors for their review. The Vendors shall
immediately execute the Form 8023-A and submit seven original
signed duplicates thereof to Purchaser who shall be entitled
to file the Form 8023-A and the Election Schedules with the
IRS. Vendors shall also timely comply with their
responsibilities as required by the Code to effect the
338(h)(10) Election.
(b) Section 338(h)(10) Election Purchase Price Adjustment. The
Purchaser hereby covenants and agrees to defend, indemnify and
hold harmless the Vendor for, from and against any tax
liability, including related penalties, interest and any
additional fees and costs (including, without limitation,
attorneys' and accountants' fees and costs) that accrue to the
Vendor as a direct result of the Section 338(h)(10) Election
(the "Tax Liability"). The Tax Liability resulting from the
Section 338(h)(10) Election shall be paid in cash to the
Vendor immediately prior to the time such Tax Liability, if
any, is required to be paid to the applicable taxing
authority.
ARTICLE 7
INDEMNIFICATION
7.1 INDEMNIFICATION BY VENDORS
(a) General - Subject to Section 7.4 hereof, Vendors jointly and
severally covenant and agree to defend, indemnify and hold
Purchaser and the Company, its and their officers, directors,
shareholders and subsidiaries, harmless for, from and against
any and all damages, losses, liabilities (absolute and
contingent), fines, penalties, costs and expenses (including,
without limitation, reasonable counsel fees and costs and
expenses incurred in the investigation, defense or settlement
of any claim covered by this indemnity) with respect to or
arising out of any demand, claim, inquiry, investigation,
proceeding, action or cause of action that Purchaser and/or
the Company, its and their officers, directors, shareholders
and
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subsidiaries, may suffer or incur by reason of: (a) the
inaccuracy of any of the representations or warranties of
Vendors contained in this Agreement, or any of the agreements,
certificates, documents, exhibits or schedules delivered in
connection with this Agreement; (b) the failure to comply
with, or the breach or default by any Vendor of any of the
covenants, warranties or agreements made by that Vendor
contained in this Agreement, or any of the agreements,
certificates, documents, exhibits or schedules delivered in
connection with this Agreement; (c) any pending or threatened
litigation, claims, investigations, inquiries, regulatory
audits or assessments, or other similar proceedings against
Purchaser and/or the Company and/or its or their directors,
officers, shareholders, employees, agents or representatives,
as well as any future litigation, claims, investigations,
inquiries, regulatory audits or assessments, or other similar
proceedings against the Purchaser and/or the Company and/or
its or their directors, officers, shareholders, employees,
agents or representatives that arise from a state of facts
existing prior to the Closing, and which are not fully covered
and reimbursed by insurance; or (d) any liability or
obligation of the Company not reflected, provided for, or
adequately reserved against on the balance sheets included in
the Financial Statements. Purchaser and/or the Company shall
be entitled to offset against any amount owed by Purchaser
and/or the Company to Vendors, (or any of them) any amount
owed to Purchaser and/or the Company by Vendor, (or any of
them) or any of their Affiliates.
(b) Environmental - Subject to Section 7.4 hereof, Vendors jointly
and severally covenant and agree to defend, indemnify and hold
Purchaser and/or the Company, and their officers, directors
and shareholders harmless for, from and against any and all
damages, losses, liabilities (absolute and contingent), fines,
penalties, costs and expenses (including, without limitation,
reasonable counsel fees and costs and expenses incurred in the
investigation, defense or settlement of any claim covered by
this indemnity and costs associated with any environmental
assessments and/or remediation expenses) by reason of any
inaccuracy of any of the representations or warranties set
forth in Section 3.1(cc) hereof, or with respect to or arising
out of any demand, claim, inquiry, investigation, proceeding,
action, or cause of action brought by any governmental agency
or instrumentality or any Person other than Purchaser, which
Purchaser and/or the Company, or any of their officers,
directors or shareholders may suffer or incur by reason of:
(i) any generation, transportation, storage, treatment
or disposal of industrial, toxic or hazardous
substances or solid or hazardous wastes occurring on
or prior to the Closing Date including, without
limitation, any waste or other disposal activities
or discharges that occurred at a facility on which
any portion of the Company's (or its predecessors')
business was conducted, any waste or other disposal
activities or discharges that occurred off of any
such facility with regard to wastes and other
substances generated on such facility, and any waste
or other
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disposal activities or discharges that occurred on
real estate at any time whether or not the Company
(or its predecessors) owned or leased such real
estate at the time such waste or other disposal
activities or discharges were engaged in, where the
Company or Persons at the direction of the Company
performed such waste or other disposal activities or
discharges;
(ii) any spills, discharges, leaks, emissions,
injections, escapes, dumping, or any releases as
defined now or in the future under the Comprehensive
Environmental Response, Compensation, and Liability
Act of 1980, P.L. 96-510, as amended or reauthorized
from time to time, or any other similar federal,
state or local laws, statutes, rules or regulations,
occurring on or prior to the Closing Date,
including, but not limited to, both those releases
or incidents involving environmental contamination
that required notification or reporting to
appropriate federal, state or local officials or
agencies, or clean-up or remedial activities and
those releases or incidents which occurred prior to
the effective date of any requirements imposing such
notification or reporting obligations or clean-up
or remedial activities, but which would have been
subject to such obligations if they had occurred
subsequent to the effective date of such
requirements;
(iii) any discharges to surface waters or groundwaters
occurring on or prior to the Closing Date;
(iv) any air emissions occurring on or prior to the
Closing Date;
(v) the exposure of and resulting consequences to any
persons, including, but not limited to, employees of
the Company (or any of its predecessors), to any
mineral, chemical or industrial product, raw
material intermediate, by-product or waste, or
substance created, generated, processed, handled or
originating at a facility at which the Company (or
any of its predecessors) conducted business on or
prior to the Closing Date or otherwise used by the
Company (or any of its predecessors) in the conduct
of its business;
(vi) any violations by the Company (or any of its
predecessors) occurring on or prior to the Closing
Date of federal, state or local (A) environmental
laws, or (B) occupational or employee health and
safety laws;
(vii) any and all actions, failures to act and negligence
in monitoring, maintaining and upkeep of on-site
storage, treatment and disposal facilities on or
prior to the Closing Date;
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<PAGE> 36
(viii) any misuse, removal, failure to properly maintain
and/or monitor storage tanks on or prior to the
Closing Date; or
(ix) any violations, fees, obligations or failures to
comply with any and all environmental permit
requirements on or prior to the Closing Date.
7.2 INDEMNIFICATION BY PURCHASER
(a) General - Subject to Section 7.4 hereof, Purchaser covenants
and agrees to defend, indemnify and hold each Vendor harmless
for, from and against any and all damages, losses, liabilities
(absolute and contingent), fines, penalties, costs and
expenses (including, without limitation, reasonable counsel
fees and costs and expenses incurred in the investigation,
defense or settlement of any claim covered by this indemnity)
with respect to or arising out of any demand, claim, inquiry,
investigation, proceeding, action and/or cause of action that
any Vendor may suffer or incur by reason of: (a) the
inaccuracy of any of the representations or warranties of
Purchaser contained in this Agreement, or any of the
agreements, certificates, documents, exhibits or schedules
delivered by Purchaser in connection with this Agreement; and
(b) the failure to comply with, the breach or the default by
Purchaser of any of the covenants, warranties or agreements
made by Purchaser in this Agreement, or any of the agreements,
certificates, documents, exhibits or schedules delivered by
Purchaser in connection with this Agreement.
(b) Environmental - Subject to Section 7.4 hereof, Purchaser
covenants and agrees to defend, indemnify and hold each Vendor
harmless for, from and against any and all damages, losses,
liabilities (absolute and contingent), fines, penalties, costs
and expenses (including, without limitation, reasonable
counsel fees and costs and expenses incurred in the
investigation, defense or settlement of any claim covered by
this indemnity) with respect to or arising out of any demand,
claim, inquiry, investigation, proceeding, action or cause of
action brought by any governmental agency or instrumentality
or any Person other than Vendors which any Vendor may suffer
or incur by reason of:
(i) any generation, transportation, storage, treatment
or disposal of industrial, toxic or hazardous
substances or solid or hazardous wastes occurring
after the Closing Date including, without
limitation, any waste or other disposal activities
or discharges that occur after the Closing Date at a
facility on which any portion of the business of the
Company is conducted, any waste or other disposal
activities or discharges that occur after the
Closing Date off of any such facility with regard to
wastes and other substances generated after the
Closing Date on such facility, and any waste or
other disposal activities or discharges that occur
after the Closing Date on real estate owned or
leased by the Company, at any time
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<PAGE> 37
after the Closing Date whether or not the Company
owns or leases such real estate at the time such
waste or other disposal activities or discharges are
engaged in, and whether or not the Company performs
such waste or other disposal activities or
discharges;
(ii) any spills, discharges, leaks, emissions,
injections, escapes, dumping, or any releases as
defined now or in the future under the Comprehensive
Environmental Response, Compensation, and Liability
Act of 1980, P.L. 96-510, as amended or reauthorized
from time to time, or any other similar federal,
state or local laws, statutes, rules or regulations
occurring after the Closing Date, including, but not
limited to, both those releases or incidents
involving environmental contamination which require
notification or reporting to appropriate federal,
state or local officials or agencies, or clean-up or
remedial activities and those releases or incidents
which occurred prior to the effective date of any
requirements imposing such notification or
reporting obligations or clean-up or remedial
activities, but which would have been subject to
such obligations if they had occurred subsequent
to the effective date of such requirements;
(iii) any discharges to surface waters or groundwaters
occurring after the Closing Date;
(iv) any air emissions occurring after the Closing Date;
(v) the exposure after the Closing Date of and resulting
consequences to any persons, including, but not
limited to, employees of Purchaser to any mineral,
chemical or industrial product, raw material
intermediate, by-product or waste, or substance
created, generated, processed, handled or originated
after the Closing Date at a facility at which
Purchaser, or the Company conducts business after
the Closing Date or otherwise used after the Closing
Date by Purchaser or the Company in the conduct of
its business or contained in or constituting a part
of merchandise which is sold by Purchaser or the
Company after the Closing Date;
(vi) any violations by Purchaser or the Company occurring
after the Closing Date of federal, state or local
(A) Environmental Laws, or (B) occupational or
employee health and safety laws;
(vii) any and all actions, failures to act and negligence
in monitoring, maintaining and upkeep of on-site
storage, treatment and disposal facilities after the
Closing Date;
37
<PAGE> 38
(viii) any misuse, removal, failure to properly maintain
and/or monitor storage tanks after the Closing Date;
and
(ix) any violations, fees, obligations or failure to
comply with any and all environmental permit
requirements after Closing Date.
7.3 NOTICE AND RIGHT TO DEFEND THIRD-PARTY CLAIMS - Promptly upon receipt of
notice of any claim, demand or assessment or the commencement of any suit,
action or proceeding with respect to which indemnity may be sought pursuant to
this Agreement, the party seeking to be indemnified or held harmless (the
"Indemnitee") shall notify in writing, if possible, within sufficient time to
respond to such claim or answer or otherwise plead in such action (but in any
event within thirty (30) days), the party from whom indemnification is sought
(the "Indemnitor"). In case any claim, demand or assessment shall be asserted,
or suit, action or proceeding commenced against the Indemnitee, the Indemnitor
shall be entitled, at the Indemnitor's expense, to participate therein, and, to
the extent that it may wish, to assume the defense, conduct or settlement
thereof, at its own expense, with counsel satisfactory to the Indemnitee, whose
consent to the selection of counsel shall not be unreasonably withheld or
delayed, provided that the Indemnitor confirms to the Indemnitee that it is a
claim to which Indemnitee's rights of indemnification apply. The Indemnitor
shall have the right to settle or compromise monetary claims; however, as to any
other claim, the Indemnitor shall first obtain the prior written consent from
the Indemnitee, which consent shall be exercised in the sole discretion of the
Indemnitee. After notice from the Indemnitor to the Indemnitee of Indemnitor's
intent so to assume the defense, conduct, settlement or compromise of such
action, the Indemnitor shall not be liable to the Indemnitee for any legal or
other expenses (including, without limitation, settlement costs) subsequently
incurred by the Indemnitee in connection with the defense, conduct, settlement
or compromise of such action while the Indemnitor is diligently defending,
conducting, settling or compromising such action. The Indemnitor shall be
afforded at least thirty (30) days, at its sole cost and expense, to resist,
defend and compromise any claim for which indemnification is sought. The
Indemnitor shall keep the Indemnitee promptly apprised of the status of the
suit, action or proceeding and shall make Indemnitor's counsel available to the
Indemnitee, at the Indemnitor's expense, upon the request of the Indemnitee. The
Indemnitee shall reasonably cooperate with the Indemnitor in connection with any
such claim and shall make personnel, books and records and other information
relevant to the claim available to the Indemnitor during normal business hours
to the extent that such personnel, books and records and other information are
in the possession and/or control of the Indemnitee. If the Indemnitor decides
not to participate, the Indemnitee shall be entitled, at the Indemnitor's
expense, to defend, conduct, settle and/or compromise such matter with counsel
satisfactory to the Indemnitor, whose consent to the selection of counsel shall
not be unreasonably withheld or delayed.
7.4 SURVIVAL OF OBLIGATIONS - The liability of Vendors and Purchaser for
indemnification pursuant to this Article 7 shall (i) survive until terminated by
the applicable statute of limitations as to matters relating to: (a) ownership
and title to any of the assets of the Company; (b) ownership and title to the
capital stock of the Company; (c) competency to execute and deliver documents to
effect the transactions contemplated thereby and hereby, and the legal, binding
and
38
<PAGE> 39
enforceable nature thereof and hereof; (d) the environment; and (e) taxes; (ii)
expire three (3) years from the Closing Date with respect to claims not made
prior thereto relating to any price or reimbursement adjustment under any
contract or arrangement with the United States Government, any state government,
or any insurer or healthcare provider organization involving any liability,
claim and/or fraud with respect to billings or reimbursement under either
Medicare or Medicaid for services provided by the Company prior to the Closing
Date (collectively, a "Third Party Claim"); and (iii) expire two (2) years from
the Closing Date with respect to claims not made prior thereto relating to all
other matters not referenced in this Section 7.4. This Section in no way limits
any claims that an Indemnitee may have against an Indemnitor for fraud or for
the breach of any direct covenant made by the Indemnitor to the Indemnitee
contained in this Agreement or the other agreements delivered in connection
therewith.
7.5 INDEMNIFICATION THRESHOLD FOR THIRD PARTY CLAIMS - Purchaser shall not be
entitled to indemnification pursuant to this Agreement with respect to any Third
Party Claim (as defined in Section 7.4 hereof) until the total amount for which
Purchaser shall be entitled to such indemnification including any
indemnification owing to Purchaser arising from Third Party Claims against any
one or more of the other Southwest Companies,exceeds Fifty Thousand Dollars
($50,000) in the aggregate; provided, however, that once such amount exceeds
Fifty Thousand Dollars ($50,000), then in that event, Purchaser shall be
entitled to indemnification for the total amount for which indemnification may
be owing, less the first Fifty Thousand Dollars ($50,000). Such indemnification
threshold will be increased in an amount equal to the amount by which the
Closing Accounts Receivable actually collected by the Southwest Companies during
the Collection Period exceeds the Target Accounts Receivable. Nothing contained
in this Section 7.5 shall in any manner constitute or be deemed to limit any
claim by Purchaser arising out of a claim of fraud.
ARTICLE 8
TERMINATION
8.1 RIGHT TO TERMINATE - Notwithstanding anything to the contrary contained
herein, this Agreement and the transactions contemplated hereby may be
terminated at any time prior to the Closing: (a) by Purchaser if the conditions
precedent set forth in Section 4.1 are not satisfied or waived in writing by
Purchaser; or (b) by Vendors if the conditions precedent set forth in Section
4.2 are not satisfied or waived in writing by Vendors. In addition, this
Agreement shall terminate if the Closing has not occurred by April 15, 1997,
unless extended by written agreement of the Parties hereto.
39
<PAGE> 40
ARTICLE 9
GENERAL
9.1 DISCLOSURE SCHEDULES - The Schedules referred to in Section 3.1 and Section
3.2 of this Agreement reflect information supplied to Purchaser and Vendors,
respectively, in the course of their investigation of the Company and Purchaser,
respectively. Vendors may supplement or amend any Schedule from time to time
prior to or at the Closing, by notice in accordance with the terms of this
Agreement, including by delivering one or more supplements or amendments to
correct any matter which would constitute a breach of any representation or
warranty contained herein. All references to any Schedule hereto which is
supplemented or amended as provided in this Section 9.1 shall, for all purposes,
whether or not the transactions contemplated hereby occur, be deemed to be a
reference to such Schedule as so supplemented or amended.
9.2 PUBLIC NOTICES - All public notices to third parties and all other publicity
concerning the transactions contemplated by this Agreement shall be jointly
planned and coordinated by the Vendors and the Purchaser and no Party shall act
unilaterally in this regard without the prior approval of the Vendors and the
Purchaser or the other of them.
9.3 EXPENSES - The expenses incurred by each party hereto in connection with
this Agreement and the transactions provided herein shall be borne by such
party. Notwithstanding the foregoing, all professional fees incurred by the
Vendors in connection with the transactions contemplated by this Agreement shall
be borne by the Vendors and all expenses incurred in connection with the
preparation of any environmental reports after the date of execution of this
Agreement with respect to the real property owned or leased by the Company shall
be borne by the Purchaser (which reports shall remain the property of the
Purchaser following the Closing).
9.4 TIME - Time shall be of the essence hereof.
9.5 NOTICES - Any notice, direction or other document required or permitted to
be given hereunder or for the purposes hereof (hereinafter in this Section 9.5
called a "notice") to any Party shall be in writing and shall be sufficiently
given if delivered personally, or if sent by prepaid registered mail or if
transmitted by telex, facsimile or other form of recorded communication tested
prior to transmission to such Party:
(a) in the case of a notice to the Vendors to:
Robert E. Ramsey, Jr.
222 Main Street East
Mesa, Arizona 85201
40
<PAGE> 41
with a copy to the Vendors' Counsel at
Gallagher & Kennedy, P.A.
2600 North Central Avenue
Phoenix, AZ 85004-3020
Attention: Terence W. Thompson, Esq.
with a facsimile number of (602) 257-9459.
(b) in the case of a notice to the Purchaser at
8401 E. Indian School Road
Scottsdale, Arizona 85251
Attention: Warren S. Rustand
with a facsimile number of (602) 481-3328
with a copy to Purchaser's Counsel at
O'Connor Cavanagh Anderson
Killingsworth & Beshears, P.A.
One E. Camelback Road, Suite 1100
Phoenix, Arizona 85012
Attention: John B. Furman, Esq.
with a facsimile number of (602) 263-2900
or at such other address as the Party to whom such writing is to be given shall
have last notified the Party giving the same in the manner provided in this
section. Any notice delivered in person to the Party to whom it is addressed as
hereinbefore provided shall be deemed to have been given and received on the day
it is so delivered at such address, provided that if such day is not a Business
Day then the notice shall be deemed to have been given and received on the first
Business Day next following such day. Any notice mailed as aforesaid shall be
deemed to have been given and received on the seventh Business Day following the
date of its mailing. Any notice transmitted by telex, facsimile or other form of
recorded communication shall be deemed given and received on the Business Day of
its transmission.
9.6 ASSIGNMENT - Neither this Agreement nor any rights or obligations hereunder
shall be assignable by any Party without the prior written consent of the other
Party hereto; provided, however, that the Vendors shall be entitled to assign
their rights to receive payments hereunder (or under any related documents) to
any person without the consent of the Purchaser. Subject thereto, this Agreement
shall enure to the benefit of and be binding upon the Parties and their
respective heirs, executors, administrators and successors (including any
successor by reason of amalgamation of the Purchaser) and permitted assigns.
9.7 FURTHER ASSURANCES - The Parties hereto shall with reasonable diligence do
all such things and provide all such reasonable assurances as may be required to
consummate the
41
<PAGE> 42
transactions contemplated hereby, and each Party shall provide such further
documents or instruments required by any other Party as may be reasonably
necessary or desirable to effect the purpose of this Agreement and carry out its
provisions, whether before or after the Closing.
9.8 SEVERABILITY - If any covenant or provision of this Agreement (other than
the provisions pertaining to payments to be made to the Vendors) is prohibited
in whole or in part in any jurisdiction, such covenant or provision shall, as to
such jurisdiction, be ineffective to the extent of such prohibition without
invalidating the remaining covenants and provisions hereof and shall, as to such
jurisdiction, be deemed to be severed from this Agreement to the extent of such
prohibition.
9.9 COUNTERPARTS - This Agreement may be executed by the Parties in separate
counterparts (and by facsimile transmission) each of which when so executed and
transmitted or delivered shall be an original, but all such counterparts shall
together constitute one and the same instrument.
9.10 MEDIATION AND ARBITRATION - Any dispute, controversy or claim (including
without limitation tort claims, requests for provisional remedies or other
interim relief, and issues as to the arbitrability of any matter) arising out of
or relating to this Agreement, or breach thereof, (a) shall be settled by
negotiation at a meeting between the Vendors and the chief executive officer of
the Purchaser held in Phoenix, Arizona within 5 days after notice given by any
party hereto to the other parties hereto, and (b) if within that 5 day period
settlement cannot be achieved through negotiation, it shall be settled (i)
first, by the parties trying in good faith to settle the dispute by mediation
under the Commercial Mediation Rules of the American Arbitration Association
("AAA") (such mediation session to be held in Phoenix, Arizona and to commence
with 10 days of the appointment of the mediator by the AAA), and (ii) if the
controversy, claim or dispute cannot be settled by mediation, then by
arbitration administered by the AAA under its Commercial Arbitration Rules and
in accordance with its expedited hearing procedures (such arbitration to be held
in Phoenix, Arizona before a single arbitrator by the AAA), and judgment on the
award rendered by the arbitrator may be entered in any court having jurisdiction
thereof.
9.11 ATTORNEYS' FEES - If any action is necessary to enforce the terms of this
Agreement, the prevailing party shall be entitled to recover from the other
party all costs, expenses and fees incurred by the prevailing party (including
reasonable attorneys' fees, costs and disbursements) in addition to other relief
to which the prevailing party may be entitled.
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<PAGE> 43
IN WITNESS WHEREOF, the Parties have set their hand this 25th day of
February, 1997 through our trust in God and our service to others. . . . for
life.
Rural/Metro Corporation, a Delaware corporation
By:
----------------------------------------
James H. Bolin, President
----------------------------------------
Robert E. Ramsey, Jr., individually
43
<PAGE> 44
CONSENT OF SPOUSE
The undersigned spouse of Robert E. Ramsey, Jr., who is a
party to the above Agreement of Purchase and Sale, pertaining to the sale of the
stock of Southwest Ambulance of Casa Grande, Inc., an Arizona corporation (the
"Agreement"), hereby declares, contemporaneously with the execution of the
Agreement, that she has read the Agreement in its entirety, and being fully
convinced of the wisdom and equity of the terms of the Agreement, and in
consideration of the premises and of the provisions of the Agreement, hereby
expresses her consent to the execution and consummation of the Agreement by
Robert E. Ramsey, Jr.
The undersigned further agrees that in the event of the death
of Robert E. Ramsey, Jr., the dissolution of their marriage, or any occurrence
contemplated by the Agreement that gives rise to any liability or obligation of
Robert E. Ramsey, Jr., the provisions of the Agreement shall be binding upon her
to the extent of any community property she may now have or hereafter acquire,
and any and all separate property that she may hereafter possess which arises
(directly or indirectly) from any consideration given to Robert E. Ramsey, Jr.
pursuant to the Agreement or any agreement executed in connection thereto.
The undersigned further agrees that she will, at any and all
times, make, execute and deliver such instruments and documents as may be
reasonably necessary to carry out the provisions of the Agreement, provided that
no such documents require the incurring of any liabilities in excess of that
already provided in the Agreement.
Dated this 25th day of February, 1997.
------------------------------------
Virginia (Jenny) L. Norton
44
<PAGE> 45
APPENDIX J
(i) All real property leased by the Company
from NRM Properties, Inc. or Chaparral Properties, Inc. (the "Leased
Properties") is set forth in Schedule "J" and is zoned as set forth on Schedule
"J", pursuant to the ordinances of the applicable cities, towns, villages or
townships identified on such Schedule "J", and is not located in an area that
has been identified by the Secretary of Housing and Urban Development as an area
of special flood hazard. The uses to which such real property are presently put
do not violate or conflict with the applicable provisions of such zoning
ordinances, or other zoning laws of such cities, towns, villages or townships or
any other governmental body.
(ii) The Company does not sublease any of
its Leased Properties. The Company does not lease any of its owned real
property.
(iii) Neither the Company nor any Vendor,
nor any one or more of them, has retained or engaged any real estate broker,
commission agent or other person who is or may be entitled to payment of a
commission or finder's fee or other compensation in connection with any of the
Leased Properties.
(iv) As to the Leased Properties, the
present use and operation of the real property is authorized by and in
compliance with all applicable building, fire, health, labor and safety laws,
ordinances, rules and regulations applicable to the real property, including,
without limitation, OSHA, and the Americans with Disabilities Act, and there is
no litigation, action, proceeding or any present plan or study by any
governmental authority or any private person or entity which in any way would
affect the present use and operation of the real property. There are in
existence all licenses, permits and approvals that are required for the use and
operation of the Leased Properties, and no Vendor has any reason to believe that
any of the same are in jeopardy of being revoked or not being reissued upon
expiration.
(v) No Vendor has any knowledge of any fact
or condition existing which would result or could result in the termination or
reduction of the current access from the Leased Properties to existing public
roads and highways, or of any reduction in sewer or other utility services
presently serving the Leased Properties. Leased Properties have direct access to
dedicated roads and highways and all utility services to the Leased Properties
are furnished through dedicated or perpetual easements.
(vi) As to the Leased Properties, no Vendor
has received notice from any insurance company of any defects or inadequacies in
such real property or any part thereof which would materially and adversely
affect the insurability of the real property or the premiums for the insurance
thereof.
(vii) As to the Leased Properties, no Vendor
has failed to disclose any material conditions of disrepair or other adverse
conditions or defects with respect to such
Appendix J-1
<PAGE> 46
real property or any portion thereof of which that Vendor has knowledge or
which, with the exercise of reasonable diligence, that Vendor should have known.
(viii) As to the Leased Properties, no
Vendor has any knowledge of any planned public improvement which might result in
a special assessment levied against such real property. If any Vendor becomes
aware of any of the foregoing (whether arising before or after the date hereof)
after the date hereof, but prior to Closing, that Vendor shall give prompt
written notice thereof to Purchaser prior to Closing.
Appendix J-2
<PAGE> 47
APPENDIX 4.1(j)
FORM OF INVESTMENT AGREEMENT
See attached.
<PAGE> 48
AMENDMENT TO AGREEMENT OF PURCHASE AND SALE
WHEREAS, RURAL/METRO CORPORATION, a Delaware corporation ("Purchaser"), and
ROBERT E. RAMSEY, JR., an individual, ("Vendor"), signed that certain Agreement
of Purchase and Sale, made as of February 25, 1997 (the "Agreement"), with
respect to the purchase of all the issued and outstanding shares of the stock of
SOUTHWEST AMBULANCE OF CASA GRANDE, INC., an Arizona corporation (the
"Company").
WHEREAS, Purchaser and Vendor desire to extend the Closing Date (as defined in
the Agreement), and amend the Agreement as set forth in this Amendment.
NOW, THEREFORE, in consideration of the premises and the mutual agreements and
covenants herein contained (the adequacy of which consideration as to each of
the parties hereto is hereby mutually admitted), the parties hereto hereby amend
the Agreement as follows:
1. Section 1.1(e) of the Agreement is hereby modified to read as
follows:
"Closing Date" means the earlier of May 30, 1997 or
five (5) business days following the satisfaction or
waiver of all conditions precedent to the
transactions contemplated by this Agreement, or such
other date as the Parties may mutually agree in
writing;"
2. The last sentence of Section 8.1 of the Agreement is hereby amended
to read as follows:
"In addition, this Agreement shall terminate if the
Closing has not occurred by May 30, 1997, unless
extended by written agreement of the Parties hereto."
3. This Amendment shall constitute a written extension as contemplated
by the original Section 8.1 of the Agreement.
4. The terms and conditions set forth in the letter agreement, dated
April 15, 1997, by and among Purchaser, Bob Ramsey and Barry Landon, Trustee for
the Southwest ESOP, a copy of which letter agreement is attached hereto as
Exhibit A, shall constitute amendments and supplemental provisions to the
Agreement, as applicable.
<PAGE> 49
5. This Amendment may be executed by the parties hereto in separate
counterparts (and by facsimile transmission) each of which when so executed and
transmitted or delivered shall be an original, but all such counterparts shall
together constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have set their hand as of the
15th day of April, 1997, through our trust in God and our service to others ...
for life.
RURAL/METRO CORPORATION, a
Delaware corporation
By: /s/ James H. Bolin
------------------------------------
James H. Bolin, President
/s/ Robert E. Ramsey, Jr.
---------------------------------------
Robert E. Ramsey, Jr., individually
I HEREBY CONSENT TO THE TERMS
OF THIS AMENDMENT as of the 15th day
of April, 1997:
/s/ Virginia (Jenny) L. Norton
- -------------------------------
Virginia (Jenny) L. Norton
2
<PAGE> 50
EXHIBIT A
April 15, 1997
James H. Bolin, President
Rural/Metro Corporation
8401 E. Indian School Road
Scottsdale, Arizona 85251
Dear Jim:
In response to our phone conversation in which we discussed the
extension of the Agreement of Purchase and Sale between Rural/Metro and SW
General, Inc., Southwest Ambulance of Casa Grande, Inc., Medical Emergency
Devices and Services (MEDS), Inc. and Southwest General Services, Inc., I am
asking for your acknowledgement of the following clarifications:
1. SW General, Inc. shall, effective May 1, 1997, enter into a lease for the
3.5 acres of land adjacent to our facility at 617 W. Main. This land has been
used by Southwest since last year without any rental fees being paid. The need
for a new lease was disclosed during the due diligence process and will be
added to the Book of Schedules under Schedule "J".
2. The original "Normalization Work Sheet" which was presented to you in
January of this year was omitted from the Schedules. The Normalization Work
Sheet will be added to the Book of Schedules under Section "H".
Additionally, Rural Metro, as presented in the Normalization Worksheet, has
acknowledged the annual draws/management fees paid to Bob Ramsey associated
with the ownership of the "S" corporations and SW General, Inc. These draws/
management fees shall continue in practice until the closing of the Agreements
at which time they shall cease and the start up of the Ramsey employment
contract shall take effect.
3. Prior to 12/31/96 the equity of Southwest Ambulance of Casa Grande, Inc. and
MEDS were drawn out by Bob Ramsey and loaned back to the corporations as
represented by the "Notes Payable" in Schedules "A" & "C", on the respective
balance sheets of the corporations. Subsequent to 1/1/97, Bob Ramsey has drawn
the
<PAGE> 51
equity out of Southwest General Services, Inc. The equity and all state and
federal taxes have been met by these transactions.
4. From the time period from January 1, 1997 through the date of closing all
profits of the identified "S" corporations are passed on to SW General, Inc.
through a management fee resulting in a zero equity position. This action is
reflected in the financial statements of February and March, 1997 as
represented to Rural/Metro through the due diligence process. (See Schedule "A")
5. As identified in Section 5.1(b)(ii) of the Agreement, Southwest shall, prior
to close and during the normal course of business, expense such items as
management fees, annual bonus', required capital expenditures (except the two
new ambulances previously identified by SW) and miscellaneous expenses which
shall be acceptable to Rural/Metro so long as the $2,045,000 of this section is
maintained per the Agreement.
6. Two new ambulances which were previously disclosed must be funded at this
time. This expenditure, as invoiced, shall not be utilized in the debt
formulas identified in the warranties with the original Purchase and Sale
Agreement.
7. Rural/Metro acknowledges that Ramsey may exceed the $2,045,000 as identified
in section 5 above, for the purpose of purchasing the ownership interests of
William Kordsiemon in MOROKO, Inc. Utilization of these funds in excess of the
$2,045,000 will be deducted from the MEDS purchase transaction.
8. Rural/Metro re-clarifies the understanding as to Bob Ramsey's position,
responsibility and reporting structure as follows:
- Bob Ramsey will serve as President and CEO of Southwest companies
with direct management authority over the Arizona ambulance
operations of Rural/Metro except where the fire department personnel
directly operates the ambulance unit. In this capacity he shall
report directly to Bob Edwards or to Warren Rustand and not to any
Regional President.
- Bob Ramsey agrees to serve as a member of the Board of Directors of
Rural/Metro Corporation.
- Bob Ramsey will serve in a senior executive position as a
vice-president of Rural/Metro (reference: Employment Agreement and
Letter of Intent) reporting to the office of the CEO under the
direction of Warren Rustand.
<PAGE> 52
(See also the Letter of Intent dated January 31, 1997 and the Agreements
of Purchase and Sale dated February 25, 1997 as referenced herein and
exhibited in Schedule "C" of the Agreement.)
As agreed, the closing date will be extended to Friday, May 30, 1997.
Additionally, before implementation, I would like to initially meet with
Warren, Bob and yourself to review the initial and mid-term efficiencies
created by the acquisition and merging of the entities.
this letter of agreement and extension, as signed by the parties below,
shall be incorporated into the Agreement.
ACKNOWLEDGED AND ACCEPTED AS OF THE DATE FIRST WRITTEN ABOVE.
RURAL/METRO CORPORATION
/s/ Bob Ramsey /s/ James Bolin
- ------------------------------ By: --------------------------
Bob Ramsey James Bolin
Its: President
/s/ Barry Landon
- ------------------------------
Barry Landon
Trustee for the Southwest ESOP
cc: Warren Rustand
<PAGE> 53
SECOND AMENDMENT TO AGREEMENT OF PURCHASE AND SALE
WHEREAS, RURAL/METRO CORPORATION, a Delaware corporation ("Purchaser"), and
ROBERT E. RAMSEY, JR., an individual, ("Vendor"), signed that certain Agreement
of Purchase and Sale, made as of February 25, 1997, and that certain Amendment
to Agreement of Purchase and Sale, made as of April 15, 1997 (together, the
"Agreement"), with respect to the purchase of all the issued and outstanding
shares of the stock of SOUTHWEST AMBULANCE OF CASA GRANDE, INC., an Arizona
corporation (the "Company"). All defined terms used herein but not otherwise
defined shall have the meaning set forth in the Agreement.
WHEREAS, Purchaser and Vendor desire to extend the Closing Date (as defined in
the Agreement), and amend the Agreement as set forth in this Second Amendment.
NOW, THEREFORE, in consideration of the premises and the mutual agreements and
covenants herein contained (the adequacy of which consideration as to each of
the parties hereto is hereby mutually admitted), the parties hereto hereby amend
the Agreement as follows:
1. Section 1.1(e) of the Agreement is hereby modified to read as
follows:
"Closing Date" means the earlier of July 31, 1997 or
five (5) business days following the satisfaction or
waiver of all conditions precedent to the
transactions contemplated by this Agreement, or such
other date as the Parties may mutually agree in
writing;"
2. The last sentence of Section 8.1 of the Agreement is hereby amended
to read as follows:
"In addition, this Agreement shall terminate if the
Closing has not occurred by July 31, 1997, unless
extended by written agreement of the Parties hereto."
3. This Second Amendment shall constitute a written extension as
contemplated by the original Section 8.1 of the Agreement.
4. The terms and conditions set forth in the letter agreement, dated
May 30, 1997, by and among Purchaser, Bob Ramsey and Barry Landon, Trustee for
the Southwest ESOP, a copy of which letter agreement is attached hereto as
Exhibit A (the "Letter Agreement"), shall constitute amendments and supplemental
provisions to the Agreement,
<PAGE> 54
as applicable, subject to the following: Paragraph 5 of the Letter Agreement
shall be interpreted as a $277,000 indemnification threshold with respect to
claims other than Third Party Claims, in the same manner as the $50,000
indemnification threshold for Third Party Claims in Section 7.5 of the Agreement
of Purchase and Sale regarding SW General, Inc., and the $277,000
indemnification threshold shall be an aggregate threshold against the liability
of the Vendor for indemnification arising from any of the Agreements of Purchase
and Sale pertaining to the Southwest Companies.
5. The Vendor represents and warrants that the Company is and shall be
at the Closing a valid S-Corporation as defined in Section 1361 of the Code.
6. This Second Amendment may be executed by the parties hereto in
separate counterparts (and by facsimile transmission) each of which when so
executed and transmitted or delivered shall be an original, but all such
counterparts shall together constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have set their hand as of the
30th day of May, 1997, through our trust in God and our service to others ...
for life.
RURAL/METRO CORPORATION, a
Delaware corporation
By: /s/ James H. Bolin
____________________________________
James H. Bolin, President
/s/ Robert E. Ramsey, Jr.
_______________________________________
Robert E. Ramsey, Jr., individually
I HEREBY CONSENT TO THE TERMS
OF THIS SECOND AMENDMENT as of
the 30th day of May, 1997:
/s/ Virginia (Jenny) L. Norton
_______________________________
Virginia (Jenny) L. Norton
2
<PAGE> 55
[SOUTHWEST AMBULANCE LETTERHEAD]
May 30, 1997
James Bolin, President
Rural/Metro Corporation
8401 E. Indian School Road
Scottsdale, Arizona 85251
Dear Jim:
We have again reached the threshold where an agreement to extend the Agreement
of Purchase and Sale between Rural/Metro Corporation and SW General, Inc.,
Southwest Ambulance of Casa Grande, Inc., Medical Emergency Devices and
Services (MEDS), Inc. and Southwest General Services, Inc. (collectively the
"Purchase Agreements") is required. The original "Closing Date" was April 15,
1997 and the first extension reset the Closing Date for May 30, 1997. Because
of the lengthy delay in closing, caused by the FTC approval process, many
actions and transactions have taken place, which under normal time constraints,
would not need to be addressed. However, We feel that some of the issues should
be acknowledged and signed off on by both parties.
Jim- I think you will find that we have discussed these items previously and
have mutually concurred. The clarification items are:
1. The Parties reaffirm and extend through July 31, 1997 the items clarified
in the prior extension letter dated and attested to on April 15, 1997.
2. The stock purchase price value for Rural/Metro stock shall be supported by
a twelve month average daily stock valuation equal to $33.00 per share.
Rural/Metro has provided an eleven month summary which equates to a daily per
share value of $33.90. The parties agree, that should for any reason, the
twelve month average drop below the established $33.00 value that an adjustment
shall be made to match the twelve month average.
3. The Agreement of Purchase and Sale "Schedules" shall include the Department
of Health Services White Paper presented by Rural/Metro and Southwest, the
judges findings of fact and conclusion of law with recommended decision, and
the Directors final decision and order.
<PAGE> 56
4. Southwest had previously identified six new ambulances which had been
purchased and excluded from the Vendors debt covenants. Subsequently,
Rural/Metro needed to purchase four of the units for their San Diego contract.
Southwest is in the process of financing the remaining two units over a 36 month
period with said units to continue to be excluded from the Vendors debt
covenants. Additionally, six new units are on order by Southwest to fulfill our
service requirements. The six units are also excluded from any Vendor
covenants/warranties of the Purchase Agreements between the parties.
5. Reduction of term debt for the extended three month period of April-May-June
which is estimated to be $277,000 shall be applied to offset against any
warranty conditions of the Vendors pursuant to the Purchase Agreements.
6. Article 9-Section 9.3 (Expenses) of the Agreement of Purchase and Sale
dated February 25, 1997 previously stipulated that "expenses incurred by each
party hereto in connection with this Agreement and the transactions provided
herein shall be borne by such party. Notwithstanding the foregoing, all
professional fees incurred by the Vendors in connection with the transactions
contemplated by this Agreement shall be borne by the Vendors and all expenses
incurred in connection with the preparation of any environmental reports after
the date of execution of this Agreement with respect to the real property owned
or leased by the Company shall be borne by the Purchaser."
Article 9-Section 9.3 is hereby amended as follows: "Notwithstanding the
foregoing, all professional and legal fees incurred by the Vendors prior to the
original selected Close Date of March 15, 1997 shall be borne by the Vendors
and all professional and legal fees incurred by Vendors after the original
selected Close Date, up to a maximum amount of $25,000.00, shall be borne by
the Southwest Companies. Additionally, all legal fees of Patrick McGroder shall
be paid by the Southwest Companies."
7. As identified in Section 5.1(b)(ii) of the Agreement, Southwest shall,
prior to close and during the normal course of business, expense such items as
management fees, annual bonus', "S" Corps draws for the purpose of profits,
compensation and taxes, required capital expenditures (with the exception of
the previously identified eight ambulances) and miscellaneous expenses which
shall be acceptable to Rural/Metro so long as the $2,500,000 of this section is
maintained per the Agreement.
The previous identified borrowing limitation of $2,045,000 is hereby replaced
via this Letter of Agreement. This change is mandated by the additional credit
line pressures
<PAGE> 57
As mutually agreed, the closing date will be extended to July 31, 1997.
This letter of agreement, amendment and extension, as signed by the parties
below, shall be incorporated into the Agreements of Purchase and Sale dated
February 25, 1997.
ACKNOWLEDGED AND ACCEPTED AS OF THE DATE FIRST WRITTEN ABOVE.
RURAL/METRO CORPORATION
/s/ James Bolin
- ------------------------------ By: --------------------------
Bob Ramsey James Bolin
Witness and Trustee:
- ------------------------------
Barry Landon
(renw12doc)
<PAGE> 1
EXHIBIT 10.51
AGREEMENT OF PURCHASE AND SALE
THIS AGREEMENT OF PURCHASE AND SALE ("Agreement") is made as of this 25th
day of February, 1997
BETWEEN:
Rural/Metro Corporation, a Delaware corporation
("Purchaser")
-and-
Robert E. Ramsey, Jr., an individual ("Ramsey"),
Patrick McGroder, Barry Landon,
and Gary Ramsey
(collectively, the "Vendors"
and individually a "Vendor")
RECITALS:
WHEREAS, the Vendors own and control all the issued and outstanding shares
of the stock of Southwest General Services, Inc., an Arizona corporation (the
"Company");
AND WHEREAS, the Vendors desire to sell and the Purchaser desires to
purchase all of the said issued and outstanding shares of the stock of the
Company owned by the Vendors all upon and subject to the terms and conditions
hereinafter set forth;
NOW THEREFORE, in consideration of the premises and the mutual agreements
and covenants herein contained (the adequacy of which consideration as to each
of the parties hereto is hereby mutually admitted), the parties hereto hereby
covenant and agree as follows:
ARTICLE 1
DEFINITIONS AND PRINCIPLES OF INTERPRETATION
1.1 DEFINITIONS - Whenever used in this Agreement, unless there is something in
the subject matter or context inconsistent therewith, the following words and
terms shall have the respective meanings ascribed to them as follows:
(a) "Agreement" means this Agreement of Purchase and Sale and all
instruments supplemental hereto or in amendment or confirmation
hereof;
<PAGE> 2
(b) "Business" means the business presently carried on by the Company
consisting of the provision of emergency and non-emergency medical
transportation services and related billing and management services;
(c) "Business Day" means a day other than a Saturday, Sunday or any day on
which the principal commercial banks located in Phoenix, Arizona are
not open for business during normal banking hours;
(d) "Closing" means the completion of the sale to and purchase by the
Purchaser of the Purchased Shares hereunder by the transfer and
delivery of documents of title thereto and the payment of the purchase
price therefore as contemplated herein;
(e) "Closing Date" means the earlier of April 15, 1997 or five (5)
business days following the satisfaction or waiver of all conditions
precedent to this transaction, or such other date as the Parties may
mutually agree in writing;
(f) "Closing Time" means 10 o'clock a.m., Phoenix, Arizona local time, on
the Closing Date, or such other time on the Closing Date as the
Parties may agree;
(g) "Employment Agreement" means the employment agreement to be entered
into by and between Ramsey and Purchaser at the Closing, as
contemplated by the Agreement of Purchase and Sale of even date
herewith pertaining to SW General, Inc., an Arizona corporation.
(h) "Financial Statements" means the unaudited financial statements of the
Company, including a balance sheet as of December 31, 1996, and an
operating statement for the twelve (12) month period then ended;
copies of which are annexed as Schedule "A" hereto;
(i) "Parties" means, collectively, the Vendors and the Purchaser, and
"Party" means any one of them;
(j) "Person" means any individual, corporation, partnership, limited
liability company, trust or unincorporated association or similar
entity, and pronouns have a similarly extended meaning;
(k) "Purchase Price" means the purchase price to be paid by the Purchaser
to the Vendors for the Purchased Shares as provided in Section 2.1
hereof;
(l) "Purchased Shares" means all the issued and outstanding common shares
of the stock of the Company;
(m) "Southwest Companies" means, collectively, the Company, Southwest
Ambulance of Casa Grande, Inc., Medical Emergency Devices and Services
(MEDS), Inc., and SW General, Inc.
2
<PAGE> 3
Terms defined in the preamble, recitals and body of this Agreement shall have
the same meanings herein as are ascribed thereto in the preamble, recitals and
body.
1.2 GENDER AND NUMBER - Words importing the singular include the plural and vice
versa; words importing gender include all genders.
1.3 ENTIRE AGREEMENT - This Agreement, including the Schedules and Exhibits
hereto, together with the agreements, certificates, and other documents and
instruments to be delivered pursuant hereto, constitute the entire agreement
between the Parties pertaining to the subject matter hereof and supersede all
prior agreements, understandings, negotiations and discussions, whether oral or
written, of the Parties and there are no warranties, representations or other
agreements between the Parties in connection with the subject matter hereof
except as specifically set forth herein and therein.
1.4 WAIVERS, ETC. - No supplement, modification, waiver or termination of this
Agreement shall be binding unless executed in writing by the Party to be bound
thereby. No waiver of any of the provisions of this Agreement, in whole or in
part, shall be deemed or shall constitute a waiver of any other provisions
hereof (whether or not similar), nor shall such waiver constitute a continuing
waiver unless otherwise expressly provided.
1.5 OTHER WORDS AND PHRASES - In this Agreement, unless otherwise expressly
provided (i) the words "hereof", "herein", "hereto" and "hereunder" and words of
similar import refer to this Agreement as a whole and not to the particular
Article, Section, Subsection, paragraph or other subdivision, and (ii) all
references to designated "Articles", "Sections", "Subsections", "paragraphs" or
other subdivisions are to the designated Articles, Sections, Subsections,
paragraphs and other subdivisions of this Agreement.
1.6 HEADINGS - The Article and Section headings contained herein are included
solely for convenience of reference, are not intended to be full or accurate
descriptions of the content thereof and shall not be considered part of this
Agreement.
1.7 APPLICABLE LAW - This Agreement and the rights, obligations and relations of
the Parties shall be governed by and construed in accordance with the laws of
the State of Arizona and the federal laws of the United States applicable
therein.
1.8 ACCOUNTING TERMS - All accounting terms shall have the meanings ascribed to
them in accordance with generally accepted accounting principles consistently
applied, and all references to "generally accepted accounting principles" shall
be deemed to be, unless otherwise specified, reference to accounting principles
which are generally accepted in the United States.
1.9 SCHEDULES AND APPENDICES - The following are the schedules and appendices
attached to and incorporated in this Agreement by reference and deemed to be an
integral part hereof:
Schedule "A" - Financial Statements
Schedule "B" - Authorized and Issued Share Capital, Share Ownership, and
Purchase Price Allocation for each of the Vendors
3
<PAGE> 4
Schedule "C" - [Intentionally Omitted]
Schedule "D" - [Intentionally Omitted]
Schedule "E" - Operating Licenses
Schedule "F" - Undisclosed Liabilities, Guaranties and Indemnities
Schedule "G" - Absence of Changes
Schedule "H" - Unusual Transactions
Schedule "I" - Liens, Charges and Encumbrances
Schedule "J" - Real Property Leases and Owned Real Property
Schedule "K" - Vehicular Equipment Owned or Leased
Schedule "L" - Revenue Contracts
Schedule "M" - Contracts to Purchase Goods/Services
Schedule "N" - Employment Contracts, Collective Agreements, Pension or
Similar Plans, Unfair Labor Practice Complaints
Schedule "O" - Litigation
Schedule "P" - Employees over $40,000
Schedule "Q" - Insurance Policies
Schedule "R" - Intellectual Property
Schedule "S" - Third Party Approvals
Schedule "T" - Environmental Matters
Schedule "U" - Subsidiaries and Affiliates
Schedule "V" - Bank Accounts
Schedule "W" - Purchaser's Disclosure Schedule
Appendix "J" - Certain Real Estate Representations and Warranties
4
<PAGE> 5
ARTICLE 2
PURCHASE AND SALE
2.1 PURCHASE PRICE - At the Closing Time, the Vendors shall sell and the
Purchaser shall purchase the Purchased Shares for an aggregate purchase price of
Six Million, Five Hundred Thousand Dollars ($6,500,000), all of which shall be
paid in immediately available funds at the Closing. The cash consideration shall
be allocated amongst the Vendors as set forth in Schedule "B" hereto.
2.2 ACTION BY VENDORS AND PURCHASER AT THE CLOSING TIME -
(a) Delivery of Certificates by the Vendors, etc. - The Vendors shall
transfer and deliver to the Purchaser at the Closing stock
certificates representing all the Purchased Shares duly endorsed in
blank for transfer or accompanied by irrevocable stock transfer powers
of attorney duly executed in blank, in either case by the holders of
record thereof, free and clear of all liens, claims, rights, charges,
encumbrances and security interests of whatsoever kind and nature. The
Vendors shall take such steps as shall be necessary to cause the
Company to enter the Purchaser or its nominee upon the books of the
Company as the holder of the Purchased Shares and to issue one or more
share certificates to the Purchaser representing the Purchased Shares;
(b) Payment to Vendors - At the Closing, the Purchaser shall pay to the
Vendors the Purchase Price of Six Million, Five Hundred Thousand
Dollars ($6,500,000) by wire transfer according to the wire
instructions provided to the Purchaser by the Vendors prior to the
Closing.
(c) Delivery of Other Documents - The Vendors and Purchaser shall deliver
all such other documents at the Closing as contemplated herein.
2.3 [INTENTIONALLY OMITTED]
2.4 PLACE OF CLOSING - The Closing shall take place at the Closing Time at the
offices of O'Connor, Cavanagh, Anderson, Killingsworth & Beshears, P.A., One E.
Camelback Road, Suite 1100, Phoenix, Arizona or at such other place as may be
agreed upon by the Vendors and the Purchaser.
2.5 TAX TREATMENT - The acquisition of the Company shall be a purchase of stock
which is intended to be treated as a purchase of assets pursuant to an election
under Section 338(h)(10) of the Internal Revenue Code of 1986, as amended (the
"Code").
5
<PAGE> 6
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF VENDORS - To induce Purchaser to enter
into this Agreement and to perform its obligations hereunder, and with full
knowledge that Purchaser will rely thereon, the Vendors hereby represent and
warrant, jointly and severally, to the Purchaser the truth, accuracy and
completeness of the following:
(a) Enforceability of Obligations - This Agreement and each of the other
agreements referenced herein to which one or more Vendors is a party
have been duly executed and delivered by each of such Vendors, and
each of the Agreement and such other agreements constitutes a valid
and binding obligation of each of the Vendors enforceable against each
of them in accordance with its terms.
(b) Right to Sell - The Vendors:
(i) are the sole beneficial owners of the Purchased Shares
(which shares constitute all of the issued and outstanding
shares of the stock of the Company); and
(ii) are the holders of record of all the Purchased Shares (which
shares constitute all of the issued and outstanding shares
of the stock of the Company) and have good and marketable
title to, and rightful possession of, all of the Purchased
Shares free and clear of any liens, claims, rights, charges,
encumbrances, security interests of whatsoever kind and
nature or rights of others (other than the rights of the
Purchaser hereunder) and no Person (other than the Purchaser
hereunder) has any agreement, option or any rights capable
of becoming an agreement or option for the acquisition of
the Purchased Shares or any other shares in the Company.
(c) Licenses, Registrations and Compliance - The Company is registered,
licensed or otherwise qualified as a corporation to do business in
each jurisdiction in which the nature of its business or the property
owned or leased by it makes such registration, licensing or other
qualification necessary, and such registrations, licenses or
qualifications (as the case may be) are in good standing. The Company
is not in violation in any material respect of any applicable laws,
regulations, orders, rules, decrees, ordinances, licenses or operating
authorities. The licenses and operating authorities issued by federal,
state or local authorities to the Company, copies of which are
attached hereto as Schedule "E" (the "Operating Licenses"), comprise
all the material licenses, permits and operating authorities held in
respect of the Business. The Operating Licenses are all of the
material operating authorities necessary or reasonably required for
the carrying on of the Business as presently conducted and the
ownership and use of its assets, property, and premises. Except as
described in Schedule "E" and subject to applicable regulations and
policies of the Arizona Department of Health Services, the Operating
Licenses are not subject to review or notification and there is no
6
<PAGE> 7
litigation, arbitration or other proceeding pending or threatened
which would materially and adversely affect the use of the Operating
Licenses by the Business or which may result in the revocation,
cancellation, suspension or any materially adverse modification of any
of such Operating Licenses.
(d) Organization and Valid Existence - The Company is duly incorporated
and organized, validly existing and in good standing under the laws of
the State of Arizona, and has all necessary corporate power, authority
and capacity to own and lease its property and assets and to carry on
the Business as presently conducted by it. Each of the Vendors has the
full right, power, authority and capacity to execute and deliver this
Agreement and the other agreements referenced herein to which any such
Vendor is a party, to consummate the transactions contemplated hereby
and thereby, and to fully and timely perform its obligations hereunder
and thereunder.
(e) Capitalization - The authorized capital stock of the Company and the
total number of shares of the Company's capital stock presently issued
and outstanding are as set forth on Schedule "B". All issued and
outstanding common shares of the Company have been duly authorized and
validly issued, are fully paid and non-assessable, and are free of
pre-emptive rights.
(f) Financial Statements - Copies of the Financial Statements are each
true, complete and correct and have been prepared on an accrual basis
from the books and records of the Company, in accordance with
generally accepted accounting principles applied on a basis consistent
with that of the preceding periods. The Financial Statements each
fairly present in all material respects a true, accurate and complete
statement of the financial condition, assets, liabilities and results
of operations of the Company as of the dates and for the periods set
forth therein.
(g) Absence of Undisclosed Liabilities - Except as fully disclosed on
Schedule "F" hereto, the Company has no liabilities or obligations,
fixed or contingent, accrued or unaccrued that are not fully and
properly reflected, or adequately reserved against, on the December
31, 1996 balance sheet of the Company included in the Financial
Statements, excepting only those liabilities and obligations incurred
by the Company in the ordinary course of its business between the date
of such balance sheet and the Closing Date, none of which liabilities
is individually or are collectively material, incurred in violation of
this Agreement, or would require accrual and/or disclosure under
generally accepted accounting principles.
(h) Guaranties and Indemnities - Schedule "F" hereto contains a true,
complete and correct list of all contracts and agreements pursuant to
which the Company has guaranteed or indemnified any debt, liability or
obligation of any other person or entity, including, without
limitation, any Vendor (including, without limitation, the execution
of any document obligating the Company with respect to any performance
or other bond), or pursuant to which the Company has pledged or
otherwise encumbered any of its assets. Except as disclosed in
Schedule "F" hereto, the Company is not indebted to any Vendor, nor is
any Vendor indebted
7
<PAGE> 8
to the Company in any amount for any purpose. Except as disclosed in
Schedule "F" hereto, the Company has not agreed to give any guaranty
of indebtedness or other obligations of third parties or made any
other commitment by which the Company is, or is contingently,
responsible for such indebtedness or other obligation.
(i) Tax Matters - The Company has duly and timely filed all federal,
state, county and local income, franchise, capital, sales or use,
excise, fuel, escheatment, property or other tax returns, reports or
filings required by any law or regulation to be filed by it and has
duly paid all taxes, assessments and reassessments, and all other
taxes, duties, governmental charges, penalties, interest and fines due
and payable by it on or before the date hereof.
The federal, state, county and local income tax returns of the Company
provided to Purchaser are accurate in all respects.
There are no actions, suits, proceedings, inquiries, investigations or
claims of any nature or kind whatsoever now pending or, to the best
knowledge of Vendors, after due inquiry, threatened, against the
Company with respect to any such returns or reports, or any such
taxes, or any matters under discussion with any federal, state,
county, local or other authority relating to such taxes.
The Company has not received from any authority any assessment,
reassessment or notice of underpayment of any taxes or other penalty
or charges and no such notice is reasonably to be expected.
There is no misrepresentation that is attributable to wilful default
or fraud in tax returns of the Company previously filed.
No consents extending or waiving the time limited for reassessment of
any taxes, duties, governmental charges, penalties, interest or fines,
or any statutes of limitations related thereto have been filed with
respect to the Company for any fiscal year.
The Company has withheld from each payment made to any of its
officers, directors, former directors, and employees and former
employees the amount of all taxes and other deductions (including
without limitation, income taxes, unemployment, disability, and other
required taxes and contributions) required to be withheld and has paid
the same together with the employer's share of same, if any (to the
extent required to be paid so no such amount is past due), to the
proper tax or other receiving officers within the prescribed times and
has filed, in complete and accurate form, all information and other
returns required pursuant to any applicable legislation within the
prescribed times.
The provision made for current and deferred taxes included in the
Financial Statements is sufficient for the payment of all accrued and
unpaid federal, state, county and local income, franchise, capital,
sales or use, excise, fuel, escheatment, property or other taxes,
assessments and reassessments, duties, governmen-
8
<PAGE> 9
tal charges, penalties, interest and fines of, and payable by, the
Company, whether or not disputed, for the period ended the date
thereof and for all periods prior thereto.
(j) Absence of Changes - Except as disclosed on Schedule "G" hereto, since
December 31, 1996 there has not been:
(i) any change in the condition or operations of the business,
assets, financial condition, or otherwise of the Company
other than changes in the ordinary and normal course of
business, none of which has been materially adverse; or
(ii) any damage, destruction or loss, labor trouble or other
event, development or condition of any character (whether or
not covered by insurance) materially and adversely affecting
the business, financial condition, assets, properties or
business prospects of the Company.
(k) Absence of Unusual Transactions - Except as disclosed on Schedule "H",
the Company has not, other than with respect to affiliated entities of
the Company being acquired by the Purchaser on the Closing Date, since
December 31, 1996:
(i) transferred, assigned, sold or otherwise disposed of any
assets, granted a lien, security interest, mortgage or other
encumbrance in any assets, or cancelled any debts or claims
except only in each case in the ordinary and usual course of
business or to the extent such assets, liens, security
interests, mortgages, encumbrances, debts or claims do not
individually or in the aggregate exceed $20,000 (when added
to any dispositions, grants, or cancellations by the other
Southwest Companies);
(ii) incurred or assumed any obligation or liability which
individually or in the aggregate exceeds $100,000 (fixed or
contingent), except those listed in Schedule "F" hereto and
except unsecured current obligations and liabilities
incurred in the ordinary and normal course of business which
individually or in the aggregate do not exceed $100,000;
(iii) discharged or satisfied any lien or encumbrance, or paid any
obligation or liability (fixed or contingent) other than
liabilities included in the Financial Statements and
liabilities incurred since the date thereof in the ordinary
and normal course of business;
(iv) declared or made any payment of any dividend or other
distribution in respect of any shares of its stock as
applicable, or purchased or redeemed any such shares
thereof, or effected any subdivision, consolidation or
reclassification of any such shares;
(v) suffered or been threatened with any material adverse change
in its business or financial condition, business activities,
or business prospects,
9
<PAGE> 10
including, without limiting the generality of the foregoing,
the existence or threat of any labor dispute, or any
material adverse change in, or loss of, any material
relationship between the Company and any of its customers,
suppliers or key employees, or entered into any commitment
or transaction not in the ordinary and usual course of
business where such commitment or transaction is or would be
material in relation to the Company;
(vi) made any general wage or salary increases in respect of
personnel which it employs, other than increases in the
ordinary and normal course of business, nor hired any
employee who shall have an annual salary in excess of
$70,000; or
(vii) authorized or agreed or otherwise become committed to do any
of the foregoing.
(l) Title to Properties - Except as disclosed in Schedules "I" and "J"
hereto, the Company has good and marketable title to all its
respective properties, interests in properties and assets, real and
personal, including without limitation those reflected in the
Financial Statements or acquired since the date of the Financial
Statements, free and clear of all mortgages, pledges, liens, claims,
rights, encumbrances or charges of any kind or nature.
(m) Equipment and Condition of Assets - All non-vehicular equipment,
assets, personal property and fixtures in the possession or custody of
the Company which, as of the date hereof, are owned, leased or held
under license or similar arrangement by the Company and are necessary
for the conduct of the Business are in good condition, repair and
proper working order, reasonable wear and tear excepted. Copies of all
leases, licenses, agreements and other documentation relating thereto
have been provided or made available to Purchaser.
(n) Leases of Real Property - The Company is not a party to or bound by
any leases of real property other than those disclosed in Schedule "J"
hereto, and all interests held by the Company as lessee under such
leases are free and clear of any and all liens, charges and
encumbrances of any nature and kind whatsoever. All rental and other
payments required to be paid by the Company, as lessee, pursuant to
such leases have been duly paid. Such leases are in full force and
effect without amendment thereto and the Company is not otherwise in
default in any material respect in meeting its obligations contained
in any such lease. The representations or warranties set forth in
Appendix "J" hereto with respect to any real property owned by NRM
Properties, Inc. or Chaparral Properties, Inc. that is subject to a
lease to which the Company is a party or by which it is bound are true
and correct.
(o) Real Property - The Company does not own any interest in real
property, except as disclosed on Schedule "J" hereto.
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(p) Vehicular Equipment - Schedule "K" contains a list of all vehicular
equipment owned or leased by the Company and copies of all motor
vehicle certificates of title with respect to such vehicular equipment
have been provided to the Purchaser. Such vehicular equipment is, in
all material respects, in good condition, repair and proper working
order, reasonable wear and tear excepted, and each vehicle complies in
all material respects with all laws and regulations affecting its
operation and each vehicle bears a current safety standards
certificate.
(q) Revenue Contracts - Except as disclosed in Schedule "L", the Company
is not a party to any contract pursuant to which it is to provide
transportation or other services. Each of the contracts set out in
Schedule "L" is in full force and effect and enforceable in accordance
with its respective terms and conditions, and there is not existing
any default, or event or condition which, with the giving of notice or
the passage of time, or both, would constitute an event of default, by
the Company or any other party thereto under any of such contracts,
that could have a material adverse effect on any of such contracts.
(r) Contracts to Purchase - Except as set out in Schedule "M", the Company
is not a party to any contract to purchase any goods and/or services
with a value in excess of $20,000/year. Each of the contracts set out
in Schedule "M" is in full force and effect and enforceable in
accordance with its respective terms and conditions, and there is not
existing any default, or event or condition which, with the giving of
notice or the passage of time, or both, would constitute an event of
default, by the Company or any other party thereto under any of such
contracts, that could have a material adverse effect on any of such
contracts.
(s) Employment Contracts - Except as set out in Schedule "N", the Company
neither has any written employment contracts, union or collective
labor, pension, deferred profit sharing, retirement, employee benefit,
stock option or other similar agreements or plans nor has it had any
such plan or agreement in the past, nor does it have any written
contracts of employment with any employees or, to the best of Vendors'
knowledge, any oral contracts of employment which are not terminable
on the giving of reasonable notice in accordance with applicable law.
The Company has not, in the last four (4) years, experienced any labor
disputes which were of a material nature, work stoppages or strikes.
There is not now any circumstances or conduct which could result in
the filing of an unfair labor practice complaint against the Company;
any such complaints previously raised and currently ongoing and the
current status thereof are particularized in Schedule "N".
(t) Material Contracts - Except for the material contracts and commitments
disclosed herein, including the Schedules attached hereto, the Company
is not a party to or bound by any material contract or commitments
whether oral or written. True, correct and complete copies of all such
written contracts and commitments either have been delivered to the
Purchaser or will be delivered prior to Closing. Each of such
contracts and commitments is in full force and effect and enforceable
in
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<PAGE> 12
accordance with its respective terms and conditions, and there is not
existing any default, or event or condition which, with the giving of
notice or the passage of time, or both, would constitute an event of
default, by either of the Company or any other party thereto under any
of such contracts or commitments, that could have a material adverse
effect on any of such contracts or commitments. The Company has the
capacity, including the necessary personnel, equipment and supplies,
to perform all its obligations thereunder in all material respects.
(u) Pension/Benefit/Health Plans - The only pension, benefit or health
plans established by or for the Company for its employees are those
disclosed in Schedule "N" hereto; such plans are duly registered where
required by, and are in good standing under all, applicable
legislation; all required employer contributions thereunder to the
date hereof have been made and the respective pension funds are funded
in accordance with the rules of the pension plans and no past service
funding liabilities exist thereunder. Except as disclosed on Schedule
"N" hereto, there is no employee benefit or health plan established or
maintained for employees of the Company, or to which contributions
have been made by the Company with respect to such employees, which is
subject to Title IV of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"). The Company is in compliance in all
material respects with all provisions of ERISA, and the Company is not
subject to any liability or obligation arising under ERISA or any
other applicable law or the provisions of any other employee benefit
plan, including but not limited to liability owed to the Pension
Benefit Guaranty Corporation on account of a termination or partial
termination of any employee benefit plan, any liability resulting from
a "prohibited transaction", any liability for failure to meet minimum
funding requirements, any liability related to the termination of a
multi-employer pension plan, and any liability caused by the
non-qualification of any plan under section 401 of the Code. No
pension plan, no employee benefit plan, no "disqualified person" (as
such term is used in Section 4975(c)(1) of the Code) has engaged, and
no Vendor has engaged, in any transaction in violation of Section 406
of ERISA or any "prohibited transaction" (as defined in Section
4975(c)(1) of the Code) other than any such transaction which is
exempt under Section 408 of ERISA or Section 4975(d) of the Code. The
401k plan of the Company meets in all material respects the
requirements of section 401(a) of the Code. The Company does not have
any obligation to provide material post-retirement benefits of any
nature to its employees, former employees or their survivors,
dependents or beneficiaries, except as may be required by the
Consolidated Omnibus Budget Reconciliation Act of 1986 ("COBRA") or
any other applicable state medical benefits continuation laws, nor
will any such obligation to provide such post-retirement benefits be
incurred solely as a result of the consummation of the within
transactions. The Company has not caused there to occur a "mass
lay-off", as defined in section 693.3 of the regulations issued under
the Worker Adjustment and Retention Notification Act (20 CFR 639) at
any time in the past.
(v) Absence of Conflicting Agreements - Neither the Company nor any Vendor
is a party to, bound or affected by or subject to any indenture,
mortgage, lease,
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<PAGE> 13
agreement, instrument, charter or by-law provision, or, to the best of
Vendors' knowledge, any statute, regulation, order, judgment, decree
or law which would be in any material respect violated, contravened,
breached by or under which a material default would occur, as a result
of the execution and delivery of this Agreement or the consummation of
any of the transactions provided for herein.
(w) Litigation - Except for the items disclosed in Schedule "O" hereto,
all of which are fully insured against, there is no suit, action,
litigation, arbitration proceeding or private or governmental
proceeding, hearing before an administrative tribunal, including
appeals and applications for review, in progress, pending or to the
knowledge of Vendors threatened against the Company or materially and
adversely affecting its properties, business, financial condition or
business prospects. Except as shown in Schedule "O", there is not
presently outstanding against the Company any adverse judgment,
decree, injunction, rule or order of any court, governmental
department, commission, agency, instrumentality or arbitrator.
(x) Employees - There are set forth in Schedule "P" hereto the names and
titles of all personnel employed or engaged by the Company whose
annual base salary exceeds $40,000, including rates of remuneration,
positions held and date of commencement of employment. The employment
records of the Company are true, complete and correct in all material
respects. Except as disclosed in Schedule "P" hereto, the Company does
not owe any past or present employee any sum other than for accrued
wages or salaries for the current payroll period, reimbursable
expenses, accrued vacation and holiday pay (none of which is for a
period in excess of two (2) weeks' pay with respect to any single
employee), sick leave rights and amounts payable under employee
benefit plans, and all of such sums that accrue from the date hereof
until the Closing shall be timely paid by the Company on or prior to
the Closing Date. There is not pending or, to the best knowledge of
Vendors, after due inquiry, threatened, any charge or complaint
against or involving the Company or any of its officers or employees
by the National Labor Relations Board, the Occupational Health &
Safety Administration, the Department of Labor, or any similar
federal, state or local board of agency, or any representative
thereof.
(y) Insurance - The Company currently has in force the policies of
insurance set out in Schedule "Q" hereto. Such policies are
appropriate to its Business, property and assets, are in such amounts
and against such risks as are customarily carried and insured against
by owners of comparable businesses, properties and assets, and, to the
knowledge of Vendors, are issued by responsible insurers. All such
policies of insurance are in full force and effect and the Company is
not in default, whether as to the payment of premium or otherwise,
under the terms of any such policy. Such policies can be cancelled
without penalty or premium, and such cancellation would trigger a full
pro rata refund of prepaid premiums. The Company has no liability for
retrospective insurance premiums or costs.
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<PAGE> 14
(z) Intellectual Property - Attached as Schedule "R" is a true and correct
schedule identifying all material patents, patent rights or licenses,
patent applications, trademarks, trademark registrations and
applications, trademark rights, trade names, trade secrets, service
marks and applications therefore, copyrights and copyright
registrations and copyright applications used in whole or in part in
or required for the proper carrying on of the Business of the Company
(the "Intellectual Property"). None of the matters covered by the
Intellectual Property, nor any of the products or services sold or
provided by the Company, nor any of the processes used or the business
practices followed by the Company, infringes or has infringed upon any
trademark, trade name, fictitious name, service mark, trade secrets,
patent or copyright owned by any person or entity (or any application
with respect thereto), or constitutes unfair competition. The Company
is not obligated to pay any royalty or other payment with respect to
any of the Intellectual Property, except as disclosed in Schedule "R".
Except as disclosed in Schedule "R" hereto, to the best of Vendors'
knowledge, no person or entity is producing, providing, selling or
using products, services, names, or marks that would constitute an
infringement of any of the Intellectual Property.
(aa) Corporate Records - The corporate records and minute books of the
Company have been delivered to the Purchaser and contain complete and
accurate copies of the Company's Articles of Incorporation, as
amended, by-laws, minutes of all meetings, and resolutions of its
directors and shareholders. All such meetings were duly called and
held, all such by-laws and resolutions were duly passed and the share
certificate books, registers of shareholders and members, registers of
transfers and registers of directors of the Company are complete and
accurate in all material respects. In all material respects, the books
and records of the Company with respect to its assets, businesses,
operations, properties and prospects have been maintained in
accordance with generally accepted accounting principles and in the
usual, regular and ordinary manner, and all entries with respect
thereto have been made and all transactions have been properly
accounted for. All applicable corporate and other laws and all
applicable generally accepted accounting principles relating to the
maintenance of such books and records have been complied with by the
Company.
(bb) Third Party Approvals - Except for approvals required by the Federal
Trade Commission or other agencies for purposes of complying with the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and
the rules and regulations promulgated thereunder (the "Hart Act") and
required by the Arizona Department of Health Services, and except as
disclosed in Schedule "S", there are no approvals, consents or waivers
required to be obtained or applications required to be filed from or
with governmental authorities or from any other Person whatsoever,
including pursuant to any leases or contracts containing prohibitions
or pre-consent provisions pertinent to this Agreement in order to
permit the transactions contemplated herein or to preserve the
Business and/or assets of the Company.
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<PAGE> 15
(cc) Compliance with Environmental Laws - Except as disclosed in Schedule
"T" hereto, the Company and the Business are in all material respects
in compliance with all, and do not violate in any material respect,
and have not violated in any material respect any, applicable federal,
state, municipal or local laws, regulations, orders, certificates of
approval, licenses, permits, governmental decrees, ordinances or any
and all other applicable legislation or regulatory requirements with
respect to environmental, health or safety matters. There has been no
storage, treatment, generation, discharge, transportation or disposal
of industrial, toxic or hazardous substances or solid or hazardous
waste by, or on behalf of, the Company, in violation of any federal,
state or local law, statute, rule or regulation or any decree, order,
arbitration award or agreement with or any license or permit from any
federal, state or local governmental authority. There has been no
spill, discharge, leak, emission, injection, escape, dumping, or
release of any kind by, or on behalf of, the Company, into the
environment (including, without limitation, into air, water or ground
water) of any materials including, without limitation, industrial,
toxic or hazardous substances or solid, medical or hazardous waste, as
defined under any federal, state or local law, statute, rule or
regulation other than those releases permissible under such law,
statute, rule or regulation or allowable under applicable permits.
(dd) Compliance - The Company is not in violation in any material respect
of any laws, regulations, decrees or ordinances applicable to the
Business, assets, properties, financial condition or business
prospects of the Company.
(ee) Subsidiaries and Affiliates - Except as disclosed in Schedule "U"
hereto, the Company has no subsidiaries or any other equity investment
in any entity engaged in any aspect of the medical or transportation
industry. Except as disclosed in Schedule "U" hereto, no Vendor has
any equity interest in any "Affiliates." For purposes of this
Agreement, the term "Affiliates" shall mean all entities engaged in
any aspect of the medical or transportation industry in which the
applicable Vendor is either an officer or director, or in which the
applicable Vendor, directly or indirectly, owns or controls ten
percent (10%) or more of the equity securities of the entity.
(ff) Accounts Receivable - The accounts receivable existing on the books of
the Southwest Companies at the Closing Time (net of contractual
allowance) (the "Closing Accounts Receivable") shall be at least
$6,040,000 (the "Minimum Accounts Receivable") and an amount at least
equal to the Minimum Accounts Receivable or the Closing Accounts
Receivable, whichever amount is greater (the "Target Accounts
Receivable"), is good and collectible within 365 calendar days
thereafter. None of the Closing Accounts Receivable are subject to the
return of the merchandise or other property the selling price of which
is represented thereby, or to offsets or counterclaims, the extent of
which is in excess of any reserves for collectibility thereof
reflected in the books of the Southwest Companies at the Closing.
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(gg) Bank Accounts - Schedule "V" hereto sets forth the name and location
of each bank in which the Company has an account, lock box or safe
deposit box, the number of each such account or box, the names of all
signatories thereto and the persons authorized to draw thereon or have
access thereto. No power of attorney exists from the Company.
(hh) Accuracy of Documents, Representations and Warranties - The copies of
all documents furnished to Purchaser, or any of its representatives
by or on behalf of any Vendor or the Company, or any one or more of
them, or their representatives, are true, complete and correct in all
material respects. No representation or warranty of any Vendor
contained in this Agreement or the other agreements to be executed by
any Vendor pursuant hereto, and no statement contained in the
exhibits, the schedules or the other documents delivered by or on
behalf of any Vendor, or his or its representatives pursuant to or in
connection with this Agreement or the other agreements to be executed
by any Vendor pursuant hereto or any of the transactions contemplated
hereby or thereby, contains any untrue statement of a material fact,
or omits to state any material fact required to be stated herein or
therein in order to make the statements contained herein or therein
not misleading.
3.2 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER - To induce the Vendors to
enter into this Agreement and to perform Vendors' obligations hereunder, and
with full knowledge that Vendors will rely thereon, the Purchaser hereby
represents and warrants to the Vendors the truth, accuracy and completeness of
the following, except as disclosed in Schedule "W" hereto:
(a) Organization and Valid Existence - The Purchaser is a corporation duly
incorporated and organized, validly existing and in good standing
under the laws of the State of Delaware and has all necessary
corporate power, authority and capacity to execute and deliver the
Agreement and the other agreements referenced herein to which the
Purchaser is a party, to consummate the transactions contemplated
hereby and thereby, and to fully and timely perform its obligations
hereunder and thereunder. The execution and delivery by Purchaser of
this Agreement and the other agreements referenced herein to which
Purchaser is a party, and the consummation of the transactions
contemplated hereby and thereby, have been duly authorized and
approved by Purchaser's board of directors, and no other corporate
proceedings on the part of Purchaser are required to authorize the
execution and delivery of this Agreement, the other agreements
referenced herein to which Purchaser is a party, or the consummation
of the transactions contemplated hereby or thereby.
(b) Enforceability - This Agreement and the other agreements referenced
herein to which Purchaser is a party have been duly executed and
delivered by Purchaser and constitute legal, valid and binding
obligations of Purchaser, enforceable against Purchaser in accordance
with their respective terms.
(c) Absence of Conflicting Agreements - The Purchaser is not a party to,
bound or affected by or subject to any indenture, mortgage, lease,
agreement, instrument,
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<PAGE> 17
charter or by-law provision, statute, regulation, order, judgment,
decree or law which would be violated, contravened or breached by, or
under which any default would occur, as a result of the execution and
delivery of this Agreement or the consummation of any of the
transactions provided for herein.
(d) Litigation - There is no suit, action, litigation, arbitration
proceeding or governmental proceeding, including appeals and
applications for review, in progress, pending or, to the best of the
knowledge, information and belief (after due inquiry) of the senior
officers of the Purchaser, threatened against or involving the
Purchaser or any judgment, decree, injunction, rule or order of any
court, governmental department, commission, agency, instrumentality or
arbitrator which, in any such case, would materially and adversely
affect the ability of the Purchaser to enter into this Agreement or to
consummate the transactions contemplated hereby.
(e) Third Party Approvals - Except for approvals required by the Federal
Trade Commission or other agencies for purposes of complying with the
Hart Act and those required by the Arizona Department of Health
Services, and except as disclosed in Schedule "W", there are no
approvals, consents or waivers required to be obtained or applications
required to be filed from or with governmental authorities or from any
other Person whatsoever, including pursuant to any leases or contracts
containing prohibitions or pre-consent provisions pertinent to this
Agreement, in order to permit the transactions contemplated herein.
(f) Accuracy of Documents, Representations and Warranties - The copies of
all documents furnished to the Vendors and their representatives by
or on behalf of Purchaser and its representatives are true, complete
and correct in all material respects. No representation or warranty of
Purchaser contained in this Agreement or the other agreements
referenced herein to which Purchaser is a party, and no statement
contained in the exhibits, the schedules or the other documents
delivered by or on behalf of Purchaser or its representatives
pursuant to or in connection with this Agreement or any of the
transactions contemplated hereby contains any untrue statement of a
material fact, or omits to state any material fact required to be
stated herein or therein in order to make the statements contained
herein or therein not misleading.
3.3 NO BROKER - Each of the Parties represents and warrants to the others that
all negotiations relating to this Agreement and the transactions contemplated
hereby have been carried on between them directly and without the intervention
of any other party in such manner as to give rise to any valid claims against
any of the Parties for a brokerage commission, finder's fee or other like
payment.
3.4 NON-WAIVER - No investigations made by or on behalf of a Party at any time
shall have the effect of waiving, diminishing the scope of or otherwise
affecting any representation or warranty made by the other Party herein or
pursuant hereto.
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3.5 NATURE OF REPRESENTATIONS, WARRANTIES AND COVENANTS - All statements
contained in any certificate or other instrument delivered by or on behalf of a
Party pursuant to or in connection with the transactions contemplated by this
Agreement shall be deemed to be made by such Party hereunder.
ARTICLE 4
CONDITIONS PRECEDENT TO THE PERFORMANCE
BY THE PURCHASER AND THE VENDORS OF
THEIR OBLIGATIONS UNDER THIS AGREEMENT
4.1 PURCHASER'S CONDITIONS - The obligation of the Purchaser to complete the
purchase of the Purchased Shares hereunder shall be subject to the satisfaction
of, or compliance with, in all material respects, at or before the Closing Time,
each of the following conditions precedent (each of which is hereby acknowledged
to be inserted for the exclusive benefit of the Purchaser and may be waived by
it in whole or in part):
(a) Truth and Accuracy of Representations of Vendors at the Closing Time -
All of the representations and warranties of Vendors made in or
pursuant to this Agreement shall be true and correct in all material
respects as at the Closing Time and with the same effect as if made at
and as of the Closing Time (except as such representations and
warranties may be affected by the occurrence of events or transactions
expressly contemplated and permitted hereby), and the Purchaser shall
have received a certificate from each of the Vendors confirming the
truth and correctness in all material respects of their
representations and warranties contained herein;
(b) Performance of Obligations - The Vendors shall have performed or
complied with all of their obligations, covenants and agreements
hereunder;
(c) Receipt of Closing Documentation - All documentation relating to the
due authorization and completion of the sale and purchase hereunder of
the Purchased Shares and all actions and proceedings taken on or prior
to the Closing in connection with the performance by the Vendors of
their obligations under this Agreement shall be reasonably
satisfactory to the Purchaser and the Purchaser shall have received
copies of all such documentation or other evidence as it may
reasonably request in order to establish the consummation of the
transactions contemplated hereby and the taking of all corporate
proceedings in connection therewith in compliance with these
conditions, in form (as to certification and otherwise) and substance
reasonably satisfactory to the Purchaser;
(d) Consents, Authorizations and Registrations - All consents, approvals,
orders and authorizations of any Persons or governmental authorities
(or registrations, declarations, filings or recordings with any such
authorities) required in connection with the completion of any of the
transactions contemplated by this Agreement (including, without
limitation, any notifications, approvals or consents required by the
Arizona Department of Health Services) shall have been obtained
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on or before the Closing Time; the Vendors shall have obtained and
delivered by Closing to the Purchaser written consents, in form and
substance satisfactory to the Purchaser, to the transaction
contemplated herein which are required (if any) pursuant to the real
property leases referred to in Schedule "J" (and any customer
contracts where approval or consent is required), including, without
limiting the generality of the foregoing, such acknowledgements and
confirmations of good standing from the lessors in respect of the real
property leases referred to in Schedule "J" hereto as may be
reasonably requested by the Purchaser;
(e) Directors and Officers of Company - Subject to the terms of the
Employment Agreement, there shall have been delivered to the Purchaser
on or before the Closing Date the resignations of such persons as the
Purchaser shall direct who are presently directors and/or officers of
the Company.
(f) No Damage - No substantial damage by fire or other hazard to the
assets of the Company shall have occurred from the date hereof to the
Closing Date which is not fully and adequately insured against;
(g) Litigation - On the Closing Date, there shall be no litigation,
governmental investigation or proceeding pending or threatened for the
purpose of enjoining or preventing the consummation of any of the
transactions contemplated by this Agreement or otherwise claiming that
such consummation is improper;
(h) Hart-Scott-Rodino Filing - The applicable waiting period under the
Hart Act shall have expired or terminated.
(i) Management - Rural/Metro's Board of Directors shall have confirmed the
appointment of Ramsey to the Board of Directors of Rural/Metro and to
a senior executive position with Rural/Metro.
(j) Environmental Reports - Purchaser shall have received reports, in form
and content satisfactory to Purchaser, in the exercise of its sole
discretion, from independent environmental consultants acceptable to
Purchaser in its sole discretion, and from legal counsel to Purchaser,
concerning the real properties owned or leased by the Company, which
reports shall be based, in part, on the results of environmental site
assessments which Purchaser may cause to be completed for and on
behalf of Purchaser prior to the Closing Date on all such real or
leased properties, which reports, if any, shall be prepared at
Purchaser's expense.
(k) Due Diligence - Purchaser shall, in the exercise of its sole
discretion, be entirely satisfied with the business, operations,
financial condition, assets and liabilities of the Company.
(l) Schedules - Purchaser shall have received from Vendors the Schedules
referred to herein and all amendments and modifications thereto, and
Purchaser shall, in the exercise of its sole discretion, be entirely
satisfied with the nature and extent
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<PAGE> 20
of the disclosures made therein and the representations and warranties
of Vendors as modified by the disclosures contained in the Schedules.
(m) Simultaneous Closings - On the Closing Date, the share purchases and
other transactions contemplated in each of the Agreements of Purchase
and Sale executed of even date herewith for the sale of Southwest
Ambulance of Casa Grande, Inc., Medical Emergency Devices and Services
(MEDS), Inc., and SW General, Inc. shall be consummated simultaneously
with the transactions contemplated herein.
4.2 VENDORS' CONDITIONS - The obligations of the Vendors to complete the sale of
the Purchased Shares hereunder shall be subject to the satisfaction of or
compliance with, at or before the Closing Time, each of the following conditions
precedent (each of which is hereby acknowledged to be inserted for the exclusive
benefit of the Vendors and may be waived by them in whole or in part):
(a) Truth and Accuracy of Representations of Purchaser at Closing Time -
All of the representations and warranties of the Purchaser made in or
pursuant to this Agreement shall be true and correct in all material
respects as at the Closing Time and with the same effect as if made at
and as of the Closing Time and the Vendors shall have received a
certificate from a duly authorized senior officer of the Purchaser
confirming the truth and correctness in all material respects of the
representations and warranties of the Purchaser contained herein;
(b) Performance of Obligations - The Purchaser shall have performed or
complied with all of its obligations, covenants and agreements
hereunder;
(c) Receipt of Closing Documentation - All documentation relating to the
due authorization and completion of the sale and purchase hereunder of
the Purchased Shares and all actions and proceedings taken on or prior
to the Closing in connection with the performance by the Purchaser of
its obligations under this Agreement shall be reasonably satisfactory
to the Vendors and the Vendors shall have received copies of all such
documentation or other evidence as they may reasonably request in
order to establish the consummation of the transactions contemplated
hereby and the taking of all corporate proceedings in connection
therewith in compliance with these conditions, in form (as to
certification and otherwise) and substance satisfactory to the
Vendors;
(d) Release of Vendors' Guaranties - Purchaser shall have secured the
release of Vendors from liability for any personal guarantees issued
by Vendors as the shareholders of the Company with respect to any
liability of the Company for borrowed money, and shall have provided
to Vendors written evidence thereof, or, in the alternative, Purchaser
shall deliver an agreement of assumption and indemnification, in form
and content mutually satisfactory to Purchaser and Vendors, pursuant
to which Purchaser will indemnify Vendors for any such personal
guaranty;
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(e) Litigation - On the Closing Date, there shall be no litigation,
governmental investigation or proceeding pending or threatened for the
purpose of enjoining or preventing the consummation of any of the
transactions contemplated by this Agreement or otherwise claiming that
such consummation is improper;
(f) Hart-Scott-Rodino Filing - The applicable waiting period under the
Hart Act shall have expired or terminated;
(g) Management - The Board of Directors of Rural/Metro shall have
confirmed the appointment of Ramsey to the Board of Directors of
Rural/Metro and to a senior executive position with Rural/Metro and
approved certain existing management contracts of the Company;
(h) Simultaneous Closings - On the Closing Date, the share purchases and
other transactions contemplated in each of the Agreements of Purchase
and Sale executed of even date herewith for the sale of Southwest
Ambulance of Casa Grande, Inc., Medical Emergency Devices and Services
("MEDS"), Inc., and SW General, Inc. shall be consummated
simultaneously with the transactions contemplated herein.
ARTICLE 5
OTHER COVENANTS OF THE PARTIES
5.1 CONDUCT OF BUSINESS PRIOR TO CLOSING - During the period from the date of
this Agreement to the Closing Time, the Vendors will have the following
obligations and will cause the Company to do the following:
(a) Access to Records - Vendors shall, and shall cause the Company and its
employees, officers, agents, representatives and accountants to, fully
cooperate with Purchaser to allow the officers, employees, attorneys,
consultants and accountants of Purchaser free and unrestricted access
(but only through Barry Landon, as representative of the Vendors and
without interference to the ordinary conduct of the Business) during
normal business hours to all of the properties, books, contracts,
documents and records of the Company and furnish to Purchaser such
information as Purchaser may at any time and from time to time
reasonably request until the Closing Time.
(b) Business in Ordinary Course - Vendors shall cause the Company to carry
on its business and affairs as heretofore carried on, and neither the
Company nor any Vendor will order, purchase or lease any products,
inventory, equipment, leased personalty, or other items, or dispose of
any of its assets or leased property, or issue any quotations, or
prepay any of its material obligations, incur any liabilities or
obligations, hire or discharge any employee or officer or, without
limitation by specific enumeration of the foregoing, enter into any
other transaction, except in the usual and ordinary course of its
business in accordance with the past practices of the Company and
except as provided herein. Without limiting the
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generality of the foregoing, Vendors shall not permit the Company,
without the prior written consent of Purchaser, to:
(i) create or suffer to exist any liens or encumbrances with
respect to any of the assets or properties of the Company
which shall not be discharged at or prior to the Closing
Date, other than liens for nondelinquent taxes;
(ii) incur any indebtedness for borrowed money other than in the
usual and ordinary course of its business;
(iii) sell or transfer any material assets or properties
(including, without limitation, sales and transfers to
Affiliates, other than Affiliates of the Company the stock
of which is to be acquired by Purchaser or an Affiliate of
Purchaser on the Closing Date);
(iv) acquire or enter into any agreement or understanding (oral
or written) to acquire the stock or assets of any other
person, firm, corporation or other entity;
(v) make any material change in the conduct or nature of any
aspect of its business, whether in the ordinary course of
business or not, or whether or not the change has or will
have a material adverse affect on the business activities,
financial condition, or business prospects of the Company;
(vi) waive any material rights;
(vii) pay any Affiliate, other than Affiliates of the Company the
stock of which is to be acquired by Purchaser or an
Affiliate of Purchaser on the Closing Date, or be charged by
any Affiliate, other than Affiliates of the Company the
stock of which is to be acquired by Purchaser or an
Affiliate of Purchaser on the Closing Date, for goods sold
or services rendered or be charged by any Affiliate, other
than Affiliates of the Company the stock of which is to be
acquired by Purchaser or an Affiliate of Purchaser on the
Closing Date, for corporate overhead expenses, management
fees, legal or accounting fees, capital charges, or similar
charges or expenses, except for any payments made by the
Company pursuant to leases with NRM Properties, Inc. or
Chaparral Properties, Inc.;
(viii) incur or commit to incur any individual capital expenditures
except in the ordinary course of its business;
(ix) amend employment contracts or the terms and conditions of
employment of any officer, director or employee earning
total annual compensation in excess of $70,000, other than
normal merit and cost of living
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increases to employees in accordance with the general
prevailing practices of the Company existing prior to the
date of this Agreement;
(x) pay or incur any management or consulting fees;
(xi) hire any employee who shall have an annual salary in excess
of $70,000;
(xii) enter into any transaction other than in the usual and
ordinary course of business; or
(xiii) issue or sell any shares of the stock or other securities of
the Company, including any of the Purchased Shares, or make
or become obligated to make any dividend or other
distribution or payment to Vendors or any former shareholder
of the Company in respect of any stock or other security of
the Company at any time held by Vendor or such other former
shareholders.
(c) Employees - Vendors shall use their reasonable efforts to retain, and
shall cause the Company to each retain its business intact, preserve
all its goodwill and customer and employee relations, including
keeping available the services of each of its present employees,
representatives and agents.
(d) Continue Insurance - Vendors shall cause the Company to continue in
force all existing policies of insurance presently maintained by the
Company.
(e) Perform Obligations - Vendors shall cause the Company to comply in all
material respects with all laws affecting the operation of the
Business and to pay all required taxes and tax installments.
(f) Confidentiality - Until the Closing, and at all times thereafter as
provided in Section 6.1(d) hereof, Vendors will maintain as
confidential their discussions with Purchaser, and the terms and
conditions of this Agreement, and the other agreements to be executed
in connection herewith, and except as reasonably necessary to fulfill
Vendors' obligations hereunder or as required by law, will not make
any trade press or other announcement or disclosure in relation to
such discussions whether before or after Closing without the prior
written consent of Purchaser.
(g) Exclusivity - Until the earlier of the Closing or the termination of
this Agreement in accordance with the terms hereof, Vendors will
negotiate the sale of the stock, assets and properties of the Company
only with Purchaser, and no Vendor will permit the Company to,
directly or indirectly, enter into any discussion with, or disclose
any information in relation to the Purchased Shares or the assets of
the Company to any other person, firm, or other entity, other than
Purchaser.
(h) Equitable Relief - Each Vendor acknowledges and agrees that the
covenants contained in each of paragraphs (f) and (g) of this Section
5.1 are a material inducement for Purchaser to execute and deliver
this Agreement and to con-
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summate the transactions contemplated hereby. Accordingly, Vendor
acknowledges and agrees that the restrictions contained in each of
paragraphs (f) and (g) of this Section 5.1 are reasonable and
necessary for the protection of the business of Purchaser and its
subsidiaries, the Company, and the investment of Purchaser in the
Company, and that a breach of any such restriction could not
adequately be compensated by damages in an action at law. In the event
of a breach or threatened breach by any Vendor of any of the
provisions of any of paragraphs (f) or (g) of this Section 5.1,
Purchaser shall be entitled to obtain, without the necessity of
posting bond therefor, an injunction (preliminary or permanent, or a
temporary restraining order) restraining such Vendor from the activity
or threatened activity constituting, or which would constitute, a
breach, as well as damages and an equitable accounting of all
earnings, profits and other benefits arising from a violation, which
right shall be cumulative and in addition to any other rights or
remedies to which Purchaser may be entitled.
(i) Severability - Each and every provision set forth in each of
paragraphs (f) and (g) of this Section 5.1 is independent and
severable from the others, and no provision shall be rendered
unenforceable by virtue of the fact that, for any reason, any other or
others of them may be unenforceable in whole or in part. The parties
hereto agree that if any provision of paragraphs (f) or (g) of this
Section 5.1 shall be declared by a court of competent jurisdiction to
be unenforceable for any reason whatsoever, the court may
appropriately limit or modify such provision, and such provision shall
be given effect to the maximum extent permitted by applicable law.
(j) Consents - Vendors shall use their reasonable efforts and make every
good faith attempt to obtain any and all consents and estoppel letters
reasonably requested by Purchaser to or in connection with the
assignment of, or alternate arrangements satisfactory to Purchaser
with respect to, any contract, lease, license, permit, agreement, or
other instrument, which is to be an asset of the Company, or which may
be necessary, appropriate, or required in order to permit the conduct
of the Business and operations of the Company after the Closing to be
in all respects the same as the conduct of the Business and operations
of the Company, prior to the Closing.
5.2 OBLIGATIONS OF PURCHASER - During the period from the date of this Agreement
to the Closing Time, or such other period as provided by this Agreement, the
Purchaser will have the following obligations:
(a) Confidentiality - Purchaser will maintain as confidential its
discussions with Vendors, and the terms and conditions of this
Agreement, and the other agreements to be executed in connection
herewith, and except as reasonably necessary to fulfill its
obligations hereunder or as required by law, will not make any trade
press or other announcement or disclosure in relation to such
discussions without the prior written consent of Vendors. In the event
of the termination of this Agreement without consummation of the
transactions contemplated hereby, Purchaser will keep confidential any
information (unless readily available from
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public or published information sources) obtained from the Company or
the Vendors. If this Agreement is so terminated, promptly after such
termination, all documents, work papers and other written material
obtained from Vendors' representative in connection with this
Agreement and not theretofore made public (including all copies
thereof), shall be returned to the Person that provided such material.
Purchaser shall provide Vendors with a list of representatives of
Purchaser involved in the due diligence, and said representatives
shall refrain from discussing the transaction and its due diligence
activities with any other employee or representative of Purchaser not
disclosed on the list.
(b) Nonsolicitation - In the event of termination of this Agreement
without consummation of the transactions contemplated hereby,
Purchaser agrees that for a period of three (3) years following such
termination, Purchaser will not, directly or indirectly, solicit or
cause others to solicit any person who, on the date hereof, is an
employee of the Company and whose annual compensation from the Company
exceeds $25,000, for employment or as an independent contractor with
any person or entity, unless first authorized in writing by Vendors,
which authorization may be withheld in the sole and absolute
discretion of Vendors.
(c) Trade Secrets and Other Information - In the event of termination of
this Agreement without consummation of the transactions contemplated
hereby, Purchaser agrees that after the Closing Purchaser will not
communicate or divulge to, or use for the benefit of, any person, firm
or corporation any of the trade secrets, methods, formulas, business
and/or marketing plans, processes or any other proprietary or
confidential information with respect to the Company and its business,
financial condition, business operations or methods, or business
prospects. The preceding sentence shall not apply to information which
(i) is, was or becomes generally known or available to the public or
the industry other than as a result of a disclosure by Purchaser in
violation of this Agreement, or (ii) is required to be disclosed by
law. Purchaser will advise Vendors, in writing, of any request,
including a subpoena or similar legal inquiry, to disclose any such
confidential information, such that Vendors can seek appropriate legal
relief.
(d) Equitable Relief - Purchasers acknowledge that the covenants contained
in each of paragraphs (a), (b), and (c) of this Section 5.2 are a
material inducement for Vendors to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. Accordingly,
Purchaser acknowledges and agrees that the restrictions contained in
each of paragraphs (a), (b), and (c) of this Section 5.2 are
reasonable and necessary for the protection of the business of the
Company, and Vendors' investment in the Company, and that a breach of
any such restriction could not adequately be compensated by damages in
an action at law. In the event of a breach or threatened breach by
Purchaser of any of the provisions of any of paragraphs (a), (b), or
(c) of this Section 5.2, Vendors shall be entitled to obtain, without
the necessity of posting bond therefor, an injunction (preliminary or
permanent, or a temporary restraining order) restraining Purchaser
from the activity or threatened activity constituting, or which would
constitute, a breach of this Agreement, as well as damages and an
equitable
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<PAGE> 26
accounting of all earnings, profits and other benefits arising from
such a violation, which right shall be cumulative and in addition to
any other rights or remedies to which Vendors may be entitled.
(e) Severability - Each and every provision set forth in each of
paragraphs (a), (b), and (c) this Section 5.2 is independent and
severable from the others, and no provision shall be rendered
unenforceable by virtue of the fact that, for any reason, any other or
others of them may be unenforceable in whole or in part. The parties
hereto agree that if any provision of any of paragraphs (a), (b), or
(c) of this Section 5.2 shall be declared by a court of competent
jurisdiction to be unenforceable for any reason whatsoever, the court
may appropriately limit or modify such provision, and such provision
shall be given effect to the maximum extent permitted by applicable
law.
(f) Consents - Purchaser shall use its reasonable efforts and make every
good faith attempt to obtain any and all consents and estoppel letters
which may be necessary, appropriate, or required in order to permit
consummation of the transactions contemplated herein.
5.3 JOINT OBLIGATIONS OF VENDORS AND PURCHASER - During the period from the date
of this Agreement to the Closing Time, the following shall apply with equal
force to Vendors and Purchaser:
(a) Notice - Each Party shall promptly give the other parties written
notice of the existence or occurrence of any condition that would make
any representation or warranty of the notifying Party untrue or that
might reasonably be expected to prevent the consummation of the
transactions herein contemplated.
(b) Performance - No Party shall intentionally perform or omit to perform
any act which, if performed or omitted, would prevent or excuse the
performance of this Agreement by any Party hereto or that would result
in any representation or warranty contained herein of that Party being
untrue in any material respect as of the date hereof and as if
originally made on and as of the Closing Date.
(c) Hart-Scott-Rodino Filings - Each party shall take whatever steps are
necessary to make any filings required under the Hart Act not later
than ten days after the date of execution of this Agreement.
ARTICLE 6
POST CLOSING OBLIGATIONS
6.1 OBLIGATIONS OF VENDORS - Following the Closing, Vendors shall each be
subject to the following obligations:
(a) Covenant Not to Compete - In consideration of the execution and
delivery of this Agreement by Purchaser, and in consideration of the
Purchase Price, and as
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additional consideration therefor, each of the Vendors unconditionally
agrees that during the Restricted Period (as defined below) no Vendor
will, directly or indirectly (including, without limitation, as a
partner, shareholder, director, officer or employee of, or lender or
consultant to, any other person or entity), for himself, herself or
itself, or on behalf of, or in conjunction with, any other Person or
governmental entity, in any manner whatsoever, or in any other
capacity within, into or from the Restricted Territory (as defined
below) engage or cause others to engage in the Business, or any aspect
thereof, unless first authorized in writing by Purchaser, which
authorization may be withheld in the sole and absolute discretion of
Purchaser. For purposes of this Agreement, the term "Restricted
Period" shall mean the period ending three (3) years from the Closing
Date. For purposes of this Agreement, the term "Restricted Territory"
shall mean the State of Arizona. If any Vendor violates his, her or
its obligations under this Section 6.1(a), then the Restricted Period
shall be extended by the period of time equal to that period beginning
when the activities constituting such violation commenced and ending
when the activities constituting such violation terminated.
Notwithstanding the foregoing, the obligations of the Vendors under
this Section 6.1(a) shall terminate if Ramsey is terminated by
Purchaser without Cause as defined and described in the Employment
Agreement. The Purchaser agrees that no breach of this covenant not to
compete will occur as a result of Ramsey's formation of and activities
with respect to any 501(c)(3) foundation, his continued association
with the International Association of Firefighters, his continued
ownership and operation of an ambulance service company in Pima County
under the name Kords Southwest, or his continued service as President
of the Arizona Ambulance Association.
(b) Nonsolicitation - In consideration of the execution and delivery of
this Agreement by Purchaser, and in consideration of the Purchase
Price, each of the Vendors agrees that for a period of three (3) years
following the Closing Date no Vendor will directly or indirectly
solicit or cause others to solicit, (i) in respect of the Business,
any Person or other entity that is, or was within the twelve (12)
month period immediately prior to the Closing, a customer or supplier
of the Company, or (ii) any person who, on the date hereof, is an
employee of the Company and whose annual compensation from the Company
exceeds $25,000, for employment or as an independent contractor with
any Person or entity, unless first authorized in writing by Purchaser,
which authorization may be withheld in the sole and absolute
discretion of Purchaser. If any Vendor violates his, her or its
obligations under this Section 6.1(b), then the time periods hereunder
shall be extended by the period of time equal to that period beginning
when the activities constituting such violation commenced and ending
when the activities constituting such violation terminated.
Notwithstanding the foregoing, the obligations of the Vendors under
this Section 6.1(b) shall terminate if Ramsey is terminated by
Purchaser without Cause as defined and described in the Employment
Agreement.
(c) Trade Secrets and Other Information - In consideration of the
execution and delivery of this Agreement by Purchaser, and in
consideration of the Purchase Price, each of the Vendors agrees that
after the Closing no Vendor will
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communicate or divulge to, or use for the benefit of, any Person other
than Purchaser or the Company, or its or their agents and
representatives, any of the trade secrets, methods, formulas, business
and/or marketing plans, processes or any other proprietary or
confidential information with respect to the Company and its business,
financial condition, business operations or methods, or business
prospects. The preceding sentence shall not apply to information which
(i) is, was or becomes generally known or available to the public or
the industry other than as a result of a disclosure by a Vendor in
violation of this Agreement, or (ii) is required to be disclosed by
law. Vendors will advise Purchaser, in writing, of any request,
including a subpoena or similar legal inquiry, to disclose any such
confidential information, such that Purchaser can seek appropriate
legal relief.
(d) Confidentiality - At all times after the Closing, Vendors will
maintain as confidential the discussions between Vendors and
Purchaser, and the terms and conditions of this Agreement, and the
other agreements to be executed in connection herewith, and except as
required by law, will not make any trade press or other announcement
or disclosure in relation to such discussions whether before or after
Closing without the prior written consent of Purchaser.
(e) Equitable Relief - Vendors acknowledge that the covenants contained in
each of paragraphs (a), (b), (c), and (d) of this Section 6.1 are a
material inducement for Purchaser to execute and deliver this
Agreement and to consummate the transactions contemplated hereby.
Accordingly, Vendors acknowledge and agree that the restrictions
contained in each of paragraphs (a), (b), (c), and (d) of this Section
6.1 (including, without limitation, the Restricted Period and the
Restricted Territory) are reasonable and necessary for the protection
of the business of the Company, and Purchaser's investment in the
Company, and that a breach of any such restriction could not
adequately be compensated by damages in an action at law. In the event
of a breach or threatened breach by any Vendors of any of the
provisions of any of paragraphs (a), (b), (c), or (d) of this Section
6.1, Purchaser shall be entitled to obtain, without the necessity of
posting bond therefor, an injunction (preliminary or permanent, or a
temporary restraining order) restraining that Vendor from the activity
or threatened activity constituting, or which would constitute, a
breach of this Agreement, as well as damages and an equitable
accounting of all earnings, profits and other benefits arising from
such a violation, which right shall be cumulative and in addition to
any other rights or remedies to which Purchaser may be entitled.
(f) Severability - Each and every provision set forth in each of
paragraphs (a), (b), (c), and (d) this Section 6.1 is independent and
severable from the others, and no provision shall be rendered
unenforceable by virtue of the fact that, for any reason, any other or
others of them may be unenforceable in whole or in part. The parties
hereto agree that if any provision of any of paragraphs (a), (b), (c)
or (d) of this Section 6.1 shall be declared by a court of competent
jurisdiction to be unenforceable for any reason whatsoever, the court
may appropriately limit or modify such provision, and such provision
shall be given effect to the maximum extent permitted by applicable
law.
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(g) Consents - Vendors shall use their reasonable efforts and make every
good faith attempt to obtain any and all consent and estoppel letters,
if any, reasonably requested by Purchaser to or in connection with the
assignment of, or alternate arrangements satisfactory to Purchaser
with respect to, any contract, lease, license, permit, agreement, or
other instrument, which is to be an asset of the Company, or which may
be necessary, appropriate, or required in order to permit the conduct
of the business and operations of the Company after the Closing to be
in all respects the same as the conduct of the business and operations
of the Company prior to the Closing.
6.2 OBLIGATIONS OF PURCHASER - Following the Closing, Purchaser shall be subject
to the following obligations:
(a) Tax Amendments - The Purchaser agrees that the Company shall not, and
the Purchaser shall not cause the Company to, amend the Company's tax
returns for 1995 or earlier without the prior consent of Ramsey. In
the event the Company and/or the Purchaser amends such tax returns
without Ramsey's consent, the Purchaser agrees to indemnify the
Vendors for any liabilities that any of them may occur as a result of
any such amendment; provided, however, that Vendors agree jointly and
severally to indemnify, defend and hold harmless the Purchaser and the
Company for any liabilities, costs, penalties, fines and interest that
either of them may incur as the result of any refusal to grant the
consent referred to above.
(b) Non Interference With Leases - Purchaser acknowledges the existence of
certain real property leases between the Company and NRM Properties,
Inc. and Chaparral Properties, Inc. (collectively the "Landlords"),
and agrees not to interfere with such leases and to cause the Company
to abide by such leases. In the event that the Company and/or the
Purchaser reaches this Agreement, the Purchaser shall pay to the
appropriate Landlord the full amount of all unpaid monetary
obligations of the Company through the lease period in effect at the
time of the Closing and agrees that such remedy is in addition to all
other remedies that the Landlords or the Vendors may have at law or in
equity.
6.3 OBLIGATIONS OF VENDORS AND PURCHASER - Following the Closing, Vendors and
Purchaser shall execute such further documents, and perform such further acts,
as may be necessary to transfer and convey the Purchased Shares to Purchaser, on
the terms herein contained, and to otherwise comply with the terms of this
Agreement and consummate the transactions herein provided.
6.4 SECTION 338(h)(10) ELECTION
(a) Making the Section 338(h)(10) Election; Form 8023-A - Vendors shall
timely join with the Purchaser in making an election pursuant to
Section 338(h)(10) of the Code (and any corresponding election under
state law) (the "Section 338(h)(10) Election"). After Closing,
Purchaser will promptly prepare IRS Form 8023-A ("Form 8023-A") and
any related schedules required to be included with such
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<PAGE> 30
form and Vendors shall provide the Purchaser with all necessary
information to timely prepare such schedules (the "Election
Schedules"). Purchaser shall submit the Form 8023-A and the Election
Schedules to the Vendors for their review. The Vendors shall
immediately execute the Form 8023-A and submit seven original signed
duplicates thereof to Purchaser who shall be entitled to file the Form
8023-A and the Election Schedules with the IRS. Vendors shall also
timely comply with their responsibilities as required by the Code to
effect the 338(h)(10) Election.
(b) Section 338(h)(10) Election Purchase Price Adjustment. The Purchaser
hereby covenants and agrees to defend, indemnify and hold harmless the
Vendors for, from and against any tax liability, including related
penalties, interest and any additional fees and costs (including,
without limitation, attorneys' and accountants' fees and costs) that
accrue to the Vendors as a direct result of the Section 338(h)(10)
Election (the "Tax Liability"). The Tax Liability resulting from the
Section 338(h)(10) Election shall be paid in cash to the Vendors
immediately prior to the time such Tax Liability, if any, is required
to be paid to the applicable taxing authority.
ARTICLE 7
INDEMNIFICATION
7.1 INDEMNIFICATION BY VENDORS
(a) General - Subject to Section 7.4 hereof, Vendors jointly and severally
covenant and agree to defend, indemnify and hold Purchaser and the
Company, its and their officers, directors, shareholders and
subsidiaries, harmless for, from and against any and all damages,
losses, liabilities (absolute and contingent), fines, penalties, costs
and expenses (including, without limitation, reasonable counsel fees
and costs and expenses incurred in the investigation, defense or
settlement of any claim covered by this indemnity) with respect to or
arising out of any demand, claim, inquiry, investigation, proceeding,
action or cause of action that Purchaser and/or the Company, its and
their officers, directors, shareholders and subsidiaries, may suffer
or incur by reason of: (a) the inaccuracy of any of the
representations or warranties of Vendors contained in this Agreement,
or any of the agreements, certificates, documents, exhibits or
schedules delivered in connection with this Agreement; (b) the failure
to comply with, or the breach or default by any Vendor of any of the
covenants, warranties or agreements made by that Vendor contained in
this Agreement, or any of the agreements, certificates, documents,
exhibits or schedules delivered in connection with this Agreement; (c)
any pending or threatened litigation, claims, investigations,
inquiries, regulatory audits or assessments, or other similar
proceedings against Purchaser and/or the Company and/or its or their
directors, officers, shareholders, employees, agents or
representatives, as well as any future litigation, claims,
investigations, inquiries, regulatory audits or assessments, or other
similar proceedings against the Purchaser and/or the Company and/or
its or their
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directors, officers, shareholders, employees, agents or
representatives that arise from a state of facts existing prior to the
Closing, and which are not fully covered and reimbursed by insurance;
or (d) any liability or obligation of the Company not reflected,
provided for, or adequately reserved against on the balance sheets
included in the Financial Statements. Purchaser and/or the Company
shall be entitled to offset against any amount owed by Purchaser
and/or the Company to Vendors, (or any of them) any amount owed to
Purchaser and/or the Company by Vendor, (or any of them) or any of
their Affiliates.
(b) Environmental - Subject to Section 7.4 hereof, Vendors jointly and
severally covenant and agree to defend, indemnify and hold Purchaser
and/or the Company, and their officers, directors and shareholders
harmless for, from and against any and all damages, losses,
liabilities (absolute and contingent), fines, penalties, costs and
expenses (including, without limitation, reasonable counsel fees and
costs and expenses incurred in the investigation, defense or
settlement of any claim covered by this indemnity and costs associated
with any environmental assessments and/or remediation expenses) by
reason of any inaccuracy of any of the representations or warranties
set forth in Section 3.1(cc) hereof, or with respect to or arising out
of any demand, claim, inquiry, investigation, proceeding, action, or
cause of action brought by any governmental agency or instrumentality
or any Person other than Purchaser, which Purchaser and/or the
Company, or any of their officers, directors or shareholders may
suffer or incur by reason of:
(i) any generation, transportation, storage, treatment or
disposal of industrial, toxic or hazardous substances or
solid or hazardous wastes occurring on or prior to the
Closing Date including, without limitation, any waste or
other disposal activities or discharges that occurred at a
facility on which any portion of the Company's (or its
predecessors') business was conducted, any waste or other
disposal activities or discharges that occurred off of any
such facility with regard to wastes and other substances
generated on such facility, and any waste or other disposal
activities or discharges that occurred on real estate at any
time whether or not the Company (or its predecessors) owned
or leased such real estate at the time such waste or other
disposal activities or discharges were engaged in, where
the Company or Persons at the direction of the Company
performed such waste or other disposal activities or
discharges;
(ii) any spills, discharges, leaks, emissions, injections,
escapes, dumping, or any releases as defined now or in the
future under the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, P.L. 96-510, as
amended or reauthorized from time to time, or any other
similar federal, state or local laws, statutes, rules or
regulations, occurring on or prior to the Closing Date,
including, but not limited to, both those releases or
incidents involving environmental contamination that
required notification or reporting to appropriate federal,
state or local officials or agencies, or clean-up or
remedial activities and those
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releases or incidents which occurred prior to the effective
date of any requirements imposing such notification or
reporting obligations or clean-up or remedial activities,
but which would have been subject to such obligations if
they had occurred subsequent to the effective date of such
requirements;
(iii) any discharges to surface waters or groundwaters occurring
on or prior to the Closing Date;
(iv) any air emissions occurring on or prior to the Closing Date;
(v) the exposure of and resulting consequences to any persons,
including, but not limited to, employees of the Company (or
any of its predecessors), to any mineral, chemical or
industrial product, raw material intermediate, by-product or
waste, or substance created, generated, processed, handled
or originating at a facility at which the Company (or any of
its predecessors) conducted business on or prior to the
Closing Date or otherwise used by the Company (or any of its
predecessors) in the conduct of its business;
(vi) any violations by the Company (or any of its predecessors)
occurring on or prior to the Closing Date of federal, state
or local (A) environmental laws, or (B) occupational or
employee health and safety laws;
(vii) any and all actions, failures to act and negligence in
monitoring, maintaining and upkeep of on-site storage,
treatment and disposal facilities on or prior to the Closing
Date;
(viii) any misuse, removal, failure to properly maintain and/or
monitor storage tanks on or prior to the Closing Date; or
(ix) any violations, fees, obligations or failures to comply with
any and all environmental permit requirements on or prior to
the Closing Date.
7.2 INDEMNIFICATION BY PURCHASER
(a) General - Subject to Section 7.4 hereof, Purchaser covenants and
agrees to defend, indemnify and hold each Vendor harmless for, from
and against any and all damages, losses, liabilities (absolute and
contingent), fines, penalties, costs and expenses (including, without
limitation, reasonable counsel fees and costs and expenses incurred in
the investigation, defense or settlement of any claim covered by this
indemnity) with respect to or arising out of any demand, claim,
inquiry, investigation, proceeding, action and/or cause of action that
any Vendor may suffer or incur by reason of: (a) the inaccuracy of any
of the representations or warranties of Purchaser contained in this
Agreement, or any of the agreements, certificates, documents, exhibits
or schedules delivered by Purchaser in connection with this Agreement;
and (b) the failure to comply with, the breach
32
<PAGE> 33
or the default by Purchaser of any of the covenants, warranties or
agreements made by Purchaser in this Agreement, or any of the
agreements, certificates, documents, exhibits or schedules delivered
by Purchaser in connection with this Agreement.
(b) Environmental - Subject to Section 7.4 hereof, Purchaser covenants and
agrees to defend, indemnify and hold each Vendor harmless for, from
and against any and all damages, losses, liabilities (absolute and
contingent), fines, penalties, costs and expenses (including, without
limitation, reasonable counsel fees and costs and expenses incurred in
the investigation, defense or settlement of any claim covered by this
indemnity) with respect to or arising out of any demand, claim,
inquiry, investigation, proceeding, action or cause of action brought
by any governmental agency or instrumentality or any Person other than
Vendors which any Vendor may suffer or incur by reason of:
(i) any generation, transportation, storage, treatment or
disposal of industrial, toxic or hazardous substances or
solid or hazardous wastes occurring after the Closing Date
including, without limitation, any waste or other disposal
activities or discharges that occur after the Closing Date
at a facility on which any portion of the business of the
Company is conducted, any waste or other disposal activities
or discharges that occur after the Closing Date off of any
such facility with regard to wastes and other substances
generated after the Closing Date on such facility, and any
waste or other disposal activities or discharges that occur
after the Closing Date on real estate owned or leased by the
Company, at any time after the Closing Date whether or not
the Company owns or leases such real estate at the time such
waste or other disposal activities or discharges are
engaged in, and whether or not the Company performs such
waste or other disposal activities or discharges;
(ii) any spills, discharges, leaks, emissions, injections,
escapes, dumping, or any releases as defined now or in the
future under the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, P.L. 96-510, as
amended or reauthorized from time to time, or any other
similar federal, state or local laws, statutes, rules or
regulations occurring after the Closing Date, including, but
not limited to, both those releases or incidents involving
environmental contamination which require notification or
reporting to appropriate federal, state or local officials
or agencies, or clean-up or remedial activities and those
releases or incidents which occurred prior to the effective
date of any requirements imposing such notification or
reporting obligations or clean-up or remedial activities,
but which would have been subject to such obligations if
they had occurred subsequent to the effective date of such
requirements;
(iii) any discharges to surface waters or groundwaters occurring
after the Closing Date;
33
<PAGE> 34
(iv) any air emissions occurring after the Closing Date;
(v) the exposure after the Closing Date of and resulting
consequences to any persons, including, but not limited to,
employees of Purchaser to any mineral, chemical or
industrial product, raw material intermediate, by-product
or waste, or substance created, generated, processed,
handled or originated after the Closing Date at a facility
at which Purchaser, or the Company conducts business after
the Closing Date or otherwise used after the Closing Date by
Purchaser or the Company in the conduct of its business or
contained in or constituting a part of merchandise which is
sold by Purchaser or the Company after the Closing Date;
(vi) any violations by Purchaser or the Company occurring after
the Closing Date of federal, state or local (A)
Environmental Laws, or (B) occupational or employee health
and safety laws;
(vii) any and all actions, failures to act and negligence in
monitoring, maintaining and upkeep of on-site storage,
treatment and disposal facilities after the Closing Date;
(viii) any misuse, removal, failure to properly maintain and/or
monitor storage tanks after the Closing Date; and
(ix) any violations, fees, obligations or failure to comply with
any and all environmental permit requirements after Closing
Date.
7.3 NOTICE AND RIGHT TO DEFEND THIRD-PARTY CLAIMS - Promptly upon receipt of
notice of any claim, demand or assessment or the commencement of any suit,
action or proceeding with respect to which indemnity may be sought pursuant to
this Agreement, the party seeking to be indemnified or held harmless (the
"Indemnitee") shall notify in writing, if possible, within sufficient time to
respond to such claim or answer or otherwise plead in such action (but in any
event within thirty (30) days), the party from whom indemnification is sought
(the "Indemnitor"). In case any claim, demand or assessment shall be asserted,
or suit, action or proceeding commenced against the Indemnitee, the Indemnitor
shall be entitled, at the Indemnitor's expense, to participate therein, and, to
the extent that it may wish, to assume the defense, conduct or settlement
thereof, at its own expense, with counsel satisfactory to the Indemnitee, whose
consent to the selection of counsel shall not be unreasonably withheld or
delayed, provided that the Indemnitor confirms to the Indemnitee that it is a
claim to which Indemnitee's rights of indemnification apply. The Indemnitor
shall have the right to settle or compromise monetary claims; however, as to any
other claim, the Indemnitor shall first obtain the prior written consent from
the Indemnitee, which consent shall be exercised in the sole discretion of the
Indemnitee. After notice from the Indemnitor to the Indemnitee of Indemnitor's
intent so to assume the defense, conduct, settlement or compromise of such
action, the Indemnitor shall not be liable to the Indemnitee for any legal or
other expenses (including, without limitation, settlement costs) subsequently
incurred by the Indemnitee in connection with the defense, conduct, settlement
or compromise of such action while the Indemnitor is diligently defending,
conducting, settling or compromising such action. The Indemnitor shall be
afforded at least thirty (30) days, at its sole
34
<PAGE> 35
cost and expense, to resist, defend and compromise any claim for which
indemnification is sought. The Indemnitor shall keep the Indemnitee promptly
apprised of the status of the suit, action or proceeding and shall make
Indemnitor's counsel available to the Indemnitee, at the Indemnitor's expense,
upon the request of the Indemnitee. The Indemnitee shall reasonably cooperate
with the Indemnitor in connection with any such claim and shall make personnel,
books and records and other information relevant to the claim available to the
Indemnitor during normal business hours to the extent that such personnel, books
and records and other information are in the possession and/or control of the
Indemnitee. If the Indemnitor decides not to participate, the Indemnitee shall
be entitled, at the Indemnitor's expense, to defend, conduct, settle and/or
compromise such matter with counsel satisfactory to the Indemnitor, whose
consent to the selection of counsel shall not be unreasonably withheld or
delayed.
7.4 SURVIVAL OF OBLIGATIONS - The liability of Vendors and Purchaser for
indemnification pursuant to this Article 7 shall (i) survive until terminated by
the applicable statute of limitations as to matters relating to: (a) ownership
and title to any of the assets of the Company; (b) ownership and title to the
capital stock of the Company; (c) competency to execute and deliver documents to
effect the transactions contemplated thereby and hereby, and the legal, binding
and enforceable nature thereof and hereof; (d) the environment; and (e) taxes;
(ii) expire three (3) years from the Closing Date with respect to claims not
made prior thereto relating to any price or reimbursement adjustment under any
contract or arrangement with the United States Government, any state government,
or any insurer or healthcare provider organization involving any liability,
claim and/or fraud with respect to billings or reimbursement under either
Medicare or Medicaid for services provided by the Company prior to the Closing
Date; and (iii) expire two (2) years from the Closing Date with respect to
claims not made prior thereto relating to all other matters not referenced in
this Section 7.4. This Section in no way limits any claims that an Indemnitee
may have against an Indemnitor for fraud or for the breach of any direct
covenant made by the Indemnitor to the Indemnitee contained in this Agreement or
the other agreements delivered in connection therewith.
ARTICLE 8
TERMINATION
8.1 RIGHT TO TERMINATE - Notwithstanding anything to the contrary contained
herein, this Agreement and the transactions contemplated hereby may be
terminated at any time prior to the Closing: (a) by Purchaser if the conditions
precedent set forth in Section 4.1 are not satisfied or waived in writing by
Purchaser; or (b) by Vendors if the conditions precedent set forth in Section
4.2 are not satisfied or waived in writing by Vendors. In addition, this
Agreement shall terminate if the Closing has not occurred by April 15, 1997,
unless extended by written agreement of the Parties hereto.
35
<PAGE> 36
ARTICLE 9
GENERAL
9.1 DISCLOSURE SCHEDULES - The Schedules referred to in Section 3.1 and Section
3.2 of this Agreement reflect information supplied to Purchaser and Vendors,
respectively, in the course of their investigation of the Company and Purchaser,
respectively. Vendors may supplement or amend any Schedule from time to time
prior to or at the Closing, by notice in accordance with the terms of this
Agreement, including by delivering one or more supplements or amendments to
correct any matter which would constitute a breach of any representation or
warranty contained herein. All references to any Schedule hereto which is
supplemented or amended as provided in this Section 9.1 shall, for all purposes,
whether or not the transactions contemplated hereby occur, be deemed to be a
reference to such Schedule as so supplemented or amended.
9.2 PUBLIC NOTICES - All public notices to third parties and all other publicity
concerning the transactions contemplated by this Agreement shall be jointly
planned and coordinated by the Vendors and the Purchaser and no Party shall act
unilaterally in this regard without the prior approval of the Vendors and the
Purchaser or the other of them.
9.3 EXPENSES - The expenses incurred by each party hereto in connection with
this Agreement and the transactions provided herein shall be borne by such
party. Notwithstanding the foregoing, all professional fees incurred by the
Vendors in connection with the transactions contemplated by this Agreement shall
be borne by the Vendors and all expenses incurred in connection with the
preparation of any environmental reports after the date of execution of this
Agreement with respect to the real property owned or leased by the Company shall
be borne by the Purchaser (which reports shall remain the property of the
Purchaser following the Closing).
9.4 TIME - Time shall be of the essence hereof.
9.5 NOTICES - Any notice, direction or other document required or permitted to
be given hereunder or for the purposes hereof (hereinafter in this Section 9.5
called a "notice") to any Party shall be in writing and shall be sufficiently
given if delivered personally, or if sent by prepaid registered mail or if
transmitted by telex, facsimile or other form of recorded communication tested
prior to transmission to such Party:
(a) in the case of a notice to the Vendors to:
Robert E. Ramsey, Jr.
222 Main Street East
Mesa, Arizona 85201
36
<PAGE> 37
with a copy to the Vendors' Counsel at
Gallagher & Kennedy, P.A.
2600 North Central Avenue
Phoenix, AZ 85004-3020
Attention: Terence W. Thompson, Esq.
with a facsimile number of (602) 257-9459.
(b) in the case of a notice to the Purchaser at
8401 E. Indian School Road
Scottsdale, Arizona 85251
Attention: Warren S. Rustand
with a facsimile number of (602) 481-3328
with a copy to Purchaser's Counsel at
O'Connor Cavanagh Anderson
Killingsworth & Beshears, P.A.
One E. Camelback Road, Suite 1100
Phoenix, Arizona 85012
Attention: John B. Furman, Esq.
with a facsimile number of (602) 263-2900
or at such other address as the Party to whom such writing is to be given shall
have last notified the Party giving the same in the manner provided in this
section. Any notice delivered in person to the Party to whom it is addressed as
hereinbefore provided shall be deemed to have been given and received on the day
it is so delivered at such address, provided that if such day is not a Business
Day then the notice shall be deemed to have been given and received on the first
Business Day next following such day. Any notice mailed as aforesaid shall be
deemed to have been given and received on the seventh Business Day following the
date of its mailing. Any notice transmitted by telex, facsimile or other form of
recorded communication shall be deemed given and received on the Business Day of
its transmission.
9.6 ASSIGNMENT - Neither this Agreement nor any rights or obligations hereunder
shall be assignable by any Party without the prior written consent of the other
Party hereto; provided, however, that the Vendors shall be entitled to assign
their rights to receive payments hereunder (or under any related documents) to
any person without the consent of the Purchaser. Subject thereto, this Agreement
shall enure to the benefit of and be binding upon the Parties and their
respective heirs, executors, administrators and successors (including any
successor by reason of amalgamation of the Purchaser) and permitted assigns.
9.7 FURTHER ASSURANCES - The Parties hereto shall with reasonable diligence do
all such things and provide all such reasonable assurances as may be required to
consummate the transactions contemplated hereby, and each Party shall provide
such further documents or instruments required by any other Party as may be
reasonably necessary or desirable to effect the purpose of this Agreement and
carry out its provisions, whether before or after the Closing.
37
<PAGE> 38
9.8 SEVERABILITY - If any covenant or provision of this Agreement (other than
the provisions pertaining to payments to be made to the Vendors) is prohibited
in whole or in part in any jurisdiction, such covenant or provision shall, as to
such jurisdiction, be ineffective to the extent of such prohibition without
invalidating the remaining covenants and provisions hereof and shall, as to such
jurisdiction, be deemed to be severed from this Agreement to the extent of such
prohibition.
9.9 COUNTERPARTS - This Agreement may be executed by the Parties in separate
counterparts (and by facsimile transmission) each of which when so executed and
transmitted or delivered shall be an original, but all such counterparts shall
together constitute one and the same instrument.
9.10 MEDIATION AND ARBITRATION - Any dispute, controversy or claim (including
without limitation tort claims, requests for provisional remedies or other
interim relief, and issues as to the arbitrability of any matter) arising out of
or relating to this Agreement, or breach thereof, (a) shall be settled by
negotiation at a meeting between the Vendors and the chief executive officer of
the Purchaser held in Phoenix, Arizona within 5 days after notice given by any
party hereto to the other parties hereto, and (b) if within that 5 day period
settlement cannot be achieved through negotiation, it shall be settled (i)
first, by the parties trying in good faith to settle the dispute by mediation
under the Commercial Mediation Rules of the American Arbitration Association
("AAA") (such mediation session to be held in Phoenix, Arizona and to commence
with 10 days of the appointment of the mediator by the AAA), and (ii) if the
controversy, claim or dispute cannot be settled by mediation, then by
arbitration administered by the AAA under its Commercial Arbitration Rules and
in accordance with its expedited hearing procedures (such arbitration to be held
in Phoenix, Arizona before a single arbitrator by the AAA), and judgment on the
award rendered by the arbitrator may be entered in any court having jurisdiction
thereof.
9.11 ATTORNEYS' FEES - If any action is necessary to enforce the terms of this
Agreement, the prevailing party shall be entitled to recover from the other
party all costs, expenses and fees incurred by the prevailing party (including
reasonable attorneys' fees, costs and disbursements) in addition to other relief
to which the prevailing party may be entitled.
38
<PAGE> 39
IN WITNESS WHEREOF, the Parties have set their hand this 25th day of
February, 1997 through our trust in God and our service to others. . . . for
life.
Rural/Metro Corporation, a Delaware corporation
By: /s/ James H. Bolin
---------------------------------------------
James H. Bolin, President
/s/ Robert E. Ramsey, Jr.
--------------------------------------------------
Robert E. Ramsey, Jr., individually
/s/ Patrick McGroder
--------------------------------------------------
Patrick McGroder, individually
/s/ Barry Landon
--------------------------------------------------
Barry Landon, individually
/s/ Gary Ramsey
--------------------------------------------------
Gary Ramsey, individually
39
<PAGE> 40
CONSENT OF SPOUSE
The undersigned spouse of Robert E. Ramsey, Jr., who is a party to the
above Agreement of Purchase and Sale, pertaining to the sale of the stock of
Southwest General Services, Inc., an Arizona corporation (the "Agreement"),
hereby declares, contemporaneously with the execution of the Agreement, that she
has read the Agreement in its entirety, and being fully convinced of the wisdom
and equity of the terms of the Agreement, and in consideration of the premises
and of the provisions of the Agreement, hereby expresses her consent to the
execution and consummation of the Agreement by Robert E. Ramsey, Jr.
The undersigned further agrees that in the event of the death of Robert E.
Ramsey, Jr., the dissolution of their marriage, or any occurrence contemplated
by the Agreement that gives rise to any liability or obligation of Robert E.
Ramsey, Jr., the provisions of the Agreement shall be binding upon her to the
extent of any community property she may now have or hereafter acquire, and any
and all separate property that she may hereafter possess which arises (directly
or indirectly) from any consideration given to Robert E. Ramsey, Jr. pursuant to
the Agreement or any agreement executed in connection thereto.
The undersigned further agrees that she will, at any and all times, make,
execute and deliver such instruments and documents as may be reasonably
necessary to carry out the provisions of the Agreement, provided that no such
documents require the incurring of any liabilities in excess of that already
provided in the Agreement.
Dated this 24th day of February, 1997.
/s/ Virginia (Jenny) L. Norton
--------------------------------------------------
Virginia (Jenny) L. Norton
State of Arizona )
County of Maricopa)
The foregoing instrument was acknowledged before me this 24th day of February,
1997 by Virginia (Jenny) L. Norton.
[SEAL] /s/ Jacque Tenge
-----------------------------
Notary Public
<PAGE> 41
CONSENT OF SPOUSE
The undersigned spouse of Patrick McGroder, who is a party to the above
Agreement of Purchase and Sale, pertaining to the sale of the stock of Southwest
General Services, Inc., an Arizona corporation (the "Agreement"), hereby
declares, contemporaneously with the execution of the Agreement, that she has
read the Agreement in its entirety, and being fully convinced of the wisdom and
equity of the terms of the Agreement, and in consideration of the premises and
of the provisions of the Agreement, hereby expresses her consent to the
execution and consummation of the Agreement by Patrick McGroder.
The undersigned further agrees that in the event of the death of Patrick
McGroder, the dissolution of their marriage, or any occurrence contemplated by
the Agreement that gives rise to any liability or obligation of Patrick
McGroder, the provisions of the Agreement shall be binding upon her to the
extent of any community property she may now have or hereafter acquire, and any
and all separate property that she may hereafter possess which arises (directly
or indirectly) from any consideration given to Patrick McGroder pursuant to the
Agreement or any agreement executed in connection thereto.
The undersigned further agrees that she will, at any and all times, make,
execute and deliver such instruments and documents as may be reasonably
necessary to carry out the provisions of the Agreement, provided that no such
documents require the incurring of any liabilities in excess of that already
provided in the Agreement.
Dated this 25th day of February, 1997.
/s/ Susan McGroder
-------------------------
Susan McGroder
State of Arizona )
)
County of Maricopa)
On this 25 day of February, 1997, before me, the undersigned Notary Public,
personally appeared Susan McGroder who acknowledged to me that she signed the
foregoing instrument for the purposes and contents therein contained.
My Commission expires:
6-1-97 /s/ Deborah A. Francis
- --------------------- -----------------------------
Notary Public
<PAGE> 42
CONSENT OF SPOUSE
The undersigned spouse of Barry Landon, who is a party to the above
Agreement of Purchase and Sale, pertaining to the sale of the stock of Southwest
General Services, Inc., an Arizona corporation (the "Agreement"), hereby
declares, contemporaneously with the execution of the Agreement, that she has
read the Agreement in its entirety, and being fully convinced of the wisdom and
equity of the terms of the Agreement, and in consideration of the premises and
of the provisions of the Agreement, hereby expresses her consent to the
execution and consummation of the Agreement by Barry Landon.
The undersigned further agrees that in the event of the death of Barry
Landon, the dissolution of their marriage, or any occurrence contemplated by the
Agreement that gives rise to any liability or obligation of Barry Landon, the
provisions of the Agreement shall be binding upon her to the extent of any
community property she may now have or hereafter acquire, and any and all
separate property that she may hereafter possess which arises (directly or
indirectly) from any consideration given to Barry Landon pursuant to the
Agreement or any agreement executed in connection thereto.
The undersigned further agrees that she will, at any and all times, make,
execute and deliver such instruments and documents as may be reasonably
necessary to carry out the provisions of the Agreement, provided that no such
documents require the incurring of any liabilities in excess of that already
provided in the Agreement.
Dated this 25th day of February, 1997.
/s/ Margaret Anne Landon
-----------------------------------
Margaret Anne Landon
State of Arizona )
County of Maricopa)
The foregoing was acknowledged before me this 25th day of February,
1997 by Margaret Anne Landon.
[SEAL] /s/ Jacque Tenge
-----------------------------
Notary Public
<PAGE> 43
CONSENT OF SPOUSE
The undersigned spouse of Gary Ramsey, who is a party to the above
Agreement of Purchase and Sale, pertaining to the sale of the stock of Southwest
General Services, Inc., an Arizona corporation (the "Agreement"), hereby
declares, contemporaneously with the execution of the Agreement, that she has
read the Agreement in its entirety, and being fully convinced of the wisdom and
equity of the terms of the Agreement, and in consideration of the premises and
of the provisions of the Agreement, hereby expresses her consent to the
execution and consummation of the Agreement by Gary Ramsey.
The undersigned further agrees that in the event of the death of Gary
Ramsey, the dissolution of their marriage, or any occurrence contemplated by the
Agreement that gives rise to any liability or obligation of Gary Ramsey, the
provisions of the Agreement shall be binding upon her to the extent of any
community property she may now have or hereafter acquire, and any and all
separate property that she may hereafter possess which arises (directly or
indirectly) from any consideration given to Gary Ramsey pursuant to the
Agreement or any agreement executed in connection thereto.
The undersigned further agrees that she will, at any and all times, make,
execute and deliver such instruments and documents as may be reasonably
necessary to carry out the provisions of the Agreement, provided that no such
documents require the incurring of any liabilities in excess of that already
provided in the Agreement.
Dated this 25th day of February, 1997.
/s/ Denise Ramsey
-----------------------------------
Denise Ramsey
State of Arizona )
County of Maricopa)
The foregoing instrument was acknowledged before me this 25th day of
February, 1997.
[SEAL] /s/ Jacque Tenge
-----------------------------
Notary Public
<PAGE> 44
APPENDIX J
(i) All real property leased by the Company from NRM Properties, Inc.
or Chaparral Properties, Inc. (the "Leased Properties") is set forth in Schedule
"J" and is zoned as set forth on Schedule "J", pursuant to the ordinances of the
applicable cities, towns, villages or townships identified on such Schedule "J",
and is not located in an area that has been identified by the Secretary of
Housing and Urban Development as an area of special flood hazard. The uses to
which such real property are presently put do not violate or conflict with the
applicable provisions of such zoning ordinances, or other zoning laws of such
cities, towns, villages or townships or any other governmental body.
(ii) The Company does not sublease any of its Leased Properties. The
Company does not lease any of its owned real property.
(iii) Neither the Company nor any Vendor, nor any one or more of them,
has retained or engaged any real estate broker, commission agent or other person
who is or may be entitled to payment of a commission or finder's fee or other
compensation in connection with any of the Leased Properties.
(iv) As to the Leased Properties, the present use and operation of the
real property is authorized by and in compliance with all applicable building,
fire, health, labor and safety laws, ordinances, rules and regulations
applicable to the real property, including, without limitation, OSHA, and the
Americans with Disabilities Act, and there is no litigation, action, proceeding
or any present plan or study by any governmental authority or any private person
or entity which in any way would affect the present use and operation of the
real property. There are in existence all licenses, permits and approvals that
are required for the use and operation of the Leased Properties, and no Vendor
has any reason to believe that any of the same are in jeopardy of being revoked
or not being reissued upon expiration.
(v) No Vendor has any knowledge of any fact or condition existing
which would result or could result in the termination or reduction of the
current access from the Leased Properties to existing public roads and highways,
or of any reduction in sewer or other utility services presently serving the
Leased Properties. Leased Properties have direct access to dedicated roads and
highways and all utility services to the Leased Properties are furnished through
dedicated or perpetual easements.
(vi) As to the Leased Properties, no Vendor has received notice from
any insurance company of any defects or inadequacies in such real property or
any part thereof which would materially and adversely affect the insurability of
the real property or the premiums for the insurance thereof.
(vii) As to the Leased Properties, no Vendor has failed to disclose
any material conditions of disrepair or other adverse conditions or defects with
respect to such
Appendix J-1
<PAGE> 45
real property or any portion thereof of which that Vendor has knowledge or
which, with the exercise of reasonable diligence, that Vendor should have known.
(viii) As to the Leased Properties, no Vendor has any knowledge of any
planned public improvement which might result in a special assessment levied
against such real property. If any Vendor becomes aware of any of the foregoing
(whether arising before or after the date hereof) after the date hereof, but
prior to Closing, that Vendor shall give prompt written notice thereof to
Purchaser prior to Closing.
Appendix J-2
<PAGE> 46
AMENDMENT TO AGREEMENT OF PURCHASE AND SALE
WHEREAS, RURAL/METRO CORPORATION, a Delaware corporation ("Purchaser"), ROBERT
E. RAMSEY, JR., an individual ("R. Ramsey"), BARRY LANDON ("Landon"), PATRICK
MCGRODER ("McGroder"), and GARY RAMSEY ("G. Ramsey") (R. Ramsey, McGroder,
Landon and G. Ramsey may be hereinafter referred to collectively as the
"Vendors"), signed that certain Agreement of Purchase and Sale, made as of
February 25, 1997 (the "Agreement"), with respect to the purchase of all the
issued and outstanding shares of the stock of SOUTHWEST GENERAL SERVICES, INC.,
an Arizona corporation (the "Company").
WHEREAS, Purchaser and Vendors desire to extend the Closing Date (as defined in
the Agreement), and amend the Agreement as set forth in this Amendment.
NOW, THEREFORE, in consideration of the premises and the mutual agreements and
covenants herein contained (the adequacy of which consideration as to each of
the parties hereto is hereby mutually admitted), the parties hereto hereby amend
the Agreement as follows:
1. Section 1.1(e) of the Agreement is hereby modified to read as
follows:
"Closing Date" means the earlier of May 30, 1997 or
five (5) business days following the satisfaction or
waiver of all conditions precedent to the
transactions contemplated by this Agreement, or such
other date as the Parties may mutually agree in
writing;"
2. The last sentence of Section 8.1 of the Agreement is hereby amended
to read as follows:
"In addition, this Agreement shall terminate if the
Closing has not occurred by May 30, 1997, unless
extended by written agreement of the Parties hereto."
3. This Amendment shall constitute a written extension as contemplated
by the original Section 8.1 of the Agreement.
4. The terms and conditions set forth in the letter agreement, dated
April 15, 1997, by and among Purchaser, Bob Ramsey and Barry Landon, Trustee for
the Southwest
<PAGE> 47
ESOP, a copy of which letter agreement is attached hereto as Exhibit A, shall
constitute amendments and supplemental provisions to the Agreement, as
applicable.
5. This Amendment may be executed by the parties hereto in separate
counterparts (and by facsimile transmission) each of which when so executed and
transmitted or delivered shall be an original, but all such counterparts shall
together constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have set their hand as of the
15th day of April, 1997, through our trust in God and our service to others ...
for life.
RURAL/METRO CORPORATION, a
Delaware corporation
By: /s/ James H. Bolin
____________________________________
James H. Bolin, President
/s/ Robert E. Ramsey, Jr.
_______________________________________
Robert E. Ramsey, Jr., individually
/s/ Patrick McGroder
_______________________________________
Patrick McGroder
/s/ Barry Landon
_______________________________________
Barry Landon
/s/ Gary Ramsey
_______________________________________
Gary Ramsey
2
<PAGE> 48
I HEREBY CONSENT TO THE TERMS
OF THIS AMENDMENT as of the 15th day
of April, 1997:
_______________________________
Virginia (Jenny) L. Norton
_______________________________
Susan McGroder
_______________________________
Margaret Anne Landon
_______________________________
Denise Ramsey
3
<PAGE> 49
EXHIBIT A
April 15, 1997
James H. Bolin, President
Rural/Metro Corporation
8401 E. Indian School Road
Scottsdale, Arizona 85251
Dear Jim:
In response to our phone conversation in which we discussed the
extension of the Agreement of Purchase and Sale between Rural/Metro and SW
General, Inc., Southwest Ambulance of Casa Grande, Inc., Medical Emergency
Devices and Services (MEDS), Inc. and Southwest General Services, Inc., I am
asking for your acknowledgment of the following clarifications:
1. SW General, Inc. shall, effective May 1, 1997, enter into a lease for the
3.5 acres of land adjacent to our facility at 617 W. Main. This land has been
used by Southwest since last year without any rental fees being paid. The need
for a new lease was disclosed during the due diligence process and will be
added to the Book of Schedules under Schedule "J".
2. The original "Normalization Work Sheet" which was presented to you in
January of this year was omitted from the Schedules. The Normalization Work
Sheet will be added to the Book of Schedules under Section "H".
Additionally, Rural Metro, as presented in the Normalization Worksheet, has
acknowledged the annual draws/management fees paid to Bob Ramsey associated
with the ownership of the "S" corporations and SW General, Inc. These
draws/management fees shall continue in practice until the closing of the
Agreements at which time they shall cease and the start up of the Ramsey
employment contract shall take effect.
3. Prior to 12/31/96 the equity of Southwest Ambulance of Casa Grande, Inc.
and MEDS were drawn out by Bob Ramsey and loaned back to the corporations as
represented by the "Notes Payable" in Schedules "A" & "C", on the respective
balance sheets of the corporations. Subsequent to 1/1/97, Bob Ramsey has drawn
the
<PAGE> 50
equity out of Southwest General Services, Inc. The equity and all state and
federal taxes have been met by these transactions.
4. From the time period from January 1, 1997 through the date of closing all
profits of the identified "S" corporations are passed on to SW General, Inc.
through a management fee resulting in a zero equity position. This action is
reflected in the financial statements of February and March, 1997 as presented
to Rural/Metro through the due diligence process. (See Schedule "A")
5. As identified in Section 5.1(b)(ii) of the Agreement, Southwest shall, prior
to close and during the normal course of business, expense such items as
management fees, annual bonus', required capital expenditures (except the two
new ambulances previously identified by SW) and miscellaneous expenses, which
shall be acceptable to Rural/Metro so long as the $2,045,000 of this section is
maintained per the Agreement.
6. Two new ambulances which were previously disclosed must be funded at this
time. This expenditure, as invoiced, shall not be utilized in the debt formulas
identified in the warranties with the original Purchase and Sale Agreement.
7. Rural/Metro acknowledges that Ramsey may exceed the $2,045,000 as identified
in section 5 above, for the purpose of purchasing the ownership interests of
William Kordsiemon in MOROKO, Inc. Utilization of these funds in excess of the
$2,045,000 will be deducted from the MEDS purchase transaction.
8. Rural/Metro re-clarifies the understanding as to Bob Ramsey's position,
responsibility and reporting structure as follows:
- Bob Ramsey will serve as President and CEO of Southwest companies with
direct management authority over the Arizona ambulance operations of
Rural/Metro except where the fire department personnel directly
operates the ambulance unit. In this capacity he shall report directly
to Bob Edwards or to Warren Rustand and not to any Regional President.
- Bob Ramsey agrees to serve as a member of the Board of Directors of
Rural/Metro Corporation.
- Bob Ramsey will serve in a senior executive position as a
vice-president of Rural/Metro (reference: Employment Agreement and
Letter of Intent) reporting to the office of the CEO under the
direction of Warren Rustand.
<PAGE> 51
(See also the Letter of Intent dated January 31, 1997 and the Agreements
of Purchase and Sale dated February 25, 1997 as referenced herein and
exhibited in Schedule "C" of the Agreement.)
As agreed, the closing date will be extended to Friday, May 30, 1997.
Additionally, before implementation, I would like to initially meet with
Warren, Bob and yourself to review the initial and mid-term efficiencies
created by the acquisition and merging of the entities.
This letter of agreement and extension, as signed by the parties below,
shall be incorporated into the Agreement.
ACKNOWLEDGED AND ACCEPTED AS OF THE DATE FIRST WRITTEN ABOVE.
RURAL/METRO CORPORATION
/s/ Bob Ramsey /s/ James Bolin
- ------------------------------ By: --------------------------
Bob Ramsey James Bolin
Its: President
/s/ Barry Landon
- ------------------------------
Barry Landon
Trustee for the Southwest ESOP
cc: Warren Rustand
<PAGE> 52
SECOND AMENDMENT TO AGREEMENT OF PURCHASE AND SALE
WHEREAS, RURAL/METRO CORPORATION, a Delaware corporation ("Purchaser"), ROBERT
E. RAMSEY, JR., an individual ("R. Ramsey"), BARRY LANDON ("Landon"), PATRICK
MCGRODER ("McGroder"), and GARY RAMSEY ("G. Ramsey") (R. Ramsey, Landon,
McGroder, and G. Ramsey may be hereinafter referred to collectively as the
"Vendors"), signed that certain Agreement of Purchase and Sale, made as of
February 25, 1997, and that certain Amendment to Agreement of Purchase and Sale,
made as of April 15, 1997 (together, the "Agreement"), with respect to the
purchase of all the issued and outstanding shares of the stock of SOUTHWEST
GENERAL SERVICES, INC., an Arizona corporation (the "Company"). All defined
terms used herein but not otherwise defined shall have the meaning set forth in
the Agreement.
WHEREAS, Purchaser and Vendors desire to extend the Closing Date (as defined in
the Agreement), and amend the Agreement as set forth in this Second Amendment.
NOW, THEREFORE, in consideration of the premises and the mutual agreements and
covenants herein contained (the adequacy of which consideration as to each of
the parties hereto is hereby mutually admitted), the parties hereto hereby amend
the Agreement as follows:
1. Section 1.1(e) of the Agreement is hereby modified to read as
follows:
"Closing Date" means the earlier of July 31, 1997 or
five (5) business days following the satisfaction or
waiver of all conditions precedent to the
transactions contemplated by this Agreement, or such
other date as the Parties may mutually agree in
writing;"
2. The last sentence of Section 8.1 of the Agreement is hereby amended
to read as follows:
"In addition, this Agreement shall terminate if the
Closing has not occurred by July 31, 1997, unless
extended by written agreement of the Parties hereto."
3. This Second Amendment shall constitute a written extension as
contemplated by the original Section 8.1 of the Agreement.
4. The terms and conditions set forth in the letter agreement, dated
May 30, 1997, by and among Purchaser, Bob Ramsey and Barry Landon, Trustee for
the Southwest
<PAGE> 53
ESOP, a copy of which letter agreement is attached hereto as Exhibit A (the
"Letter Agreement"), shall constitute amendments and supplemental provisions to
the Agreement, as applicable, subject to the following: Paragraph 5 of the
Letter Agreement shall be interpreted as a $277,000 indemnification threshold
with respect to claims other than Third Party Claims, in the same manner as the
$50,000 indemnification threshold for Third Party Claims in Section 7.5 of the
Agreement of Purchase and Sale regarding SW General, Inc., and the $277,000
indemnification threshold shall be an aggregate threshold against the liability
of the Vendors for indemnification arising from any of the Agreements of
Purchase and Sale pertaining to the Southwest Companies.
5. The Vendors represent and warrant that the Company is and shall be
at the Closing a valid S-Corporation as defined in Section 1361 of the Code.
6. This Second Amendment may be executed by the parties hereto in
separate counterparts (and by facsimile transmission) each of which when so
executed and transmitted or delivered shall be an original, but all such
counterparts shall together constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have set their hand as of the
30th day of May, 1997, through our trust in God and our service to others ...
for life.
WE HEREBY CONSENT TO THE RURAL/METRO CORPORATION, a
TERMS OF THIS SECOND Delaware corporation
AMENDMENT as of the 30th day
of May, 1997:
By: /s/ James H. Bolin
____________________________________
James H. Bolin, President
/s/ Robert E. Ramsey, Jr.
_______________________________ _______________________________________
Virginia (Jenny) L. Norton Robert E. Ramsey, Jr., individually
/s/ Patrick McGroder
_______________________________ _______________________________________
Susan McGroder Patrick McGroder
/s/ Barry Landon
_______________________________ _______________________________________
Margaret Anne Landon Barry Landon
/s/ Gary Ramsey
_______________________________ _______________________________________
Denise Ramsey Gary Ramsey
2
<PAGE> 54
THIRD AMENDMENT TO AGREEMENT OF PURCHASE AND SALE
A. WHEREAS, RURAL/METRO CORPORATION, a Delaware corporation
("Purchaser"), ROBERT E. RAMSEY, JR., an individual ("R. Ramsey"), BARRY LANDON
("Landon"), PATRICK MCGRODER ("McGroder"), and GARY RAMSEY ("G. Ramsey") (R.
Ramsey, Landon, McGroder, and G. Ramsey may be hereinafter referred to
collectively as the "Vendors"), signed that certain Agreement of Purchase and
Sale, made as of February 25, 1997, that certain Amendment to Agreement of
Purchase and Sale, made as of April 15, 1997, and that certain Second Amendment
to Agreement of Purchase and Sale, made as of May 30, 1997, (the "Agreement"),
with respect to the purchase of all the issued and outstanding shares of the
stock of SOUTHWEST GENERAL SERVICES, INC., an Arizona corporation (the
"Company"). All defined terms used herein but not otherwise defined shall have
the meaning set forth in the Agreement;
B. WHEREAS, the Agreement and exhibits thereto incorrectly state that
R. Ramsey is the registered and beneficial owner of 769 of the Purchased Shares;
C. WHEREAS, R. Ramsey is the registered and beneficial owner of 469 of
the Purchased Shares and Patrick Cantelme ("Cantelme") is the registered and
beneficial owner of 300 of the Purchased Shares; and
D. WHEREAS, Cantelme and the parties to the Agreement as originally
executed and delivered desire to amend the Agreement as provided herein.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements and covenants herein contained (the adequacy of which consideration
as to each of the parties hereto is hereby mutually admitted), the parties
hereto hereby amend the Agreement as follows:
1. For all purposes under and in connection with the Agreement
(including any all amendments thereto, exhibits or schedules thereto and any
documents, agreements and instruments delivered at the Closing of the
Agreement), (a) the terms "Vendor" and "Vendors" shall be deemed to include
Cantelme, in addition to the Vendors named in the Agreement as originally
executed and delivered and (b) the ownership of Purchased Shares and the
allocation of the aggregate Purchase Price therefor, shall be changed to reflect
the fact that the 769 Purchased Shares incorrectly indicated as being held by R.
Ramsey are held by R. Ramsey as to 469 of such shares and by Cantelme as to 300
of such shares.
2. The parties hereto agree that Cantelme shall be deemed a "Vendor"
for all purposes under or in connection with the Agreement, as if named as a
Vendor in the Agreement when and as originally executed by the original parties
thereto, and as if it had executed and delivered the Agreement when and as
originally executed by the original parties thereto. Cantelme and the parties to
the Agreement as originally executed and
<PAGE> 55
delivered agree that Cantelme and the other Vendors shall be jointly and
severally liable for the obligations of the Vendors as and to the extent set
forth in the Agreement.
3. Cantelme and each of the Vendors named in the Agreement as
originally executed and delivered represent and warrant to Purchaser that (a)
the recitals set forth in paragraphs B and C above are true and correct as of
the date hereof, and (b) that Cantelme has full power and authority to execute
and deliver this Fourth Amendment.
4. This Third Amendment may be executed by the parties hereto in
separate counterparts (and by facsimile transmission) each of which when so
executed and transmitted or delivered shall be an original, but all such
counterparts shall together constitute one and the same instrument.
2
<PAGE> 56
IN WITNESS WHEREOF, the parties hereto have set their hand as of the
30th day of June, 1997, through our trust in God and our service to others ...
for life.
WE HEREBY CONSENT TO THE
TERMS OF THIS THIRD
AMENDMENT as of the 30th day
of June, 1997:
RURAL/METRO CORPORATION, a
Delaware corporation
By:_________________________________
Dean Hoffman, Director of
Finance
/s/ Robert E. Ramsey, Jr.
- ------------------------------------
Robert E. Ramsey, Jr.
/s/ Patrick McGroder
- ------------------------------------
Patrick McGroder
/s/ Barry Landon
- ------------------------------------
Barry Landon
/s/ Gary Ramsey
- ------------------------------------
Gary Ramsey
/s/ Patrick Cantelme
- ------------------------------------
Patrick Cantelme
3
<PAGE> 1
EXHIBIT 10.52
AGREEMENT OF PURCHASE AND SALE
THIS AGREEMENT OF PURCHASE AND SALE ("Agreement") is made as of this
25th day of February, 1997
BETWEEN:
Rural/Metro Corporation, a Delaware corporation
("Purchaser")
-and-
Robert E. Ramsey, Jr., an individual
("Ramsey" and also referred to herein as "Vendors" and "Vendor")
RECITALS:
WHEREAS, the Vendor owns and controls all the issued and outstanding
shares of the stock of Medical Emergency Devices and Services (MEDS), Inc., an
Arizona corporation (the "Company");
AND WHEREAS, the Vendor desires to sell and the Purchaser desires to
purchase all of the said issued and outstanding shares of the stock of the
Company owned by the Vendor all upon and subject to the terms and conditions
hereinafter set forth;
NOW THEREFORE, in consideration of the premises and the mutual
agreements and covenants herein contained (the adequacy of which consideration
as to each of the parties hereto is hereby mutually admitted), the parties
hereto hereby covenant and agree as follows:
ARTICLE 1
DEFINITIONS AND PRINCIPLES OF INTERPRETATION
1.1 DEFINITIONS - Whenever used in this Agreement, unless there is something in
the subject matter or context inconsistent therewith, the following words and
terms shall have the respective meanings ascribed to them as follows:
<PAGE> 2
(a) "Agreement" means this Agreement of Purchase and Sale and all
instruments supplemental hereto or in amendment or
confirmation hereof;
(b) "Business" means the business presently carried on by the
Company consisting of the provision of emergency and
non-emergency medical transportation services and related
billing and management services;
(c) "Business Day" means a day other than a Saturday, Sunday or
any day on which the principal commercial banks located in
Phoenix, Arizona are not open for business during normal
banking hours;
(d) "Closing" means the completion of the sale to and purchase by
the Purchaser of the Purchased Shares hereunder by the
transfer and delivery of documents of title thereto and the
payment of the purchase price therefore as contemplated
herein;
(e) "Closing Date" means the earlier of April 15, 1997 or five (5)
business days following the satisfaction or waiver of all
conditions precedent to this transaction, or such other date
as the Parties may mutually agree in writing;
(f) "Closing Time" means 10 o'clock a.m., Phoenix, Arizona local
time, on the Closing Date, or such other time on the Closing
Date as the Parties may agree;
(g) "Employment Agreement" means the employment agreement to be
entered into by and between Ramsey and Purchaser at the
Closing, as contemplated by the Agreement of Purchase and Sale
of even date herewith pertaining to SW General, Inc., an
Arizona corporation.
(h) "Financial Statements" means the unaudited financial
statements of the Company, including a balance sheet as of
December 31, 1996, and an operating statement for the twelve
(12) month period then ended; copies of which are annexed as
Schedule "A" hereto;
(i) "Parties" means, collectively, the Vendors and the Purchaser,
and "Party" means any one of them;
(j) "Person" means any individual, corporation, partnership,
limited liability company, trust or unincorporated association
or similar entity, and pronouns have a similarly extended
meaning;
(k) "Purchase Price" means the purchase price to be paid by the
Purchaser to the Vendors for the Purchased Shares as provided
in Section 2.1 hereof;
(l) "Purchased Shares" means all the issued and outstanding common
shares of the stock of the Company;
2
<PAGE> 3
(m) "Southwest Companies" means, collectively, the Company,
Southwest Ambulance of Casa Grande, Inc., SW General Inc., and
Southwest General Services, Inc.
Terms defined in the preamble, recitals and body of this Agreement shall have
the same meanings herein as are ascribed thereto in the preamble, recitals and
body.
1.2 GENDER AND NUMBER - Words importing the singular include the plural and vice
versa; words importing gender include all genders.
1.3 ENTIRE AGREEMENT - This Agreement, including the Schedules and Exhibits
hereto, together with the agreements, certificates, and other documents and
instruments to be delivered pursuant hereto, constitute the entire agreement
between the Parties pertaining to the subject matter hereof and supersede all
prior agreements, understandings, negotiations and discussions, whether oral or
written, of the Parties and there are no warranties, representations or other
agreements between the Parties in connection with the subject matter hereof
except as specifically set forth herein and therein.
1.4 WAIVERS, ETC. - No supplement, modification, waiver or termination of this
Agreement shall be binding unless executed in writing by the Party to be bound
thereby. No waiver of any of the provisions of this Agreement, in whole or in
part, shall be deemed or shall constitute a waiver of any other provisions
hereof (whether or not similar), nor shall such waiver constitute a continuing
waiver unless otherwise expressly provided.
1.5 OTHER WORDS AND PHRASES - In this Agreement, unless otherwise expressly
provided (i) the words "hereof", "herein", "hereto" and "hereunder" and words of
similar import refer to this Agreement as a whole and not to the particular
Article, Section, Subsection, paragraph or other subdivision, and (ii) all
references to designated "Articles", "Sections", "Subsections", "paragraphs" or
other subdivisions are to the designated Articles, Sections, Subsections,
paragraphs and other subdivisions of this Agreement.
1.6 HEADINGS - The Article and Section headings contained herein are included
solely for convenience of reference, are not intended to be full or accurate
descriptions of the content thereof and shall not be considered part of this
Agreement.
1.7 APPLICABLE LAW - This Agreement and the rights, obligations and relations of
the Parties shall be governed by and construed in accordance with the laws of
the State of Arizona and the federal laws of the United States applicable
therein.
1.8 ACCOUNTING TERMS - All accounting terms shall have the meanings ascribed to
them in accordance with generally accepted accounting principles consistently
applied, and all references to "generally accepted accounting principles" shall
be deemed to be, unless otherwise specified, reference to accounting principles
which are generally accepted in the United States.
3
<PAGE> 4
1.9 SCHEDULES AND APPENDICES - The following are the schedules and appendices
attached to and incorporated in this Agreement by reference and deemed to be an
integral part hereof:
Schedule "A" - Financial Statements
Schedule "B" - Authorized and Issued Share Capital, Share
Ownership, and Purchase Price Allocation for each of
the Vendors
Schedule "C" - [Intentionally Omitted]
Schedule "D" - [Intentionally Omitted]
Schedule "E" - Operating Licenses
Schedule "F" - Undisclosed Liabilities, Guaranties and Indemnities
Schedule "G" - Absence of Changes
Schedule "H" - Unusual Transactions
Schedule "I" - Liens, Charges and Encumbrances
Schedule "J" - Real Property Leases and Owned Real Property
Schedule "K" - Vehicular Equipment Owned or Leased
Schedule "L" - Revenue Contracts
Schedule "M" - Contracts to Purchase Goods/Services
Schedule "N" - Employment Contracts, Collective Agreements, Pension
or Similar Plans, Unfair Labor Practice Complaints
Schedule "O" - Litigation
Schedule "P" - Employees over $40,000
Schedule "Q" - Insurance Policies
Schedule "R" - Intellectual Property
Schedule "S" - Third Party Approvals
Schedule "T" - Environmental Matters
4
<PAGE> 5
Schedule "U" - Subsidiaries and Affiliates
Schedule "V" - Bank Accounts
Schedule "W" - Purchaser's Disclosure Schedule
Appendix "J" - Certain Real Estate Representations and Warranties
ARTICLE 2
PURCHASE AND SALE
2.1 PURCHASE PRICE - At the Closing Time, the Vendors shall sell and the
Purchaser shall purchase the Purchased Shares for an aggregate purchase price of
Thirteen Million, Three Hundred Thousand Dollars ($13,300,000), all of which
shall be paid in immediately available funds at the Closing.
2.2 ACTION BY VENDORS AND PURCHASER AT THE CLOSING TIME -
(a) Delivery of Certificates by the Vendors, etc. - The Vendors
shall transfer and deliver to the Purchaser at the Closing
stock certificates representing all the Purchased Shares duly
endorsed in blank for transfer or accompanied by irrevocable
stock transfer powers of attorney duly executed in blank, in
either case by the holders of record thereof, free and clear
of all liens, claims, rights, charges, encumbrances and
security interests of whatsoever kind and nature. The Vendors
shall take such steps as shall be necessary to cause the
Company to enter the Purchaser or its nominee upon the books
of the Company as the holder of the Purchased Shares and to
issue one or more share certificates to the Purchaser
representing the Purchased Shares;
(b) Payment to Vendors - At the Closing, the Purchaser shall pay
to the Vendors the Purchase Price of Thirteen Million, Three
Hundred Thousand Dollars ($13,300,000) by wire transfer
according to wire instructions provided to the Purchaser by
the Vendors prior to the Closing.
(c) Delivery of Other Documents - The Vendors and Purchaser shall
deliver all such other documents at the Closing as
contemplated herein.
2.3 PAYMENT OF OBLIGATIONS TO VENDORS - At the Closing, Purchaser shall pay by
wire transfer to Ramsey the aggregate amount of $415,101.89 and all interest
accrued thereon from February 11, 1997, through the Closing Date, which interest
accrues at the rate of $66.57 per
5
<PAGE> 6
day. This will constitute repayment of all outstanding principal and accrued
interest owed to Ramsey by the Company as of the Closing Date for outstanding
loans.
2.4 [INTENTIONALLY OMITTED]
2.5 PLACE OF CLOSING - The Closing shall take place at the Closing Time at the
offices of O'Connor, Cavanagh, Anderson, Killingsworth & Beshears, P.A., One E.
Camelback Road, Suite 1100, Phoenix, Arizona or at such other place as may be
agreed upon by the Vendors and the Purchaser.
2.6 TAX TREATMENT - The acquisition of the Company shall be a purchase of stock
which is intended to be treated as a purchase of assets pursuant to an election
under Section 338(h)(10) of the Internal Revenue Code of 1986, as amended (the
"Code").
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF VENDORS - To induce Purchaser to enter
into this Agreement and to perform its obligations hereunder, and with full
knowledge that Purchaser will rely thereon, the Vendors hereby represent and
warrant, jointly and severally, to the Purchaser the truth, accuracy and
completeness of the following:
(a) Enforceability of Obligations - This Agreement and each of the
other agreements referenced herein to which one or more
Vendors is a party have been duly executed and delivered by
each of such Vendors, and each of the Agreement and such other
agreements constitutes a valid and binding obligation of each
of the Vendors enforceable against each of them in accordance
with its terms.
(b) Right to Sell - The Vendors:
(i) are the sole beneficial owners of the Purchased
Shares (which shares constitute all of the issued and
outstanding shares of the stock of the Company); and
(ii) are the holders of record of all the Purchased Shares
(which shares constitute all of the issued and
outstanding shares of the stock of the Company) and
have good and marketable title to, and rightful
possession of, all of the Purchased Shares free and
clear of any liens, claims, rights, charges,
encumbrances, security interests of whatsoever kind
and nature or rights of others (other than the rights
of the Purchaser hereunder) and no Person (other than
the Purchaser hereunder) has any agreement, option or
any rights capable of becoming an agreement or option
for the acquisition of the Purchased Shares or any
other shares in the Company.
6
<PAGE> 7
(c) Licenses, Registrations and Compliance - The Company is
registered, licensed or otherwise qualified as a corporation
to do business in each jurisdiction in which the nature of its
business or the property owned or leased by it makes such
registration, licensing or other qualification necessary, and
such registrations, licenses or qualifications (as the case
may be) are in good standing. The Company is not in violation
in any material respect of any applicable laws, regulations,
orders, rules, decrees, ordinances, licenses or operating
authorities. The licenses and operating authorities issued by
federal, state or local authorities to the Company, copies of
which are attached hereto as Schedule "E" (the "Operating
Licenses"), comprise all the material licenses, permits and
operating authorities held in respect of the Business. The
Operating Licenses are all of the material operating
authorities necessary or reasonably required for the carrying
on of the Business as presently conducted and the ownership
and use of its assets, property, and premises. Except as
described in Schedule "E" and subject to applicable
regulations and policies of the Arizona Department of Health
Services, the Operating Licenses are not subject to review or
notification and there is no litigation, arbitration or other
proceeding pending or threatened which would materially and
adversely affect the use of the Operating Licenses by the
Business or which may result in the revocation, cancellation,
suspension or any materially adverse modification of any of
such Operating Licenses.
(d) Organization and Valid Existence - The Company is duly
incorporated and organized, validly existing and in good
standing under the laws of the State of Arizona, and has all
necessary corporate power, authority and capacity to own and
lease its property and assets and to carry on the Business as
presently conducted by it. Each of the Vendors has the full
right, power, authority and capacity to execute and deliver
this Agreement and the other agreements referenced herein to
which any such Vendor is a party, to consummate the
transactions contemplated hereby and thereby, and to fully and
timely perform its obligations hereunder and thereunder.
(e) Capitalization - The authorized capital stock of the Company
and the total number of shares of the Company's capital stock
presently issued and outstanding are as set forth on Schedule
"B". All issued and outstanding common shares of the Company
have been duly authorized and validly issued, are fully paid
and non-assessable, and are free of pre-emptive rights.
(f) Financial Statements - Copies of the Financial Statements are
each true, complete and correct and have been prepared on an
accrual basis from the books and records of the Company, in
accordance with generally accepted accounting principles
applied on a basis consistent with that of the preceding
periods. The Financial Statements each fairly present in all
material respects a true, accurate and complete statement of
the financial condition, assets, liabilities and results of
operations of the Company as of the dates and for the periods
set forth therein.
7
<PAGE> 8
(g) Absence of Undisclosed Liabilities - Except as fully disclosed
on Schedule "F" hereto, the Company has no liabilities or
obligations, fixed or contingent, accrued or unaccrued that
are not fully and properly reflected, or adequately reserved
against, on the December 31, 1996 balance sheet of the Company
included in the Financial Statements, excepting only those
liabilities and obligations incurred by the Company in the
ordinary course of its business between the date of such
balance sheet and the Closing Date, none of which liabilities
is individually or are collectively material, incurred in
violation of this Agreement, or would require accrual and/or
disclosure under generally accepted accounting principles.
(h) Guaranties and Indemnities - Schedule "F" hereto contains a
true, complete and correct list of all contracts and
agreements pursuant to which the Company has guaranteed or
indemnified any debt, liability or obligation of any other
person or entity, including, without limitation, any Vendor
(including, without limitation, the execution of any document
obligating the Company with respect to any performance or
other bond), or pursuant to which the Company has pledged or
otherwise encumbered any of its assets. Except as disclosed in
Schedule "F" hereto, the Company is not indebted to any
Vendor, nor is any Vendor indebted to the Company in any
amount for any purpose. Except as disclosed in Schedule "F"
hereto, the Company has not agreed to give any guaranty of
indebtedness or other obligations of third parties or made any
other commitment by which the Company is, or is contingently,
responsible for such indebtedness or other obligation.
(i) Tax Matters - The Company has duly and timely filed all
federal, state, county and local income, franchise, capital,
sales or use, excise, fuel, escheatment, property or other tax
returns, reports or filings required by any law or regulation
to be filed by it and has duly paid all taxes, assessments and
reassessments, and all other taxes, duties, governmental
charges, penalties, interest and fines due and payable by it
on or before the date hereof.
The federal, state, county and local income tax returns of the
Company provided to Purchaser are accurate in all respects.
There are no actions, suits, proceedings, inquiries,
investigations or claims of any nature or kind whatsoever now
pending or, to the best knowledge of Vendors, after due
inquiry, threatened, against the Company with respect to any
such returns or reports, or any such taxes, or any matters
under discussion with any federal, state, county, local or
other authority relating to such taxes.
The Company has not received from any authority any
assessment, reassessment or notice of underpayment of any
taxes or other penalty or charges and no such notice is
reasonably to be expected.
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There is no misrepresentation that is attributable to wilful
default or fraud in tax returns of the Company previously
filed.
No consents extending or waiving the time limited for
reassessment of any taxes, duties, governmental charges,
penalties, interest or fines, or any statutes of limitations
related thereto have been filed with respect to the Company
for any fiscal year.
The Company has withheld from each payment made to any of its
officers, directors, former directors, and employees and
former employees the amount of all taxes and other deductions
(including without limitation, income taxes, unemployment,
disability, and other required taxes and contributions)
required to be withheld and has paid the same together with
the employer's share of same, if any (to the extent required
to be paid so no such amount is past due), to the proper tax
or other receiving officers within the prescribed times and
has filed, in complete and accurate form, all information and
other returns required pursuant to any applicable legislation
within the prescribed times.
The provision made for current and deferred taxes included in
the Financial Statements is sufficient for the payment of all
accrued and unpaid federal, state, county and local income,
franchise, capital, sales or use, excise, fuel, escheatment,
property or other taxes, assessments and reassessments,
duties, governmental charges, penalties, interest and fines
of, and payable by, the Company, whether or not disputed, for
the period ended the date thereof and for all periods prior
thereto.
(j) Absence of Changes - Except as disclosed on Schedule "G"
hereto, since December 31, 1996 there has not been:
(i) any change in the condition or operations of the
business, assets, financial condition, or otherwise
of the Company other than changes in the ordinary and
normal course of business, none of which has been
materially adverse; or
(ii) any damage, destruction or loss, labor trouble or
other event, development or condition of any
character (whether or not covered by insurance)
materially and adversely affecting the business,
financial condition, assets, properties or business
prospects of the Company.
(k) Absence of Unusual Transactions - Except as disclosed on
Schedule "H", the Company has not, other than with respect to
affiliated entities of the Company being acquired by the
Purchaser on the Closing Date, since December 31, 1996:
(i) transferred, assigned, sold or otherwise disposed of
any assets, granted a lien, security interest,
mortgage or other encumbrance in any assets,
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<PAGE> 10
or cancelled any debts or claims except only in each
case in the ordinary and usual course of business or
to the extent such assets, liens, security interests,
mortgages, encumbrances, debts or claims do not
individually or in the aggregate exceed $20,000 (when
added to any dispositions, grants, or cancellations
by the other Southwest Companies);
(ii) incurred or assumed any obligation or liability which
individually or in the aggregate exceeds $100,000
(fixed or contingent), except those listed in
Schedule "F" hereto and except unsecured current
obligations and liabilities incurred in the ordinary
and normal course of business which individually or
in the aggregate do not exceed $100,000;
(iii) discharged or satisfied any lien or encumbrance, or
paid any obligation or liability (fixed or
contingent) other than liabilities included in the
Financial Statements and liabilities incurred since
the date thereof in the ordinary and normal course of
business;
(iv) declared or made any payment of any dividend or other
distribution in respect of any shares of its stock as
applicable, or purchased or redeemed any such shares
thereof, or effected any subdivision, consolidation
or reclassification of any such shares;
(v) suffered or been threatened with any material adverse
change in its business or financial condition,
business activities, or business prospects,
including, without limiting the generality of the
foregoing, the existence or threat of any labor
dispute, or any material adverse change in, or loss
of, any material relationship between the Company and
any of its customers, suppliers or key employees, or
entered into any commitment or transaction not in the
ordinary and usual course of business where such
commitment or transaction is or would be material in
relation to the Company;
(vi) made any general wage or salary increases in respect
of personnel which it employs, other than increases
in the ordinary and normal course of business, nor
hired any employee who shall have an annual salary in
excess of $70,000; or
(vii) authorized or agreed or otherwise become committed to
do any of the foregoing.
(l) Title to Properties - Except as disclosed in Schedules "I" and
"J" hereto, the Company has good and marketable title to all
its respective properties, interests in properties and assets,
real and personal, including without limitation those
reflected in the Financial Statements or acquired since the
date of the Financial
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<PAGE> 11
Statements, free and clear of all mortgages, pledges, liens,
claims, rights, encumbrances or charges of any kind or nature.
(m) Equipment and Condition of Assets - All non-vehicular
equipment, assets, personal property and fixtures in the
possession or custody of the Company which, as of the date
hereof, are owned, leased or held under license or similar
arrangement by the Company and are necessary for the conduct
of the Business are in good condition, repair and proper
working order, reasonable wear and tear excepted. Copies of
all leases, licenses, agreements and other documentation
relating thereto have been provided or made available to
Purchaser.
(n) Leases of Real Property - The Company is not a party to or
bound by any leases of real property other than those
disclosed in Schedule "J" hereto, and all interests held by
the Company as lessee under such leases are free and clear of
any and all liens, charges and encumbrances of any nature and
kind whatsoever. All rental and other payments required to be
paid by the Company, as lessee, pursuant to such leases have
been duly paid. Such leases are in full force and effect
without amendment thereto and the Company is not otherwise in
default in any material respect in meeting its obligations
contained in any such lease. The representations or warranties
set forth in Appendix "J" hereto with respect to any real
property owned by NRM Properties, Inc. or Chaparral
Properties, Inc. that is subject to a lease to which the
Company is a party or by which it is bound are true and
correct.
(o) Real Property - The Company does not own any interest in real
property, except as disclosed on Schedule "J" hereto.
(p) Vehicular Equipment - Schedule "K" contains a list of all
vehicular equipment owned or leased by the Company and copies
of all motor vehicle certificates of title with respect to
such vehicular equipment have been provided to the Purchaser.
Such vehicular equipment is, in all material respects, in good
condition, repair and proper working order, reasonable wear
and tear excepted, and each vehicle complies in all material
respects with all laws and regulations affecting its operation
and each vehicle bears a current safety standards certificate.
(q) Revenue Contracts - Except as disclosed in Schedule "L", the
Company is not a party to any contract pursuant to which it is
to provide transportation or other services. Each of the
contracts set out in Schedule "L" is in full force and effect
and enforceable in accordance with its respective terms and
conditions, and there is not existing any default, or event or
condition which, with the giving of notice or the passage of
time, or both, would constitute an event of default, by the
Company or any other party thereto under any of such
contracts, that could have a material adverse effect on any of
such contracts.
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<PAGE> 12
(r) Contracts to Purchase - Except as set out in Schedule "M", the
Company is not a party to any contract to purchase any goods
and/or services with a value in excess of $20,000/year. Each
of the contracts set out in Schedule "M" is in full force and
effect and enforceable in accordance with its respective terms
and conditions, and there is not existing any default, or
event or condition which, with the giving of notice or the
passage of time, or both, would constitute an event of
default, by the Company or any other party thereto under any
of such contracts, that could have a material adverse effect
on any of such contracts.
(s) Employment Contracts - Except as set out in Schedule "N", the
Company neither has any written employment contracts, union or
collective labor, pension, deferred profit sharing,
retirement, employee benefit, stock option or other similar
agreements or plans nor has it had any such plan or agreement
in the past, nor does it have any written contracts of
employment with any employees or, to the best of Vendors'
knowledge, any oral contracts of employment which are not
terminable on the giving of reasonable notice in accordance
with applicable law. The Company has not, in the last four (4)
years, experienced any labor disputes which were of a material
nature, work stoppages or strikes. There is not now any
circumstances or conduct which could result in the filing of
an unfair labor practice complaint against the Company; any
such complaints previously raised and currently ongoing and
the current status thereof are particularized in Schedule "N".
(t) Material Contracts - Except for the material contracts and
commitments disclosed herein, including the Schedules attached
hereto, the Company is not a party to or bound by any material
contract or commitments whether oral or written. True, correct
and complete copies of all such written contracts and
commitments either have been delivered to the Purchaser or
will be delivered prior to Closing. Each of such contracts and
commitments is in full force and effect and enforceable in
accordance with its respective terms and conditions, and there
is not existing any default, or event or condition which, with
the giving of notice or the passage of time, or both, would
constitute an event of default, by either of the Company or
any other party thereto under any of such contracts or
commitments, that could have a material adverse effect on any
of such contracts or commitments. The Company has the
capacity, including the necessary personnel, equipment and
supplies, to perform all its obligations thereunder in all
material respects.
(u) Pension/Benefit/Health Plans - The only pension, benefit or
health plans established by or for the Company for its
employees are those disclosed in Schedule "N" hereto; such
plans are duly registered where required by, and are in good
standing under all, applicable legislation; all required
employer contributions thereunder to the date hereof have been
made and the respective pension funds are funded in accordance
with the rules of the pension plans and no past service
funding liabilities exist thereunder. Except as disclosed on
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<PAGE> 13
Schedule "N" hereto, there is no employee benefit or health
plan established or maintained for employees of the Company,
or to which contributions have been made by the Company with
respect to such employees, which is subject to Title IV of the
Employee Retirement Income Security Act of 1974, as amended
("ERISA"). The Company is in compliance in all material
respects with all provisions of ERISA, and the Company is not
subject to any liability or obligation arising under ERISA or
any other applicable law or the provisions of any other
employee benefit plan, including but not limited to liability
owed to the Pension Benefit Guaranty Corporation on account of
a termination or partial termination of any employee benefit
plan, any liability resulting from a "prohibited transaction",
any liability for failure to meet minimum funding
requirements, any liability related to the termination of a
multi-employer pension plan, and any liability caused by the
non-qualification of any plan under section 401 of the Code.
No pension plan, no employee benefit plan, no "disqualified
person" (as such term is used in Section 4975(c)(1) of the
Code) has engaged, and no Vendor has engaged, in any
transaction in violation of Section 406 of ERISA or any
"prohibited transaction" (as defined in Section 4975(c)(1) of
the Code) other than any such transaction which is exempt
under Section 408 of ERISA or Section 4975(d) of the Code. The
401k plan of the Company meets in all material respects the
requirements of section 401(a) of the Code. The Company does
not have any obligation to provide material post-retirement
benefits of any nature to its employees, former employees or
their survivors, dependents or beneficiaries, except as may be
required by the Consolidated Omnibus Budget Reconciliation Act
of 1986 ("COBRA") or any other applicable state medical
benefits continuation laws, nor will any such obligation to
provide such post-retirement benefits be incurred solely as a
result of the consummation of the within transactions. The
Company has not caused there to occur a "mass lay-off", as
defined in section 693.3 of the regulations issued under the
Worker Adjustment and Retention Notification Act (20 CFR 639)
at any time in the past.
(v) Absence of Conflicting Agreements - Neither the Company nor
any Vendor is a party to, bound or affected by or subject to
any indenture, mortgage, lease, agreement, instrument, charter
or by-law provision, or, to the best of Vendors' knowledge,
any statute, regulation, order, judgment, decree or law which
would be in any material respect violated, contravened,
breached by or under which a material default would occur, as
a result of the execution and delivery of this Agreement or
the consummation of any of the transactions provided for
herein.
(w) Litigation - Except for the items disclosed in Schedule "O"
hereto, all of which are fully insured against, there is no
suit, action, litigation, arbitration proceeding or private or
governmental proceeding, hearing before an administrative
tribunal, including appeals and applications for review, in
progress, pending or to the knowledge of Vendors threatened
against the Company or materially and adversely affecting its
properties, business, financial condition or business
13
<PAGE> 14
prospects. Except as shown in Schedule "O", there is not
presently outstanding against the Company any adverse
judgment, decree, injunction, rule or order of any court,
governmental department, commission, agency, instrumentality
or arbitrator.
(x) Employees - There are set forth in Schedule "P" hereto the
names and titles of all personnel employed or engaged by the
Company whose annual base salary exceeds $40,000, including
rates of remuneration, positions held and date of commencement
of employment. The employment records of the Company are true,
complete and correct in all material respects. Except as
disclosed in Schedule "P" hereto, the Company does not owe any
past or present employee any sum other than for accrued wages
or salaries for the current payroll period, reimbursable
expenses, accrued vacation and holiday pay (none of which is
for a period in excess of two (2) weeks' pay with respect to
any single employee), sick leave rights and amounts payable
under employee benefit plans, and all of such sums that accrue
from the date hereof until the Closing shall be timely paid by
the Company on or prior to the Closing Date. There is not
pending or, to the best knowledge of Vendors, after due
inquiry, threatened, any charge or complaint against or
involving the Company or any of its officers or employees by
the National Labor Relations Board, the Occupational Health &
Safety Administration, the Department of Labor, or any similar
federal, state or local board of agency, or any representative
thereof.
(y) Insurance - The Company currently has in force the policies of
insurance set out in Schedule "Q" hereto. Such policies are
appropriate to its Business, property and assets, are in such
amounts and against such risks as are customarily carried and
insured against by owners of comparable businesses, properties
and assets, and, to the knowledge of Vendors, are issued by
responsible insurers. All such policies of insurance are in
full force and effect and the Company is not in default,
whether as to the payment of premium or otherwise, under the
terms of any such policy. Such policies can be cancelled
without penalty or premium, and such cancellation would
trigger a full pro rata refund of prepaid premiums. The
Company has no liability for retrospective insurance premiums
or costs.
(z) Intellectual Property - Attached as Schedule "R" is a true and
correct schedule identifying all material patents, patent
rights or licenses, patent applications, trademarks, trademark
registrations and applications, trademark rights, trade names,
trade secrets, service marks and applications therefore,
copyrights and copyright registrations and copyright
applications used in whole or in part in or required for the
proper carrying on of the Business of the Company (the
"Intellectual Property"). None of the matters covered by the
Intellectual Property, nor any of the products or services
sold or provided by the Company, nor any of the processes used
or the business practices followed by the Company, infringes
or has infringed upon any trademark, trade name, fictitious
name,
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<PAGE> 15
service mark, trade secrets, patent or copyright owned by any
person or entity (or any application with respect thereto), or
constitutes unfair competition. The Company is not obligated
to pay any royalty or other payment with respect to any of the
Intellectual Property, except as disclosed in Schedule "R".
Except as disclosed in Schedule "R" hereto, to the best of
Vendors' knowledge, no person or entity is producing,
providing, selling or using products, services, names, or
marks that would constitute an infringement of any of the
Intellectual Property.
(aa) Corporate Records - The corporate records and minute books of
the Company have been delivered to the Purchaser and contain
complete and accurate copies of the Company's Articles of
Incorporation, as amended, by-laws, minutes of all meetings,
and resolutions of its directors and shareholders. All such
meetings were duly called and held, all such by-laws and
resolutions were duly passed and the share certificate books,
registers of shareholders and members, registers of transfers
and registers of directors of the Company are complete and
accurate in all material respects. In all material respects,
the books and records of the Company with respect to its
assets, businesses, operations, properties and prospects have
been maintained in accordance with generally accepted
accounting principles and in the usual, regular and ordinary
manner, and all entries with respect thereto have been made
and all transactions have been properly accounted for. All
applicable corporate and other laws and all applicable
generally accepted accounting principles relating to the
maintenance of such books and records have been complied with
by the Company.
(bb) Third Party Approvals - Except for approvals required by the
Federal Trade Commission or other agencies for purposes of
complying with the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and the rules and regulations
promulgated thereunder (the "Hart Act") and required by the
Arizona Department of Health Services, and except as disclosed
in Schedule "S", there are no approvals, consents or waivers
required to be obtained or applications required to be filed
from or with governmental authorities or from any other Person
whatsoever, including pursuant to any leases or contracts
containing prohibitions or pre-consent provisions pertinent to
this Agreement in order to permit the transactions
contemplated herein or to preserve the Business and/or assets
of the Company.
(cc) Compliance with Environmental Laws - Except as disclosed in
Schedule "T" hereto, the Company and the Business are in all
material respects in compliance with all, and do not violate
in any material respect, and have not violated in any material
respect any, applicable federal, state, municipal or local
laws, regulations, orders, certificates of approval, licenses,
permits, governmental decrees, ordinances or any and all other
applicable legislation or regulatory requirements with respect
to environmental, health or safety matters. There has been no
storage, treatment, generation, discharge, transportation or
disposal of
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<PAGE> 16
industrial, toxic or hazardous substances or solid or
hazardous waste by, or on behalf of, the Company, in violation
of any federal, state or local law, statute, rule or
regulation or any decree, order, arbitration award or
agreement with or any license or permit from any federal,
state or local governmental authority. There has been no
spill, discharge, leak, emission, injection, escape, dumping,
or release of any kind by, or on behalf of, the Company, into
the environment (including, without limitation, into air,
water or ground water) of any materials including, without
limitation, industrial, toxic or hazardous substances or
solid, medical or hazardous waste, as defined under any
federal, state or local law, statute, rule or regulation other
than those releases permissible under such law, statute, rule
or regulation or allowable under applicable permits.
(dd) Compliance - The Company is not in violation in any material
respect of any laws, regulations, decrees or ordinances
applicable to the Business, assets, properties, financial
condition or business prospects of the Company.
(ee) Subsidiaries and Affiliates - Except as disclosed in Schedule
"U" hereto, the Company has no subsidiaries or any other
equity investment in any entity engaged in any aspect of the
medical or transportation industry. Except as disclosed in
Schedule "U" hereto, no Vendor has any equity interest in any
"Affiliates." For purposes of this Agreement, the term
"Affiliates" shall mean all entities engaged in any aspect of
the medical or transportation industry in which the applicable
Vendor is either an officer or director, or in which the
applicable Vendor, directly or indirectly, owns or controls
ten percent (10%) or more of the equity securities of the
entity.
(ff) Accounts Receivable - The accounts receivable existing on the
books of the Southwest Companies at the Closing Time (net of
contractual allowance) (the "Closing Accounts Receivable")
shall be at least $6,040,000 (the "Minimum Accounts
Receivable") and an amount at least equal to the Minimum
Accounts Receivable or the Closing Accounts Receivable,
whichever amount is greater (the "Target Accounts
Receivable"), is good and collectible within 365 calendar days
thereafter. None of the Closing Accounts Receivable are
subject to the return of the merchandise or other property the
selling price of which is represented thereby, or to offsets
or counterclaims, the extent of which is in excess of any
reserves for collectibility thereof reflected in the books of
the Southwest Companies at the Closing.
(gg) Bank Accounts - Schedule "V" hereto sets forth the name and
location of each bank in which the Company has an account,
lock box or safe deposit box, the number of each such account
or box, the names of all signatories thereto and the persons
authorized to draw thereon or have access thereto. No power of
attorney exists from the Company.
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<PAGE> 17
(hh) Accuracy of Documents, Representations and Warranties - The
copies of all documents furnished to Purchaser, or any of its
representatives by or on behalf of any Vendor or the Company,
or any one or more of them, or their representatives, are
true, complete and correct in all material respects. No
representation or warranty of any Vendor contained in this
Agreement or the other agreements to be executed by any Vendor
pursuant hereto, and no statement contained in the exhibits,
the schedules or the other documents delivered by or on behalf
of any Vendor, or his or its representatives pursuant to or in
connection with this Agreement or the other agreements to be
executed by any Vendor pursuant hereto or any of the
transactions contemplated hereby or thereby, contains any
untrue statement of a material fact, or omits to state any
material fact required to be stated herein or therein in order
to make the statements contained herein or therein not
misleading.
3.2 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER - To induce the Vendors to
enter into this Agreement and to perform Vendors' obligations hereunder, and
with full knowledge that Vendors will rely thereon, the Purchaser hereby
represents and warrants to the Vendors the truth, accuracy and completeness of
the following, except as disclosed in Schedule "W" hereto:
(a) Organization and Valid Existence - The Purchaser is a
corporation duly incorporated and organized, validly existing
and in good standing under the laws of the State of Delaware
and has all necessary corporate power, authority and capacity
to execute and deliver the Agreement and the other agreements
referenced herein to which the Purchaser is a party, to
consummate the transactions contemplated hereby and thereby,
and to fully and timely perform its obligations hereunder and
thereunder. The execution and delivery by Purchaser of this
Agreement and the other agreements referenced herein to which
Purchaser is a party, and the consummation of the transactions
contemplated hereby and thereby, have been duly authorized and
approved by Purchaser's board of directors, and no other
corporate proceedings on the part of Purchaser are required to
authorize the execution and delivery of this Agreement, the
other agreements referenced herein to which Purchaser is a
party, or the consummation of the transactions contemplated
hereby or thereby.
(b) Enforceability - This Agreement and the other agreements
referenced herein to which Purchaser is a party have been duly
executed and delivered by Purchaser and constitute legal,
valid and binding obligations of Purchaser, enforceable
against Purchaser in accordance with their respective terms.
(c) Absence of Conflicting Agreements - The Purchaser is not a
party to, bound or affected by or subject to any indenture,
mortgage, lease, agreement, instrument, charter or by-law
provision, statute, regulation, order, judgment, decree or law
which would be violated, contravened or breached by, or under
which any default
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<PAGE> 18
would occur, as a result of the execution and delivery of this
Agreement or the consummation of any of the transactions
provided for herein.
(d) Litigation - There is no suit, action, litigation, arbitration
proceeding or governmental proceeding, including appeals and
applications for review, in progress, pending or, to the best
of the knowledge, information and belief (after due inquiry)
of the senior officers of the Purchaser, threatened against or
involving the Purchaser or any judgment, decree, injunction,
rule or order of any court, governmental department,
commission, agency, instrumentality or arbitrator which, in
any such case, would materially and adversely affect the
ability of the Purchaser to enter into this Agreement or to
consummate the transactions contemplated hereby.
(e) Third Party Approvals - Except for approvals required by the
Federal Trade Commission or other agencies for purposes of
complying with the Hart Act and those required by the Arizona
Department of Health Services, and except as disclosed in
Schedule "W", there are no approvals, consents or waivers
required to be obtained or applications required to be filed
from or with governmental authorities or from any other Person
whatsoever, including pursuant to any leases or contracts
containing prohibitions or pre-consent provisions pertinent to
this Agreement, in order to permit the transactions
contemplated herein.
(f) Accuracy of Documents, Representations and Warranties - The
copies of all documents furnished to the Vendors and their
representatives by or on behalf of Purchaser and its
representatives are true, complete and correct in all material
respects. No representation or warranty of Purchaser contained
in this Agreement or the other agreements referenced herein to
which Purchaser is a party, and no statement contained in the
exhibits, the schedules or the other documents delivered by or
on behalf of Purchaser or its representatives pursuant to or
in connection with this Agreement or any of the transactions
contemplated hereby contains any untrue statement of a
material fact, or omits to state any material fact required to
be stated herein or therein in order to make the statements
contained herein or therein not misleading.
3.3 NO BROKER - Each of the Parties represents and warrants to the others that
all negotiations relating to this Agreement and the transactions contemplated
hereby have been carried on between them directly and without the intervention
of any other party in such manner as to give rise to any valid claims against
any of the Parties for a brokerage commission, finder's fee or other like
payment.
3.4 NON-WAIVER - No investigations made by or on behalf of a Party at any time
shall have the effect of waiving, diminishing the scope of or otherwise
affecting any representation or warranty made by the other Party herein or
pursuant hereto.
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<PAGE> 19
3.5 NATURE OF REPRESENTATIONS, WARRANTIES AND COVENANTS - All statements
contained in any certificate or other instrument delivered by or on behalf of a
Party pursuant to or in connection with the transactions contemplated by this
Agreement shall be deemed to be made by such Party hereunder.
ARTICLE 4
CONDITIONS PRECEDENT TO THE PERFORMANCE
BY THE PURCHASER AND THE VENDORS OF
THEIR OBLIGATIONS UNDER THIS AGREEMENT
4.1 PURCHASER'S CONDITIONS - The obligation of the Purchaser to complete the
purchase of the Purchased Shares hereunder shall be subject to the satisfaction
of, or compliance with, in all material respects, at or before the Closing Time,
each of the following conditions precedent (each of which is hereby acknowledged
to be inserted for the exclusive benefit of the Purchaser and may be waived by
it in whole or in part):
(a) Truth and Accuracy of Representations of Vendors at the
Closing Time - All of the representations and warranties of
Vendors made in or pursuant to this Agreement shall be true
and correct in all material respects as at the Closing Time
and with the same effect as if made at and as of the Closing
Time (except as such representations and warranties may be
affected by the occurrence of events or transactions expressly
contemplated and permitted hereby), and the Purchaser shall
have received a certificate from each of the Vendors
confirming the truth and correctness in all material respects
of their representations and warranties contained herein;
(b) Performance of Obligations - The Vendors shall have performed
or complied with all of their obligations, covenants and
agreements hereunder;
(c) Receipt of Closing Documentation - All documentation relating
to the due authorization and completion of the sale and
purchase hereunder of the Purchased Shares and all actions and
proceedings taken on or prior to the Closing in connection
with the performance by the Vendors of their obligations under
this Agreement shall be reasonably satisfactory to the
Purchaser and the Purchaser shall have received copies of all
such documentation or other evidence as it may reasonably
request in order to establish the consummation of the
transactions contemplated hereby and the taking of all
corporate proceedings in connection therewith in compliance
with these conditions, in form (as to certification and
otherwise) and substance reasonably satisfactory to the
Purchaser;
(d) Consents, Authorizations and Registrations - All consents,
approvals, orders and authorizations of any Persons or
governmental authorities (or registrations, declarations,
filings or recordings with any such authorities) required in
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<PAGE> 20
connection with the completion of any of the transactions
contemplated by this Agreement (including, without limitation,
any notifications, approvals or consents required by the
Arizona Department of Health Services) shall have been
obtained on or before the Closing Time; the Vendors shall have
obtained and delivered by Closing to the Purchaser written
consents, in form and substance satisfactory to the Purchaser,
to the transaction contemplated herein which are required (if
any) pursuant to the real property leases referred to in
Schedule "J" (and any customer contracts where approval or
consent is required), including, without limiting the
generality of the foregoing, such acknowledgements and
confirmations of good standing from the lessors in respect of
the real property leases referred to in Schedule "J" hereto as
may be reasonably requested by the Purchaser;
(e) Directors and Officers of Company - Subject to the terms of
the Employment Agreement, there shall have been delivered to
the Purchaser on or before the Closing Date the resignations
of such persons as the Purchaser shall direct who are
presently directors and/or officers of the Company.
(f) No Damage - No substantial damage by fire or other hazard to
the assets of the Company shall have occurred from the date
hereof to the Closing Date which is not fully and adequately
insured against;
(g) Litigation - On the Closing Date, there shall be no
litigation, governmental investigation or proceeding pending
or threatened for the purpose of enjoining or preventing the
consummation of any of the transactions contemplated by this
Agreement or otherwise claiming that such consummation is
improper;
(h) Hart-Scott-Rodino Filing - The applicable waiting period under
the Hart Act shall have expired or terminated.
(i) Management - Rural/Metro's Board of Directors shall have
confirmed the appointment of Ramsey to the Board of Directors
of Rural/Metro and to a senior executive position with
Rural/Metro.
(j) Environmental Reports - Purchaser shall have received reports,
in form and content satisfactory to Purchaser, in the exercise
of its sole discretion, from independent environmental
consultants acceptable to Purchaser in its sole discretion,
and from legal counsel to Purchaser, concerning the real
properties owned or leased by the Company, which reports shall
be based, in part, on the results of environmental site
assessments which Purchaser may cause to be completed for and
on behalf of Purchaser prior to the Closing Date on all such
real or leased properties, which reports, if any, shall be
prepared at Purchaser's expense.
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(k) Due Diligence - Purchaser shall, in the exercise of its sole
discretion, be entirely satisfied with the business,
operations, financial condition, assets and liabilities of the
Company.
(l) Schedules - Purchaser shall have received from Vendors the
Schedules referred to herein and all amendments and
modifications thereto, and Purchaser shall, in the exercise of
its sole discretion, be entirely satisfied with the nature and
extent of the disclosures made therein and the representations
and warranties of Vendors as modified by the disclosures
contained in the Schedules.
(m) Simultaneous Closings - On the Closing Date, the share
purchases and other transactions contemplated in each of the
Agreements of Purchase and Sale executed of even date herewith
for the sale of Southwest Ambulance of Casa Grande, Inc., SW
General, Inc., and Southwest General Services, Inc. shall be
consummated simultaneously with the transactions contemplated
herein.
4.2 VENDORS' CONDITIONS - The obligations of the Vendors to complete the sale of
the Purchased Shares hereunder shall be subject to the satisfaction of or
compliance with, at or before the Closing Time, each of the following conditions
precedent (each of which is hereby acknowledged to be inserted for the exclusive
benefit of the Vendors and may be waived by them in whole or in part):
(a) Truth and Accuracy of Representations of Purchaser at Closing
Time - All of the representations and warranties of the
Purchaser made in or pursuant to this Agreement shall be true
and correct in all material respects as at the Closing Time
and with the same effect as if made at and as of the Closing
Time and the Vendors shall have received a certificate from a
duly authorized senior officer of the Purchaser confirming the
truth and correctness in all material respects of the
representations and warranties of the Purchaser contained
herein;
(b) Performance of Obligations - The Purchaser shall have
performed or complied with all of its obligations, covenants
and agreements hereunder;
(c) Receipt of Closing Documentation - All documentation relating
to the due authorization and completion of the sale and
purchase hereunder of the Purchased Shares and all actions and
proceedings taken on or prior to the Closing in connection
with the performance by the Purchaser of its obligations under
this Agreement shall be reasonably satisfactory to the Vendors
and the Vendors shall have received copies of all such
documentation or other evidence as they may reasonably request
in order to establish the consummation of the transactions
contemplated hereby and the taking of all corporate
proceedings in connection therewith in compliance with these
conditions, in form (as to certification and otherwise) and
substance satisfactory to the Vendors;
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(d) Release of Vendors' Guaranties - Purchaser shall have secured
the release of Vendors from liability for any personal
guarantees issued by Vendors as the shareholders of the
Company with respect to any liability of the Company for
borrowed money, and shall have provided to Vendors written
evidence thereof, or, in the alternative, Purchaser shall
deliver an agreement of assumption and indemnification, in
form and content mutually satisfactory to Purchaser and
Vendors, pursuant to which Purchaser will indemnify Vendors
for any such personal guaranty;
(e) Litigation - On the Closing Date, there shall be no
litigation, governmental investigation or proceeding pending
or threatened for the purpose of enjoining or preventing the
consummation of any of the transactions contemplated by this
Agreement or otherwise claiming that such consummation is
improper;
(f) Hart-Scott-Rodino Filing - The applicable waiting period under
the Hart Act shall have expired or terminated;
(g) Management - The Board of Directors of Rural/Metro shall have
confirmed the appointment of Ramsey to the Board of Directors
of Rural/Metro and to a senior executive position with
Rural/Metro and approved certain existing management contracts
of the Company;
(h) Simultaneous Closings - On the Closing Date, the share
purchases and other transactions contemplated in each of the
Agreements of Purchase and Sale executed of even date herewith
for the sale of Southwest Ambulance of Casa Grande, Inc., SW
General, Inc., and Southwest General Services, Inc. shall be
consummated simultaneously with the transactions contemplated
herein.
ARTICLE 5
OTHER COVENANTS OF THE PARTIES
5.1 CONDUCT OF BUSINESS PRIOR TO CLOSING - During the period from the date of
this Agreement to the Closing Time, the Vendors will have the following
obligations and will cause the Company to do the following:
(a) Access to Records - Vendors shall, and shall cause the Company
and its employees, officers, agents, representatives and
accountants to, fully cooperate with Purchaser to allow the
officers, employees, attorneys, consultants and accountants of
Purchaser free and unrestricted access (but only through Barry
Landon, as representative of the Vendors and without
interference to the ordinary conduct of the Business) during
normal business hours to all of the properties, books,
contracts, documents and records of the Company and furnish to
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Purchaser such information as Purchaser may at any time and
from time to time reasonably request until the Closing Time.
(b) Business in Ordinary Course - Vendors shall cause the Company
to carry on its business and affairs as heretofore carried on,
and neither the Company nor any Vendor will order, purchase or
lease any products, inventory, equipment, leased personalty,
or other items, or dispose of any of its assets or leased
property, or issue any quotations, or prepay any of its
material obligations, incur any liabilities or obligations,
hire or discharge any employee or officer or, without
limitation by specific enumeration of the foregoing, enter
into any other transaction, except in the usual and ordinary
course of its business in accordance with the past practices
of the Company and except as provided herein. Without limiting
the generality of the foregoing, Vendors shall not permit the
Company, without the prior written consent of Purchaser, to:
(i) create or suffer to exist any liens or encumbrances
with respect to any of the assets or properties of
the Company which shall not be discharged at or prior
to the Closing Date, other than liens for
nondelinquent taxes;
(ii) incur any indebtedness for borrowed money other than
in the usual and ordinary course of its business;
(iii) sell or transfer any material assets or properties
(including, without limitation, sales and transfers
to Affiliates, other than Affiliates of the Company
the stock of which is to be acquired by Purchaser or
an Affiliate of Purchaser on the Closing Date);
(iv) acquire or enter into any agreement or understanding
(oral or written) to acquire the stock or assets of
any other person, firm, corporation or other entity;
(v) make any material change in the conduct or nature of
any aspect of its business, whether in the ordinary
course of business or not, or whether or not the
change has or will have a material adverse affect on
the business activities, financial condition, or
business prospects of the Company;
(vi) waive any material rights;
(vii) pay any Affiliate, other than Affiliates of the
Company the stock of which is to be acquired by
Purchaser or an Affiliate of Purchaser on the Closing
Date, or be charged by any Affiliate, other than
Affiliates of the Company the stock of which is to be
acquired by Purchaser or an Affiliate of Purchaser on
the Closing Date, for goods sold or services
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<PAGE> 24
rendered or be charged by any Affiliate, other than
Affiliates of the Company the stock of which is to be
acquired by Purchaser or an Affiliate of Purchaser on
the Closing Date, for corporate overhead expenses,
management fees, legal or accounting fees, capital
charges, or similar charges or expenses, except for
any payments made by the Company pursuant to leases
with NRM Properties, Inc. or Chaparral Properties,
Inc.;
(viii) incur or commit to incur any individual capital
expenditures except in the ordinary course of its
business;
(ix) amend employment contracts or the terms and
conditions of employment of any officer, director or
employee earning total annual compensation in excess
of $70,000, other than normal merit and cost of
living increases to employees in accordance with the
general prevailing practices of the Company existing
prior to the date of this Agreement;
(x) pay or incur any management or consulting fees;
(xi) hire any employee who shall have an annual salary in
excess of $70,000;
(xii) enter into any transaction other than in the usual
and ordinary course of business; or
(xiii) issue or sell any shares of the stock or other
securities of the Company, including any of the
Purchased Shares, or make or become obligated to make
any dividend or other distribution or payment to
Vendors or any former shareholder of the Company in
respect of any stock or other security of the Company
at any time held by Vendor or such other former
shareholders.
(c) Employees - Vendors shall use their reasonable efforts to
retain, and shall cause the Company to each retain its
business intact, preserve all its goodwill and customer and
employee relations, including keeping available the services
of each of its present employees, representatives and agents.
(d) Continue Insurance - Vendors shall cause the Company to
continue in force all existing policies of insurance presently
maintained by the Company.
(e) Perform Obligations - Vendors shall cause the Company to
comply in all material respects with all laws affecting the
operation of the Business and to pay all required taxes and
tax installments.
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(f) Confidentiality - Until the Closing, and at all times
thereafter as provided in Section 6.1(d) hereof, Vendors will
maintain as confidential their discussions with
Purchaser, and the terms and conditions of this Agreement, and
the other agreements to be executed in connection herewith,
and except as reasonably necessary to fulfill Vendors'
obligations hereunder or as required by law, will not make any
trade press or other announcement or disclosure in relation to
such discussions whether before or after Closing without the
prior written consent of Purchaser.
(g) Exclusivity - Until the earlier of the Closing or the
termination of this Agreement in accordance with the terms
hereof, Vendors will negotiate the sale of the stock, assets
and properties of the Company only with Purchaser, and no
Vendor will permit the Company to, directly or indirectly,
enter into any discussion with, or disclose any information in
relation to the Purchased Shares or the assets of the Company
to any other person, firm, or other entity, other than
Purchaser.
(h) Equitable Relief - Each Vendor acknowledges and agrees that
the covenants contained in each of paragraphs (f) and (g) of
this Section 5.1 are a material inducement for Purchaser to
execute and deliver this Agreement and to consummate the
transactions contemplated hereby. Accordingly, Vendor acknowl-
edges and agrees that the restrictions contained in each of
paragraphs (f) and (g) of this Section 5.1 are reasonable and
necessary for the protection of the business of Purchaser and
its subsidiaries, the Company, and the investment of Purchaser
in the Company, and that a breach of any such restriction
could not adequately be compensated by damages in an action at
law. In the event of a breach or threatened breach by any
Vendor of any of the provisions of any of paragraphs (f) or
(g) of this Section 5.1, Purchaser shall be entitled to
obtain, without the necessity of posting bond therefor, an
injunction (preliminary or permanent, or a temporary
restraining order) restraining such Vendor from the activity
or threatened activity constituting, or which would
constitute, a breach, as well as damages and an equitable
accounting of all earnings, profits and other benefits arising
from a violation, which right shall be cumulative and in
addition to any other rights or remedies to which Purchaser
may be entitled.
(i) Severability - Each and every provision set forth in each of
paragraphs (f) and (g) of this Section 5.1 is independent and
severable from the others, and no provision shall be rendered
unenforceable by virtue of the fact that, for any reason, any
other or others of them may be unenforceable in whole or in
part. The parties hereto agree that if any provision of
paragraphs (f) or (g) of this Section 5.1 shall be declared by
a court of competent jurisdiction to be unenforceable for any
reason whatsoever, the court may appropriately limit or modify
such provision, and such provision shall be given effect to
the maximum extent permitted by applicable law.
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(j) Consents - Vendors shall use their reasonable efforts and make
every good faith attempt to obtain any and all consents and
estoppel letters reasonably requested by Purchaser to or in
connection with the assignment of, or alternate arrangements
satisfactory to Purchaser with respect to, any contract,
lease, license, permit, agreement, or other instrument, which
is to be an asset of the Company, or which may be necessary,
appropriate, or required in order to permit the conduct of the
Business and operations of the Company after the Closing to be
in all respects the same as the conduct of the Business and
operations of the Company, prior to the Closing.
5.2 OBLIGATIONS OF PURCHASER - During the period from the date of this Agreement
to the Closing Time, or such other period as provided by this Agreement, the
Purchaser will have the following obligations:
(a) Confidentiality - Purchaser will maintain as confidential its
discussions with Vendors, and the terms and conditions of this
Agreement, and the other agreements to be executed in
connection herewith, and except as reasonably necessary to
fulfill its obligations hereunder or as required by law, will
not make any trade press or other announcement or disclosure
in relation to such discussions without the prior written
consent of Vendors. In the event of the termination of this
Agreement without consummation of the transactions
contemplated hereby, Purchaser will keep confidential any
information (unless readily available from public or published
information sources) obtained from the Company or the Vendors.
If this Agreement is so terminated, promptly after such
termination, all documents, work papers and other written
material obtained from Vendors' representative in connection
with this Agreement and not theretofore made public (including
all copies thereof), shall be returned to the Person that
provided such material. Purchaser shall provide Vendors with a
list of representatives of Purchaser involved in the due
diligence, and said representatives shall refrain from
discussing the transaction and its due diligence activities
with any other employee or representative of Purchaser not
disclosed on the list.
(b) Nonsolicitation - In the event of termination of this
Agreement without consummation of the transactions
contemplated hereby, Purchaser agrees that for a period of
three (3) years following such termination, Purchaser will
not, directly or indirectly, solicit or cause others to
solicit any person who, on the date hereof, is an employee of
the Company and whose annual compensation from the Company
exceeds $25,000, for employment or as an independent
contractor with any person or entity, unless first authorized
in writing by Vendors, which authorization may be withheld in
the sole and absolute discretion of Vendors.
(c) Trade Secrets and Other Information - In the event of
termination of this Agreement without consummation of the
transactions contemplated hereby, Purchaser agrees that after
the Closing Purchaser will not communicate or divulge
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<PAGE> 27
to, or use for the benefit of, any person, firm or corporation
any of the trade secrets, methods, formulas, business and/or
marketing plans, processes or any other proprietary or
confidential information with respect to the Company and its
business, financial condition, business operations or methods,
or business prospects. The preceding sentence shall not apply
to information which (i) is, was or becomes generally known or
available to the public or the industry other than as a result
of a disclosure by Purchaser in violation of this Agreement,
or (ii) is required to be disclosed by law. Purchaser will
advise Vendors, in writing, of any request, including a
subpoena or similar legal inquiry, to disclose any such
confidential information, such that Vendors can seek
appropriate legal relief.
(d) Equitable Relief - Purchasers acknowledge that the covenants
contained in each of paragraphs (a), (b), and (c) of this
Section 5.2 are a material inducement for Vendors to execute
and deliver this Agreement and to consummate the transac-
tions contemplated hereby. Accordingly, Purchaser acknowledges
and agrees that the restrictions contained in each of
paragraphs (a), (b), and (c) of this Section 5.2 are
reasonable and necessary for the protection of the business of
the Company, and Vendors' investment in the Company, and that
a breach of any such restriction could not adequately be
compensated by damages in an action at law. In the event of a
breach or threatened breach by Purchaser of any of the
provisions of any of paragraphs (a), (b), or (c) of this
Section 5.2, Vendors shall be entitled to obtain, without the
necessity of posting bond therefor, an injunction (preliminary
or permanent, or a temporary restraining order) restraining
Purchaser from the activity or threatened activity
constituting, or which would constitute, a breach of this
Agreement, as well as damages and an equitable accounting of
all earnings, profits and other benefits arising from such a
violation, which right shall be cumulative and in addition to
any other rights or remedies to which Vendors may be entitled.
(e) Severability - Each and every provision set forth in each of
paragraphs (a), (b), and (c) this Section 5.2 is independent
and severable from the others, and no provision shall be
rendered unenforceable by virtue of the fact that, for any
reason, any other or others of them may be unenforceable in
whole or in part. The parties hereto agree that if any
provision of any of paragraphs (a), (b), or (c) of this
Section 5.2 shall be declared by a court of competent
jurisdiction to be unenforceable for any reason whatsoever,
the court may appropriately limit or modify such provision,
and such provision shall be given effect to the maximum extent
permitted by applicable law.
(f) Consents - Purchaser shall use its reasonable efforts and make
every good faith attempt to obtain any and all consents and
estoppel letters which may be necessary, appropriate, or
required in order to permit consummation of the transactions
contemplated herein.
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5.3 JOINT OBLIGATIONS OF VENDORS AND PURCHASER - During the period from the date
of this Agreement to the Closing Time, the following shall apply with equal
force to Vendors and Purchaser:
(a) Notice - Each Party shall promptly give the other parties
written notice of the existence or occurrence of any condition
that would make any representation or warranty of the
notifying Party untrue or that might reasonably be expected to
prevent the consummation of the transactions herein
contemplated.
(b) Performance - No Party shall intentionally perform or omit to
perform any act which, if performed or omitted, would prevent
or excuse the performance of this Agreement by any Party
hereto or that would result in any representation or warranty
contained herein of that Party being untrue in any material
respect as of the date hereof and as if originally made on and
as of the Closing Date.
(c) Hart-Scott-Rodino Filings - Each party shall take whatever
steps are necessary to make any filings required under the
Hart Act not later than ten days after the date of execution
of this Agreement.
ARTICLE 6
POST CLOSING OBLIGATIONS
6.1 OBLIGATIONS OF VENDORS - Following the Closing, Vendors shall each be
subject to the following obligations:
(a) Covenant Not to Compete - In consideration of the execution
and delivery of this Agreement by Purchaser, and in
consideration of the Purchase Price, and as additional
consideration therefor, each of the Vendors unconditionally
agrees that during the Restricted Period (as defined below) no
Vendor will, directly or indirectly (including, without
limitation, as a partner, shareholder, director, officer or
employee of, or lender or consultant to, any other person or
entity), for himself, herself or itself, or on behalf of, or
in conjunction with, any other Person or governmental entity,
in any manner whatsoever, or in any other capacity within,
into or from the Restricted Territory (as defined below)
engage or cause others to engage in the Business, or any
aspect thereof, unless first authorized in writing by
Purchaser, which authorization may be withheld in the sole and
absolute discretion of Purchaser. For purposes of this
Agreement, the term "Restricted Period" shall mean the period
ending three (3) years from the Closing Date. For purposes of
this Agreement, the term "Restricted Territory" shall mean the
State of Arizona. If any Vendor violates his, her or its
obligations under this Section 6.1(a), then the Restricted
Period shall be extended by the period of time equal to that
period beginning when the activities constituting such
violation commenced and ending when the activities
constituting such violation
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terminated. Notwithstanding the foregoing, the obligations of
the Vendors under this Section 6.1(a) shall terminate if
Ramsey is terminated by Purchaser without Cause as defined and
described in the Employment Agreement. The Purchaser agrees
that no breach of this covenant not to compete will occur as a
result of Ramsey's formation of and activities with respect to
any 501(c)(3) foundation, his continued association with the
International Association of Firefighters, his continued
ownership and operation of an ambulance service company in
Pima County under the name Kords Southwest, or his continued
service as President of the Arizona Ambulance Association.
(b) Nonsolicitation - In consideration of the execution and
delivery of this Agreement by Purchaser, and in consideration
of the Purchase Price, each of the Vendors agrees that for a
period of three (3) years following the Closing Date no Vendor
will directly or indirectly solicit or cause others to solicit
(i) in respect of the Business, any Person or any other entity
that is, or was within the twelve (12) month period
immediately prior to the Closing, a customer or supplier of
the Company or (ii) any person who, on the date hereof, is an
employee of the Company and whose annual compensation from the
Company exceeds $25,000, for employment or as an independent
contractor with any Person or entity, unless first authorized
in writing by Purchaser, which authorization may be withheld
in the sole and absolute discretion of Purchaser. If any
Vendor violates his, her or its obligations under this Section
6.1(b), then the time periods hereunder shall be extended by
the period of time equal to that period beginning when the
activities constituting such violation commenced and ending
when the activities constituting such violation terminated.
Notwithstanding the foregoing, the obligations of the Vendors
under this Section 6.1(b) shall terminate if Ramsey is
terminated by Purchaser without Cause as defined and described
in the Employment Agreement.
(c) Trade Secrets and Other Information - In consideration of the
execution and delivery of this Agreement by Purchaser, and in
consideration of the Purchase Price, each of the Vendors
agrees that after the Closing no Vendor will communicate or
divulge to, or use for the benefit of, any Person other than
Purchaser or the Company, or its or their agents and
representatives, any of the trade secrets, methods, formulas,
business and/or marketing plans, processes or any other
proprietary or confidential information with respect to the
Company and its business, financial condition, business
operations or methods, or business prospects. The preceding
sentence shall not apply to information which (i) is, was or
becomes generally known or available to the public or the
industry other than as a result of a disclosure by a Vendor in
violation of this Agreement, or (ii) is required to be
disclosed by law. Vendors will advise Purchaser, in writing,
of any request, including a subpoena or similar legal inquiry,
to disclose any such confidential information, such that
Purchaser can seek appropriate legal relief.
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(d) Confidentiality - At all times after the Closing, Vendors will
maintain as confidential the discussions between Vendors and
Purchaser, and the terms and conditions of this Agreement, and
the other agreements to be executed in connection herewith,
and except as required by law, will not make any trade press
or other announcement or disclosure in relation to such
discussions whether before or after Closing without the prior
written consent of Purchaser.
(e) Equitable Relief - Vendors acknowledge that the covenants
contained in each of paragraphs (a), (b), (c), and (d) of this
Section 6.1 are a material inducement for Purchaser to execute
and deliver this Agreement and to consummate the transactions
contemplated hereby. Accordingly, Vendors acknowledge and
agree that the restrictions contained in each of paragraphs
(a), (b), (c), and (d) of this Section 6.1 (including, without
limitation, the Restricted Period and the Restricted
Territory) are reasonable and necessary for the protection of
the business of the Company, and Purchaser's investment in the
Company, and that a breach of any such restriction could not
adequately be compensated by damages in an action at law. In
the event of a breach or threatened breach by any Vendors of
any of the provisions of any of paragraphs (a), (b), (c), or
(d) of this Section 6.1, Purchaser shall be entitled to
obtain, without the necessity of posting bond therefor, an
injunction (preliminary or permanent, or a temporary
restraining order) restraining that Vendor from the activity
or threatened activity constituting, or which would
constitute, a breach of this Agreement, as well as damages and
an equitable accounting of all earnings, profits and other
benefits arising from such a violation, which right shall be
cumulative and in addition to any other rights or remedies to
which Purchaser may be entitled.
(f) Severability - Each and every provision set forth in each of
paragraphs (a), (b), (c), and (d) this Section 6.1 is
independent and severable from the others, and no provision
shall be rendered unenforceable by virtue of the fact that,
for any reason, any other or others of them may be
unenforceable in whole or in part. The parties hereto agree
that if any provision of any of paragraphs (a), (b), (c) or
(d) of this Section 6.1 shall be declared by a court of
competent jurisdiction to be unenforceable for any reason
whatsoever, the court may appropriately limit or modify such
provision, and such provision shall be given effect to the
maximum extent permitted by applicable law.
(g) Consents - Vendors shall use their reasonable efforts and make
every good faith attempt to obtain any and all consent and
estoppel letters, if any, reasonably requested by Purchaser to
or in connection with the assignment of, or alternate
arrangements satisfactory to Purchaser with respect to, any
contract, lease, license, permit, agreement, or other
instrument, which is to be an asset of the Company, or which
may be necessary, appropriate, or required in order to permit
the conduct of the business and operations of the Company
after the Closing to
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be in all respects the same as the conduct of the business and
operations of the Company prior to the Closing.
6.2 OBLIGATIONS OF PURCHASER - Following the Closing, Purchaser shall be subject
to the following obligations:
(a) Tax Amendments - The Purchaser agrees that the Company shall
not, and the Purchaser shall not cause the Company to, amend
the Company's tax returns for 1995 or earlier without the
prior consent of Ramsey. In the event the Company and/or the
Purchaser amends such tax returns without Ramsey's consent,
the Purchaser agrees to indemnify the Vendors for any
liabilities that any of them may occur as a result of any such
amendment; provided, however, that Vendors agree jointly and
severally to indemnify, defend and hold harmless the Purchaser
and the Company for any liabilities, costs, penalties, fines
and interest that either of them may incur as the result of
any refusal to grant the consent referred to above.
(b) Non Interference With Leases - Purchaser acknowledges the
existence of certain real property leases between the Company
and NRM Properties, Inc. and Chaparral Properties, Inc.
(collectively the "Landlords"), and agrees not to interfere
with such leases and to cause the Company to abide by such
leases. In the event that the Company and/or the Purchaser
reaches this Agreement, the Purchaser shall pay to the
appropriate Landlord the full amount of all unpaid monetary
obligations of the Company through the lease period in effect
at the time of the Closing and agrees that such remedy is in
addition to all other remedies that the Landlords or the
Vendors may have at law or in equity.
6.3 OBLIGATIONS OF VENDORS AND PURCHASER - Following the Closing, Vendors and
Purchaser shall execute such further documents, and perform such further acts,
as may be necessary to transfer and convey the Purchased Shares to Purchaser, on
the terms herein contained, and to otherwise comply with the terms of this
Agreement and consummate the transactions herein provided.
6.4 SECTION 338(h)(10) ELECTION
(a) Making the Section 338(h)(10) Election; Form 8023-A - Vendors
shall timely join with the Purchaser in making an election
pursuant to Section 338(h)(10) of the Code (and any
corresponding election under state law) (the "Section
338(h)(10) Election"). After Closing, Purchaser will promptly
prepare IRS Form 8023-A ("Form 8023-A") and any related
schedules required to be included with such form and Vendors
shall provide the Purchaser with all necessary information to
timely prepare such schedules (the "Election Schedules").
Purchaser shall submit the Form 8023-A and the Election
Schedules to the Vendors for their review. The Vendors shall
immediately execute the Form 8023-A and submit seven
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original signed duplicates thereof to Purchaser who shall be
entitled to file the Form 8023-A and the Election Schedules
with the IRS. Vendors shall also timely comply with their
responsibilities as required by the Code to effect the
338(h)(10) Election.
(b) Section 338(h)(10) Election Purchase Price Adjustment. The
Purchaser hereby covenants and agrees to defend, indemnify and
hold harmless the Vendor for, from and against any tax
liability, including related penalties, interest and any
additional fees and costs (including, without limitation,
attorneys' and accountants' fees and costs) that accrue to the
Vendor as a direct result of the Section 338(h)(10) Election
(the "Tax Liability"). The Tax Liability resulting from the
Section 338(h)(10) Election shall be paid in cash to the
Vendor immediately prior to the time such Tax Liability, if
any, is required to be paid to the applicable taxing
authority.
ARTICLE 7
INDEMNIFICATION
7.1 INDEMNIFICATION BY VENDORS
(a) General - Subject to Section 7.4 hereof, Vendors jointly and
severally covenant and agree to defend, indemnify and hold
Purchaser and the Company, its and their officers, directors,
shareholders and subsidiaries, harmless for, from and against
any and all damages, losses, liabilities (absolute and
contingent), fines, penalties, costs and expenses (including,
without limitation, reasonable counsel fees and costs and
expenses incurred in the investigation, defense or settlement
of any claim covered by this indemnity) with respect to or
arising out of any demand, claim, inquiry, investigation,
proceeding, action or cause of action that Purchaser and/or
the Company, its and their officers, directors, shareholders
and subsidiaries, may suffer or incur by reason of: (a) the
inaccuracy of any of the representations or warranties of
Vendors contained in this Agreement, or any of the agreements,
certificates, documents, exhibits or schedules delivered in
connection with this Agreement; (b) the failure to comply
with, or the breach or default by any Vendor of any of the
covenants, warranties or agreements made by that Vendor
contained in this Agreement, or any of the agreements,
certificates, documents, exhibits or schedules delivered in
connection with this Agreement; (c) any pending or threatened
litigation, claims, investigations, inquiries, regulatory
audits or assessments, or other similar proceedings against
Purchaser and/or the Company and/or its or their directors,
officers, shareholders, employees, agents or representatives,
as well as any future litigation, claims, investigations,
inquiries, regulatory audits or assessments, or other similar
proceedings against the Purchaser and/or the Company and/or
its or their directors, officers, shareholders, employees,
agents or representatives that arise
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from a state of facts existing prior to the Closing, and which
are not fully covered and reimbursed by insurance; or (d) any
liability or obligation of the Company not reflected, provided
for, or adequately reserved against on the balance sheets
included in the Financial Statements. Purchaser and/or the
Company shall be entitled to offset against any amount owed by
Purchaser and/or the Company to Vendors, (or any of them) any
amount owed to Purchaser and/or the Company by Vendor, (or any
of them) or any of their Affiliates.
(b) Environmental - Subject to Section 7.4 hereof, Vendors jointly
and severally covenant and agree to defend, indemnify and hold
Purchaser and/or the Company, and their officers, directors
and shareholders harmless for, from and against any and all
damages, losses, liabilities (absolute and contingent), fines,
penalties, costs and expenses (including, without limitation,
reasonable counsel fees and costs and expenses incurred in the
investigation, defense or settlement of any claim covered by
this indemnity and costs associated with any environmental
assessments and/or remediation expenses) by reason of any
inaccuracy of any of the representations or warranties set
forth in Section 3.1(cc) hereof, or with respect to or arising
out of any demand, claim, inquiry, investigation, proceeding,
action, or cause of action brought by any governmental agency
or instrumentality or any Person other than Purchaser, which
Purchaser and/or the Company, or any of their officers,
directors or shareholders may suffer or incur by reason of:
(i) any generation, transportation, storage, treatment or
disposal of industrial, toxic or hazardous substances
or solid or hazardous wastes occurring on or prior to
the Closing Date including, without limitation, any
waste or other disposal activities or discharges that
occurred at a facility on which any portion of the
Company's (or its predecessors') business was
conducted, any waste or other disposal activities or
discharges that occurred off of any such facility
with regard to wastes and other substances generated
on such facility, and any waste or other disposal
activities or discharges that occurred on real estate
at any time whether or not the Company (or its
predecessors) owned or leased such real estate at the
time such waste or other disposal activities or
discharges were engaged in, where the Company or
Persons at the direction of the Company performed
such waste or other disposal activities or
discharges;
(ii) any spills, discharges, leaks, emissions, injections,
escapes, dumping, or any releases as defined now or
in the future under the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980,
P.L. 96-510, as amended or reauthorized from time to
time, or any other similar federal, state or local
laws, statutes, rules or regulations, occurring on or
prior to the Closing Date, including, but not limited
to, both those releases or incidents involving
environmental contamination
33
<PAGE> 34
that required notification or reporting to
appropriate federal, state or local officials or
agencies, or clean-up or remedial activities and
those releases or incidents which occurred prior to
the effective date of any requirements imposing such
notification or reporting obligations or clean-up or
remedial activities, but which would have been
subject to such obligations if they had occurred
subsequent to the effective date of such
requirements;
(iii) any discharges to surface waters or groundwaters
occurring on or prior to the Closing Date;
(iv) any air emissions occurring on or prior to the
Closing Date;
(v) the exposure of and resulting consequences to any
persons, including, but not limited to, employees of
the Company (or any of its predecessors), to any
mineral, chemical or industrial product, raw material
intermediate, by-product or waste, or substance
created, generated, processed, handled or originating
at a facility at which the Company (or any of its
predecessors) conducted business on or prior to the
Closing Date or otherwise used by the Company (or any
of its predecessors) in the conduct of its business;
(vi) any violations by the Company (or any of its
predecessors) occurring on or prior to the Closing
Date of federal, state or local (A) environmental
laws, or (B) occupational or employee health and
safety laws;
(vii) any and all actions, failures to act and negligence
in monitoring, maintaining and upkeep of on-site
storage, treatment and disposal facilities on or
prior to the Closing Date;
(viii) any misuse, removal, failure to properly maintain
and/or monitor storage tanks on or prior to the
Closing Date; or
(ix) any violations, fees, obligations or failures to
comply with any and all environmental permit
requirements on or prior to the Closing Date.
7.2 INDEMNIFICATION BY PURCHASER
(a) General - Subject to Section 7.4 hereof, Purchaser covenants
and agrees to defend, indemnify and hold each Vendor harmless
for, from and against any and all damages, losses, liabilities
(absolute and contingent), fines, penalties, costs and
expenses (including, without limitation, reasonable counsel
fees and costs and expenses incurred in the investigation,
defense or settlement of any claim covered by this indemnity)
with respect to or arising out of any demand, claim, inquiry,
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<PAGE> 35
investigation, proceeding, action and/or cause of action that
any Vendor may suffer or incur by reason of: (a) the
inaccuracy of any of the representations or warranties of
Purchaser contained in this Agreement, or any of the
agreements, certificates, documents, exhibits or schedules
delivered by Purchaser in connection with this Agreement; and
(b) the failure to comply with, the breach or the default by
Purchaser of any of the covenants, warranties or agreements
made by Purchaser in this Agreement, or any of the agreements,
certificates, documents, exhibits or schedules delivered by
Purchaser in connection with this Agreement.
(b) Environmental - Subject to Section 7.4 hereof, Purchaser
covenants and agrees to defend, indemnify and hold each Vendor
harmless for, from and against any and all damages, losses,
liabilities (absolute and contingent), fines, penalties, costs
and expenses (including, without limitation, reasonable
counsel fees and costs and expenses incurred in the
investigation, defense or settlement of any claim covered by
this indemnity) with respect to or arising out of any demand,
claim, inquiry, investigation, proceeding, action or cause of
action brought by any governmental agency or instrumentality
or any Person other than Vendors which any Vendor may suffer
or incur by reason of:
(i) any generation, transportation, storage, treatment or
disposal of industrial, toxic or hazardous substances
or solid or hazardous wastes occurring after the
Closing Date including, without limitation, any waste
or other disposal activities or discharges that occur
after the Closing Date at a facility on which any
portion of the business of the Company is conducted,
any waste or other disposal activities or discharges
that occur after the Closing Date off of any such
facility with regard to wastes and other substances
generated after the Closing Date on such facility,
and any waste or other disposal activities or
discharges that occur after the Closing Date on real
estate owned or leased by the Company, at any time
after the Closing Date whether or not the Company
owns or leases such real estate at the time such
waste or other disposal activities or discharges are
engaged in, and whether or not the Company performs
such waste or other disposal activities or
discharges;
(ii) any spills, discharges, leaks, emissions, injections,
escapes, dumping, or any releases as defined now or
in the future under the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980,
P.L. 96-510, as amended or reauthorized from time to
time, or any other similar federal, state or local
laws, statutes, rules or regulations occurring after
the Closing Date, including, but not limited to, both
those releases or incidents involving environmental
contamination which require notification or reporting
to appropriate federal, state or local officials or
agencies, or clean-up or remedial activities and
those releases
35
<PAGE> 36
or incidents which occurred prior to the effective
date of any requirements imposing such notification
or reporting obligations or clean-up or remedial
activities, but which would have been subject to such
obligations if they had occurred subsequent to the
effective date of such requirements;
(iii) any discharges to surface waters or groundwaters
occurring after the Closing Date;
(iv) any air emissions occurring after the Closing Date;
(v) the exposure after the Closing Date of and resulting
consequences to any persons, including, but not
limited to, employees of Purchaser to any mineral,
chemical or industrial product, raw material
intermediate, by-product or waste, or substance
created, generated, processed, handled or originated
after the Closing Date at a facility at which
Purchaser, or the Company conducts business after the
Closing Date or otherwise used after the Closing Date
by Purchaser or the Company in the conduct of its
business or contained in or constituting a part of
merchandise which is sold by Purchaser or the Company
after the Closing Date;
(vi) any violations by Purchaser or the Company occurring
after the Closing Date of federal, state or local (A)
Environmental Laws, or (B) occupational or employee
health and safety laws;
(vii) any and all actions, failures to act and negligence
in monitoring, maintaining and upkeep of on-site
storage, treatment and disposal facilities after the
Closing Date;
(viii) any misuse, removal, failure to properly maintain
and/or monitor storage tanks after the Closing Date;
and
(ix) any violations, fees, obligations or failure to
comply with any and all environmental permit
requirements after Closing Date.
7.3 NOTICE AND RIGHT TO DEFEND THIRD-PARTY CLAIMS - Promptly upon receipt of
notice of any claim, demand or assessment or the commencement of any suit,
action or proceeding with respect to which indemnity may be sought pursuant to
this Agreement, the party seeking to be indemnified or held harmless (the
"Indemnitee") shall notify in writing, if possible, within sufficient time to
respond to such claim or answer or otherwise plead in such action (but in any
event within thirty (30) days), the party from whom indemnification is sought
(the "Indemnitor"). In case any claim, demand or assessment shall be asserted,
or suit, action or proceeding commenced against the Indemnitee, the Indemnitor
shall be entitled, at the Indemnitor's expense, to participate therein, and, to
the extent that it may wish, to assume the defense, conduct or
36
<PAGE> 37
settlement thereof, at its own expense, with counsel satisfactory to the
Indemnitee, whose consent to the selection of counsel shall not be unreasonably
withheld or delayed, provided that the Indemnitor confirms to the Indemnitee
that it is a claim to which Indemnitee's rights of indemnification apply. The
Indemnitor shall have the right to settle or compromise monetary claims;
however, as to any other claim, the Indemnitor shall first obtain the prior
written consent from the Indemnitee, which consent shall be exercised in the
sole discretion of the Indemnitee. After notice from the Indemnitor to the
Indemnitee of Indemnitor's intent so to assume the defense, conduct, settlement
or compromise of such action, the Indemnitor shall not be liable to the
Indemnitee for any legal or other expenses (including, without limitation,
settlement costs) subsequently incurred by the Indemnitee in connection with the
defense, conduct, settlement or compromise of such action while the Indemnitor
is diligently defending, conducting, settling or compromising such action. The
Indemnitor shall be afforded at least thirty (30) days, at its sole cost and
expense, to resist, defend and compromise any claim for which indemnification is
sought. The Indemnitor shall keep the Indemnitee promptly apprised of the status
of the suit, action or proceeding and shall make Indemnitor's counsel available
to the Indemnitee, at the Indemnitor's expense, upon the request of the
Indemnitee. The Indemnitee shall reasonably cooperate with the Indemnitor in
connection with any such claim and shall make personnel, books and records and
other information relevant to the claim available to the Indemnitor during
normal business hours to the extent that such personnel, books and records and
other information are in the possession and/or control of the Indemnitee. If the
Indemnitor decides not to participate, the Indemnitee shall be entitled, at the
Indemnitor's expense, to defend, conduct, settle and/or compromise such matter
with counsel satisfactory to the Indemnitor, whose consent to the selection of
counsel shall not be unreasonably withheld or delayed.
7.4 SURVIVAL OF OBLIGATIONS - The liability of Vendors and Purchaser for
indemnification pursuant to this Article 7 shall (i) survive until terminated by
the applicable statute of limitations as to matters relating to: (a) ownership
and title to any of the assets of the Company; (b) ownership and title to the
capital stock of the Company; (c) competency to execute and deliver documents to
effect the transactions contemplated thereby and hereby, and the legal, binding
and enforceable nature thereof and hereof; (d) the environment; and (e) taxes;
(ii) expire three (3) years from the Closing Date with respect to claims not
made prior thereto relating to any price or reimbursement adjustment under any
contract or arrangement with the United States Government, any state government,
or any insurer or healthcare provider organization involving any liability,
claim and/or fraud with respect to billings or reimbursement under either
Medicare or Medicaid for services provided by the Company prior to the Closing
Date; and (iii) expire two (2) years from the Closing Date with respect to
claims not made prior thereto relating to all other matters not referenced in
this Section 7.4. This Section in no way limits any claims that an Indemnitee
may have against an Indemnitor for fraud or for the breach of any direct
covenant made by the Indemnitor to the Indemnitee contained in this Agreement or
the other agreements delivered in connection therewith.
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<PAGE> 38
ARTICLE 8
TERMINATION
8.1 RIGHT TO TERMINATE - Notwithstanding anything to the contrary contained
herein, this Agreement and the transactions contemplated hereby may be
terminated at any time prior to the Closing: (a) by Purchaser if the conditions
precedent set forth in Section 4.1 are not satisfied or waived in writing by
Purchaser; or (b) by Vendors if the conditions precedent set forth in Section
4.2 are not satisfied or waived in writing by Vendors. In addition, this
Agreement shall terminate if the Closing has not occurred by April 15, 1997,
unless extended by written agreement of the Parties hereto.
ARTICLE 9
GENERAL
9.1 DISCLOSURE SCHEDULES - The Schedules referred to in Section 3.1 and Section
3.2 of this Agreement reflect information supplied to Purchaser and Vendors,
respectively, in the course of their investigation of the Company and Purchaser,
respectively. Vendors may supplement or amend any Schedule from time to time
prior to or at the Closing, by notice in accordance with the terms of this
Agreement, including by delivering one or more supplements or amendments to
correct any matter which would constitute a breach of any representation or
warranty contained herein. All references to any Schedule hereto which is
supplemented or amended as provided in this Section 9.1 shall, for all purposes,
whether or not the transactions contemplated hereby occur, be deemed to be a
reference to such Schedule as so supplemented or amended.
9.2 PUBLIC NOTICES - All public notices to third parties and all other publicity
concerning the transactions contemplated by this Agreement shall be jointly
planned and coordinated by the Vendors and the Purchaser and no Party shall act
unilaterally in this regard without the prior approval of the Vendors and the
Purchaser or the other of them.
9.3 EXPENSES - The expenses incurred by each party hereto in connection with
this Agreement and the transactions provided herein shall be borne by such
party. Notwithstanding the foregoing, all professional fees incurred by the
Vendors in connection with the transactions contemplated by this Agreement shall
be borne by the Vendors and all expenses incurred in connection with the
preparation of any environmental reports after the date of execution of this
Agreement with respect to the real property owned or leased by the Company shall
be borne by the Purchaser (which reports shall remain the property of the
Purchaser following the Closing).
9.4 TIME - Time shall be of the essence hereof.
9.5 NOTICES - Any notice, direction or other document required or permitted to
be given hereunder or for the purposes hereof (hereinafter in this Section 9.5
called a "notice") to any
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<PAGE> 39
Party shall be in writing and shall be sufficiently given if delivered
personally, or if sent by prepaid registered mail or if transmitted by telex,
facsimile or other form of recorded communication tested prior to transmission
to such Party:
(a) in the case of a notice to the Vendors to:
Robert E. Ramsey, Jr.
222 Main Street East
Mesa, Arizona 85201
with a copy to the Vendors' Counsel at
Gallagher & Kennedy, P.A.
2600 North Central Avenue
Phoenix, AZ 85004-3020
Attention: Terence W. Thompson, Esq.
with a facsimile number of (602) 257-9459.
(b) in the case of a notice to the Purchaser at
8401 E. Indian School Road
Scottsdale, Arizona 85251
Attention: Warren S. Rustand
with a facsimile number of (602) 481-3328
with a copy to Purchaser's Counsel at
O'Connor Cavanagh Anderson
Killingsworth & Beshears, P.A.
One E. Camelback Road, Suite 1100
Phoenix, Arizona 85012
Attention: John B. Furman, Esq.
with a facsimile number of (602) 263-2900
or at such other address as the Party to whom such writing is to be given shall
have last notified the Party giving the same in the manner provided in this
section. Any notice delivered in person to the Party to whom it is addressed as
hereinbefore provided shall be deemed to have been given and received on the day
it is so delivered at such address, provided that if such day is not a Business
Day then the notice shall be deemed to have been given and received on the first
Business Day next following such day. Any notice mailed as aforesaid shall be
deemed to have been given and received on the seventh Business Day following the
date of its mailing. Any notice transmitted by telex, facsimile or other form of
recorded communication shall be deemed given and received on the Business Day of
its transmission.
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<PAGE> 40
9.6 ASSIGNMENT - Neither this Agreement nor any rights or obligations hereunder
shall be assignable by any Party without the prior written consent of the other
Party hereto; provided, however, that the Vendors shall be entitled to assign
their rights to receive payments hereunder (or under any related documents) to
any person without the consent of the Purchaser. Subject thereto, this Agreement
shall enure to the benefit of and be binding upon the Parties and their
respective heirs, executors, administrators and successors (including any
successor by reason of amalgamation of the Purchaser) and permitted assigns.
9.7 FURTHER ASSURANCES - The Parties hereto shall with reasonable diligence do
all such things and provide all such reasonable assurances as may be required to
consummate the transactions contemplated hereby, and each Party shall provide
such further documents or instruments required by any other Party as may be
reasonably necessary or desirable to effect the purpose of this Agreement and
carry out its provisions, whether before or after the Closing.
9.8 SEVERABILITY - If any covenant or provision of this Agreement (other than
the provisions pertaining to payments to be made to the Vendors) is prohibited
in whole or in part in any jurisdiction, such covenant or provision shall, as to
such jurisdiction, be ineffective to the extent of such prohibition without
invalidating the remaining covenants and provisions hereof and shall, as to such
jurisdiction, be deemed to be severed from this Agreement to the extent of such
prohibition.
9.9 COUNTERPARTS - This Agreement may be executed by the Parties in separate
counterparts (and by facsimile transmission) each of which when so executed and
transmitted or delivered shall be an original, but all such counterparts shall
together constitute one and the same instrument.
9.10 MEDIATION AND ARBITRATION - Any dispute, controversy or claim (including
without limitation tort claims, requests for provisional remedies or other
interim relief, and issues as to the arbitrability of any matter) arising out of
or relating to this Agreement, or breach thereof, (a) shall be settled by
negotiation at a meeting between the Vendors and the chief executive officer of
the Purchaser held in Phoenix, Arizona within 5 days after notice given by any
party hereto to the other parties hereto, and (b) if within that 5 day period
settlement cannot be achieved through negotiation, it shall be settled (i)
first, by the parties trying in good faith to settle the dispute by mediation
under the Commercial Mediation Rules of the American Arbitration Association
("AAA") (such mediation session to be held in Phoenix, Arizona and to commence
with 10 days of the appointment of the mediator by the AAA), and (ii) if the
controversy, claim or dispute cannot be settled by mediation, then by
arbitration administered by the AAA under its Commercial Arbitration Rules and
in accordance with its expedited hearing procedures (such arbitration to be held
in Phoenix, Arizona before a single arbitrator by the AAA), and judgment on the
award rendered by the arbitrator may be entered in any court having jurisdiction
thereof.
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<PAGE> 41
9.11 ATTORNEYS' FEES - If any action is necessary to enforce the terms of this
Agreement, the prevailing party shall be entitled to recover from the other
party all costs, expenses and fees incurred by the prevailing party (including
reasonable attorneys' fees, costs and disbursements) in addition to other relief
to which the prevailing party may be entitled.
IN WITNESS WHEREOF, the Parties have set their hand this 25th day of
February, 1997 through our trust in God and our service to others. . . . for
life.
Rural/Metro Corporation, a Delaware corporation
By: /s/ James H. Bolin
-----------------------------------------------
James H. Bolin, President
/s/ Robert E. Ramsey
-----------------------------------------------
Robert E. Ramsey, Jr., individually
41
<PAGE> 42
CONSENT OF SPOUSE
The undersigned spouse of Robert E. Ramsey, Jr., who is a party to the
above Agreement of Purchase and Sale, pertaining to the sale of the stock of
Medical Emergency Devices and Services (MEDS), Inc., an Arizona corporation (the
"Agreement"), hereby declares, contemporaneously with the execution of the
Agreement, that she has read the Agreement in its entirety, and being fully
convinced of the wisdom and equity of the terms of the Agreement, and in
consideration of the premises and of the provisions of the Agreement, hereby
expresses her consent to the execution and consummation of the Agreement by
Robert E. Ramsey, Jr.
The undersigned further agrees that in the event of the death of Robert
E. Ramsey, Jr., the dissolution of their marriage, or any occurrence
contemplated by the Agreement that gives rise to any liability or obligation of
Robert E. Ramsey, Jr., the provisions of the Agreement shall be binding upon her
to the extent of any community property she may now have or hereafter acquire,
and any and all separate property that she may hereafter possess which arises
(directly or indirectly) from any consideration given to Robert E. Ramsey, Jr.
pursuant to the Agreement or any agreement executed in connection thereto.
The undersigned further agrees that she will, at any and all times,
make, execute and deliver such instruments and documents as may be reasonably
necessary to carry out the provisions of the Agreement, provided that no such
documents require the incurring of any liabilities in excess of that already
provided in the Agreement.
Dated this 24th day of February, 1997.
/s/ Virginia (Jenny) L. Norton
------------------------------
Virginia (Jenny) L. Norton
State of Arizona )
County of Maricopa )
The foregoing instrument was acknowledged before me this 24th day of February,
1997 by Virginia (Jenny) L. Norton.
[OFFICIAL NOTARY SEAL] /s/ Jacque Tenge
------------------------
Notary Public
<PAGE> 43
APPENDIX J
(i) All real property leased by the Company from NRM
Properties, Inc. or Chaparral Properties, Inc. (the "Leased Properties") is set
forth in Schedule "J" and is zoned as set forth on Schedule "J", pursuant to the
ordinances of the applicable cities, towns, villages or townships identified on
such Schedule "J", and is not located in an area that has been identified by the
Secretary of Housing and Urban Development as an area of special flood hazard.
The uses to which such real property are presently put do not violate or
conflict with the applicable provisions of such zoning ordinances, or other
zoning laws of such cities, towns, villages or townships or any other
governmental body.
(ii) The Company does not sublease any of its Leased
Properties. The Company does not lease any of its owned real property.
(iii) Neither the Company nor any Vendor, nor any one or more
of them, has retained or engaged any real estate broker, commission agent or
other person who is or may be entitled to payment of a commission or finder's
fee or other compensation in connection with any of the Leased Properties.
(iv) As to the Leased Properties, the present use and
operation of the real property is authorized by and in compliance with all
applicable building, fire, health, labor and safety laws, ordinances, rules and
regulations applicable to the real property, including, without limitation,
OSHA, and the Americans with Disabilities Act, and there is no litigation,
action, proceeding or any present plan or study by any governmental authority or
any private person or entity which in any way would affect the present use and
operation of the real property. There are in existence all licenses, permits and
approvals that are required for the use and operation of the Leased Properties,
and no Vendor has any reason to believe that any of the same are in jeopardy of
being revoked or not being reissued upon expiration.
(v) No Vendor has any knowledge of any fact or condition
existing which would result or could result in the termination or reduction of
the current access from the Leased Properties to existing public roads and
highways, or of any reduction in sewer or other utility services presently
serving the Leased Properties. Leased Properties have direct access to dedicated
roads and highways and all utility services to the Leased Properties are
furnished through dedicated or perpetual easements.
(vi) As to the Leased Properties, no Vendor has received
notice from any insurance company of any defects or inadequacies in such real
property or any part thereof which would materially and adversely affect the
insurability of the real property or the premiums for the insurance thereof.
(vii) As to the Leased Properties, no Vendor has failed to
disclose any material conditions of disrepair or other adverse conditions or
defects with respect to such
Appendix J-1
<PAGE> 44
real property or any portion thereof of which that Vendor has knowledge or
which, with the exercise of reasonable diligence, that Vendor should have known.
(viii) As to the Leased Properties, no Vendor has any
knowledge of any planned public improvement which might result in a special
assessment levied against such real property. If any Vendor becomes aware of any
of the foregoing (whether arising before or after the date hereof) after the
date hereof, but prior to Closing, that Vendor shall give prompt written notice
thereof to Purchaser prior to Closing.
Appendix J-2
<PAGE> 45
AMENDMENT TO AGREEMENT OF PURCHASE AND SALE
WHEREAS, RURAL/METRO CORPORATION, a Delaware corporation ("Purchaser"), and
ROBERT E. RAMSEY, JR., an individual ("Vendor"), signed that certain Agreement
of Purchase and Sale, made as of February 25, 1997 (the "Agreement"), with
respect to the purchase of all the issued and outstanding shares of the stock of
MEDICAL EMERGENCY DEVICES AND SERVICES (MEDS), INC., an Arizona corporation (the
"Company").
WHEREAS, Purchaser and Vendor desire to extend the Closing Date (as defined in
the Agreement), and amend the Agreement as set forth in this Amendment.
NOW, THEREFORE, in consideration of the premises and the mutual agreements and
covenants herein contained (the adequacy of which consideration as to each of
the parties hereto is hereby mutually admitted), the parties hereto hereby amend
the Agreement as follows:
1. Section 1.1(e) of the Agreement is hereby modified to read as
follows:
"Closing Date" means the earlier of May 30, 1997 or
five (5) business days following the satisfaction or
waiver of all conditions precedent to the
transactions contemplated by this Agreement, or such
other date as the Parties may mutually agree in
writing;"
2. The last sentence of Section 8.1 of the Agreement is hereby amended
to read as follows:
"In addition, this Agreement shall terminate if the
Closing has not occurred by May 30, 1997, unless
extended by written agreement of the Parties hereto."
3. This Amendment shall constitute a written extension as contemplated
by the original Section 8.1 of the Agreement.
4. The terms and conditions set forth in the letter agreement, dated
April 15, 1997, by and among Purchaser, Bob Ramsey and Barry Landon, Trustee for
the Southwest ESOP, a copy of which letter agreement is attached hereto as
Exhibit A, shall constitute amendments and supplemental provisions to the
Agreement, as applicable.
<PAGE> 46
5. This Amendment may be executed by the parties hereto in separate
counterparts (and by facsimile transmission) each of which when so executed and
transmitted or delivered shall be an original, but all such counterparts shall
together constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have set their hand as of the
15th day of April, 1997, through our trust in God and our service to others ...
for life.
RURAL/METRO CORPORATION, a
Delaware corporation
By: /s/ James H. Bolin
____________________________________
James H. Bolin, President
/s/ Robert E. Ramsey, Jr.
_______________________________________
Robert E. Ramsey, Jr., individually
I HEREBY CONSENT TO THE TERMS
OF THIS AMENDMENT as of the 15th day
of April, 1997:
/s/ Virginia (Jenny) L. Norton
____________________________________
Virginia (Jenny) L. Norton
2
<PAGE> 47
EXHIBIT A
April 15, 1997
James H. Bolin, President
Rural/Metro Corporation
8401 E. Indian School Road
Scottsdale, Arizona 85251
Dear Jim:
In response to our phone conversation in which we discussed the
extension of the Agreement of Purchase and Sale between Rural/Metro and SW
General, Inc., Southwest Ambulance of Casa Grande, Inc., Medical Emergency
Devices and Services (MEDS), Inc. and Southwest General Services, Inc., I am
asking for your acknowledgment of the following clarifications:
1. SW General, Inc. shall, effective May 1, 1997, enter into a lease for the
3.5 acres of land adjacent to our facility at 617 W. Main. This land has been
used by Southwest since last year without any rental fees being paid. The need
for a new lease was disclosed during the due diligence process and will be
added to the Book of Schedules under Schedule "J".
2. The original "Normalization Work Sheet" which was presented to you in
January of this year was omitted from the Schedules. The Normalization Work
Sheet will be added to the Book of Schedules under Section "H".
Additionally, Rural Metro, as presented in the Normalization Worksheet, has
acknowledged the annual draws/management fees paid to Bob Ramsey associated with
the ownership of the "S" corporations and SW General, Inc. These draws/
management fees shall continue in practice until the closing of the Agreements
at which time they shall cease and the start up of the Ramsey employment
contract shall take effect.
3. Prior to 12/31/96 the equity of Southwest Ambulance of Casa Grande, Inc.
and MEDS were drawn out by Bob Ramsey and loaned back to the corporations as
represented by the "Notes Payable" in Schedules "A" & "C", on the respective
balance sheets of the corporations. Subsequent to 1/1/97, Bob Ramsey has drawn
the
<PAGE> 48
equity out of Southwest General Services, Inc. The equity and all state and
federal taxes have been met by these transactions.
4. From the time period from January 1, 1997 through the date of closing all
profits of the identified "S" corporations are passed on to SW General, Inc.
through a management fee resulting in a zero equity position. This action is
reflected in the financial statements of February and March, 1997 as presented
to Rural/Metro through the due diligence process. (See Schedule "A")
5. As identified in Section 5.1 (b)(ii) of the Agreement, Southwest shall,
prior to close and during the normal course of business, expense such items as
management fees, annual bonus', required capital expenditures (except the two
new ambulances previously identified by SW) and miscellaneous expenses which
shall be acceptable to Rural/Metro so long as the $2,045,000 of this section is
maintained per the Agreement.
6. Two new ambulances which were previously disclosed must be funded at this
time. This expenditure, as invoiced, shall not be utilized in the debt formulas
identified in the warranties with the original Purchase and Sale Agreement.
7. Rural/Metro acknowledges that Ramsey may exceed the $2,045,000 as
identified in section 5 above, for the purpose of purchasing the ownership
interests of William Kordsiemon in MOROKO, Inc. Utilization of these funds in
excess of the $2,045,000 will be deducted from the MEDS purchase transaction.
8. Rural/Metro re-clarifies the understanding as to Bob Ramsey's position,
responsibility and reporting structure as follows:
- Bob Ramsey will serve as President and CEO of Southwest companies
with direct management authority over the Arizona ambulance
operations of Rural/Metro except where the fire department personnel
directly operates the ambulance unit. In this capacity he shall
report directly to Bob Edwards or to Warren Rustand and not to any
Regional President.
- Bob Ramsey agrees to serve as a member of the Board of Directors of
Rural/Metro Corporation.
- Bob Ramsey will serve in a senior executive position as a
vice-president of Rural/Metro (reference: Employment Agreement and
Letter of Intent) reporting to the office of the CEO under the
direction of Warren Rustand.
<PAGE> 49
(See also the Letter of Intent dated January 31, 1997 and the
Agreements of Purchase and Sale dated February 25, 1997 as
referenced herein and exhibited in Schedule "C" of the Agreement.)
As agreed, the closing date will be extended to Friday, May 30, 1997.
Additionally, before implementation, I would like to initially meet with
Warren, Bob and yourself to review the initial and mid-term efficiencies
created by the acquisition and merging of the entities.
This letter of agreement and extension, as signed by the parties below,
shall be incorporated into the Agreement.
ACKNOWLEDGED AND ACCEPTED AS OF THE DATE FIRST WRITTEN ABOVE.
RURAL/METRO CORPORATION
/s/ Bob Ramsey By: /s/ James Bolin
- ---------------------------- ---------------------------
Bob Ramsey James Bolin
Its: President
/s/ Barry Landon
- ------------------------------
Barry Landon
Trustee for the Southwest ESOP
cc: Warren Rustand
<PAGE> 50
SECOND AMENDMENT TO AGREEMENT OF PURCHASE AND SALE
WHEREAS, RURAL/METRO CORPORATION, a Delaware corporation ("Purchaser"), and
ROBERT E. RAMSEY, JR., an individual ("Vendor"), signed that certain Agreement
of Purchase and Sale, made as of February 25, 1997, and that certain Amendment
to Agreement of Purchase and Sale, made as of April 15, 1997 (together, the
"Agreement"), with respect to the purchase of all the issued and outstanding
shares of the stock of MEDICAL EMERGENCY DEVICES AND SERVICES (MEDS), INC., an
Arizona corporation (the "Company"). All defined terms used herein but not
otherwise defined shall have the meaning set forth in the Agreement.
WHEREAS, Purchaser and Vendor desire to extend the Closing Date (as defined in
the Agreement), and amend the Agreement as set forth in this Second Amendment.
NOW, THEREFORE, in consideration of the premises and the mutual agreements and
covenants herein contained (the adequacy of which consideration as to each of
the parties hereto is hereby mutually admitted), the parties hereto hereby amend
the Agreement as follows:
1. Section 1.1(e) of the Agreement is hereby modified to read as
follows:
"Closing Date" means the earlier of July 31, 1997 or
five (5) business days following the satisfaction or
waiver of all conditions precedent to the
transactions contemplated by this Agreement, or such
other date as the Parties may mutually agree in
writing;"
2. The last sentence of Section 8.1 of the Agreement is hereby amended
to read as follows:
"In addition, this Agreement shall terminate if the
Closing has not occurred by July 31, 1997, unless
extended by written agreement of the Parties hereto."
3. This Second Amendment shall constitute a written extension as
contemplated by the original Section 8.1 of the Agreement.
4. The terms and conditions set forth in the letter agreement, dated
May 30, 1997, by and among Purchaser, Bob Ramsey and Barry Landon, Trustee for
the Southwest ESOP, a copy of which letter agreement is attached hereto as
Exhibit A (the "Letter Agreement"), shall constitute amendments and supplemental
provisions to the Agreement,
<PAGE> 51
as applicable, subject to the following: Paragraph 5 of the Letter Agreement
shall be interpreted as a $277,000 indemnification threshold with respect to
claims other than Third Party Claims, in the same manner as the $50,000
indemnification threshold for Third Party Claims in Section 7.5 of the Agreement
of Purchase and Sale regarding SW General, Inc., and the $277,000
indemnification threshold shall be an aggregate threshold against the liability
of the Vendor for indemnification arising from any of the Agreements of Purchase
and Sale pertaining to the Southwest Companies.
5. The Vendor represents and warrants that the Company is and shall be
at the Closing a valid S-Corporation as defined in Section 1361 of the Code.
6. This Second Amendment may be executed by the parties hereto in
separate counterparts (and by facsimile transmission) each of which when so
executed and transmitted or delivered shall be an original, but all such
counterparts shall together constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have set their hand as of the
30th day of May, 1997, through our trust in God and our service to others ...
for life.
RURAL/METRO CORPORATION, a
Delaware corporation
By: /s/ James H. Bolin
_____________________________________
James H. Bolin, President
/s/ Robert E. Ramsey, Jr.
________________________________________
Robert E. Ramsey, Jr., individually
I HEREBY CONSENT TO THE TERMS
OF THIS SECOND AMENDMENT as of the
30th day of May, 1997:
/s/ Virginia (Jenny) L. Norton
________________________________
Virginia (Jenny) L. Norton
2
<PAGE> 52
EXHIBIT A
[SOUTHWEST AMBULANCE LOGO]
May 30, 1997
James Bolin, President
Rural/Metro Corporation
8401 E. Indian School Road
Scottsdale, Arizona 85251
Dear Jim:
We have again reached the threshold where an agreement to extend the Agreement
of Purchase and Sale between Rural/Metro Corporation and SW General, Inc.,
Southwest Ambulance of Casa Grande, Inc., Medical Emergency Devices and
Services (MEDS), Inc. and Southwest General Services, Inc. (collectively the
"Purchase Agreements") is required. The original "Closing Date" was April 15,
1997 and the first extension reset the Closing Date for May 30, 1997. Because
of the lengthy delay in closing, caused by the FTC approval process, many
actions and transactions have taken place, which under normal time constraints,
would not need to be addressed. However, We feel that some of the issues should
be acknowledged and signed off on by both parties.
Jim--I think you will find that we have discussed these items previously and
have mutually concurred. The clarification items are:
1. The Parties reaffirm and extend through July 31, 1997 the items clarified in
the prior extension letter dated and attested to on April 15, 1997.
2. The stock purchase price value for Rural/Metro stock shall be supported by a
twelve month average daily stock valuation equal to $33.00 per share.
Rural/Metro has provided an eleven month summary which equates to a daily per
share value of $33.90. The parties agree, that should for any reason, the
twelve month average drop below the established $33.00 value that an adjustment
shall be made to match the twelve month average.
3. The Agreement of Purchase and Sale "Schedules" shall include the Department
of Health Services White Paper presented by Rural/Metro and Southwest, the
judges findings of fact and conclusion of law with recommended decision, and
the Directors final decision and order.
222 East Main St., Mesa, AZ 85201-7410/Mailing Address: P.O. Box 1486, Mesa,
Arizona 85211-1486
Business: 602/655-9686 Emergency: 602/267-8991
<PAGE> 53
4. Southwest had previously identified six new ambulances which had been
purchased and excluded from the Vendors debt covenants. Subsequently,
Rural/Metro needed to purchase four of the units for their San Diego contract.
Southwest is in the process of financing the remaining two units over a 36
month period with said units to continue to be excluded from the Vendors debt
covenants. Additionally, six new units are on order by Southwest to fulfill our
service requirements. The six units are also excluded from any Vendor
covenants/warranties of the Purchase Agreements between the parties.
5. Reduction of term debt for the extended three month period of April-May-June
which is estimated to be $277,000 shall be applied to offset against any
warranty conditions of the Vendors pursuant to the Purchase Agreements.
6. Article 9 - Section 9.3 (Expenses) of the Agreement of Purchase and Sale
dated February 25, 1997 previously stipulated that "expenses incurred by each
party hereto in connection with this Agreement and the transactions provided
herein shall be borne by such party. Notwithstanding the foregoing, all
professional fees incurred by the Vendors in connection with the transactions
contemplated by this Agreement shall be borne by the Vendors and all expenses
incurred in connection with the preparation of any environmental reports after
the date of execution of this Agreement with respect to the real property owned
or leased by the Company shall be borne by the Purchaser."
Article 9 - Section 9.3 is hereby amended as follows: "Notwithstanding the
foregoing, all professional and legal fees incurred by the Vendors prior to the
original selected Close Date of March 15, 1997 shall be borne by the Vendors
and all professional and legal fees incurred by Vendors after the original
selected Close Date, up to a maximum amount of $25,000.00, shall be borne by
the Southwest Companies. Additionally, all legal fees of Patrick McGroder
shall be paid by the Southwest Companies."
7. As identified in Section 5.1(b)(ii) of the Agreement, Southwest shall, prior
to close and during the normal course of business, expense such items as
management fees, annual bonus', "S" Corps draws for the purpose of profits,
compensation and taxes, required capital expenditures (with the exception of
the previously identified eight ambulances) and miscellaneous expenses which
shall be acceptable to Rural/Metro so long as the $2,500,000 of this section is
maintained per the Agreement.
The previous identified borrowing limitation of $2,045,000 is hereby replaced
via this Letter of Agreement. This change is mandated by the additional credit
line pressures
<PAGE> 54
As mutually agreed, the closing date will be extended to July 31, 1997.
This letter of agreement, amendment and extension, as signed by the parties
below, shall be incorporated into the Agreements of Purchase and Sale dated
February 25, 1997.
ACKNOWLEDGED AND ACCEPTED AS OF THE DATE FIRST WRITTEN ABOVE.
RURAL/METRO CORPORATION
By: /s/ JAMES BOLIN
- ---------------------------- -------------------
Bob Ramsey James Bolin
Witness and Trustee:
- ----------------------------
Barry Landon
<PAGE> 55
EXHIBIT A
[SOUTHWEST AMBULANCE LOGO]
May 30, 1997
James Bolin, President
Rural/Metro Corporation
8401 E. Indian School Road
Scottsdale, Arizona 85251
Dear Jim:
We have again reached the threshold where an agreement to extend the Agreement
of Purchase and Sale between Rural/Metro Corporation and SW General, Inc.,
Southwest Ambulance of Casa Grande, Inc., Medical Emergency Devices and
Services (MEDS), Inc. and Southwest General Services, Inc. (collectively the
"Purchase Agreements") is required. The original "Closing Date" was April 15,
1997 and the first extension reset the Closing Date for May 30, 1997. Because
of the lengthy delay in closing, caused by the FTC approval process, many
actions and transactions have taken place, which under normal time constraints,
would not need to be addressed. However, We feel that some of the issues should
be acknowledged and signed off on by both parties.
Jim- I think you will find that we have discussed these items previously and
have mutually concurred. The clarification items are:
1. The Parties reaffirm and extend through July 31, 1997 the items clarified in
the prior extension letter dated and attested to on April 15, 1997.
2. The stock purchase price value for Rural/Metro stock shall be supported by a
twelve month average daily stock valuation equal to $33.00 per share.
Rural/Metro has provided an eleven month summary which equates to a daily per
share value of $33.90. The parties agree, that should for any reason, the
twelve month average drop below the established $33.00 value that an adjustment
shall be made to match the twelve month average.
3. The Agreement of Purchase and Sale "Schedules" shall include the Department
of Health Services White Paper presented by Rural/Metro and Southwest, the
judges findings of fact and conclusion of law with recommended decision, and
the Directors final decision and order.
222 East Main St., Mesa, AZ 85201-7410/Mailing Address: P.O. Box 1486, Mesa,
Arizona 85211-1486
Business: 602/655-9686 Emergency: 602/267-8991
<PAGE> 56
4. Southwest had previously identified six new ambulances which had been
purchased and excluded from the Vendors debt covenants. Subsequently,
Rural/Metro needed to purchase four of the units for their San Diego contract.
Southwest is in the process of financing the remaining two units over a 36
month period with said units to continue to be excluded from the Vendors debt
covenants. Additionally, six new units are on order by Southwest to fulfill our
service requirements. The six units are also excluded from any Vendor
covenants/warranties of the Purchase Agreements between the parties.
5. Reduction of term debt for the extended three month period of April-May-June
which is estimated to be $277,000 shall be applied to offset against any
warranties conditions of the Vendors pursuant to the Purchase Agreements.
6. Article 9 - Section 9.3 (Expenses) of the Agreement of Purchase and Sale
dated February 25, 1997 previously stipulated that "expenses incurred by each
party hereto in connection with this Agreement and the transactions provided
herein shall be borne by such party. Notwithstanding the foregoing, all
professional fees incurred by the Vendors in connection with the transactions
contemplated by this Agreement shall be borne by the Vendors and all expenses
incurred in connection with the preparation of any environmental reports after
the date of execution of this Agreement with respect to the real property owned
or leased by the Company shall be borne by the Purchaser."
Article 9 - Section 9.3 is hereby amended as follows: "Notwithstanding the
foregoing, all professional and legal fees incurred by the Vendors prior to the
original selected Close Date of March 15, 1997 shall be borne by the Vendors and
all professional and legal fees incurred by Vendors after the original selected
Close Date, up to a maximum amount of $25,000.00, shall be borne by the
Southwest Companies. Additionally, all legal fees of Patrick McGroder shall be
paid by the Southwest Companies."
7. As identified in Section 5.1(b)(ii) of the Agreement, Southwest shall,
prior to close and during the normal course of business, expense such items as
management fees, annual bonus', "S" Corps draws for the purpose of profits,
compensation and taxes, required capital expenditures (with the exception of
the previously identified eight ambulances) and miscellaneous expenses which
shall be acceptable to Rural/Metro so long as the $2,500,000 of this section is
maintained per the Agreement.
The previous identified borrowing limitation of $2,045,000 is hereby replaced
via this Letter of Agreement. This change is mandated by the additional credit
line pressures
<PAGE> 57
As mutually agreed, the closing date will be extended to July 31, 1997.
This letter of agreement, amendment and extension, as signed by the parties
below, shall be incorporated into the Agreements of Purchase and Sale dated
February 25, 1997.
ACKNOWLEDGED AND ACCEPTED AS OF THE DATE FIRST WRITTEN ABOVE.
RURAL/METRO CORPORATION
By: /s/ James Bolin
- --------------------------------- ----------------------------
Bob Ramsey James Bolin
Witness and Trustee:
- ----------------------------------
Barry Landon
