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EXHIBIT 2.1
AGREEMENT FOR PURCHASE AND SALE OF ASSETS
between
▇▇▇▇▇▇ INTELLIGENCE SERVICES, INC., A DELAWARE CORPORATION,
as Buyer
and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, AN INDIVIDUAL,
as Seller
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AGREEMENT FOR PURCHASE AND SALE OF ASSETS
TABLE OF CONTENTS
Page
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I THE TRANSACTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1.1 Tangible Personal Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1.2 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1.3 Intangible Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1.4 Files and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1.5 Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1.6 Prepaid Items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1.7 Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1.8 Accounts and Notes Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.2 Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.2.1 Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.2.2 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.2.3 Duplicate Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.2.4 Excluded Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.2.5 Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.3 Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.4 Purchase Price and Method of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.5 Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.5.1 Adjustment Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.6 Employment and Noncompetition Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.7 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.8 Jaycor Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.9 Physical Condition of the Tangible Personal Property . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
II SELLER'S REPRESENTATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.1 Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.2 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.3 No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.4 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.5 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.6 Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.7 Absence of Certain Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.8 Title to Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.9 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.10 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.12 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.13 Complete Copies of Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.14 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
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III BUYER'S REPRESENTATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.1 Corporate Organization and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.2 Agreement Will Not Cause Breach or Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.3 Buyer's Authority and Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.4 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
IV CONDITIONS PRECEDENT TO BUYER'S PERFORMANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.1 Representations and Warranties True as of the Closing Date . . . . . . . . . . . . . . . . . . . . . . . . 10
4.2 Compliance with this Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.3 No Threatened or Pending Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.4 ▇▇▇▇▇▇ Employment and Noncompetition Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.5 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.6 Board and Other Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.7 Consents and Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.8 Seller's Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.9 Due Diligence Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.10 Consent to Assignment of Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.11 Confidentiality and Inventions Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
V CONDITIONS PRECEDENT TO SELLER'S PERFORMANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.1 Accuracy of Buyer's Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.2 Performance by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.3 Absence of Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.4 Buyer's Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
VI INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.1 Indemnity by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.2 Indemnity by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.3 Limitation of Indemnification Liability of Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.4 Limitation of Indemnification Liability of Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.5 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.6 Indemnification Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
VII THE CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
7.1 Seller's Deliveries at Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
7.1.1 ▇▇▇▇ of Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
7.1.2 Possession of the Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.1.4 ▇▇▇▇▇▇ Employment and Noncompetition Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.1.5 Third-Party Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.1.6 Lessor's Consent to Assignment of Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.1.7 Lien Releases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.1.8 Bills of Sale and Other Instruments of Transfer . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.1.9 Confidentiality and Inventions Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.2 Buyer's Deliveries at Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.2.1 Closing Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.3 Further Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
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VIII TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8.1 Termination of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
IX GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
9.1 Effect of Headings; Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
9.2 Entire Agreement; Modification; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
9.3 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
9.4 Parties in Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
9.5 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
9.6 Recovery of Litigation or Arbitration Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
9.7 Nature and Survival of Representations and Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
9.8 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
9.9 Necessary Acts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
9.10 Time of Essence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
9.11 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
9.12 Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
9.12.1 Location . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
9.12.2 Selection of Arbitrators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
9.12.3 Discovery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
9.12.4 Case Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
9.12.5 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
9.12.6 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
9.12.7 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
9.13 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
9.14 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
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EXHIBITS:
A Assignment and Assumption of Contracts
B ▇▇▇▇▇▇ Employment and Noncompetition Agreement
C Schedule of Exceptions
D Confidentiality and Inventions Agreement
SCHEDULES:
1.1.1 Tangible Personal Property
1.1.2 Contracts
1.1.3 Intangible Rights
1.1.8 Accounts Receivable
1.2.4 Excluded Contracts
1.3.4 Assumed Contracts
1.4 Creditor Payments
2.11 Agreements, Contracts and Commitments
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AGREEMENT FOR PURCHASE AND SALE OF ASSETS
This Agreement for Purchase and Sale of Assets (this "Agreement") is
entered into as of March 4, 1996 by and among ▇▇▇▇▇▇ Intelligence Services,
Inc., a Delaware corporation ("Buyer"), and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, an individual
("Seller"), with respect to the following facts:
RECITALS
A. Seller is the owner of a sole proprietorship, ▇▇▇▇▇▇
Intelligence Service, engaged in the business of providing security guard and
patrol services to its customers (the "Business").
B. Buyer is a newly-formed corporation possessing surveillance
and security technologies and capabilities, which it believes are complementary
to the Business.
C. Seller is the beneficial owner of all of the assets used or
usable in connection with the Business.
D. Seller desires to sell Buyer substantially all of the assets
used in the Business.
E. Buyer desires to purchase certain specified assets from Seller
and to assume certain specified liabilities of Seller, all as set forth in this
Agreement.
AGREEMENT
NOW, THEREFORE, for and in consideration of the mutual agreements set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and subject to the terms and
provisions set forth herein, the parties hereto mutually agree as follows:
ARTICLE I
THE TRANSACTION
1.1 Assets. Subject to and in reliance upon the
representations, warranties and agreements herein set forth, and subject to the
terms and conditions herein contained, Seller agrees to grant, convey, sell,
assign, transfer and deliver to Buyer on the Closing Date (as hereinafter
defined), and Buyer agrees on the Closing Date to purchase, accept and assume,
all properties and assets, real and personal, tangible and intangible, of every
type and description owned by Seller and used or
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held for use in connection with the Business set forth in this Section 1.1 and
the schedules attached hereto, including its business and goodwill
(collectively, the "Assets"). The Assets shall include the following, except
to the extent that any of the following are Excluded Assets:
1.1.1 Tangible Personal Property. All equipment,
telecommunications equipment, electrical devices, antennas, cables, vehicles,
furniture, fixtures, office materials and supplies, uniforms, hardware, tools,
spare parts, films, records, tapes, discs and other tangible personal property
of every kind and description owned and used or held for use by Seller as of
the date of this Agreement in connection with the Business which are listed and
described on Schedule 1.1.1 attached hereto (collectively, the "Tangible
Personal Property").
1.1.2 Contracts. All contracts and leases in
connection with the Business listed and described on Schedule 1.1.2 attached
hereto (collectively, the "Contracts").
1.1.3 Intangible Rights. All trademarks, trade
names, service marks, franchises, patents, jingles, slogans, logotypes and
other intangible rights, owned and used or held for use by Seller as of the
date of this Agreement in connection with the Business which are listed and
described on Schedule 1.1.3 attached hereto (collectively, the "Intangible
Property").
1.1.4 Files and Records. All files and records of
Seller relating to the Business (other than duplicate copies of such files,
hereinafter "Duplicate Records" which Seller may elect to retain) other than
the contents of files and other records that refer to operations of Seller
(other than the Business or that are privileged), including without limitation
all available schematics, blueprints, engineering data, customer lists,
reports, specifications, projections, statistics, promotional graphics,
original art work, mats, plates, negatives and other advertising, marketing or
related materials, and all other technical and financial information concerning
Seller and the Assets.
1.1.5 Claims. Any and all claims, choses in
action, and rights against third parties if and to the extent that they relate
to (i) the condition of the Assets, including, without limitation, all rights
under manufacturers' and vendors' warranties, or (ii) the operation of the
Business prior to the Closing (collectively, the "Claims").
1.1.6 Prepaid Items. All deposits, reserves and
prepaid expenses relating to the Business and prepaid ad valorem taxes relating
to the Business or the Assets (which shall be prorated as provided in Section
1.5).
1.1.7 Goodwill. All of Seller's goodwill in, and
going concern value of, the Business.
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1.1.8 Accounts and Notes Receivable. All accounts
receivable, notes receivable and any notes or written obligations reflecting
accounts receivable, of Seller relating to the Business (collectively, the
"Receivables") existing as of the Closing Date which are listed on Schedule
1.1.8 attached hereto.
1.2 Excluded Assets. There shall be excluded from the
Assets and retained by Seller, to the extent in existence on the Closing Date,
the following assets (collectively, the "Excluded Assets"):
1.2.1 Securities. Any securities owned or held by
Seller.
1.2.2 Insurance. All contracts of insurance.
1.2.3 Duplicate Records. All Duplicate Records and
other files and records not acquired by Buyer pursuant to Section 1.1.4.
1.2.4 Excluded Contracts. Any Contracts not being
assumed by Buyer pursuant to Section 1.3.4 hereof, which are listed and
described on Schedule 1.2.4 attached hereto.
1.2.5 Claims. Any and all claims, choses in
action, and rights against third parties other than the Claims as defined in
Section 1.1.5.
1.2.6 Datamate. The custom software associated
with the Datamate 841 mobile communications terminal product and integrated
office software, and future versions thereof.
1.3 Liabilities.
1.3.1 Seller shall sell and convey the Assets to
Buyer free and clear of all mortgages, liens, deeds of trust, security
interests, pledges, restrictions, prior assignments, charges, claims, defects
in title and encumbrances of any kind or type whatsoever (collectively, the
"Security Interests") except: (i) for liens for taxes not yet due and payable
or that are being contested in good faith by appropriate proceedings, and (ii)
for the obligations of Seller under leases and contracts which Buyer hereby
agrees to assume as described in Section 1.3.4 of this Agreement.
1.3.2 Except as otherwise specifically provided
herein, or as otherwise specifically agreed by Seller and Buyer, Buyer shall
not assume or be liable for, and does not, and does not undertake to attempt
to, assume or discharge:
a. any liability or obligation of
Seller arising out of or relating to any contract or agreement;
b. any liability or obligation of
Seller arising out of or relating to any pension, retirement or profit-sharing
plan or trust;
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c. any liability or obligation of
Seller arising out of or relating to any lease of Tangible Personal Property or
Intangible Property;
d. any liability or obligation of
Seller arising out of or relating to any litigation, proceeding or claim by any
person or entity relating to the business or operations of or otherwise
relating to the Business or the Assets before the Closing Date, whether or not
such litigation, proceeding or claim is pending, threatened or asserted before,
on or after the Closing Date;
e. any and all other liabilities,
obligations, debts or commitments of Seller whatsoever, whether accrued now or
hereafter, whether fixed or contingent, whether known or unknown, arising prior
to the Closing Date, or any claims asserted against the Seller or any of the
Assets or other items transferred to Buyer by Seller relating to any event
(whether act or omission) prior to the Closing Date, including without
limitation, the payment of all taxes; and
f. any liability or obligation of
Seller arising out of or relating to any employment agreement, including the
payment of severance pay, if any, to present or former employees of Seller. No
employee of Seller who becomes an employee of Buyer shall have any entitlement
to severance pay by virtue of this provision.
1.3.3 Seller retains and shall hereafter pay,
satisfy, discharge, perform and fulfill all such obligations and liabilities
not expressly assumed by Buyer hereunder as they become due, without any charge
or cost to Buyer, and Seller agrees to indemnify and hold Buyer and its
successors and assigns harmless from and against any and all such liabilities
in accordance with the terms of Article VI below.
1.3.4 Buyer agrees to execute and assume, at the
Closing, the obligations arising, and expressly provided to be performed by
Seller, after the Closing Date under those Contracts listed on Schedule 1.3.4
hereto. All such Contracts will be assigned and assumed pursuant to the form
of Assignment and Assumption of Contracts attached hereto as Exhibit A.
Notwithstanding the foregoing, Buyer shall not be obligated to assume any
obligations under any contract as to which Seller fail to deliver the written
consent of all other parties thereto.
1.4 Purchase Price and Method of Payment. The purchase
price to be paid for the Assets (the "Purchase Price") shall be comprised of
(i) One Hundred Seventy-Two Thousand Eight Hundred Ten Dollars and Fifty-Nine
Cents ($172,810.59) the ("Seller Payment"), and (ii) Buyer's payoff, on or
before the Closing Date, of the creditors listed on Schedule 1.4 hereto in the
amounts set forth opposite each such creditor's name (each a "Creditor
Payment," and collectively the "Creditor Payments"), payable on the Closing
Date by check or bank wire transfer of immediately available federal funds, as
instructed by Seller.
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1.5 Adjustments. The operation of the Business and the
income and normal operating expenses attributable thereto through the date
preceding the Closing Date shall be for the account of Seller and thereafter
for the account of Buyer, and any income or expense shall be allocated, charged
or prorated accordingly. Expenses for goods or services received both before
and after the Closing Date, power and utilities charges, wages, payroll taxes,
and rents and similar prepaid and deferred items shall be prorated between
Seller and Buyer as of the Closing Date. All special assessments and similar
charges or liens imposed against the Tangible Personal Property in respect of
any period of time through the Closing Date, whether payable in installments or
otherwise, shall be the responsibility of Seller, and amounts payable with
respect to such special assessments, charges or liens in respect of any period
of time after the Closing Date shall be the responsibility of Buyer, and such
charges shall be adjusted as required hereunder.
1.5.1 Adjustment Procedure. Within thirty (30)
days after the Closing, Seller shall deliver to Buyer a Certificate ("Seller's
Adjustment Certificate") dated the Closing Date and signed by Seller, setting
forth the adjustments provided for in Section 1.5, if any, certified to be true
and correct on the basis of the then most recently available financial
statements of the Business, with the supporting documentation as to how such
amount was derived annexed to the Seller's Adjustment Certificate. Within
sixty (60) days after the Closing Date, Seller and Buyer will use their good
faith efforts to agree upon a final Closing Statement setting forth the final
proration adjustments required under Section 1.5, and any required refund or
payment shall be made on the basis of such Closing Statement. Any payment due
hereunder shall be paid by check to the party to which such refund or payment
is due within sixty (60) days after the Closing Date. Failure of the parties
to agree on the final proration adjustments after a good faith effort to so
agree by the parties shall not constitute grounds to rescind the transactions
contemplated in this Agreement.
1.6 Employment and Noncompetition Agreement. On the
Closing Date, Seller shall enter into to enter into an Employment and
Noncompetition Agreement with Buyer substantially in the form attached hereto
as Exhibit B.
1.7 Closing. The closing (the "Closing") of the sale and
purchase of the Assets shall take place at the offices of ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ &
Freidenrich, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, on March
1, 1996 at 1:00 p.m., Pacific Standard Time, or on such other date and time as
may be mutually agreed upon in writing by Buyer and Seller. The date of the
Closing is sometimes herein referred to as the "Closing Date."
1.8 Jaycor Stock Options. Buyer hereby covenants that in
the event the Business achieves extraordinary growth (after the Closing Date),
Buyer will use its best efforts to cause Jaycor, Inc., a California corporation
("Jaycor"), to make key employees of the Business eligible to receive Jaycor
stock options, consistent with Jaycor's practice of awarding other similarly
situated Jaycor key top management;
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provided, however, that the award of such Jaycor stock options is subject to
the prior approval of Jaycor's Chief Executive Officer and Board of Directors.
1.9 Physical Condition of the Tangible Personal Property.
Buyer acknowledges that with respect to the physical condition of the Tangible
Personal Property, Buyer is purchasing such items of Tangible Personal Property
on an "as-is" basis and without any representations or warranties by the Seller
as to the physical condition of such items. Nothing in this provision,
however, shall be construed to limit or diminish any other representation or
warranty made by Seller herein, including but not limited to, Seller's
representations and warranties regarding Seller's title to the Assets in
general and the Tangible Personal Property in particular.
ARTICLE II
SELLER'S REPRESENTATIONS AND WARRANTIES
Seller hereby represents and warrants to Buyer and covenants
and agrees with Buyer, except as set forth on the Schedule of Exceptions
attached hereto as Exhibit C (the "Schedule of Exceptions"), each of which
exceptions shall specifically identify the relevant subsection hereof to which
it relates and shall be deemed to be representations and warranties as if made
hereunder, that:
2.1 Existence. Seller is a sole proprietorship, validly
existing and in good standing under the laws of the State of California, and
has the requisite power to own and operate its properties and assets, and to
carry on its business as presently conducted. Seller does not now and has not
at any time in the past used any name in its business operations other than
▇▇▇▇▇▇ Intelligence Service. Seller is not required to be qualified to do
business as a foreign entity in any state of the United States or any other
jurisdiction where the failure to be so qualified would have a material adverse
effect on the Business or the Assets.
2.2 Authorization. Seller has the sole power, authority
and legal right to execute, deliver, and perform this Agreement. This
Agreement has been, and the other agreements, documents and instruments
required to be delivered by Seller in accordance with the provisions hereof
(the "Seller's Documents") will be, duly executed and delivered on behalf of
Seller, and this Agreement constitutes, and the Seller's Documents when
executed and delivered on behalf of Seller will constitute, the legal, valid
and binding obligations of Seller, enforceable against Seller in accordance
with such Documents' respective terms.
2.3 No Violation. Neither the execution and delivery of
this Agreement nor the consummation of the transactions contemplated hereby,
nor compliance with the terms hereof, will (i) violate, conflict with or result
in a breach of or default under any of the terms, conditions or provisions of
any agreement, understanding, arrangement, indenture, contract, lease,
sublease, loan agreement,
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note, restriction, obligation or liability to which Seller is a party or by
which it is bound or to which it or its assets are subject (individually, an
"Instrument" and collectively, the "Instruments"), or (ii) accelerate or give
to others any interests or rights, including rights of acceleration,
termination, modification or cancellation, under any Instrument or in or with
respect to the Business or the Assets, or (iii) conflict with, violate or
result in a breach of or constitute a default under any law, statute, rule,
judgment, order, decree, injunction, ruling or regulation of any government,
governmental agency, authority or instrumentality, court or arbitration
tribunal to which Seller or any of the Seller's assets or properties are
subject, or (v) require Seller to give notice to, or obtain an authorization,
approval, order, license, franchise, declaration or consent of, or make a
filing with, any foreign, federal, state, county, local or other governmental
or regulatory body.
2.4 Financial Statements. Seller has delivered to Buyer
an unaudited income statement of Seller for the period ended December 31, 1995,
an unaudited balance sheet of Seller as of December 31, 1995 (the "Balance
Sheet") (collectively, the "Financial Statements"). The Financial Statements
are complete and correct in all material respects and have been prepared in a
manner consistent with Seller's past practices throughout the periods
indicated. The Financial Statements fairly present the results of operations
and financial condition of Seller for the periods, and at the dates, to which
they relate. The books and records of Seller upon which the Financial
Statements are based accurately reflect all transactions of Seller. As of
December 31, 1995, Seller owned all property, equipment, and assets shown on
the Financial Statements to and through such date, subject to no lien, charge,
mortgage or other encumbrance, except as (a) therein noted and (b) items leased
under valid and subsisting leases.
2.5 Absence of Undisclosed Liabilities. Seller has no
liabilities or obligations with respect to the Business, either direct or
indirect, matured or unmatured or absolute, contingent or otherwise, except:
a. those liabilities or obligations set forth on
the Balance Sheet and not heretofore paid or discharged;
b. liabilities arising in the ordinary course of
business under any agreement, contract, commitment, lease or plan specifically
disclosed on the Schedule of Exceptions or not required to be disclosed because
of the term or amount involved; and
c. those liabilities or obligations incurred,
consistently with past business practice, in or as a result of the normal and
ordinary course of business since December 31, 1995.
For purposes of this Agreement, the term
"liabilities" shall include, without limitation, any direct or indirect
indebtedness, guaranty, endorsement, claim, loss, damage, deficiency, cost,
expense, obligation or
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responsibility, fixed or unfixed, known or unknown, asserted or unasserted,
▇▇▇▇▇▇ or inchoate, liquidated or unliquidated, secured on unsecured.
2.6 Accounts Receivable. The accounts receivable of
Seller arising from the Business as set forth on the Balance Sheet or arising
since the date thereof (i) are valid and genuine; (ii) have arisen solely out
of bona fide sales and deliveries of goods, performance of services and other
business transactions in the ordinary course of business consistent with past
practice; (iii) are, to the best of Seller's knowledge, not subject to valid
defenses, set-offs or counterclaims; and (iv) are, to the best of Seller's
knowledge, collectible within one hundred twenty (120) days after billing at
the full recorded amount thereof less, the recorded allowance for collection
losses on the Balance Sheet. The allowance for collection losses on the
Balance Sheet has been determined in a manner acceptable to Buyer consistent
with Seller's past practice.
2.7 Absence of Certain Changes. Since December 31, 1995,
there has not been (i) any change in the assets, liabilities, financial
condition or operations of Seller from that reflected in the Balance Sheet
other than changes in the ordinary course of business, none of which
individually or in the aggregate have had a material adverse effect on such
assets, liabilities, financial condition or operations or business prospects of
Seller, (ii) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the Assets or the Business; (iii)
any mortgage, pledge or subjection to lien, charge or encumbrance of any kind
of any of the Assets; (iv) any sale, transfer or assignment of any Assets,
including any intangible assets, except sales for fair value in the ordinary
course of business or the transactions contemplated in this Agreement; (v) any
material amendment or termination of any contracts or commitments or licenses,
except in the ordinary course of business; (vi) any issuance of ownership
interests, rights to purchase ownership interests or any agreement concerning
ownership interests of Seller; or (vii) any other event or condition of any
character, materially and adversely affecting the Assets or the Business;
provided, however, that Seller has made expenditures of cash to fund Seller's
continuing operating expenses in the ordinary course of Seller's business as
conducted to date.
2.8 Title to Assets. Seller has good, valid and
marketable title to all of its properties and assets, real, personal and mixed,
which would be included in the Assets if the Closing took place on the date
hereof, which it purports to own, including without limitation all properties
and assets reflected in the Balance Sheet free and clear of all mortgages,
liens, pledges, security interests, charges, claims, restrictions and other
encumbrances and defects of title of any nature whatsoever.
2.9 Taxes. Seller has timely filed within the time
period required for filing or any extension granted with respect thereto all
federal, state, local and other returns and reports relating to any and all
taxes or any other governmental charges, obligations or fees for taxes and any
related interest or penalties ("Tax" or "Taxes") required to be filed by it and
such returns and reports are true and correct. Seller
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has paid all Taxes, if any, shown to be due and payable on said returns and
reports and has withheld with respect to employees all federal and state income
Taxes, FICA, FUTA and other Taxes required to be withheld and has timely paid
all sales, use and similar Taxes. No income, sales, use or similar Tax return
or report of Seller has been examined or audited by the Internal Revenue
Service or any state taxing authority. There are no pending or threatened
audits, examinations, assessments, asserted deficiencies or claims for
additional Taxes. There are (and as of immediately following the Closing there
will be) no liens or similar encumbrances relating to or attributable to Taxes
on the Assets, other than liens for Taxes not yet due.
2.10 Litigation. There is no claim, action, proceeding or
investigation pending or threatened against or by the Seller, or which
questions or challenges the validity of this Agreement or any action taken by
the Seller pursuant to this Agreement or in connection with the transactions
contemplated hereby or which could be reasonably expected to have a material
adverse effect on Seller's ability to perform its obligations hereunder or on
Buyer's use and enjoyment of the Assets; and, to the best of Seller's
knowledge, there is no valid basis for any such claim, action, proceeding or
investigation. The Seller is not subject to any judgment, order or decree
entered in any lawsuit or proceeding which has had or may have a material
adverse effect on the business or its business practices or which could
materially adversely affect Buyer's use and enjoyment of the Assets.
2.11 Agreements, Contracts and Commitments. Schedule 2.11
hereto truly and accurately lists all material licenses, agreements and
undertakings of the Seller to which any of its properties or assets are or will
be subject, Seller has performed in all material aspects all obligations
required to be performed by Seller under any and all such agreements listed in
Schedule 2.11 to which it is a party or to which any of its property or assets
is subject, and neither it nor, to the best of its knowledge, any other party
thereto is in default under any such agreement or obligation.
2.12 Compliance with Laws. To the best of Seller's
knowledge, Seller is not in violation of any federal, state or local statute,
law, rule or regulation with respect to or affecting the Assets. Seller has
obtained all licenses, orders, approvals, and authorizations required in
connection with the conduct of the Business.
2.13 Complete Copies of Materials. Seller has made
available to Buyer true and complete copies of each contract, agreement,
license, lease and similar document referred to in any exhibit hereunder or
included in the Assets.
2.14 Disclosure. No representation or warranty by Seller
in this Agreement or the Exhibits attached hereto, nor any document, written
information, statement or certificate furnished or to be furnished by Seller to
Buyer pursuant hereto or in connection with the transactions contemplated
hereby, notwithstanding any investigation by Buyer, contains or will contain
any untrue statement of a
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material fact, or omits or will omit to state a material fact necessary to make
the statement contained herein or therein not misleading.
ARTICLE III
BUYER'S REPRESENTATIONS
Buyer hereby represents as follows:
3.1 Corporate Organization and Authority. Buyer is a
corporation duly organized, validly existing, and in good standing under the
laws of Delaware. Buyer has all necessary corporate powers, authority, and
approvals to purchase the Assets and consummate the transactions contemplated
pursuant to this Agreement.
3.2 Agreement Will Not Cause Breach or Violation. The
consummation of the transactions contemplated by this Agreement will not result
in or constitute a default or an event that, with notice or lapse of time or
both, would be a default, breach, or violation of the certificate of
incorporation or bylaws of Buyer or any lease, license, promissory note,
conditional sales contract, permit, license, commitment, indenture, mortgage,
deed of trust, or other agreement, instrument, or arrangement to which Buyer is
party.
3.3 Buyer's Authority and Consents. Buyer has the right,
power, legal capacity and authority to enter into, and perform its obligations
under this Agreement, and no approvals or consents of any person are necessary
in connection with it.
3.4 Full Disclosure. None of the representations made by
Buyer contains or will contain any untrue statement of a material fact, or omit
any material fact the omission of which would be misleading.
ARTICLE IV
CONDITIONS PRECEDENT TO BUYER'S PERFORMANCE
The obligation of Buyer to consummate the transactions
contemplated by this Agreement is subject to the satisfaction, at or before the
Closing of all the conditions set out below in this Article IV. Buyer may
waive in writing any or all of these conditions, in whole or in part, without
prior notice; provided, however, that no such waiver of a condition shall
constitute a waiver by Buyer of any of its other rights or remedies, at law or
in equity, if Seller shall be in default of any of the representations or
covenants under this Agreement.
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4.1 Representations and Warranties True as of the Closing
Date. The representations and warranties of Seller contained in this Agreement
or in any schedule, certificate or document delivered by Seller to Buyer
pursuant to the provisions hereof shall have been true on the date hereof and
shall be true on the Closing Date with the same effect as though such
representations and warranties were made as of such date.
4.2 Compliance with this Agreement. Seller shall have
performed and complied with all agreements and conditions required by this
Agreement to be performed or complied with by it prior to or at the Closing.
4.3 No Threatened or Pending Litigation. On the Closing
Date, no suit, action or other proceeding, or injunction or final judgment
relating thereto, shall be threatened or be pending before any court or
governmental or regulatory official, body or authority in which it is sought to
restrain or prohibit or to obtain damages or other relief in connection with
this Agreement or the consummation of the transactions contemplated hereby, and
no investigation that might result in any such suit, action or proceeding shall
be pending or threatened.
4.4 ▇▇▇▇▇▇ Employment and Noncompetition Agreement.
Buyer and Seller shall have executed and delivered an employment agreement in
the form attached as Exhibit B hereto.
4.5 No Material Adverse Change. The Assets and the
business, operations, assets, properties or prospects of the Business shall not
have been and shall not be threatened to be materially adversely affected in
any way as a result of any event or occurrence.
4.6 Board and Other Approvals. The Board of Directors of
Buyer, the Board of Directors of Jaycor, a California corporation ("Jaycor"),
and Jaycor's Chief Executive Officer and President shall have authorized and
approved this Agreement and the transactions contemplated hereby.
4.7 Consents and Proceedings. Seller shall have obtained
all of the consents (including third party consents), authorizations, orders
and approvals required in order to execute and deliver this Agreement and to
perform its obligations hereunder and all actions, proceedings, instruments and
documents deemed necessary or appropriate by Buyer and its counsel to
effectuate this Agreement and the consummation of the transactions contemplated
hereby, or incidental thereto, shall have been obtained and all other related
legal matters shall have been approved by such counsel.
4.8 Seller's Deliveries. Seller shall have delivered to
Buyer all the items set forth in Section 7.1 hereof.
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4.9 Due Diligence Review. Buyer shall have completed its
due diligence review of Seller and be satisfied in its sole discretion with the
results thereof.
4.10 Consent to Assignment of Lease. Seller shall have
obtained and delivered the lessor's consent to Seller's assignment to Buyer of
the ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇ lease.
4.11 Confidentiality and Inventions Agreement. Seller
shall have executed and delivered a confidentiality and inventions agreement in
the form attached as Exhibit D hereto.
ARTICLE V
CONDITIONS PRECEDENT TO SELLER'S PERFORMANCE
The obligation of Seller to consummate the transactions
contemplated by this Agreement is subject to the satisfaction, at or before the
Closing of all the conditions set out below in this Article V. Seller may
waive in writing any or all of these conditions, in whole or in part, without
prior notice; provided, however, that no such waiver of a condition shall
constitute a waiver by Seller of any of its other rights or remedies, at law or
in equity, if Buyer shall be in default of any of the representations or
covenants under this Agreement.
5.1 Accuracy of Buyer's Representations and Warranties.
Except as otherwise permitted by this Agreement, all representations by Buyer
in this Agreement or in any written statement that shall be delivered to Seller
under this Agreement shall be true on and as of the Closing as though made at
that time.
5.2 Performance by Buyer. Buyer shall have performed,
satisfied, and complied with all covenants, agreements, and conditions required
by this Agreement to be performed or complied with by Buyer on or before the
Closing including, but not limited to, executing the Assignment and Assumption
Agreement in the form attached hereto as Exhibit A.
5.3 Absence of Litigation. No action, suit, or
proceeding before any court or any governmental body or authority, pertaining
to the transaction contemplated by this Agreement or to its consummation, shall
have been instituted or threatened on or before the Closing.
5.4 Buyer's Deliveries. Buyer shall have delivered to
Seller all the items set forth in Section 7.2 hereof.
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ARTICLE VI
INDEMNIFICATION
6.1 Indemnity by Seller. Seller shall indemnify Buyer,
and its affiliates, directors, officers, stockholders, employees, agents,
representatives, successors and assigns against any and all claims, losses,
liabilities, damages, expenses (including reasonable attorneys' fees and costs
of suit) which may be asserted against, incurred or required to be paid by
Buyer or its affiliates, directors, officers, stockholders, employees, agents,
representatives, successors and assigns by reason or on account of (i) any
representation or warranty made by Seller herein being untrue or incorrect; or
(ii) any failure by Seller to observe or perform their covenants and agreements
set forth herein or in any agreement entered into pursuant to this Agreement;
or (iii) any liabilities of Seller incurred in connection with the Business
prior to the Closing Date.
6.2 Indemnity by Buyer. Buyer shall indemnify Seller and
its employees, agents, representatives, successors and assigns against any and
all claims, losses, liabilities, damages, expenses (including reasonable
attorneys' fees and costs of suit) which may be asserted against, incurred or
required to be paid by Seller and its employees, agents, representatives,
successors and assigns by reason or on account of (i) any representation or
warranty made by Buyer herein being untrue or incorrect or (ii) any failure by
Buyer to observe or perform its covenants and agreements herein or in any
agreement entered into pursuant to this Agreement.
6.3 Limitation of Indemnification Liability of Seller.
Seller shall have no liability for indemnification hereunder with respect to
any claim resulting from a breach of their representations and warranties set
forth in this Agreement unless Seller has been notified of the claim, in the
manner provided under Section 9.11 hereof, within the survival period specified
in Section 6.5 hereof.
6.4 Limitation of Indemnification Liability of Buyer.
Buyer shall have no liability for indemnification hereunder with respect to any
claim resulting from a breach of its representations and warranties set forth
in this Agreement unless it has been notified of the claim, in the manner
provided under Section 9.11 hereof, within the survival period specified in
Section 6.5 hereof.
6.5 Survival. All representations and warranties
contained in or made pursuant to this Agreement or in any agreement,
certificate, document or statement delivered pursuant hereto shall survive the
Closing for a period of three (3) years; provided, however, that,
notwithstanding the foregoing, the representations and warranties set forth in
Section 2.10 shall survive the Closing for the applicable tax statute of
limitations plus ninety (90) days.
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6.6 Indemnification Procedures. Any party making a claim
for indemnification under this Article VI (the "Indemnitee") shall notify the
indemnifying party (the "Indemnitor") of the claim in writing promptly after
discovering the claim or receiving written notice of a claim against it if by a
third party), describing the claim, the amount thereof (if known and
quantifiable), and the basis thereof. The obligations and liabilities of the
Indemnitor with respect to claims resulting from the assertion of liability by
any third party shall be subject to the following terms and conditions:
a. In the event any action, suit or proceeding
is brought against the Indemnitee, with respect to which the Indemnitor may
have liability under the indemnity agreements contained herein, the action,
suit or proceeding shall be defended including all proceedings on appeal or for
review which counsel for the Indemnitee shall deem appropriate) by the
Indemnitor. The Indemnitee shall have the right to employ its own counsel in
any such case, but the fees and expenses of such counsel shall be at the
Indemnitee's own expense unless the employment of such counsel and the payment
of such fees and expenses both shall have been specifically authorized by the
Indemnitor in connection with the defense of such action, suit or proceeding.
In such case only that portion of such fees and expenses reasonably related to
matters covered by the indemnity agreements contained herein shall be borne by
the Indemnitor. The Indemnitee shall be kept fully informed of such action,
suit or proceeding at all stages thereof whether or not it is so represented.
The Indemnitee shall make available to the Indemnitor and its attorneys and
accountants all books and records of the Indemnitee relating to such
proceedings or litigation and the parties hereto agree to render to each other
such assistance as they may reasonably require of each other in order to ensure
the proper and adequate defense of any such action, suit or proceeding.
b. The Indemnitee shall not make any settlement
of any claims without the written consent of the Indemnitor, which consent
shall not be unreasonably withheld or delayed.
ARTICLE VII
THE CLOSING
The Closing shall occur at the place and time as specified in
Section 1.7 unless extended as set forth in Section 1.7 or the Agreement is
terminated earlier in accordance with Article VIII.
7.1 Seller's Deliveries at Closing. At the Closing,
Seller shall deliver or cause to be delivered to Buyer:
7.1.1 ▇▇▇▇ of Sale. A signed ▇▇▇▇ of sale for the
Assets.
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7.1.2 Possession of the Assets. Possession of the
Assets.
7.1.3 Assignment and Assumption of Contracts. A
signed Assignment and Assumption of Contracts substantially in the form
attached hereto as Exhibit A.
7.1.4 ▇▇▇▇▇▇ Employment and Noncompetition
Agreement. A signed Employment and Noncompetition Agreement substantially in
the form attached hereto as Exhibit B.
7.1.5 Third-Party Consents. The consents discussed
in Section 4.7 hereof.
7.1.6 Lessor's Consent to Assignment of Lease. The
consent specified in Section 4.10 executed by the lessor.
7.1.7 Lien Releases. Termination statements
executed by the appropriate secured party for each of the following UCC-1
financing statements: Number 94155679 and Number 9254778; and evidence of the
release of liens against vehicles number 10, 12 and 13 in favor of North County
Bank (#▇▇▇▇▇▇▇▇), North County Bank (#▇▇▇▇▇▇▇▇), and Toyota Motor Credit
Corporation, respectively.
7.1.8 Bills of Sale and Other Instruments of
Transfer. Any bills of sale, deeds, assignments, receipts, or other
instruments of transfer reasonably requested by Buyer to effectuate the
transactions contemplated by this Agreement.
7.1.9 Confidentiality and Inventions Agreement. A
signed Confidentiality and Inventions Agreement substantially in the form
attached hereto as Exhibit D.
7.2 Buyer's Deliveries at Closing. At the Closing, Buyer
shall deliver to Seller:
7.2.1 Closing Purchase Price. The Closing Purchase
Price, which shall be paid in the manner specified in Section 1.4, in return
for Seller's delivery of the items specified in Section 7.1.
7.3 Further Documents. At any time before or after the
Closing, Seller will execute, acknowledge, and deliver any further deeds,
assignments, conveyances, and other assurances, documents, and instruments of
transfer, reasonably requested by Buyer, and will take any other action
consistent with the terms of this Agreement that may reasonably be requested by
Buyer, for the purpose of assigning, transferring, granting, conveying, and
confirming to Buyer, or reducing to possession, any of the Assets to be
conveyed and transferred by this Agreement.
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ARTICLE VIII
TERMINATION
8.1 Termination of Agreement. This Agreement may be
terminated at any time prior to the Closing (i) by Buyer in its sole
discretion, without cause, (ii) by the mutual consent of Seller and Buyer, or
(iii) by either party as long as such party is not in default if the Closing
has not taken place by the scheduled Closing Date (including the permissible
extensions of the Closing, if applicable) as set forth in Section 1.7 hereof,
or (iv) by Seller if Buyer is in default of its obligations or representations
under this Agreement.
8.2 Remedies. Subject to the controlling provisions in
Article VIII, in the event of a material breach of this Agreement, the
non-breaching party shall have the right to pursue all remedies available to it
under this Agreement or otherwise at law or in equity.
ARTICLE IX
GENERAL PROVISIONS
9.1 Effect of Headings; Exhibits. The subject headings
of the sections of this Agreement are included for purposes of convenience
only, and shall not affect the construction or interpretation of any of its
provisions. All Exhibits and Schedules to this Agreement are incorporated
herein in their entirety.
9.2 Entire Agreement; Modification; Waiver. This
Agreement constitutes the entire agreement between the parties pertaining to
the subject matter contained in it, except for any other agreements referenced
herein. This Agreement supersedes all prior and contemporaneous agreements
(other than those entered into in writing simultaneously with this Agreement),
representations, and understandings of the parties. No supplement,
modification, or amendment of this Agreement shall be binding unless executed
in writing by all the parties. No waiver of any of the provisions of this
Agreement shall be deemed, or shall constitute, a waiver of any other
provisions, whether or not similar, nor shall any waiver constitute a
continuing waiver. No waiver shall be binding unless executed in writing by
the party making the waiver.
9.3 Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. Counterparts of
this Agreement may be signed and the signature pages transmitted by facsimile;
provided, however, that the person transmitting such signature page by
facsimile must deliver the originally executed counterpart signature page via
express courier within two (2) business days.
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9.4 Parties in Interest. Nothing in this Agreement,
whether express or implied, is intended to confer any rights or remedies under
or by reason of this Agreement on any persons other than the parties to it and
their respective successors and assigns. Nothing in this Agreement is intended
to relieve or discharge the obligation or liability of any third person to any
party to this Agreement, nor shall any provision give any third person any
right of subrogation or action over against any party to this Agreement.
9.5 Assignment. Neither party may assign its rights or
obligations under this Agreement without the prior written consent of the other
party. Subject to the foregoing, this Agreement shall be binding on and shall
inure to the benefit of the parties to it and their respective permitted
successors and assigns.
9.6 Recovery of Litigation or Arbitration Costs. If any
legal action, arbitration or other proceeding is brought for the enforcement of
this Agreement, or because of an alleged dispute, breach, default, or
misrepresentation in connection with any of the provisions of this Agreement,
the successful or prevailing party or parties shall be entitled to recover
reasonable attorneys' fees and other costs incurred in that action or
proceeding, in addition to any other relief to which it or they may be
entitled, as may be decided by the arbitrators pursuant to Section 9.12.6
hereof.
9.7 Nature and Survival of Representations and Covenants.
Subject to any limitations set forth in Article VI, all representations,
covenants, and agreements of the parties contained in this Agreement, or in any
instrument, certificate, opinion, or other writing provided for in it, shall
survive the Closing.
9.8 Severability. Each term, covenant, condition or
provision of this Agreement shall be viewed as separate and distinct, and in
the event that any such term, covenant, condition or provision shall be held by
a court of competent jurisdiction to be invalid, the remaining provisions shall
continue in full force and effect, so long as the essential benefits of this
Agreement will still be realized by the parties.
9.9 Necessary Acts. Each party to this Agreement agrees
to perform any further acts and execute and deliver any further documents that
may be reasonably necessary to carry out the provisions of this Agreement.
9.10 Time of Essence. Time is of the essence in the
performance of all obligations under this Agreement.
9.11 Notices. All notices to be given with respect to
this Agreement shall be given in writing to the party, at the appropriate
address listed below. Each notice shall be deemed delivered whenever it
arrives at the party's address, by any written means, including without
limitation, facsimile, telegraph, teletype personal delivery, express delivery,
or mail.
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9.11.1 If to Buyer, then to:
Jaycor Security Intelligence Services, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: P. ▇▇▇▇▇ ▇▇▇▇▇▇▇, Chief Financial Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Cameron ▇▇▇ ▇▇▇▇▇, Esq.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ & Freidenrich
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
9.11.2 If to Seller, then to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇, Esq.
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, A.P.C.
▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
9.12 Arbitration. Any controversy or claim arising out of
or relating to this Agreement, or the breach thereof, shall be settled by
binding arbitration in accordance with the Commercial Arbitration Rules of the
American Arbitration Association ("AAA"), and the procedures set forth below.
In the event of any inconsistency between the Rules of AAA and the procedures
set forth below, the procedures set forth below shall control. Judgment upon
the award rendered by the arbitrators may be enforced in any court having
jurisdiction thereof.
9.12.1 Location. The location of the arbitration
shall be in San Diego County, California.
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9.12.2 Selection of Arbitrators. The arbitration
shall be conducted by a panel of three neutral arbitrators who are independent
and disinterested with respect to the parties, this Agreement, and the outcome
of the arbitration. Each party shall appoint one neutral arbitrator, and these
two arbitrators so selected by the parties shall then select the third
arbitrator. If one party has given written notice to the other party as to the
identity of the arbitrator appointed by the party, and the party thereafter
makes a written demand on the other party to appoint its designated arbitrator
within the next ten days, and the other party fails to appoint its designated
arbitrator within ten (10) days after receiving said written demand, then the
arbitrator who has already been designated shall appoint the other two
arbitrators. Notwithstanding anything in this Section 9.12 to the contrary,
the arbitration may be conducted by a sole arbitrator; provided, however, that
Buyer and Seller shall have mutually agreed upon the selection of such sole
arbitrator.
9.12.3 Discovery. Unless the parties mutually agree
in writing to some additional and specific pre-hearing discovery, the only
pre-hearing discovery shall be (a) reasonably limited production of relevant
and non-privileged documents, and (b) the identification of witnesses to be
called at the hearing, which identification shall give the witness's name,
general qualifications and position, and a brief statement as to the general
scope of the testimony to be given by the witness. The arbitrators shall
decide any disputes and shall control the process concerning these pre-hearing
discovery matters. Pursuant to the Rules of AAA, the parties may subpoena
witnesses and documents for presentation at the hearing.
9.12.4 Case Management. Prompt resolution of any
dispute is important to both parties; and the parties agree that the
arbitration of any dispute shall be conducted expeditiously. The arbitrators
are instructed and directed to assume case management initiative and control
over the arbitration process (including scheduling of events, pre-hearing
discovery and activities, and the conduct of the hearing), in order to complete
the arbitration as expeditiously as is reasonably practical for obtaining a
just resolution of the dispute.
9.12.5 Remedies. The arbitrators shall follow and
apply applicable law. The arbitrators shall grant such legal or equitable
remedies and relief in compliance with applicable law that the arbitrators deem
just and equitable, to the same extent that remedies or relief could be granted
by a state or federal court, provided, however, that no punitive damages may be
awarded. No court action may be maintained seeking punitive damages. The
decision of any two of the three arbitrators appointed shall be binding upon
the parties.
9.12.6 Expenses. The expenses of the arbitration,
including the arbitrators' fees, expert witness fees, and attorney's fees, may
be awarded to the prevailing party, in the discretion of the arbitrators, or
may be apportioned between the parties in any manner deemed appropriate by the
arbitrators. Unless and until the arbitrators decide that one party is to pay
for all (or a share) of such expenses,
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both parties shall share equally in the payment of the arbitrators' fees as and
when billed by the arbitrators.
9.12.7 Confidentiality. Except as set forth below,
the parties shall keep confidential the fact of the arbitration, the dispute
being arbitrated, and the decision of the arbitrators. Notwithstanding the
foregoing, the parties may disclose information about the arbitration to
persons who have a need to know, such as directors, trustees, management
employees, witnesses, experts, investors, attorneys, lenders, insurers, and
others who may be directly affected. Additionally, if a party has stock which
is publicly traded, the party may make such disclosures as are required by
applicable securities laws. Further, if a party is expressly asked by a third
party about the dispute or the arbitration, the party may disclose and
acknowledge in general and limited terms that there is a dispute with the other
party which is being (or has been) arbitrated. Once the arbitration award has
become final, if the arbitration award is not promptly satisfied, then these
confidentiality provisions shall no longer be applicable.
9.13 Governing Law. This Agreement and all questions
relating to its validity, interpretation, performance and enforcement shall be
governed by and construed in accordance with the laws of the State of
California without giving effect to principles of conflict of laws.
9.14 Construction. This Agreement shall be construed and
interpreted in accordance with the plain meaning of the entirety of the
provisions of this Agreement, consistent with the overall intent and spirit of
the parties and the entire Agreement. As both parties and their legal counsel
have participated in the negotiations and the drafting for this Agreement, any
ambiguity or inconsistency in any of the provisions of this Agreement shall not
be construed against either party as the draftsman of this Agreement.
IN WITNESS WHEREOF, the parties to this Agreement have duly executed
it as of the date set forth above.
▇▇▇▇▇▇ INTELLIGENCE SERVICES,
INC., A DELAWARE CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇, President
and Chief Executive Officer
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, AN INDIVIDUAL
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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