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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-
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., an individual
("▇▇▇▇▇▇", 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:
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(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 ▇▇▇▇▇▇ 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;
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(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.
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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
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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
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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 ▇▇▇▇▇▇ by the Company as of
the Closing Date for outstanding loans.
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2.4 [INTENTIONALLY OMITTED]
2.5 PLACE OF CLOSING - The Closing shall take place at the Closing Time at the
offices of ▇'▇▇▇▇▇▇, Cavanagh, Anderson, ▇▇▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, 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
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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.
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(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.
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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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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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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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(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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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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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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service ▇▇▇▇, 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 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act of 1976, as amended, and the rules and regulations
promulgated thereunder (the "▇▇▇▇ 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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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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(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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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 ▇▇▇▇ 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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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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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) ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Filing - The applicable waiting period under
the ▇▇▇▇ Act shall have expired or terminated.
(i) Management - Rural/Metro's Board of Directors shall have
confirmed the appointment of ▇▇▇▇▇▇ to the Board of Directors
of Rural/Metro and to a senior executive position with
Rural/Metro.
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(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) ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Filing - The applicable waiting period under
the ▇▇▇▇ Act shall have expired or terminated;
(g) Management - The Board of Directors of Rural/Metro shall have
confirmed the appointment of ▇▇▇▇▇▇ 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 ▇▇▇▇▇
▇▇▇▇▇▇, 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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(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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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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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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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) ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Filings - Each party shall take whatever
steps are necessary to make any filings required under the
▇▇▇▇ 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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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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇'▇ 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 ▇▇▇▇▇▇ is
terminated by Purchaser without Cause as defined and described
in the Employment Agreement.
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(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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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 ▇▇▇▇▇▇. In the event the Company and/or the
Purchaser amends such tax returns without ▇▇▇▇▇▇'▇ 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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35
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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(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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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;
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(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
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 ▇▇▇▇▇▇▇▇ 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.
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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:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
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41
with a copy to the Vendors' Counsel at
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, P.A.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
with a facsimile number of (▇▇▇) ▇▇▇-▇▇▇▇.
(b) in the case of a notice to the Purchaser at
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
with a facsimile number of (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to Purchaser's Counsel at
▇'▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, P.A.
One E. Camelback Road, Suite 1100
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
with a facsimile number of (▇▇▇) ▇▇▇-▇▇▇▇
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
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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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:
----------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇, President
----------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., individually
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44
CONSENT OF SPOUSE
The undersigned spouse of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., 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
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
The undersigned further agrees that in the event of the death
of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., the dissolution of their marriage, or any occurrence
contemplated by the Agreement that gives rise to any liability or obligation of
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., 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 ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
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 (▇▇▇▇▇) ▇. ▇▇▇▇▇▇
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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
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
47
APPENDIX 4.1(j)
FORM OF INVESTMENT AGREEMENT
See attached.
48
AMENDMENT TO AGREEMENT OF PURCHASE AND SALE
WHEREAS, RURAL/METRO CORPORATION, a Delaware corporation ("Purchaser"), and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., 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, ▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇, 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.
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/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇, President
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
---------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., individually
I HEREBY CONSENT TO THE TERMS
OF THIS AMENDMENT as of the 15th day
of April, 1997:
/s/ Virginia (▇▇▇▇▇) ▇. ▇▇▇▇▇▇
-------------------------------
Virginia (▇▇▇▇▇) ▇. ▇▇▇▇▇▇
2
50
EXHIBIT A
April 15, 1997
▇▇▇▇▇ ▇. ▇▇▇▇▇, President
Rural/Metro Corporation
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear ▇▇▇:
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 ▇▇▇ ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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 ▇▇▇ ▇▇▇▇▇▇ 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, ▇▇▇ ▇▇▇▇▇▇ has drawn
the
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 ▇▇▇▇▇▇ may exceed the $2,045,000 as identified
in section 5 above, for the purpose of purchasing the ownership interests of
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ 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 ▇▇▇ ▇▇▇▇▇▇'▇ position,
responsibility and reporting structure as follows:
- ▇▇▇ ▇▇▇▇▇▇ 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 ▇▇▇ ▇▇▇▇▇▇▇ or to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and not to any
Regional President.
- ▇▇▇ ▇▇▇▇▇▇ agrees to serve as a member of the Board of Directors of
Rural/Metro Corporation.
- ▇▇▇ ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇.
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
▇▇▇▇▇▇, ▇▇▇ 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/ ▇▇▇ ▇▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇▇▇▇▇
------------------------------ By: --------------------------
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
Its: President
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇
Trustee for the Southwest ESOP
cc: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
53
SECOND AMENDMENT TO AGREEMENT OF PURCHASE AND SALE
WHEREAS, RURAL/METRO CORPORATION, a Delaware corporation ("Purchaser"), and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., 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, ▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇, 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,
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/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
____________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇, President
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
_______________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., individually
I HEREBY CONSENT TO THE TERMS
OF THIS SECOND AMENDMENT as of
the 30th day of May, 1997:
/s/ Virginia (▇▇▇▇▇) ▇. ▇▇▇▇▇▇
_______________________________
Virginia (▇▇▇▇▇) ▇. ▇▇▇▇▇▇
2
55
[SOUTHWEST AMBULANCE LETTERHEAD]
May 30, 1997
▇▇▇▇▇ ▇▇▇▇▇, President
Rural/Metro Corporation
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear ▇▇▇:
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.
▇▇▇- 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.
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 ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 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
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/ ▇▇▇▇▇ ▇▇▇▇▇
------------------------------ By: --------------------------
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
Witness and Trustee:
------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇
(renw12doc)