ERMUSR HANDOUT 08-22-2016 RESOLUTION NO. 16-9
BOARD OF COMMISSIONERS
ELK RIVER MUNICIPAL UTILITIES
A RESOLUTION OF THE BOARD OF COMMISSIONERS OF ELK RIVER
MUNICIPAL UTILITIES AUTHORIZING SALE OF MONITORING
ACCOUNTS
WHEREAS, WH Securities, LLC has made an offer to purchase certain security and
medical monitoring accounts from the Elk River Municipal Utilities ("ERMU");
WHEREAS, A draft Asset Purchase Agreement and draft Bill of Sale Assignment&
Assumption Agreement(collectively"The Agreements") have been prepared; and
WHEREAS,The Elk River Utility Commission has reviewed the draft Agreements.
NOW, THEREFORE,BE IT RESOLVED:
The Agreements are approved and the Vice Chair and General Manager are authorized to
execute the Agreements subject to the finalization of the Agreements to the satisfaction
of the Vice Chair, General Manager, and Commission Attorney.
This Resolution Passed and Adopted this day of , 2016.
Al Nadeau, Vice Chair
Troy Adams, P.E., General Manager
ASSET PURCHASE AGREEMENT
ELK RIVER MUNICIPAL UTILITIES ("Seller")
WH SECURITY, LLC ("Buyer"),
Closing Date: September 30, 2016
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is entered into as of
August , 2016 (which date shall be filled in as the date of delivery and exchange by each of
the Seller and the Buyer of fully executed counterparts of this Agreement) between ELK RIVER
MUNICIPAL UTILITIES, with principal offices located at 13069 Orono Parkway, Elk River,
MN 55330 ("Seller"), and WH SECURITY, LLC., a Minnesota limited liability company, with
its principal offices at 6800 Electric Drive, Rockford, MN 55373 ("Buyer").
BACKGROUND
WHEREAS, Seller is engaged in, among other things, a residential and commercial
security business operating under its own name (the "Business"); and
WHEREAS, Seller wishes to sell, transfer and assign to Buyer, and Buyer wishes to
purchase from Seller, certain of Seller's accounts and other select assets used in the Business,
upon the terms and conditions set forth in this Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged by the parties hereto, it is hereby agreed as follows:
ARTICLE 1
DEFINITIONS AND CONSTRUCTION
1.1 Defined Terms. Capitalized terms used and not otherwise defined in the body of
this Agreement have the meanings assigned to such terms in Annex A.
1.2 Preparation of Agreement. The parties have participated jointly in the negotiation
and drafting of this Agreement and the agreements and instruments to be delivered pursuant
hereto. Each party accepts the terms and conditions of this Agreement, having the right to be
represented by legal counsel and other advisors of their choosing, and each party enters into this
agreement intending to be legally bound hereunder.
ARTICLE 2
SALE AND PURCHASE OF ASSETS
2.1 Purchased Assets. Subject to the conditions contained herein, Seller agrees to sell
to Buyer and Buyer agrees to purchase from Seller on the Closing Date, free and clear of all
Liens, all of Seller's right, title and interest in and to the following assets, tangible and
intangible, used or held for use in connection with the Business (the "Purchased Assets"). The
Purchased Assets include only the following assets and properties, and shall not include the
Excluded Assets or any other assets of the Seller (Exhibits or Schedules, as applicable, will be
updated to be current as of the Closing Date):
2.1.1. Accounts. All monitoring and security customer accounts of the Business
and Seller as of the Closing Date, as listed on Schedule 2.1.1 totaling approximately eight
hundred thirty-eight (838), along with all contracts, monitoring agreements, and
equipment service agreements in place with such customers, all security and monitoring
equipment owned by Seller and intended exclusively and solely for use in connection
with any of the accounts, and all related data, licensing, customer information,
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monitoring numbers, and other assets pertaining to such accounts (the "Accounts");
2.1.2. Deposits and Prepaid Expenses. All payments and rights to collections
accruing on the Accounts as of the Closing Date and thereafter, and any customer credits,
pre-paid expenses, advance payments and deposits on the Accounts, as listed on Schedule
2.1.2, if any(the "Deposits and Prepaid Expenses");
2.1.3. Books and Records. All books of account, records, files, customer
information and correspondence, customer lists, technical information and similar
materials and records and other files and records relating to the Business, the Accounts or
the Deposits and Prepaid Expenses, excluding private data under Minn. Stat. Chapter 13
(the"Books and Records").
2.1.4. Inventory. All inventory of the Seller used in the Business and held for
sale or use to or use with customers, including security and monitoring equipment, spare
parts,raw materials, component parts, and related materials (the "Inventory"). Inventory
existing as of the Effective Date is as set forth in Schedule 2.1.4.
2.2 Excluded Assets. Except for the Purchased Assets, no other assets of the Seller
(such as cash, accounts receivable, trade name, or good will) are being sold to the Buyer, and all
excluded assets are referred to herein as "Excluded Assets". Excluded Assets (i) shall not be
sold to Buyer, (ii) shall not be included in the Purchased Assets and (iii) shall be retained by
Seller.
ARTICLE 3
PURCHASE PRICE
3.1 Purchase Price.
3.1.1. Purchase Price. The "Purchase Price" for the Purchased Assets shall be
determined as follows, to be set forth on the Closing Date in writing as agreed to by the
Parties:
a. The Purchase Price for the Accounts, Deposits and Prepaid Expenses, and
Books and Records shall be determined according to the following
formulas:
For Security Accounts: An amount equivalent to the multiple of the (i)
total recurring revenue for a one-month period generated from the
Accounts existing as of the Closing Dates times (ii) the number 24. The
Purchase Price and the formula shall be subject to the following
adjustments determined by mutual agreement of the parties on or before
the Closing Date:
i. prepayments to Seller on Accounts for periods of service after the
Date of Closing shall be deducted from the aggregate Purchase
Price.
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ii. The formula shall be applied to the number of Accounts existing as
of the Closing Date.
For Medical Accounts: An amount equivalent to the multiple of the (i)
total recurring revenue for a one-month period generated from the
Accounts existing as of the Closing Date times (ii) the number 10. The
Purchase Price and the formula shall be subject to the following
adjustments determined by mutual agreement of the parties on or before
the Closing Date:
i. prepayments to Seller on Accounts for periods of service after the
Date of Closing shall be deducted from the aggregate Purchase
Price.
ii. The formula shall be applied to the number of Accounts existing as
of the Closing Date.
b. The Purchase Price for the Inventory shall be a fixed sum of$5,000.00.
The sums set forth in the foregoing subparagraphs (a) and (b) (subject to the
specified adjustments) shall be aggregated to yield a total Purchase Price for all
Purchased Assets.
3.1.2. Payment of Purchase Price. Buyer shall pay the Purchase Price to Seller by
means of check or wire transfer to Seller and delivered at Closing.
3.1.3. Allocation of Purchase Price. The Purchase Price shall be allocated by
category of Purchased Assets as agreed upon by the parties and set forth in Annex B,
which shall be completed by the parties on or before the Closing Date (the "Allocation").
The parties agree that the Allocation shall be used by them and respected for all
purposes, including all United States Tax purposes, and that the parties shall each file a
Form 8594 with their respective federal income tax returns.
ARTICLE 4
LIABILITIES OF THE SELLER
4.1 Limited Liabilities to be Assumed by Buyer. The Buyer shall assume, as of 12:01
a.m. on October 1, 2016, and agrees to pay, perform, and discharge when and as due, only the
following liabilities and obligations of the Seller and no others (collectively, the "Assumed
Liabilities"):
4.1.1 All liabilities and obligations of the Seller under all monitoring and/or
equipment service agreements in place with Seller and a customer in connection with any
of the Accounts, including to continue to make available the required goods and services
specified in contracts pertaining to the Accounts for the Purchased Assets, but only as to
matters and events which arise and accrue for periods following the Closing Date (and
specifically not including any indemnities, liabilities, or other obligations of the Seller for
matters or events on or prior to the Date of Closing) related to the Accounts.
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4.2 Liabilities Not Assumed by Buyer. Except as specifically provided in Section 4.1
hereof, Buyer shall not assume, or in any way become liable for, any liabilities or obligations of
Seller of any kind or nature, whether accrued, absolute, contingent or otherwise, or whether due
or to become due, or otherwise, whether known or unknown, (the "Excluded Liabilities") which
liabilities and obligations, if ever in existence, shall continue to be liabilities and obligations of
Seller who shall pay, perform and discharge the Excluded Liabilities when due. Specifically,the
Excluded Liabilities include:
4.1.1. Violation of Representations. Obligations or liabilities which arise or
exist in violation of any of the representations, warranties, covenants or agreements of
Seller contained in this Agreement or otherwise in connection with the transactions
contemplated hereby.
4.1.2. Taxes. Debts, obligations or liabilities of Seller for federal, state, or other
taxes of any kind whatsoever arising from operation of its Business.
4.1.3. Indebtedness. Any liabilities or obligations of the Seller in respect of the
borrowing of money, loans, credit agreement or other evidence of Indebtedness or direct
or indirect guaranty or assumption of indebtedness, liabilities or obligations of others.
4.1.4. Excluded Assets. Any liabilities or obligations arising out of or relating to
the Excluded Assets.
4.1.5. Accounts Payable. Any accounts payable of Seller arising from Seller's
operation of the Business.
ARTICLE 5
CLOSING
5.1 Closing; Closing Date; Time; Place. Subject to the satisfaction of the conditions
set forth herein, the closing of the transactions contemplated by this Agreement (the "Closing")
shall take place on September 30, 2016 (the "Closing Date"). On the Closing Date, (i) Seller
shall sell, transfer, assign, convey and deliver to Buyer all right, title and interest in and to the
Purchased Assets, free and clear of all liabilities, obligations and Liens, excepting only for the
Assumed Liabilities; and (ii)the parties shall make the deliveries described in Section 5.2. The
effective time of the transfer of the Purchase Assets and acceptance of the Assumed Liabilities
shall be 12:01 a.m., October 1, 2016.
5.2 Documentation. In order to effectuate the sale, conveyance, transfer and
assignment contemplated by this Agreement, the parties shall execute and deliver on the Closing
Date all such bills of sale, assignment agreements and other documents or instruments of
conveyance, transfer or assignment as shall be necessary or appropriate to vest or confirm in
Buyer, all right, title and interest in and to all of the Purchased Assets, free and clear of all Liens
(excepting only for Assumed Liabilities), all of which documents shall be in form and substance
satisfactory to the parties, as follows:
5.2.1 Deliveries by Seller. At the Closing, Seller shall deliver to Buyer:
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(i) a Bill of Sale, transferring and assigning the Purchased Assets to
Buyer and such other executed assignments, consents, documents
of transfer, and other instruments as Buyer reasonably may
request;
(ii) evidence satisfactory to Buyer of the release of Liens, if any,
against the Purchased Assets;
(iii) any and all schedules, assignments, certificates or such other
documents reasonably requested by the Buyer in order to
effectuate the transactions contemplated by this Agreement;
(iv) a certified copy of resolutions of Seller's Governing Board
authorizing the transactions contemplated by this Agreement;
(v) such other documents or instruments as are reasonably necessary
or customary to effect the transactions contemplated herein.
(a) Deliveries by Buyer. At the Closing,Buyer shall deliver to Seller:
(i) the Purchase Price pursuant to Section 3.1.2;
(ii) a certified copy of resolutions of Buyer's Board of Governors
authorizing the transactions contemplated by this Agreement;
(iii) such other documents or instruments as are reasonably necessary
or customary to effect the transactions contemplated herein.
5.3 Further Assurances. If at any time after the Closing Date, Buyer or Seller shall
consider or be advised that any further documents or any other acts are reasonably necessary to
carry out the purposes of this Agreement, Buyer and Seller agree that each of them shall execute
and deliver all such documents and do all acts reasonably necessary to carry out the purposes of
this Agreement.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
6.1 Organization and Qualification. Seller is a municipal Utilitycorporation, duly
organized and validly existing under the laws of the State of Minnesota, and has all requisite
power and authority to transfer with Purchased Assets to Buyer and perform the other
requirements of this Agreement. Seller has not conducted business under any name other than
its corporate name "WH Security, LLC."No Consents. No consent of, or notice to, any
Governmental Entity, or any other Person, is required to be obtained or given by the Seller in
connection with the execution, delivery or performance of this Agreement or any other
agreement or document to be executed, delivered or performed hereunder by the Seller.
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6.3 Liabilities and Obligations Pertaining to Accounts. Seller does not have any
liabilities or obligations of any nature whatsoever pertaining to the Accounts, accrued or
unaccrued, due or to become due, whether arising out of Contract, tort, Law or otherwise.
6.4 [Reserved]
6.5 Title to and Condition of Assets. Seller is the sole owner of and has good and
marketable title to the Purchased Assets free and clear of all Liens.
6.6 Contracts.Schedule 2.1.1 contains a complete list of the Accounts, which are
customers in good standing for security, monitoring, service and other goods and
products pertaining to the Business and to be acquired by the Buyer.
(b) Copies of all written contracts relating to the Accounts have been made
available to Buyer. All such contracts are assignable to Buyer without any Consent,
constitute legal, valid and binding obligations of customer identified therein, neither
Seller nor any customer are in default under any contract, and all payments and
performance by the Seller and any customer are current and will be current as of the
Closing Date.
6.7 Litigation. Except routine customer complaints, no action, suit, claim, demand or
other proceeding is pending or threatened against Seller in any court, arbitration tribunal,
administrative agency, or otherwise, with respect to the Accounts, the Purchased Assets, and/or the
Business or their operations.
6.8 Authority. Seller has the necessary power, authority, and legal capacity to enter
into, execute and deliver this Agreement and to perform all of its obligations, undertakings and
agreements to be observed and performed by it hereunder. The execution, delivery and
performance of this Agreement has been duly authorized by all necessary action of Seller's
governing body. This Agreement will constitute the valid and binding agreements of Seller,
enforceable in accordance with their respective terms subject, as to the enforcement of remedies,
to general equitable principles and to bankruptcy, insolvency and similar laws affecting
creditors' rights generally.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
7.1 Organization and Good Standing. Buyer is a limited liability company duly
organized and existing under the laws of the State of Minnesota, and has all requisite power and
authority to acquire the Purchased Assets from Seller and perform the other requirements of this
Agreement.
7.2 Authority. Buyer has the necessary power, authority, and legal capacity to enter
into, execute and deliver this Agreement and to perform all of its obligations, undertakings and
agreements to be observed and performed by it hereunder. The execution, delivery and
performance of this Agreement has been duly authorized by all necessary action of Buyer's
Board of Governors. This Agreement will constitute the valid and binding agreements of Buyer,
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enforceable in accordance with their respective terms subject, as to the enforcement of remedies,
to general equitable principles and to bankruptcy, insolvency and similar laws affecting
creditors' rights generally.No Consents. No Consent of, or notice to, any Governmental Entity,
or any other Person, is required to be obtained or given by the Buyer in connection with the
execution, delivery or performance of this Agreement or any other agreement or document to be
executed, delivered or performed hereunder by the Buyer, except for the consent of Buyer's sole
member, which has been acquired as of the Effective Date.
ARTICLE 8
PRE-CLOSING COVENANTS
8.1 Covenants of the Seller. Seller covenants and agrees with Buyer that from the
date hereof until the Closing or other termination of this Agreement, unless otherwise consented
to in writing by Buyer:
8.1.1. Investigation. Seller shall, upon reasonable notice from Buyer and at
reasonable times allow Buyer and its representatives full access during normal business
hours to all its property, offices, books, contracts, records and affairs, excluding private
data as fefined in Minn. Statute Chapter 13, for the purpose of completing its due
diligence on the Purchase Assets; provided that such access shall not unreasonably
interfere with the operation and conduct of the Business, and both parties shall adhere to
normal security procedures in connection with such access. Subsequent to the execution
of this Agreement, Seller shall furnish its customer list to Buyer at such time as it is
requested by Buyer, and satisfactory to Seller, so as to enable Buyer to enter said
information into its data base and prepare it for a seamless transition of delivery services
to the Accounts and the newly acquired customers as of the Closing Date.
8.1.2. Conduct of Business; No Material Adverse Change. Seller will:
(i) conduct its business only in the ordinary course; (ii) make no material change in the
Accounts; (iii)not waive any material rights under or terminate any Specified Account;
(iv) perform in all material respects all of its obligations under all Accounts; (v) and
keep all Accounts in good standing and with no default.
8.1.3. Exclusivity. Seller will neither, directly or indirectly, take any action to
solicit indications of interest or offers for the purchase and sale of the Purchased Assets.
8.1.4. Consents and Approvals. Seller agrees that as promptly as possible
following the execution of this Agreement Seller shall use its best efforts to obtain all
Consents to assignment for the Contracts which require consent to assignment.
8.1.5. Payment of Indebtedness. Prior to or contemporaneously with the Closing,
Seller shall arrange for the termination or release of all Liens, if any, on the Purchased
Assets securing or related to such Indebtedness.
8.1.6 Servicing of Accounts. Buyer shall service and maintain the Accounts and
any new accounts pending Close on terms and conditions that are ordinary and customary
for third party management and assistance with security account maintenance. Seller's
management will coordinate with Buyer's management on the logistics and specifics of
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the same.
ARTICLE 9
POST-CLOSING COVENANTS
9.1 Account Relations. Neither Seller nor any of its Affiliates will take any action
that is designed or intended to have the effect of discouraging any customer, supplier, or other
business associate of Seller from maintaining the same business relationships with Buyer after
the Closing as maintained with Seller prior to the Closing. The parties will jointly notify the
Accounts of the transfer to the Buyer, under a mutually acceptable notice letter signed on the
Closing Date. Any collections on Accounts for periods after the Closing Date if collected by the
Seller will be promptly paid to the Buyer.
9.2 Non-competition Agreement. Seller agrees that for a period of five (5) years
after the Closing Date, it will not, in its own behalf or in behalf of any other person, firm,
partnership, association, employer or other entity of any nature whatsoever, whether as an owner,
operator, manager, partner, member, independent contractor, investor, lender, member, associate,
agent, advisor, consultant, or any other position whatsoever, directly or indirectly, do any of the
following acts:
a. Engage in the marketing, sales, service, or other activity with
respect to residential and commercial security goods or services, or
b. Engage in any activity that is similar to, or in competition with the
Business.
The geographic area of this Non-competition provision in which Seller shall not engage
in the precluded activities shall be limited to: an area within the city limits of Elk River,
Minnesota and within a fifty (50) mile radius of Elk River, Minnesota. Seller agrees that this
geographic area represents a mutually agreeable restricted area and portion of the trade area of
the Seller, the Business, and Buyer, and that the geographic restriction is reasonable in scope,
and that the time period of the non-competition agreement is reasonable in duration.
The parties acknowledge that the restrictions of this Non-competition provision have
been carefully considered and are reasonable for the protection of the legitimate business
interests of Buyer and that the restrictions contained in these paragraphs will not unduly interfere
with the Seller's business operations outside the Business.
Recognizing the irreparable nature of the injury that could be worked by violation of any
provision of this provision and recognizing that money damages would be inadequate
compensation for a violation of this provision, it is agreed that any actual or threatened violation
of this Agreement by Seller is the proper subject of immediate injunctive relief, together with
specific performance and any other equitable relief.
Buyer, or its assigns, or any of its officers, governors, or management service providers
shall be entitled to enforce this provision, and recover from the Seller all attorney fees and costs
incurred in any action that is brought for breach or threatened breach of this provision or
otherwise to enforce the terms of this Agreement. If any period of time, or limitation on
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activity, or any geographic limitation stated in this provision is longer or greater than the
maximum limitation permitted by law, then the period of time, activity limitation, or geographic
limitation therein shall be deemed to be the maximum permissible under the law.
ARTICLE 10
CONDITIONS TO CLOSING
10.1 Conditions to Buyer's Obligations. The obligations of Buyer to consummate the
transactions contemplated by this Agreement shall be subject to the fulfillment at or prior to
Closing of each of the following conditions unless waived by Buyer:
10.1.1 Representations and Warranties. All representations and warranties made
by Seller contained in this Agreement shall be true and correct on the date hereof and as
of the Closing Date as though such representations and warranties were made as of the
Closing Date.
10.1.2 Covenants. Seller shall have materially performed or complied with all of
the covenants and obligations to be performed or complied with by it under the terms of
this Agreement on or prior to Closing.
10.1.3 Due Diligence. Buyer shall have completed customary due diligence of
the Purchased Assets and the legal status of Seller.
10.1.4 Consents and Approvals. All Consents required to be obtained by Seller,
and all Consents required to be obtained by Buyer, shall have been obtained.
10.1.5 Instruments of Assignment, Transfer and Conveyance. Seller shall have
delivered to Buyer all instruments of assignment, transfer and conveyance of the
Purchased Assets, and such other Closing documents as shall have been reasonably
requested by Buyer, all in form and substance reasonably acceptable to Buyer.
10.1.6 Release of Liens. Any Liens on the Purchased Assets shall have been
released or terminated as of the Closing and Seller shall have filed or delivered to Buyer
as of the Closing evidence in form and substance satisfactory to Buyer of such release or
termination.
10.2 Conditions to the Seller's Obligations. The obligations of Seller to consummate the
transactions contemplated by this Agreement shall be subject to the fulfillment at or prior to the
Closing of each of the following conditions:
10.2.1 Representations and Warranties. The representations and warranties of
Buyer contained in this Agreement shall be true and correct on the date hereof and as of
the Closing Date as though such representations and warranties were made as of the
Closing Date.
10.2.2 Covenants. Buyer shall have materially performed or complied with all of
the covenants and obligations to be performed or complied with by it under the terms of
this Agreement on or prior to Closing.
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ARTICLE 11
TERMINATION
11.1 Termination of Agreement. This Agreement and the transactions contemplated
hereby may be terminated at any time prior to the Closing, as follows:
11.1.1 Mutual Consent. By mutual written consent of all of the parties hereto.
11.1.2 Breach. By Buyer, on the one hand, or by Seller, on the other hand, by
reason of the breach by the other in any material respect of any of its or their
representations,warranties, covenants or agreements contained in this Agreement.
11.1.3 Respective Conditions. By Buyer, on the one hand, or by Seller, on the
other hand, if the conditions precedent to their respective obligations contained in
Sections 10.1 or 10.2 hereof have not been met as of the Closing Date (the
"Termination Date").
11.2 Procedure and Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 11.1, the terminating party or parties shall give written notice of
termination to the other party or parties and this Agreement shall terminate without further
action by any party hereto. Upon termination of this Agreement in accordance with this
Article 11, there shall be no liability or obligation hereunder on the part of Seller, Buyer (or any
of their respective stockholders/members, directors/governing body members, officers,
managers, employees or representatives), except the obligations which survive any such
termination, and(ii) for any liability resulting from any such party's breach of this Agreement.
ARTICLE 12
INDEMNIFICATION; SURVIVAL
12.1 Indemnification of Buyer Indemnified Parties. Subject to the terms of this
Agreement, Seller covenants and agrees with Buyer that, following the Closing, Seller shall
reimburse, indemnify, and hold Buyer and its managers, governing body members, officers and
Affiliates ("Buyer Indemnified Parties") harmless from, against and in respect of any and all
Losses suffered or incurred by any of the Buyer Indemnified Parties resulting from, or which
exist due to or arise out of any of the following:
12.1.1 (i) Any inaccuracy or breach of or in, any of the representations and
warranties made by Seller in this Agreement; (ii)the assertion against any Buyer
Indemnified Party of any Excluded Liabilities or any other liabilities and
obligations of Seller that are not Assumed Liabilities; (iii) any claims, suits or
proceedings brought against any Buyer Indemnified Party by any third parties
arising out of or relating to the operation of the Business or the Purchased Assets
on or prior to the Closing Date, except as otherwise set forth herein; (iv) any
claims, liabilities and obligations in connection with the Excluded Assets;
12.1.2 Any nonfulfillment of any covenant or agreement of Seller under this
Agreement; or
12.1.3 Any claim made by a third party alleging facts which, if true,would entitle
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a Buyer Indemnified Party to indemnification pursuant to any of the above.
12.2 Indemnification of Seller Indemnified Parties. Buyer covenants and agrees with
Seller that, following the Closing, Buyer shall reimburse, indemnify and hold Seller and the
Seller and its officers, governors, member, and Affiliates (the "Seller Indemnified Parties")
harmless from, against and in respect of any and all Losses resulting from, or which exist due to
or arise out of any of the following:
12.2.1 (i) any inaccuracy or breach of or in, any of the representations and
warranties made by Buyer in this Agreement; (ii) any Assumed Liabilities; or (iii) any
liability arising out of the ownership or operation of the Purchased Assets after the
Closing other than the Excluded Liabilities;
12.2.2 Any nonfulfillment of any covenant or agreement of Buyer under this
Agreement or Ancillary Agreement; or
12.2.3 Any claim made by a third party alleging facts which, if true,would entitle
a Seller Indemnified Party to indemnification pursuant to any of the above.
12.3 Survival. The indemnity obligations of the parties, and any representations and
warranties made by Seller or Buyer under this Agreement, shall survive the Closing.
ARTICLE 13
GENERAL PROVISIONS
13.1 Amendment; Waiver of Terms. This Agreement cannot under any circumstances
be modified orally, and no agreement shall be effective to amend, change, modify or discharge
this Agreement in whole or in part unless such agreement is in writing and is signed by Seller,
Seller and Buyer. No waiver of any provision or right shall be valid unless it is in writing and
signed by the party giving it.
13.2 Payment of Expenses. Each of the parties shall pay its or their own expenses,
including, without limitation, the expenses of its or their own counsel, investment bankers and
accountants, incurred in connection with the preparation, execution and delivery of this
Agreement.
13.3 Entire Agreement; Binding Nature; Assignment. This Agreement and the other
agreements and documents referred to herein set forth the entire understanding of the parties
with respect to the subject matter hereto. None of the rights or obligations of any of the parties
hereto may be assigned without the prior written consent of the other.
13.4 Notices. All notices, requests, demands and other communications ("Notices")
required or permitted to be given hereunder shall be in writing and shall be given by
hand-delivery, by certified or registered mail return receipt requested, to the parties at the
addresses set forth on the first page of this Agreement. Such Notices shall be deemed given on
the date personally delivered, if delivered by hand or by courier, with receipt confirmed in
writing; on the date five (5) days after the date sent if sent certified or registered mail. Any party
hereto may designate a different address to which notices required or permitted to be given
pursuant to this Agreement shall thereafter be transmitted by giving notice to that effect in
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accordance with this Section.
13.5 Counterparts. This Agreement may be executed in any number of counterparts
which, when taken together, shall constitute a single, binding instrument. The exchange of
copies of this Agreement and of signature pages by facsimile or electronic transmission shall
constitute effective execution and delivery of this Agreement as to the parties and such copies
may be used in lieu of the original Agreement for all purposes. Signatures of the parties
transmitted by facsimile or electronic mail shall be deemed to be their original signatures for all
purposes.
13.6 Governing Law; Jurisdiction; Waiver of Jury. This Agreement shall be governed
by, construed and enforced in accordance with the laws of the State of Minnesota, without
reference to the conflicts of laws rules of that or any other jurisdiction, except that federal laws
shall also apply to the extent relevant. Subject to the requirements of alternative dispute
resolutions set forth below in Section 13.7, venue and exclusive jurisdiction for enforcement of
an arbitration decision shall be in the Minnesota state courts, located in Wright County,
Minnesota. Seller and Buyer each hereby waives any right to jury trial in the event any party
files an action relating to this Agreement or to the transactions or obligations contemplated
hereunder.
13.7 Government Data Practices Act. The Buyer must comply with the Minnesota
Government Data Practices Act, Minnesota Statutes Chapter 13, as it applies to all data provided
by the Seller in accordance with this Agreement, and as it applies to all data, created, collected,
received, stored, used, maintained, or disseminated by the Seller in accordance with this
Agreement. Arbitration. Disputes pursuant to this Agreement shall be subject to arbitration. All
disputes, claims, or controversies ("disputes") arising from or related in any way to this
Agreement or the Purchased Assets or their operation that arc not resolved by agreement of the
arbitration rules and procedures shall be determined pursuant to the Uniform Arbitration Act in
Minnesota Statutes §§ 572B.01 572B.31, or any successor provisions. The determination of any
dispute in arbitration shall be governed by the laws of the State of Minnesota. This agreement to
arbitrate disputes shall survive any termination of this Agreement. The arbitration decision shall
be enforceable in the state courts of Minnesota, or in any other court having competent
jurisdiction over a party.
13.8 Prior Agreements. The existing monitoring agreements between the Buyer and Seller
shall terminate on the closing date without cost to either party.
[Signature Page Follows]
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IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto
on the day and year first above written.
Seller: ELK RIVER MUNICIPAL UTILITIES
By:
Its:
Dated: August , 2016
Buyer: WH SECURITY, LLC
By:
Tim Sullivan
Its: Chief Manager/President
Dated: August , 2016
13
ANNEX A
DEFINED TERMS
As used in the Agreement,the following terms have the respective meanings set forth below:
"Consent"means all consents, approvals, notices, waivers or other actions required in connection
with the execution, delivery and performance of this Agreement.
"Contract" means any agreement, understanding, contract, purchase order, obligation, promise,
arrangement, commitment or undertaking (whether written or oral and whether express or
implied) including, in each case, all amendments, modifications and supplements thereto.
"Governmental Entity" means any federal, state or local governmental authority, any court,
administrative or regulatory agency or commission or other governmental authority or agency,
domestic or foreign.
"Indebtedness" means, as of any particular time, the unpaid principal amount of and accrued
interest on all indebtedness for borrowed money including all outstanding amounts under (i)
notes, bonds, debentures, and similar instruments; (ii) obligations under conditional sale or other
title retention agreements; (iii) deferred purchase price for property or services; (iv) guarantees
of indebtedness of any other Person; (v) repayment of any of the foregoing.
"Law" means any law, rule, regulations, judgment, injunction, order, decree or other restriction
of any court or Governmental Entity.
"Lien" means any lien, security interest, mortgage, deed of trust, pledge, hypothecation, claim,
charge or encumbrance of any kind.
"Losses" means any and all losses, liabilities, damages, obligations, costs, payments,
deficiencies, fines, penalties, assessments, expenses (including expenses incurred in
investigating, defending and asserting claims and reasonable attorneys' fees), judgments,
settlements and other charges or claims.
"Person" means an individual, a partnership, a corporation, a limited liability company, an
association, a joint stock company, a trust, a joint venture, an unincorporated organization or
other entity, or a Governmental Entity or any department, agency or political subdivision thereof.
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SCHEDULE 2.1.1
Accounts
[See Attached]
SCHEDULE 2.1.2
Deposits and Prepaid Expenses*
*Amount to be credited against the Purchase Price payable by Buyer at Closing.
[See Attached]
SCHEDULE 2.1.4
Inventory
[See Attached]
ANNEX B
PURCHASE PRICE ALLOCATION
Accounts $
Inventory $ 5,000.00
TOTAL $
BILL OF SALE, ASSIGNMENT & ASSUMPTION AGREEMENT
KNOW ALL PERSONS BY THESE PRESENTS, that Elk River Municipal Utilities, a
Minnesota municipal corporation (the "Seller"), pursuant to that certain Asset Purchase
Agreement (the "APA"), dated effective August , 2016, by and among the hereinafter
named `Buyer," and for good and valuable consideration, the receipt of which is hereby
acknowledged, hereby sells, assigns, transfers, sets over, conveys and delivers the following
assets and property unto WH Security, LLC, a Minnesota limited liability company (the
"Buyer"), effective 12:01 a.m. on October 1, 2016 (the "Effective Date"), free and clear of all
Liens, claims and restrictions of any kind or nature:
All right, title and interest in, to and under the Acquired Assets, comprised of the
following:
(a) Accounts. All monitoring and security and medical customer accounts, as
listed on Schedule 2.1.1 totaling eight hundred thirty-eight [838], along with all
contracts, monitoring agreements, and equipment service agreements in place
with such customers, all security and monitoring equipment owned by Seller and
intended exclusively and solely for use in connection with any of the accounts,
and all related data, licensing, customer information, monitoring numbers, and
other assets pertaining to such accounts (the "Accounts");
(b) Deposits and Prepaid Expenses. All payments and rights to collections
accruing on the Accounts as of the Closing Date and thereafter, and any customer
credits, pre-paid expenses, advance payments and deposits on the Accounts, as
listed on Schedule 2.1.2, if any (the "Deposits and Prepaid Expenses");
(c) Books and Records. All books of account, records, files, customer
information and correspondence, customer lists, technical information and similar
materials and records and other files and records relating to the Business, the
Accounts or the Deposits and Prepaid Expenses excluding private data under
Minn. Stat. Chapter 13 (the"Books and Records");
(d) All other assets to be transferred by Seller to Buyer under the APA.
To the extent that any asset otherwise described above is not immediately assignable to
the Buyer, the Seller shall use its reasonable efforts to provide the Buyer with all of the benefits
of such asset. To the extent that any asset described above is not assignable to the Buyer without
the consent of a third party, which consent has not been obtained as of the date hereof, then,
Seller shall immediately disclose to Buyer in writing the name of such party from whom consent
is required, and (i) such asset shall not be assigned to the Buyer until the consent has been
obtained; (ii) the Seller shall use its reasonable efforts to obtain the consent; and (iii) until the
consent is obtained the Seller shall use its reasonable efforts to provide the Buyer with all of the
benefits of such asset.
PROVIDED, HOWEVER, that the Acquired Assets shall not include and the Seller shall
retain all of its right, title and interest in and to the Excluded Assets. Seller transfers the
foregoing Assets based upon the warranties and representations of Seller set forth in the APA,
1
and any limitations thereof, and the terms and conditions of the APA are hereby incorporated by
reference and made a part hereof.
TO HAVE AND TO HOLD, the entire right, title and interest of the Seller in and to the
assets hereby sold,transferred, conveyed and assigned to the Buyer, its successors and assigns,to
and for its and their own use and benefit forever.
Effective as of effective 12:01 a.m. on October 1, 2016, (i) Seller hereby sells, assigns,
conveys and transfers to Buyer the rights, title and interest of Seller under each of the monitoring
and/or equipment service agreements in place with Seller and a customer in connection with any
of the Accounts (collectively, the "Assigned Contracts"), and (ii) Buyer hereby assumes and
agrees to be responsible for the payment, performance and discharge of obligations of Seller
related to or arising under the Assigned Contracts; in all cases, upon the terms and subject to the
conditions contained herein and in the APA.
Buyer hereby assumes, as of effective 12:01 a.m. on October 1, 2016, and agrees to pay,
perform, and discharge when and as due the following liabilities and obligations of Seller (the
"Assumed Liabilities"):
All liabilities and obligations of the Seller under the Assigned Contracts,
including to continue to make available the required goods and services for the
Accounts, but only as to matters and events which arise and accrue for periods on
and after October 1, 2016 (and specifically not including any indemnities,
liabilities, or other obligations of the Seller for matters or events on or prior to the
Date of Closing) related to the Accounts. The Buyer does not assume any other
liability or obligation to pay, satisfy, discharge, perform or fulfill any debts,
obligations, contracts, leases or liabilities of the Seller with respect to the assets
transferred hereunder, except as specifically set forth herein or in the APA, which
shall govern in the event of a conflict with this document.
The Buyer does not assume any other liability or obligation to pay, satisfy, discharge, perform or
fulfill any debts, obligations, contracts, leases or liabilities of the Seller with respect to the assets
transferred hereunder, except as specifically set forth in the APA, which shall govern in the event
of a conflict with this document.
This Bill of Sale, Assignment and Assumption Agreement may be executed in two
counterparts, each of which shall be deemed an original, but both of which shall constitute one
and the same instrument. Capitalized terms not defined herein shall have the meanings given
such terms in the APA. This Bill of Sale, Assignment and Assumption Agreement shall be
binding upon and inure to the benefit of the parties hereto and to their respective successors and
assigns.
GOVERNING LAW; JURISDICTION; WAIVER OF JURY. THIS BILL OF SALE SHALL
BE GOVERNED BY, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF MINNESOTA, WITHOUT REFERENCE TO THE CONFLICTS
OF LAWS RULES OF THAT OR ANY OTHER JURISDICTION, EXCEPT THAT FEDERAL
LAWS SHALL ALSO APPLY TO THE EXTENT RELEVANT. VENUE AND EXCLUSIVE
JURISDICTION FOR ANY DISPUTES SHALL BE IN THE MINNESOTA STATE COURTS,
2
LOCATED IN WRIGHT COUNTY, MINNESOTA. SELLER AND BUYER EACH HEREBY
WAIVE ANY RIGHT TO JURY TRIAL IN THE EVENT ANY PARTY FILES AN ACTION
RELATING TO THIS BILL OF SALE OR TO THE TRANSACTIONS OR OBLIGATIONS
CONTEMPLATED HEREUNDER.
IN WITNESS WHEREOF, the Buyer and the Seller have each caused this Bill of Sale,
Assignment and Assumption Agreement to be executed by their respective duly authorized
representatives effective as of the Effective Date.
ELK RIVER MUNICIPAL UTILITIES
By
Its •
WH SECURITY, LLC
By
Tim Sullivan
Its Chief Manager/President
3
SCHEDULE 2.1.1
Accounts
[See Attached]
SCHEDULE 2.1.2
Deposits and Prepaid Expenses
[See Attached]