4.3. ERMUSR 10-11-2016 Elk River
Municipal Utilities UTILITIES COMMISSION MEETING
TO: FROM:
Elk River Municipal Utilities Commission Mike O'Neill—Technical Services Superintendent
John Dietz—Chair
Al Nadeau—Vice Chair
Daryl Thompson—Trustee
MEETING DATE: AGENDA ITEM NUMBER:
October 11th 2016 4.3
SUBJECT:
Sale of Security Accounts and Security Alarm Inventory
BACKGROUND:
On August 22, 2016 the Elk River Municipal Utilities Commission and approved through
resolution the sale of ERMU security system sales and installation department to Wright
Hennepin (WH) Security.
DISCUSSION:
On September 30, 2016, Elk River Municipal Utilities closed on the sale of the security business
line with WH Security for a purchase price of$347,251.96. Attached is a picture of the
leadership team from ERMU and WH that was taken at the closing.
This transaction was a win-win for the ERMU security customers as they were already serviced
in part by WH Security. The transition was seamless and our former customers will be well
served by WH Security.
With this sale, ERMU has been able to establish a relationship with WH that otherwise may not
have taken place. While the sale of the security business line is one door closing at ERMU, it
opens doors to other possibilities with WH that can last a long time.
ACTION:
Staff requests the Commission receive the executed Bill of Sale, Assignment& Assumption
Agreement and Sellers and Buyers Agreement of Purchase Price.
ATTACHMENTS:
• Executed Bill of Sale, Assignment&Assumption Agreement
• Sellers and Buyers Agreement of Purchase Price Payable at Closing
• Wright Hennepin Security Customer Letter dated October 3, 2016
• Picture—ERMU and WH Leadership Team at Security Business Line Closing
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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 September 20, 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 security and medical monitoring 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 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"), set forth
in Schedule 2.1.4.
(e)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
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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,
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.
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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,
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.
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SELLERS AND BUYER AGREEMENT OF PURCHASE PRICE
PAYABLE AT CLOSING and RECEIPT
Pursuant to Section 3.1.1 of the Asset Purchase Agreement (the "Purchase Agreement") dated as
of September 20, 2016, between Elk River Municipal Utilities ("Seller) and WH Security, LLC
("Buyer"), Seller and Buyer hereby set forth a mutually agreeable written statement setting forth
Buyer's and Seller's agreement of the Purchase Price for the Purchased Assets,and the components
thereof,payable by Buyer to Seller at Closing. Capitalized terms not defined herein shall have the
meaning set forth in the Purchase Agreement.
The amount of the Purchase Price due payable at closing is $347,251.96, representing the sum
achieved by the following formula (applied consistent with the requirements of the Purchase
Price):
Purchase Price RMR Multiplier Number of Accounts
2.1.1 Purchase Accounts
Security Annual $184,467.12 $ 7,686.13 24 361
Security Monthly $187,572.00 $ 7,815.50 24 386
Medicals $ 18,050.00 $ 1,805.00 10 76
$390,089.12 $17,306.63 823
2.1.2. Less Prepaids
Security Annual ($47,837.16)
Plus Inventory $5,000.00
Net Purchase Price Payable At Closing September 30,2016: $347,251.96
Seller hereby acknowledges receipt of the Net Purchase Price Payable at Closing
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ELK RIVER MUNICIPAL UTILITIES
Dated: ', , ,2016 By:
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Elk River —.
Municipal Utilities
Security Systems
October 3,2016
1M IISecurity
Dear Customer,
We are pleased to announce that Elk River Municipal Security has transferred your account
to WH Security,and you are now part of the WH Security family. You previously should have received
a letter informing you of the sale of Elk River Municipal Utilities security systems department.All
future correspondence,including billing statements,will come from WH Security.
Your monthly monitoring rate will remain the same.Your monitoring center,WHIRC,which provides
service in the event of an alarm,will also stay the same.Your monitoring center's phone number is
(800)858-7811.You do have a new customer service support number: (763)477-3664.
WH Security is a local company based in Rockford,Minn.,about 20 miles west of Minneapolis.
WH Security has been in business since 1989,serving about 16,000 residential and business
customers.There are several advantages for you as part of WH Security:
• Your monitoring rate remains unchanged.
• You now have access to medical alerts,extra camera choices and other optional services that
WH Security provides.
• You will begin receiving WH Security's newsletter every other month.This features security
tips for your home,special offers and helpful information about your security system.
• You will find a high level of support from WH Security's experienced technical and
service group.
• WH Security has an A+Better Business Bureau ranking.
Please give us a call if you would like to update your yard sign from Elk River Municipal Security to
WH Security.As a special offer,you can also receive 10 percent off any add-ons to your security
system that are requested before December 31st,2016.
We want to thank you for your continued business and we look forward to having you as part
of the WH Security team.Should you have any questions,please feel free to contact us at
(763)477-3664.
Sincerely,
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Wendy Youngren
Chief Operating Officer
WH Security,LLC
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ERMU and WH Leadership Team at Security Business Line Closing
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Pictured from left to right:
Mike O'Neill, Theresa Slominski, Steve Walstad, Troy Adams, Tim Sullivan, Wendy Youngren,
Jennie Nelson, Angie Pribyl and Ashley Raisanen.
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