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Home My WebLink About07-0848 ZEPLIN' S SECURITY GROUP, Plaintiff, V. ALARM CAPITAL ALLIANCE, Defendant. TO THE PROTHONOTARY: IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA NO: 01 -o0Za &U CIVIL ACTION -LAW Please issue a Writ of Summons against the above-named defendant at the following address: Alarm Capital Alliance 1400 Providence Road, Suite 3055 Media, PA 19062 Respectfully submitted, Mancke, Wagner By P.`Richard,XtmT; & McQuillan ITY #23103 2233 North Front Street Harrisburg, PA 17110 (717) 234-7051 Date: Attorney for Plaintiff n ? 91 -UP TM-1 N W 4Z N rnjP 'C7 Z Commonwealth of Pennsylvania County of Cumberland WRIT OF SUMMONS ZEPLIN'S SECURITY GROUP Plaintiff Vs. ALARM CAPITAL ALLIANCE 1400 PROVIDENCE ROAD SUITE 3055 MEDIA, PA 19062 Defendant Court of Common Pleas No 07-848 Civil Term in CivilAction-Law To ALARM CAPITAL ALLIANCE, You are hereby notified that ZEPLIN'S SECURITY GROUP the Plaintiff(s) has / have commenced an action in Civil Action-Law against you which you are required to defend or a default judgment may be entered agains? you. 'n (SEAL) Cuftis R. Irothtotary Date 02-13-07 By Attorney: Name: P. RICHARD WAGNER, ESQUIRE Address: 2233 NORTH FRONT STREET HARRISBURG, PA 17110 Attorney for: Plaintiff Telephone: (717) 234-7051 Supreme Court ID No. 23103 Deputy r•, ? SPP:DHM 439235.1 (25900.001 ) 4/4107 IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW ZEPLIN' S SECURITY GROUP, V. ALARM CAPITAL ALLIANCE, Plaintiff Defendant No. 07-848 Civil Term ENTRY OF APPEARANCE TO THE PROTHONOTARY: Please enter the appearance of Blakinger, Byler & Thomas, P.C. and Susan P. Peipher, Esquire on behalf of Defendant Alarm Capital Alliance in the above-captioned matter. ALI ?- Dated: BLAKINGER, B R & THOMAS, P. C. By. Susan P. Peipher, Es uire Attorney I.D. #87580 28 Penn Square Lancaster, PA 17603 (717) 299-1100 Attorneys for Defendant Alarm Capital Alliance SPP:DHM 439235.1 (25900.001) 414/07 CERTIFICATE OF SERVICE I HEREBY CERTIFY that I have this day served the foregoing Entry of Appearance upon the persons and in the manner indicated below. Service by first-class mail as follows: P. Richard Wagner, Esquire 2233 North Front Street Harrisburg, PA 17110 BLAKINGER, BYLER & THOMAS, P.C. Dated: 4c, 16By: Susan P. Peipher, Esquire Attorney I.D. #87580 28 Penn Square Lancaster, PA 17603 (717) 299-1100 Attorneys for Defendant Alarm Capital Alliance ` r? " ?" ? t ? ' C --°? ?i , r t- , -" ?? '^V .? ?'} J'' i.W _ ?? J ?` py ? y? w. t"4 1 w SPP:DHM 439245.1 (25900.001) 4/4/07 IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW ZEPLIN'S SECURITY GROUP, No. 07-848 Civil Term V. ALARM CAPITAL ALLIANCE, PRAECIPE TO FILE COMPLAINT TO THE PROTHONOTARY: Please enter a Rule upon Plaintiff to file a Complaint within twenty (20) days hereof or suffer the entry of a Judgment of Non Pros. Dated: qi n Plaintiff Defendant BLAKI GER, BYLER & THOMAS, P.C. By: Susan P. Peipher, Esquire Attorney I.D. #87580 28 Penn Square Lancaster, PA 17603 (717) 299-1100 Attorneys for Defendant Alarm Capital Alliance AND NOW, this S -`k- day of ?T2L , 2007, a Rule is hereby granted upon Plaintiff to file a Complaint herein within twenty (20) days after service hereof or suffer entry of Judgment of Non Pros. I PR THO Y SPP:DHM 439245.1 (25900.001 ) 4/4/07 CERTIFICATE OF SERVICE I HEREBY CERTIFY that I have this day served the foregoing Praecipe to File Complaint upon the persons and in the manner indicated below. Service by first-class mail as follows: P. Richard Wagner, Esquire 2233 North Front Street Harrisburg, PA 17110 Dated: BLAKINGER, BYLER & THOMAS, P.C. By: Susan P. Peipher, Esquir Attorney I.D. #87580 28 Penn Square Lancaster, PA 17603 (717) 299-1100 Attorneys for Defendant Alarm Capital Alliance ? r-? ? ? ; _ . . } 1 ?? ;_ ??. ? ?? . .-.:.- 1 "j y ?.? .. SPP:DHM 440149.1 (25900.001 ) 4/12/07 IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW ZEPLIN'S SECURITY GROUP, Plaintiff No. 07-848 Civil Term V. ALARM CAPITAL ALLIANCE, Defendant CERTIFICATE OF SERVICE I HEREBY CERTIFY that I have this day served the Rule to File Complaint upon the persons and in the manner indicated below. Service by first-class mail as follows: P. Richard Wagner, Esquire 2233 North Front Street Harrisburg, PA 17110 Dated: H I l`a Ion BLAKI GE,R BYL 7HOAL4 P.C. By: Susan . Peipher, Esquire Attorney I.D. #87580 28 Penn Square Lancaster, PA 17603 (717) 299-1100 Attorneys for Defendant Alarm Capital Alliance C'3 ? C _.? i -77 CX) f , ZEPLIN'S SECURITY GROUP, Plaintiff, V. ALARM CAPITAL ALLIANCE, Defendant. IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA NO. 07-848 CIVIL ACTION - LAW NOTICE You have been sued in court. If you wish to defend against the claims set forth in the following pages, you must take action within twenty (20) days after this Complaint and notice are served, by entering a written appearance personally or by attorney and filing in writing with the Court your defenses or objections to the claims set forth against you. You are warned that if you fail to do so the case may proceed without you and a judgment may be entered against you by the Court without further notice for any money claimed in the Complaint or for any other claim or relief requested by the Plaintiff. You may lose money or property or other rights important to you. YOU SHOULD TAKE THIS PAPER TO YOUR LAWYER AT ONCE. IF YOU DO NOT HAVE A LAWYER OR CANNOT AFFORD ONE, GO TO OR TELEPHONE THE OFFICE SET FORTH BELOW TO FIND OUT WHERE YOU CAN GET LEGAL HELP. CUMBERLAND COUNTY BAR ASSOCIATION 2 LIBERTY AVENUE Carlisle, PA 17013 (717) 249-3166 [ l NOTICIA Les han demandado a usted en la corte. Se usted guiere defenderse de estas demandas expuestas en las paginas siguientes, usted tiene viente (20) dias de plazo al partir de la fecha de la demanda y la notificacion. Usted debe presentar una apariencia escrita o en persona o por abogado y archhivar en la corte en forma escrita sus defensas o sus objeciones a las demandas en conra de su persona. Sea avisado qui si usted no soe defiende, la corte tomara mmedidas y purde entrar una orden contra usted sin previo aviso o notoficacion y pro cualquier queja o alivio que es pedido en la peticion de demanda. Usted puede perder dinero o sus propiedades o otros derechos importantes para usted. LLEVE ESTA DEMANDO A UN ABODAGO IMMEDIATEMENTE. SI NO TIENE ABOGADO 0 SI NO TIENE EL DINERO SUFICIENTE DE PAGAR TAL SERVICIO, VAYA EN PERSONA 0 LLAME FOR TELEFONO A LA OFICIAN CUYA DIRECCION SE ENCUENTRA ESCRITA ABAJO PARA AVERIGUAR DONDE SE PUEDE CONSGUIR ASISTENCIA LEGAL. CUMBERLAND COUNTY BAR ASSOCIATION 2 LIBERTY AVENUE Carlisle, PA 17013 (717) 249-3166 1 0 ZEPLIN'S SECURITY GROUP, INC., : IN THE COURT OF COMMON PLEAS : CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff, V. : NO: 07-848 Civil Term CIVIL ACTION -LAW ALARM CAPITAL ALLIANCE, Defendant. COMPLAINT AND NOW, comes the Plaintiff, Zeplin's Security Group, Inc., by and through its attorneys, Mancke, Wagner, Spreha & McQuillan, and files the following Complaint: 1. The Plaintiff, Zeplin's Security Group, Inc., is a Pennsylvania Corporation having as an address 2026 Market Street, P.O. Box 144, Camp Hill, Cumberland County, Pennsylvania. 2. The Defendant, Alarm Capital Alliance, LLC, is a Delaware Limited Liability company, having as an address, 1400 N. Providence Road, Suite 3055, Media, Pennsylvania. 3. The Plaintiff and Defendant entered into an Account Purchase and Sale Agreement, a copy of which is attached hereto, incorporated herein by reference, and marked as Exhibit A. 4. While Exhibit A contains a copy of the Agreement, which appears not to have been signed by Defendant, Plaintiff believes and therefore avers that there is an existing contract that has been properly signed by both parties. 5. At all times material hereto, the Plaintiff was engaged in the burglar and fire alarm business in the Central Pennsylvania Area. 6. Pursuant to the provisions of the Agreement, the Plaintiff sold unto the Defendant certain accounts that were maintained by the Plaintiff as a result of the nature of the business in which he was engaged. 7. Pursuant the provisions of the Agreement, the Defendant was to pay unto Plaintiff the sum of $1,632,087.66. 8. Plaintiff acknowledges having received ninety (90) percent of the aforementioned amount, or $1,327,358.79, leaving the amount of $163,208.77 due and owing on the Agreement. 9. In addition for the purchase of accounts, the Defendant owed the Plaintiff repair contracts in the amount of $7,884.51, replacement contracts in the amount of $5,541.00, and monies from cancelled accounts in the amount of $36,512.86. 10. Defendant was entitled to a credit because of the value of the accounts between the date of the Agreement and the current value. 11. As a result of the above, pursuant to the provisions of the Agreement, Plaintiff is owed by the Defendant the sum of $163,208,77, plus $12,792.91, for a total of $176,001.68. 12. Plaintiff has made demand for the same and Defendant has refused to pay. -2- WHEREFORE, Plaintiff requests the Court to award Plaintiff the sum of $176,001.68 pursuant to the provisions of the Agreement, and interest thereon. Respectfully submitted, Mancke, Water, Spreha & McQuillan i P. Riclxr er, Esquire I.D.,,#231 22 rih Front Street Harrisburg, PA 17110 (717) 234-7051 Attorneys for Plaintiff Date: Vf 0 n-I -3- VERIFICATION I verify that the statements made in the foregoing document are true and correct. I understand that false statements herein are made subject to the penalties of 18 Pa.C.S.A. Section 4904, relating to unsworn falsification to authorities. ?J DATE: rhy/d7 ACCOUNT PURCHASE AND SALE AGREEMENT THIS AGREEMENT (the "Agreement") is made as of this 5th day of December, 2005, by and between Zeplin Security Group, Inc., a Pennsylvania corporation ("Seller"), Fred W. Zeplin ("Shareholder") and Alarm Capital Alliance II, L.L.C., a Delaware limited liability company ("Purchaser"). RECITALS: A. Seller is engaged in the burglar and fire alarm business in Camp Hill, PA and the surrounding area (the "Business"); and B. Shareholder is the majority shareholder of Seller and is in possession of detailed, non-public information regarding Seller's customers and their alarm systems; C. Seller desires to sell to Purchaser, and Purchaser desires to purchase from Seller, certain of the customer accounts owned by the Business. D. All of Seller's customer accounts are subject to a security interest in favor of SAFE, Inc. ("SAFE") to secure indebtedness of Seller to SAFE in an amount greater than the amounts to be paid by Purchaser under Section 1.3 on the Closing Date. NOW, THEREFORE, in consideration of the mutual agreements set forth herein, and for other good and valuable consideration, the parties hereto agree as follows: 1. Accounts to be Sold and Purchase Price. 1.1 Accounts. Seller agrees to sell, assign and deliver to Purchaser, and Purchaser agrees to purchase from Seller, free and clear of all restrictions and encumbrances, the customer accounts (including customer contracts, Amendment Contracts and customer billing and payment records, account and system information (including system premise location ("Account Location")), equipment leased to customers and all other records necessary to provide electronic security service to such customers) listed on Exhibits A and B to this Agreement (collectively, the "Accounts"). The Accounts listed on Exhibit A shall be referred to as the "Current Account" and the Accounts listed on Exhibit B shall be referred to as the "December 2006 Accounts". 1.2 Amount of Purchase Price. (a) The total purchase price ("Current Purchase Price") to be paid by Purchaser to SAFE on behalf of Seller for the Current Accounts shall be the aggregate Net Monthly Recurring Revenue (as defined below) associated with the Current Accounts as of the Closing Date multiplied by 36 (the "Purchase Price Multiple"), less the aggregate Deferred Service Revenue associated with the Current Accounts as of the Closing Date. "Deferred Service Revenue" means amounts billed by Seller on account of Net Monthly Recurring Revenue on or prior to the Closing Date for all services to be rendered on or after the Closing Date. The Current Purchase Price determined under this Section 1.2(a) shall be adjusted as provided in Section 1.4 below. The amount of the adjustments pursuant to Section 1.4 will not be limited to the amount of the Holdback (as defined below) and if the adjustment should exceed the amount of the Holdback, Seller and Shareholder shall, jointly and severally, pay such excess to Purchaser upon receipt of notice of the amount of such excess. (b) The total purchase price ("December 2006 Purchase Price") to be paid by Purchaser to Seller for the December 2006 Accounts shall be the aggregate Net Monthly Recurring Revenue (as defined below) associated with the December 2006 Accounts which are still active (defined below) as of the Adjustment Date (defined below) multiplied by the Purchase Price Multiple, less the aggregate Deferred Service Revenue associated with such December 2006 Accounts as of the Closing Date. 1.3 Payments. (a) On the date of this Agreement, Purchaser shall pay to SAFE on behalf of Seller in order to obtain termination of SAFE's security interest in the Accounts $1,327,358.79 on account of the Current Purchase Price determined in accordance with Section 1.2(a) using the amounts of Net Monthly Recurring Revenue and Deferred Service Revenue set forth on Exhibit A to this Agreement, by wire transfer. The balance of the Current Purchase Price ("Holdback"), being 10 % thereof (the "Holdback Percentage"), shall be paid 13 months after the Closing Date ("Holdback Payment Date") subject to adjustment and the conditions set forth in Section 1.4 and 9.1.1 below. All amounts included in the Net Monthly Recurring Revenue set forth on Exhibit A are attributable to contracts ("Current Account Contracts") which Seller represents are held by SAFE, Seller's lender, as security for amounts due to SAFE. SAFE has agreed to send any Current Account Contracts it holds to Purchaser promptly after the Closing Date, but has not confirmed that all or any of the Current Account Contracts are in its possession. Upon receipt of contracts from SAFE, Purchaser shall review them to determine if they are Customer Contracts and to determine if any of the represented Current Account Contracts are not received. Seller shall have 90 days to replace any Current Account Contracts which are not Customer Contracts or are not received. To the extent that a contract is not a Customer Contract, or the contracts received do not include all of the Current Account Contracts listed on Exhibit A and are not replaced within such 90 day period, the Current Purchase Price shall be automatically reduced by the product of the Net Monthly Recurring Revenue shown on Exhibit A attributable to all such Accounts and the Purchase Price Multiple ("SAFE Reduction"). Purchaser shall notify Seller and Shareholder of the SAFE Reduction and they shall, jointly and severally, immediately repay to Purchaser 90% of the SAFE Reduction and the Holdback shall be automatically reduced by 10% of the SAFE Reduction. Any Account determined not to be represented by a Current Account Contract or, if so, which contract is determined not to be a Customer Contract and therefore included in the calculation of the SAFE Reduction shall be re-assigned to Seller promptly after either replacement or payment by Seller, as provided above. (b) On the Holdback Payment Date, Purchaser shall pay Seller the December 2006 Purchase Price as determined under Section 1.2(b), provided however, that if (i) the Purchase Price Adjustment under Section 1.4 results in a decrease in the Current Purchase Price in an amount in excess of the Holdback, and/or (ii) Seller and Shareholder are obligated to repay any portion of the SAFE Reduction to Purchaser and by the Adjustment Date less than the entire portion repayable has been paid, the December 2006 Purchase Price otherwise payable shall be reduced by such amounts. If such reduction is not sufficient to repay Purchaser in full for such amounts, Seller and 2 Shareholder shall continue to be liable for the deficiency. All amounts included in the Net Monthly Recurring Revenue set forth on Exhibit B are attributable to December 2006 Account Contracts which Seller represents are held by SAFE as security for amounts due to SAFE. SAFE has agreed to send any December 2006 Account Contracts it holds to Purchaser promptly after the Closing Date, but has not confirmed that all or any of the December 2006 Account Contracts are in its possession. Upon receipt of contracts from SAFE, Purchaser shall review them to determine if they are Customer Contracts and to determine if any of the represented December 2006 Account Contracts are not received. Any December 2006 Account as to which a December 2006 Account Contract is not received or, if received, is not a Customer Contract, shall not be considered to be active on the Adjustment Date. 1.4 Revenue Guarantee Adjustment. (a) The Current Purchase Price shall be reduced by the product of the Purchase Price Multiple times the amount by which Net Monthly Recurring Revenue from active Current Accounts and Replacement Accounts (defined below) purchased from Seller as of the date one year after the Closing Date ("Adjustment Date") is less than the Net Monthly Recurring Revenue associated with the Current Accounts set forth on Exhibit A and increased or decreased, as the case may be, by the sum of (i) any amount then owed to Purchaser by Seller, or to Seller by Purchaser, as reflected in Seller's Dealer Account and (ii) the amount by which the Annual Revenue is less or more than the Expected Annual Revenue. "Annual Revenue" means the sum of the amounts of Net Monthly Recurring Revenue billable to active Current Accounts on the last day of each calendar month between the Closing Date and the Adjustment Date. "Expected Annual Revenue" means the aggregate Net Monthly Recurring Revenue shown on Exhibit A multiplied by 12. A Current Account or Replacement Account shall not be considered to be "active" ("Inactive Account") if (i) it is no longer being provided services by Purchaser for which Net Monthly Recurring Revenue is billable, (ii) it has given notice of cancellation and been cancelled, (iii) any invoice issued to it by Purchaser or Seller is more than 90 days overdue and been cancelled, or (iv) such Account's or Replacement Account's alarm system does not annunciate at Purchaser's designated central station. An Account shall not be considered to be an Inactive Account if it cancels due to billing errors or poor service by Purchaser's designated central station or due to a rate increase. (b) "Net Monthly Recurring Revenue" means the total recurring regular monthly amounts billed to Seller's customers with installed systems as of a given date under Customer Contracts (billings made other than on a monthly basis shall be adjusted to the equivalent monthly amount) for electrical protection, monitoring, repair, closed circuit television, radio or cell phone back-up services, access control services, fire and police panel charges, equipment lease rental and fire testing, less all monthly charges incurred by Purchaser after the Closing Date (charges billed to Purchaser other than on a monthly basis shall be adjusted to the equivalent monthly amount) (collectively, "Charges") for dedicated signal circuit telephone lines used to transmit alarm signals antenna rental charges for radio frequency alarm systems, answering services, sales taxes, false alarm charges not rebillable to customers, city franchise and police panel fees and charges paid by Purchaser for receiving alarms applicable to such accounts; provided, however, that (i) pending cancellations known by Seller and (ii) customers which have outstanding balances due to Seller or Purchaser which are more than 90 days after invoice as of the date as of which the determination is made, shall be excluded from Net Monthly Recurring Revenue. For purposes of this Section, 3 Charges shall be determined (i) under contracts in existence at the Closing Date and (ii) from invoices to pay Charges received by Purchaser or Seller, as the case may be, prior to the Adjustment Date for the monthly period (or greater period including the monthly period) in which the Closing Date occurs. (c) "Customer Contracts" means valid, written contracts calling for recurring payments for alarm system leasing, monitoring or repair or other services, duly executed by all purported parties thereto (which, for residential customers shall mean that at least one of the owners or lessees of the residence has signed), and having an original term of at least one year, and providing that unless either party shall give the other written notice of intent to terminate, the agreement shall renew for an additional term of at least one year, and which will not terminate, give rise to a right to terminate or otherwise be at all affected by the sale of Accounts contemplated by this Agreement, containing legally compliant notices of and forms for rescission rights (for residential customers) and clauses limiting the liability of the alarm company or companies which installed and/or monitor said alarm systems or equipment which are customary in the industry and which are valid and enforceable in the jurisdiction whose law governs said contracts. (d) Purchaser will report to Seller monthly between the Closing Date and the Adjustment Date any Accounts or Replacement Accounts which become Inactive Accounts and will provide Seller with a report ("Post Closing Report") detailing all Inactive Accounts and Replacement Accounts since the Closing Date. Inactive Accounts shall be returned to Seller promptly after being canceled by Purchaser. Seller will have the right to reduce or avoid the Purchase Price adjustment in subsection (a) above by replacing the associated Net Monthly Recurring Revenue for Inactive Accounts. Any new customer Account offered in replacement of Inactive Accounts ("Replacement Accounts") shall be subject to Purchaser's then applicable standards for acquisition of accounts, as determined by Purchaser. In addition, all representations and warranties made by Seller and/or Shareholder with respect to the Accounts shall be deemed to have been made with respect to each Replacement Account on and as of the date of transfer of such Replacement Account to Purchaser. All Replacement Accounts will be subject to the same revenue guarantee and Purchase Price adjustment as applies to the initial purchase of Current Accounts under subsection (a) above until the Adjustment Date. Seller shall, within 10 days of receipt of a report from Purchaser for any period after the Adjustment Date showing Replacement Accounts still under guarantee which have become Inactive Accounts either deliver to Purchaser Replacement Accounts or pay Purchaser the product of the Net Monthly Recurring Revenue for all non-replaced Inactive Accounts times the Purchase Price Multiple. Replacement Accounts shall be transferred to Purchaser by delivery of account information required by Purchaser, the Customer Contracts in effect with the customer and releases of any liens or encumbrances (or satisfactory payoff letters from lien holders) necessary to transfer the Replacement Accounts free and clear of any liens or encumbrances. (e) As a condition of receiving payment of the Holdback, Seller shall, on the Holdback Payment Date, deliver to Purchaser a signed Acceptance and Confirming Bill of Sale in form provided by Purchaser accepting the Post Closing Report and confirming and ratifying the prior transfer of all Replacement Accounts and shall also deliver any release necessary to assure that Purchaser has received title to the Replacement Accounts free and clear of all liens and encumbrances. Neither acceptance of delivery of documents with respect to Replacement Accounts 4 on the date of transfer or on the Holdback Payment Date, nor payment of the Holdback, constitutes a waiver by Purchaser of Seller's or Shareholder's obligations under representations and warranties with respect to such Replacement Accounts or, specifically, the obligation to transfer them free and clear of all liens and encumbrances. 2. Assumption of Liabilities. Purchaser shall assume no liabilities or obligations of Seller other than obligations arising or to be performed on or after the Closing Date under Customer Contracts included in the Accounts and Replacement Accounts being sold under this Agreement ("Assumed Contracts"). 3. Closing. The closing of the purchase and sale of the Accounts provided for in this Agreement shall take place at Purchaser's offices in Media, PA on the date hereof (the "Closing Date") 4. Representations and Warranties of Seller and Shareholder. In order to induce Purchaser to consummate the transactions contemplated herein, Seller and Shareholder hereby, jointly and severally represent and warrant the following to Purchaser: 4.1 Incorporation, Powers and Qualification. Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of Pennsylvania and is not required to be qualified to do business in any other state. Seller has all requisite power to execute, deliver and perform this Agreement and to own the Accounts and to carry on its business as now being conducted. Seller has no subsidiaries. Seller's business is not the sale of merchandise from stock. 4.2 Authority. The execution and delivery of this Agreement by Seller and Shareholder and the performance by Seller of its obligations hereunder have been approved by all necessary corporate action and no other proceedings on the part of Seller or its shareholders will be necessary to effect or approve the transactions contemplated by this Agreement. No filing, notice or recordation with, or consent or approval from any governmental agency or any third party is required in order to, or as a result of, entering into this Agreement or in order to consummate, or as a result of the consummation of, this Agreement. 4.3 No Conflict. Neither the execution nor the delivery of this Agreement, nor the consummation of the transactions covered hereby, nor the fulfillment of the terms hereof, nor compliance with the terms and provisions hereof, will conflict with, result in a breach of the terms, conditions or provisions of, constitute a default under or create any liability under any agreement or instrument to which Seller or Shareholder is a party or by which either of them is bound. 4.4 Tax Matters. All federal, state, local and foreign tax returns and tax reports required to be filed at any time with respect to the business and accounts of Seller have been filed, all of the foregoing are true, correct and complete, and all amounts shown as owing thereon have been paid. 4.5 Ownership of Property. (a) Seller has good and marketable title to the Accounts free and clear of all restrictions or encumbrances of any nature whatsoever, except those 5 liens to be satisfied at Closing. The Business of Seller has been conducted under the same name and at the same location, since 1976. Seller has not acquired any of the Accounts of another business since 1993. (b) Each Assumed Contract is a Customer Contract and is valid and in effect and, to the best of Seller's knowledge, no other party thereto is in default. Seller is not in default under any such Assumed Contract, has received no notice of default thereunder, and no event has occurred or is expected to occur which (after notice and lapse of time or both) would become a breach or default under, or otherwise permit modification, cancellation, acceleration or termination of, any such Assumed Contract, Seller has delivered to Purchaser a true, complete and correct copy of each Assumed Contract to which Seller is a party and any amendments thereto. 4.6 Litigation; Liabilities. Neither Seller nor Shareholder is a party to or threatened with, any litigation or governmental or other proceeding, nor does there exist any basis for any such litigation or proceeding. Neither Seller nor Shareholder is aware of any litigation or governmental or other proceeding pending or threatened which may affect the validity or enforceability of this Agreement or the ancillary agreements entered into pursuant hereto. 4.7 Alarm Systems. (a) All of the alarm systems associated with the Accounts designed, installed, partially installed, or contracted for installation by Seller prior to the Closing Date, and each supervisory alarm panel associated with the Accounts owned or operated by Seller as of the Closing Date has been, and will, as of the Closing Date, (where applicable) be in good working order and condition, ordinary wear and tear, subscriber negligence and subscriber non-use excepted, and (where applicable) will have been designed, installed and maintained, and be operating and operated in accordance with good and workmanlike practices prevailing in the industry in the locality where the installation is located at the time of design, installation or repair, and with respect to those alarm systems and panels required by law or by agreement with the customer, substantially in accordance with the specifications or standards of the Insurance Services Office, Underwriters Laboratories, Factory Mutual Insurance Company, local authorities and applicable telephone operating company requirements. All alarm systems associated with the Accounts designed, installed or partially installed prior to the Closing Date will conform in all material respects to the contracts pursuant to which they were designed or installed and no design, installation or partial installation will have been made by the Seller which was in violation of any applicable law, code or regulation when designed or installed. (b) Neither Seller nor Shareholder is aware of any planned changes in area codes in any areas in which Seller has customers. 4.8 Compliance. Seller is in compliance with, and has operated its business in compliance with, all federal and state laws (including alarm company licensing or permit laws and environmental laws), ordinances, regulations and orders, applicable to it. Seller is in compliance with all employment and employee benefit laws applicable to it. Seller or Shareholder is licensed under applicable alarm company licensing laws in all states in which such licensing is required. 4.9 Customer Lists. All of the Accounts listed on Exhibits A and B are parties to Customer Contracts with Seller. Exhibits A and B are true and correct lists of the Accounts being 6 sold by Seller to Purchaser on the Closing Date and all of the Accounts are being billed for recurring services rendered by or on behalf of Seller, showing as to each: name, billing address, recurring rate and billing cycle. There has not been a general increase in Seller's customer rates since 2003, but there have been isolated rate increases and increases due to increased sesrvices. The Net Monthly Recurring Revenue associated with each Account is as shown on the Customer Contract for such Account subject to rate increases permitted under such Customer Contract that have been imposed after its date and the aggregate Net Monthly Recurring Revenue and Deferred Service Revenue for all the Accounts being sold on the Closing Date are correctly stated on Exhibits A and B. 4.10 Customer Claims; Insurance. Seller maintains in effect insurance covering its Accounts and business and any liabilities relating thereto in amounts customarily carried by persons or organizations conducting similar businesses. Seller's errors and omissions insurance policy is written on an occurrence basis. There have been no material customer claims against Seller during the past five years and there is no basis for any such claim. 4.11 Shareholders. Shareholder and George Lance are all the stockholders of Seller's capital stock. 4.12 Employee Benefit Plans; Wages and Benefits of Employees. Seller has no employee benefit plans (as defined in Section 3 (3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")), multi-employer plans (as defined in section 401 (a) (3) of ERISA), or compensation programs and employment arrangements which are maintained, or contributed to, by Seller for the employees of the Business (collectively, "Employee Benefit Plans") and has never maintained any Employee Benefit Plans, except for IRA and usual employee health and insurance plans. 4.13 Labor and Employee Relations. Seller is not a party to any collective bargaining agreement nor are its employees members of a collective bargaining unit or union, nor has there been any recent unionization activity, and Seller has complied with all laws relating to the employment of labor, and the payment of social security, withholding and similar taxes, and is not liable for any arrears of wages or any taxes or penalties for failure to comply with such laws, where, in any such case, the violation of which or liability for which would have a material adverse effect on the Accounts. 4.14. Brokers. Seller has not engaged any broker or other third party which might claim a commission with respect to the purchase and sale contemplated by this Agreement. 4.15 Material Statements. Seller and Shareholder have provided Purchaser with access to various records relating to the Accounts prior to the date of this Agreement. No representation or warranty, nor any record or document delivered to Purchaser by Seller or Shareholder pursuant hereto or as to which Seller or Shareholder has provided Purchaser access prior to the date of this Agreement, contains or did contain an untrue statement of material fact or omits or did omit to state a material fact necessary to make any statement of fact contained therein not misleading. 7 5. Representations and Warranties of Purchaser. Purchaser hereby represents and warrants the following to Seller: 5.1 Organization and Good Standing. Purchaser is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware. Purchaser has all requisite power to carry on its business as it is now conducted and is entitled to own, lease or operate the properties and Accounts it now owns, leases or operates. 5.2 Authority. The execution and delivery of this Agreement by Purchaser and the performance by Purchaser of its obligations hereunder have been approved by all necessary corporate action and no further proceedings on the part of Purchaser will be necessary to effect or approve the transactions contemplated by this Agreement. 5.3 No Conflict. Neither the execution nor the delivery of this Agreement, nor the consummation of the transactions covered hereby, nor the fulfillment of the terms hereof, nor compliance with the terms and provisions hereof, will conflict with, or result in a breach of the terms, conditions or provisions of, or constitute a default under, any agreement or instrument to which Purchaser is a party or by which it is bound. 6. Closing. At the Closing the Purchaser shall make the payments called for above and Seller and Shareholder shall deliver the items called for above and the following, executed by all parties thereto: (a) Non-Solicitation Agreement in a form acceptable to Purchaser signed by Seller, Shareholder and George Lance; (b) All Assumed Contracts, customer orders, a current aged accounts receivable report and all other customer records associated with the Accounts; (c) A Closing Bill of Sale in form acceptable to Purchaser for the Accounts being purchased hereunder; (d) A banking authorization agreement in a form acceptable to Purchaser; (e) A telephone line transfer agreement in a form acceptable to Purchaser; (f) Releases, or payoff letters containing commitments to provide releases, of all liens or encumbrances on the Accounts, in form and substance satisfactory to Purchaser; (g) Confirmation acceptable to Purchaser that Seller's counsel has wired $52,641.21 to SAFE to reduce Seller's indebtedness to SAFE secured by the Accounts, on or prior to the Closing Date. (h) Such other documents as Purchaser reasonably requires to consurnmate the transactions contemplated in this Agreement. 8 7. Post Closing. 7.1 Warranties and Representations. The respective representations and warranties of Seller, Shareholder and Purchaser contained herein shall survive the Closing Date for a 24-month period. 7.2 State Filings. Seller shall, to the extent not completed prior to the Closing Date, file, or cooperate with Purchaser in filing, any notices required under applicable state law relating to the sale of Seller's Accounts and Replacement Accounts and shall send a copy of any response received from the state to Purchaser upon receipt. 7.3 Transfer of Monitoring; Transfer of Billing. (a) Seller shall, at its sole expense cause all alarm systems associated with the Accounts and Replacement Accounts to annunciate at Purchaser's designated central station using Purchaser's dedicated telephone lines within 45 days after the Closing Date. Seller shall not be required to pay for any services provided by Purchaser's designated central station in connection with integration of the transfer of Accounts and Replacement Accounts. Until the transfer of monitoring takes place, Seller shall cooperate with Purchaser in its dealings with Seller's central station and, if requested by Purchaser, shall communicate with Seller's central station on behalf of Purchaser. Seller has approximately 200 wholesale monitoring customers (customers of another dealer for which Seller provides monitoring services) whose systems are programmed to use the same telephone line as the Accounts, resulting in those accounts also being transferred to Purchaser's designated central station for monitoring services. Those accounts will not be assigned to Purchaser by Seller but shall remain accounts of Seller. However, as partial consideration for this transaction, Purchaser will arrange to have those accounts monitored at no cost to Seller during the fifteen month period following the Closing Date. (b) Seller shall continue to bill and collect Net Monthly Recurring Revenue for all billing periods through December 1, 2005 (the "Billing Transfer Date"). Seller shall be entitled to keep all such amounts collected. In addition, Seller shall bill for the billing period December 1, 2005 to January 1, 2006 but shall specify that payments be sent to Purchaser's designated address using billing and mailing materials approved by Purchaser before mailing and shall otherwise cooperate with Purchaser in connection with such billing. Seller shall promptly pay over to Purchaser any amounts received for billing periods on and after December 1, 2005. Purchaser shall bill and collect for all billing periods on and after January 1, 2006. 7.4 Operation of Purchaser's Business. On and after the Closing Date, and in order to allow for the best retention of Accounts by allowing Seller to better preserve its ongoing relationship with them, Purchaser will have the right to undertake any and all communications with Accounts in Seller's name. Such communications include, but are not limited to making and answering telephone calls, invoicing for services, providing information and notices to Accounts, seeking to enter into renewal, replacement, extension or other amendment agreements for the same services as are called for in the Assumed Accounts ("Amendment Contracts"). All such communications and resulting revenues, agreements and obligations shall be the responsibility of and property of Purchaser except to the extent otherwise agreed between Seller and Purchaser. Seller has provided Purchaser with a specimen signature of an executive officer of Seller which Purchaser may affix to communications to be sent to Account customers, provided each 9 1 communication to which it is to be affixed has been approved by Seller prior to use. The preceding sentence shall apply only to communications onto which the specimen signature is to be affixed. 7.5 Precautionary UCC Filing. In order to document the purchase of Accounts pursuant to this Agreement, Purchaser is authorized to snake a precautionary Financing Statement filing in the filing office applicable to security interests applicable to Seller under the Uniform Commercial Code indicating Purchaser's purchase of the Accounts, Replacement Accounts, contracts included in the Accounts and Replacement Accounts and related rights, using substantially the language in Exhibit C attached to this Agreement. 7.6 Right of First Refusal. For a period of 5 years after the Closing Date, or until an earlier sale of substantially all of Purchaser's business or assets, if Seller receives a bona fide offer from a third party to purchase any or all of the alarm accounts of Seller, Seller will first make a written offer to Purchaser offering to sell those accounts to Purchaser on the same terms and conditions contained in the third-party offer; provided, that Purchaser may pay the reasonable cash equivalent of any non-cash consideration. Purchaser will then have 30 days to notify Seller of its election to either accept or reject such offer. In the event Purchaser accepts such offer, Seller and Purchaser shall consummate the transaction within the time limits specified in the offer or, if none, within 90 days after acceptance of the offer by Purchaser. In the event Purchaser rejects the offer, Seller will then have 150 days following Purchaser's rejection in which to consummate the transaction with the third party. If that transaction is not consummated within the 150-day period, Seller will again become subject to the restrictions contained in this subsection. The foregoing notwithstanding, Seller shall not have the right to sell to any third party any contract calling for Net Monthly Recurring Revenue for repair services ("Net Monthly Repair Revenue") from an Account or Replacement Account previously sold to ACA for so long as ACA owns such Account. 7.7 Dealer Account and Reporting. Purchaser shall maintain and report to Seller monthly after the Closing Date an account ("Dealer Account") which shall be debited or credited, as the case may be, for amounts collected by one party but belonging to the other, approved credits granted by Seller to customers as a sales incentive; payments for services provided by Seller which require payment and any other items owed by one party to the other in the conduct of business after the Closing Date. Seller shall pay Purchaser, or Purchaser shall pay Seller, as the case may be, within 10 days of delivery of the Dealer Account report, the net amount shown as due. 8. Repair Services and Post-Closing Payment for Net Monthly Repair Revenue. 8.1 Repair Services. Seller will provide repair service for all Accounts and Replacement Accounts for a period of five years following transfer to Purchaser under this Agreement, and thereafter for as long as agreed by the parties. After the five-year period, either party may terminate Seller's repair service obligations by giving the other 60 days'. notice of termination. For Accounts and Replacement Accounts paying Net Monthly Repair Revenue to Purchaser, Seller shall bill Purchaser for time spent at the customer location at $55 per hour, plus parts installed, at cost. For Accounts and Replacement Accounts which are not paying Net Monthly Repair Revenue, Seller may bill customers for repair services on a time and materials basis at Seller's normal rates. Repair services shall be provided on a timely, courteous and technically proficient manner. Repair services shall be provided in a good and workmanlike 10 manner and in strict accordance with all regulations, customs, laws and ordinances applicable to the work to be performed. Seller shall, before commencing any such work, have in Seller's possession, all required licenses, permits and other goverm-nent authorizations and liability insurance in amounts reasonably acceptable to Purchaser naming Purchaser as an additional insured (certificates evidencing coverage shall be supplied to Purchaser upon request). Seller shall pay when due for all labor and materials used in providing the repair services called for in this Agreement and shall indemnify, defend and hold Purchaser and the owner of each property at which such services are performed harmless from any lien or claim arising out of the failure to pay when due for labor or materials. Seller shall be solely responsible for the quality of the services performed and shall indemnify, defend and hold Purchaser harmless from and against all claims, costs or damages arising out of or relating to the services provided by Seller. Purchaser shall include Seller as an additional insured on its liability policy for as long as Seller is providing repair services under this Section. 8.2 Termination of Repair Services. Purchaser shall have the right to terminate Seller's right to payment and obligation to provide repair services to any one or more Accounts or Replacement Accounts if, in Purchaser's reasonable determination, Seller is not providing repair services in the manner called for in Section 8.1. Termination shall be effective upon Purchaser giving notice of such termination to Seller. 8.3 Additional Services. For so long as Purchaser owns any particular Account or Replacement Account, Seller shall be free to seek to sell to that Account or Replacement Account additional equipment and services. Seller shall inform Purchaser of any sales to Accounts or Replacement Account resulting in new contracts for additional Net Monthly Recurring Revenue. Purchaser shall have the right to purchase contracts which call for Net Monthly Recurring Revenue on the same terms as apply to the purchase of Accounts in this Agreement and Seller shall cooperate with Purchaser in consummating such purchases within 30 days of notice from Purchaser of its intention to do so. 8.4 Option to Purchase Net Monthly Repair Revenue. For a period of 5 years after the Closing Date, Purchaser shall have the option at any time and from time to time to purchase from Seller any or all Customer Contracts for repair services providing for Net Monthly Repair Revenue with any customer of Seller which is then also a customer of Purchaser for which it is already paying Purchaser Net Monthly Recurring Revenue ("Option Customer"), free and clear of all liens and encumbrances. Purchaser may request, from time to time, and Seller shall provide Purchaser with, a list of all Customer Contracts to which Seller is a party with Option Customers. Such list shall contain the names, addresses and amount of Net Monthly Repair Revenue being paid by such Option Customers as of the date the list is prepared in response to Purchaser's request. By delivering such list, Seller and Shareholder shall be deemed to have certified that it is true, correct and complete as of the date on which it is sent to Purchaser. The purchase price shall be equal to 25 times the Net Monthly Repair Revenue associated with those Accounts and/or Replacement Accounts less any applicable Deferred Service Revenue. Seller shall be entitled to collect and keep any amounts billed prior to the transfer date. Purchaser shall exercise this option by giving no less than 20 days' notice to that effect to Seller. The notice shall state the date, time and place at which such closing shall take place. At the closing for such purchase and sale, Seller shall execute and deliver to Purchaser a new Non-Solicitation Agreement and Bill of Sale substantially in the forms 11 of the Non-Solicitation Agreement and Bill of Sale delivered on the date of this Agreement covering such Customer Contracts. 8.5 Seller hereby grants to Purchaser a security interest in all of Seller's Customer Contracts with Option Customers, including any contract rights, whether now owned or hereafter acquired, to secure Seller's obligations under Section 8.4 of this Agreement. Seller authorizes Purchaser to file any financing statements, amendments, renewals, continuations or assignments necessary to perfect the security interest granted herein. To the extent necessary, Seller will cooperate with Purchaser in snaking any such filing. Seller acknowledges that it has received value for the obligations set forth in Section 8.4 of this Agreement and for this grant of a security interest. 8.6 Amendment Contracts and Account Location Vacancies. From time to time, Purchaser may request that Seller contact Accounts for the purpose of entering into Amendment Contracts or that Seller contact a new occupant of an Account Location which has become vacant for the purpose of entering into a Customer Contract. Seller shall promptly after receipt of such a request, make such contact and attempt to enter into such a contract. Seller shall be paid $250 for each contract entered into with a new occupant of an Account Location after the Adjustment Date. Any such contract to be entered into shall be on a form acceptable to or provided by Purchaser and shall, promptly after expiration of any applicable rescission period, be forwarded to Purchaser. All such contracts shall be the property of Purchaser upon execution. 9. Indemnification 9.1 Indemnification by Seller and Shareholder. 9.1.1 Claims. Seller and Shareholder hereby, jointly and severally, agree to indemnify and defend Purchaser against and to hold Purchaser harmless from any and all damages, losses, liabilities, costs and expenses, including, without limitation, reasonable attorneys' fees (collectively "Damages") incurred or suffered by Purchaser, arising out of or related to, or due to any claim asserted against Purchaser arising out of or related to: (a) any misrepresentation or breach of any warranty, covenant or agreement made or to be performed by Seller or Shareholder in or pursuant to this Agreement or any document or agreement delivered pursuant to this Agreement or (b) the operation of Seller's business prior to the Closing Date or (c) the provision of materials or services to Accounts or Replacement Accounts on or after the Closing Date by Seller or (d) any obligations or liabilities of Seller other than liabilities expressly assumed by Purchaser under this Agreement. Payments otherwise due under Section 1.3 above may be withheld in reasonable amounts pending resolution of any claims brought against Purchaser as to which this indemnity is applicable. 9.1.2 Notice. Purchaser agrees to give prompt notice to Seller and Shareholder of the assertion of any claim or the commencement of any suit, action or proceeding, in respect of which indemnity may be sought hereunder. Seller and/or Shareholder may, in its or his sole discretion, assume the, defense of any such claim, suit, action or proceeding at its or his own expense and may dispose of any such claim, suit, action or proceeding in its or his sole discretion 12 without any liability or expense to Purchaser. In any event, Purchaser shall have the right to participate in or with respect to any such claim, suit, action or proceeding with counsel of its own choice and at its own expense. 9.1.3 Shareholder Limit. Any claim under this Section 9.1 against Shareholder must be made on or before the date two years after the date of this Agreement. 9.2 Indemnification by Purchaser. 9.2.1 Claims. Purchaser hereby agrees to indemnify Seller and Shareholder against and to hold Seller and Shareholder harmless from any and all damages in connection with any claim, action, suit or proceeding incurred or suffered by Seller or Shareholder arising out of or related to (a) any misrepresentation or breach of any warranty, covenant or agreement made or to be performed by Purchaser in or pursuant to this Agreement or (b) the operation of the Accounts or Replacement Accounts by Purchaser from and after the Closing Date, or (c) the obligations and liabilities of Seller expressly assumed by Purchaser under this Agreement. 9.2.2 Notice. Seller and Shareholder agree to give prompt notice to Purchaser of the assertion of any claim, or the commencement of any suit, action or proceeding in respect of which indemnity may be sought hereunder. Purchaser may, in its sole discretion, assume the defense of any such claim, suit, action or proceeding at its own expense and may dispose of any such claim, suit, action or proceeding, it its sole discretion without any liability or expense to Seller or Shareholder. In any event, Seller and Shareholder shall have the right to participate in or with respect to any such claim, suit, action or proceeding with counsel of its or his own choosing and at its or his own expense. 10. Miscellaneous. 10.1 Notices. All notices and other communications hereunder shall be in writing and shall be deemed given when sent by overnight courier or by registered or certified mail, deposited in the United States mail, postage prepaid, return receipt requested, to the appropriate party at its or his address below or at such other address for such party (as shall be specified by written notice): If to Seller or Shareholder, at: Mr. Fred Zeplin 2026 Market Street Camp Hill, PA 17011 If to Purchaser, at: Ms. Amy Kothari Alarm Capital Alliance II, LLC 1400 North Providence Road Building 2, Suite 3055 Media, PA 19063 10.2 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania. 13 1 . I CERTIFICATE OF SERVICE • . I 1 I, Debra K. Spinner, secretary in the law firm of Mancke, Wagner & Spreha, do hereby certify that I am this day serving a copy of the foregoing document to the following persons and in the manner indicated below, which service satisfies the requirements of the Pennsylvania Rules of Civil Procedure, by depositing the same in the United States Mail, Harrisburg, Pennsylvania, with first class postage, prepaid, and addressed as follows: Susan P. Peipher, Esquire 28 Penn Square Lancaster, PA 17603 By 'LS - - fia?W? i Debra K. Spinner, ecretary Mancke, Wagner, Spreha & McQuillan 2233 North Front Street Harrisburg, PA 17110 P. Richard Wagner, Esquire Attorney for Plaintiff Date: v15 C-1` t?' O ? n i n >' r n tV h.7 SPP:DHM 441893.1 (25900.001 ) 5/17/07 IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, CIVIL ACTION - LAW ZEPLIN'S SECURITY GROUP, V. ALARM CAPITAL ALLIANCE, V. FRED W. ZEPLIN, Plaintiff Defendant Additional Defendant No. 07-848 Civil NOTICE TO PLEAD To: Plaintiff/Counterclaim Defendant Zeplin's Security Group and Zeplin Security Group, Inc. P. Richard Wagner, Esquire 2233 North Front Street Harrisburg, PA 17110 You are hereby notified to file a written response to the enclosed ] Counterclaim within twenty (20) days from service hereof, or a default judgmer against you. BYLER & Dated:_ By: Susan P. Peipher, Esqu re Attorney I.D. #87580 28 Penn Square Lancaster, PA 17603 (717) 299-1100 Attorneys for Defendant/Coun1 Alarm Capital Alliance II, LLC'' YLVANIA ew Matter and may be entered , P.C. im Plaintiff 1• SPP:DHM 441893.1 (25900.001 ) 5/17/07 IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, CIVIL ACTION - LAW ZEPLIN'S SECURITY GROUP, Plaintiff V. ALARM CAPITAL ALLIANCE, Defendant V. FRED W. ZEPLIN, Additional Defendant No. 07-848 Civil To TO THE WITHIN ADDITIONAL DEFENDANT FRED W. ZEPLIN: NOTICE YLVANIA You have been sued in court. If you wish to defend against the claims set forth in the following pages, you must take action within twenty (20) days after this Complaint and Notice are served by entering a written appearance personally or by attorney and filing in wriing with the court your defense or objections to the claims set forth against you. You are warned that if you fail to do so, the case may proceed without you and a judgment may be entered against you by the court without further notice for any money claimed in the Complaint or for any oth r claim or relief requested by the Plaintiff. You may lose money or property or other rights imp t to you. YOU SHOULD TAKE THIS PAPER TO YOUR LAWYER AT ONCE. IF YOU DO NOT HAVE A LAWYER, GO TO OR TELEPHONE THE OFFICE SET FORTH IBELOW. THIS OFFICE CAN PROVIDE YOU WITH INFORMATION ABOUT HIRING A LAWYER. IF YOU CANNOT AFFORD TO HIRE A LAWYER, THIS OFFICE Y BE ABLE TO PROVIDE YOU WITH INFORMATION ABOUT AGENCIES THAT MAY OFFER LEGAL SERVICES TO ELIGIBLE PERSONS AT A REDUCED FEE OR NO FEE. 14 f SPP:DHM 441893.1 ( 25900.001 ) 5117107 Cumberland County Bar Association 32 S. Bedford Street Carlisle, PA 17013 Telephone: (800) 990-9108 GER, BYLE$,& THO Dated: L J i d--? By: Susan P. Peipher, Esqui& Attorney I.D. #87580 28 Penn Square Lancaster, PA 17603 (717) 299-1100 Attorneys for Defendant/, Alarm Capital Alliance II, P.C. Plaintiff ?' ?' SPP:DHM 441893.1 ( 25900.001 ) 5117107 IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW ZEPLIN' S SECURITY GROUP, V. ALARM CAPITAL ALLIANCE, V. FRED W. ZEPLIN, Plaintiff Defendant Additional Defendant No. 07-848 Civil 1. Denied. The Pennsylvania Department of State has no record of' eplin's Security Group, Inc." as a registered corporation. Upon information and belief, Plaintiffs correct name is Zeplin Security Group, Inc. 2. Admitted in part; denied in part. While it is admitted that Alarm Capital Alliance, LLC is a Delaware limited liability company with an address of 1400 N. Provi nce Road, Suite 3055, Media, Pennsylvania, it is denied that Alarm Capital Alliance, LLC is the roper Defendant to this action as Alarm Capital Alliance, LLC never entered into an agreement w th Plaintiff. 3. Denied. It is denied that Zeplin's Security Group, Inc. and Alarm apital Alliance, LLC entered into an Account Purchase and Sale Agreement. To the contrary, a agreement was entered into by Zeplin Security Group, Inc. and Alarm Capital Alliance II, LLC. y way of further answer, the document attached as Exhibit "A" is not a fully executed copy of the A eement and any ?' t' SPRDHM 441893.1 (25900.001) 5!17107 allegations as to the accuracy and completeness of the Agreement attached as and strict proof is demanded. 4. Admitted in part; denied in part. It is admitted that Exhibit "A" an Agreement which has not been signed by Defendant. Any allegations as to completeness of the Agreement are denied and strict proof is demanded. 5. Admitted upon information and belief. 6. Denied. It is denied that Zeplin's Security Group, Inc. and Alarm LLC entered into an Account Purchase and Sale Agreement. To the contrary, tl entered into by Zeplin Security Group, Inc. and Alarm Capital Alliance II, LL( demanded. By way of further answer, the Agreement is a written document, speak for themselves. Any characterization of the terms of the Agreement are de is demanded at trial. 7. Denied. It is denied that Zeplin's Security Group, Inc. and Alarr LLC entered into an Account Purchase and Sale Agreement. To the contrary, entered into by Zeplin Security Group, Inc. and Alarm Capital Alliance II, LLC. answer, the Agreement is a written document, the terms of which speak for characterization of the terms of the Agreement are denied and strict proof is dE 8. Admitted in part; denied in part. It is denied that Zeplin's Secu Alarm Capital Alliance, LLC entered into an Account Purchase and Sale E contrary, the agreement was entered into by Zeplin Security Group, Inc. and Ala II, LLC. It is admitted only that Alarm Capital Alliance II, LLC has paid $1,3 "A" are denied a copy of the accuracy and Capital Alliance, agreement was Strict proof is terms of which d and strict proof 1 Capital Alliance, t e agreement was y way of further emselves. Any ded at trial. i Group, Inc. and g eement. To the Capital Alliance !1, 358.79 to Zeplin 2 SPP:DHM 441893.1 (25900.001 ) 5117107 Security Group, Inc. pursuant to the terms of the Purchase Agreement. It is $163,208.77 is due and owing to Zeplin Security Group, Inc. Strict proof is 9. Denied. It is denied that Zeplin's Security Group, Inc. and LLC entered into an Account Purchase and Sale Agreement. To the contrary, entered into by Zeplin Security Group, Inc. and Alarm Capital Alliance II, LLC. paragraph 9 relating to the amounts purportedly owed by Alarm Capital Security Group, Inc. are denied and strict proof is demanded at trial. 10. Admitted in part; denied in part. It is denied that Zeplin's Alarm Capital Alliance, LLC entered into an Account Purchase and Sale contrary, the agreement was entered into by Zeplin Security Group, Inc. and II, LLC. It is admitted that Alarm Capital Alliance II, LLC is owed credits in the value of the accounts in addition to other substantial amounts as set Counterclaim. denied that Capital Alliance, agreement was averments in II, LLC to Zeplin Group, Inc. and To the Capital Alliance ink to the difference below in the 11. Denied. It is denied that Zeplin's Security Group, Inc. and Alarm LLC entered into an Account Purchase and Sale Agreement. To the contrary, Capital Alliance, agreement was entered into by Zeplin Security Group, Inc. and Alarm Capital Alliance II, LLC. If is strictly denied that Alarm Capital Alliance II, LLC owes Zeplin Security Group, Inc. $176,001 demanded at trial. 12. Admitted in part; denied in part. While it is admitted that Zeplin has made a demand upon Alarm Capital Alliance II, LLC for certain sums terms of the Agreement, it is denied that Alarm Capital Alliance II, LLC has due. It is admitted that Alarm Capital Alliance II, LLC has refused to pay the ; Strict proof is ity Group, Inc. owed under the to pay all sums demanded in 3 f e ' , SPP:DHM 441893.1 (25900.001 ) 5/17/07 Plaintiff's Complaint. It is strictly denied that the sum currently demanded by P Alarm Capital Alliance II, LLC to Zeplin Security Group, Inc. and strict proof is WHEREFORE, Defendant Alarm Capital Alliance respectfully requests ju in its favor and against Zeplin's Security Group, Inc. NEW MATTER 13. Answering Defendant incorporates by reference its Answers to p through 12 of Plaintiff's Complaint. 14. Plaintiff s Complaint fails to state a claim upon which relief may 15. Plaintiff s claims may be barred by the applicable statute of limit, 16. Plaintiff has failed to mitigate its alleged losses. 17. By virtue of its breaches of the Purchase Agreement and its other Defendant as set forth above and in the Counterclaim herein, Plaintiff s claims a defense of unclean hands. 18. By virtue of its breaches of the Purchase Agreement and its other Defendant as set forth above and in the Counterclaim herein, Plaintiff s claims a defense of waiver. 19. By virtue of its breaches of the Purchase Agreement and its other Defendant as set forth above and in the Counterclaim herein, Plaintiff's claims a defense of estoppel. 20. Plaintiff's failure to perform the obligations and duties owed to material breaches of Plaintiffs obligations and duties and bar its claims against 21. Plaintiff's claims are barred by the doctrine of laches. is owed by led at trial. be entered 1 be granted. duties owed to e barred by the duties owed to •e barred by the owed to barred by the are 4 SPP:DHM 441893.1 (25900.001 ) 5117107 WHEREFORE, Defendant Alarm Capital Alliance respectfully requests entered in its favor and against Zeplin's Security Group, Inc. COUNTERCLAIMMOINDER COMPLAINT Alarm Capital Alliance II, LLC v Zeplin Security Group, Inc. and Fre Counterclaim Plaintiff asserts the following causes of action against Col Defendant Zeplin Security Group, Inc. and Additional Defendant Fred W. Zepli 1. The Counterclaim Plaintiff is Alarm Capital Alliance II, LLC. 2. The Counterclaim Defendant is Zeplin Security Group, Inc. 3. Additional Defendant Fred Zeplin is an adult individual with a b 2026 Market Street, P.O. Box 144, Camp Hill, Pennsylvania. 4. The claims against Zeplin Security Group, Inc. and Fred W. Zel same transactions or occurrences upon which the Plaintiff s cause of action is 1 5. Counterclaim Plaintiff, Counterclaim Defendant and Additional into a written Account Purchase and Sale Agreement ("Purchase Agreement") or concerning the sale of certain customer accounts to Counterclaim Plaintiff. A tr of the Purchase Agreement is attached hereto and incorporated herein as Exhib 6. Pursuant to the terms of the Purchase Agreement, an initial judgment be l W. Zeplin N• finess address of 1 arise out of the ,ed. efendant entered ecember 5, 2005 and correct copy it "A." of$1,327,358.79 lender) on behalf 7ty interest in the was paid by Counterclaim Plaintiff to SAFE (Counterclaim Defendant's secured of Counterclaim Defendant and Additional Defendant to terminate SAFE's seca customer accounts. 7. The Purchase Agreement further provided for a post-closing j purchase price. In particular, ten (10) percent of the purchase price (the holdbac of the payment) was to 5 SPP:DHM 441893.1 (25900.001 ) 5117/07 be paid thirteen (13) months after the closing date subject to adjustments foi number of and the actual revenue associated with the accounts purchased. 8. Pursuant to Section 7.3(b) of the Purchase Agreement, Countercl Additional Defendant were obligated to bill for the billing period December 1, 2006 and specify that the payments were to be sent to Counterclaim Plaintiff. 9. Despite the parties' agreement with respect to the December 20 were mailed by Counterclaim Defendant and Additional Defendant but did not re were to be made directly to Counterclaim Plaintiff. 10. As a result of Counterclaim Defendant and Additional Defendan were made directly to Counterclaim Defendant and Additional Defendant. 11. Upon information and belief, the amounts received by Countercl Additional Defendant for the December 2005 billing totaled $39,498.83. 12. Section 7.3(b) of the Purchase Agreement provides that "Seller over to Purchaser any amounts received for billing periods on and after Deceml 13. Despite demand being made, Counterclaim Defendant and Ads failed to pay over to Counterclaim Plaintiff the amounts received for the Dece periods. 14. Counterclaim Plaintiff subsequently debited the Dealer Section 7.7 of the Purchase Agreement and provided notice to Cow Additional Defendant. in the Defendant and 5 to January 1, billing, the bills ct that payments s error, payments Defendant and call promptly pay x 1, 2005." tional Defendant fiber 2005 billing it established by i Defendant and 6 SPP:DHM 441893.1 (25900.001 ) 5/17/07 15. Pursuant to Section 7.7, Counterclaim Defendant and Additio al Defendant are obligated, jointly and severally, to pay to Counterclaim Plaintiff within ten (10) (lays of delivery of the Dealer Account report, the net amount shown as due. 16. As of the filing of this Counterclaim/Joinder Complaint, the net g mount due on the Dealer Account to Counterclaim Plaintiff is $28,644.12. 17. Upon information and belief, Counterclaim Defendant and Additional Defendant willfully and purposefully misrepresented facts relating to the accounts sold to Co terclaim Plaintiff including but not limited to the number of valid accounts and the revenue associated with each account. 18. Section 1.3 of the Purchase Agreement provides for an adjustme t in price in favor of Counterclaim Plaintiff if any of the accounts purchased are missing contracts. urrently there are a total of four (4) missing contracts. Pursuant to the terms of the Purchase Agreement, the total owed to Counterclaim Plaintiff for the missing contracts is $2,924.10. 19. Since the closing date a number of accounts were cancelled. It ws also discovered by Counterclaim Plaintiff that some accounts generated less revenue than w s represented by Counterclaim Defendant and Additional Defendant. 20. As stated above in paragraph 5, the Purchase Agreement provided or an adjustment in the holdback payment to handle the difference in accounts discovered post-closing. 21. Counterclaim Plaintiff has calculated the amount owed to it bas upon cancelled accounts and/or reduced rates for accounts and adjustments in revenue. In parti ular, the amount owed to Counterclaim Plaintiff by Counterclaim Defendant and Additional III Defendant totals $149,035.66. 7 SPP:DHM 441893.1 (25900.001 ) 5/17/07 22. The total sum owed to Counterclaim Plaintiff for missing Account balance and the difference in revenue pursuant to the terms of the $180,603.88. Count I - Breach of Contract 23. Counterclaim Plaintiff hereby incorporates by reference as if ful the allegations of paragraphs 1 through 22 of its Counterclaim. 24. Despite demand being made, Counterclaim Defendant and Addi have failed to pay any portion of the $180,603.88 owed to Counterclaim Plainti 25. Counterclaim Defendant and Additional Defendant's failure to X $180,603.88 owed to Counterclaim Plaintiff is a breach of their obligations Agreement. WHEREFORE, Counterclaim Plaintiff Alarm Capital Alliance II, LLC d judgment in its favor and against Counterclaim Defendant Zeplin Security Group Additional Defendant Fred W. Zeplin, jointly and severally, for $180,603.88 tog and other relief this Court deems appropriate. Count II - Conversion 26. Counterclaim Plaintiff hereby incorporates by reference as if fully s the Dealer Agreement, is V set forth herein Defendant the balance of the Purchase , Inc. and with costs .t forth herein the allegations of paragraphs 1 through 25 of its Counterclaim. 27. As set forth in paragraphs 8 through 13 above, Counterclai Defendant and Additional Defendant exercised unlawful control over the assets of Counterclaim aintiff when they took the payments associated with the December 2005 billing and refused o remit them to Counterclaim Plaintiff. 8 + SPP:DHM 441893.1 (25900.001 ) 5/17/07 28. Counterclaim Defendant and Additional Defendant have no claim to the revenue associated with the December 2005 billing to the 29. The amount taken by Counterclaim Defendant and Additional Dq to Counterclaim Plaintiff for the December 2005 billing totals $39,498.83. WHEREFORE, Counterclaim Plaintiff Alarm Capital Alliance II, LLC in its favor and against Counterclaim Defendant Zeplin Security Group, Defendant Fred W. Zeplin, jointly and severally, in the amount of $39,498.83 punitive damages, and costs and other relief this Court deems just and proper. Count III - Negligent Misrepresentation 30. Counterclaim Plaintiff hereby incorporates by reference as if the allegations of paragraphs 1 through 29 of its Counterclaim. 31. Counterclaim Defendant and Additional Defendant had a duty toll II facts concerning the contractual obligations and anticipated revenue of the the Purchase Agreement. 32. Counterclaim Defendant and Additional Defendant made false title, interest or of Plaintiff. and owed judgment and Additional $50,000.00 for / set forth herein accurate subject to deceptive representations about material facts related to the contractual obligations and the anticipated revenue of the Accounts subject to the Purchase Agreement. In particular, Defendant and Additional Defendant misrepresented the number and validity of the anticipated revenue from each account in an effort to achieve a purchase the secured lender, SAFE. 33. Counterclaim Defendant and Additional Defendant failed to use and competence in obtaining and communicating information concerning the accounts and acceptable to care 9 SPP:DHM 441893.1 (25900.001 ) 5117/07 34. Counterclaim Defendant and Additional Defendant knew, or that these representations concerning the accuracy of the contractual have known, of each Account purchased and the anticipated revenue were false and grossly inaccurate. 35. Counterclaim Plaintiff did not have ready access to information oncerning the Accounts prior to the closing date and relied upon the information provided by Counterclaim Defendant and Additional Defendant prior to closing. 36. The representations by Counterclaim Defendant and Additional efendant have caused Counterclaim Plaintiff to sustain the damages averred in paragraphs 18 d 21 above. WHEREFORE, Counterclaim Plaintiff Alarm Capital Alliance II, LLC demands judgment in its favor and against Counterclaim Defendant Zeplin Security Groin , Inc. and Additional Defendant Fred W. Zeplin, jointly and severally, for $180,603.88 to ether with costs and other relief this Court deems appropriate. Count IV - Intentional Misrepresentation/Fraud 37. Counterclaim Plaintiff hereby incorporates by reference as if fully et forth herein the allegations of paragraphs 1 through 36 of its Counterclaim. 38. Counterclaim Defendant and Additional Defendant knowinjzl made false and deceptive representations about material facts related to the contractual ob, igations and the anticipated revenue of the Accounts subject to the Purchase Agreement, knowing at Counterclaim Plaintiff intended to rely upon that information when negotiating the purchase p?j ce. In particular, Counterclaim Defendant and Additional Defendant misrepresented the number d validity of the accounts and the anticipated revenue from each account in an effort to acceptable to the secured lender, SAFE. a purchase price 10 SPP:DHM 441893.1 (25900.001 ) 5117107 39. Counterclaim Defendant and Additional Defendant knew, or should these representations concerning the accuracy of the contractual obligations purchased and the anticipated revenue were false and grossly inaccurate. 40. Counterclaim Plaintiff did not have ready access to informatic Accounts prior to the closing date and relied upon the information Defendant and Additional Defendant prior to closing. 41. The representations by Counterclaim Defendant and Addition caused Counterclaim Plaintiff to sustain the damages averred in paragraphs 18 42. Counterclaim Defendant and Additional Defendant's conduct is of undertaken with gross negligence and reckless indifference to Counterclaim interests. WHEREFORE, Counterclaim Plaintiff Alarm Capital Alliance II, LLC in its favor and against Counterclaim Defendant Zeplin Security Group, Ind, Defendant Fred W. Zeplin, jointly and severally, for $180,603.88 together with III attorney fees, costs and other relief this Court deems appropriate. Count V - Violation of Non-Solicitation Agreement 43. Counterclaim Plaintiff hereby incorporates by reference as if allegations of paragraphs 1 through 42 of its Counterclaim. 44. On December 5, 2005, Counterclaim Plaintiff and Counterclai Additional Defendant entered into a Non-Solicitation Agreement. A true and c I have known, that of each Account n concerning the by Counterclaim Defendant have 21 above. and was s rights and iands judgment and Additional itive damages, illy set forth the Defendant and copy of the Non-Solicitation Agreement is attached hereto and incorporated herein as Exhibit "B". 11 SPP:DHM 441893.1 (25900.001 ) 5/17/07 45. Under the terms of the Agreement, Counterclaim Defendarj, Defendant agreed, jointly and severally, they would not disclose to any other competition with or in a manner detrimental to the interest of Counterclaim Plain of itself or others, any confidential information related to the Accounts that Purchase Agreement. 46. The Non-Solicitation Agreement further prohibits Counterc Additional Defendant, for a period of five years, from contacting, soliciting, a in any business, directly or indirectly, with any Account which is subject to the except as specifically permitted in the Purchase Agreement and except for se which are cancelled and returned to Counterclaim Defendant and Additional 47. Counterclaim Defendant and Additional Defendant have terms of the Non-Solicitation Agreement by soliciting Accounts. A true and correspondence from Additional Defendant Fred Zeplin to Alarm Capital Al] threat is attached hereto and incorporated herein as Exhibit "C." 48. Counterclaim Defendant and Additional Defendant's potential Accounts would be a clear violation of the terms of the Non-Solicitation Agn 49. Pursuant to the terms of the Non-Solicitation Agreement, entitled to injunctive relief against any violations by Counterclaim De Defendant, including threatened and actual violations, entitle Counterclaim relief. and Additional or use, in for the benefit subject to the Defendant and or engaging I ichase Agreement ing the Accounts to breach the copy of email setting forth the of soliciting Plaintiff is and Additional an injunctive 12 ' SPP:DHM 441893.1 (25900.001 ) 5/17/07 50. Pursuant to the terms of the Non-Solicitation Agreement, any breach of the Non-Solicitation Agreement will cause irreparable and ( Counterclaim Plaintiff and that money damages will not provide an adequate 51. Unless the Counterclaim Defendant and Additional Defen enjoined and restrained from their conduct, threatened or actual, as described Plaintiff will suffer immediate, substantial and irreparable harm. 52. Counterclaim Defendant and Additional Defendant will be u result of their unlawful acts. 53. The issuance of an injunction is reasonably suited to abate and Additional Defendant's wrongful acts. 54. Greater injury will result by refusing to grant Counterclaim injunction than by granting it. 55. Counterclaim Plaintiff has no adequate remedy at law to redres?, injury that will be caused by Counterclaim Defendant and Additional Defer unlawful and unauthorized actions. WHEREFORE, Counterclaim Plaintiff respectfully requests that this following relief: A. This Honorable Court issue an Order: (i) enjoining, preliminarily until trial and perm Counterclaim Defendant Zeplin Security Group, Defendant Fred W. Zeplin, their agents, successor contacting, soliciting, accepting or otherwise :ach or threatened rinuing injury to nedy. it are effectively ,ve, Counterclaim fitly enriched as a rclaim Defendant ffts request for an the harm and the dant's continued Court grant the ently thereafter, and Additional and assigns from ig to do business 13 SPP:DHM 441893.1 (25900.001) 5/17107 (ii) (iii) with any Accounts or occupants of an Account lip subject to the Purchase Agreement except as speci the Purchase Agreement; which are permitted by ordering an accounting by Counterclaim Defend t Zeplin Security Group, Inc. and Additional Defendant Fred . Zeplin of all compensation, profits, monies, accurals, incremen s or other benefits derived or received by them as a result of Accounts solicited by them; ordering Counterclaim Defendant Zeplin Securi Group, Inc. and Additional Defendant Fred W. Zeplin to pay alll court costs incurred by Counterclaim Plaintiff Counterclaim; B. Such other relief as may be deemed just and proper. BYLER & Dated: E I (-" la By: l Susan P. Peipher, Esquir Attorney I.D. 487580 28 Penn Square Lancaster, PA 17603 (717) 299-1100 Attorneys for Defendant/, Alarm Capital Alliance II, 14 fees and in asserting this P. C. Plaintiff MAV. 2 0 0 7 11:37AM NO. 769 ?. 3/3 VERMCA,TION Y, Gary welsh, verify that Y am the Chief Operating Officer of Alarm Cap ta[ Alliance II, LLC and, as such, I am authorized to make this verification on its behalf and tha the statements made in the Defendant's Answer to Plaintiffs Complaint with New Matter and II ounterclaim are true and correct. This Verification is subject to the penalties of l8 Pa.C.S.A. § 04, relating to unworn falsification to authorities. ALARM CAPITAL ALLIANCE LLC Dated: S 1L Q Gary We C Operating Offc 41 15 ' '4! A SPP:DHM 441893.1 ( 25900.001 ) 5/17/07 CERTIFICATE OF SERVICE I HEREBY CERTIFY that I have this day served the foregoing Defer Plaintiff's Complaint with New Matter, Counterclaim and Joinder Complaint Defendant Fred W. Zeplin upon the persons and in the manner indicated below.! Service by first-class mail as follows: P. Richard Wagner, Esquire 2233 North Front Street Harrisburg, PA 17110 Dated: B,U"NGER, BYLER & By: )I I l Susan P. Peipher, Esquir Attorney I.D. #87580 28 Penn Square Lancaster, PA 17603 (717) 299-1100 Attorneys for Defendant/, Alarm Capital Alliance II, 16 's Answer to Additional ? S, P. C. Plaintiff EX4?4;{.4 ACCOUNT PURCHASE AND SALE AGREEMENT THIS AGREEMENT (the "Agreement") is made as of this 5th day 2005, by and between Zeplin Security Group, Inc., a Pennsylvania corporation ("Sel Zeplin ("Shareholder') and Alarm Capital Alliance H, L.L.C., a Delaware limited lial ("Purchaser"). F December, r" ), Fred W. ity company RECITALS: A. Seller is engaged in the burglar and fire alarm business in Camp H? , PA and the surrounding area (the `Business'; and B. Shareholder is the majority shareholder of Seller and is in possessi n of detailed, non-public information regarding Seller's customers and their alarm systems; C. Seller desires to sell to Purchaser, and Purchaser desires to certain of the customer accounts owned by the Business. D. All of Seller's customer accounts are subject to a security in SAFE, Inc. ("SAFE') to secure indebtedness of Seller to SAFE in an amount amounts to be paid by Purchaser under Section 1.3 on the Closing Date. NOW, THEREFORE, in consideration of the mutual agreements and for other good and valuable consideration, the parties hereto agree as follows: 1. Accounts to be Sold and Purchase Price. 1.1 Accounts. Seller agrees to sell, assign and deliver to F Purchaser agrees to purchase from Seller, free and clear of all restrictions and encu customer accounts (including customer contracts, Amendment Contracts and custon payment records, account and system information (including system premise locat Location')), equipment leased to customers and all other records necessary to pro) security service to such customers) listed on Exhibits A and B to this Agreement (c< "Accounts'. The Accounts listed on Exhibit A shall be referred to as the "Current the Accounts listed on Exhibit B shall be referred to as the "December 2006 Account: 1.2 Amount of Purchase Price. (a) The total purchase price ("C Price") to be paid by Purchaser to SAFE on behalf of Seller for the Current Accoun aggregate Net Monthly Recurring Revenue (as defined below) associated wi Accounts as of the Closing Date multiplied by 36 (the "Purchase Price Multi aggregate Deferred Service Revenue associated with the Current Accounts as of the "Deferred Service Revenue" means amounts billed by Seller on account of Net Mon Revenue on or prior to the Closing Date for all services to be rendered on or after the The Current Purchase Price determined under this Section 1.2(a) shall be adjusted from Seller, in favor of er than the forth herein, haser, and rances, the billing and ("Account electronic ctively, the count" and ;nt Purchase shall be the the Current ), less the losing Date. ly Recurring losing Date. provided in Section 1.4 below. The amount of the adjustments pursuant to Section 1.4 will not b? amount of the Holdback (as defined below) and if the adjustment should exceed the Holdback, Seller and Shareholder shall, jointly and severally, pay such excess to F receipt of notice of the amount of such excess. (b) The total purchase price ("December 2006 Purchase Price' Purchaser to Seller for the December 2006 Accounts shall be the aggregate Net Moi Revenue (as defined below) associated with the December 2006 Accounts which (defined below) as of the Adjustment Date (defined below) multiplied by the Multiple, less the aggregate Deferred Service Revenue associated with such I Accounts as of the Closing Date. 1.3 Payments. (a) On the date of this Agreement, Purchaser shall on behalf of Seller in order to obtain termination of SAFE's security interest in $1,327,358.79 on account of the Current Purchase Price determined in accordance 1.2(a) using the amounts of Net Monthly Recurring Revenue and Deferred Service forth on Exhibit A to this Agreement, by wire transfer. The balance of the Current l ("Holdback"), being 10 % thereof (the "Holdback Percentage"), shall be paid 13 m4 Closing Date ("Holdback Payment Date") subject to adjustment and the conditiot Section 1.4 and 9.1.1 below. All amounts included in the Net Monthly Recurring forth on Exhibit A are attributable to contracts ("Current Account Contracts") represents are held by SAFE, Seller's lender, as security for amounts due to SAF agreed to send any Current Account Contracts it holds to Purchaser promptly aft4 Date, but has not confirmed that all or any of the Current Account Contracts are in Upon receipt of contracts from SAFE, Purchaser shall review them to determir Customer Contracts and to determine if any of the represented Current Account Co received. Seller shall have 90 days to replace any Current Account Contracts Customer Contracts or are not received. To the extent that a contract is not a Custom the contracts received do not include all of the Current Account Contracts listed on are not replaced within such 90 day period, the Current Purchase Price shall be reduced by the product of the Net Monthly Recurring Revenue Shown on Exhibit A all such Accounts and the Purchase Price Multiple ("SAFE Reduction"). Purchas Seller and Shareholder of the SAFE Reduction and they shall, jointly and severally repay to Purchaser 90% of the SAFE Reduction and the Holdback shall be automal by 10% of the SAFE Reduction. Any Account determined not to be representec Account Contract or, if so, which contract is determined not to be a Customer therefore included in the calculation of the SAFE Reduction shall be re-assigned to S after either replacement or payment by Seller, as provided above. (b) On the Holdback Payment Date, Purchaser shall pay Seller the I Purchase Price as determined under Section 1.2(b), provided however, that if (i) the Adjustment under Section 1.4 results in a decrease in the Current Purchase Price i excess of the Holdback, and/or (ii) Seller and Shareholder are obligated to repay an; SAFE Reduction to Purchaser and by the Adjustment Date less than the entire po has been paid, the December 2006 Purchase Price otherwise payable shall be re amounts. If such reduction is not sufficient to repay Purchaser in full for such amo, to the of the upon be paid by y Recurring still active chase Price mber 2006 pay to SAFE he Accounts with Section Revenue set urchase Price nths after the set forth in Revenue set which Seller SAFE has r the Closing is possession. if they are tracts are not (hich are not r Contract, or 'sxhibit A and automatically attributable to r shall notify immediately cally reduced by a Current Contract and slier promptly ,cember 2006 urchase Price an amount in portion of the ion repayable aced by such its, Seller and i 1 1 l I Shareholder shall continue to be liable for the deficiency. All amounts included in tb Recurring Revenue set forth on Exhibit B are attributable to December 2006 Acc which Seller represents are held by SAFE as security for amounts due to SAFE. SA to send any December 2006 Account Contracts it holds to Purchaser promptly afl Date, but has not confirmed that all or any of the December 2006 Account Cont possession. Upon receipt of contracts from SAFE, Purchaser shall review them to de are Customer Contracts and to determine if any of the represented December Contracts are not received. Any December 2006 Account as to which a December Contract is not received or, if received, is not a Customer Contract, shall not be cc active on the Adjustment Date. 1.4 Revenue Guarantee Adjustment. (a) The Cure Price shall be reduced by the product of the Purchase Price Multiple times the amou Net Monthly Recurring Revenue from active Current Accounts and Replacement Ac (defined below) purchased from Seller as of the date one year after the Closing Date Date") is less than the Net Monthly Recurring Revenue associated with the Current forth on Exhibit A and increased or decreased, as the case may be, by the sum of (i) then owed to Purchaser by Seller, or to Seller by Purchaser, as reflected in Seller's r and (ii) the amount by which the Annual Revenue is less or more than the Expected, Revenue. "Annual Revenue" means the sum of the amounts of Net Monthly Recurri billable to active Current Accounts on the last day of each calendar month between t Date and the Adjustment Date. "Expected Annual Revenue" means the aggregate N Recurring Revenue shown on Exhibit A multiplied by 12. A Current Account or Replacement Account shall not be considered to be "actiAccount'D if (i) it is no longer being provided services by Purchaser for which Recurring Revenue is billable, (ii) it has given notice of cancellation and been canc invoice issued to it by Purchaser or Seller is more than 90 days overdue and been cai such Account's or Replacement Account's alarm system does not annunciate designated central station. An Account shall not be considered to be an Inactive cancels due to billing errors or poor service by Purchaser's designated central stati, rate increase. (b) "Net Monthly Recurring Revenue" means the total recurring amounts billed to Seller's customers with installed systems as of a given date Contracts (billings made other than on a monthly basis shall be adjusted to the eql amount) for electrical protection, monitoring, repair, closed circuit television, rad back-up services, access control services, fire and police panel charges, equipment fire testing, less all monthly charges incurred by Purchaser after the Closing Date (i Purchaser other than on a monthly basis shall be adjusted to the equivalent it (collectively, "Charges') for dedicated signal circuit telephone lines used to transn antenna rental charges for radio frequency alarm systems, answering services, s alarm charges not rebillable to customers, city franchise and police panel fees and Purchaser for receiving alarms applicable to such accounts; provided, however, cancellations known by Seller and (ii) customers which have outstanding balances Purchaser which are more than 90 days after invoice as of the date as of which the made, shall be excluded from Net Monthly Recurring Revenue. For purposes Net Monthly mt Contracts E has agreed the Closing cts are in its rmme if they )06 Account 006 Account sidered to be t Purchase by which Adjustment counts set y amount der Account Revenue Closing Monthly e" ("Inactive Net Monthly fled, (iii) any celled, or (iv) t Purchaser's Account if it n or due to a ;ular monthly 3er Customer alent monthly or cell phone ase rental and irges billed to Mthly amount) alarm signals ?s taxes, false arges paid by it (i) pending ie to Seller or termination is this Section, Charges shall be determined (i) under contracts in existence at the Closing D; ` invoices to pay Charges received by Purchaser or Seller, as the case may Adjustment Date for the monthly period (or greater period including the monthly the Closing Date occurs. (c) "Customer Contracts" means valid, written contracts calling payments for alarm system leasing, monitoring or repair or other services, duly e purported parties thereto (which, for residential customers shall mean that at least on or lessees of the residence has signed), and having an original term of at least providing that unless either party shall give the other written notice of intent to agreement shall renew for an additional term of at least one year, and which will not rise to a right to terminate or otherwise be at all affected by the sale of Accounts cc this Agreement, containing legally compliant notices of and forms for rescissi residential customers) and clauses limiting the liability of the alarm company or co: installed and/or monitor said alarm systems or equipment which are customary in tl which are valid and enforceable in the jurisdiction whose law governs said contracts. (d) Purchaser will report to Seller monthly between the Closing Adjustment Date any Accounts or Replacement Accounts which become Inactive will provide Seller with a report ("Post Closing Report") detailing all Inactive Replacement Accounts since the Closing Date. Inactive Accounts shall be rett promptly after being canceled by Purchaser. Seller will have the right to reduc Purchase Price adjustment in subsection (a) above by replacing the associated Recurring Revenue for Inactive Accounts. Any new customer Account offered in Inactive Accounts ("Replacement Accounts") shall be subject to Purchaser's t standards for acquisition of accounts, as determined by Purchaser. In addition, all and warranties made by Seller and/or Shareholder with respect to the Accounts shal have been made with respect to each Replacement Account on and as of the date of t Replacement Account to Purchaser. All Replacement Accounts will be subject to thi guarantee and Purchase Price adjustment as applies to the initial purchase of Cu under subsection (a) above until the Adjustment Date. Seller shall, within 10 days report from Purchaser for any period after the Adjustment Date showing Replace still under guarantee which have become Inactive Accounts either deliver Replacement Accounts or pay Purchaser the product of the Net Monthly Recurring 1 non-replaced Inactive Accounts times the Purchase Price Multiple. Replacement Ac transferred to Purchaser by delivery of account information required by Purchaser Contracts in effect with the customer and releases of any liens or encumbrances payoff letters from lien holders) necessary to transfer the Replacement Accounts fir any liens or encumbrances. (e) As a condition of receiving payment of the Holdback, Sell Holdback Payment Date, deliver to Purchaser a signed Acceptance and Confirming form provided by Purchaser accepting the Post Closing Report and confirming prior transfer of all Replacement Accounts and shall also deliver any release nec that Purchaser has received title to the Replacement Accounts free and clear o encumbrances. Neither acceptance of delivery of documents with respect to Replace and (ii.) from prior to the aod) in which for recurring ecuted by all of the owners me year, and erminate, the ;rminate, give itemplated by n rights (for ipanies which industry and Date and the Accounts and Accounts and ned to Seller or avoid the Net Monthly eplacement of en applicable be deemed to ansfer of such same revenue rent Accounts )f receipt of a lent Accounts to Purchaser evenue for all ounts shall be the Customer )r satisfactory e and clear of shall, on the 3ill of Sale in ratifying the >ary to assure all liens and tent Accounts 4 on the date of transfer or on the Holdback Payment Date, nor payment of the Holdba a waiver by Purchaser of Seller's or Shareholder's obligations under representations with respect to such Replacement Accounts or, specifically, the obligation to transfer clear of all liens and encumbrances. 2. Assumption of Liabilities. Purchaser shall assume no liabilities or Seller other than obligations arising or to be performed on or after the Closi Customer Contracts included.in the Accounts and Replacement Accounts being Agreement ("Assumed Contracts"). constitutes warranties m free and ligation of Date under 1 under this 3. Closing. The closing of the purchase and sale of the Accounts provi for in this Agreement shall take place at Purchaser's offices in Media, PA on the date hereof the "Closing Date") 4. Representations and Warranties of Seller and Shareholder. In or to induce Purchaser to consummate the transactions contemplated herein, Seller and Shareh lder hereby, jointly and severally represent and warrant the following to Purchaser: 4.1 Incorporation, Powers and Qualification. Seller is a co oration duly organized, validly existing and in good standing under the laws of the State of Pennsylvania and is not required to be qualified to do business in any other state. Seller has all req ite power to execute, deliver and perform this Agreement and to own the Accounts and to carry its business as now being conducted. Seller has no subsidiaries. Seller's business is not the sale o merchandise from stock. 4.2 Authority. The execution and delivery of this Agreement y Seller and Shareholder and the performance by Seller of its obligations hereunder have been approved by all necessary corporate action and no other proceedings on the part of Seller or its share lders will be necessary to effect or approve the transactions contemplated by this Agreement. N filing, notice or recordation with, or consent or approval from any governmental agency or any third party is required in order to, or as a result of, entering into this Agreement or in order to cons ate, or as a result of the consummation of, this Agreement. 4.3 No Conflict. Neither the execution nor the delivery of this cement, nor the consummation of the transactions covered hereby, nor the fulfillment of the to is hereof, nor compliance with the terms and provisions hereof, will conflict with, result in a breach of the terms, conditions or provisions of, constitute a default under or create any liability under anagreement or instrument to which Seller or Shareholder is a party or by which either of them is bo d. 4.4 Tax Matters. All federal, state, local and foreign tax returns d tax reports required to be filed at any time with respect to the business and accounts of Seller have been filed, all of the foregoing are true, correct and complete, and all amounts shown as owin thereon have been paid. i 4.5 Ownership of Property. (a) Seller has good and marketable title to the Accounts free and clear of all restrictions or encumbrances of any nature whatsoeve , except those liens to be satisfied at Closing. The Business of Seller has been conducted under same name ' and at the same location, since 1976. Seller has not acquired any of the Accoun s of another business since 1993. (b) Each Assumed Contract is a Customer Contract and is valid and in ffect and, to the best of Seller's knowledge, no other party thereto is in default. Seller is not in def It under any such Assumed Contract, has received no notice of default thereunder, and no event has occurred or is expected to occur which (after notice and lapse of time or both) would becom a breach or default under, or otherwise permit modification, cancellation, acceleration or termi tion of, any such Assumed Contract, Seller has delivered to Purchaser a true, complete and correct copy of each Assumed Contract to which Seller is a party and any amendments thereto. 4.6 Litigation; Liabilities. Neither Seller nor Shareholder is party to or threatened with, any, litigation or governmental or other proceeding, nor does there ist any basis for any such litigation or proceeding. Neither Seller nor Shareholder is aware of an litigation or governmental or other proceeding pending or threatened which may affect validity or enforceability of this Agreement or the ancillary agreements entered into pursuant her to. 4.7 Alarm Systems. (a) All of the alarm systems associated with the Accounts designed, installed, partially installed, or contracted for installation by Seller prior the Closing Date, and each supervisory alarm panel associated with the Accounts owned or op ted by Seller as of the Closing Date has been, and will, as of the Closing Date, (where applicab ) be in good working order and condition, ordinary wear and tear, subscriber negligence and subs riber non-use excepted, and (where applicable) will have been designed, installed and maintained, and be operating and operated in accordance with good and workmanlike practices prevailing in the industry in the locality where the installation is located at the time of design, install 'on or repair, and with respect to those alarm systems and panels required by law or by agree ent with the customer, substantially in accordance with the specifications or standards of the Insurance Services Office, Underwriters Laboratories, Factory Mutual Insurance Company, local a thorities and applicable telephone operating company requirements. All alarm systems assoc ted with the Accounts designed, installed or partially installed prior to the Closing Date will nform in all material respects to the contracts pursuant to which they were designed or installed and no design, installation or partial installation will have been made by the Seller which was in violation of any applicable law, code or regulation when designed or installed. (b) Neither Seller nor Shareholder is aware of any planned changes i area codes in any areas in which Seller has customers. 4.8 Compliance. Seller is in compliance with, and has operated is business in compliance with, all federal and state laws (including alarm company licensing or p 't laws and environmental laws), ordinances, regulations and orders, applicable to it. Seller is ' compliance with all employment and employee benefit laws applicable to it. Seller or Shareholder is licensed under applicable alarm company licensing laws in all states in which such licensing i required. T' i i 4.9 Customer Lists. All of the Accounts listed on Exhibits A and are parties to Customer Contracts with Seller. Exhibits A and B are true and correct lists of the ccounts being e? sold by Seller to Purchaser on the Closing Date and all of the Accounts are be recurring services rendered by or on behalf of Seller, showing as to each: name, b recurring rate and billing cycle. There has not been a general increase in Seller's since 2003, but there have been isolated rate increases and increases due to incre The Net Monthly Recurring Revenue associated with each Account is as shown on Contract for such Account subject to rate increases permitted under such Customer have been imposed after its date and the aggregate Net Monthly Recurring Revenu Service Revenue for all the Accounts being sold on the Closing Date are corn Exhibits A and B. 4.10 Customer Claims; Insurance. Seller maintains in effect insu its Accounts and business and any liabilities relating thereto in amounts customs persons or organizations conducting similar businesses. Seller's errors and orris; policy is written on an occurrence basis. There have been no material customer Seller during the past five years and there is no basis for any such claim. 4.11 Shareholders. Shareholder and George Lance are all the Seller's capital stock. 4.12 Employee Benefit Plans; Wages and Benefits of Employees. employee benefit plans (as defined in Section 3 (3) of the Employee Retirement In Act of 1974, as amended ("ERISA")), multi-employer plans (as defined in section ERISA), or compensation programs and employment arrangements which are i contributed to, by Seller for the employees of the Business (collectively, "Eml Plans") and has never maintained any Employee Benefit Plans, except for IRA and L health and insurance plans. 4.13 Labor and Employee Relations. Seller is not a party to bargaining agreement nor are its employees members of a collective bargaining ur has there been any recent unionization activity, and Seller has complied with all la-A employment of labor, and the payment of social security, withholding and similar I liable for any arrears of wages or any taxes or penalties for failure to comply where, in any such case, the violation of which or liability for which would have a i effect on the Accounts. 4.14. Brokers. Seller has not engaged any broker or other third claim a commission with respect to the purchase and sale contemplated by this A 4.15 Material Statements. Seller and Shareholder have provided access to various records relating to the Accounts prior to the date of this A, representation or warranty, nor any record or document delivered to Purchase Shareholder pursuant hereto or as to which Seller or Shareholder has provided Pi prior to the date of this Agreement, contains or did contain an untrue statement of : omits or did omit to state a material fact necessary to make any statement of fact cc not misleading. ag billed for fling address, lstomer rates red serrvices. the Customer Contract that and Deferred tlv stated on e covering carried by insurance ms against of Seller has no ome Security @1 (a) (3) of .aintained, or oyee Benefit ual employee 4ny collective or union, nor relating to the ces, and is not th such laws, 3terial adverse which might irchaser with cement. No by Seller or .haser access iterial fact or ;wined therein I 5. Representations and Warranties of Purchaser. Purchaser hereby warrants the following to Seller: and 5.1 Organization and Good Standing. Purchaser is a limited liabi 'ty company duly organized, validly existing and in good standing under the laws of the State of Delaware. Purchaser has all requisite power to carry on its business as it is now conducted and' is entitled to own, lease or operate the properties and Accounts it now owns, leases or operates. 5.2 Authority. The execution and delivery of this Agreement by Purchaser and the performance by Purchaser of its obligations hereunder have been approved by!all necessary corporate action and no further proceedings on the part of Purchaser will be necessary to effect or approve the transactions contemplated by this Agreement. 5.3 No Conflict. Neither the execution nor the delivery of this A eement, nor the consummation of the transactions covered hereby, nor the fulfillment of the to s hereof, nor compliance with the terms and provisions hereof, will conflict with, or result in a reach of the terms, conditions or provisions of, or constitute a default under, any agreement or strument to which Purchaser is a party or by which it is bound. 6. Closing. At the Closing the Purchaser shall make the payments called or above and Seller and Shareholder shall deliver the items called for above and the following, executed by all parties thereto: (a) Non-Solicitation Agreement in a form acceptable to Purchaser Shareholder and George Lance; (b) All Assumed Contracts, customer orders, a current aged report and all other customer records associated with the Accounts; (c) A Closing Bill of Sale in form acceptable to Purchaser for the purchased hereunder; (d) A banking authorization agreement in a form acceptable to (e) A telephone line transfer agreement in a form acceptable to (f) Releases, or payoff letters containing commitments to provide rule liens or encumbrances on the Accounts, in form and substance satisfactory to Purchas ; (g) Confirmation acceptable to Purchaser that Seller's $52,641.21 to SAFE to reduce Seller's indebtedness to SAFE secured by the . to the Closing Date. (h) Such other documents as Purchaser reasonably requires to transactions contemplated in this Agreement.. by Seller, receivable being 7 of all has wired on or prior the i i 8 7. Post Closing. 7.1 Warranties and Representations. The respective reps warranties of Seller, Shareholder and Purchaser contained herein shall survive the a 24-month period. )ns and Date for 7.2 State Filings. Seller shall, to the extent not completed prior o the Closing Date, file, or cooperate with Purchaser in filing, any notices required under appli le state law relating to the sale of Seller's Accounts and Replacement Accounts and shall send copy of any response received from the state to Purchaser upon receipt. 7.3 Transfer of Monitoring; Transfer of Billing. (a) Sellers , at its sole expense cause all alarm systems associated with the Accounts and Replacem Accounts to annunciate at Purchaser's designated central station using Purchaser's dedicated t elephone lines within 45 days after the Closing Date. Seller shall not be required to pay for any se vices provided by Purchaser's designated central station in connection with integration of the trans r of Accounts and Replacement Accounts. Until the transfer of monitoring takes place, Seller all cooperate with Purchaser in its dealings with Seller's central station and, if requested by rchaser, shall communicate with Seller's central station on behalf of Purchaser. Seller has app ximately 200 wholesale monitoring customers (customers of another dealer for which Seller provi es monitoring services) whose systems are programmed to use the same telephone line as the Acco unts, resulting in those accounts also being transferred to Purchaser's designated central station or monitoring services. Those accounts will not be assigned to Purchaser by Seller but shall rem ' accounts of Seller. However, as partial consideration for this transaction, Purchaser will arrang e to have those accounts monitored at no cost to Seller during the fifteen month period following th Closing Date. (b) Seller shall continue to bill and collect Net Monthly Recurring evenue for all billing periods through December 1, 2005 (the "Billing Transfer Date"). Seller sha be entitled to keep all such amounts collected. In addition, Seller shall bill for the billing erio December 1, 2,005 to January 2006 bu all _snecifv that payments be sent tourcaser s des to s using billing and mailing materials approved by Purchaser before mailing and hal o -1. _--._ ... ___... cooperate with Purchaser connection with such bill. Seller shall Prompt, -?z_l_o __....._._.... ?cliasex any._am24ults receivefox.billing?nods_wZa after De? cember 1, 2005. Purchaser shall bill and collect for all billing periods on and after January 1, 200 . 7.4 Operation of Purchaser's Business. On and after the Closij order to allow for the best retention of Accounts by allowing Seller to better prese relationship with them, Purchaser will have the right to undertake any and all comet Accounts in Seller's name. Such communications include, but are not limited answering telephone calls, invoicing for services, providing information and notic, seeking to enter into renewal, replacement, extension or other amendment agreemei services as are called for in the Assumed Accounts ("Amendment Contracts", communications and resulting revenues, agreements and obligations shall be the r and property of Purchaser except to the extent otherwise agreed between Seller Seller has provided Purchaser with a specimen signature of an executive officer Purchaser may affix to communications to be sent to Account customers, Date, and in its ongoing ications with making and to Accounts, for the same All such 3onsibility of d Purchaser. Seller which ovided each 9 communication to which it is to be affixed has been approved by Seller prior to use. the preceding sentence shall apply only to communications onto which the specimen signature is to a affixed. 7.5 Precautionary UCC Filing. In order to document the purcha pursuant to this Agreement, Purchaser is authorized to make a precautionary Finan filing in the filing office applicable to security interests applicable to Seller und( Commercial Code indicating Purchaser's purchase of the Accounts, Replacer: contracts included in the Accounts and Replacement Accounts and related substantially the language in Exhibit C attached to this Agreement. 7.6 Right of First Refusal. For a period of 5 years after the Cl, until an earlier sale of substantially all of Purchaser's business or assets, if Seller r( fide offer from a third party to purchase any or all of the alarm accounts of Seller, ; make a written offer to Purchaser offering to sell those accounts to Purchaser on f and conditions contained in the third-party offer; provided, that Purchaser may pay cash equivalent of any non-cash consideration. Purchaser will then have 30 days-to r its election to either accept or reject such offer. In the event Purchaser accepts suc and Purchaser shall consummate the transaction within the time limits specified in none, within 90 days after acceptance of the offer by Purchaser. In the event Purch, offer, Seller will then have 150 days following Purchaser's rejection in which to cc transaction with the third party. If that transaction is not consummated within the 1 Seller will again become subject to the restrictions contained in this subsection. notwithstanding, Seller shall not have the right to sell to any third party any contract Monthly Recurring Revenue for repair services ("Net Monthly Repair Revenue") frc or Replacement Account previously sold to ACA for so long as ACA owns such Acc 7.7 Dealer Account and Reporting. Purchaser shall maintain Seller monthly after the Closing Date an account ("Dealer Account") which shall credited, as the case may be, for amounts collected by one party but belongin€ approved credits granted by Seller to customers as a sales incentive; payments for sei by Seller which require payment and any other items owed by one party to the other of business after the Closing Date. Seller shall pay Purchaser, or Purchaser shall pa case may be, within 10 days of delivery of the Dealer Account report, the net amount 8. Repair Services and Post-Closing Payment for Net Monthly Repair 8.1 Repair Services. Seller will provide repair service for all Replacement Accounts for a period of five years following transfer to Purcha Agreement, and thereafter for as long as agreed by the parties. After the five-yeas party may terminate Seller's repair service obligations by giving the other 60 d termination. For Accounts and Replacement Accounts paying Net Monthly Reps Purchaser, Seller shall bill Purchaser for time spent at the customer location at $55 parts installed, at cost. For Accounts and Replacement Accounts which are n Monthly Repair Revenue, Seller may bill customers for repair services on a time basis at Seller's normal rates. Repair services shall be provided on a timely, technically proficient manner. Repair services shall be provided in a good an( of Accounts rig Statement the Uniform it Accounts, rights, using ng Date, or rives a bona ler will first same terms reasonable ify Seller of offer, Seller offer or, if ;r rejects the .ummate the -day period, ie foregoing fling for Net an Account and report to be debited or to the other, ices provided ?n the conduct Seller, as the shown as due. Accounts and er under this period, either tys' notice of it Revenue to per hour, plus >t paying Net and materials courteous and workmanlike 10 manner and in strict accordance with all regulations, customs, laws and ordinances app 'cable to the work to be performed. Seller shall, before commencing any such work, have in Seller possession, all required licenses, permits and other government authorizations and liability nsurance in amounts reasonably acceptable to Purchaser naming Purchaser as an additional insure (certificates evidencing coverage shall be supplied to Purchaser upon request). Seller shall pay w due for all labor and materials used in providing the repair services called for in this Agreement and shall indemnify, defend and hold Purchaser and the owner of each property at which such services are performed harmless from any;lien or claim arising out of the failure to pay when du for labor or materials. Seller shall be solely responsible for the quality of the services perfo ed and shall indemnify, defend and hold Purchaser harmless from and against all claims, cos or damages arising out of or relating to the services provided by Seller. Purchaser shall includ Seller as an additional insured on its liability policy for as long as Seller is providing repair servi es under this Section. 8.2 Termination of Repair Services. Purchaser shall have the ri to terminate Seller's right to payment and obligation to provide repair services to any one or-moreAccounts or Replacement Accounts if, in Purchaser's reasonable determination, Seller is not pr viding repair services in the manner called for in Section 8.1. Termination shall be effective u n Purchaser giving notice of such termination to Seller. 8.3 Additional Services. For so long as Purchaser owns any par or Replacement Account, Seller shall be free to seek to sell to that Account c Account additional equipment and services. Seller shall inform Purchaser of any sa or Replacement Account resulting in new contracts for additional Net Monthly Rec, Purchaser shall have the right to purchase contracts which call for Net Monthly Re( on the same terms as apply to the purchase of Accounts in this Agreement cooperate with Purchaser in consummating such purchases within 30 days of notice of its intention to do so. 8.4 Option to Purchase Net Monthly Repair Revenue. For a per. after the Closing Date, Purchaser shall have the option at any time and from tip purchase from Seller any or all Customer Contracts for repair services providing foi Repair Revenue with any customer of Seller which is then also a customer of Purchas is already paying Purchaser Net Monthly Recurring Revenue ("Option Customer'), of all liens and encumbrances. Purchaser may request, from time to time, and Selle Purchaser with, a list of all Customer Contracts to which Seller is a party with Opti Such list shall contain the names, addresses and amount of Net Monthly Repair Revei by such Option Customers as of the date the list is prepared in response to Purchaser delivering such list, Seller and Shareholder shall be deemed to have certified that it and complete as of the date on which it is sent to Purchaser. The purchase price sh 25 times the Net Monthly Repair Revenue associated with those Accounts and/or Accounts less any applicable Deferred Service Revenue. Seller shall be entitled to c< any amounts billed prior to the transfer date. Purchaser shall exercise this option by than 20 days' notice to that effect to Seller. The notice shall state the date, time and such closing shall take place. At the closing for such purchase and sale, Seller sha deliver to Purchaser a new Non-Solicitation Agreement and Bill of Sale substantial] ular Account Replacement to Accounts ing Revenue. ring Revenue Seller shall :)m Purchaser >d of 5 years e to time to Net Monthly r for which it iee and clear shall provide n Customers. ue being paid > request. By true, correct 11 be equal to Replacement lest and keep wing no less lace at which 1 execute and r in the forms 11 of the Non-Solicitation Agreement and Bill of Sale delivered on the date of s Agreement covering such Customer Contracts. 8.5 Seller hereby grants to Purchaser a security interest in 1 of Seller's Customer Contracts with Option Customers, including any contract rights, whether ow owned or hereafter acquired, to secure Seller's obligations under Section 8.4 of this Agreement. Seller authorizes Purchaser to file any financing statements, amendments, renewals, co inuations or assignments necessary to perfect the security interest granted herein. To the ext t necessary, Seller will cooperate with Purchaser in making any such filing. Seller acknowled es that it has received value for the obligations set forth in Section 8.4 of this Agreement and for s grant of a security interest. 8.6 Amendment Contracts and Account Location Vacancies. rom time to time, Purchaser may request that Seller contact Accounts for the purpose of entering into Amendment Contracts or that Seller contact a new occupant of an Account Location which has become vacant for the purpose of entering into a Customer Contract. Seller shall promptly after receipt of such a request, make such contact and attempt to enter into such a contract Seller shall be paid $250 for each contract entered into with a new occupant of an Account Lo tion after the Adjustment Date. Any such contract to be entered into shall be on a form acceptable o or provided by Purchaser and shall, promptly after expiration of any applicable rescission period be forwarded to Purchaser. All such contracts shall be the property of Purchaser upon execution. 9. Indemnification 9.1 Indemnification by Seller and Shareholder. 9.1.1 Claims. Seller and Shareholder hereby, jointly and sever) ly, agree to indemnify and defend Purchaser against and to hold Purchaser harmless from any and all damages, losses, liabilities, costs and expenses, including, without limitation, reasonable attorneys' fees (collectively "Damages") incurred or suffered by Purchaser, arising out of or relate to, or due to any claim asserted against Purchaser arising out of or related to: (a) any misr esentation or breach of any warranty, covenant or agreement made or to be performed by Seller T Shareholder in or pursuant to this Agreement or any document or agreement delivered pursuant to this Agreement or (b) the operation of Seller's business prior to the Closing Date or (c) a provision of materials or services to Accounts or Replacement Accounts on or after the Closing ate by Seller or (d) any obligations or liabilities of Seller other than liabilities expressly assume by Purchaser under this Agreement. Payments otherwise due under Section 1.3 above may tie withheld in reasonable amounts pending resolution of any claims brought against Purchaser to which this indemnity is applicable. 9.1.2 Notice. Purchaser agrees to give prompt notice to Seller and hareholder of the assertion of any claim or the commencement of any suit, action or proceedin in respect of which indemnity may be sought hereunder. Seller and/or Shareholder may, in is or his sole discretion, assume the defense of any such claim, suit, action or proceeding at s or his own expense and may dispose of any such claim, suit, action or proceeding in its or his ole discretion 12 without any liability or expense to Purchaser. In any event, Purchaser shall hav the right to participate in or with respect to any such claim, suit, action or proceeding with co el of its own choice and at its own expense. 9.1.3 Shareholder Limit. Any claim under this Section 9.1 agains? Shareholder must be made on or before the date two years after the date of this Agreement. 9.2 Indemnification by Purchaser. 9.2.1 Claims. Purchaser hereby agrees to indemnify Seller an Shareholder against and to hold Seller and Shareholder harmless from any and all damages in co ection with any claim, action, suit or proceeding incurred or suffered by Seller or Shareholder Ith ing out of or related to (a) any misrepresentation or breach of any warranty, covenant or agreet made or to be performed by Purchaser in or pursuant to this Agreement or (b) the operation of Acco unts or Replacement Accounts by Purchaser from and after the Closing Date, or (c) the igations and liabilities of Seller expressly assumed by Purchaser under this Agreement. 9.2.2 Notice. Seller and Shareholder agree to give prompt notice t Purchaser of the assertion of any claim, or the commencement of any suit, action or proceedin in respect of which indemnity may be sought hereunder. Purchaser may, in its sole discretio , assume the defense of any such claim, suit, action or proceeding at its own expense and may .spose of any such claim, suit, action or proceeding, it its sole discretion without any liability or expense to Seller or Shareholder. In any event, Seller and Shareholder shall have the right to partici to in or with respect to any such claim, suit, action or proceeding with counsel of its or his own c oosing and at its or his own expense. 10. Miscellaneous. 10.1 Notices. All notices and other communications hereunder shad be in writing and shall be deemed given when sent by overnight courier or by registered or ertified mail, deposited in the United States mail, postage prepaid, return receipt requested, to a appropriate party at its or his address below or at such other address for such party (as shall bl specified by written notice): If to Seller or Shareholder, at: Mr. Fred Zeplin 2026 Market Street Camp Hill, PA 17011 Media, PA 19063 10.2 Governing Law. This Agreement shall be governed by accordance with the laws of the Commonwealth of Pennsylvania. If to Purchaser, at: Ms. Amy Kothari Alarm Capital Alliance II, LLC 1400 North Providence Road Building 2, Suite 3055 construed in 13 10.3 Assignment. This Agreement shall not be assignable by anyl except with the written consent of the other party. Any other attempted assignment 9 The foregoing notwithstanding, Purchaser may assign its rights hereunder, and agreement or document entered into or received hereunder, to any affiliated enti collateral to any lender providing funds to be used in acquiring or operating the Purchaser. No such assignment shall relieve the assignor of its obligations hereunder. 10.4 Attorneys' Fees. If any action or proceeding is brought interpret any provision of this Agreement, then each party shall bear its own costs. party hereto hall be void. under any y and/or as kccounts by enforce or 10.5 Further Assurances. Before, during and after the Closing. ate, without further consideration, the parties hereto shall each execute and deliver such further in' tn=ents and documents and take such fiuther actions as the other party shall reasonably request to!, consummate, or in furtherance of, the transactions contemplated by this Agreement and to perfect Purchaser's title to the Accounts. 10.6 Counterparts. This Agreement maybe executed in separate co terparts, each of which, when so executed, shall be deemed to be an original. Such counterparts shall, together, constitute and shall be one and the same instrument. IN WITNESS WHEREOF, the undersigned have duly executed this of the date first above written. SELLER: ZEPLIN SECURITY GROUP, INC. PURCHASER: ALARM CAPITAL ALLIANCE J A , r By By Fred eplin y of Presi ent President SHAREHOLDER: L/ Fred W. eplin 14 as II, LLC ?<, NONSOLICIATION AGREEMENT THIS AGREEMENT (the "Agreement") is made as of this December 2005, by and between Zeplin Security Group, Inc. ("Dealer"), Fred W George Lance ("Owners") and Alarm Capital Alliance II, L.L.C., a Delaware hm? company ("ACA"). WITNESSETH: WHEREAS, the Owners own 100%of the equity ownership i WHEREAS, Dealer is engaged in the burglar and fire alarm Camp Hill, PA regional area (the "Business"); and WHEREAS, Dealer, Owners and ACA have executed a cer Purchase and Sale Agreement on this date (the "Purchase Agreement"), purse Dealer agrees to sell, and ACA agrees to buy, certain customer accounts and Accounts (collectively referred to herein as "Accounts'), all as defined in and u and conditions therein set forth; ;th day of Zeplin and :ed liability in Dealer; ?ess in the a Account t to which ,placement 1 the terms WHEREAS, ACA would not purchase the Accounts from Deale pursuant to the Purchase Agreement but for the agreements and covenants of Dealer d Owners contained herein which agreements the parties hereto agree shall have $500 of a purchase price paid under the Purchase Agreement allocated to them; provided that AC shall not be limited, and neither Dealer nor Owners shall assert that ACA shall be limited to uch amount in seeking damages for any breach of this Agreement; WHEREAS, the agreements and covenants contained herein are cessary and essential to protect the value of the Accounts acquired by ACA; NOW, THEREFORE, the parties hereto agree as follows: 1 . Confidential Information and Covenant Not To Solicit. ACA has paid to Dealer, which payments will benefit Owners, as onsideration for this Agreement certain amounts called for under the Purchase Agreement for t!ie Accounts. In recognition and specific acknowledgment of ACA's legitimate need t protect its investment in the Accounts, Dealer and Owners, jointly and severally with Deale but not with each other, covenant and agree that they shall not: (a) at any time disclose to any person other than ACA, or use, ' competition with or in a manner otherwise detrimental to the interests of ACA, for the bene t of itself or others, any confidential information related to the Accounts, including but not li 'ted to, trade secrets, customer lists, customer billing addresses, customer alarm system loca on addresses ("Account Locations"), details of client or customer contracts, pricing policies, methods, marketing plans or strategies, and sales records, except as specifically the Purchase Agreement and except for servicing Accounts which are canceled anSeller under the provisions of the Purchase Agreement; (b) for a period of five years following the date of this Agree or indirectly on his or its own behalf or as owner, employee or consultant for an solicit or otherwise seek to do business with such Account or with any occupant Location, providing services for which such Account or occupant is oblig payments of Net Monthly Recurring Revenue (as defined in the Purchase 1 accept or otherwise engage in any such business with such Account or occur specifically permitted in the Purchase Agreement and except for servicing Acco canceled and returned to Seller under the provisions of the Purchase Agreement; (c) for a period of the earlier to expire of five years followh Account by ACA or seven years following the date of this Agreement, directly or his or its own behalf or as owner, employee or consultant for another, conta otherwise seek to do business with such Account providing any services in the commercial burglar or fire alarm business, or accept or otherwise engage in any with such Account and except for servicing Accounts which are canceled an Seller under the provisions of the Purchase Agreement. operational ermitted in returned to ,nt, directly per, contact, an Account d to make •eement) or t, except as s which are sale of an ddirectly on :, solicit or sidential or ch business returned to (d) The provisions of subparts (b) and (c) of this Section 1 shl 1 not apply to any Account on or after an assignment of such Account by ACA to an unrelat d third party which purports to terminate Seller's rights under Section 8.1 of the Purchase A eement with respect to such Account, except in accordance with the provisions of Sectio 8.2 of the Purchase Agreement. 2. Rights and Remedies Upon Breach. If Dealer or Owne s breach, or threaten to commit a breach of, any of the provisions of Section 1 (the' "Restrictive Covenants"), ACA shall have the following rights and remedies, each of whi h rights and remedies shall be independent of any others and severally enforceable, and shall a in addition to, and not in lieu of, any other rights and remedies available to ACA at law or in quity: (a) The right and remedy to have the Restrictive Covenant specifically enforced by any court of competent jurisdiction, including, without limitation, e right to an entry against Dealer or Owners of restraining orders and injunctions (prelimin , mandatory, temporary and permanent) against violations, threatened or actual, and whether or not then continuing, of any of the Restrictive Covenants, it being acknowledged and agr d by Dealer and Owners that any breach or threatened breach of any of the Restrictive Covenants would cause irreparable and continuing injury to ACA and that money damages would t provide an adequate remedy to ACA; or (b) The right and remedy to require Dealer and/or Owners to aqount for and pay over to ACA all compensation, profits, monies, accruals, increments or ther benefits 2 derived or received by any of them as the result of any transactions constituting breach of any of the Restrictive Covenants. 3. Severabih y of Covenants. Dealer and Owners acknowledge an agree that the Restrictive Covenants are reasonable and valid in geographical and temporal s ope and in 11 all other respects. If any court determines that any of the Restrictive Covenants, o any part of any of the Restrictive Covenants, is invalid or unenforceable, the remainder of th Restrictive Covenants and parts thereof shall not thereby be affected and shall be given full of ct, without regard to the invalid portions. 4. Blue-Penciling If any court determines that any of the Restrictive Covenants, or any part thereof, is invalid or unenforceable because of e g graphic or temporal scope of such provision, it is the intention and agreement of the parsi s that such court shall have the power to reduce the geographic or temporal scope of such ovision, as the case may be, and, in its reduced form, such provision shall then be enforceable 5. Enforceability in Jurisdictions. Dealer and ACA intend to and hereby confer jurisdiction to enforce the Restrictive Covenants upon the courts of Pennsy ania. 6. Governing Law. This Agreement shall be governed by and accordance with the laws of the Commonwealth of Pennsylvania. 7. Benefit. This Agreement shall be binding upon the administrators, legal representatives, nominees, successors and assigns of inure to the benefit of the successors and assigns of ACA and Dealer. Agreement shall be assigned by ACA and the assignee does not accept assigi by the terms of the Purchase Agreement set forth in Section 8 thereof, this terminate. in executors, s and shall ver, if this of or abide :ment shall 8. Counterparts. This Agreement may be executed by the part es hereto in separate counterparts, each of which when so executed and delivered shall be an' original, but all such counterparts shall together constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have executed, or a duly 3 ? J authorized officer to execute, this Agreement as of the date first written above. ACA: Dealer: Alarm Capital Allian e III, L.L.C. By: Amy o an its President Owne r r Fred W. Zeplin Zeplin Security Group, Inc. - 1 Fred W. Zeplin its President George Lance 4 ? J ti,d;+ c . .. ,, Page 1 of 2 From: Gary Welsh [Gary.Welsh c@alarmcapital.com] Sent: Tuesday, April 24, 2007 9:09 AM To: fredzeplin@zeplinsecudty.com Cc: Susan P. Peipher; Tracy Ambler Subject: RE: Zeplin Fred, Thank you so much for your input. I appreciate your feedback. As I stated earlier, please ACA if they have any questions. Your assumptions on the notice of the price increase are ever unsure about what ACA did or did not do, please call me. At this point in time, Zepli discussions with our customers except for service related issues. All other calls should e have the customer call 866-484-4800 since we are able to look at their entire account hibst previous phone calls, payment history, invoices, credits, etc. It is imperative that Zeplin d any opinions, comments, or thoughts regarding ACA to the customer. Again, thank you for the heads up. ACA purchased the accounts from Zeplin and, therefore, any attempt to compromise ACf customers would, as you know, be a breach of this agreement. As you stated in your e-mail, there is an agreement between ACA and Zeplin, which cleat Zeplin Security from any contact with customers other than with respect to providing servi and appreciate your decision not to violate this agreement. Gary From: Fred Zeplin [mailto:fredzeplin@zeplinsecurity.com] Sent: Monday, April 23, 2007 9:22 PM To: Gary Welsh Subject: FW: Zeplin ave the customers call ncorrect. If you are should not have any brwarded to ACA or y with regards to .s not communicate relationship with the prohibits you and . Therefore, I respect From: phdarian [mailto:phdarian@yahoo.com] Sent: Monday, April 23, 2007 12:07 PM To: fredzeplin@zeplinsecurity.com Subject: Re: Zeplin Gary, I would appreciate when you do rate increases that you enclose a letter form increasing the rates. If you have any question please give them your phone r. back. Also I want to take the time to tell you I know whats about to happen and I better care of your customers. I am averaging 2 phone calls a day from cuss stating you are so they can call you to you that you take rat are frustrated with 4/24/2007 ACA and want to come back to Zeplins'. I have been hesitant to swing these accoun because of my agreement with ACA. If you chose to lose them, you are leaving me bring them back to Zeplins' for monitoring. In closing please take better care of you customers. Fred Gary Welsh <Gary. Welsh@alarmcapitaL com> wrote: Hello, Please tell them to call ACA if they have any questions. Thanks, Gary From: phdarian [maifto:phdarian@yahoo.coml Sent: Friday, April 20, 2007 4:02 PM To: Gary Welsh; Sue Nolan Subject: rate Has ACA increased the rate on monthly monitoring? If so how were the customers notifed? Page 2 of 2 back to Zeplins' r choose then to Ahhh...imagining that irresistible "new car" smell? Check out new cars at Yahoo! Autos. Ahhh...imagining that irresistible "new car" smell? Check out new cars at Yahoo! Autos. 4//24/2007 ? r`' - ?: -, , ..? i +=, -: _ . - __=z . _. :,?; ?z y... ?`? :;: ?; <a r,, SPP:DHM 443599.1 (25900.001 ) 5/17/07 IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW ZEPLIN' S SECURITY GROUP, V. ALARM CAPITAL ALLIANCE, V. FRED W. ZEPLIN, Plaintiff Defendant Additional Defendant No. 07-848 Civil Term ACCEPTANCE OF SERVICE I accept service of the Defendant's Joinder Complaint on behalf of Additional Defendant Fred W. Zeplin and certify that I am authorized to do so. Dated: > ?J By ? ? ?. s-t? ;. ? .,,t -ct y i- ?S ?~. f...,, ? ? ?? ?ra.?{ ,? ? s ? {"} i. ? ? ? ZEPLIN' S SECURITY GROUP, Plaintiff, V. ALARM CAPITAL ALLIANCE, Defendant, V. FRED W. ZEPLIN, Additional Defendant. t IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA NO: 07-848 CIVIL TERM CIVIL ACTION -LAW NOTICE TO PLEAD TO: Alarm Capital Alliance c/o Susan P. Peipher, Esquire Blakinger, Byler & Thomas, P.C. 28 Penn Square Lancaster, PA 17603 You are hereby notified to plead to the within document within twenty (20) days after service hereof, or a default judgment may be entered against you. Respectfully submitted, Mancke, Wagger, Spreha & McQuillan By 'Rich er, Esquire I.D. #23W3 2233 North Front Street Harrisburg, PA 17110 (717) 234-7051 Attorney for Defendant DATE: :P 1 ZEPLIN'S SECURITY GROUP, Plaintiff, V. ALARM CAPITAL ALLIANCE, Defendant, V. FRED W. ZEPLIN, Additional Defendant. : IN THE COURT OF COMMON PLEAS : CUMBERLAND COUNTY, PENNSYLVANIA NO: 07-848 CIVIL TERM CIVIL ACTION -LAW ANSWER TO NEW MATTER: COUNTERLAIM AND JOINDER COMPLAINT AGAINST ADDITIONAL DEFENDANT FRED W. ZEPLIN AND NOW, comes the Counterclaim Defendant, hereinafter referred to as "Corporation," (Corp.), and the Additional Defendant, Fred W. Zeplin, hereinafter referred to as "Zeplin," by and through their attorneys, Mancke, Wagner, Spreha & McQuillan, and files the following: ANSWER TO NEW MATTER 13. No answer is required. 14. No answer is required as this is a legal conclusion. 15. No answer is required as this is a legal conclusion. 16. No answer is required as this is a legal conclusion. 17. No answer is required as this is a legal conclusion. 18. No answer is required as this is a legal conclusion. 19. No answer is required as this is a legal conclusion. 20. No answer is required as this is a legal conclusion. 21. No answer is required as this is a legal conclusion. WHEREFORE, answering Defendants request the Court to dismiss the New Matter. COUNTERCLAIMMJOINDER COMPLAINT AND NOW, comes the above Defendants, hereinafter referred to as Counterclaim Defendant (Corporation), and Additional Defendant, hereinafter referred to as "Zeplin," and answers as follows: 1. Admitted. 2. Admitted. 3. Admitted. 4. Denied. It is denied that the claims against Corporation and Zeplin arise out of the same transactions or occurrences upon which the Plaintiffs cause of action is based. 5. Admitted. By way of further answer, Zeplin is referred to as "shareholder" in the Agreement. 6. Admitted. 7. Admitted. -2- 8. Denied. It is denied that pursuant to §7.3(b) of the Agreement, the Corporation and Zeplin were obligated to bill for any period of time. 9. Denied. It is denied that bills were mailed by Corporation and Zeplin, and it is further denied that they did not reflect that payments were to be made to the Counterclaim Plaintiff. 10. Denied. It is denied that Corporation and Zeplin made any errors or that any payments were made directly to Zeplin. 11. It is admitted that Corporation received billing payments in the amount of $39,498.83, but it is expressly denied that Zeplin received any amounts. 12. It is admitted that the Agreement speaks for itself. 13. Denied. It is denied that demands were made against the Corporation and Zeplin, and it is further denied that the Corporation and Zeplin failed to pay over to Counterclaim Plaintiff the amounts of the December 2005 billing. 14. Corporation and Zeplin are without information to form a belief as to whether or not the action of the Counterclaim Plaintiff was appropriate in debiting dealer account, therefore, the same is denied and strict proof is demanded at the time of trial. 15. Denied. It is denied that the Corporation and Zeplin are obligated jointly and severally to pay to the Counterclaim Plaintiff within ten (10) days of delivery of the Dealer Account report, and it is further that any such obligation is set forth in §7.7 of the contract. -3- 16. Denied. It is denied that the net amount due on the Dealer Account of the Counterclaim Plaintiff is $28,644.12. 17. Denied. It is denied that the Corporation and Zeplin willfully and purposely misrepresented facts relating to accounts sold to the Counterclaim Plaintiff. 18. Denied. It is denied that the Counterclaim Plaintiff is owed any monies for missing contracts, and it is further denied that there are any missing contracts. 19. The answering Defendants, Corporation and Zeplin, are without information to form a belief concerning averment 19, therefore, the same is denied and strict proof is demanded at the time of trial. 20. Admitted. 21. Denied. It is denied that the Corporation or Zeplin owes any monies to the Counterclaim Plaintiff by virtue of cancelled accounts and/or reduced rates or adjustments in revenue in the amount of $149,035.66. 22. Denied. It is denied that Counterclaim Plaintiff is owed any monies for missing contracts, Dealer Account, or revenue pursuant to the terms of the Purchase Agreement, and it is specifically denied that the amount of $180,603.88 is owed to the Counterclaim Plaintiff. WHEREFORE, Corporation and Zeplin request this Court to dismiss the New Matter. -4- COUNT I - BREACH OF CONTRACT 23. Answers to paragraphs 13 through 22 above are incorporated herein by reference and made a part hereof. 24. Denied. It is denied that the Corporation and Zeplin failed to pay a portion of $180,603.88 to Counterclaim Plaintiff, and it is expressly denied that any such sums are due and owing. 25. Denied. It is denied Corporation and Zeplin owe any obligation, therefore, it is denied that they failed to pay, and it is further denied that there was a breach of any obligation by the Corporation and Zeplin under the Purchase Agreement. WHEREFORE, the Corporation and Zeplin requests that Count I of the Counterclaim be dismissed. COUNT H - CONVERSION 26. Answers to paragraphs 13 through 25 above are incorporated herein by reference and made a part hereof. 27. Denied. It is denied that the Corporation and Zeplin exercised unlawful control over the assets of the Counterclaim Plaintiff, and it is further denied that they took any payments associated with the December 2005 billing, and further denied that they refused to remit the payments to Counterclaim Plaintiff. -5- 28. Denied. It is denied that the Corporation and Zeplin have no right, title, interest or claim to the revenue associated with the December 2005 billing to the exclusion of the Counterclaim Plaintiff. 29. Denied. It is denied that any amounts were taken by Corporation or Zeplin, and it is further denied that any amounts are due and owing the Counterclaim Plaintiff, expressly denying that $39,498.83 is due and owing. WHEREFORE, Corporation and Zeplin request Count 11 of the Counterclaim be dismissed. COUNT III - NEGLIGENT MISREPRESENTATION 30. Answers to paragraphs 13 through 29 above are incorporated herein by reference and made a part hereof. 31. Denied. It is denied that the Corporation and Zeplin had a duty to disclose accurate facts concerning the contractual obligations and anticipated revenue of the accounts subject to the Purchase Agreement. 32. Denied. It is denied that the Corporation and Zeplin made false and deceptive representations about material facts, and it is further denied that they misrepresented the number and validity of the accounts and the anticipated revenue from each account in an effort to achieve a purchase price acceptable to SAFE. -6- 33. Denied. It is denied that the Corporation and Zeplin failed to use reasonable care and competence in obtaining and communicating information concerning the accounts. 34. Denied. It is denied that the Corporation and/or Zeplin knew or should have known that any representations they made were false and grossly inaccurate, and it is expressly denied that either has made any false or grossly inaccurate claims concerning contractual obligations of the account or anticipated revenue. 35. Denied. It is denied that Counterclaim Plaintiff did not have ready access to information concerning the accounts prior to closing. It is expressly denied that there was any reliance upon the information provided by Corporation and/or Zeplin prior to closing. 36. Denied. It is denied that Counterclaim Plaintiff has sustained any damages, and it is further denied that any representations were made by the Corporation and/or Zeplin. WHEREFORE, Corporation and Zeplin request Count III of the Counterclaim be dismissed. COUNT IV - INTENTIONAL NHSREPRESENTATIONMRAUD 37. Answers to paragraphs 13 through 36 above are incorporated herein by reference and made a part hereof. 38. Denied. It is denied that the Corporation and/or Zeplin made any false and deceptive representations about material facts related to the contractual obligations and the revenue of the accounts subject to the Purchase Agreement. It is further denied that the Counterclaim Plaintiff -7- relied or intended to rely on any such information. It is expressly denied that the Corporation and Zeplin misrepresented the number and validity of the accounts and the anticipated revenue in order to achieve a purchase price acceptable to the secured lender. 39. Denied. It is denied that the Corporation and/or Zeplin knew or should have known that any representations were false and grossly inaccurate. It is expressly denied that any such representations were made by either that were false or grossly inaccurate. 40. Denied. It is denied that Counterclaim Plaintiff did not have ready access to the information concerning the accounts prior to closing, and it is further denied that they did not have access to information provided by the Corporation and/or Zeplin prior to closing. 41. Denied. It is denied that the Corporation and/or Zeplin have caused any damage to the Counterclaim Plaintiff, and it is expressly denied that any misrepresentations were made. 42. Denied. It is denied that the Corporation and/or Zeplin engaged in any conduct that was outrageous, and it is further denied that they engaged in any conduct that amounted to gross negligence and reckless indifference to the rights and interests of the Counterclaim Plaintiff. WHEREFORE, Corporation and Zeplin request the Court to dismiss Count IV of the Counterclaim. COUNT V - VIOLATION OF NON-SOLICITATION AGREEMENT 43. Answers to paragraphs 13 through 42 above are incorporated herein by reference and made a part hereof. -8- 44. Admitted. 45. It is admitted that the terms of the Agreement provide the same, however, it is expressly denied from inference that the Corporation or Zeplin disclosed any confidential information. 46. It is admitted that the Agreement speaks for itself, and to the extent an inference is made that Corporation or Zeplin contacted or solicited anyone in violation of the Agreement, it is expressly denied. 47. Denied. It is denied that the Corporation or Zeplin threatened to breach the terms of the Agreement, and it is expressly denied that Exhibit "C" makes reference to the same. 48. Denied. It is denied that the Corporation or Zeplin engaged in any actions now or potential that would violate any terms of the Non-Solicitation Agreement. 49. It is admitted that the Agreement speaks for itself, however, it is expressly denied that any such violations were perpetrated by the Corporation or Zeplin that would entitle injunctive relief to the Counterclaim Plaintiff. 50. It is admitted that the Agreement speaks for itself, but it is expressly denied that the Counterclaim Plaintiff has suffered irreparable and continuing injury or monetary damages. 51. Denied. It is denied that the Corporation or Zeplin are to be enjoined and restrained from any conduct, threatened or actual, in that they have not engaged in any conduct in violation -9- of the Agreement, therefore, the Counterclaim Plaintiff has not suffered any immediate, substantial or irreparable harm. 52. Denied. It is expressly denied that the Corporation or Zeplin will be unjustly enriched, and it is expressly denied that they have engaged in any unlawful conduct. 53. Denied. It is denied that any injunction should be issued as against the Corporation or Zeplin, and it is expressly denied that they have engaged in wrongful acts. 54. Denied. It is denied that the Counterclaim Plaintiff has suffered any injury, and it is further denied that they are entitled to any kind of injunction. 55. Denied. It is denied that the Counterclaim Plaintiff has no adequate remedy at law, primarily because there was no harm or injury that were caused by the Corporation or Zeplin, and it is expressly denied that they engaged in any unlawful and unauthorized actions. WHEREFORE, Corporation and Zeplin request the Court to dismiss Count V of the Counterclaim. COUNTERCLAIM OF FRED ZEPLIN. INDIVIDUALLY V. ALARM CAPITAL ALLIANCE AND NOW, comes the Additional Defendant, Fred W. Zeplin, by and through his attorneys, and files the following Counterclaim as against the Defendant, Alarm Capital Alliance, in its capacity as the Counterclaim Plaintiff: -10- I S 56. Paragraphs 13 through 55 above are incorporated herein by reference and made a part hereof 57. The Account Purchase and Sales Agreement identifies Fred W. Zeplin in his individual capacity as a shareholder, as more particularly set forth in Exhibit "A" attached to the Counterclaim of Alarm Capital Alliance. 58. Pursuant to said contract, Fred W. Zeplin in his individual capacity was not obligated to do any billing as set forth in the Counterclaim by Counterclaim Plaintiff. 59. Fred W. Zeplin, in his individual capacity, was not obligated to make any payments over to the Counterclaim Plaintiff in its Counterclaim against Fred W. Zeplin, individually. 60. Pursuant to the provisions of the Agreement, Fred W. Zeplin, individually, was not obligated to pay any monies nor owes any monies to the Counterclaim Plaintiff. 61. As a result of the Counterclaim Plaintiffs action against Fred W. Zeplin, in his individual capacity and joining him as an additional defendant, when no cause of action exists, Fred W. Zeplin, in his individual capacity, has been forced to incur legal fees for which he counterclaims as against the Counterclaim Plaintiff, Alarm Capital Alliance. 62. Upon belief of Fred W. Zeplin in his individual capacity, he will be obligated to pay legal fees in the amount of a minimum of $150.00 per hour for all services rendered, and therefore, requests that the Counterclaim Plaintiff, Alarm Capital Alliance, pay unto Fred W. -11- Zeplin in his individual capacity, reimbursement of all legal fees for the wrongful inclusion in the Counterclaim Complaint of Alarm Capital Alliance. WHEREFORE, Additional Defendant, Fred W. Zeplin, prays this Court to grant the relief as requested. Date: 6 Respectfully submitted, Mancke, W Spreha & McQuillan Attorneys for Corporation and Zeplin -12- 2233 North Front Street Harrisburg, PA 17110 (717) 234-7051 11 , VERIFICATION I verify that the statements made in the foregoing document are true and correct. I understand that false statements herein are made subject to the penalties of 18 Pa.C.S.A. Section 4904, relating to unworn falsification to authorities. Z DATE: lo0 VERIFICATION I verify that the statements made in the foregoing document are true and correct. I understand that false statements herein are made subject to the penalties of 18 Pa.C.S.A. Section 4904, relating to unworn falsification to authorities. Yn; ?-, I) ?-- , , , " - DATE: G?ti?? 0 1 4 , 0 CERTIFICATE OF SERVICE I, Debra K. Spinner, secretary in the law firm of Mancke, Wagner, Spreha & McQuillan, do hereby certify that I am this day serving a copy of the foregoing document to the following persons and in the manner indicated below, which service satisfies the requirements of the Pennsylvania Rules of Civil Procedure, by depositing the same in the United States Mail, Harrisburg, Pennsylvania, with first class postage, prepaid, and addressed as follows: Susan P. Peipher, Esquire Blakinger, Byler & Thomas, P.C. 28 Penn Square Lancaster, PA 17603 Debra K. Spinner, Secretary Mancke, Wagner, Spreha & McQuillan 2233 North Front Street Harrisburg, PA 17110 P. Richard Wagner, Esquire Attorney for Corporation and Zeplin Date: ?' ? ? ?? C7 ?i r - _.? C::? ? ?? :_ :: :: r- ?? i : ?-? ? c? ? ?' ? `? =' - - 5rr, _ ? ? ?? ? -? tPP:DHM 445629.1 ( 25900.001 ) 6/14/07 IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW ZEPLIN'S SECURITY GROUP, V. ALARM CAPITAL ALLIANCE, FRED W. ZEPLIN, NOTICE TO PLEAD To: Additional Defendant Fred W. Zeplin P. Richard Wagner, Esquire 2233 North Front Street Harrisburg, PA 17110 You are hereby notified to file a written response to the enclosed New Matter within twenty (20) days from service hereof, or a default judgment may be entered against you. Dated: V. Plaintiff Defendant No. 07-848 Civil Term Additional Defendant BLA GER, BY & THOMAS, P.C. By: Susan P. Peipher, Esq ire Attorney I.D. #87580 28 Penn Square Lancaster, PA 17603 (717) 299-1100 Attorneys for Defendant/Counterclaim Plaintiff Alarm Capital Alliance II, LLC %PP:DHM 445629.1 ( 25900.001 ) 6/14107 IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW ZEPLIN' S SECURITY GROUP, V. ALARM CAPITAL ALLIANCE, V. FRED W. ZEPLIN, Plaintiff Defendant Additional Defendant No. 07-848 Civil Term DEFENDANT ALARM CAPITAL ALLIANCE'S ANSWER TO COUNTERCLAIM OF FRED ZEPLIN WITH NEW MATTER 56. No response required. 57. Denied. The Account Purchase and Sales Agreement is written document, the terms of which speak for themselves. 58. Denied as a legal conclusion to which no response is necessary. 59. Denied as a legal conclusion to which no response is necessary. 60. Denied as a legal conclusion to which no response is necessary. 61. Denied as a legal conclusion to which no response is necessary. 62. Denied. It is specifically denied that Fred Zeplin has been wrongful included in the Counterclaim of Alarm Capital Alliance. Strict proof is demanded. WHEREFORE, Counterclaim Plaintiff Alarm Capital Alliance II, LLC demands judgment in its favor and against Counterclaim Defendant Zeplin Security Group, Inc. and t*PP:DHM 445629.1 (25900.001) 6/14107 Additional Defendant Fred W. Zeplin, jointly and severally, for $180,603.88 together with costs and other relief this Court deems appropriate. NEW MATTER 63. Defendant Alarm Capital Alliance incorporates by reference its Answer to Plaintiff s Complaint with New Matter and Counterclaim and paragraphs 56 through 62 of its Answer to Defendant Zeplin's Counterclaim. 64. Defendant Zeplin's Counterclaim fails to state a cause of action upon which relief may be granted. 65. The Account Purchase and Sales Agreement specifically obligates Defendant Fred W. Zeplin in his individual capacity to make payment and be responsible for the claims set forth in the Counterclaim. WHEREFORE, Counterclaim Plaintiff Alarm Capital Alliance II, LLC demands judgment in its favor and against Counterclaim Defendant Zeplin Security Group, Inc. and Additional Defendant Fred W. Zeplin, jointly and severally, for $180,603.88 together with costs and other relief this Court deems appropriate. Dated: (I?I BLAKINGER, BYLER & THOMAS, P.C. By: G Affli? Susan P. Peipher, Esqu' e Attorney I.D. #87580 28 Penn Square Lancaster, PA 17603 (717) 299-1100 Attorneys for Defendant/Counterclaim Plaintiff Alarm Capital Alliance II, LLC 2 'SPP:DHM 445629.1 ( 25900.001 ) 6/8/07 VERIFICATION I, Gary Welsh, verify that I am the Chief Operating Officer of Alarm Capital Alliance II, LLC and, as such, I am authorized to make this verification on its behalf and that the statements made in Defendant Alarm Capital Alliance's Answer to Counterclaim of Fred Zeplin with New Matter are true and correct. This Verification is subject to the penalties of 18 Pa.C.S.A. § 4904, relating to unsworn falsification to authorities. Dated: b 0 ALARM CAPITAL ALLIANCE II, LLC Gary is hief Operating Officer 3`PP:DHM 445629.1 (25900.001 ) 6/14/07 CERTIFICATE OF SERVICE I HEREBY CERTIFY that I have this day served the Defendant Alarm Capital Alliance's Answer to Counterclaim of Fred Zeplin with New Matter upon the persons and in the manner indicated below. Service by first-class mail as follows: P. Richard Wagner, Esquire 2233 North Front Street Harrisburg, PA 17110 Dated: WL&?Ul_ BLAKINGER, BYLER & THOMAS, P. C. By: Susan P. Peipher, Esquire Attorney I.D. #87580 28 Penn Square Lancaster, PA 17603 (717) 299-1100 Attorneys for Defendant/Counterclaim Plaintiff Alarm Capital Alliance II, LLC 4 ._. ? .?;` . ? '? -_ C?:- ?? ? ?.?. = ? - _- r??z ? ?w: ?,, y SHERIFF'S RETURN - OUT OF COUNTY s- `+ CASE NO: 2007-00848 P COMMONWEALTH OF PENNSYLVANIA: COUNTY OF CUMBERLAND ZEPLIN'S SECURITY GROUP VS ALARM CAPITAL ALLIANCE R. Thomas Kline , Sheriff or Deputy Sheriff who being duly sworn according to law, says, that he made a diligent search and and inquiry for the within named DEFENDANT , to wit: ALARM CAPITAL ALLIANCE but was unable to locate Them deputized the sheriff of DELAWARE in his bailiwick. He therefore serve the within WRIT OF SUMMONS County, Pennsylvania, to On March 7th , 2007 , this office was in receipt of the attached return from DELAWARE Sheriff's Costs: So answers:-- Docketing 18.00 Out of County 9.00 Surcharge 10.00 R. Thomas ine Dep Delaware Co 34.80 Sheriff o Cumberland County Postage 1.02 72.82 ? 3f u?,. 03/07/2007 MANCKE WAGNER SPREHA MCQUILLAN Sworn and subscribe to before me this day of A. D. Iii" The Court of Common Pleas of Cumberland County, Pennsylvania Zeplin's Security Group vs. Alarm Capital Alliance No. 07-848 civil Now, February 15, 2007 , I, SHERIFF OF CUMBERLAND COUNTY, PA, do hereby deputize the Sheriff of Delaware County to execute this Writ, this deputation being made at the request and risk of the Plaintiff. Sheriff of Cumberland County, PA Affidavit of Service Now, within upon at by handing to a and made known to copy of the original the contents thereof. So answers, Sheriff of Sworn and subscribed before me this day of , 20 COSTS SERVICE $ MILEAGE AFFIDAVIT County, PA 20 , at o'clock M. served the We ?ti? of. C?Curri?er ? Q 1 411- v - RONNY R. ANDERSON R. THOMAS KLINE Sheriff Chief Deputy EDWARD L. SCHORPP JODY S. SMITH Solicitor OFFICE OF THE SHERIFF Real Estate Deputy One Courthouse Square Carlisle, Pennsylvania 17013 1? ?7 TO: Hon. Joseph McGinn Delaware County Sheriff Dear Sheriff: Zeplin's Security Group RE:. VS Alarm Capital Alliance 07-848 civil Enclosed please find Writ of Summons to be served upon ?• in your County. Kindly make service thereof and send us your return of service. .11 A014-7 CAPI*fift I- 5410 A1`r esS 13y LiL??TI?' 3L??? P'}' •? &XIt.- A Enclosures: Swom to and sub before the this--U-day of 20t?J. Very truly yours, R. Thomas Kline, Sheriff Cumberland County, Pennsylvania 7 COMMONWEALTH OF PENNSYLVANIA NOTARIAL SEAL GRACE M. SPECK, Notary Public Media Boro., Delaware County M Commission Expires August 3, 2010 X 1? Q 4, ,)a/ ? 1 W?/ ?-Sq ?bof ZEPLIN'S SECURITY GROUP, Plaintiff, V. ALARM CAPITAL ALLIANCE, Defendant, V. FRED W. ZEPLIN, Additional Defendant. IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA NO: 07-848 CIVIL TERM CIVIL ACTION -LAW ANSWER TO NEW MATTER AND NOW, comes the Additional Defendant, Fred W. Zeplin, by and through his attorneys, Mancke, Wagner, Spreha & McQuillan, and files the following Answer To New Matter: 63. No answer is required. 64. Denied. It is denied that the Counterclaim fails to state a cause of action. 65. Denied. It is denied that the Agreement set forth in paragraph 65 obligates the Additional Defendant to be individually responsible for payments. WHEREFORE, Additional Defendant requests the Court to dismiss the New Matter. Respectfully submitted, Mancke, Wagner, Spreha & McQuillan P, c 409per, Esquire #23103 2233 North Front Street Harrisburg, PA 17110 (717) 234-7051 Attorneys for Additional Defendant Date: 7 D 7 -2- VERIFICATION I verify that the statements made in the foregoing document are true and correct. I understand that false statements herein are made subject to the penalties of 18 Pa.C.S.A. Section 4904, relating to unsworn falsification to authorities. 7 DATE: z Lo -T7 CERTIFICATE OF SERVICE I, Debra K. Spinner, secretary in the law firm of Mancke, Wagner, Spreha & McQuillan, do hereby certify that I am this day serving a copy of the foregoing document to the following persons and in the manner indicated below, which service satisfies the requirements of the Pennsylvania Rules of Civil Procedure, by depositing the same in the United States Mail, Harrisburg, Pennsylvania, with first class postage, prepaid, and addressed as follows: Susan P. Peipher, Esquire Blakinger, Byler & Thomas, P.C. 28 Penn Square Lancaster, PA 17603 By_ c4t-? Debra K. Spinner, S retary Mancke, Wagner, Spreha & McQuillan 2233 North Front Street Harrisburg, PA 17110 P. Richard Wagner, Esquire Attorney for Plaintiff ?_ Date: '71fl-e ^.) ZEPLIN'S SECURITY GROUP, Plaintiff, IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA V. ALARM CAPITAL ALLIANCE, Defendant, NO: 07-848 V. FRED W. ZEPLIN, Additional Defendant. CIVIL ACTION PRAECIPE TO WITHDRAW APPEARANCE Please withdraw my appearance on behalf of the Defendant, Fred W. Zeplin, in the above- captioned matters. Respe submitted, Date R?'e a er, Esq. ID?k : 3103 2233 North Front Street Harrisburg, PA 17110 PRAECIPE OF ENTRY OF APPEARANCE Please enter my appearance on behalf of the Defendant, Fred W. Zeplin, in the above-captioned matters. Respectfully submitted, 41401, Date Wayman, Irvin & McAuley, LLC Firlp #583 Grant Street 1624 Frick Building Pittsburgh, PA 15219 - (,I G I C Pv V j ?i (y ? 07 S.„,