DEFINITIVE PURCHASE AGREEMENT
AGREEMENT, made this 2nd day of January 1998, by and between
MANCHESTER EQUIPMENT CO., INC., a Corporation organized and existing under and
by virtue of the laws of the State of New York, with a principal place of
business at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (hereinafter referred to
as the "Purchaser or Manchester"), ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, an individual residing at
▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, an
individual residing at ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, (hereinafter
referred to as the "Seller" or "Sellers" and/or "Shareholder", or
"Shareholders"), COASTAL OFFICE PRODUCTS, INC., a Corporation organized and
existing under the laws of the State of Maryland, with a principal place of
business at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (hereinafter referred to
as the "Company").
W I T N E S S E T H:
WHEREAS, the Company is the owner and operator of a computer sales,
service and repair business conducted at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇ and the Seller and/or shareholder are the sole stockholders, directors,
and chief executive officers in the Company, and as such they represent that
they hold such capital stock without charge or lien against it, and
WHEREAS, the Sellers and/or Shareholders have made certain
representations and warranties as to the "Company Assets" and "Company
Liabilities" as more particularly defined in the within Agreement or Schedules
annexed thereto, and
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WHEREAS, the Purchaser desires to purchase one hundred (100%) percent
of the right, title and interest of the Seller Shareholder in the capital stock
of the Company.
NOW, THEREFORE, in consideration of the sum of One ($1.00)
Dollar and other good and valuable consideration, receipt of which is hereby
acknowledged, and the mutual agreements hereinafter set forth, the parties
hereto agree as follows:
Definitions: The following terms shall have the meaning hereby assigned in
this Agreement as well as any other Agreement which is collateral hereto:
"Assets" means all right, title, and interest in and to all of the
assets of Coastal or the Company as set forth on Exhibit "A", including all of
its (a) real property, leaseholds and sub-lease holds therein, improvements,
fixtures, and fittings thereon, and easements, rights-of-way, and other
appurtenants thereto (such as appurtenant rights in and to public streets), (b)
tangible personal property (such as machinery, equipment, Inventory), (c)
intellectual property, goodwill associated therewith, the trade name including
"Coastal Office Products, Inc.", licenses and sub-licenses granted and obtained
with respect thereto, and rights thereunder, remedies against infringements
thereof, and rights to protection of interests therein under the laws of all
jurisdictions, (d) leases, sub-leases, and rights thereunder, (e) agreements,
contracts, indentures, mortgages, instruments, security interests, guaranties,
other similar arrangements, and rights thereunder, (f) accounts, notes, and
other receivables, (g) securities, if any, (h) claims, deposits, prepayments,
refunds, causes of action, choses in action, rights of recovery, rights of set
off, and rights of recoupment (including any such item relating to the payment
of Taxes), (i) franchises, approvals, permits, licenses, registrations,
certificates, variances, and similar rights obtained from governments and
governmental agencies, (j) books, records, ledgers, files, documents,
correspondence, lists, plats, architectural plans, drawings, and specifications,
creative materials, advertising and promotional materials, studies,
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reports, and other printed or written materials, (k) any cash, including a
certain money market deposit account having a present principal value of Three
Hundred Seventy-eight Thousand, One hundred ninety-one and 34/100 ($378,230.45)
Dollars, (l) the corporate charter, qualifications to conduct business as a
foreign corporation, arrangements with registered agents relating to foreign
qualifications, taxpayer and other identifications numbers, seals, minute books,
stock transfer books, blank stock certificates,, and other documents relating to
the organization, maintenance, and existence of the Company as a corporation;
(m) any of the rights of the Company under this Agreement.
"Adverse Consequences" means all actions, suits, proceedings, hearings,
charges, complaints, claims, judgments, orders, decrees, rulings, damages,
penalties, fines, costs, obligations, liens, losses, expenses, and fees,
including court costs and reasonable attorneys' fees and expenses.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"Affiliated Group" means any affiliated group within the meaning of Code
Sec. 1504(a) or any similar group defined under a similar provision of state,
local, or foreign law.
"Cash" means cash and cash equivalents (including marketable securities and
short term investments) calculated in accordance with GAAP applied on a basis
consistent with the preparation of the Closing Date Financial Statements.
"Closing" has the meaning set forth in Paragraph "THIRD" below.
"Closing Date" has the meaning set forth in Paragraph "THIRD" below.
"Closing Date Financial Statements" means the financial statements of the
Company to be prepared by the Company at its cost reflecting the financial
condition of the Company as of the day prior to the Closing Date, prepared in
accordance with GAAP and in accordance with the Company's
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previous financial statements and to be delivered to the Parties within ninety
(90) days of the Closing Date and accepted by the Parties in writing. In the
event of a dispute regarding the Closing Date Financial Statements which cannot
be resolved by the Parties within fifteen (15) days of delivery of the Closing
Date Financial Statements, the Closing Date Financial Statements shall be
reviewed by the Jericho, New York office of KPMG Peat Marwick, which costs of
review shall be split equally by the Sellers and the Company.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidential Information" means any confidential business information
concerning the businesses and affairs of the Company that is not already
generally available to the public.
"Contingent Payments" has the meaning set forth on Paragraph "SECOND" (B)
below.
"Controlled Group of Corporations" has the meaning set forth in Code Sec.
1563.
"Employee Benefit Plan" means the Coastal Office Products, Inc. Profit
Sharing Plan and the Comprehensive Standard Health Benefit Plan, Preferred
Provider Plan for Coastal Office Products, Inc. administered by Blue Cross and
Blue Shield of Maryland, Inc.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA Sec.
3(2)
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA Sec.
3(1).
"Environmental, Health, and Safety Laws" means the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Resource
Conservation and Recovery Act of 1976, and the Occupational Safety and Health
Act of 1970, each as amended, together with all other laws (including rules,
regulations, codes, plans, injunctions, judgments, orders, decrees, rulings, and
charges thereunder) of federal, state, local, and foreign governments (and all
agencies thereof) concerning pollution or protection of the environment, public
health and safety, or employee health and safety, including laws relating to
emissions, discharges, releases, or threatened releases of
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pollutants, contaminants, or chemical, industrial, hazardous, or toxic materials
or wastes into ambient air, surface water, ground water, or lands or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of pollutants, contaminants, or chemical,
industrial, hazardous, or toxic materials or wastes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Extremely Hazardous Substance" has the meaning set forth in Sec. 302 of
the Emergency Planning and Community Right-to-Know Act of 1986, as amended.
"GAAP" means United States generally accepted accounting principles as in
effect from time to time.
"Indemnified Party" has the meaning set forth in the Indemnity Agreements
annexed hereto.
"Indemnifying Party" has the meaning set forth in the Indemnity Agreements
annexed hereto.
"Intellectual Property" means (a) all inventions, (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
re-issuance, continuations, continuations-in-part, revisions, extensions, and
re-examinations thereof, (b) all trademarks, service marks, trade dress, logos,
trade names, and corporate names, together with all translations, adaptations,
derivations, and combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals in connection
therewith, (c) all copyrightable works, all copyrights, and all applications,
registrations, and renewals in connection therewith, (d) all mask works and all
applications, registrations, and renewals in connection therewith, (e) all trade
secrets and confidential business information (including ideas, research and
development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings,
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specifications, customer and supplier lists, pricing and cost information, and
business and marketing plans and proposals), (f) all computer software
(including data and related documentation), (g) all other proprietary rights,
and (h) all copies and tangible embodiments thereof (in whatever form or
medium).
"Inventory" means all goods in process and finished goods, manufactured
and purchased parts and supplies and other items deemed inventory in accordance
with GAAP in the operation of the Company's business.
"Knowledge" means actual knowledge after reasonable investigation.
"Liabilities" means (a) all Liabilities of Coastal or the Company as
recorded on the November 30, 1997 balance sheet, and as adjusted for the passage
of time through the Closing Date in accordance with past custom and practice and
in the ordinary course of business of the Company and to be recorded on the
Closing Date Financial Statements, and subject to the representations and
warranties of Seller and the Company herein, (b) all obligations of the Company
under the agreements, contracts, leases, licenses, and other arrangements
referred to in the definition of Assets either (i) to furnish goods, services,
and other non-Cash benefits to another party after the Closing of (ii) to pay
for goods, services, and other non-Cash benefits that another party will furnish
to it after the Closing, (c) any Liability of the Company for unpaid Taxes for
the Company's fiscal year ending December 31, 1997, and for periods prior to the
Closing which were not due and payable prior to Closing, (d) any Liability or
obligation under any insurance policy, health or medical or life insurance plan
of the Company in effect as of the Closing Date, costs, amounts paid in
settlement, losses, expenses, or otherwise and whether such indemnification is
pursuant to any statute, charter documents, bylaw, agreement, or otherwise, any
Liability of the Company for costs and expenses incurred in connection with the
Agreement and the transactions contemplated hereby, any Liability
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or obligation of the Company under this Agreement, any Liability or obligation
of the Company, the Employee Benefit Plan, any Liability resulting from any
breach of contract, breach of warranty, tort infringement or violation of law.
"Liability" means any liability (whether known or unknown, whether asserted
or un-asserted, whether absolute or contingent, whether accrued or un-accrued,
whether liquidated or unliquidated, and whether due or to become due), including
any liability for Taxes.
"Manchester Options" means the options to acquire shares of Manchester
delivered to Sellers in accordance with the employment agreements substantially
in the form annexed hereto.
"Multi-employer Plan" has the meaning set forth in ERISA Sec. 3(37).
"Non Contingent Price" has the meaning set forth in Paragraph "SECOND" (A)
below.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency), excluded therefrom is the transaction contemplated by the within
Agreement.
"Party" has the meaning set forth in the preface above.
"Person" means an individual, a partnership, a corporation, an association,
a joint stock company, a trust, a joint venture, an unincorporated organization,
or a governmental entity (or any department, agency, or political subdivision
thereof).
"Pre-Tax Profit" shall be that meaning as set forth in and by the
"Employment Agreement" Paragraph "SEVENTH", which is annexed hereto as an
Exhibit hereof.
"Prohibited Transaction" has the meaning set forth in ERISA Sec. 406 and
Code Sec. 4975.
"Purchase Price" has the meaning set forth in Paragraph "SECOND" below.
"Reportable Event" has the meaning set forth in ERISA Sec. 4043.
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"Security Interest" means any mortgage, pledge, lien, encumbrance, charge,
or other security interest, other than (a) mechanic's, material men's and
similar liens, (b) liens for Taxes not yet due and payable or for Taxes that the
taxpayer is contesting in good faith through appropriate proceedings, (c)
purchase money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business and
not incurred in connection with the borrowing of money.
"Subsidiary" means any corporation with respect to which a specified Person
(or a Subsidiary thereof) owns a majority of the common stock or has the power
to vote or direct the voting of sufficient securities to elect a majority of the
directors.
"Tax" means any federal, state, local, or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Code Sec. 59A), customs
duties, capital stock, franchise, profits, withholding, social security (or
similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax or any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any Schedule or
attachment thereto, and including any amendment thereof.
"Third Party Claim" has the meaning set forth in Paragraph "EIGHTH" (d)
below.
FIRST: SALE OF STOCK- The Sellers agree to sell, transfer and assign one
hundred (100%) percent of the issued outstanding capital stock of the Company;
to wit: One Thousand (1,000) shares, pursuant to the terms and conditions
hereinafter set forth.
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SECOND: PURCHASE PRICE- The Purchaser agrees to buy all of the issued and
outstanding shares of the capital stock of Seller constituting one hundred
(100%) percent of all the issued and outstanding stock in the Company, for a
price of $4,661,524.60 subject to the conditions for "Contingent Payments" in
favor of the Sellers or Purchaser respectively in accordance with the following
terms and conditions except as modified by Paragraph "NINTH" of that certain
"Employment Agreement" which is an Exhibit hereto:
A) NON-CONTINGENT PAYMENTS:
1) $3,061,563.70 in cash payable by wire transfer, pursuant to Seller's
written instructions effected on January 5, 1998.
B) CONTINGENT PAYMENTS:
1) $800,000.00 in cash due and payable in a lump sum on or
before March 15, 1999, contingent upon the Company achieving FYE98 projections
of $10 Million gross in revenues and $1.3 Million in pre-tax profits ("the FYE
98 projections").
2) $800,000.00 in cash due and payable in a lump sum on or
before March 15, 2000, contingent upon the Company achieving FYE99 projections
of $11.7 Million in gross revenues and $1.5 Million in pre-tax profits ("the FYE
99 projections").
3) The contingent payments due and payable on March 15, 1999
and March 15, 2000 will be subject to the following conditions:
a) i. The contingent payment for fiscal year 1998 will be made in full if
the gross revenue and pretax profit for fiscal year 1998 meet or exceed the FYE
98 projections.
ii. The contingent payment for fiscal year 1999 will be made in full
if the gross revenue and pretax profit for fiscal year 1999 meet
or exceed the FYE 99 projections.
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b) i. The contingent payment for fiscal year 1998 will be reduced by
forty (40%) percent in the event gross revenue or pretax profit for the fiscal
year 1998 is between ninety (90%) percent and ninety-nine and 9/10 (99.9%)
percent of the FYE 98 projections.
ii. The contingent payment for fiscal year 1999 will be reduced
by forty (40%) percent in the event gross revenue or pretax profit for the
fiscal year 1999 is between ninety (90%) percent and ninety-nine and 9/10
(99.9%) percent of the FYE 99 projections.
c) i. The contingent payment for fiscal year 1998 will be reduced
by sixty (60%) percent in the event gross revenue or pretax profit for the
fiscal year 1998 is between eighty-five (85%) percent and eighty-nine and 9/10
(89.9%) percent of the FYE 98 projections.
ii. The contingent payment for fiscal year 1999 will be reduced
by sixty (60%) percent in the event gross revenue or pretax profit for the
fiscal year 1999 is between eighty-five (85%) percent and eighty-nine and 9/10
(89.9%) percent of the FYE 99 projections.
d) i. No contingent payment for fiscal year 1998 will be made in
the event gross revenue or pretax profit for the fiscal year 1998 is less than
eighty-five (85%) percent of the FYE 98 projections.
ii. No contingent payment for fiscal year 1999 will be made in
the event gross revenue or pretax profit for the fiscal year 1999 is less than
eighty-five (85%) percent of the FYE 99 projections.
e) i. An additional cash payment of $250,000.00 will be due and
payable on March 15, 1999 for fiscal year 1998, in the event that gross revenue
and pretax profits for fiscal year 1998 exceeds the FYE 98 projections by ten
(10%) percent or more.
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ii. An additional cash payment of $250,000.00 will be due on
March 15, 2000 for fiscal year 1999, in the event gross revenue and pretax
profits for fiscal year 1999 exceeds the FYE 99 projections by ten (10%) percent
or more.
C) Purchaser may, at Purchaser's sole option substitute an equivalent
amount of Manchester registered stock for the contingent cash payments due on
March 15, 1999 and March 15, 2000, provided that the price of Manchester stock
is at least Five and 00/100 ($5.00) Dollars, per share on the date the
contingent payment is due. Any stock substituted for the contingent cash
payments will be restricted in the respect that it will not be able to be
redeemed until six (6) months after the date of issue. The date of issue of any
stock substituted for a contingent cash payment will be the date on which the
pertinent contingent cash payment was due.
D) The Company shall cause a statement showing a detailed calculation
of Gross Revenue and Pre-Tax Profit to be delivered to Sellers not later than
(i) March 15, 1999, in case of fiscal year 1998, (ii) March 15, 2000, in case of
fiscal year 1999, and (iii) March 15, 2001, in case of fiscal year 2000 (the
"Performance Statement"). Concurrent with the delivery of the Performance
Statement, the Treasurer shall certify to Seller that the Performance Statement
was calculated in accordance with the provisions of the within Agreement.
Seller shall have reasonable access to all personnel of the
Company and shall have the right to review all books, accounting records and
other materials of the Company relevant to the preparation of the 1998, 1999 and
2000 Performance Statements. In addition, the Company shall use reasonable
efforts to cause Seller to have reasonable access to all materials and personnel
of the Company involved in the preparation of such Performance Statements and to
be permitted to review the Treasurer's work papers regarding same.
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In the event the Seller disagrees in any respect with the 1998
or 1999 Performance Statement, the Seller shall deliver to the Company, within
fifteen (15) days after the delivery by the Treasurer of such Performance
Statement to the Seller, a written notice specifying the matters to which it
objects. The Company and the Seller thereafter endeavor in good faith to resolve
any disagreement or dispute concerning the Performance Statement. In the event
the parties are able to resolve any such disagreement or dispute, they shall
promptly execute a document which sets forth the resolution of the disagreement
or dispute.
In the event the Company and the Sellers are unable to resolve
a disagreement or dispute concerning a Performance Statement within ten (10)
business days, the disagreement or dispute shall be submitted to a nationally
recognized firm of independent accountants (who shall not be the Purchaser's
duly appointed Auditors to be chosen by the Company and the Sellers; provided,
that if the parties are unable to agree on such accountants within fourteen (14)
days of the end of the ten (10) business day period, then the parties will,
within seven (7) days of the end of the fourteen (14) day period, jointly
request that the President of the American Arbitration Association select an
accountant with a nationally recognized accounting firm who shall not be the
Purchaser's duly appointed Auditors. Upon delivery of a written statement
setting forth the accountant's determination regarding the disagreement or
dispute, and the effect of such conclusion on the Performance Statement, such
determination shall be final and binding upon the Company and the Seller without
any further right of appeal.
The accountant selected to resolve a disagreement or dispute
concerning a Performance Statement shall have reasonable access to all personnel
of the Company and shall have the right to review all books, accounting records
and other materials pertaining to the relevant Performance Statement that the
accountant shall request.
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Fees and expenses of the accountant selected to resolve any
disagreement or dispute concerning a Performance Statement (a) shall be paid by
the Seller if, notwithstanding any modifications made to the Performance
Statement by the accountant, the Seller is not entitled to receive any greater
amount than he would have received if such disagreement or dispute had not been
submitted to the accountant, and (b) shall be paid by the Company, if as a
result of modifications made to the Performance Statement by the accountant, the
Seller is entitled to a greater amount than he would have received if the
disagreement or dispute had not been submitted to the accountant.
All sums due the Seller, after the resolution of any
disagreement or dispute concerning a Performance Statement, shall be paid to the
Seller within five (5) days of the date following which the Performance
Statement is deemed final and shall bear interest from and after the original
date due, as provided elsewhere in the within Agreement, until the date paid in
full at a rate which is equal to the prime rate announced by The Bank of New
York. THIRD: Closing - The Closing shall take place at the offices of ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ & ▇▇▇▇, Esqs., ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attorneys for
the Purchaser, on or about January 2, 1998 with an effective date of January 1,
1998.
A) At the Closing, the Seller shall deliver to the Purchaser:
1. Certificate -
A certificate or certification dated the Closing date, signed by the
Secretary of the Company setting forth:
(a) The authorized, outstanding and unissued capital stock of the Company;
(b) The names and addresses of the holders (of record and beneficially) of
such authorized and outstanding stock, and the number of shares owned by each;
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(c) The names and addresses of all directors and officers of the Company;
and
(d) The names of the officers authorized to execute and deliver the
documents and related instruments deliverable hereunder.
2. Stock Certificates-
Certificates for the Seller's stock, duly endorsed and with all necessary
documentary transfer tax stamps affixed and canceled. The Company shall
thereupon issue new certificates representing shares to be delivered to
Purchaser.
3. Corporate Records-
The complete and correct corporate minute books, Certificate of
Incorporation, By-Laws, stock certificates and stock transfer records of the
Company, and a current Certificate of Good Standing issued by the State of
Incorporation, with an accompanying certification from the secretary of the
Company attesting to said records being correct.
4. Resignations-
The written resignations of the Sellers as officers of the Company,
effective upon consummation of the Closing.
5. Contracts-
Originals of any and all written Contracts entered into by the Company,
which are presently in effect. For purposes of this provision the term
"Contracts" shall include any and all agreements between the company and any
other person or entity involving a consideration paid or to be paid by either
such party in excess of $10,000.00 in value.
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6. Creditors-
A Schedule of all accounts payable by the Company as of the date of Closing
which have accrued or been amended subsequent to the within agreement.
7. Indemnifications-
At Closing Seller will deliver indemnifications in the form set forth
annexed hereto.
8. Schedule of Assets and Liabilities-
A Schedule of any and all assets and liabilities as of the date of Closing.
9. General Releases-
a) The Selling shareholders shall deliver releases to the Company in the
form annexed.
b) The Release from the Broker in the form annexed.
10. A lease from BC and HC Properties, LLC to the Company in the form annexed.
B) At the Closing the Purchaser shall deliver the following:
1) An Indemnity Agreement in the form annexed.
2) Copy of a letter of direction to the Purchaser's transfer
agent as to grant of restricted shares as required under the Employment
Agreements referred to in Paragraph "FOURTH".
3) Certificate of Resolution of the Board of Directors
authorizing the within transaction.
4) An "Incentive Stock Option Agreement" as required under the
"Employment Agreement" referred to in Paragraph "FOURTH".
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C) On or before January 5, 1998:
1) Appropriate wire transfers totaling Three Million Sixty-one
Thousand Five Hundred Sixty-three and 70/100 ($3,061,563.70) Dollars as per
Paragraph "SECOND" A) 1).
FOURTH: EMPLOYMENT AGREEMENT- Each of the selling
Shareholders and Coastal, simultaneously with the Closing, shall enter into an
Employment Agreement in the forms annexed hereto.
FIFTH: BOOKS AND RECORDS- All of the books and records,
including but not limited to journals and work sheets, tax returns, bank
statements, accountant's records, daily diaries, contracts and other materials
used for the operation of the Company shall remain intact at the Company, and
shall not be removed from the Company offices without the permission of the
Purchaser, except to the extent that same were delivered at Closing.
SIXTH: SELLERS AGREEMENT TO PAY BROKER - Each of the Parties hereto
represents and warrants that it has not employed any broker or finder in
connection with this Agreement, or the transaction contemplated hereby, other
than ▇.▇. ▇▇▇▇▇ & Associates, Inc. and agrees to indemnify the other Party and
hold it harmless from any and all liabilities (including, but not limited to,
reasonable Attorneys fees and disbursements and Court costs paid or incurred in
connection with any such liabilities) for brokerage commissions or finder's fees
in connection with this Agreement asserted by any other party based upon
arrangements or agreements made or claimed to have been made by or in behalf of
such indemnifying party.
SEVENTH: A. Pre-Closing Obligations-
Parties hereby acknowledge and agree that the following has occurred
prior to or contemporaneous with the Closing:
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1.1 Seller, Shareholder and Company has afforded to the Attorneys and other
authorized representatives, free and full access during regular business hours,
to the books, records, personnel and properties of the Company.
1.2 Purchaser has had the right to make copies of the general
ledger, general journal, cash receipts and disbursements books, purchase book,
accounts receivable and accounts payable records, payroll records, canceled
checks, bank statements and copies of all city, state and federal tax returns
filed by the Company.
1.3 The Company's business was conducted only in the ordinary course.
1.4 The Company has maintained in force its insurance policies
currently in effect as of the date hereof, except to the extent that they may be
replaced with equivalent policies at lower rates approved by the Seller. If in
the Purchaser's opinion, additional coverage is reasonably necessary to keep
adequately insured all properties of the Company, Seller shall cause the
Company, at the written request of the Purchaser, and at the Company's expense,
to obtain such additional insurance from financially sound and reputable
insurers for a period ending no sooner than the close of business on the Closing
date.
1.5 Without the prior written consent of the Purchaser, no change has been
made in the Certificate of Incorporation or By-Laws of the Company.
1.6 No Change has been made in the Company's authorized, issued
and outstanding capital stock, and no options, warrants, rights or calls have
been granted with respect to any shares of such capital stock.
1.7 No dividend or other distribution or payment has been declared or made
in respect of any shares of the Company's stock.
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1.8 No contract, commitment, or other business transaction has been entered
into or terminated by the Company without Purchaser's prior written approval,
except such as are in the ordinary course of business.
1.9 Except as expressly provided herein, the Company has not (i) mortgaged,
pledged or subjected to lien or any other encumbrance any of its assets,
tangible or intangible; (ii) sold or transferred any fixed assets; (iii)
canceled any debts or claims except in each case in the ordinary course of
business, or (iv) sold, assigned or transferred any patents, trademarks, trade
names, copyrights, licenses or other intangible assets.
1.10 The Company has not increased compensation to be paid or become
payable to any officer, director, employee or agent (except regular or periodic
increases), nor enter into any purchase or sales Contract except in the regular
course of business, or made any material change in sales, marketing, pricing or
distribution policies.
1.11 The Company has maintained its business and properties substantially
intact, including its present operations, physical facilities, working
conditions, and relationships with lessors, licensors, suppliers, customers, and
employees.
B) Post-Closing Covenants-
The Parties agree as follows with respect to the period following the
Closing:
(a) General: In case at any time after the Closing any further
action is necessary or desirable to carry out the purposes of this Agreement,
each of the Parties will take such further action (including the execution and
delivery of such further instruments and documents) as the other Party
reasonably may request, all at the sole cost and expense of the
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requesting Party (unless the requesting Party is entitled to indemnification
therefore pursuant to the Indemnity Agreement annexed hereto.
(b) Litigation Support: In the event and for so long as any Party actively
is contesting or defending against any action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand in connection with (i) any
transaction contemplated under this Agreement or between any other agreement
collateral hereto, (ii) any fact, situation, circumstance, status, condition,
activity, practice, plan, occurrence, event, incident, action, failure to act,
or transaction on or prior to the Closing Date involving the business of the
Company as conducted prior to the Closing Date, the other Party will cooperate
with the contesting or defending Party and its counsel in the contest or
defense, make available its personnel, and provide such testimony and access to
its books and records as shall be necessary in connection with the contest or
defense, all at the sole cost and expense of the contesting or defending Party
(unless the contesting or defending Party is entitled to indemnification
therefor under an indemnity agreement annexed hereto.
EIGHTH: Representations and Warranties- Sellers and Company hereby
covenant, represent and warrant to the Purchaser that the statements contained
in this Paragraph "EIGHTH" are true and correct , both as of the date hereof and
as of the Closing date,( as though made then and as though the Closing Date were
substituted for the date of this Agreement) as follows:
1. Corporate Matters
(a) Valid Corporate Existence- The Company is a Corporation duly
organized and validly existing and in good standing under the laws of the
State of Maryland.
(b) Authority- The Company has all requisite corporate power and
authority to own its assets and properties, and to carry on its business as
now conducted. Sellers have the power and authority to enter into this
Agreement, and to carry out the transactions
-19-
contemplated hereby, including, without limitation, the authority to transfer
the Company's stock as herein provided.
(c) Capitalization; Stockholders of the Company- The Company has the number
of shares of authorized, issued and outstanding shares of capital stock as set
forth below:
1500 authorized,
1000 issued.
Sellers are the owners beneficially and of record of one hundred (100%)
percent of all issued and outstanding capital stock of the Company. There are no
outstanding options, Contracts, calls, demands, commitments, stock restriction
agreements or encumbrances of any character relating to its capital stock in
said Company, and no securities of the Company outstanding which by their terms
are convertible into capital stock. With the exception of a suit against the
Company by "Offit & ▇▇▇▇▇▇, PA" (Case Number 03-C-97-010683), that there are no
actions, litigations, judgments or executions now in force or pending against
the Sellers or the Company, nor have any petitions in bankruptcy or arrangements
been filed by or against the Sellers or the Company. That the sale of said stock
does not render the Seller insolvent. That the schedules of assets and
liabilities are true and complete representations of the liabilities and assets
of the Company.
(d) Subsidiaries- The Company does not own any capital stock or any other
interest in any other business entity, whether incorporated or unincorporated.
(e) Enforceability- This Agreement constitutes a binding and enforceable
agreement of both parties.
(f) Actions, Claims, etc.- With the exception of a suit against the Company
by "Offit & ▇▇▇▇▇▇, PA" (Case Number 03-C-97-010683), there are no claims,
suits,
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proceedings or investigations, governmental or private, pending or, so far as is
known to Seller, threatened, nor any order, injunction or decree outstanding,
against or relating to the Company or its property, assets or business. Seller
does not know or have any reasonable grounds to know of any basis for any such
claims, actions, suits, proceedings, investigations or orders, injunctions or
decrees; and Seller is not knowingly in violation of any applicable law,
regulation or ordinance and is not knowingly or otherwise in violation of any
order, injunction or decree, or any other requirement of any governmental body
or Court, relating to its property or business.
(g) Collective Bargaining- Except as set forth in and by the Schedule of
Employment Agreements annexed, the Company has no employment, union
or collective bargaining agreements.
(h) Miscellaneous- The Company has not (i) issued, delivered or agreed to
issue or deliver any stock, bonds or other corporate securities (whether
authorized and unissued or held in the treasury), or granted or agreed to grant
any options, warrants or other rights calling for the issue thereof; (ii)
borrowed or agreed to borrow any funds or incurred, or become subject to, any
obligation or liability (absolute or contingent) except obligations and
liabilities (other than tort liabilities) incurred in the ordinary course of
business; (iii) paid any obligation or liability (absolute or contingent) other
than current liabilities incurred in the ordinary course of business; (iv)
declared or made, or agreed to declare or make any payment of dividends or
distributions of any assets of any kind whatsoever to its stockholders, or
purchased, or agreed to purchase, any of the Company common stock; (v) except in
the ordinary course of business and as contemplated by this Agreement, sold or
transferred, or agreed to sell or transfer, any of its assets, property or
rights or canceled, or agreed to cancel, any debts or claims; (vi) except in the
ordinary course of business, entered or agreed to enter into any agreement or
arrangement granting any preferential rights to
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purchase any of the assets, property or rights of the Company or requiring the
consent of any party to the transfer and assignment of any such assets, property
or rights; (vii) suffered any losses or waived any rights of value which in the
aggregate are extraordinary or material considering the business of the Company
taken as a whole; (viii) except in the ordinary course of business, made or
permitted any amendment or termination of any Contract, agreement or license to
which it is a party if such amendment or termination is material considering the
business of the Company taken as a whole; (ix) except in accordance with its
normal and usual practice and except for the obligation to ▇▇▇▇▇▇ ▇▇▇▇▇
designated as and for a "consulting fee" in and by a certain Settlement
Agreement made May 14, 1997 between one ▇▇▇▇▇▇ ▇▇▇▇▇ and the Sellers and the
Company, made any accrual or arrangement for or payment of bonuses or special
compensation of any kind or any severance or termination pay to any present or
former officer of employee; and (x) except in accordance with its normal and
usual practice, increased the salary of any officer or employee.
(i) Title to Assets- Except to the extent inventory may be subject to
security interests of Deutsche Financial Corp. and/or Apple Computer, Inc., and
except to the extent that a security interest is noted upon any Certificate of
Title to a vehicle owned by the Company, the Company has good and marketable
title to, or a valid leasehold interest in, the properties and assets used by
them, located on their premises, or shown on the most recent financial
statements or acquired after the date thereof, free and clear of all Security
Interests, except for properties and assets disposed of in the Ordinary Course
of Business since the date of the most recent balance sheet. Without limiting
the generality of the foregoing, the Company has good and marketable title to
all of the Assets, free and clear of any Security Interest or restriction on
transfer.
(j) Financial Statements- Attached hereto as Exhibit "A" are the unaudited
balance sheets and statements of income and cash flow as of and for the period
from
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January 1, 1997 to November 30, 1997 , collectively, the "1997 Financial
Statements". The 1997 Financial Statements (including the Notes thereto, if any)
have been prepared in accordance with GAAP applied on a consistent basis
throughout the periods covered thereby, present fairly the financial condition
of the Company as of such dates and the results of operations of the Company for
such periods, are correct and complete, and are consistent with the books and
records of the Company (which books and records are correct and complete);
PROVIDED, HOWEVER, that the 1997 Financial Statements are subject to normal
year-end adjustments (which will not be material individually or in the
aggregate).
(k) Events Subsequent to November 30, 1997 Financial Statements- Since the
November 30, 1997 Financial Statements, there has not been any material adverse
change in the business, financial condition, operations, results of operations,
or future prospects of the Company. Without limiting the generality of the
foregoing, since that date:
(i) The Company has not sold, leased, transferred, or assigned
any of its assets, tangible or intangible, other than for a
fair consideration in the Ordinary Course of Business;
(ii) The Company has not entered into any agreement, contract,
lease, or license (or series of related agreements,
contracts, leases, and licenses) or other than in the
Ordinary Course of Business;
(iii) No party has accelerated, terminated, modified, or canceled
any agreement, contract, lease, or license (or series of
related agreements, contracts, leases, and licenses)
involving more than $10,000.00 to which the Company is a
party or is bound;
(iv) Other than increases in credit extensions under existing
agreements with Apple Computer, Inc. and Deutsche Financial
Services Corp. which the Company
-23-
may have incurred in the usual course of business, the
Company has not imposed any Security Interest upon any of
its assets, tangible or intangible;
(v) The Company has not made any capital expenditure (or series
of related capital expenditures) either involving more than
$2,500.00, or other than in the Ordinary Course of Business;
(vi) The Company has not issued any note, bond, or other debt
security or created, incurred, assumed, or guaranteed any
indebtedness for borrowed money or capitalized lease
obligation either involving more than $10,000.00 singly or
$50,000.00, in the aggregate;
(vii) Except as otherwise agreed to by the Purchaser, the Company
has not delayed or postponed the payment of accounts payable
and other Liabilities other than in the Ordinary Course of
Business;
(viii) The Company has not canceled, compromised, waived, or
released any right or claim (or series of related rights,
and claims) other than in the Ordinary Course of Business;
(ix) The Company has not granted any license or sub-license of
any rights under or with respect to any Intellectual
Property;
(x) Except for the stock held by the Sellers, the Company has
not issued, sold, or otherwise disposed of any of its
capital stock, or granted any options, warrants, or other
rights to purchase or obtain (including upon conversion,
exchange, or exercise) any of its capital stock;
-24-
(xi) The Company has not declared, set aside, or paid any
dividend or made any distribution with respect to its
capital stock (whether in cash or in kind) or redeemed,
purchased, or otherwise acquired any of its capital stock;
(xii)The Company has not experienced any material damage,
destruction, or loss (whether or not covered by insurance)
to its property;
(xiii) The Company has not made any loan to, or entered into any
other transaction with, any of the directors, officers, and
employees of the Company other than in the Ordinary Course
of Business;
(xiv)The Company has not entered into any employment contract or
collective bargaining agreement, written or oral, or
modified the terms of any existing employment contract or
collective bargaining agreement;
(xv) The Company has not granted any increase in the base
compensation of any of its directors, officers, and other
than in the Ordinary Course of Business;
(xvi) The Company has not adopted, amended, modified, or
terminated any bonus, profit-sharing, incentive, severance,
or other plan, contract, or commitment for the benefit of
any of the directors, officers, and employees of the Company
or taken any such action with respect to the existing
Employee Benefit Plan;
(xvii) The Company has not made any other change in employment
terms for any of its directors, officers, and employees
other than in the Ordinary Course of Business; (xviii) The
Company has not made or pledged to make any charitable or
other capital contribution other than in the Ordinary Course
of Business;
(xix The Company has not paid any amount to any third party with
respect to any Liability or obligation other than in the
Ordinary Course of Business;
-25-
(xx) There has not been any other material occurrence, event, incident,
action, failure to act, or transaction other than in the Ordinary
Course of Business involving the Company.
(l) Undisclosed Liabilities- The Company does not have any Liability (and,
to its and/or the Sellers' knowledge, there is no Basis for any present or
future action, suit, proceeding, hearing, investigation, charge, complaint,
claim, or demand against any of them giving rise to any Liability), except for
(i) Liabilities set forth on the face of the November 30, 1997 Financial
Statements (rather than in any notes thereto) (ii) Liabilities which have arisen
after the November 30, 1997 Financial Statement in the Ordinary Course of
Business (to the best of Seller's knowledge, none of which results from, arises
out of, relates to, is in the nature of, or was caused by any breach of
contract, breach of warranty, tort, infringement, or violation of law); and
(iii) that certain liability to ▇▇▇▇▇▇ ▇▇▇▇▇ designated as a consulting fee in
and by a Settlement Agreement between ▇▇▇▇▇▇ ▇▇▇▇▇, the Company and the Sellers
dated May 14, 1997, which obligation currently does not exceed $216,666.70.
(m) Legal Compliance- To its knowledge the Company has materially complied
with all applicable laws (including rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings, and charges thereunder) of
federal, state, local, and foreign governments (and all agencies thereof), and
no action, suit, proceeding, hearing, investigation, charge, complaint, claim,
demand, or notice has been filed or, to its and/or the Sellers' knowledge,
commenced against any of them alleging any failure so to comply except where
failure to comply would not have any material adverse effect upon the Company or
its business.
(n) Tax Matters-
-26-
(i) The Company has filed all Tax Returns that it was required to file
prior to the Closing Date. All such Tax Returns were correct and complete in all
respects. All Taxes owed by the Company (whether or not shown on any Tax Return)
have been paid. The Company currently is not the beneficiary of any extension of
time within which to file any Tax Return. No claim has ever been made by an
authority in a jurisdiction where the Company does not file Tax Returns that it
is or may be subject to taxation by that jurisdiction. There are no Security
Interests affecting any of the assets of the Company that arose in connection
with any failure (or alleged failure) to pay any Tax;
(ii) The Company has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder, or other third party;
(iii) Neither the Company nor any director nor officer (or employee
responsible for Tax matters) expects any authority to assess any additional
Taxes with respect to the Company for any period for which Tax Returns have been
filed. There is no dispute or claim concerning any Tax Liability of the Company
either (A) claimed or raised by any authority in writing or (B) as to which any
directors and officers (and employees responsible for Tax matters) of the
Company;
(iv) The Company has not waived any statute of limitations in as to
liabilities or Taxes of any nature or agreed to any extension of time with
respect to any liabilities or Tax assessments or deficiencies;
(v) The Company has not filed a consent under Code Sec. 341(f) concerning
collapsible corporations. The Company has not been a United States real property
holding corporation within the meaning of Code Sec. 897(c)(2) during the
applicable period specified in Code
-27-
Sec. 987 (c)(1)(A)(ii). The Company has not been a member of an Affiliated Group
filing a consolidated federal income Tax Return or (B) has any Liability for the
Taxes of any Person under any provision of federal, state, local, or foreign
law), as a transferee or successor by contract, or otherwise.
(o) Real Property- The Company does not own any real property. The Sellers
are presently the sole members of BC and HC Properties, LLC. That BC and HC
Properties, LLC is the owner in fee of the premises to be demised to the Company
pursuant to the lease annexed. That upon execution of the Lease by BC and HC
Properties, LLC as Landlord and the Company as Tenant, such Lease will establish
a valid leasehold interest as represented and described therein.
(p) Intellectual Property-
(i) The Company owns or has the right to use pursuant to
license, sub-licenses, agreement, or permission all Intellectual Property
necessary for the operation of its businesses as presently conducted. Each item
of Intellectual Property owned or used by the Company immediately prior to the
Closing hereunder will be owned or available for use by the Company subsequent
to the Closing hereunder;
(ii) To the best of the Seller's knowledge, the Company has
not interfered with, infringed upon, misappropriated, or otherwise come into
conflict with any Intellectual Property rights of third parties, and neither the
Company nor its directors and officers (any employees with responsibility for
Intellectual Property matters) has ever received any charge, complaint, claim,
demand, or notice alleging any such interference, infringement,
misappropriation, or violation (including any claim that the Company must
license or refrain from using any Intellectual Property rights of any third
party), to the knowledge of the Sellers and the knowledge of the Company and its
-28-
directors and officers (any employees with responsibility for Intellectual
Property matters), no third party has interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any Intellectual Property
rights of the Company.
(q) Tangible Assets- The Company owns or leases all buildings, machinery,
equipment, and other tangible assets necessary for the conduct of their
businesses as presently conducted. To the Seller's knowledge, each such tangible
asset is free from defects (patent and latent), has been maintained in
accordance with normal industry practice, is in good operating condition and
repair (subject to normal wear and tear), and is suitable for the purposes for
which it presently is used.
(r) Inventory- The inventory of the Company consists of manufactured and
purchased parts, goods in process, and finished goods, all of which is
merchantable and fit for the purpose for which it was procured, and none of
which is slow-moving, obsolete, damaged, or defective.
(s) Contracts- The Schedule of Contracts as annexed hereto, lists all
contracts and other agreements to which the Company is a party, including but
not limited to:
(i) any agreement (or group of related agreements) for the lease of
personal property to or from any person providing for lease
payments;
(ii) any agreement (or group of related agreements) for the purchase
or sale of raw material, commodities, supplies, products, or
other personal property, or for the furnishing or receipt of
services;
(iii) any agreement concerning a partnership or joint venture;
(iv) any agreement (or group of related agreements) under which it has
created, incurred, assumed, or guaranteed any indebtedness for
borrowed money, or any
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capitalized lease obligation, or under which it has imposed a Security
Interest on any of its assets, tangible or intangible;
(v) any agreement concerning confidentiality or non-competition;
(vi) any profit sharing, stock option, stock purchase, stock appreciation,
deferred compensation, severance, or other material plan or
arrangement for the benefit of the current or former directors,
officers, and employees;
(vii) any collective bargaining agreement;
(viii) any agreement for the employment of any individual on a full- time,
part-time, consulting, or other basis;
(ix) any agreement under which it has advanced or loaned any amount to any
of the directors, officers, and employees other than in the Ordinary
Course of Business;
(x) any agreement under which the consequences of a default or termination
could have an effect on the business, financial condition, operations,
results of operations, or future prospects of the Company; or
(xi) any other agreement.
The Company has delivered to Manchester a correct and complete copy of
each written agreement listed in Schedule of Contracts (as amended to date).
With respect to each such agreement; (A) the agreement is legal, valid, binding,
enforceable, and in full force and effect; (B) the agreement will continue to be
legal, valid, binding, enforceable, and in full force and effect on identical
terms following the consummation of the transactions contemplated hereby subject
to the right of any third party to consent to such assignment; (C) to its
knowledge, no party is in breach or default; and no event has occurred which
with notice or lapse of time would constitute a breach or
-30-
default, or permit termination, modification, or acceleration, under the
agreement; and (D) to its knowledge, no party has repudiated any provision of
the Agreement.
(t) Notes and Accounts Receivable- All notes and accounts receivable
of the Company are reflected properly on the Company's books and records, are
valid receivables subject to no set offs or counterclaims, are current or
collectible, and will be collected in accordance with their terms at their
recorded amounts, as adjusted for the passage of time through the Closing Date
in accordance with the past custom and practice of the Company.
(u) Powers of Attorney- There are no outstanding Powers of Attorney
executed on behalf of the Company.
(v) Insurance- The Schedule of Insurance Agreements annexed sets
forth each insurance policy (including policies providing life (key man policies
on Sellers lives), property, casualty, liability, and workers' compensation
coverage and bond and surety arrangements) to which the Company is currently a
party, a named insured, or otherwise the beneficiary of coverage:
With respect to each such insurance policy: (A) the policy is legal,
valid, binding, enforceable, and in full force and effect; (B) the Company is
not in breach or default (including with respect to the payment of premiums or
the giving of notices), and no event has occurred which, with notice or the
lapse of time, would constitute such a breach or default, or permit termination,
modification, or acceleration, under the policy; and (C) no party to the policy
has repudiated any provision thereof.
(w) Product Warranty- Each product manufactured, sold, leased, or delivered
by the Company has been in conformity with all applicable contractual
commitments and all express and implied warranties, and the Company to the best
of Seller's knowledge, has no liability (and there is no basis for any present
or future action, suit, proceeding, hearing, investigation, charge,
-31-
complaint, claim, or demand against any of them giving rise to any liability)
for replacement or repair thereof or other damages in connection therewith as
adjusted for the passage of time through the Closing Date in accordance with the
past custom and practice. No product manufactured, sold, leased, or delivered by
the Company is subject to any guaranty, warranty, or other indemnity beyond the
applicable standard terms and conditions of sale or lease.
(x) Product Liability- To the best of Seller's knowledge, the Company
has no liability (and there is no basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand against
any of them giving rise to any liability) arising out of any injury to
individuals or property as a result of the ownership, possession, or use by it.
(y) Employees- To the best of the Seller's Knowledge no executive, key
employee, or group of employees of the Company has any plans to terminate
employment. The Company is not a party to or bound by any collective bargaining
agreement, nor has it experienced any strikes, grievances, claims of unfair
labor practices, or other collective bargaining disputes.
(z) Employee Benefits-
(i) Each such Employee Benefit Plan (and each related trust, insurance
contract, or fund) complies in form and in operation in all respects with
the applicable requirements of ERISA, the Code, and other applicable laws.
(ii) To the best of Seller's knowledge, each such Employee Benefit
Plan which is an Employee Pension Benefit Plan meets the requirements of a
"qualified plan" under Code Sec. 401(a).
(iii) The Company has delivered to the Purchaser correct and complete
copies of the plan documents and summary plan descriptions.
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(iv) The Company does not currently maintain, has never maintained, and has
no liability with respect to any Multi-employer Plan.
(v) The Schedule of Employee Benefit Plans annexed hereto sets forth all
fringe benefits such as pension, profit sharing, medical, health or life
insurance plans provided by the Company to its employees. The Company has
delivered a copy of all such plans to Manchester prior to Closing.
(aa) Guaranties- The Company is not a guarantor or otherwise is liable for
any liability or obligation (including indebtedness) of any other person.
(bb) Environment, Health, and Safety- To the Seller's knowledge, the
Company has complied with all Environmental, Health, and Safety Laws, and no
action, suit, proceeding, hearing, investigation, charge, complaint, claim,
demand, or notice has been filed or commenced against any of them alleging any
failure so to comply. Without limiting the generality of the preceding sentence,
the Company has obtained and been in compliance with all of the terms and
conditions of all permits, licenses, and other authorizations which are required
under, and has complied with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, Schedules, and timetables
which are contained in, all Environmental, Health, and Safety Laws.
(cc) Disclosure- The representations and warranties contained in this
Paragraph "EIGHTH", do not contain any untrue statement of a material fact or
omit to state any material fact.
NINTH: REPRESENTATIONS AND WARRANTIES OF MANCHESTER-
1. Manchester represents and warrants to The Company and the Sellers that
the statements contained in Paragraph "NINTH", are correct and complete as of
the date of this
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Agreement and will be correct and complete as of the Closing Date (as though
made then and as though the Closing Date were substituted for the date of this
Agreement throughout this Paragraph "NINTH").
(a) Organization of Manchester: Manchester is a corporation duly organized,
validly existing, and in good standing under the laws of the jurisdiction of the
State of New York.
(b) Authorization of Transaction: Manchester has full power and authority
(including full corporate power and authority) to execute and deliver this
Agreement and all collateral Agreements and to perform its obligations
hereunder. This Agreement constitutes the valid and legally binding obligation
of Manchester, enforceable in accordance with its terms and conditions.
(c) Non-contravention: Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which Manchester is subject or any provision of
its charter or bylaws or (ii) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other arrangement to which
Manchester is a party or by which it is bound or to which any of its respective
assets is subject. Manchester needs not give any notice to, make any filing
with, or obtain any authorization, consent, or approval of any government or
governmental agency in order for the Parties to consummate the transactions
contemplated by this Agreement.
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TENTH: CONDITIONS TO OBLIGATIONS TO CLOSE-
A. Conditions to Obligation of Manchester- The obligation of
Purchaser to consummate the transactions to be performed by each of them in
connection with the Closing is subject to satisfaction of the following
conditions:
(i) The representations and warranties of the Sellers and the Company set
forth in Paragraph "EIGHTH" above, shall be true and correct in all material
respects at and as of the Closing Date;
(ii) The Company and the Sellers shall have performed and complied with
all of its covenants hereunder in all material respects through the Closing;
(iii) No action, suit, or proceeding shall be pending before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator wherein an unfavorable injunction,
judgment, order, decree, ruling, or charge would (A) prevent consummation of any
of the transactions contemplated by this Agreement, (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation, (C) affect adversely the right of Purchaser to operate the
businesses of the Company conducted prior to the Closing, or (D) affect
adversely its right to own its assets and to operate its businesses (and no such
injunction, judgment, order, decree, ruling, or charge shall be in effect);
(iv) Manchester shall have received from counsel to the Company and the
shareholders an opinion in form and substance as annexed hereto, addressed to
Manchester and dated as of the Closing Date; and
B. Conditions to Obligation of the Shareholders- The
obligation of the Shareholders to consummate the transactions to be performed by
it in connection with the Closing is subject to satisfaction of the following
conditions:
-35-
(i) The representations and warranties set forth in Paragraph "NINTH"
above, shall be true and correct in all material respects at and as of the
Closing Date;
(ii) Each of Manchester and the Company shall have performed and complied
with all of its covenants hereunder in all material respects through the
Closing;
(iii) No action, suit, or proceeding shall be pending or threatened before
any court or quasi-judicial or administrative agency of any federal, state,
local, or foreign jurisdiction or before any arbitrator wherein an unfavorable
injunction, judgment, order, decree, ruling, or charge would (A) prevent
consummation or any of the transactions contemplated by the Agreement or (B)
cause any of the transactions contemplated by this Agreement to be rescinded
following consummation (and no such injunction, judgment order, decree, ruling,
or charge shall be in effect);
(iv) The Shareholders shall have received from counsel to Manchester an
opinion in form and substance as annexed hereto;
(v) All actions to be taken by Manchester in connection with consummation
of the transactions contemplated hereby and all certificates, opinions,
instruments, and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and substance to the
Shareholders.
ELEVENTH: TERMINATION- Intentionally Deleted
TWELFTH: MISCELLANEOUS PROVISIONS-
(a) Scope of Agreement - The Parties do not intend to confer any benefit
hereunder on any person, firm or corporation, other than the Sellers and the
Purchasers. Without limiting the generality of the foregoing, each of the
parties may, by written notice to the other and without consent of any other
person, firm or corporation (i) extend the time for performance of any of the
obligations or other acts of the other Party; (ii) waive any inaccuracies in the
representations
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and warranties of the other party contained in this Agreement; (iii) waive
compliance with any of the covenants of the other party contained in this
Agreement; or (iv) waive performance of any of the obligations under this
Agreement by the other party.
(b) Binding Agreement - This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns.
(c) Exhibits - All Exhibits, Schedules and Appendices annexed hereto and
the documents and instruments delivered simultaneously herewith and at the
Closing are expressly made a part of this Agreement as fully as though
completely set forth herein, and all references to this Agreement herein or in
any of such writings, shall be deemed to refer to and include all such writings.
(d) Entire Agreement, etc. - This Agreement constitutes the entire
understanding between the parties pertaining to the subject matter hereof. No
interpretation, change, termination or waiver of any of the provisions hereof
shall be binding upon either party unless in writing. No waiver by either party
of any provision of or default under this Agreement shall affect the right of
such party thereafter to enforce said provision or any other provision hereof,
or to exercise any right or remedy in the event of any other default, whether or
not similar. The invalidity of any provision hereof shall not affect the
validity of any other such provision.
(e) Further Instruments - On and after the Closing date, upon the request
of either party, the other party shall do all such further acts, and shall
execute, acknowledge and deliver all such further instruments and documents, as
may reasonably be necessary, desirable or appropriate to carry out the
transactions contemplated by this Agreement, all of such documents to be
reasonably satisfactory to such other Party's Counsel in form and content.
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(f) Survival of Representations, etc. - Except as may otherwise be agreed
to, the parties agree that all of the representations, warranties, covenants,
agreements and undertakings contained in this Agreement shall survive Closing.
(g) Applicable Law - This Agreement and all the agreements annexed hereto
as exhibits shall be governed by and construed in accordance with the laws of
the State of New York.
(h) Venue - The venue of any action commenced by any party to this
agreement or any agreement annexed hereto as an exhibit shall be in the Supreme
Court of the State of New York a court with subject matter jurisdiction in the
County of Suffolk, State of New York. For purposes hereof, this agreement and
all agreements annexed hereto shall be deemed to have been entered into within
the County of Suffolk, State of New York.
(i) Paragraph Headings - Paragraph headings have been inserted herein for
convenience only, and do not form a part of the Agreement.
(j) Counterparts - This Agreement may be executed in any number of separate
counterparts, each of which shall be deemed to be an original and which together
shall constitute one and the same instrument.
(k) Notices - Any payment, notices, request, instructions, consent or other
documents to be given hereunder shall be in writing and delivered personally or
sent by certified or registered mail, postage prepaid as follows:
If to the Purchaser, addressed to:
Manchester Equipment Co., Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
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with a copy thereof addressed to:
▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇, Esqs.
▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
If to the Sellers, addressed to:
▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
with a copy thereof addressed to:
▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇, P.A.
Sun Life Building
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Att: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Either party may change the persons and addresses to which any payment,
notice, request, instruction, consent or other document is to be sent to it by
giving written notice of any such change to the other party in the manner
provided for herein for giving notice. Any payment, notice, request,
instruction, consent or other document mailed hereunder shall be deemed to have
been received when mailed.
(l) Prior Agreements - The parties agree that all prior agreements between
the parties, whether oral or written, are herewith made null and void and of no
effect, legal or equitable.
(m) Press Releases and Public Announcements - No Party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement prior to the Closing without the prior written approval of the
other Party; PROVIDED, HOWEVER, that any Party may make any public disclosure it
believes in good faith is required by
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applicable law or any listing or trading agreement concerning its
publicly-traded securities (in which case the disclosing Party will use
reasonable best efforts to advise the other party prior to making the
disclosure).
(n) Amendments and Waivers - No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Purchaser, the Sellers and the Company: No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
(o) Severability - Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term of provision in any other
situation or in any other jurisdiction.
(p) Expenses - Each Party will bear his or its own costs and expenses
(including legal fees and expenses) incurred in connection with this Agreement
and the transactions contemplated hereby.
(q) Construction - The Parties have participated jointly in the negotiation
and drafting of this Agreement. In the event an ambiguity or question of intent
or interpretation arises, this Agreement shall be construed as if drafted
jointly by the Parties and no presumption or burden of proof shall arise
favoring or disfavoring any Party by virtue of the authorship of any of the
provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. Nothing in the
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Schedules annexed to this Agreement shall be deemed adequate to disclose an
exception to a representation or warranty made herein unless such Schedule
identifies the exception with reasonable particularity and describes the
relevant facts in reasonable detail. The Parties intend that each
representation, warranty, and covenant contained herein shall have independent
significance.
(r) Specific Performance - Each of the Parties acknowledges and agrees that
the other Party would be damaged irreparably in the event any of the provisions
of this Agreement are not performed in accordance with their specific terms or
otherwise are breached. Accordingly, each of the Parties agrees that the other
Party shall be entitled to an injunction or injunctions to prevent breaches of
the provisions of this Agreement and to enforce specifically this Agreement and
the terms and provisions hereof in any action instituted in any Court of the
United States or any State hereof having jurisdiction over the Parties and the
matter (subject to the provisions set forth in Paragraph "TWELFTH" (s) below),
in addition to any other remedy to which it may be entitled, at law or in
equity.
(s) Submission to Jurisdiction - Each of the Parties submits to the
jurisdiction of the Supreme Court of the State of New York situated within the
County of Suffolk in any action or proceeding arising out of or relating to this
Agreement and agrees that all claims in respect of the action or proceeding may
be heard and determined in any such Court provided that service of process is
effected in accordance with the rules of such court. Each Party also agrees not
to bring any action or proceeding arising out of or relating to this Agreement
in any other Court provided, however, that any dispute related to the
determination of gross revenues and/or pretax profits be determined in
accordance with the provisions of Paragraph "SECOND" C) herein. Each of the
Parties waives any defense of inconvenient forum to the maintenance of any
action or proceeding so brought and waives any bond, surety, or other security
that might be required of any
-41-
other Party with respect thereto. Each Party agrees that a final Judgment in any
action or proceeding so brought shall be conclusive and may be enforced by suit
on the Judgment or in any other manner provided by law or in equity.
IN WITNESS WHEREOF, the Company and the Purchasers have
executed this Agreement by its authorized officers and the Sellers have caused
their individual signatures to be affixed hereto on the day and year first above
written. In the Presence Of:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Manchester Equipment Co., Inc.
By:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, CEO
Coastal Office Products, Inc.
By:
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