Exhibit 10.2
STOCK TRANSFER AND REDEMPTION AGREEMENT
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THIS STOCK TRANSFER AND REDEMPTION AGREEMENT ("Agreement") is made and
entered into as of the 29th day of May, 1995, by and between SOFTSENSE COMPUTER
PRODUCTS INC., a New York corporation (the "Company") and XXXXXX XXXXXXXX
("Xxxxxxxx"), an individual resident of the State of Georgia.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, as of the 29th day of May, 1995, the Company, Xxxxxxxx and Logic
Shop, Inc. ("LSI") executed and delivered that certain Agreement and Plan of
Reorganization and Distribution, a copy of which is annexed hereto as Exhibit A
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(the "Reorganization Agreement"), whereby the Company, Xxxxxxxx and LSI agreed
to effect the transfer of the automotive systems division of the Company to LSI
and subsequent thereto to transfer to Xxxxxxxx all of the issued and outstanding
capital stock of LSI in exchange for certain capital stock of the Company (the
"Split-Off"); and
WHEREAS, immediately prior to the execution of this Agreement, the Company
transferred to LSI certain assets, rights, properties and businesses relating to
the automotive systems division of Softsense, all as more fully described in
that certain Blanket Xxxx of Sale, Assignment and Assumption Agreement which was
executed and delivered by LSI and the Company, a copy of which is annexed hereto
as Exhibit B; and
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WHEREAS, the Company and Xxxxxxxx intend that the Split-Off will constitute
a tax-free reorganization under Sections 368(a)(1)(D) and 355(a)(1) of the
Internal Revenue Code of 1986, as amended, and desire to consummate the Split-
Off in accordance with the terms and conditions more fully set forth below;
NOW, THEREFORE, for and in consideration of the premises, the mutual
covenants contained herein and other good and valuable consideration, the
receipt, adequacy and sufficiency of which are hereby acknowledged, the parties
hereto covenant and agree as follows:
1. Consummation of Split-Off.
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1.1 Stock Transfer and Redemption. Simultaneously with the execution and
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delivery of this Agreement, Xxxxxxxx shall deliver to the Company the
certificate or certificates representing 31.25 shares of the Common Stock, no
par value per share, of the Company (the "Softsense Common Stock"), duly
endorsed, or accompanied by a duly executed stock power, effectively
transferring the Softsense Common Stock to the Company, free and clear of any
and all liens, claims, charges and encumbrances. Simultaneously therewith the
Company shall deliver to Xxxxxxxx (i) 7.292 shares of original issue Class A
Common Stock of the Company and (ii) the certificate or certificates
representing all 2,000,000 shares of the issued and outstanding common stock, no
par value per share, of LSI (the "LSI Stock"), duly endorsed, or accompanied by
a duly executed stock power, effectively transferring the LSI Stock to Xxxxxxxx,
free and clear of any and all liens, claims, charges and encumbrances.
1.2 Further Assurance. Each of the parties shall, without further
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consideration or payments, execute such documents and other papers and take such
further actions as may be reasonably required or desired to evidence or more
effectively carry out the stock transfers referenced in Section 1.1 above or
such other transactions as are contemplated by this Agreement.
1.3 Name Usage Agreement. Xxxxxxxx hereby covenants and agrees that
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neither he nor LSI will now or hereafter, directly or indirectly, utilize the
"Softsense" name, or any name confusingly similar thereto or a derivative
thereof, as or in connection with a trademark, trade name, service xxxx,
certification xxxx, or corporate or other business name, without the Company's
prior written consent which may be granted, withheld or conditioned by the
Company in it sole discretion. Xxxxxxxx, on behalf of himself and on behalf of
LSI, acknowledges and agrees that the "Softsense" name and the right to utilize
the same for commercial purposes is the exclusive property of the Company and
its affiliates, and for himself and for LSI hereby disclaims any right, title or
interest in or to the same. Xxxxxxxx will not, and will not permit LSI to, do
or omit to do any act or thing, the doing or omission of which would contest,
assist others to contest or in any way impair or tend to impair the Company's
right, title or interest in or to the "Softsense" name or any registration
relating thereto.
1.4 Resignations. Xxxxxxxx hereby resigns all offices and directorships
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held in the Company or any of its direct or indirect subsidiaries (other than
LSI), effective immediately upon the execution and delivery of this Agreement.
2. Representations and Warranties.
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2.1 Representation and Warranties from Xxxxxxxx. As an inducement to the
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Company's execution and delivery of this Agreement, and with knowledge that the
Company is relying thereon, Xxxxxxxx hereby represents and warranties (i) that
Xxxxxxxx is the sole owner of the Softsense Common Stock being transferred to
the Company by Xxxxxxxx, (ii) such Common Stock evidences and constitutes all of
Xxxxxxxx'x equity interest in the Company or its direct or indirect
subsidiaries, and there are no outstanding options, warrants, rights,
commitments or agreements of any nature, kind or character relating to the
issuance or purchase of any additional shares of the capital stock of the
Company or any of its direct or indirect subsidiaries held legally or
beneficially by Xxxxxxxx, (iii) Xxxxxxxx has full right, power and capacity to
make, execute and perform this Agreement and the transactions contemplated
herein, (iv) this Agreement and the stock powers and other instruments or
documents delivered by Xxxxxxxx hereunder constitute the valid and legally
binding obligations of Xxxxxxxx enforceable in accordance with their respective
terms, and no further action on the part of Xxxxxxxx is required in connection
with the consummation of the transactions contemplated by this Agreement, (v)
the Blanket Xxxx of Sale, Assignment and Assumption Agreement, a copy of which
is annexed hereto as Exhibit B, was duly executed and delivered by LSI and
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constitutes the valid and legally binding obligation of LSI enforceable in
accordance with its terms, and (vi) the Softsense Common Stock being transferred
and conveyed to the Company under this Agreement is being transferred and
conveyed free and clear of all liens, encumbrances, charges or claims of any
nature, kind, or character.
2.2 Representation and Warranties from the Company. As an inducement to
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Xxxxxxxx'x execution and delivery of this Agreement, and with knowledge that
Xxxxxxxx is relying thereon, the Company hereby represents and warranties (i)
that the Company is the sole owner of the LSI Stock being transferred to
Xxxxxxxx hereunder, (ii) the LSI Stock evidences and constitutes all of the
Company's equity interest in LSI, and there are no outstanding options,
warrants, rights, commitments or agreements of any nature, kind or character
relating to the issuance or purchase of any additional shares of the capital
stock of LSI held legally or beneficially by the Company, (iii) the authorized
capital stock of the Company consists of 400 shares of Common Stock, of which
93.75 shares are issued and outstanding and 200 shares of Class A Common Stock
of which 3.125 shares are issued and outstanding and to the knowledge of the
Company, except for the warrants granted Emro Marketing Company and certain
repurchase rights pursuant to the Stock Redemption Agreement between the Company
and Xxxxxxxx Xxxxxx, there are no
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outstanding options, warrants, rights, commitments, or agreements of any nature,
kind or character relating to the issuance or purchase of shares of capital
stock of the Company, (iv) the Company has full right, power and authority to
make, execute and perform this Agreement and the transactions contemplated
herein, (v) this Agreement and the stock powers and other instruments or
documents delivered by the Company hereunder constitute the valid and legally
binding obligations of the Company enforceable in accordance with their
respective terms, and no further action on the part of the Company is required
in connection with the consummation of the transactions contemplated by this
Agreement, (vi) the Blanket Xxxx of Sale, Assignment and Assumption Agreement, a
copy of which is annexed hereto as Exhibit B, was duly executed and delivered by
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the Company and constitutes the valid and legally binding obligations of the
Company enforceable in accordance with its terms, and (vii) the LSI Stock is
being transferred and conveyed to Xxxxxxxx under this Agreement, free and clear
of all liens, encumbrances, charges or claims of any nature, kind or character.
3. Acquisition of Class A Common Stock. Xxxxxxxx acknowledges that the
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Class A Common Stock issued to Xxxxxxxx by the Company pursuant to the terms
hereof, has not been registered under the Securities Act of 1933, as amended
(the "1933 Act") or the securities laws of any state, in reliance upon
exemptions from registration contained in the 1933 Act and applicable state
securities laws and that the Company's reliance upon such exemption is based in
part upon Xxxxxxxx'x representations, warranties and agreements contained in
this Agreement. To induce the Company to enter into this Agreement and to issue
the Class A Common Stock, Xxxxxxxx warrants and represents, as of the date
hereof as follows:
(a) Xxxxxxxx is acquiring the Class A Common Stock for his own account, with
the intention of holding the Class A Common Stock for investment, with no
present intention of dividing or allowing others to participate in this
investment or of reselling or otherwise participating, directly or indirectly,
in a distribution of the Class A Common Stock; and Xxxxxxxx shall not make any
sale, transfer or other disposition of the Class A Common Stock without
registration under the 1933 Act and any applicable securities laws of any state
or unless an exemption from registration is available under those laws.
(b) Except as otherwise noted, Xxxxxxxx and/or his purchaser representative
has such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of an investment in the Class A
Common Stock.
(c) Xxxxxxxx has been given the opportunity to ask questions of, and receive
answers from the Company concerning the business of the Company and has been
provided with such other information as Xxxxxxxx desired in order to evaluate
the investment.
(d) Xxxxxxxx is not purchasing the Class A Common Stock as a result of or
subsequent to any advertisement, article, notice or other communication
published in any newspaper, magazine or similar media or broadcast over
television or radio, or presented at any seminar or meeting, or any solicitation
of a subscription by a person not previously known to Xxxxxxxx in connection
with investments in securities generally.
4. Release of Guarantees. The Company shall use its best efforts to
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obtain the release of Xxxxxxxx from his personal guaranty of any outstanding
obligations of the Company, including without limitation Xxxxxxxx'x guaranty of
that certain Agreement for Wholesale Financing dated August 19, 1993, between
the Company and AT&T Commercial Finance Corporation and Xxxxxxxx'x guaranty of
any obligations of the Company to Xxxxxxxx X. Xxxxxx. In the event that the
Company is unable to obtain any
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such releases, the Company agrees to indemnify, defend and hold harmless
Xxxxxxxx from and against the contingent liabilities represented thereby.
5. Survival of Representations and Warranties. All of the representations
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and warranties of Xxxxxxxx and the Company contained in this Agreement shall
survive the execution of this Agreement.
6. Restrictions Upon the Transfer of the Stock. Xxxxxxxx agrees that he
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will not make any Disposition of Class A Common Stock, other than a Permitted
Disposition, except as provided in this Agreement. Any purported transfer in
violation of any provision of this Agreement shall be null and void and shall
not operate to transfer any interest or title to the purported transferee.
Whenever used in this Agreement, the following terms shall have the meanings
set forth below:
"Appraised Value" shall mean the value of each share of Class A Common Stock
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as determined in accordance with Section 6.3.
"Disposition" shall mean any sale, gift, or other transfer, whether outright
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or as security, inter vivos or at death, with or without consideration,
voluntary or involuntary, of all or any part of any right, title, or interest
(including but not limited to voting rights) in or to any Class A Common Stock
other than a Permitted Disposition.
"Permitted Disposition" shall mean any transfer of the Class A Common Stock
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of Xxxxxxxx (i) to not more than three (3) members of his immediate family,
which shall be limited to Xxxxxxxx'x spouse and lineal descendants or (ii) upon
Xxxxxxxx'x death, to an heir or legatee; provided, however, that such family
member, heir or legatee acknowledges in writing that he, she or it will be bound
by, and the Class A Common Stock transferred will be subject to, this Agreement;
and further provided that, in the event of the death of Xxxxxxxx, neither the
Company nor the other shareholders of the Company (the "Shareholders") have
elected to repurchase the Class A Common Stock pursuant to Section 6.2 hereof.
6.1 Right of First Refusal.
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6.1.1. Condition to Transfer. If Xxxxxxxx desires to sell any Class A
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Common Stock (other than pursuant to a Permitted Disposition), he shall first
offer such Class A Common Stock to the Company and the other Shareholders by
giving them notice of his intention to sell the Class A Common Stock. Such
notice shall name the proposed transferee, the number of shares to be
transferred, the price per share, and the terms of payment. Following receipt of
such notice by the non-offering Shareholders and the Company, the non-offering
Shareholders and the Company may exercise an option in the manner provided by
subsection 6.1.2 to purchase all, but not less than all, of the offered Class A
Common Stock in the discretion of each purchaser, at a price equal to the price
specified in the notice.
6.1.2 Exercise of Option. The Company shall have first option to purchase
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all of the offered Class A Common Stock (or any part provided one or more
Shareholders elect to purchase all offered Class A Common Stock that the Company
does not purchase). The Company may exercise its option by giving written
notice, which must state the number of shares the Company elects to purchase,
and the price and terms of purchase, to Xxxxxxxx within 10 days after its
receipt of Xxxxxxxx'x notice. If the Company elects to purchase none or less
than all of the offered Class A Common Stock, the non-offering Shareholders
shall have an option to purchase all, but not less than all, of the offered
Class A Common Stock that the
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Company elects not to purchase, exercisable by giving notice to all Shareholders
and the Company within 30 days after its receipt of notice from Xxxxxxxx. Each
non-offering Shareholder shall have the right to purchase a proportion of the
offered Class A Common Stock (to the extent not purchased by the Company) equal
to the ratio that the Common Stock and/or Class A Common Stock owned by such
non-offering Shareholder bears to the total Common Stock and/or Class A Common
Stock owned by all of the non-offering Shareholders who elect to exercise their
purchase option (or in such other proportion as is unanimously agreed to among
the Shareholders who elect to exercise their purchase option). The Company or
non-offering Shareholders or both may purchase all of the offered Class A Common
Stock but may not together purchase less than all of the offered Class A Common
Stock. If the Company elects to purchase more shares than any other offeree, it
shall state in its notice of exercise the date for the closing of the purchase,
which shall not be less than 45 nor more than 60 days after its receipt of
notice from Xxxxxxxx. If any Shareholder exercises his option to purchase more
shares than any other offeree, including the Company, he shall state in his
notice of exercise, with a copy to the Secretary of the Company, the purchase
price of the shares and the terms of purchase and a date for the closing of the
purchase by all accepting offerees. Such date for closing shall be not less than
45 nor more than 60 days after the date of such accepting Shareholder's receipt
of notice from Xxxxxxxx. The Secretary of the Company shall promptly mail a copy
of such notice of exercise to all accepting offerees to advise them of the time
of closing.
6.1.3 Failure to Exercise. If the right of first refusal provided above is
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not exercised as to all of the offered Class A Common Stock, if the exercise by
the non-offering Shareholders and the Company is not made within the time
specified in subsection 6.1.2, or if the purchase by the non-offering
Shareholders or the Company is not consummated within the time specified in
subsection 6.1.2 through no fault of Xxxxxxxx, Xxxxxxxx may transfer the offered
Class A Common Stock to the proposed purchaser, at the price and on the terms
and conditions set forth in the notice of intention sent by Xxxxxxxx. As a
condition to such transfer, Xxxxxxxx shall obtain the written acknowledgement of
the transferee that the transferee will be bound by, and the Class A Common
Stock transferred will be subject to, this Agreement. If the transfer of Class A
Common Stock by Xxxxxxxx to the proposed purchaser named in the notice of
intention is not made within 30 days after the date Xxxxxxxx became free to
transfer, the right to transfer in accordance with the notice shall expire. In
such event this Agreement, including without limitation this Article VI, shall
remain in full force and effect as to the offered Class A Common Stock.
6.1.4 Closing. At the closing the purchasers shall deliver the required
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consideration, and Xxxxxxxx shall deliver the offered Class A Common Stock, duly
endorsed for transfer and with any and all required revenue stamps attached.
6.2 Company's Right of Repurchase Upon Death.
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6.2.1 Optional Repurchase by the Company. The Company shall have the
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right, but not the obligation, to purchase all (but not less than all) of the
Class A Common Stock of Xxxxxxxx in the event of his death at a price equal to
its Appraised Value, at any time following the death of Xxxxxxxx. As used in
Sections 6.2 and 6.3 of this Agreement, the term "Xxxxxxxx" shall be deemed to
include any transferee of the Class A Common Stock as a result of a Permitted
Disposition. The right of the Company set forth in this subsection 6.2.1 may be
exercised by written notice from the Company to the estate of Xxxxxxxx,
specifying the amount of the Appraised Value and the time (which shall be not
more than ten business days following the date of giving such written notice)
and place for closing the Company's purchase of such shares. The Company's
purchase of such shares of Class A Common Stock shall take place in accordance
with such notice.
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6.2.2 Assignment of Option to Repurchase by Company. The Company may
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assign its rights under subsection 6.2.1 hereof to all of the Shareholders other
than the estate of Xxxxxxxx, such that each such other Shareholder shall have
the right to purchase his pro rata share of the Class A Common Stock of
Xxxxxxxx, or such other portion of the Class A Common Stock of Xxxxxxxx as shall
be mutually agreed among the Company and all of the Shareholders, so long as, in
the aggregate, the Company and the other Shareholders purchase all of the Class
A Common Stock of Xxxxxxxx.
6.2.3 Installment Payment of Purchase Price Upon Death. Any payment of the
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purchase price for the Class A Common Stock of Xxxxxxxx may be made in cash or
in an initial installment, payable at the closing, of 20% of the total price,
with the balance to be paid in 5 equal annual installments of principal and
interest beginning on the first day of the thirteenth month following the date
of the closing. The obligation to pay the balance of the purchase price shall
be evidenced by a promissory note bearing interest at a fluctuating rate per
annum equal at all times to the rate published by the Wall Street Journal as its
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Corporate Prime Rate, plus two percent (2%). Such note shall provide for
acceleration upon the default in any installment payment which is not cured
within thirty (30) days after written notice and shall give the purchaser of the
Class A Common Stock the option of prepayment without premium or penalty in
whole at any time and in part from time to time after the calendar year of sale.
The purchaser shall pledge the purchased Class A Common Stock to secure payment
of the note, pursuant to a stock pledge agreement.
6.3 Determination of Appraised Value. For purposes of this Agreement the
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Appraised Value of the Class A Common Stock shall mean the fair market value as
determined by an independent appraiser mutually agreeable to the representative
of Xxxxxxxx'x estate and the Company. If the representative of Xxxxxxxx'x estate
and the Company are not able to agree on an independent appraiser within thirty
(30) days of the receipt by the representative of Xxxxxxxx'x estate of notice
that the Company desires to determine the Appraised Value then the Company and
the representative of Xxxxxxxx'x estate shall each promptly select an appraiser.
If either the Company or the representative of Xxxxxxxx'x estate fails to select
an appraiser within twenty (20) days of a written demand by the other, the fair
market value of the Class A Common Stock shall be determined solely by the
appraiser selected by the party giving the written demand. Each of the
appraisers, within ninety (90) of their appointment, shall determine the fair
market value of the Class A Common Stock. If the lower of the two appraisals is
equal to or in excess of the product of eighty-five one hundredths (.85) times
the higher appraisal, then the two appraisals shall be averaged, and the
averaged appraisal amount shall be the fair market value for purposes of this
Agreement. If the lower of the two appraised values is less than the foregoing
product, then the two selected appraisers shall, within twenty (20) days,
jointly select a third appraiser, who shall then have forty-five (45) days
within which to arrive at a fair market value, at which time the value
determined by the third appraiser shall be averaged with the closer of the two
previously determined values to determine the fair market value for purposes of
this Agreement. The cost of obtaining the appraisals shall be paid by the non-
offering Shareholders (and the Company if it is an offeree of the Class A Common
Stock) and fifty percent (50%) thereof shall be credited against the purchase
price for the shares of the Class A Common Stock.
7. Legend on Stock.
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7.1 Form of Legend. Upon the execution of this Agreement, the Company's
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Secretary shall endorse the Class A Common Stock certificate to be received by
Xxxxxxxx with the following legend:
The shares of Class A Common Stock represented by this
certificate are held subject to, and transfer of such shares
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restricted by, the repurchase terms of a Stock Transfer and
Redemption Agreement, dated as of the 29th day of May, 1995, a
copy of which is on file at the office of the Company. No
transfer of any share represented by this certificate shall be
valid unless made in accordance with the terms of the Agreement.
A copy of this Agreement shall be filed with the Company's Secretary.
7.2 Intention of Parties. The parties to this Agreement intend that the
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legend conform to the provisions of section 8-204 of the Uniform Commercial Code
as adopted in the Company's state of incorporation. This legend may be modified
from time to time by the Board of Directors to conform to any amendments to this
Agreement or to section 8-204 of the Uniform Commercial Code as adopted in the
Company's state of incorporation.
8. Working Capital. To facilitate the orderly transfer of the
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automotive systems division to LSI and to induce Xxxxxxxx to enter into this
Agreement, at the closing of the transactions contemplated in this Agreement,
Softsense agrees to loan LSI $30,000 pursuant to a promissory note to be
executed and delivered by LSI in substantially the form of Exhibit C.
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9. Indemnification.
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9.1 Indemnification by Xxxxxxxx. Xxxxxxxx hereby covenants and agrees
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that he shall, and shall cause LSI to, now and forever indemnify, defend and
hold the Company, and its successors and assigns, harmless from and against any
and all losses, liabilities, costs, expenses and damages of any nature, kind or
character which are incurred in connection with or as a result of (i) any breach
of any representation or warranty contained in Section 2.1 of this Agreement,
(ii) any breach by Xxxxxxxx of any covenant contained in this Agreement, (iii)
any breach by Xxxxxxxx or LSI of any warranty, representation or covenant
contained in any of the agreements or documents entered into or provided in
connection with the Split-Off including the Blanket Xxxx of Sale, Assignment and
Assumption Agreement, a copy of which is annexed hereto as Exhibit B, (iv) the
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pending litigation filed by Sage Micro Systems, Inc. (but only to the extent, if
any, the defense thereof or any settlement or judgment is not covered and paid
for by insurance).
9.2 Indemnification by the Company. Company hereby covenants and agrees
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that it shall now and forever indemnify, defend and hold Xxxxxxxx, and his
successors and assigns, harmless from and against any and all losses,
liabilities, costs, expenses and damages of any nature, kind or character which
are incurred in connection with or as a result of any breach of any
representation or warranty contained in Section 2.2 of this Agreement, any
failure of the Company to obtain the releases of the personal guaranty(ies) of
Xxxxxxxx referred to in Article 4, any breach by the Company of any covenant
contained in this Agreement or any breach by the Company of any warranty,
representation or covenant contained in any of the agreements or documents
entered into or provided in connection with the Split-Off including the Blanket
Xxxx of Sale, Assignment and Assumption Agreement, a copy of which is annexed
hereto as Exhibit B.
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10. Arbitration.
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All disputes and claims relating to any provision hereof or relating to or
arising out of the parties relationship or creation or termination thereof
(including, without limitation, any claims that any provision
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of this Agreement or any obligation of Xxxxxxxx or of Company is illegal or
otherwise unenforceable or voidable under law, ordinance or ruling) shall be
settled by arbitration at the office of the American Arbitration Association in
Atlanta, Georgia, in accordance with the United States Arbitration Act (9 USC,
(S) 1 et seq.) and the commercial arbitration rules of the American Arbitration
-- ---
Association. Xxxxxxxx and the Company each consents and submits to the
jurisdiction and venue of the trial courts of Xxxxxx County, Georgia, and also
to the jurisdiction and venue of the United States District Court for the
Northern District of Georgia for purposes of enforcing this provision. All
awards of the arbitration shall be binding and non-appealable except as
otherwise provided in the United States Arbitration Act. Judgment upon the award
of the arbitrator may be entered in any court having jurisdiction thereof. The
arbitration shall take place at a time noticed by the American Arbitration
Association regardless of whether one of the parties fails or refuses to
participate. The foregoing provision shall not preclude either party from
bringing an action in any court of competent jurisdiction for injunctive or
other provisional relief as necessary or appropriate.
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11. Tax Matters.
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11.1 Election. Xxxxxxxx acknowledges that he and the Company have entered
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into this Agreement with the understanding and expectation that the Company will
be taxed as an "S corporation" under (i) the tax laws of the United States; (ii)
the tax laws of the State of Georgia; and (iii) unless otherwise agreed to by a
majority of the Shareholders, under the tax laws of each state where such status
(or similar status) is available and in which at any time the Company does
business or any Shareholder is resident. Xxxxxxxx covenants and agrees that he
will use his best efforts not do any act or fail to do any act, the commission
or omission of which would cause the termination of the S corporation election
of the Company, unless such action or failure to act has the consent of each
other Shareholder. Xxxxxxxx further covenants and agrees that, notwithstanding
any other provision of this Agreement, the Company shall have no obligation to
recognize or effect on the transfer records of the Company any transfer of any
security by Xxxxxxxx which would, in the opinion of counsel to the Company,
cause or have the effect of termination of the S-corporation election of the
Company. Xxxxxxxx (and his spouse) shall take all necessary and appropriate
steps and execute all necessary and appropriate consents and other documents
required to make each election to be taxed as an S corporation effective under
the laws of the United States and the respective states in which the Company
files an election to be an S corporation.
11.2 Inadvertent Termination of S Corporation Status. In the event of an
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inadvertent termination of the Company's S corporation election, then Xxxxxxxx
and the Company agree to take appropriate action under Section 1362(f) of the
Internal Revenue Code of 1986, as amended (the "Code") and the regulations
thereunder to request a determination of inadvertent termination from the
Commissioner of Internal Revenue allowing the Company to be treated as or
continuing to be an S corporation, and if a waiver of the terminating event is
not granted, to request consent for an early reelection of S corporation status
under Section 1362(g) of the Code and the regulations thereunder.
11.3 Shareholder Termination of Interest. In the event Xxxxxxxx terminates
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his entire interest in the stock of the Company, Xxxxxxxx agrees to file an
election under Code Section 1377(a)(2) to close the tax year of the Company as
of the date of such termination for federal income tax accounting purposes.
11.4 Allocation of Income or Loss in S Termination Year. If the Company's S
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election is terminated during any taxable year of the Company, Xxxxxxxx agrees
to make such elections and sign such consent forms as may be required, and the
Company will allocate all tax items between the short tax year ending on the
date immediately prior to the terminating event and the short tax year beginning
with the date of the terminating event in accordance with Code Section
1362(e)(3).
11.5 Power of Attorney. Xxxxxxxx (and his spouse) hereby irrevocably
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constitutes and appoints the President of the Company, or any successor, with
power of substitution, his or her true and lawful attorney-in-fact and agent, to
execute, acknowledge, verify, swear to, deliver, record and file, in his (or his
spouse's) name, place and stead, all consents, instruments, documents and
certificates that may from time to time be required by the laws of the United
States, the State of Georgia, or any other relevant state, to effectuate,
implement and continue the valid existence of the Company as an S corporation
(or similar status). This power of attorney is a special power and shall not be
terminated upon the incapacity, disability or incompetence of Xxxxxxxx (or
spouse) and shall not be revoked and shall survive the assignment or transfer by
Xxxxxxxx (or spouse) of all or part of his or her Stock in the Company. The
existence of this power shall not preclude execution of any such instrument by
Xxxxxxxx (or spouse) individually on any such matter.
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12. Miscellaneous.
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12.1 Waivers and Consents. All waivers and consents given hereunder shall
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be in writing. No waiver by any party hereto of any breach or anticipated breach
of any provision hereof by any other party shall be deemed a waiver of any other
contemporaneous, preceding or succeeding breach or anticipated breach, whether
or not similar, on the part of the same or any other party.
12.2 Notices. All notices and other communications hereunder shall be in
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writing and shall be deemed to have been given only if and when (i) personally
delivered, or (ii) three (3) business days after mailing, postage prepaid, by
certified mail, or (iii) when delivered (and receipted for) by an overnight
delivery service, or (iv) when first sent by telex, telecopier or other means of
instantaneous communication provided such communication is promptly confirmed by
personal delivery, mail or an overnight delivery service as provided above,
addressed in each case as follows:
(a) If to Xxxxxxxx:
Xxxxxx Xxxxxxxx
0000 Xxxxx Xxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
(b) If to Company:
Softsense Computer Products Inc.
0000 Xxxxxxx Xxxxx
Xxxxx X-0000
Xxxxxxx, Xxxxxxx 00000
Attention: President
Either Xxxxxxxx or the Company may change the address(es) for the giving of
notices and communications to him or it, as the case may be, by written notice
to the other party in conformity with the foregoing.
12.3 Headings. The Article and Section headings contained in this Agreement
--------
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
12.4 Governing Law. The interpretation and construction of this Agreement,
-------------
and all matters relating hereto, shall be governed by the laws of the State of
Georgia, without giving effect to the principles of conflicts of laws.
12.5 Parties in Interest. This Agreement shall inure to the benefit of, and
-------------------
be binding upon, Xxxxxxxx and the Company, and their respective successors and
assigns.
12.6 Section References. Any reference in this Agreement to a section or
------------------
subsection shall be deemed to include a reference to any subsidiary sections
whenever the context requires.
12.7 Gender. Masculine, feminine and neuter terms shall be interchangeable
------
(and shall include a corporation, a partnership, or another entity), and shall
be singular and plural, where the context makes a change of gender or number
appropriate.
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12.8 Counterparts. This Agreement may be executed in two or more
------------
counterparts, all of which taken together shall constitute one and the same
instrument.
12.9 Entire Agreement. This Agreement, including all schedules annexed
----------------
hereto, contains the entire understanding of the parties hereto with respect to
the subject matter contained herein or therein, and supersedes all prior or
contemporaneous written or verbal arrangements or agreements regarding the same.
12.10 Amendments. This Agreement may not be changed orally. This
----------
Agreement may be changed only by an agreement in writing signed by Company and
Xxxxxxxx.
12.11 Severability. In case any provision in this Agreement shall be held
------------
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions hereof will not in any way be affected or impaired
thereby.
12.12 Attorneys' Fees. If any legal proceeding is brought for the
---------------
enforcement of this Agreement, or because of an alleged breach, default or
misrepresentation in connection with any provision of this Agreement or other
dispute concerning this Agreement, the successful or prevailing party shall be
entitled to recover reasonable attorneys' fees and other costs incurred in that
proceeding, in addition to any other relief to which it may be entitled.
12.13 Interpretation. Should any provision of this Agreement require
--------------
judicial or arbitral interpretation, it is agreed that the court or arbitrator
interpreting or construing the same shall not apply the presumption that the
terms of any such provision shall be more strictly construed against one party
or the other by reason of the rule of construction that a document is to be
construed most strictly against the party who itself or through its agent
prepared the same, it being agreed that the agents of all parties have
participated in the preparation of this Agreement.
IN WITNESS WHEREOF, the Company and Xxxxxxxx have executed this Agreement,
under seal, as of the day and year first above written.
"COMPANY"
SOFTSENSE COMPUTER PRODUCTS INC.
By: /s/ Xxxx Xxxxx
---------------------------------------
Title: President
---------------------------------
Attest: Xxxxxx Xxxxxxxx
-----------------------------------
Title:
---------------------------------
[CORPORATE SEAL]
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"XXXXXXXX"
By: /s/ Xxxxxx Xxxxxxxx (SEAL)
-----------------------
Xxxxxx Xxxxxxxx
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EXHIBIT A
---------
AGREEMENT AND PLAN OF REORGANIZATION AND DISTRIBUTION
This AGREEMENT AND PLAN OF REORGANIZATION AND DISTRIBUTION (the "Agreement")
made as of the 29th day of May, 1995 among Softsense Computer Products Inc.
("Softsense"), a New York corporation, Logic Shop, Inc. ("LSI"), a Georgia
corporation, and Xxxxxx Xxxxxxxx ("Xxxxxxxx"), an individual shareholder of
Softsense.
WHEREAS, LSI is a newly organized Georgia corporation;
WHEREAS, the parties desire to transfer to LSI the Softsense automotive
systems division, including the Compu-Car Care, Compu-Central and Compu-Local
products, in exchange for 2,000,000 shares of the common stock, no par value per
share, of LSI;
WHEREAS, thereafter the parties desire to split-off LSI to Xxxxxxxx in
exchange for stock of Softsense in a manner intended to be a tax-free
reorganization and a tax-free split-off under Sections 368(a)(1)(D) and
355(a)(1) of the Internal Revenue Code of 1986, as amended (the "Code");
NOW, THEREFORE, in consideration of the mutual covenants herein set forth,
the parties agree as follows:
1. Transfer of Properties and Assumption of Liabilities. In exchange for
----------------------------------------------------
2,000,000 shares of capital stock of LSI, Softsense will transfer to LSI certain
assets used primarily in the Softsense automotive systems division, including
the Compu-Car Care, Compu-Central and Compu-Local products, and LSI will assume
or take subject to certain liabilities of such division.
2. Distribution of Controlled Stock. Immediately after the transfer of
--------------------------------
assets and liabilities set forth in Section 1 hereto, Softsense will immediately
distribute to Xxxxxxxx all 2,000,000 shares of the issued and outstanding
capital stock of LSI and 7.292 shares of Softsense Class A Common Stock in
exchange for all 31.25 shares of Softsense Common Stock owned by Xxxxxxxx. The
value of the LSI stock and Softsense Class A Common Stock and the value of the
Softsense Common Stock surrendered by Xxxxxxxx will be determined as of the date
of the transfer by Softsense's Board of Directors using such independent
valuation advice as they deem necessary.
[THIS SPACE INTENTIONALLY LEFT BLANK]
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3. Miscellaneous. This Agreement constitutes the entire agreement and
-------------
understanding between the parties and supersedes all prior agreements and
understandings related hereto. This Agreement shall be governed by the laws of
the State of Georgia.
IN WITNESS WHEREOF, the undersigned have executed this Agreement or caused
it to be executed by their duly authorized officers effective as of the date
first written above.
SOFTSENSE COMPUTER PRODUCTS INC.
By:
---------------------------------------
Its:
--------------------------------------
LOGIC SHOP, INC.
By:
---------------------------------------
Its:
--------------------------------------
------------------------------------------
XXXXXX XXXXXXXX
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EXHIBIT B
---------
BLANKET XXXX OF SALE, ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS BLANKET XXXX OF SALE, ASSIGNMENT AND ASSUMPTION AGREEMENT
("Assignment") is made and entered into as of the 29th day of May, 1995, by and
between SOFTSENSE COMPUTER PRODUCTS INC., a New York corporation (the
"Transferor") and LOGIC SHOP, INC., a Georgia corporation (the "Transferee").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Transferor is in the business of developing, licensing and
distributing computer software for use in the automotive care field under the
trade names Compu-Car Care, Compu-Central and Compu-Local (the "Subject
Business"); and
WHEREAS, Transferor is the sole shareholder of Transferee and the parties
hereto desire that Transferor transfer to the Transferee the Subject Business as
a going concern, any goodwill associated therewith, and those certain assets,
rights, properties and business of Transferor used by, or relating to, the
Subject Business and more specifically described in Exhibit A annexed hereto
---------
(collectively, the "Transferred Assets"), but specifically excluding, without
limitation, the assets, rights, properties and business described in Exhibit B
---------
attached hereto (collectively, the "Excluded Assets"); and
WHEREAS, the parties hereto further desire that Transferee assume all of the
liabilities and obligations relating to the Transferred Assets, if any, and
certain liabilities and obligations relating to the Subject Business, all as
more particularly described in Exhibit C annexed hereto (collectively, the
---------
"Assumed Liabilities"); and
WHEREAS, the aforementioned transaction is being effected as part of a tax
free split-off in accordance with the provisions of Sections 368(a)(1)(D) and
355(a)(1) of the Internal Revenue Code of 1986, as amended;
NOW, THEREFORE, KNOW ALL MEN BY THESE PRESENTS THAT for and in consideration
of the premises, the mutual covenants contained herein, and other good and
valuable consideration, the receipt, adequacy and sufficiency of which are
hereby acknowledged and confessed, the parties hereto covenant and agree as
follows:
1. Transfer of Transferred Assets. The Transferor does hereby grant,
------------------------------
bargain, sell, assign, transfer, convey and deliver to Transferee, and its
successors and assigns, forever, all of the Transferor's right, title and
interest in, to, and under the Transferred Assets.
2. Contingent Assets. Should the assignment of any of the Transferred
-----------------
Assets under this Assignment require a third party consent as a condition to
assignment and such consent has not been obtained as of the date hereof (any
such asset being referred to as a "Contingent Asset"), Transferor, for itself
and its successors and assigns, hereby covenants and agrees to take all
commercially reasonable steps and incur all reasonable and ordinary costs
necessary to obtain such consent promptly. Until such consents have been
obtained, the Transferred Assets assigned hereunder shall not include the
Contingent Assets, however, immediately upon obtaining such consent, the
Contingent Asset to which such consent relates
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shall be deemed, without further action of any kind, to be a Transferred Asset
that is assigned by Transferor to Transferee pursuant to this Assignment.
3. Assumption of Liabilities. The Transferee does hereby assume all of
-------------------------
the Assumed Liabilities, including, without limitation, the liabilities and
obligations relating to the leases and contracts included as part of the
Transferred Assets, and Transferee agrees that it shall fully and timely pay,
perform and discharge all of the Assumed Liabilities, when due in accordance
with their respective terms. Transferee shall indemnify and hold harmless the
Transferor from and against any and all claims, liabilities, losses, damages,
costs and expenses (including attorneys' fees and court costs) which Transferor
may suffer or incur arising out of the Transferee's failure to fulfill its
obligations under Sections 3 or 4 of this Assignment.
4. Contingent Obligations. Notwithstanding anything contained herein to
----------------------
the contrary, the Assumed Liabilities shall not include any obligation which
relates to a Contingent Asset for which a required third party consent has not
been obtained (any obligation relating thereto being referred to as a
"Contingent Obligation"). However, immediately upon obtaining such consent, the
Contingent Obligation to which such consent relates shall be deemed, without
further action of any kind, to be an obligation included within the Assumed
Liabilities. Notwithstanding the foregoing, Transferee shall fully pay and
discharge when due in accordance with their respective terms any and all
obligations accruing after the date hereof with respect to those certain
Contingent Obligations for which and during the period in which Transferee is
receiving the benefits of the Contingent Assets relating thereto; provided,
however, that Transferee may, at its election, exercised in good faith, void its
obligation to assume a Contingent Obligation if during the period in which
consent is being sought any material default occurs under the Contingent Asset
relating thereto and such material default results from the acts or omissions of
Transferor, and Transferee is willing to forego any additional benefit under or
with respect to such Contingent Asset and agrees that such Contingent Asset
shall not be included within the Transferred Assets.
5. Further Assurances. Each party covenants and agrees that from and
------------------
after the date hereof, each will execute, deliver and acknowledge (or cause to
be executed, delivered and acknowledged), from time to time, at the request of
the other and without further consideration, all such further instruments and
take all such further action as may be reasonably necessary or appropriate to
confirm or more effectively carry out the provisions and intent of this
Assignment; provided, however, that all recording and filing costs shall be the
responsibility of the requesting party.
6. Employee Matters. As of the date hereof, all employees employed by the
----------------
Transferor exclusively for the Subject Business and listed on Exhibit D (the
---------
"Transferred Employees") shall be made available to the Transferee for hire, and
the Transferee shall offer employment, as of the date hereof, to the Transferred
Employees at no less than the same compensation rate described on Exhibit D.
---------
The Transferee shall be solely responsible for severance pay obligations, if
any, arising on or after the date hereof with respect to all Transferred
Employees.
7. Disclaimer of Warranties. TRANSFEROR IS GRANTING, BARGAINING, SELLING,
------------------------
ASSIGNING, TRANSFERRING, CONVEYING AND DELIVERING THE TRANSFERRED ASSETS
HEREUNDER IN "AS IS" AND "WHERE IS" CONDITION. TRANSFEROR MAKES NO
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT THERETO AND
SPECIFICALLY DISCLAIMS ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR
A PARTICULAR PURPOSE.
-16-
8. Arbitration. All disputes and claims relating to any provision hereof
-----------
(including, without limitation, any claims that any provision of this Assignment
or any obligation of Transferor or of Transferee is illegal or otherwise
unenforceable or voidable under law, ordinance or ruling) shall be settled by
arbitration at the office of the American Arbitration Association in Atlanta,
Georgia, in accordance with the United States Arbitration Act (9 USC, (S) 1 et
--
seq.) and the commercial arbitration rules of the American Arbitration
---
Association. Transferee and Transferor each consents and submits to the
jurisdiction and venue of the trial courts of Xxxxxx County, Georgia, and also
to the jurisdiction and venue of the United States District Court for the
Northern District of Georgia for purposes of enforcing this provision. All
awards of the arbitration shall be binding and non-appealable except as
otherwise provided in the United States Arbitration Act. Judgment upon the
award of the arbitrator may be entered in any court having jurisdiction thereof.
The arbitration shall take place at a time noticed by the American Arbitration
Association regardless of whether one of the parties fails or refuses to
participate. The foregoing provision shall not preclude either party from
bringing an action in any court of competent jurisdiction for injunctive or
other provisional relief as necessary or appropriate.
9. Entire Agreement. This Assignment, including all schedules and
----------------
exhibits annexed hereto, supersedes all prior agreements and undertakings
between the parties hereto with respect to the subject matter contained herein,
constitutes the entire agreement of the parties with respect to the subject
matter hereof, and may not be modified, amended or terminated except by a
written instrument specifically referring to this Assignment signed by the party
to be so bound by such modification, amendment or termination.
10. Headings. The section headings contained in this Assignment are for
--------
reference purposes only and shall not affect in any way the meaning or
interpretation of this Assignment.
11. Counterparts. This Assignment may be executed in two or more
------------
counterparts, all of which taken together shall constitute one and the same
instrument.
12. Time of the Essence. Time shall be of the essence with respect to the
-------------------
performance of any obligation or duty hereunder.
13. Governing Law. The interpretation and construction of this Assignment,
-------------
and all matters relating thereto, shall be governed by the internal laws of the
State of Georgia without giving effect to the principles of conflicts of laws.
14. Interpretation. Should any provision of this Assignment require
--------------
judicial or arbitral interpretation, it is agreed that the court or arbitrator
interpreting or construing the same shall not apply a presumption that the terms
of any such provision shall be more strictly construed against one party or the
other by reason of the rule of construction that a document is to be construed
most strictly against the party who itself or through its agent prepared the
same, it being agreed that the agents of all parties hereto have participated in
the preparation of this Assignment.
15. Parties in Interest. This Assignment shall be binding upon and shall
-------------------
inure to the benefit of the parties hereto and their respective heirs,
executors, administrators, successors and assigns.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment to be
executed and delivered, under seal, as of the date and year first above written.
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"Transferor"
Signed, sealed and delivered SOFTSENSE COMPUTER PRODUCTS INC.
in the presence of:
By:
------------------------------
Title:
---------------------- ---------------------------
Notary Public
Attest:
--------------------------
My Commission Expires: Title:
---------------------------
"Transferee"
Signed, sealed and delivered LOGIC SHOP, INC.
in the presence of:
By:
-----------------------------
Title:
---------------------- --------------------------
Notary Public
Attest:
--------------------------
My Commission Expires: Title:
---------------------------
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EXHIBIT C
PROMISSORY NOTE
$30,000 May 29, 1995
FOR VALUE RECEIVED, the undersigned (hereafter referred to as "Maker"),
promises to pay to the order of SOFTSENSE COMPUTER PRODUCTS INC. (hereafter
referred to as "Payee"; Payee, and any subsequent holder(s) hereof, being
hereafter referred to as "Holder"), at the address of Maker at 0000 Xxxxxxx
Xxxxx, Xxxxx X-0000, Xxxxxxx, Xxxxxxx 00000, or at such other place as Holder
may designate to Maker in writing from time to time, the principal sum of THIRTY
THOUSAND AND NO/100 DOLLARS ($30,000), together with interest on so much thereof
as is from time to time outstanding and unpaid, at the rate hereinafter set
forth, in lawful money of the United States of America, such principal and said
interest to be paid in the following manner:
From and after the date hereof (until maturity) interest on the outstanding
principal indebtedness evidenced hereby shall accrue at the rate of eight
percent (8%) per annum and shall be computed on a simple interest basis.
The outstanding principal amount and accrued interest on this Note shall be
due and payable in full on August 31, 1995.
This Note may be prepaid in whole or in part at any time.
If the outstanding principal and all accrued interest is not paid when due,
interest shall accrue on the outstanding principal balance of this Note from the
due date and for so long as such default continues, at the rate equal to
eighteen percent (18%) per annum. Time is of the essence of this Note.
Presentment for payment, demand, protest and notice of demand, dishonor,
protest and non-payment and all other notices are hereby waived. No indulgences
granted from time to time shall be construed as a waiver of the right of Holder
thereafter to insist upon strict compliance with the terms of this Note, or any
other right granted hereunder or by the laws of the State of Georgia; and Maker
hereby expressly waives the benefit or any statute or rule of law or equity now
provided, or which may hereafter be provided, which would produce a result
contrary to or in conflict with the foregoing. No extension of the time for the
payment of this Note or any installment due hereunder, made by agreement with
any person now or hereafter liable for the payment of this Note, shall operate
to release, discharge, modify, change or affect the original liability of Maker
under this Note, either in whole or in part, unless Holder agrees otherwise in
writing. This Note may not be changed orally, but only by an agreement in
writing signed by the party against whom enforcement of any waiver, change,
modification or discharge is sought.
This Note is intended as a contract under and shall be construed and
enforceable in accordance with the laws of the State of Georgia.
If from any circumstances whatsoever, fulfillment of any provision of this
Note or of any other instrument evidencing or securing the indebtedness
evidenced hereby, at the time performance of such provision shall be due, shall
involve transcending the limit of validity presently prescribed by any
applicable usury statute or any other applicable law with regard to obligations
of like character and amount, the, ipso facto, the obligation to be fulfilled
shall be reduced to the limit of such validity, so that in no event shall any
exaction be possible under this Note or under any other instrument evidencing or
securing the
-19-
indebtedness evidenced hereby that is in excess of the current limit of such
validity, but such obligation shall be fulfilled to the limit of such validity.
This Note shall not be transferred or otherwise disposed of by the Holder
without the prior written consent of the Maker.
As used herein, the terms "Maker" and "Holder" shall be deemed to include
their respective heirs, successors, legal representatives and assigns, whether
by voluntary action of the parties or by operation of law.
IN WITNESS WHEREOF, Maker has executed this Note under seal on the date
first above written.
"Maker"
LOGIC SHOP, INC.
By:
------------------------------------------
Title:
-----------------------------------
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