Exhibit 2
ASSET PURCHASE AND SALE AGREEMENT
Agreement made this 28th day of May, 2004 by and between ePlus Technology,
Inc., a Virginia corporation, with a principal place of business at 000 Xxxxxxx
Xxxxxxx, Xxxxxxx, XX 00000 ("Buyer") and Manchester Technologies, Inc., a New
York corporation, with a principal place of business at 000 Xxxx Xxxxxx,
Xxxxxxxxx, Xxx Xxxx 00000 ("Seller"), on behalf of itself and all of its
subsidiaries.
RECITALS
A. Seller is a reseller of computer information technology products
and services.
B. Seller desires to sell to Buyer and the Buyer desires to purchase
from the Seller the Assets and the Business.
C. For a period of three years from the Closing, the Seller shall
cease to act directly or indirectly as a reseller of computer
information technology products and services to domestic (USA)
end users, as provided herein.
D. Seller and Buyer are publicly traded companies and Seller and
Buyer are in compliance with all applicable SEC and NASD rules
and regulations.
E. Capitalized terms used in this Agreement are defined in Section 1
hereof.
1. Definitions.
1.1. "Ancillary Documents": The Services Agreement, the Escrow
Agreement, the Sublease Agreements and/or Assignments and the
Non-Solicitation Agreement.
1.2. "Assets"(all of which are owned by Seller): all assets
exclusively used in the Business, unless excluded herein,
including but not limited to the customer lists, computer data
files, personnel records regarding employees hired by Buyer,
sales records, customer records, marketing materials, and web
content including the domain name and address for Manchester
Software (xxxxxxxxxxxxxxxxxx.xxx), , and the "superstore" but not
including x-xxxxxxxxxx.xxx or xxxxxx.xxx, and the Contracts
including but not limited to those set forth on Schedules 1.2 and
3.7, the rights to income from Qwest agreements scheduled on
1.2.2 ($210,527), the rights to income from the Cisco agreements
scheduled on 1.2.2 ($268,979), provided Buyer uses best efforts
to comply with the contractual requirements of Cisco to obtain
payment, and equipment set forth on Schedule 1.2 excluding items
on Schedule 1.2.1; provided for the avoidance of doubt that the
following are expressly excluded from such definition: all assets
used in the Reserved Business Activities, cash, trademarks and
other Proprietary Information not expressly included, securities
held in any entity, accounts receivable invoiced as of the
Closing or on open orders as scheduled provided the products
shipped pursuant to such open orders are shipped on or before
June 11, 2004, as such term is defined in Section 7.1 hereof, and
corporate minute books and stock transfer records.
1.3. "Business": the information technology hardware and software
reseller and services operations, including e. Track Solutions
(d.b.a. Manchester Software), carried on by the Seller to its
information technology hardware products and services end user
customers to the date of Closing. The Business includes
information technology, product sale and services to domestic
(USA) end users, which shall be defined to mean end users taking
delivery of the product and/or services in the United States
(including Territories) including any international
organizations. The Business excludes sales of paper custom forms
sold to end-users, product sales and services to resellers and
product sales and services to non-domestic end users who accept
delivery outside the United States, including non-domestic end
users who accept delivery by a domestic export agent or freight
forwarder. The Business includes the Doctor Notes and Quest and
UNICEF Contracts.
1.3.1. "Committed Inventory: The inventory scheduled on Schedule 1.3.1
shall be the Committed Inventory.
1.4. "Contracts": The Agreements including all revenue-producing
contracts in the Business and such other agreements related
exclusively to the Business, excluding the Agreements relating to
the Reserved Business Activities provided, however, that any
Agreement (other than Doctor Notes, UNICEF and Quest) relating to
both the Business and the Reserved Business Activity shall be
shared, subject to the terms of any such Agreement
1.5. "Excluded Liabilities": Except for Liabilities, all liabilities,
obligations or commitments of Sellers for (i) any state, federal,
sales, use, goods and services, excise or custom taxes, (ii) any
claim with respect to any "employee benefit plan", as such term
is used in section 3(3) of ERISA, and any bonus, incentive, or
deferred compensation, severance, retention, change of control,
or stock option plan, (iii) the termination of any employee
benefits or employee benefit plan on or prior to the Closing and
any liabilities arising from the termination of Seller's
employees not hired by Purchaser subsequent to Closing, (iv) the
termination of employment of any employee of the Seller on or
prior to the Closing and any liabilities arising from the
termination of Seller's employees not hired by Purchaser
subsequent to Closing, (v) any legal, accounting, transactional,
consultant, brokerage or other expense relating to the
negotiation and consummation of the transactions contemplated by
this Agreement by or on behalf of the Seller, (vi) any liability,
obligation or commitment of any kind caused by or arising from
the conduct or operation of the Business prior to the Closing.
1.6. "Inventory": Means all goods identified on Schedule 1.6. Schedule
8.15(a) to be completed after Closing shall list all Inventory to
be transferred to Buyer. Schedule 8.15(b) to be completed after
the Closing shall list all Inventory to be retained by Seller.
Such Schedules and total consideration shall be agreed upon after
closing in accordance with Section 8.15.
1.7. "Liabilities": all liabilities of Seller which are listed on
Schedule 1.7, liabilities to third parties under any other
Contracts pursuant to Section 8.4 or to indemnify Seller pursuant
to Section 8.4, the Seller's liabilities with respect to Hired
Active Employees as provided in Section 8.1, the liabilities for
such other Employees to the extent allocated to Buyer as provided
for in Section 3.25, and, the Buyers' obligations pursuant to the
Ancillary Documents and no others. Buyer assumes no liability of
Seller not set forth herein.
1.8. "Services Agreement": the Agreement in substantially the form
attached hereto as Schedule 1.8.
1.9. "Purchase Price": Five million two hundred six thousand, eight
hundred fourteen dollars and eighteen cents ($5,206,814.18). ,
plus the value of Inventory to be Scheduled in 8.15(a), plus
Purchase Price Adjustments as provided for in Section 2.5 below..
The net purchase price to be paid at closing is five million
dollars ($5,000,000), (which is $5,206,814.18, adjusted pursuant
to Paragraph 2.5), to be paid by wire transfer at closing.
1.10.The "Sublease and Assignment Agreements" are the Agreements in
substantially the form attached as Schedule 1.10.
1.11."Seller Financial Statements": the financial statements provided
pursuant to Sections 7.1.5 and 8.9 hereof.
1.12.The "Non Solicitation Agreements" are the Agreements in
substantially the forms attached as Schedule 1.12.
1.13 "Reserved Business Activities" shall mean the remaining
post-closing business of the Seller, such as Electrograph
Systems, and any business activity which is not expressly
prohibited by this Agreement or the Ancillary Documents.
2. Transaction.
2.1. Upon the terms and subject to the conditions set forth in this
Agreement, at the Closing, the Seller shall sell, transfer,
convey, assign and deliver to the Buyer, and the Buyer shall
purchase or acquire from the Seller, all of the right, title and
interest in and to the Assets, other than the Assets set forth in
Schedule 1.2.1, free and clear of all liens and encumbrances.
2.2. The Buyer shall assume and agree to pay, honor and discharge
through performance when due the Liabilities.
2.3. The Buyer shall not assume any of the Excluded Liabilities.
2.4. Purchase Price. The purchase price shall equal (i) the Purchase
Price by delivery of cash payable by wire transfer or, and (ii)
assumption of the Liabilities. A portion of the purchase price
shall be escrowed pursuant to the Escrow Agreement.
2.5. Purchase Price Adjustments. The Purchase Price shall be subject
to adjustment ("Purchase Price Adjustment") in accordance with
this Section 2.5. Any and all Purchase Price Adjustments required
to be made shall be payable by cash payments by Buyer to Seller
or Seller to Buyer and otherwise in accordance with this Section
2.5. All Purchase Price Adjustments shall be subject to the
agreement of the Parties and shall be evidenced by Schedule 2.5.
2.6. The Purchase Price shall be apportioned as in Schedule 2.6, to be
agreed post-closing.
3. Warranties and Representations of the Seller. The Seller warrants
and represents to Buyer:
3.1. Corporate. Seller is a duly organized and a validly existing New
York corporation in good standing as to corporate status and tax
requirements in every jurisdiction where its business so
requires. Seller has obtained all necessary corporate,
regulatory, and governmental approvals for the execution and
performance of each of this Agreement and the Ancillary
Documents, as applicable, and has full legal right and power so
to do. Each of this Agreement and the Ancillary Documents has
been duly executed and delivered by Seller and is valid and
binding obligation, duly approved as necessary by law,
enforceable in accordance with its terms. The execution and
performance of each of this Agreement and the Ancillary Documents
will not violate or constitute a default under any agreement,
charter, by-law, court order, law, rule, regulation, judgment or
injunction by which Seller is bound.
3.2. Approval. No governmental approval or other consent or Seller
shareholder approval is required to be obtained or made by Seller
in connection with the execution and delivery of this Agreement
or the Ancillary Documents to which it is a party, or the
consummation of the transactions contemplated hereby or thereby.
3.3. Title. All the Assets are owned by Seller with good and
marketable title, and are not subject to security interests,
liens, encumbrances or claims by third parties.
3.4. Litigation. Seller is not subject to or threatened by any
defensive litigation, investigation, administrative procedure,
arbitration or similar proceeding that (i) are not generally in
the ordinary course of business, or if outside the ordinary
course of business would not have or result in a material adverse
effect to the Business or Assets (ii) questions the validity of,
or the obligations of Seller under, this Agreement or any
Ancillary Document, (iii) seeks to impede, enjoin or invalidate
the transactions contemplated by this Agreement or any Ancillary
Document, or (iv) would have or result, in any case or in the
aggregate, in a material adverse effect to the Business or the
Assets.
3.5. Brokers. Seller has no agreement, written or oral, with any
broker or finder requiring any payment in connection with this
Agreement, except as disclosed on Schedule 3.5.
3.6. Real Property. Schedule 3.6 includes a complete list of the real
property leased by Seller ("Leased Real Property"). Seller has a
valid leasehold interest in the Leased Real Property and such
interest shall be in full force and effect at Closing. It is
understood and agreed that Buyer has no obligations with respect
to the Leased Real Property except as set forth in the Sublease
and Assignment Agreements.
3.7. Contracts: Each of the Contracts described in Schedule 3.7 which
schedule is a non exclusive schedule of Contracts, is, except as
the same may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws now or hereafter in
effect relating to the enforcement of creditors' rights generally
or by principles governing the availability of equitable
remedies, (a) a valid and binding obligation of Seller and other
party thereto, (b) is in full force and effect and enforceable
against Seller and the other party to the Contract, and (c) there
does not exist any violation, breach or default, or any event or
condition that would constitute a violation or breach or a
default under any such Contract by the Seller. Seller has
performed all material obligations required to be performed by it
to date under the Contracts. All Contracts are in the name of
Seller. Schedule 3.7 lists the names of all parties, and with
respect to each Contract attached, and to the extent evidenced by
the attached, , the subject matter, the duration, whether the
Contract is assignable or not, whether there are any notices that
are required and whether they have or have not been given and any
other information material to Buyer with respect to the
Contracts. With respect to each Contract attached to Schedule
3.7, Seller is providing Buyer an original, or if after diligent
search an original is not located, a certified copy, of the
Contract and any and all necessary attachments and related
documents. Seller warrants that the Contract is a true and
complete copy and there are no side letters or other documents or
oral agreements which modify the terms of the written documents
provided and that no person is authorized to modify any contract
up to the date of Closing. Contracts for which consent is
required but not obtained shall be addressed in the Service
Agreement. There shall be no adjustment of the Purchase Price by
reason of the failure of any third party to withhold or condition
consent to the assignment of any contract, including without
limitation any lease to Leased Real Property. Seller covenants
that Buyer will receive the amount set forth in Schedules 1.2.2,
provided Buyer fulfills its obligations thereunder.
3.8. Benefits. There are no plans of Seller in effect for pension,
profit sharing, deferred compensation, severance pay, bonuses,
stock options, stock purchases, or any other form of retirement
or deferred benefit, or for any health, accident or other welfare
plan, collectively herein "the Benefits." Subject to Sectons 3.25
and 8.1, Buyer shall have no liability as to any of the Benefits,
as limited in this Section 3.8, for the individuals listed on
Schedule 3.21(c) unless specifically assumed on Schedule 3.8.
3.9. Claims. There have been no private or governmental claims,
citations, complaints, notices of violation or letters made,
issued to or threatened against Seller by any governmental entity
or private or other party for the impairment or diminution of, or
damage, injury or other adverse effects to, the environment or
public health resulting, in whole or in part, from the use or
operation of the Leased Real Property. Seller has duly complied
with and the Leased Real Property is in compliance with, the
provisions of all federal, state and local environmental, health
and safety laws, codes and ordinances and all rules and
regulations promulgated thereunder.
0.00.Xx Violation. Seller is not in violation with respect to the
Assets of any law, order, ordinance, rule or regulation of any
governmental authority.
3.11.Compliance. The transaction contemplated herein complies with
all applicable SEC, governmental, and NASD statutes, rules and
regulations. Seller specifically represents that the approval of
a majority of its shareholders is not required.
0.00.Xxxxxxxxx Statements. The Seller Financial Statements comprising
Schedule 3.12, defined in section 7.1.5 and those to be provided
pursuant to Section 8.9, present fairly in all respects the
financial position of Seller as of the dates indicated and the
results of its operations and its cash flows for the periods then
ended in accordance with GAAP, consistently applied. The Seller
Financial Statements contain all adjustments necessary to present
fairly the financial condition of Seller as of the respective
dates indicated and the results of operations of Seller for the
respective periods indicated, except for normal audit
adjustments.
3.13.Absence of Changes. Since the date of the last Balance Sheet
provided by Seller to Buyer, (i) Seller has carried on its
business only in the ordinary course consistent with past
practice, (ii) there has been no material adverse change, and
there has been no event or circumstance which is reasonably
anticipated to result in a material adverse change, with respect
to Seller, and (iii) Seller has not made any change in any method
of accounting or accounting practice.
3.14. Tax Matters.
(a) Seller 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 Seller (whether
or not shown on any tax return) have been paid. Seller 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 Seller does not file tax returns that it
is or may be subject to taxation by that jurisdiction. There are
no security interests or liens on any of the Assets of Seller
that arose in connection with any failure (or alleged failure) to
pay any tax.
(b) Seller 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.
(c) Seller does not expect any authority to assess any
additional taxes with respect to Seller for any period for which
tax returns have been filed. There is no dispute or claim
concerning any tax liability of Seller 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 Seller have knowledge.
(d) Seller has not waived any statute of limitations in
respect of taxes or agreed to any extension of time with respect
to a tax assessment or deficiency.
(e) Seller has not filed a consent under Code Sec. 341 (f)
concerning collapsible corporations. Seller 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 Sec. 897 (c) (1) (A) (ii). (A) Seller has not been a member
of an affiliated group filing a consolidated federal income tax
return (other than a group the common parent of which is the
Seller or (B) nor has Seller any liability for the taxes of any
person (other than any of Seller and its Subsidiaries) under
Treas. Reg. ss. 1.150206 (or any similar provision of state,
local, or foreign law), as a transferee or successor, by
contract, or otherwise.
3.15. Intellectual Property.
(a) Schedule 3.15(a) contains a list of all of Seller's
Intellectual Property which is part of the Assets. All licenses
included in Seller's Intellectual Property are in full force and
effect and constitute legal, valid, and binding obligations of
the respective parties thereto and there have not been and there
currently are not any defaults thereunder by any party. Neither
Seller nor any of its predecessors or affiliates (or any goods or
services sold by any of them) has violated, infringed upon, or
unlawfully or wrongfully used the intellectual property of others
and, to the knowledge of Seller, none of Seller's Intellectual
Property or any related rights or any customer lists, supplier
lists, or mailing lists, as used in Seller's business now or
heretofore conducted by Seller, infringes upon or otherwise
violates the rights of others, nor has any person asserted a
claim of such infringement or misuse. Except as set forth on
Schedule 3.15.b, Seller has taken all reasonable measures to
enforce, maintain, and protect its interests and, to the extent
applicable, the rights of third parties, in and to Sellers
Intellectual Property. Seller has all right, title, and interest
in the Intellectual Property identified on Schedule 3.15(a). The
consummation of the transactions contemplated by this Agreement
will not alter or impair any Intellectual Property rights of
Seller or result in a Default under any Contract of Seller.
Seller is not obligated nor has Seller incurred any liability to
make any payments for royalties, fees, or otherwise to any person
in connection with any of Seller's Intellectual Property.
(b) No present or former officer, director, partner, or
employee of Seller owns or has any proprietary, financial, or
other interest, direct or indirect, in any of Seller's
Intellectual Property. To Seller's reasonable knowledge, no
officer or employee of Seller has entered into any Contract with
a non-party to this Agreement that requires such officer or
employee to assign any interest to inventions or other
Intellectual Property or keep confidential any trade secrets,
proprietary data, customer lists, or other business information
or which restricts or prohibits such officer or employee from
engaging in competitive activities with or the solicitation of
customers from any competitor of Seller except as set forth in
Schedule 3.15(b).
(c) Seller grants Buyer an unconditional, fully-paid,
non-exclusive perpetual, royalty-free, transferable license to
use all software owned by Seller to maintain the Business on or
prior to Closing. Seller agrees to use its best efforts to
transfer any third-party licenses used by it in the Business to
Buyer. Best efforts shall not be construed to require Seller to
incur any costs.
3.16 Inventory. The Inventory and Committed Inventory of Seller
consists of new 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
damaged, or defective.
0.00.Xxxxxxxx Software and Databases. Schedule 3.17(a) identifies all
Computer Software and Databases owned, licensed, leased,
internally developed, or otherwise used in connection with the
Business ("Seller's Computer Software and Databases") which are
to be purchased by Buyer. Seller has all Computer Software and
Databases that are necessary to conduct Seller's business as
presently conducted by Seller and all documentation relating to
all such Computer Software and Databases. Schedule 3.17(b)
identifies each Person to whom Seller, in the last two (2) years,
has sold, licensed, leased, or otherwise transferred or granted
any interest or rights to any of Seller's Computer Software and
Databases and the date of each such sale, license, lease, or
other transfer or grant.
3.18 Insurance. All of the Assets and the operations of Seller of an
insurable nature and of a character usually insured by companies
of similar size and in similar businesses are insured by Seller
in such amounts and against such losses, casualties or risks as
is (i) usual in such companies and for such assets, operations,
and businesses, (ii) required by any Law applicable to Seller, or
(iii) required by any Contract of Seller relating to Seller's
business. Schedule 3.18 (to be provided post-closing) contains a
complete and accurate list of all insurance policies held or
owned by Seller and now in force and such Schedule indicates the
name of the insurer, the type of policy, the risks covered
thereby, the amount of the premiums, the term of each policy, the
policy number and the amounts of coverage and deductible in each
case and all outstanding claims thereunder as of the date hereof.
All such policies are in full force and effect and enforceable in
accordance with their terms. Seller is not now in Default
regarding the provisions of any such policy, including, without
limitation, failure to make timely payment of all premiums due
thereon, and has not failed to give any notice or present any
claim thereunder in due and timely fashion. Seller has not been
refused, or denied renewal of, any insurance coverage in
connection with the ownership or use of the Assets or the
operation of Seller's business. In addition to the deductibles
set forth on Schedule 3.18, such Schedule discloses all risks
that are self-insured by Seller that in the ordinary course of
business would reasonably be insured by companies of similar
size.
3.19. Employees.
(a) As of the Schedule date, Schedule 3.19(a) contains a
complete and accurate list of the following information for each
active full-time employee, independent contractor, consultant and
agent of Seller, including each full-time employee on leave of
absence or layoff status: employer; name; job title; date of
hiring or engagement; current compensation paid by type (i.e.
salary, bonus, commission, overtime or other). Upon Buyer's
request from and after the Closing, Seller will promptly
supplement Schedule 3.19(a) by providing all information
requested by Buyer within the possession and control of Seller
pertaining to any such employee, subject only to legal
limitations restricting disclosure;
(b) As of the Schedule date, Schedule 3.19(b) states the
number of full-time employees terminated by Seller and contains a
complete and accurate list of the following information for each
employee of Seller who has been terminated or laid off, or whose
hours of work have been reduced by more than fifty percent (50%)
by Seller, in the six (6) months prior to the date of this
Agreement: (i) the date of such termination, layoff or reduction
in hours; (ii) the reason for such termination, layoff or
reduction in hours; and (iii) the location to which the employee
was assigned.
(c) No officer is bound by any contract with any third party
that purports to limit the ability of such officer (i) to engage
in or continue or perform any conduct, activity, duties or
practice relating to the business of Seller or (ii) to assign to
Seller or to any other Person any rights to any invention,
improvement, or discovery. To Seller's reasonable knowledge no
former or current employee of Seller is a party to, or is
otherwise bound by, any contract that in any way adversely
affected, affects, or will affect the ability of Seller or Buyer
to conduct the business as heretofore carried on by Seller except
to the extent Scheduled in Schedule 3.15(b).
3.20 Labor Disputes; Compliance
(a) Seller has complied in all respects with all legal
requirements relating to employment practices, terms and
conditions of employment, equal employment opportunity,
nondiscrimination, immigration, wages, hours, benefits,
collective bargaining and other requirements under federal, state
and local law, the payment of social security and similar taxes
and occupational safety and health. Buyer is not liable for the
payment of any taxes, fines, penalties, or other amounts, however
designated, for failure to comply with any of the foregoing legal
requirements.
(b) Except as disclosed on Schedule 3.20(b), (i) Seller has
not been, and is not now, a party to any collective bargaining
agreement or other labor contract; (ii) since May 26, 2004, there
has not been, there is not presently pending or existing, and to
Seller's Knowledge there is not threatened any strike, slowdown,
picketing, work stoppage or employee grievance process involving
Seller; (iii) no event has occurred or circumstance exists that
could provide the basis for any work stoppage or other labor
dispute; (iv) there is not pending or, to Seller's knowledge,
threatened against or affecting Seller any proceeding relating to
the alleged violation of any legal requirement pertaining to
labor relations or employment matters, including any charge or
complaint filed with the National Labor Relations Board or any
comparable Governmental Body, and there is no organizational
activity or other labor dispute against or affecting Seller; (v)
no application or petition for an election of or for
certification of a collective bargaining agent is pending; (vi)
no grievance or arbitration Proceeding exists that might have an
adverse effect upon Seller or the conduct of its business; (vii)
there is no lockout of any employees by Seller, and no such
action is contemplated by Seller; and (viii) there is no charge
of discrimination pending against or threatened against Seller
with the Equal Employment Opportunity Commission or similar
governmental body.
3.21. Employees and Employee Benefits.
(a) For the purpose of this Agreement, the term "Active
Employees" shall mean all employees employed on the Closing Date
by Seller for its business.
(b) For the purpose of this Agreement the term "Independent
Contractors" shall mean all individuals or business entities who
are not employees and are performing services as sales
representatives of Seller in connection with the Business on the
Closing Date.
(c) Employment of Active Employees and Engagement of
Independent Contractors by Buyer. (i) Buyer is not obligated to
hire any Active Employee or to enter into an agreement with any
Independent Contractor but may interview all Active Employees and
Independent Contractors, except that, for the persons or entities
on Schedules 3.21(c) and 3.21(c.2), Buyer will offer employment
or engagement on the same or similar terms, provided, however,
Buyer shall not offer employment or solicit the services of any
person identified by Seller on Schedule 3.21(c.1).The employees
or independent contractors to whom Buyer has offered employment
or engagement and who have accepted such employment or engagement
will be referred to as the Hired Active Employees and the Hired
Independent Contractors respectively.. Subject to legal
requirements, Buyer will have reasonable access to the personnel
records (including performance appraisals, disciplinary actions
and grievances of Seller for the purpose of preparing for and
conducting employment interviews with all Active Employees and
will conduct the interviews as expeditiously as possible
following the Closing Date. Access to Active Employees will be
provided by Seller upon reasonable prior notice during normal
business hours. Seller will terminate its employment of all of
its Hired Active Employees and Hired Independent Contractors upon
the effective date of such Hired Active Employee's or Hired
Independent Contractor's employment or engagement by Buyer. (ii)
Except insofar as Seller determines, in its sole discretion, that
their employment is necessary under the Services Agreement,
Seller shall not solicit the continued employment of any Active
Employee whom Buyer indicates, pursuant to Schedules 3.21(c) and
3.21(c.2), as being the intended recipient of an offer of
Employment, unless and until Buyer has previously informed Seller
in writing that the particular Active Employee or Independent
Contractor will not receive any employment offer from Buyer nor
shall Seller solicit the employment or engagement of any Hired
Active Employee or Hired Independent Contractors after the
Closing unless and until such Hired Active Employee or Hired
Independent Contractor has been discharged by Buyer. Buyer shall
inform Seller promptly of the identities of those Active
Employees to whom it will not make employment or engagement
offers. (iii) It is understood and agreed that (A) Buyer's
expressed intention to extend offers of employment as set forth
in this section shall not constitute any commitment, contract or
understanding (expressed or implied) of any obligation on the
part of Buyer to a post-Closing employment relationship of any
fixed term or duration or, except as set forth in Section 8.1,
upon any terms or conditions other than those that Buyer may
establish pursuant to individual offers of employment, and (B)
employment offered by Buyer to Active Employees or Independent
Contractors is "at will" and may be terminated by Buyer or by an
employee or independent contractor at any time for any reason
(subject to any applicable legal requirements). Nothing in this
Agreement shall be deemed to prevent or restrict in any way the
right of Buyer to terminate, reassign, promote or demote any of
the Hired Active Employees or Hired Independent Contractors after
the Closing or to change adversely or favorably the title,
powers, duties, responsibilities, functions, locations, salaries,
other compensation or terms or conditions of employment of such
individuals. Schedule 3.21(c.2) consists of employees to whom
Buyer is making employment/engagement offers, effective upon
landlord consents and who will be retained by Seller until the
time of such consents.
(d) Salaries and Benefits. Except as set forth in Section
8.1 (i) Seller shall be responsible for (A) the payment of all
wages and other remuneration due to Active Employees with respect
to their services as employees of Seller through the close of
business on the Closing Date, including pro rata bonus payments
and all vacation and sick pay ("PAL leave") earned prior to the
Closing Date; (B) the payment to any Active Employees, of any
termination or severance payments and the provision of health
plan continuation coverage in accordance with the requirements of
COBRA and Sections 601 through 608 of ERISA; and (C) subject to
the provisions of Section 3.25 any and all payments to employees
required under the Worker Adjustment and Retraining Notification
Act (the "WARN Act.") in respect of any "plant closing" or "mass
layoff" affecting Seller's employees and occurring prior to the
Closing Date. (ii) Seller shall be liable for any claims made or
incurred by Active Employees and their beneficiaries through the
Closing Date. For purposes of the immediately preceding sentence,
a claim will be deemed incurred, in the case of hospital, medical
or dental benefits, when the services that are the subject of the
charge are performed and, in the case of other benefits (such as
disability or life insurance), when an event has occurred or when
a condition has been diagnosed that entitles the employee to the
benefit.
(e) Seller's Deferred Compensation, Retirement and/or
Savings Plans. (i) All Hired Active Employees who are
participants in Seller's deferred compensation and/or retirement
plans sponsored and/or provided by Seller, hereinafter Seller's
"Retirement Plans" shall retain their benefits to the extent
theretofore vested under Seller's Retirement Plans as of the
Closing Date, and Seller (or Seller's Retirement Plans) shall
retain sole ability for the payment or transfer of such vested
benefits as and when such Hired Active Employees become eligible
therefor under such plans.
(f) Collective Bargaining Matters. Buyer will set its own
initial terms and conditions of employment for the Hired Active
Employees and others it may hire, including work rules, benefits
and salary and wage structure, all as permitted by law. Buyer is
not obligated to assume any collective bargaining agreements
under this Agreement. Subject to Section 3.25 and Section 8.1.
Seller shall be solely liable for any severance payment required
to be made to its employees. Any bargaining obligations of Buyer
with any union with respect to bargaining unit employees
subsequent to the Closing, whether such obligations arise before
or after the Closing, shall be the sole responsibility of Buyer.
(g) General Employee Provisions. (i) Seller and Buyer shall
give any notices required by legal requirements and take whatever
other actions with respect to the plans, programs and policies
described in this Section 3.21 as maybe necessary to carry out
the arrangements described in this Section 3.21. (ii) Seller and
Buyer shall provide each other with such plan documents and
summary plan descriptions, employee data or other information as
may be reasonably required to carry out the arrangements
described in this Section 3.21. (iii) If any of the arrangements
described in this Section 3.21 are determined by the IRS or other
Governmental Body of competent jurisdiction to be prohibited
bylaw, Seller and Buyer shall modify such arrangements to reflect
as closely as possible their expressed intent and retain the
allocation of economic benefits and burdens to the parties
contemplated herein in a manner that is not prohibited by law.
(iv) Seller shall provide Buyer with completed I-9 forms and
attachments with respect to all Hired Active Employees, except
for such employees as Seller certifies in writing to Buyer are
exempt from such requirement. (v) Buyer shall not have any
responsibility, liability or obligation, whether to Active
Employees, former employees, their beneficiaries or to any other
Person, with respect to any employee benefit plans, practices,
programs or arrangements (including the establishment, operation
or termination thereof and the notification and provision of
COBRA coverage extension) maintained by Seller.
(h) Seller will provide Buyer with duplicate copies of all
personnel records with respect to Hired Active Employees and
Hired Independent Contractors.
(i) Subsequent to Closing, Seller shall pay its employees,
independent contractors, and former employees commissions due to
them, subject to the same terms and conditions as the existing
commission policies and/or agreements.
3.22.Assistance in Proceedings. Seller will cooperate with Buyer and
its counsel in the contest or defense of, and make available its
personnel and provide any testimony and access to its Books and
Records in connection with, any Proceeding involving or relating
to (a) any contemplated transaction or (b) any action, activity,
circumstance, condition, conduct, event, fact, failure to act,
incident, occurrence, plan, practice, situation, status or
transaction on or before the Closing Date involving Seller or its
business.
3.23. Nonsolicitation and Nondisparagement.
(a) Restriction. For a period of three (3) years after the
Closing Date, Seller shall not, anywhere in the United States,
directly or indirectly invest in, own, manage, operate, finance,
control, advise, render services to or guarantee the obligations
of any Person engaged in or planning to become engaged in the
computer IT services business as a domestic reseller to end users
("Competing Business"), provided, however, that Seller may engage
in distribution of such products to other "resellers" (excepting
any Independent Contractors) or non-domestic end users and may
continue to engage in distribution and sales of display
technology and such other products and services related to such
business currently engaged in by Electrograph Systems, Inc., a
wholly owned subsidiary of Seller, and any other business not
expressly restricted hereby, and purchase or otherwise acquire up
to (but not more than) five percent (5 %) of any class of the
securities of any Person (but may not otherwise participate in
the activities of such Person) if such securities are listed on
any national or regional securities exchange or have been
registered under Section 12(g) of the Exchange Act. For purposes
hereof "non-domestic end-users" shall include end-users to whom
Seller sells by delivery through domestic freight forwarders or
domestic export agents.
(b) Nonsolicitation. For a period of three (3) years after
the Closing Date, Seller shall not, directly or indirectly: (i)
cause, induce or attempt to cause or induce any customer,
supplier, licensee, licensor, franchisee, employee, consultant or
other business relation of Buyer to cease doing business with
Buyer, to deal with any competitor of Buyer or in any way
interfere with its relationship with Buyer; (ii) cause, induce or
attempt to cause or induce any customer, supplier, licensee,
licensor, franchisee, employee, consultant or other business
relation of Seller on the Closing Date or within the year
preceding the Closing Date to cease doing business with Buyer, to
deal with any competitor of Buyer or in any way interfere with
its relationship with Buyer; or (iii) knowingly hire, retain or
attempt to hire or retain any employee or independent contractor
of Buyer or in any way interfere with the relationship between
Buyer and any of its employees or independent contractors.
(c) Nondisparagement. After the Closing Date, Seller will
not disparage Buyer or any of Buyer's shareholders, directors,
officers, employees or agents.
(d) Modification of Covenant. If a final judgment of a court
or tribunal of competent jurisdiction determines that any term or
provision contained in Section 3.24(a) through (c) is invalid or
unenforceable, then the parties agree that the court or tribunal
will have the power to reduce the scope, duration or geographic
area of the term or provision, to delete specific words or
phrases or to replace any invalid or unenforceable term or
provision with a term or provision that is valid and enforceable
and that comes closest to expressing the intention of the invalid
or unenforceable term or provision. This Section 3.24 will be
enforceable as so modified after the expiration of the time
within which the judgment may be appealed. This Section 3.24 is
reasonable and necessary to protect and preserve Buyer's
legitimate business interests and the value of the Assets and to
prevent any unfair advantage conferred on Seller.
(e) No restriction on Seller under this Section3.23 shall be
operative with respect to Seller's disposition of inventory
scheduled on Schedule 8.15(b).
3.24.Customer and Other Business Relationships. After the
Closing, Seller will cooperate with Buyer in its efforts to
continue and maintain for the benefit of Buyer those business
relationships of Seller existing prior to the Closing and
relating to the Business to be operated by Buyer after the
Closing, including relationships with lessors, landlords,
vendors, employees, regulatory authorities, licensors, customers,
suppliers and others, and Seller will satisfy the Excluded
Liabilities in a manner that is not detrimental to any of such
relationships. Seller will refer to Buyer all inquiries relating
to such Business and no other Person or entity. Neither Seller
nor during the course of continued employment by Seller, any of
its officers, shall take any action that would tend to diminish
the value of the Assets after the Closing or that would interfere
with the Business to be engaged in after the Closing by Buyer,
including disparaging the name or business of Buyer.
3.25. WARN Act. Pursuant to Section 3.21 Buyer will notify
Seller of the names of all Active Employees of Seller to whom
Buyer intends to make an offer of employment. From and after the
closing Buyer shall continue to notify Seller of the names of all
Active Employees who continue to be employed by Seller after the
Closing Date to whom Buyer has made an offer of employment.
Seller agrees to bear all the responsibilities under the WARN
Act, if any, including all notifications for any Active Employees
subject to any pre-Closing "plant closing" or "mass layoff"
within the meaning of the WARN Act. The parties agree to
cooperate to minimize WARN Act liability and to share equally in
any such liability as to Seller's Active employees, post-Closing,
excepting therefrom liability as to Hired Active Employees, as to
whom any WARN Act obligations shall be the sole responsibility of
Buyer. For purposes hereof "WARN Act liability" shall include
without limitation each of the following: (a) liability for
continued compensation after notice of termination is given to
any employee or the cost of a mutually agreeable negotiated
severance payment which such employee agrees to accept in return
for a release of claims pursuant to the WARN Act; and (b) the
actual cost of retaining such employee through and including any
such notice period required by the WARN Act. Seller's agreement
to share the liability equally will not diminish the Buyer's
liability to reimburse Seller for the cost of any such employee
pursuant to the Services Agreement 4. Warranties and
Representations of Buyer. Buyer warrants and represents to
Seller:
4.1. Buyer is a duly organized and a validly existing
Virginia corporation in good standing as to corporate status and
tax requirements in every jurisdiction where its business so
requires. Buyer has obtained all necessary corporate approvals
for the execution and performance of each of this Agreement and
the Ancillary Documents and has full legal right and power so to
do. Each of this Agreement and the Ancillary Documents has been
duly executed and delivered by Buyer and is its valid and binding
obligation, enforceable in accordance with its terms. The
execution and performance of each of this Agreement and the
Ancillary Documents does not and will not violate or constitute a
default under any agreement, charter, bylaw, court order,
judgment or injunction to which Buyer is a party or by which it
is bound.
4.2. Each of this Agreement and the Ancillary Documents is
the legal, valid and binding obligation of Buyer, enforceable in
accordance with its terms.
4.3. Buyer has no written or oral agreement with any broker
or finder requiring any payment in connection with this
Agreement.
4.4. No governmental approval or other consent or Buyer
shareholder approval or other corporate action is required to be
obtained or made by the Buyer in connection with the execution
and delivery of this Agreement or the Ancillary Documents to
which it is a party, or the consummation of the transactions
contemplated hereby or thereby.
4.5 Buyer will satisfy the Liabilities in accordance with
the assumption of same hereunder.
4.6 Nondisparagement. After the Closing Date, Buyer will not
disparage Seller or any of Seller's shareholders, directors,
officers, employees or agents.
5. Intentionally Deleted.
6. Buyer Confidentiality Obligation., Buyer and Seller agree to
be bound by the terms and conditions of the Non-Disclosure Agreement
dated February 27, 2004, with the following modification: for
information conveyed from the Seller (Discloser) to the Buyer
(Recipient), only information which satisfies both the requirements of
being Confidential Information in the Non-Disclosure Agreement and is
related to the Reserved Business Activities, shall be considered to be
Confidential Information. Buyer may not publicly disclose the Seller's
Financial Statements prior to Seller's own public disclosure except,
and to the extent necessary, for regulatory filings.
7. Closing.
7.1. Buyer shall purchase and Seller shall sell all of
Seller's right, title and interest in and to the Assets, subject
to the Liabilities, at the offices of Kressel, Rothlein, Xxxxx &
Xxxx, LLC, 000 Xxxxxxxx, Xxxxxxxxxx, Xxx Xxxx 00000 on May 28,
2004 (the "Closing"); provided, however, in no event shall Buyer
assume any of the Excluded Liabilities. At the Closing, all
transactions set forth below shall be effected. No transaction
shall be deemed consummated unless all such transactions are
consummated. It is a condition of the obligation of Buyer and
Seller to consummate the Closing that the obligations of the
other at Closing shall have been performed, unless waived. At
Closing:
7.1.1. Buyer shall deliver to the Seller, and Seller
shall deliver to Buyer, certificates that all warranties and
representations herein are true and correct in all material
respects at Closing.
7.1.2. Seller and Buyer shall each deliver to the other
certified copies of resolutions of its Board of Directors
authorizing the execution and performance of this Agreement.
7.1.3. The Purchase Price as per Closing adjustments
shall be paid by Buyer to Seller by wire transfer in
accordance with Seller's instructions.
7.1.4. Seller shall have delivered to Buyer all other
instruments and documents of transfer reasonably requested
by Buyer to pass title and possession of the Assets.
7.1.5. Financial Statements. Seller shall have provided
financial statements ("Seller Financial Statements") which
include 1) full carve-out financial statements (including
balance sheets, statements of earnings, changes in
shareholders' equity, cash flow, footnotes, and auditor's
opinion) of the entity representing the Seller's assets,
liabilities and business being sold or transferred herein,
audited by Seller's independent accountants in accordance
with GAAP and Regulation S-X as of July 31, 2003, 2002 and
2001 ("Audit Years"), and 2) quarterly unaudited financial
statements (including balance sheets, statement of earnings,
and cash flow) for each quarterly period through January 31,
2004.
7.1.6. The Ancillary Documents shall be executed.
7.1.7. A Xxxx of Sale and an Assignment executed and
delivered by Seller to Buyer.
7.1.8. The Buyer and Seller shall each have received an
opinion of the other's respective counsel, substantially in
the form of Schedule 7.1.8 or with such changes thereto as
are reasonably satisfactory to the other.
8. Post-Closing Matters.
8.1. Effective June 1, 2004 at 12:01 AM, (and except for
employees or independent contractors whose services Seller continues
under the Services Agreement), Seller shall terminate the employment
of each of the employees named on Schedules 3.21(c) and 3.21(c.2), and
effective as of June 1, 2004 at 12:01 AM, the Buyer shall offer
employment to each employee named on Schedules 3.21(c) and 3.21(c.2)
(i) at a position comparable to such employee's position with Seller
immediately prior to the Closing, (iii) in the same general vicinity
of the facility at which such employee was employed by Seller, (iii)
at wage or salary levels and bonus or other incentive compensation
amount, as applicable, in compliance with Buyer's compensation
Schedule with respect to similarly situated employees, and (iv) with
its standard employee benefits at Closing, with length of service with
Seller, up to the Closing, to be recognized by Buyer for purposes of
Buyer's 401-K benefit plan (other than accrual of benefits) as service
with Buyer. After the closing Buyer may supplement (without
diminution) Schedule 3.21c. The employees named on Schedules 3.21(c)
and 3.21(c.2) (including those on Schedules 3.21(c) and 3.21(c.2)as
may be supplemented) who accept such offers of employment by the Buyer
shall be referred to in this Agreement as the Hired Active Employees.
The Buyer shall assume and be solely responsible for the liability, if
any, under the WARN Act and continued health care coverage as
described in Section 4980B of the Code (COBRA), incurred by the Seller
in connection with the actual or constructive termination of
employment with the Seller (including in connection with the
consummation of the transactions contemplated by this Agreement and
the Ancillary Documents) of any employee named on Schedule 3.21(c),
and Schedule 3.21(c) as may be supplemented, and Schedule 3.21(c.2),
inclusive. Subject to Section 3.25 the Seller shall remain solely
responsible for any and all liabilities in respect of any Active
Employees who do not become Hired Active Employees. Subject to the
terms of the Services Agreement, Seller agrees to retain those
employees set forth in Exhibit F of the Services Agreement and
Schedule 1.10, for the benefit of Buyer. Buyer may, from time to time,
add one or more employees to Schedules 3.21(c) and 3.21(c.2) or give
notice that it does not intend to add employees to Schedules 3.21(c)
and 3.21(c.2).
8.2. The Buyer shall provide Hired Active Employees with coverage
under any welfare and benefit plans, programs, policies or
arrangements established by the Buyer provided that Seller shall
remain solely responsible for any and all benefit liabilities to or in
respect of Hired Active Employees or their beneficiaries or dependents
relating to or in connection with any claims based upon an occurrence
prior to the effective date of employment by Buyer for life,
disability, accidental death or dismemberment, medical, dental,
hospitalization, other health or other welfare or benefit plans or
expense reimbursements. The Buyer shall waive any preexisting
condition restrictions, as permitted by its insurance provider(s) and
to the extent permitted by law for any Hired Active Employees and his
or her dependents under the applicable benefit plan. From and after
the Closing, the Seller shall remain solely responsible for any and
all liabilities relating to or in connection with the requirements of
COBRA to provide continuation of health care coverage under any plan
in respect of (i) Active Employees who do not become Hired Active
Employees and their covered dependents, and (ii) to the extent related
to a qualifying event occurring before the effective date of
employment by Buyer for Hired Active Employees and their covered
dependents.
8.3. To assure to Buyer the full benefit of conducting the
Business from and after the Closing Date, Seller undertakes that they
shall not disclose to another person or itself use for any purpose,
and shall use all reasonable endeavors to prevent the publication or
disclosure of, information concerning the Business or affairs of the
clients or customers of the Business, of which it has knowledge except
for disclosure (i) required by law or applicable regulation or (ii) on
a confidential basis to its professional advisers or (iii) of
information that has come into the public domain through no breach of
this Agreement.
8.4. Notwithstanding anything to the contrary in this Agreement:
This Agreement shall not constitute an agreement to transfer, convey
or assign any Contracts if a transfer, conveyance or assignment, or an
attempt to make a transfer, conveyance or assignment, without the
consent of a third party (including any governmental authority) would
constitute a breach or violation thereof or in any way materially
affect the rights of the transferee, conveyee or assignee thereof
until such consent is obtained; and if any such required consent is
not obtained on or prior to the Closing and Buyer shall so request,
the Seller shall use commercially reasonable efforts to obtain such
consent thereafter, and the Seller and the Buyer shall cooperate with
each other to effect any reasonable arrangement designed to provide to
the Buyer the benefit of, and to permit it to assume the liabilities
and. obligations under, any such Contracts. To the extent any Contract
is assigned, Buyer assumes the obligations of its performance from and
after the effective date of its assignment. In the event any Contract
cannot be assigned to Buyer, Seller shall allow Buyer to obtain the
benefit of the Contract in Seller's name and each shall serve as the
others' agents for such purpose; provided that Buyer shall indemnify,
defend and hold Seller harmless from and against any and all claim,
demand, action, damage, loss, cost, interest, liability, fee or
expense, including without limitation attorney's fees, which the
Seller may suffer or incur in connection therewith.
8.5. From the date of Closing until the third annual anniversary
thereof, neither Seller nor its subsidiaries or affiliates shall
directly or indirectly resell information technology hardware or
software products or provide associated services relating thereto to
domestic end users or the Independent Contractors, nor shall Seller
receive an agent fee from a reseller of information technology
hardware or software products for the sale by such agent of any
information technology hardware or software products or services,
unless said referral was made prior to closing and payment as a result
of said referral occurs within 120 days of Closing, nor shall they
enter into any agreement designed to subvert the spirit of this
paragraph. Nothing herein shall limit or prohibit the right of Seller,
an affiliate or subsidiary to engage in sale or distribution of such
products and/or services to non-domestic end users (as defined in
Section 3.23) or resellers (domestic and non-domestic) or to continue
to engage in sale and distribution of display technology or related
products and services or to engage in any other business activity not
expressly prohibited hereby.
8.6. On and after the date of Closing, the Seller shall afford
promptly to the Buyer and its representatives access to its books and
records, employees and auditors to the extent necessary or useful for
the Buyer in connection with any third party audit, investigation,
dispute or litigation or any other reasonable business purpose
relating to the Business and the Assets. Any such access by the Buyer
shall (i) be upon reasonable notice and at reasonable times during the
normal business hours of Seller, (ii) shall not unreasonably interfere
with the conduct of the business of the Seller, (iii) be at the
Buyer's expense and (iv) shall be subject to appropriate restrictions
for classified or privileged information.
8.7. Following the Closing, the parties shall at their own
expense, execute and deliver, or cause to be executed and delivered,
such additional reasonable instruments, documents, conveyances or
assurances and take such other actions as may be reasonably necessary,
or otherwise reasonably requested by the other party, to render
effective the consummation of the transactions contemplated by this
Agreement and the Ancillary Documents or otherwise carry out the
intent and purposes of this Agreement and the Ancillary Documents.
8.8. Seller and Buyer shall each promptly remit to the other any
payments received from any Person which belongs to the other party. In
the event both parties have an interest in the check, the payee may
endorse and cash it, provided it promptly remits the amount due to the
other party within 5 business days of clearance or availability of
funds.
8.9. Seller will provide Buyer with unaudited financial
statements, prepared in accordance with GAAP, for the quarter ending
April 30, 2004 and from May 1, 2004 to Closing.
8.10. Subsequent to closing:
All rights, title and interest in pre-Closing purchase
orders that have not been filled and invoiced by Seller on or
before June 11, 2004, shall be assigned to Buyer on June 12,
2004, and Buyer shall assume Seller's obligation to perform
and/or fill such purchase order.
8.11. The parties shall simultaneously announce this transaction.
Each shall have the right to approve the other's text prior to
issuance; the right to approval shall not be unreasonably withheld and
in no event may either party restrict the other from complying with
any applicable law or regulation.
8.12.Seller will sign such documents as are needed to title all
tangible and intangible assets in Buyer.
8.13 Buyer and Seller each will forthwith use best efforts and
submit necessary materials to obtain Landlord consent for the
Subleases and Assignments. In no event shall Seller be obligated to
pay any consideration to secure the Landlord consent. unless such
consideration is provided for in and by the existing Lease. Upon
obtaining such consents, respectively, Seller shall assign to Buyer
all right, title and interest in and to the Assets scheduled on
Schedule 1.2 regarding the locations to which those consents
correspond. Until such time, Buyer shall have free use of the such
Assets. Upon landlord consent, Buyer will pay Seller the security
deposits for Boca Raton ($8,239.73) and Pittsford ($4,196.00).
8.14 Seller shall afford full access at all reasonable times, and
in a manner so as not to interfere with the normal business operations
of Seller, to Buyer and its duly appointed representatives to all
information concerning the Assets and personnel of Seller.
8.15 On or before June 12, 2004 Buyer shall inspect all Seller's
Inventory as scheduled on Schedule 1.6 and identify those items of
Inventory to be purchased from Seller. The items to be purchased by
Buyer shall be sold to Buyer at Seller's cost. The items and costs of
such items to be sold to Buyer shall be scheduled on Schedule 8.15(a).
The items to be retained by Seller shall be scheduled on Schedule
8.15(b)
8.16 Without charge to Buyer, Seller will permit Buyer to use
such personal property as existing in Seller's premises leased to
Seller situated at the Columbia office from and after the closing
until purchased by Buyer from Seller or removed by Seller. Until
Seller's removal or Buyer's Purchase or such use by Buyer terminates,
whichever is later, Buyer shall maintain such personal property in the
same condition as presently existing, reasonable wear and tear
excepted. Prior to December 1, 2004, Seller agrees not to remove such
property unless and until Buyer has been offered an opportunity to
purchase such items at the same price and on the same terms as offered
to Seller by a third party. Buyer shall grant access to Seller on
reasonable notice during usual business hours to permit inspection by
Seller and/or third parties to whom Seller identifies as prospective
purchasers of such property.
8.17 Buyer shall purchase all the Committed Inventory remaining
after June 11, 2004 in accordance with Schedule 2.5 (Item 3), and such
other inventory as Buyer may elect to purchase pursuant to Schedule
2.5 (Item 2).
9. Remedies for Breaches of This Agreement
(a) Survival of Representations and Warranties.
All of the representations and warranties of the Parties
contained in this Agreement shall survive the Closing and continue in
full force and effect for a period of one (1) year.
(b) Indemnification Provisions for Benefit of Buyer.
(i) In the event Seller breaches (or in the event any third
party alleges facts that, if true, would mean Seller has
breached) any of its respective representations, warranties, and
covenants contained in this Agreement, and, if there is an
applicable survival period pursuant to Section 9(a) above,
provided that Buyer makes a written claim for indemnification
against Seller within one year of expiration of such survival
period, then Seller agrees, jointly and severally, to indemnify
Buyer from and against the entirety of any Adverse Consequences
Buyer may suffer through and after the date of the claim for
indemnification (including any Adverse Consequences Buyer may
suffer after the end of any applicable survival period) resulting
from, arising out of, relating to, in the nature of, or caused by
the breach (or the alleged breach) provided, however, that Seller
shall not have any obligation to indemnify Buyer from and against
any Adverse Consequences resulting from, arising out of, relating
to, in the nature of, or caused by the breach (or alleged breach)
of any representation or warranty of Seller until Buyer has
suffered Adverse Consequences by reason of all such breaches (or
alleged breaches) in excess of a $50,000 aggregate threshold at
which point Seller will be obligated thereafter to indemnify
Buyer from and against all such Adverse Consequences. The $50,000
aggregate threshold provided for herein shall not be applicable
to the Purchase Price Adjustments, Post Closing Adjustments,
Seller's obligations under Section 3.25, or under the Services
Agreement.
(ii) Seller agrees to indemnify Buyer from and against the
entirety of any Adverse Consequences Buyer may suffer resulting
from, arising out of, relating to, in the nature of, or caused by
any liability of Seller which is not an assumed Liability
including any liability of Seller that becomes a liability of
Buyer under any bulk transfer law (other than bulk transfer sales
taxes) of any jurisdiction, under any common law doctrine of de
facto merger or successor liability, or otherwise by operation of
law.
(c) Indemnification Provisions for Benefit of Seller.
(i) In the event Buyer breaches (or in the event any third
party alleges facts that, if true, would mean Buyer has breached)
any of its representations, warranties, and covenants contained
in this Agreement, and, if there is an applicable survival period
pursuant to Section 9(a) above, provided that Seller makes a
written claim for indemnification against Buyer within such
survival period, then Buyer agrees to indemnify Seller from and
against the entirety of any Adverse Consequences Seller may
suffer after the end of any applicable survival period) resulting
from, arising out of, relating to, in the nature of, or caused by
the breach (or the alleged breach). Buyer shall not have any
obligation to indemnify Seller from and against any Adverse
Consequences resulting from, arising out of, relating to, in the
nature of, or caused by the breach (or alleged breach) of any
representation or warranty of Buyer until Seller has suffered
Adverse Consequences by reason of all such breaches (or alleged
breaches) in excess of a $50,000 aggregate threshold at which
point Buyer will be obligated thereafter to indemnify Seller and
against all such Adverse Consequences. The $50,000 aggregate
threshold shall not be applicable to a breach of Sections 4.5,
3.25, or 8.1, the Purchase Price Adjustments, the Post Closing
Adjustments, or under the Services Agreement.
(ii) Buyer agrees to indemnify Seller from and against the
entirety of any Adverse Consequences Seller may suffer resulting
from, arising out of, relating to, in the nature of, or caused by
any liability of Seller that becomes a liability of Buyer for any
bulk transfer sales taxes of any jurisdiction, and any claim by
the Landlord under any lease assigned to Buyer or by any Lessor
under any sublease granted by Seller to Buyer, under any of the
Ancillary Agreements and any claim by any Lessor under any lease
agreement through which Buyer is granted a sublease in accordance
with any of the Ancillary Agreements.
(d) Matters Involving Third Parties.
(i) If any third party shall notify any Party (the
"Indemnified Party") with respect to any matter (a "Third Party
Claim") which may give rise to a claim for indemnification
against the other Party (the "Indemnifying Party") under this
Section 9, then the Indemnified Party shall promptly notify the
Indemnifying party thereof in writing; provided, however, that no
delay on the part of the Indemnified Party in notifying the
Indemnifying Party shall relieve the Indemnifying Party from any
obligation hereunder unless (and then solely to the extent) the
Indemnifying Party thereby is prejudiced.
(ii) The Indemnifying Party will have the right to defend
the Indemnified Party against the Third Party Claim with counsel
of its choice reasonably satisfactory to the Indemnified Party so
long as (A) the Indemnifying Party notifies the Indemnified Party
in writing within 15 days after the Indemnified Party has given
notice of the Third Party Claim that the Indemnifying Party will
indemnify the Indemnified Party from and against the entirety of
any Adverse Consequences the Indemnified Party may suffer
resulting from, arising out of, relating to, in the nature of, or
caused by the Third Party Claim, (B) the Indemnifying Party
provides the Indemnified Party with evidence reasonably
acceptable to the Indemnified Party that the Indemnifying Party
will have the financial resources to defend against the Third
Party Claim and fulfill its indemnification obligations
hereunder, (C) the Third Party Claim involves only money damages
and does not seek an injunction or other equitable relief, (D)
settlement of, or an adverse judgment with respect to, the Third
Party Claim is not, in the good faith judgment of the Indemnified
Party, likely to establish a precedential custom or practice
materially adverse to the continuing business interests of the
Indemnified Party, and (E) the Indemnifying Party conducts the
defense of the Third Party Claim actively and diligently.
(iii) So long as the Indemnifying Party is conducting the
defense of the Third Party Claim in accordance with Section 8 (d)
(ii) above, (A) the Indemnified Party may retain separate
co-counsel at its sole cost and expense and participate in the
defense of the Third Party Claim, (B) the Indemnified Party will
not consent to the entry of any judgment or enter into any
settlement with respect to the Third Party Claim without the
prior written consent of the Indemnifying Party (not to be
withheld unreasonably), and (C) the Indemnifying Party will not
consent to the entry of any judgment or enter into any settlement
with respect to the Third Party Claim without the prior written
consent of the Indemnified Party (not to be withheld
unreasonably).
(iv) In the event any of the conditions in Section 8 (d)
(ii) above is or becomes unsatisfied, however, (A) the
Indemnified Party may defend against, and consent to the entry of
any judgment or enter into any settlement with respect to, the
Third Party Claim in any manner it reasonably may deem
appropriate (and the Indemnified Party need not consult with, or
obtain any consent from, the Indemnifying Party in connection
therewith), (B) the Indemnifying Party will reimburse the
Indemnified Party promptly and periodically for the costs of
defending against the Third Party Claim (including reasonable
attorneys' fees and expenses), and (C) the Indemnifying Party
will remain responsible for any Adverse Consequences the
Indemnified Party may suffer resulting from, arising out of,
relating to, in the nature of, or caused by the Third Party Claim
to the fullest extent provided in this Section 8.
(e) Other Indemnification Provisions. The foregoing
indemnification provisions are in addition to, and not in
derogation of, any statutory, equitable, or common law remedy any
Party may have for breach of representation, warranty, or
covenant.
(f) For purposes of this Section "Adverse Consequences"
shall mean all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands,
injunctions, judgments, orders, decrees, rulings, damages, dues,
penalties, fines, costs, amounts paid in settlement, liabilities,
obligations, Taxes, liens, losses, expenses, and fees, including
court costs and reasonable attorneys' fees and expenses.
10. Intentionally Deleted.
11. General Provisions.
11.1.Each party shall pay its own legal, accounting and other
transaction related expenses.
11.2. No waiver, amendment or termination shall be effective
unless in writing signed by the party to be charged. No waiver in one
instance shall constitute a waiver in any other. All notices shall be
in writing and delivered in hand or sent by registered or certified
mail, return receipt requested, or by overnight Federal Express at the
addresses set forth above to the attention of the persons signing this
Agreement below.
11.3. This Agreement shall be governed under the laws of New York
without regard to application of conflict of laws principles and any
disputes arising hereunder shall exclusively be adjudicated in state
or federal courts of New York or Virginia. Each party hereto consents
to the jurisdiction of such courts.
11.4. This Agreement constitutes the entire agreement of the
parties with respect to its subject matter and supersedes all prior
oral and written communications, proposals and agreements in such
regard. Except as expressly set forth herein, there are no
representations or warranties given by either party to the other. This
Agreement may be executed simultaneously in one or more counterparts,
each of which shall be deemed an original, but all of which together
shall constitute one and the same instrument.
11.5. Headings are for convenience and are not admissible as to
construction.
11.6. This Agreement shall bind upon and inure to the benefit of
the parties and their respective successors, assigns, heirs and legal
representatives; provided no party may assign this Agreement or
delegate any obligations hereunder without the prior written consent
of the other party except that Buyer may assign its rights and
obligations to any affiliated entity established by Buyer in order to
effect the within transactions.
11.7. Each of the parties hereto acknowledges that there may be
no adequate remedy at law for the failure by such party to comply with
the provisions of this Agreement and that such failure would cause
immediate harm that would not be adequately compensable in damages.
Accordingly, each of the parties hereto agrees that its agreement
contained herein may be specifically enforced without the requirement
of posting a bond or other security, in addition to all other remedies
available to the parties hereto under this Agreement.
11.8. If any provision of this Agreement is held to be
unenforceable for any reason, it shall be adjusted rather than voided,
if possible, in order to achieve the intent of the parties to this
Agreement to the extent possible. In any event, the invalidity or
unenforceability of any provision of this Agreement in any
jurisdiction shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of this Agreement, including that provision, in any
other jurisdiction.
11.9. This Agreement, including the Schedules hereto, and the
Ancillary Documents constitute the full and entire understanding and
agreement of the parties with respect to the subject matter hereof and
thereof and supersede any and all prior agreements or understandings
relating to the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement effective on the date first set forth above.
MANCHESTER TECHNOLOGIES
By: /s/ Xxxx Xxxxxxx
Name: Xxxx Xxxxxxx
Title: Vice President
ePLUS TECHNOLOGY, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx
Name: Xxxxxxx X. Xxxxxxxxx
Title: Senior Vice President, Assistant
Secretary and Treasurer
