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EXHIBIT 2.7
AGREEMENT OF PURCHASE AND SALE
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This Agreement is made and entered into this 19th day of February, 1998
by and between ALPHA MICROSYSTEMS, a California corporation ("Buyer") and M&J
Technologies, a Florida corporation ("Seller").
R E C I T A L S :
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A. Seller is in the business of selling, installing and servicing
computer systems.
B. Seller intends to continue to Refurbish Computer Hardware, to sell
computer hardware including systems, peripherals, software and all brokers
equipment and to service computer software, but desires to discontinue its
hardware maintenance and servicing of computer hardware ("Hardware Service") and
to sell substantially all of its assets relating to its hardware maintenance
service operations, other than refurbishing computer hardware (the "Hardware
Service Business") to Buyer.
C. Buyer desires to purchase Seller's Hardware Service Business upon
the terms and conditions set forth herein.
A G R E E M E N T
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In consideration of their respective representations, warranties and
agreements contained herein, the parties hereto agree as follows:
ARTICLE I
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DEFINITIONS
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1.01 Agreement. The term "Agreement" herein will refer to this
"Agreement of Purchase and Sale."
1.02 Assumed Obligations. The term "Assumed Obligations" herein is
defined in Paragraph 2.06(b).
1.03 Buyer. The term "Buyer" herein will refer to Alpha Microsystems, a
California corporation.
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1.04 Closing or Closing Date. The term "Closing" or "Closing Date"
herein is as defined in Paragraph 6.02 hereof.
1.05 Customer List. The term "Customer List" herein is defined in
Paragraph 2.05 hereof.
1.06 Hardware Service and Hardware Service Business. The terms
"Hardware Service" and "Hardware Service Business" herein are defined in Recital
B.
1.07 Leases. The term "Lease" herein shall refer to the Lease for the
premises occupied prior to the Closing by Seller located at 000 Xxxxx Xxxx 00xx
Xxxxxx, Xxxxx 00, Xxxx Xxxxx , Xxxxxxx 00000 and the AT&T Phone System lease
1.08. Post Closing Actual Monthly Contract Revenue. The term "Post
Closing Actual Monthly Contract Revenue" herein is as defined in Paragraph
2.04(e).
1.09 Post Closing Average Monthly T&M Revenue. The term "Post Closing
Average Monthly T&M Revenue" herein is defined in Paragraph 2.04(d).
1.10. Prepaid Revenue. The term "Prepaid Revenue" herein is defined as
amounts invoiced and unearned as of the Closing by Seller related to Hardware
Services to be performed by Buyer subsequent to the Closing. All Prepaid Revenue
shall remain the property of Seller, whether received before or after the
Closing Date, and does not include Seller's accounts receivable.
1.11. Purchase Price. The term "Purchase Price" herein is defined in
Paragraph 2.02 hereof.
1.12. Product Sales. The term "Product Sales" herein is defined as new
or used computer equipment sold, excluding Spare Parts and other parts used in
T&M services.
1.13. Refurbish Computer Hardware. The phrase "Refurbish Computer
Hardware" herein is defined as the purchasing and reworking of used computer
hardware for resale.
1.14. Seller. The term "Seller" herein will refer to M&J Technologies,
a Florida corporation.
1.15. Service Assets. The term "Service Assets" herein is defined in
Paragraph 2.01 hereof.
1.16 Service Contracts. The term "Service Contracts" herein is defined
in Paragraph 3.06 hereof.
1.17 Spare Parts. The term "Spare Parts" herein is defined in Paragraph
3.04 hereof and are listed on Exhibit "C".
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1.18 Transferred Service Contracts. The term "Transferred Service
Contracts" herein will refer to all service contracts between Buyer or any
affiliate of Buyer and any customer on the Customer List which replaces a
Service Contract existing at the Closing and new contracts and addendums sold to
customers by Seller and executed by Buyer during the first twelve months after
Closing.
1.19 Vehicles. The term "Vehicles" shall refer to those vehicles listed
on Exhibit "H"
ARTICLE II
PURCHASE AND SALE
2.01 Purchase and Sale. At the Closing, and subject to all of the other
terms and conditions set forth herein, Seller shall sell, transfer, convey and
assign to Buyer, and Buyer shall purchase from Seller, its entire right, title
and interest in and to all of the assets of Seller's Hardware Service Business,
including but not limited to (i) the Customer List and the associated goodwill;
(ii) the Service Contracts; (iii) the Spare Parts; (iv) the Leases; and (v) the
Vehicles; and furniture and fixtures (collectively, the "Service Assets") but
excepting those assets listed on Exhibit "I". The entirety of the Service Assets
shall be conveyed free and clear of all liens, trusts, encumbrances, charges,
claims, security interests, community property or other interests, conditional
sales agreements and all other restrictions.
2.02 Purchase Price. The purchase price ("Purchase Price") for the
Service Assets shall be Eight Hundred Thousand Dollars ($800,000), as adjusted
in accordance with Paragraphs 2.03 and 2.04 below.
2.03 Payment of Purchase Price. Subject to the terms and conditions set
forth herein, the Purchase Price shall be delivered to Seller in the form of the
Company's check as follows:
(a) Buyer shall deliver at the Closing Four Hundred Thousand
Dollars ($400,000), less any adjustments in accordance with Paragraphs
2.04(a) and (b), and less an amount equal to all Prepaid Revenue, and
less any amounts owed to Alpha Microsystems at the time of Closing.
(b) Buyer shall deliver on the date twelve (12) months after
the Closing the sum of Two Hundred Thousand Dollars ($200,000) less any
adjustments in accordance with Paragraphs 2.04(a), (b), (c) and (d)
below.
(c) Buyer shall deliver on the date eighteen (18) months after
the Closing the sum of Two Hundred Thousand Dollars ($200,000) less any
adjustments in accordance with Paragraphs 2.04(a), (b) and (e) below.
2.04 Adjustments to Purchase Price. The amounts payable pursuant to
Paragraph 2.03 above shall be adjusted as set forth above as follows:
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(a) Deduction for Claims. In the event there has been an
unresolved claim by any third party made to Buyer or Seller regarding
the Service Assets which relates to a state of facts existing prior to
the Closing, the liability with respect to which has not been assumed
by Buyer, Buyer shall be entitled to withhold from the payments to be
made pursuant to Section 2.03 the aggregate amount of such claim(s).
Subject to the provisions of Section 8.01 hereof, Buyer may account for
all said amounts claimed, until resolution of each specified claim, by
debiting the amount otherwise due Seller. Buyer shall be entitled to
compromise and settle the claim(s), and upon settlement and payment,
shall deduct any amounts paid by Buyer with respect to each claim(s)
from the amounts otherwise due Seller at the time in which actual
payment is otherwise due by Buyer to claimant. Buyer may only
compromise and settle such claims with the approval of Seller, which
approval shall not be unreasonably withheld.
(b) Deduction for Breach. In the event there has been a breach
of any agreement, representation or warranty in this Agreement by
Seller or other event which affords Buyer the right to indemnification
pursuant to the provisions of paragraph 8.01 hereof, Buyer shall be
entitled to deduct from the payments to be made to Seller pursuant to
Section 2.03, the amount of Buyer's actual loss with respect thereto
pursuant to the claim notice delivered under Paragraph 8.01 of this
Agreement.
(c) Spare Parts Adjustment. There shall be no purchase price
adjustment for amounts related to spare parts.
(d) Post Closing Average Monthly T & M Revenue Adjustment. As
used in this Agreement, the term "Post Closing Average Monthly T & M
Revenue" shall mean the total amounts invoiced by Buyer for the first
six (6) months after the Closing, to customers listed on Seller's
Customer List (excluding customers who were time and materials
customers of Buyer within two (2) months immediately prior to the date
of this Agreement) for Hardware Services rendered on a time and
materials basis, divided by six (6).
In the event the Post Closing Average Monthly T & M Revenue
calculated as set forth above is less than Nineteen Thousand Dollars
($19,000), then Buyer shall be entitled to deduct from the payment made
pursuant to Paragraph 2.03(b) a total of six (6) times the difference
between the Post Closing Average Monthly T & M Revenue and Nineteen
Thousand Dollars ($19,000).
In the event the Post Closing Average Monthly T & M Revenue
calculated as set forth above is greater than Nineteen Thousand Dollars
($19,000), then Buyer shall pay in addition to the amount due Seller
pursuant to Paragraph 2.03(b) (adjusted as set forth in the prior
paragraph of this 2.04(e), on the payment date pursuant to Paragraph
2.03(b) an additional bonus payment equal to six (6) times the
difference between the Post Closing Average Monthly T & M Revenue and
Nineteen Thousand Dollars ($19,000).
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Seller has the right to audit applicable records relating to
adjustments of the payment specified in 2.03(b) and this payment will
be adjusted for any errors in billing or otherwise made by Buyer.
(e) Post Closing Actual Monthly Contract Revenue Adjustment.
As used in this Agreement, the term "Post Closing Actual Monthly
Contract Revenue" shall mean the sum of actual amounts collected by
Buyer for services provided for the month of February 1999 with respect
to Transferred Service Contacts and excludes Significant Contracts
defined below. Post Closing Actual Monthly Contract Revenue shall be
adjusted to include an amount, if any, for services not provided in the
month of February 1999 by the Buyer as a result of Service Contracts
cancelled by customer(s) due to dissatisfaction with Buyer's service
delivery.
In the event the Post Closing Actual Monthly Contract Revenue
calculated as set forth above is less than Seventy-Five Thousand
Dollars ($75,000), then Buyer shall be entitled to deduct from the
payments made pursuant to Paragraph 2.03(c) a total of six (6) times
the difference between the Post Closing Actual Monthly Revenue and
Seventy-Five Thousand Dollars ($75,000).
In the event the Post Closing Actual Monthly Contract Revenue
calculated as set forth above is greater than Seventy-Five Thousand
Dollars ($75,000), then Buyer shall pay in addition to the amount due
Seller pursuant to Paragraph 2.03(c) (adjusted as set forth in the
prior paragraph of this 2.04(e), on the payment date pursuant to
Paragraph 2.03(c) an additional bonus payment equal to six (6) times
the difference between the Post Closing Actual Monthly Revenue and
Seventy-Five Thousand Dollars ($75,000).
In the event the Seller sells a Significant Contract, the term
"Significant Contract" shall mean any new contract or addendum sold
that would be included in the Post Closing Actual Monthly Contract
Revenue and has a monthly revenue of One Thousand Dollars ($1,000) or
more, then Buyer shall pay in lieu of the amounts due to Seller
pursuant to Paragraphs 2.03 for the Significant Contract (c) an amount
equal to Fifty Percent (50%) of the annual Significant Contract
Revenues. Buyer shall pay amounts due to Seller for Significant
Contracts as the amounts are collected until amount due to Seller is
paid in full.
In the event any adjustments are made pursuant to this Paragraph 2.04, Buyer
shall deliver to Seller a written notice specifying each ground for deduction of
funds from or the addition of funds to the payments and the dollars allocated
thereto. In the event any deduction or adjustment shall exceed the payment from
which it is to be deducted, any excess shall be deducted against future
payments, or if none, promptly paid to Buyer by Seller.
2.05 Delivery of Customer List. At the Closing Seller shall deliver to
Buyer its complete Hardware Service customer list (the "Customer List") which
shall consist of the Hardware Service customers only who have purchased from
Seller within the last three (3) years Hardware Services on either a contract or
time and materials, and shall include (1) the names,
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addresses, and telephone numbers of all such customers; and (2) with respect to
customers with Service Contracts the names, addresses, telephone numbers and
contract billing amounts for the prior month's billing. Such information shall
be delivered to Buyer by Seller via quarter inch streamer tape or other medium
acceptable to Buyer. In the event of any difficulties in assimilation by Buyer,
Seller agrees to make the necessary original records available for inspection by
Buyer.
2.06 No Assumption of Liabilities.
(a) Buyer is not assuming, nor shall it become liable for, any
debts, liabilities, taxes or any other obligations of any kind of
Seller, whether known or unknown, disclosed or undisclosed, with
respect to the business of Seller or the Service Assets existing as of
the Closing Date, except as set forth in Paragraph 2.06(b) below.
(b) At the Closing, subject to the provisions of Paragraph
2.06(c), Buyer shall assume and agree to perform and discharge, to the
extent not performed or discharged by Seller on or before the Closing
Date, (i) all obligations and liabilities of Seller under the Service
Contracts accruing after the Closing; (ii) all obligations and
liabilities of Seller under the Leases accruing after the Closing; (the
"Assumed Obligations").
(c) Notwithstanding the provisions of Paragraph 2.06(b), Buyer
shall not and does not assume any liability or obligation of Seller not
included in the Assumed Obligations, including, without limitation,
liabilities of or claims against Seller arising out of any action, suit
proceeding, arbitration, investigation, or hearing or notice of hearing
arising out of, or relating to, in any manner, the operation of the
business of Seller prior to the Closing Date, except to the extent that
the subject matter of such proceeding is an Assumed Obligation.
(d) From and after the Closing, Buyer shall have complete
control over the payment, settlement or other disposition of the
Assumed Obligations and the right to commence, conduct and control all
negotiations and proceedings with respect thereto. Seller shall notify
Buyer promptly of any claim made with respect to any such Assumed
Obligation and shall not, except with Buyer's prior consent,
voluntarily make any payment of, settle or offer to settle, or consent
to any compromise or admit liability with respect to, any such Assumed
Obligation.
2.07 Taxes. Buyer agrees to be responsible for any and all sales taxes
arising from its purchase of the Service Assets. Personal property taxes shall
be prorated between Buyer and Seller as of the Closing Date. Buyer shall be
responsible for filing necessary tax returns and reports with respect to such
taxes. Prepaid taxes relating to the Hardware Service Business for the month of
March, 1998 shall be reimbursed by the Buyer upon invoice from Seller.
2.08 Allocation of Purchase Price: Reporting Requirements. For tax
purposes the parties hereby agree to (a) allocate the Purchase Price hereunder
(which for purposes of such allocation shall include all liabilities being
assumed by Buyer) in accordance with Exhibit "A"
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hereto, and (b) timely file Internal Revenue Service Form 8594, Asset
Acquisition Statement, and otherwise report the transactions set forth herein in
accordance with such allocation and with the provisions of Internal Revenue Code
Section 1060 and comparable provisions of state law.
2.09 Delivery of Possession. At the Closing, Seller shall deliver
possession of the Service Assets to Buyer at the premises which are the subject
of the Lease. Title and risk of loss (including risk of theft) in and to the
Service Assets shall pass to and be vested in Buyer, effective at the time of
the Closing on the Closing Date, and Seller shall have no further liability with
respect to the Service Assets, including liability for personal property taxes
accruing after the Closing Date.
2.10 Consents to Assignment. Any other provision of this Agreement to
the contrary notwithstanding, this Agreement shall not constitute an agreement
to assign any concession, claim, contract, lease or order, or any benefit
arising thereunder or resulting therefrom, if an attempted assignment thereof,
without the consent required or necessary for such assignment, would constitute
a breach thereof or in any way materially adversely affect the rights of Buyer
or Seller thereunder. If such consent is not obtained, or if an attempted
assignment would be ineffective or would materially or adversely affect Seller's
rights thereunder so that Buyer would not in fact receive substantially all of
such rights, Seller shall cooperate in any arrangement Buyer may reasonably
request in writing to provide for Buyer the benefits under any such concession,
contract, lease or order, including enforcement for the benefit of Buyer of any
and all rights of Seller against any other party thereto arising out of the
breach or cancellation thereof by such party or otherwise; and any transfer or
assignment of any property, property right, contract or agreement which shall
require the consent or approval of any other party shall be made subject to such
consent or approval being obtained.
2.11 Purchase of Service Vehicles. The Buyer agrees to purchase from
the Seller the Service Vehicles listed in Exhibit "H" for the pay-off as of
closing indicated therein.
ARTICLE III
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REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF SELLER
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As an inducement to Buyer to enter into this Agreement, Seller
represents and warrants to Buyer and as to covenants agrees with Buyer that,
effective on the date hereof and on the Closing Date, except as disclosed in
Exhibit "B" to this Agreement:
3.01 Organization. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Florida.
3.02 Authority. All corporate action (including approval of the Board
and shareholders of Seller) necessary to authorize and approve this Agreement
has been taken, and this Agreement constitutes a valid and binding agreement,
enforceable against Seller in accordance with its terms, and except for the
lessor of the leased premises, no authorizations, consents or approvals, whether
of governmental bodies or otherwise, are necessary in order to
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enable Seller to enter into and perform this Agreement. Consummation of the
transactions herein contemplated, and the fulfillment of the terms of this
Agreement will not conflict with or result in a breach of any of the terms or
provisions of, or constitute a default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any of the property or assets
of Seller pursuant to the terms of, or result in the acceleration of any
obligations or payment of a penalty under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which Seller is a
party or by which Seller may be bound or to which any of the property or assets
of Seller is subject, the Certificate of Incorporation or Bylaws of Seller, any
agreement of the shareholders, or any statute or any order, decree, judgment,
rule or regulation applicable to Seller of any court or of any regulatory
authority or other governmental body having jurisdiction over Seller.
3.03 Compliance with Law. Seller is not in violation of any federal,
state and local laws, regulations and orders.
3.04 Spare Parts.
(a) Seller has prepared and delivered to Buyer a complete
listing of Seller's spare parts inventory ("Spare Parts") as of January
31, 1998 and the location of such inventory as of the date thereof,
which will be updated as of February 27th, 1998. Seller has not and
will not dispose of our use any of the Spare Parts between the date of
such listing and the Closing date except in the ordinary course of
business.
(b) Attached as Exhibit "C" is a listing of each type of Spare
Part maintained by Seller as inventory in good working condition.
3.05 Customer List. The Customer List delivered to Buyer
pursuant to Section 2.05 above includes a true, correct and complete
list of the customers who purchased either contract service or time and
material service from Seller. Seller has not received any direct or
indirect communication that any customer with whom Seller presently has
a Service Contract intends to terminate, not renew or materially reduce
the present level of services obtained from Seller.
3.06 Service Contracts.
(a) Attached as Exhibit "D" is a list of all service contracts
which Buyer shall assume (the "Service Contracts"). The Service
Contracts listed on Exhibit "D" include all existing verbal and written
service contracts of Seller pursuant to which Seller provides or is
obligated to provide Hardware Services to customers (together with
names and addresses of such customers and the equipment subject to
service under the Service Contracts) which extend beyond the Closing
Date. Seller represents that amounts due or prepaid with respect to
each of the Service Contracts are as set forth on Schedule "D".
Seller has not committed any breach and or received any notice
of default which is presently in effect under any Service Contract, nor
is Seller aware of any event
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which has occurred which, with notice or passage of time, could give
rise to any such default. All the Service Contracts, together with any
amendments or modifications thereto, were duly authorized and executed
and are enforceable in accordance with their terms, except that Seller
does not represent and warrant as to matters which may relate to (a)
the enforceability as may be limited by applicable insolvency,
bankruptcy, reorganization, moratorium or other similar laws related to
or affecting creditors' rights generally, or (b) enforceability in any
court of any equitable remedies, specific performance and injunctive
relief which are subject to the discretion of the court before which
any proceeding therefor is brought (regardless of whether such
enforceability is considered a proceeding at law or equity). To the
best of Seller's knowledge, there is no reason to believe that any
customer who is a party to any such Service Contract is unable or
unwilling to perform its obligations under such contract.
(b) Seller will deliver to Buyer at the Closing the original
or a full, true and correct copy of each of the written Service
Contracts, all proposed but not yet executed contracts, and all
modifications and amendments to the foregoing, in existence on the
Closing Date, as well as a complete written description of the terms of
any and all oral agreements.
(c) Seller is not aware of any request for or need for service
under the Service Contracts which has not been performed prior to the
Closing, except as set forth on Exhibit "D".
3.07 Spare Parts, Furniture and Fixtures and Vehicles. Attached as
Exhibits "C", "F" and "H" respectively are complete listings of Seller's Spare
Parts, Furniture and Fixtures and Vehicles used in the Company's Service
Business. Said Spare Parts and Vehicles shall be in good working order on the
Closing Date.
3.08 Leases. Seller has delivered to Buyer a true and correct copy of
each Lease. Seller has, to the best knowledge of Seller, committed no breach and
Seller has received no notice of default which is presently in effect under any
Lease, nor does Seller have knowledge of any event which has occurred which,
with notice or passage of time, could give rise to any such default. Seller has
caused no damages to the leased premises which would entitle the lessor under
such Lease to damages. Security and utility deposits for the leased premises as
well as other prepaid rent amounts and build-out costs paid by the Seller under
the Lease shall be prorated and reimbursed to the Seller at Closing. Buyer and
Seller shall use commercially reasonable efforts to cause the lessor to consent
to the assignment of such Lease. In the event the consent of the lessor shall
not be obtained prior to the Closing and Buyer shall not be legally entitled to
use the real or personal property which is the subject of the Leases, Buyer
shall not assume the Lease or have any obligations thereunder. The parties shall
use their best efforts to execute new leases on substantially the same terms to
release seller from liability on said obligations.
3.09 Employees. Attached hereto as Exhibit "E" is a list of all of
Seller's employees who have been involved during the past year in performing
Hardware Service obligations under the Service Contracts, or otherwise primarily
involved during the past year in
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Seller's Hardware Service business. Seller agrees that Buyer shall have the
right to solicit and hire the employees so designated on Exhibit "E". Seller
agrees to cooperate and assist Buyer in its efforts to hire such of Seller's
employees listed on Exhibit "E", and as are designated on Exhibit "E". Buyer
shall have no liability for any termination costs or liabilities arising by
reason of the termination of any employees of Seller, including payment of
accrued vacation, regardless of whether they are hired by Buyer.
3.10 Litigation. There are no actions, suits, investigations or
proceedings by, against, involving or relating to Seller in which service of
process has been made, nor to the best of Seller's knowledge are there any
claims, actions, suits, investigations or proceedings contemplated, pending or
against, involving or relating to Seller, at law or in equity, or before any
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, in which any claim has been made or may be
asserted against the Service Assets and there has been no garnishment,
attachment or writ of executions issued with reference to any of the Service
Assets.
3.11 Judgments, Decrees and Orders in Restraint of Business. Seller is
not a party or subject to any judgment, decree or order entered in any suit or
proceeding brought by any governmental agency or by any other person enjoining
the Seller in respect of any of its business practices or the acquisition or
disposition of any property or the conduct of its business in any area.
3.12 Title to Purchased Assets. Seller has good and marketable title to
the Service Assets free and clear of all liens, claims and encumbrances,
including covenants, conditions and restrictions, other than liens on the
Vehicles and a security interest of Xxxxxxx Bank
3.13 Adverse Facts. To the best knowledge of Seller, and except for
matters relating to the general economic condition, or the specific economic
condition of any of its customers, there is no material adverse fact or
condition relating to the Service Assets or any portion thereof which has not
been specifically disclosed on Exhibit "B".
3.14 No Misrepresentations or Omissions. No representation, warranty or
statement of Seller in this Agreement or in any document, exhibit, certificate
or schedule furnished or to be furnished to Buyer pursuant hereto or in
connection with the transactions contemplated hereby contains or will contain
any untrue statement of a material fact or omits or will omit to state a
material fact necessary to make the statements or facts contained herein or
therein not misleading.
3.15 Bulk Sales Laws. Seller represents and warrants transactions
contemplated hereunder do not require compliance with any bulk sales laws.
3.16 Compliance with Laws Regulating Environmental Quality. The
property which is the subject of the Lease is, and at all times has been,
operated, used and occupied in compliance with all Environmental Laws (as
defined herein) and have been operated, used and occupied in a manner which will
not give rise to any liability under any Environmental Laws.
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Seller has not received any notice at any time that it is or was claimed to be
in violation of or in non-compliance with any conditions of any permit or
Environmental Laws or that any of the current or past uses, operations or
conduct at the property are or were in violation of or in non-compliance with
any conditions of any permit or Environmental Laws. There is not now pending or
threatened, nor any known basis for, nor has there ever been, any known action,
claim, investigation, lawsuit, proceeding or order against Seller or any others
who have owned or leased the property which are the subject of the Lease, under
any Environmental Laws or otherwise with respect to the use, storage, presence,
generation, manufacture or handling of any Hazardous Substance (as defined
herein) at the property.
For purposes of this Section 3.15, "Environmental Laws" shall mean any
federal, state, regional, county, municipal, local and foreign laws, statutes,
rules, ordinances, regulations and codes, as well as policies, orders, decrees,
judgments, permits, directives, guidances, cleanup standards, injunctions and
binding interpretations issued, promulgated, approved or entered thereunder,
relating to pollution or protection of the environment, including, but not
limited to, those relating to the release or threatened release of Hazardous
Substances into the environment or otherwise relating to the presence,
manufacture, transfer, generation, production, refinement, pumping, processing,
distribution, use, treatment, storage, transport or handling of Hazardous
Substances.
For purposes of this Section 3.15, "Hazardous Substance" shall mean any
toxic waste, pollutant, contaminant, hazardous substance, toxic substance,
hazardous waste, special waste, industrial substance or waste, petroleum or
petroleum-derived substance or waste, infectious or mutagenic or carcinogenic
substance or waste, radioactive substance or waste, or any constituent of any
such substance or waste, which is regulated under or defined by any
Environmental Law.
3.17 Brokers or Finders. Seller has not entered into any agreement or
incurred any obligation, directly or indirectly, for the payment of any broker's
commissions or finder's fees in connection with this transaction.
3.18 Financial Information. Seller's gross revenues as detailed in
Exhibit "G" have been calculated in accordance with generally accepted
accounting principals for calendar 1997 and were not less than $1,828,720.
3.19 Survival of Representations and Warranties. The covenants,
representations, warranties and agreements contained in this Agreement by Seller
shall survive the Closing Date and shall terminate and expire on the close of
business on the second anniversary of the Closing Date and shall be of no force
or effect thereafter, except with respect to any claim with respect thereto
under Paragraph 8.01 of this Agreement, written notice of which shall have been
delivered to Seller on or prior to the second anniversary of the Closing Date.
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ARTICLE IV
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REPRESENTATIONS AND WARRANTIES OF BUYER
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As an inducement to Seller to enter into this Agreement, Buyer
represents and warrants to Seller, and as to covenants agrees, with Seller as
follows:
4.01 Incorporation. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of California, and
authorized to do business in the State of Florida.
4.02 Authority. This Agreement constitutes a valid and binding
agreement, enforceable against Buyer in accordance with its terms, and excepting
the approval of the Board of Directors of Buyer, no authorizations, consents or
approvals not already obtained, whether of governmental bodies or otherwise, are
necessary in order to enable Buyer to enter into and perform this Agreement.
Consummation of the transactions herein contemplated, and the fulfillment of the
terms of this Agreement will not conflict with or result in a breach of any of
the terms or provisions of, or constitute a default under, or result in the
creation or imposition of any lien, charge or encumbrance upon any of the
property or assets of Buyer pursuant to the terms of, or result in the
acceleration of any obligations or payment of a penalty under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to
which Buyer is a party or by which Buyer may be bound or to which any of the
property or assets of Buyer is subject, the Certificate of Incorporation or
Bylaws of Buyer, or any statute or any order, decree, judgment, rule or
regulation applicable to Buyer of any court or of any regulatory authority or
other governmental body having jurisdiction over Buyer.
4.03 Judgments, Decrees and Orders in Restraint of Business. Buyer is
not a party or subject to any judgment, decree or order entered in any suit or
proceeding brought by any governmental agency or any other person enjoining the
Buyer in respect of any of its business practices or the acquisition or
disposition of any property or the conduct of its business in any area.
4.04 Brokers or Finders. Buyer has not entered into any agreement or
incurred any obligation, directly or indirectly, for the payment of any broker's
commissions or finder's fees in connection with this Agreement.
ARTICLE V
---------
CONDITIONS PRECEDENT TO CLOSING
-------------------------------
5.01 Conditions Precedent to the Performance of Seller's Obligations.
The obligations of Seller to sell the Service Assets pursuant to this Agreement
are subject, at the option of Seller, to the fulfillment on or before the
Closing Date of each of the following conditions:
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(a) Compliance with Terms. At the Closing Date, all of the
terms, conditions and agreements herein to be complied with and
performed by Buyer at or before the Closing Date shall have been
complied with or performed in all material respects.
(b) Accuracy of Representations and Warrants. Seller shall not
have acquired information that there is any material error,
misstatement or omission in any of the representations or warranties
made herein by Buyer. The representations and warranties made by Buyer
in this Agreement shall be correct and complete at and as of the
Closing Date, with only those exceptions which have been approved in
writing by Seller.
(c) Delivery of Required Items. Buyer shall have delivered all
items set forth in Paragraph 7.02 below.
(d) Transaction Legal. There shall be no order, decree or
ruling by any court or governmental agency or threat thereof or any
other fact or circumstance which might prohibit or render illegal the
transactions contemplated by this Agreement.
5.02 Conditions Precedent to the Performance of Buyer's Obligations.
The obligations of Buyer to purchase the Service Assets pursuant to this
Agreement are subject to the fulfillment on or before the Closing Date of each
of the following conditions:
(a) Compliance with Terms. At the Closing Date, all of the
terms, conditions and agreements herein to be complied with and
performed by Seller at or before the Closing Date shall have been
complied with or performed in all material respects.
(b) Service Contracts and Agreements. Buyer shall have
received copies of all of the Service Contracts, modifications and
amendments thereof.
(c) Spare Parts Inventory. Buyer shall have been given
reasonable access to conduct an inventory and inspection of the Spare
Parts.
(d) Accuracy of Representations and Warranties. Buyer shall
not have acquired information that there is any material error,
misstatement or omission in any of the representations or warranties
made herein by Seller. The representations and warranties made by
Seller in this Agreement shall be correct and complete at and as of the
Closing Date, subject only to those exceptions which have been approved
in writing by Buyer, in its sole and absolute discretion.
(e) Delivery of Required Items. Seller shall have delivered
all items set forth in Paragraph 7.01 below.
(f) Transaction Legal. There shall be no order, decree or
ruling by any court or governmental agency or threat thereof or any
other fact or circumstance which might prohibit or render illegal the
transactions contemplated by this Agreement.
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(g) Approval of Exhibits. The form and contents of each of the
Exhibits and related deliveries shall be satisfactory to Buyer.
ARTICLE VI
----------
TERMINATION
-----------
6.01 Termination. Anything herein to the contrary notwithstanding, this
Agreement may be terminated and abandoned at any time:
(a) by mutual written consent of Buyer and Seller;
(b) by Buyer, on the Closing Date, if any one or more of the
conditions precedent to its obligations herein shall not have been
fulfilled or waived in writing by Buyer;
(c) by Seller, on the Closing Date, if any one or more of the
conditions precedent to its obligations herein shall not have been
fulfilled or waived in writing by Seller.
If this Agreement is terminated pursuant to any of the foregoing
provisions, this Agreement shall become wholly void and of no effect, and there
shall be no liability on the part of either Buyer to Seller, Seller to Buyer, or
their respective boards of directors as a result of such termination (except
such liability arising pursuant to the indemnification provisions of Article
VIII for, among other things, breach of covenants, representations and
warranties and existence of suits and other actions), and in such event each
party shall bear all expenses incurred by it in connection with this Agreement
and any transactions in connection therewith.
Notwithstanding the foregoing, in the event this Agreement is
terminated, regardless of the cause for such termination, from and after the
termination date all information furnished by Seller to Buyer prior to the date
of Termination which is not generally publicly known and available shall for all
purposes constitute confidential and trade secret information of Seller, which
information shall not be used by Buyer or any of its officers, directors,
affiliates or employees or disclosed by Buyer, its officers, directors,
affiliates and employees, to any other person, and Buyer shall forthwith return
to Seller all documents containing any written embodiments of any such
confidential information.
6.02 Closing. Provided that all of the conditions to Closing have been
fully satisfied, the transactions contemplated by this Agreement shall be
consummated at a closing to be held at M&J Technologies, on February 27, 1998
(the "Closing Date") at 2:00 p.m. Eastern Daylight Time, or at such other place
or time as shall be mutually agreed upon in writing between Buyer and Seller
(the "Closing").
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ARTICLE VII
-----------
DELIVERIES AT CLOSING
---------------------
7.01 Deliveries of Seller. At the Closing, Seller shall deliver to
Buyer all of the following:
(a) Xxxx of Sales. Originally executed Xxxx of Sales for the
Service Assets in form and content reasonably satisfactory to Buyer,
including but not limited to separate bills of sales for each of the
Vehicles.
(b) Blanket Assignment. Blanket assignment by Seller to Buyer
of all right, title and interest to the Service Contracts as well as
such other assignments (including Lease Assignments with any required
consents) which Buyer reasonably believes are necessary to vest in
Buyer all of Seller's right, title and interest in and to the Service
Assets in form and content reasonably satisfactory to Buyer.
(c) Customer Lists. True and correct copies of the Customer
Lists as of the Closing Date.
(d) Service Contracts. The original of each Service Contract
and any amendments thereto.
(e) Closing Certificate. A certificate certifying the amount
of Prepaid Revenues.
(f) Covenants not to Compete. Covenants not to Compete
executed by Xxxx Xxxxxx and Xxxxxx Xxxxxx at closing.
7.02 Deliveries of Buyer. At the Closing, Buyer shall deliver to Seller
the initial payment calculated in accordance with Paragraph 2.03(a).
ARTICLE VIII
------------
POST-CLOSING COVENANTS:
-----------------------
INDEMNIFICATION, NON-COMPETITION AND COMMISSIONS
------------------------------------------------
8.01 Indemnification by Buyer and Seller.
(a) Indemnification by Seller. Seller hereby agrees to
indemnify and hold Buyer, its officers, directors, employees, agents,
advisers, affiliates and associates harmless, from all loss, liability
and expense (including reasonable attorneys' fees and expenses in
connection with the contest of any claim and interest on any claim paid
by Buyer), which Buyer may incur or sustain by reason of the fact that
(i) Seller should breach or fail to comply with any of the terms,
conditions, covenants or agreements or any exhibits attached hereto or
any of them contained herein, (ii) any representations or
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warranties made by Seller in this Agreement, the Exhibits, or in any
certificates, lists or documents delivered pursuant hereto should prove
to be false or erroneous, (iii) any claims, actions, suits,
investigations or proceedings, pending or threatened, are or have been
made or commenced by, against, involving, relating to or affecting any
part of the Service Assets with respect to any state of facts existing
or any event occurring prior to the Closing Date except for the Assumed
Liabilities, or (iv) any action, arbitration, suit, proceeding,
compromise, settlement, assessment or judgment arising out of or
incidental to any of the matters indemnified against in this Paragraph
8.01(a); provided, however, that Seller shall not be obligated to
indemnify Buyer and hold it harmless with respect to any settlement of
a claim to which Seller has not consented, which consent by Seller
shall not unreasonably be withheld.
(b) Indemnification by Buyer. Buyer hereby agrees to indemnify
and hold Seller, its officers, directors, employees, agents, advisers,
affiliates and associates, harmless from all loss, liability and
expense (including reasonable attorneys' fees and expenses in
connection with the contest of any claim and interest on any claim paid
by Seller), which Seller may incur or sustain by reason of the fact
that (i) Buyer should breach or fail to comply with any of the terms,
conditions, covenants or agreements or any exhibits attached hereto, or
any of them contained herein, (ii) any representations or warranties
made by Buyer in this Agreement should prove to be false or materially
erroneous, (iii) any claims, actions, suits, investigations or
proceedings, pending or threatened, are or have been made or commenced
by, against, involving or arising out of (A) the Assumed Obligations,
or (B) attributable to any state of facts existing or any event
occurring after the Closing Date (to the extent included in the Assumed
Obligations), (iv) all claims, actions, suits, investigations or
proceedings, pending or threatened, are or have been made or commenced
by, against, involving or arising out of the operation by Buyer of the
Hardware Service business of Seller acquired hereunder, or the sale,
transfer or other disposition by Buyer of all or any part of the
Service Assets, from and after the Closing Date, except, in each case,
if such liability arises in connection with the breach of any of the
representations, warranties, covenants or agreements made by Seller in
this Agreement, any Schedule or Exhibit hereto or any certificate or
instrument delivered in connection herewith, (v) any action, suit,
proceeding, compromise, settlement, assignment, judgment or arbitration
arising out of or incidental to any of the matters indemnified against
in this Paragraph 8.01(b); provided, however, that Buyer shall not be
obligated to indemnify a Seller Indemnified Party and hold it harmless
under this Paragraph 8.01(b) with respect to any settlement of a claim
to which Buyer has not consented, if such consent has not been
unreasonably withheld.
(c) Right to Defend, Etc. If the facts giving rise to any such
indemnification shall involve any actual claim or demand by any third
party against a Buyer Indemnified Party or a Seller Indemnified Party
(referred to hereinafter as an "Indemnified Party"), the indemnifying
parties shall be entitled to notice of and entitled (without prejudice
to the right of any Indemnified Party to participate at its own expense
through counsel of its own choosing) to defend or prosecute such claim
at their expense and through counsel of their own choosing if they give
written notice of their intention to
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do so no later than the time by which the interests of the Indemnified
Party would be materially prejudiced as a result of its failure to have
received such notice; provided, however, that if the defendants in any
action shall include both the indemnifying parties and Indemnified
Party, and the Indemnified Party shall have reasonably concluded that
counsel selected by the indemnifying parties have a conflict of
interest because of the availability of different or additional
defenses, the Indemnified Party shall have the right to select separate
counsel to participate in the defense of such action on its own behalf,
at the expense of the indemnifying parties. The Indemnified Party shall
cooperate fully in the defense of such claim and shall make available
to the indemnifying parties pertinent information under its control
relating thereto. This subparagraph does not apply to individual claims
in an amount below $1,000; provided, however, notice of any claims
within 90 days of Closing shall be required.
8.02 Non-Competition.
(a) Covenant of Seller.
(i) Seller hereby covenants and agrees that for three
(3) years from and after the Closing Date, it will not,
directly or indirectly or through any subsidiary or joint
venture, engage in any Hardware Service business which
competes with Buyer's Hardware Service business in any
geographic area where Seller now renders its Hardware
Services.
(ii) Seller agree not to solicit or offer employment
to any employee hired by Buyer pursuant to Section 3.08 for a
period of at least three (3) years after the date of the
Closing unless such employee is not at the time of such
solicitation or offer and has not been at any time during the
immediately preceding three (3) month period employed by
Buyer.
(iii) Seller acknowledges that compliance with the
covenants contained herein is necessary to protect the
goodwill that was acquired by Buyer pursuant to this
Agreement. Seller further acknowledges that any remedy at law
for the breach of the foregoing covenants will be inadequate,
and that Seller and its successors and assigns,
notwithstanding any other provision of this Agreement, shall
be entitled to injunctive relief as well as all other remedies
which may be available at law or in equity.
(iv) The parties intend that the covenants contained
in this Section 8.02 shall be construed as a series of
separate covenants, one for each county. Except for geographic
coverage, each such separate covenant shall be deemed
identical. If any one of the covenants is declared invalid for
any reason, this ruling shall not affect the validity of the
remainder of the covenants, which shall remain in effect as if
the provision had been executed without the invalid covenants,
and the covenant declared invalid shall be construed, at the
option of Buyer, by limiting or reducing
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it, so as to be enforceable to the extent compatible with the
applicable law as it shall then appear.
(b) Covenant of Buyer. Buyer hereby covenants and agrees that
for five (5) years from and after the Closing Date, it will not,
directly or indirectly or through any subsidiary or joint venture,
engage in any hardware product sales to any of Seller's customers
included on the Customer List, other than customers who have been
customers of Buyer prior to the Closing or who are customers of any
business subsequently acquired by Buyer. Any offers to purchase such
hardware products received from such customers will be referred to the
Seller.
8.03 Commissions. As part of the purchase hereunder, Buyer agrees to
pay Seller a commission for new AMSO Maintenance Contracts sold twelve months
after Closing equal to ten percent (10%) of the first year's gross revenue under
such annual contract sold by the Seller for Hardware Services. Commissions shall
not be due the Seller for contract renewals. Commissions due to the Seller shall
be paid to the Seller within 30 days receipt from the customer by the Buyer of
the initial payment under the new AMSO Maintenance Contract. In the event any
new AMSO Maintenance Contracts are cancelled within the first six (6) months of
the Contract period, any commissions paid to the Seller for such contracts will
be deducted from future commissions earned unless such contract was cancelled
because of customer dissatisfaction with Buyer's services. In the event that a
contract is cancelled for dissatisfaction with Buyer's services no additional
commission amounts for that contract will be paid from the date of cancellation.
Buyer hereby appoints Seller as an Authorized Sales Representative of Alpha
Microsystems. M& J Technologies shall be entitled to represent itself as such.
8.04 Seller's Appointment of Buyer as Exclusive Hardware Service
Provider. Seller hereby appoints and gives Buyer the exclusive right for the
three (3) year period after the Closing to provide Hardware Services to all
existing and future customers of the Seller. Under such exclusivity, the Buyer
agrees to provided installation services to the Seller at a preferred rate of
$75.00 per hour during normal business hours, such preferred rate being subject
to increases not more than once each year, and not to exceed the percentage
increases in the Consumer Price Index .
ARTICLE IX
----------
CONDUCT OF BUSINESS PENDING THE CLOSING
---------------------------------------
9.01 The Seller covenants and agrees that, prior to the Closing Date or
the earlier termination of this Agreement pursuant to Section 6.01 hereof,
unless the Buyer shall otherwise agree in writing or as otherwise expressly
permitted by this Agreement:
(a) The business of Seller shall be conducted only in the
ordinary course of business and consistent with past practice, and the
Seller shall use its best efforts to maintain and preserve its
business, assets, prospects, employees, customers and other
advantageous business relationships. Without limiting the generality of
the foregoing,
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Seller shall (i) maintain the Service Assets in substantially their
current state of repair, excepting normal wear and tear, (ii) through
the Closing Date, maintain insurance covering the Service Assets of the
same nature and level as that in effect on the date hereof, and (iii)
perform all obligations of Seller (including under the Service
Contracts) in accordance with the Seller's past practice.
(b) Seller shall not do any of the following: (i) except in
the ordinary course of business, sell, pledge, dispose of or encumber
any of the Service Assets: (ii) whether or not in the ordinary course
of business, sell, pledge, dispose of or encumber any material portion
of the Service Assets or (iii) authorize or propose any of the
foregoing, or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing.
ARTICLE X
---------
GENERAL PROVISIONS
------------------
10.01 Notification of Changes. Each party will promptly notify the
other in writing of the existence or happening of any material fact, event or
occurrence which may tend to alter the accuracy or completeness of any
representation or warranty contained in this Agreement.
10.02 Notices. Except as otherwise expressly provided herein, any
notice herein required or permitted to be given shall be in writing and shall be
personally served or sent by overnight courier, by registered mail or certified
mail, postage prepaid, or by prepaid telex, telecopy or telegram and shall be
deemed to have been given when such writing is received by the intended
recipient thereof. For the purposes hereof, the addresses of the parties hereto
(until notice of a change thereof served as provided in this Paragraph 10.02)
shall be as follows:
If to Buyer: Alpha Microsystems
0000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxx Xxx, Xxxxxxxxxx 00000
Attn: Chief Financial Officer
Fax No.: (000) 000-0000
With a copy to: Allen, Matkins, Xxxx, Xxxxxx & Xxxxxxx
000 Xxxxx Xxxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx Xxxxx Xxxx, Esq.
Fax No.: (000) 000-0000
If to Seller: M&J Technologies, Inc.
Attn: Xxxx Xxxxxx
000 Xxxxx Xxxx 00xx Xxxxxx
Xxxx Xxxxx, Xxxxxxx 00000
Fax No.: [ ]
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With a copy to: Xxxxx X. Xxxxxx, P.A.
000 Xxxx Xxxxxx Xxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
Fax No.: (000) 000-0000
10.03. Entire Agreement. This Agreement, together with the Exhibits
hereto, constitutes the entire understanding between the parties with respect to
the subject matter hereof, superseding all negotiations, prior discussions and
preliminary agreements. This Agreement may not be changed except in writing
executed by Buyer and Seller. Fax signatures shall be binding and have the same
effect as original signatures.
10.04. Payment of Expenses. Buyer and Seller shall each be responsible
to pay all of its own respective expenses as incurred in connection with this
Agreement, the transactions contemplated hereby, the negotiations leading to the
same and the preparations made for carrying the same into effect, and no party
shall be liable or responsible for the fees or expenses incurred by any other
party.
10.05. Attorneys' Fees. Should any litigation be commenced between the
parties hereto or their representatives concerning any provision of this
Agreement or the rights and duties of any person or entity in relation thereto,
the party prevailing in such litigation shall be entitled, in addition to such
other relief as may be granted, to an award of all actual attorneys' fees and
costs incurred in such litigation, without regard to any schedule or rule of
court purporting to restrict such an award, including, without limitation,
actual attorneys' fees, costs and expenses incurred in connection with (i)
enforcing, perfecting and executing such judgment, (ii) post-judgment motions;
(iii) contempt proceedings; (iv) garnishment, levee, and debtor and third-party
examinations; (v) discovery; and (vi) bankruptcy litigation.
10.06. Waiver. No waiver of any term, provision or condition of this
Agreement, whether by conduct or otherwise, in any one or more instances, shall
be deemed to be or be construed as a further or continuing waiver of any such
term, provision or condition or as a waiver of any other term, provision or
condition of this Agreement.
10.07. Captions. The captions of the paragraphs of this Agreement are
for convenience only and shall not be considered or referred to in resolving
questions or interpretation.
10.08. Counterparts. This Agreement may be executed in one or more
counterparts and counterparts signed in the aggregate by Buyer and Seller shall
constitute a single original instrument.
10.09. Assignment. This Agreement shall not be assignable by any party
without the consent of the other party. Notwithstanding the foregoing, Buyer may
assign this Agreement in whole or in part, to any subsidiary, affiliate or
parent corporation or any successor of Buyer by
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merger, consolidation or acquisition of a substantial portion of its assets. In
the case of any such assignment, Buyer shall continue to remain liable for its
obligations hereunder.
10.10. Severability. If any term or provision of this Agreement, or the
application thereof to any person or circumstance, shall to any extent be found
to be invalid, void or unenforceable, the remaining provisions and any
application thereof shall, nevertheless, continue in full force and effect
without being impaired or invalidated in any way.
10.11. Successors and Assigns. Except as otherwise provided herein, the
provisions hereof shall be binding upon and shall inure to the benefit of the
parties hereto, their personal representatives, heirs, executors,
administrators, successors and/or assigns.
10.12. Further Actions. Each of the parties hereto agrees to take any
and all actions reasonably necessary in order to carry out the provisions of
this Agreement.
10.13. Gender and Number. As used in this Agreement, the masculine
gender includes the feminine and neuter, the feminine gender includes the
masculine and neuter, the singular number includes the plural, the plural number
includes the singular, and the term "person" includes both a corporation and a
natural person.
10.14. Time. Time is of the essence in each provisions of this
Agreement of which time is an element.
10.15. Construction. This Agreement shall be construed in accordance
with its plain meaning and not against either party.
10.16. Choice of Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of California.
10.17. Public Announcements. Neither party shall make any public
announcements or public statements regarding the transactions contemplated
herein until after the Closing, unless approved in writing by the other, or
unless the disclosing party reasonably believes that disclosure is required by
law.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
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"BUYER" "SELLER"
ALPHA MICROSYSTEMS, M&J TECHNOLOGIES, Inc.
a California corporation a Florida corporation
By: By:
------------------------------ ----------------------------
Its: Its: President
------------------------
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LIST OF EXHIBITS
----------------
Exhibit "A" Allocation of Purchase Price
Exhibit "B" Exceptions to Representations and Warranties
Exhibit "C" Spare Parts and Agreed Value
Exhibit "D" Service Contracts
Exhibit "E" Employees
Exhibit "F" Furniture and Fixtures
Exhibit "G" Seller's Gross Revenues
Exhibit "H" Service Vehicles and Fair Market Value
Exhibit "I" Excluded Assets
