AGREEMENT, made this 1st day of November, 2001, by and between
Manchester Technologies, Inc., a Corporation organized and existing under and by
virtue of the laws of the State of New York, with a principal place of business
at 000 Xxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxx 00000 (hereinafter referred to as the
"Purchaser or Manchester"), Xxxxxxx X. Xxxxxxxx, an individual residing at 0
Xxxxxxxxx Xxxx, Xxxxxxxx, Xxx Xxxx 00000, and Xxxxxx X. Xxxx, an individual
residing at 000 Xxxx Xxxxx Xxxx, Xxxxx Xxxxxxx, Xxxxxxxxxxxxx 00000 (hereinafter
referred to together as the "Shareholders"), e.Track Solutions, Inc., a
Corporation organized and existing under the virtue of the laws of the State of
New York, with a principal place of business at 0000 Xxxxxxxxx-Xxxxxx Xxxx,
Xxxxxxxx 0, Xxxxx 000, Xxxxxxxxx, Xxx Xxxx 00000 (hereinafter referred to as the
"Company").
W I T N E S S E T H:
Whereas, the Shareholders are the sole stockholders, and Xxxxxxxx is
the sole director, and chief executive officer of the Company, and as such the
Shareholders represent that they hold such capital stock without charge or lien
against it, and
Whereas, the Company is engaged in web page design and development, and
offers consulting services for operational improvements, and
Whereas, the Shareholders have made certain representations and warranties
as to the "Company Assets" and "Company Liabilities" as more particularly
defined in the within Agreement or Schedules annexed thereto, and Whereas, the
Purchaser desires to purchase one hundred (100%) percent of the right, title and
interest of the Shareholders in all of the capital stock of the Company.
Now, Therefore, in consideration of the sum of Ten ($10.00) Dollar and
other good and valuable consideration, receipt of which is hereby acknowledged,
and in further consideration of the mutual agreements hereinafter set forth, the
parties hereto agree as follows:
Definitions: The following terms shall have the meaning hereby assigned in
this Agreement as well as any other Agreement which is collateral hereto:
"Assets" means all right, title, and interest in and to all of the
assets of the Company or the Companies as set forth on Exhibit "A", including
all of their (a) real property, leaseholds and sub-lease holds therein,
improvements, fixtures, and fittings thereon, and easements, rights-of-way, and
other appurtenants thereto (such as appurtenant rights in and to public
streets), (b) tangible personal property (such as machinery, equipment,
Inventory), (c) intellectual property owned by the Company, goodwill associated
therewith, the trade names, licenses and sub-licenses granted with respect
thereto, licenses obtained by the Company in respect of intellectual property of
others, and rights thereunder, remedies against infringements thereof, and
rights to protection of interests therein under the laws of all jurisdictions,
(d) leases, sub-leases, and rights thereunder, (e) agreements, contracts,
indentures, mortgages, instruments, security interests, guaranties, other
similar arrangements, and rights thereunder, (f) accounts, notes, and other
receivables, (g) securities, if any, (h) claims, deposits, prepayments, refunds,
causes of action, choses in action, rights of recovery, rights of set off, and
rights of recoupment (including any such item relating to the payment of Taxes),
(i) franchises, approvals, permits, licenses, orders, registrations,
certificates, variances, and similar rights obtained from governments and
governmental agencies, (j) books, records, ledgers, files, documents,
correspondence, lists, plats, architectural plans, drawings, and specifications,
creative materials, advertising and promotional materials, studies, reports, and
other printed or written materials, (k) any cash, (l) the corporate charters,
qualifications to conduct business as a foreign corporation, arrangements with
registered agents relating to foreign qualifications, taxpayer and other
identifications numbers, seals, minute books, stock transfer books, blank stock
certificates, and other documents relating to the organization, maintenance, and
existence of the Company as a corporation; (m) any of the rights of the Company
under this Agreement.
"Adverse Consequences" means all actions, suits, proceedings, hearings,
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.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"Affiliated Group" means any affiliated group within the meaning of
Code Sec. 1504(a) or any similar group defined under a similar provision of
state, local, or foreign law.
"Basis" means any past or present fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction that to the knowledge of the Company or
Shareholders forms or could form the basis for any specified consequence.
"Cash" means cash and cash equivalents (including marketable securities
and short term investments) calculated in accordance with GAAP applied on a
basis consistent with the preparation of the Closing Date Financial Statements.
"Closing" has the meaning set forth in Paragraph "Third" below.
"Closing Date" has the meaning set forth in Paragraph "Third" below.
"Closing Date Financial Statements" means the internally generated
financial statements of the Company to be prepared by the Company at its cost
reflecting the financial condition of the Company as of October 26, 2001,
prepared in accordance with GAAP and in accordance with the Company's previous
financial statements and to be delivered to the Parties within ninety (90) days
of the Closing Date and accepted by the Parties in writing. In the event of a
dispute regarding the Closing Date Financial Statements which cannot be resolved
by the Parties within fifteen (15) days of delivery of the Closing Date
Financial Statements, the Closing Date Financial Statements shall be reviewed by
the Jericho, New York office of KPMG Peat Marwick, which costs of review shall
be paid by the Purchaser.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidential Information" means any information concerning the
businesses and affairs of the Company that is not already generally available to
the public.
"Controlled Group of Corporations" has the meaning set forth in Code
Sec. 1563.
"Employee Benefit Plan" means the e.Track Solutions, Inc. Profit
Sharing Plan.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA
Sec. 3(2)
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA
Sec. 3(1).
"Environmental, Health, and Safety Laws" means the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Resource
Conservation and Recovery Act of 1976, and the Occupational Safety and Health
Act of 1970, each as amended, together with all other laws (including rules,
regulations, codes, plans, injunctions, judgments, orders, decrees, rulings, and
charges thereunder) of federal, state, local, and foreign governments (and all
agencies thereof) concerning pollution or protection of the environment, public
health and safety, or employee health and safety, including laws relating to
emissions, discharges, releases, or threatened releases of pollutants,
contaminants, or chemical, industrial, hazardous, or toxic materials or wastes
into ambient air, surface water, ground water, or lands or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants, or chemical, industrial,
hazardous, or toxic materials or wastes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Extremely Hazardous Substance" has the meaning set forth in Sec. 302 of
the Emergency Planning and Community Right-to-Know Act of 1986, as amended.
"GAAP" means United States generally accepted accounting principles as in
effect from time to time.
"Xxxx-Xxxxx-Xxxxxx Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended.
"Indemnified Party" has the meaning set forth in the Indemnity Agreements
annexed hereto.
"Indemnifying Party" has the meaning set forth in the Indemnity Agreements
annexed hereto.
"Intellectual Property" means (a) all inventions, (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
re-issuance, continuations, continuations-in-part, revisions, extensions, and
re-examinations thereof, (b) all trademarks, service marks, trade dress, logos,
trade names, and corporate names, together with all translations, adaptations,
derivations, and combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals in connection
therewith, (c) all copyrightable works, all copyrights, and all applications,
registrations, and renewals in connection therewith, (d) all mask works and all
applications, registrations, and renewals in connection therewith, (e) all trade
secrets and confidential business information (including ideas, research and
development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information, and business and
marketing plans and proposals), (f) all computer software (including data and
related documentation), (g) all other proprietary rights, and (h) all copies and
tangible embodiments thereof (in whatever form or medium).
"Inventory" means all goods and works in process and finished goods,
work, manufactured and purchased parts and supplies and other items deemed
inventory in accordance with GAAP in the operation of the Company's business.
"Knowledge" means actual knowledge after reasonable investigation.
"Liabilities" means (a) all Liabilities of the Company as recorded on
the June 30, 2001 balance sheet, and as adjusted for the business operation of
the Company through the Closing Date in accordance with past custom and practice
and in the Ordinary Course of Business of the Company and to be recorded on the
Closing Date Financial Statements, and subject to the representations and
warranties of Seller and the Company herein, (b) all obligations of the Company
under the agreements, contracts, leases, licenses, and other arrangements
referred to in the definition of Assets either (i) to furnish goods, services,
and other non-Cash benefits to another party after the Closing of (ii) to pay
for goods, services, and other non-Cash benefits that another party will furnish
to it after the Closing, (c) any Liability of the Company for unpaid Taxes for
periods prior to the Closing which were not due and payable prior to Closing,
(d) any Liability or obligation under any insurance policy, health or medical or
life insurance plan of the Company in effect as of the Closing Date, costs,
amounts paid in settlement, losses, expenses, or otherwise and whether such
indemnification is pursuant to any statute, charter documents, bylaw, agreement,
or otherwise, any Liability of the Company for costs and expenses incurred in
connection with the Agreement and the transactions contemplated hereby, any
Liability or obligation of the Company under this Agreement, any Liability or
obligation of the Company, the Employee Benefit Plan, any Liability resulting
from any breach of contract, breach of warranty, tort infringement or violation
of law.
"Liability" means any liability (whether known or unknown, whether
asserted or un-asserted, whether absolute or contingent, whether accrued or
un-accrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
"Multi-employer Plan" has the meaning set forth in ERISA Sec. 3(37).
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency), excluded therefrom is the transaction contemplated by the within
Agreement.
"Party" has the meaning set forth in the preface above.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock Companies, a trust, a joint venture, an
unincorporated organization, or a governmental entity (or any department,
agency, or political subdivision thereof).
"Pre-Tax Earnings" includes all revenues earned during the period less
all expenses incurred or accrued during the period except for taxes computed on
the basis of income. For purposes of this Agreement, Pre-Tax Profit shall not
include amortization of goodwill.
"Prohibited Transaction" has the meaning set forth in ERISA Sec. 406 and
Code Sec. 4975.
"Purchase Price" has the meaning set forth in Paragraph "Second" below.
"Reportable Event" has the meaning set forth in ERISA Sec. 4043.
"Security Interest" means any mortgage, pledge, lien, encumbrance, charge,
or other security interest, other than (a) mechanic's, material men's and
similar liens, (b) liens for Taxes not yet due and payable or for Taxes that the
taxpayer is contesting in good faith through appropriate proceedings, (c)
purchase money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business and
not incurred in connection with the borrowing of money.
"Shareholders" means Xxxxxxx X. Xxxxxxxx and Xxxxxx X. Xxxx, as
Shareholders in e.Track Solutions, Inc.
"Subsidiary" means any corporation with respect to which a specified Person
(or a Subsidiary thereof) owns a majority of the common stock or has the power
to vote or direct the voting of sufficient securities to elect a majority of the
directors.
"Tax" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code Sec. 59A),
customs duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax or any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any Schedule or
attachment thereto, and including any amendment thereof.
"Third Party Claim" has the meaning set forth in Paragraph "Eighth: (d)"
below.
First: Sale of Stock- The Sellers agree to sell, transfer and assign one hundred
(100%) percent of the issued outstanding capital stock of the Company; to wit:
2,060,000 issued and outstanding shares of Common Stock in e.Track Solutions,
Inc. (not including options with respect
to 236,750 shares of Common Stock which will be redeemed by the Company at the
Closing on the terms described in Exhibit 2), pursuant to the terms and
conditions hereinafter set forth.
Second: Purchase Price- The Purchaser agrees to buy all of the issued and
outstanding shares of the capital stock of Seller constituting one hundred
(100%) percent of all the issued and outstanding stock in the Company, for a
Purchase Price of Two Hundred Ninety Thousand and 00/100 ($290,000.00) Dollars,
less the amount paid against the Company's liabilities pursuant to Paragraph
"Tenth A. (iv)". The parties shall execute at Closing a Settlement Statement
reflecting final calculation of the Purchase Price.
A. Purchase Price Set-off- Reference is herein made to a
certain represented overpayments prepayments by the Company of Federal and New
York State Income Tax, and/or available Federal and New York State Income Tax
refunds from the carry-back of losses and/or value of tax deduction to Purchaser
from the redemption of options and payment of bonuses referenced in Exhibit 2,
allegedly in an amount exceeding $20,000.00 in the aggregate. Xxxxxxxx, as a
selling Shareholder, shall reimburse the Purchaser the amount of such tax
benefit that is not received or credited on or before November 1, 2002, such
reimbursement to be limited to a maximum of $20,000.00. This provision shall
specifically survive the Closing of the transaction contemplated by the within
Agreement.
B. Apportionment of Purchase Price- The Purchase Price above
set forth shall be allocated to each of the Shareholders as set forth on Exhibit
"3", annexed hereto.
Third: Closing - The Closing shall take place at the offices of Kressel,
Rothlein, Xxxxx & Xxxx, LLC, 000 Xxxxxxxx, Xxxxxxxxxx, Xxx Xxxx 00000, Attorneys
for the Purchaser, on or about November 1, 2001. The effective date of the
within transaction shall be deemed October 26, 2001.
A) At the Closing, the Shareholders shall deliver to the Purchaser:
1. Certificate -
-----------
A certificate or certification dated the Closing date, signed by the
Secretary of the Company setting forth:
(a) The authorized, outstanding and unissued capital stock of the Company;
(b) The names and addresses of the holders (of record and beneficially) of
such authorized and outstanding stock, and the number of shares owned by each;
(c) The names and addresses of all directors and officers of the Company;
and
(d) The names of the officers authorized to execute and deliver the
documents and related instruments deliverable hereunder.
2. Stock Certificates-
------------------
Certificates for the respective Shareholder's stock, duly endorsed and with
all necessary documentary transfer tax stamps affixed and canceled. The Company
shall thereupon issue new certificates representing shares to be delivered to
Purchaser.
3. Corporate Records-
-----------------
The complete and correct corporate minute books, Certificate of
Incorporation, By-Laws, stock certificates and stock transfer records of the
Company, and a current Certificate of Good Standing issued by the State of
Incorporation.
4. Resignations-
The written resignation of Xxxxxxxx as an officer and director of the
Company, and all other officers and directors, if any, effective upon
consummation of the Closing.
5. Contracts-
---------
Originals of any and all written Contracts entered into by the Company,
which are presently in effect.
6. Creditors-
---------
A Schedule of all accounts payable by the Company as of the date of Closing
which have accrued or been amended subsequent to the date of the within
Agreement.
7. Warranties-
----------
(a) An Affidavit of Warranty and representation by each Shareholder
individually 1) that he is the owner of the shares of stock being transferred to
the Purchaser; 2) that he owns said stock free and clear of all encumbrances of
any kind; 3) that said shares have not been hypothecated or in any way
alienated; 4) that there are no actions, litigations, judgments or executions
now in force or pending against the Shareholders or to the knowledge of the
Shareholders or the Company, nor have any petitions in bankruptcy or
arrangements been filed by or against the Shareholders or to the knowledge of
the Shareholders or the Company; 5) that the sale of said stock does not render
him insolvent; 6) that the Schedules of assets and liabilities are true and
complete representations of the liabilities and assets of the Company, which
Affidavit shall be furnished solely by Xxxxxxxx.
(b) 1) An Affidavit of Warranty by Xxxxxxxx individually which Affidavit
shall expressly warrant that the Lease to the Company, a copy of which is
annexed hereto, is, in effect at the time of Closing; 2) that such tenancy is
free and clear of any and all defaults; 3) that the tenancy established thereby
is a valid leasehold interest as represented therein.
8. Indemnifications-
----------------
At Closing Seller will deliver indemnifications in the form set forth
annexed hereto.
9. Schedule of Assets-
----------------------
A Schedule of any and all assets as of the date of Closing evidencing
additions or deletions which have occurred subsequent to the execution of the
within Agreement.
10. General Releases-
a) The Shareholders and the Company shall deliver General Releases to each
other in the form annexed; Provided, However, these Releases shall except
therefrom liabilities from the within Agreement or any agreement delivered
pursuant hereto or in connection herewith.
B) At the Closing the Purchaser shall deliver the following:
1) An Indemnity Agreement in the form annexed.
2) Certified checks or appropriate wire transfers totaling
$290,000.00.
3) Certificate of Resolution of the Board of Directors authorizing
the within transaction.
Fourth: Employment Agreement- Xxxxxxxx, e.Track Solutions, Inc. and the
Purchaser, simultaneously with the Closing, shall enter into an Employment
Agreement in the form annexed hereto, and Purchaser shall deliver the Option
Contract referred to therein.
Fifth: Books and Records- All of the books and records, including but not
limited to journals and work sheets, tax returns, bank statements, accountant's
records, daily diaries, contracts and other materials used for the operation of
the Company shall remain intact at the Company, and shall not be removed from
the Company's office without the permission of the Purchaser.
Sixth: Broker-Finder Indemnity- Each of the Parties hereto represents and
warrants that it has not employed any broker or finder in connection with this
Agreement, or the transaction contemplated hereby, and agrees to indemnify the
other Party and hold it harmless from any and all liabilities (including, but
not limited to, reasonable Attorneys fees and disbursements and Court costs paid
or incurred in connection with any such liabilities) for brokerage commissions
or finder's fees in connection with this Agreement asserted by any party based
upon arrangements or agreements made or claimed to have been made by or in
behalf of such indemnifying party.
Seventh: A. Pre-Closing Obligations-
Parties hereby covenant and agree to cause the following to occur from the
date of execution hereof to the Closing:
1.1 The Shareholders and the Company shall afford to the Attorneys for the
Purchaser and its authorized representatives, free and full access during
regular business hours, and upon reasonable prior notice, to the books, records,
personnel and properties of the Company.
1.2 Purchaser shall have the right to make copies of the general ledger,
general journal, cash receipts and disbursements books, purchase book, accounts
receivable and accounts payable records, payroll records, canceled checks, bank
statements and copies of all city, state and federal tax returns filed by the
Company.
1.3 The Company's business shall be conducted only in the ordinary course;
provided that the Company may conduct the additional transactions described on
Exhibit 2.
1.4 The Company shall maintain in force its insurance policies currently in
effect as of the date hereof, except to the extent that they may be replaced
with equivalent policies at lower rates approved by Xxxxxxxx. If in the
Purchaser's opinion, additional coverage is reasonably necessary to keep
adequately insured all properties of the Company, Xxxxxxxx shall cause the
Company, at the written request of the Purchaser, and at the Company's expense,
to obtain such additional insurance from financially sound and reputable
insurers for a period ending no sooner than the close of business on the Closing
date.
1.5 Without the prior written consent of the Purchaser, no change shall be
made in the Certificate of Incorporation or By-Laws of the Company.
1.6 No Change shall be made in the Company's authorized, issued and
outstanding capital stock, and no options, warrants, rights or calls shall be
granted with respect to any shares of such capital stock, except as described on
Exhibit 2.
1.7 No dividend or other distribution or payment shall be declared or made
in respect of any shares of the Company's stock.
1.8 No contract, commitment, or other business transaction shall be entered
into or terminated by the Company without Purchaser's prior written approval,
except such as are in the ordinary course of business.
1.9 Except as expressly provided herein, the Company will not (i) mortgage,
pledge or subject to lien or any other encumbrance any of its assets, tangible
or intangible; (ii) sell or transfer any fixed assets; (iii) cancel any debts or
claims except in each case in the ordinary course of business, or (iv) sell,
assign or transfer any patents, trademarks, trade names, copyrights, licenses or
other intangible assets.
1.10 The Company will not increase compensation to be paid or become
payable to any officer, director, employee or agent (except regular or periodic
increases or as described on Exhibit 2), nor enter into any purchase or sales
Contract except in the regular course of business, or make any material change
in sales, marketing, pricing or distribution policies.
1.11 Each of the Parties will use its best efforts to take all action and
to do all things necessary, proper, or advisable in order to consummate and make
effective the transactions contemplated by this Agreement.
1.12 The Company will keep its business and properties substantially
intact, including its present operations, physical facilities, working
conditions, and relationships with lessors, licensors, suppliers, customers, and
employees.
1.13 Each party will give prompt written notice to the other Party of any
material adverse development causing a breach of any of its own representations
and warranties.
B) Post-Closing Covenants-
The Parties agree as follows with respect to the period following the
Closing:
(a) General:In case at any time after the Closing any further action is
necessary or desirable to carry out the purposes of this Agreement, each of the
Parties will take such further action (including the execution and delivery of
such further instruments and documents) as the other Party reasonably may
request, all at the sole cost and expense of the requesting Party (unless the
requesting Party is entitled to indemnification therefore pursuant to the
Indemnity Agreement annexed hereto).
(b) Litigation Support: In the event and for so long as any Party actively
is contesting or defending against any action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand in connection with (i) any
transaction contemplated under this Agreement or between any other agreement
collateral hereto, (ii) any fact, situation, circumstance, status, condition,
activity, practice, plan, occurrence, event, incident, action, failure to act,
or transaction on or prior to the Closing Date involving the business of the
Company as conducted prior to the Closing Date, the other Party will cooperate
with the contesting or defending Party and its counsel in the contest or
defense, make available its personnel, and provide such testimony and access to
its books and records as shall be necessary in connection with the contest or
defense, all at the sole cost and expense of the contesting or defending Party
(unless the contesting or defending Party is entitled to indemnification
therefor under an Indemnity Agreement annexed hereto.
Eighth: Representations and Warranties- Xxxxxxxx and Company hereby covenant,
represent and warrant to the Purchaser that subject to the qualifications in
Exhibit 2 hereto, the statements contained in this Paragraph "Eighth" are true
and correct , both as of the date hereof and as of the Closing date,( as though
made then and as though the Closing Date were substituted for the date of this
Agreement) as follows:
1. Corporate Matters
(a) Valid Corporate Existence-e.Track Solutions, Inc. is a Corporation duly
organized and validly existing and in good standing under the laws of the State
of New York. The Company is not qualified to do business in any foreign country
and any other States other than New York, and therefore the Company is not
required to file tax returns in any other country or State other than New York,
nor does the Company maintain an office in any other foreign country or State.
(b) Authority- The Company has all requisite corporate power and authority
to own its assets and properties, and to carry on its business as now conducted.
Each Shareholder has the power and authority to enter into this Agreement, and
to carry out the transactions contemplated hereby, including, without
limitation, the authority to transfer the Company's stock as herein provided.
The consent of any third party or parties, including any governmental agency or
instrumentality, to the within proposed transaction, is not required.
(c) Capitalization; Stockholders of the Company- The Company has the number
of shares of authorized, issued and outstanding shares of capital stock as set
forth below:
e.Track Solutions, Inc. Common Stock, $0.01 par value per share
5,000,000 authorized,
2,060,000 issued.
The Shareholders are together, the owners beneficially and of record of one
hundred (100%) percent of all issued and outstanding capital stock of the
Company. Except for options for 236,750 shares issued under the Company's Stock
Option Plan, which options will be redeemed by the Company at the Closing as
described on Exhibit 2. There are no outstanding options, Contracts, calls,
demands, commitments, stock restriction agreements or encumbrances of any
character relating to its capital stock in said Company, and no securities of
the Company are outstanding which by their terms are convertible into capital
stock.
(d) Subsidiaries- The Company does not own any capital stock or any other
interest in any other business entity, whether incorporated or unincorporated.
(e) Enforceability- This Agreement constitutes a binding and enforceable
agreement of the Shareholders and the Company.
(f) Actions, Claims, etc.- There are no claims, suits, proceedings or
investigations, governmental or private, pending or, so far as is known to the
Shareholders, threatened, nor any order, injunction or decree outstanding,
against or relating to the Company or its property, assets or business. Neither
Shareholder knows or has any reasonable grounds to know of, any basis for any
such claims, actions, suits, proceedings, investigations or orders, injunctions
or decrees; and neither Shareholder is not knowingly in violation of any
applicable law, regulation or ordinance and is not knowingly or otherwise in
violation of any order, injunction or decree, or any other requirement of any
governmental body or Court, relating to its property or business.
(g) Collective Bargaining-Employees- The Company has no employment, union
or collective bargaining agreements except as described in the "Schedule of
Contracts". During the past three (3) Fiscal Years, the Company has had no
"labor unrest" situations, and no pending or threatened labor strikes, or other
labor troubles. During the past three (3) Fiscal Years, the Company has had no
"unfair labor" practice complaints filed against them. At present, there are no
pending or threatened requests for arbitration, grievance proceedings, labor
disputes, strikes, or disturbances affecting the Company, and there have been no
recent union negotiations. There are no retired employees of the Company who are
presently receiving, or will be entitled to receive any payments of any nature
except with respect to redemption of their options per Exhibit 2. There are no
written or oral employment or consulting agreements to which the Company is a
party to or bound by. There are no deferred compensation programs affecting any
officers, directors, or employees of the Company.
(h) Title to Assets- The Company has good and marketable title to, or a
valid leasehold interest in, the properties and assets used by it, located on
its premises, or shown on the most recent financial statements or acquired after
the date thereof, free and clear of all Security Interest except as described
below, except for properties and assets disposed of in the Ordinary Course of
Business since the date of the most recent balance sheet. Without limiting the
generality of the foregoing, the Company has good and marketable title to all of
the Assets, free and clear of any Security Interest or restriction on transfer,
except as follows:
Security Interest held by Manufacturers and Traders Trust Company.
(i) There has been no change in the accounting policies or procedures of
the Company during the three (3) years prior to the date hereof.
(j) Financial Statements- Attached hereto as Exhibit 1 are the internally
generated balance sheet and statement of income as of and for the period from
July 1, 2000 to June 30, 2001, collectively, the "2001 Financial Statements".
The 2001 Financial Statements have been prepared in accordance with GAAP applied
on a consistent basis throughout the periods covered thereby (except for the
omission of footnote disclosure), present fairly the financial condition of the
Company as of such dates and the results of operations of the Company for such
periods, are correct and complete, and are consistent with the books and records
of the Company (which books and records are correct and complete).
(k) Events Subsequent to June 30, 2001 Financial Statements- Since the June
30, 2001 Financial Statements, there has not been any material adverse change in
the business, financial condition, operations, results of operations, or future
prospects of the Company except as described on Exhibit 2. Without limiting the
generality of the foregoing, since that date and except as described on Exhibit
2:
(i) The Company has not sold, leased, transferred, or assigned any of its
assets, tangible or intangible, other than for a fair consideration in the
Ordinary Course of Business;
(ii) The Company has not entered into any agreement, contract, lease, or
license (or series of related agreements, contracts, leases, and licenses) other
than in the Ordinary Course of Business;
(iii) No party has accelerated, terminated, modified, or canceled any
agreement, contract, lease, or license (or series of related agreements,
contracts, leases, and licenses) to which the Company is a party or are bound;
(iv) The Company has not imposed any Security Interest upon any of its
assets, tangible or intangible;
(v) The Company has not made any capital expenditure (or series of related
capital expenditures);
(vi) The Company has not issued any note, bond, or other debt security or
created, incurred, assumed, or guaranteed any indebtedness for borrowed money or
capitalized lease;
(vii) The Company has not delayed or postponed the payment of accounts
payable and other Liabilities other than in the Ordinary Course of Business;
(viii) The Company has not canceled,
compromised, waived, or released any right or claim (or series of related
rights, and claims) other than in the Ordinary Course of Business;
(ix) The
Company has not granted any license or sub-license of any rights under or with
respect to any Intellectual Property other than in the Ordinary Course of
Business;
(x) Except for the stock held by the Shareholders, the Company has not
issued, sold, or otherwise disposed of any of its capital stock, or granted any
options, warrants, or other rights to purchase or obtain (including upon
conversion, exchange, or exercise) any of its capital stock;
(xi) The Company has not declared, set aside, or paid any dividend or made
any distribution with respect to its capital stock (whether in cash or in kind)
or redeemed, purchased, or otherwise acquired any of its capital stock;
(xii) The Company has not experienced any material damage, destruction, or
loss (whether or not covered by insurance) to its property;
(xiii) The Company has not made any loan to, or entered into any other
transaction with, any of the directors, officers, and employees of the Company
other than in the Ordinary Course of Business;
(xiv) The Company has not entered into any employment contract except as
described in the Schedule of Contracts or collective bargaining agreement,
written or oral, or modified the terms of any existing employment contract or
collective bargaining agreement;
(xv) The Company has not granted any increase in the base compensation of
any of its directors, officers, and employees other than in the Ordinary Course
of Business;
(xvi) The Company has not adopted, amended, modified, or terminated any
bonus, profit-sharing, incentive, severance, or other plan, contract, or
commitment for the benefit of any of the directors, officers, and employees of
the Company or taken any such action with respect to the existing Employee
Benefit Plan;
(xvii) The Company has not made any other change in employment terms for
any of its directors, officers, and employees other than in the Ordinary Course
of Business;
(xviii) The Company has not made or pledged to make any charitable or other
capital contribution other than in the Ordinary Course of Business;
(xix) The Company has not paid any amount to any third party with respect
to any Liability or obligation other than in the Ordinary Course of Business;
(xx) There has not been any other material occurrence, event, incident,
action, failure to act, or transaction other than in the Ordinary Course of
Business involving the Company.
(l) Undisclosed Liabilities- The Company does not have any Liability (and,
to its and/or the Shareholders' knowledge, there is no Basis for any present or
future action, suit, proceeding, hearing, investigation, charge, complaint,
claim, or demand against any of them giving rise to any Liability), except for
(i) Liabilities set forth on the face of the June 30, 2000 Financial Statements
(rather than in any notes thereto) and (ii) Liabilities which have arisen after
the June 30, 2001 Financial Statement in the Ordinary Course of Business (none
of which results from, arises out of, relates to, is in the nature of, or was
caused by any breach of contract, breach of warranty, tort, infringement, or
violation of law).
(m) Legal Compliance-To its knowledge the Company has materially complied
with all applicable laws (including rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings, and charges thereunder) of
federal, state, local, and foreign governments (and all agencies thereof), and
no action, suit, proceeding, hearing, investigation, charge, complaint, claim,
demand, or notice has been filed or, to its and/or the Shareholders' knowledge,
commenced against any of them alleging any failure so to comply except where
failure to comply would not have any material adverse effect upon the Company or
its business.
(n) Tax Matters-
(i) The Company has filed all Tax Returns that it was required to file
prior to the Closing Date. All such Tax Returns were correct and complete in all
respects. All Taxes owed by the Company for tax periods ended prior to the
Closing Date (whether or not shown on any Tax Return) have been paid. The
Company currently is not the beneficiary of any extension of time within which
to file any Tax Return. No claim has ever been made by an authority in a
jurisdiction where the Company does not file Tax Returns that it is or may be
subject to taxation by that jurisdiction. There are no Security Interests
affecting any of the assets of the Company that arose in connection with any
failure (or alleged failure) to pay any Tax;
(ii) The Company has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
creditor, stockholder, or other third party;
(iii) Neither the Company nor any director nor officer (or
employee responsible for Tax matters) expects any authority to assess any
additional Taxes with respect to the Company for any period for which Tax
Returns have been filed. There is no dispute or claim concerning any Tax
Liability of the Company either (A) claimed or raised by any authority in
writing or (B) as to which any directors and officers (and employees responsible
for Tax matters) of the Company have any knowledge;
(iv) The Company has not waived any statute of limitations as to
liabilities or Taxes of any nature or agreed to any extension of time with
respect to any liabilities or Tax assessments or deficiencies;
(v) The Company has not filed a consent under Code Sec. 341(f) concerning
collapsible corporations. The Company has not been a United States real property
holding corporation within the meaning of Code Sec. 897(c)(2) during the
applicable period specified in Code Sec. 987 (c)(1)(A)(ii). The Company has not
been a member of an Affiliated Group filing a consolidated federal income Tax
Return. The Company does not have any Liability for the Taxes of any Person
under any provision of federal, state, local, or foreign law), as a transferee
or successor by contract, or otherwise;
(vi) There are no pending or threatened disputes with regard to tax matters
involving the Company;
(vii) There are no tax indemnification, tax sharing, or tax allocation
agreements involving the Company and other members of an affiliated group,
including any joint venture agreements that have the effect of tax allocations
agreements;
(viii) The Company has received no legal or accounting tax opinions during
the three (3) years prior to the date hereof relating to the tax reporting of
the Company other than determinations made by the Company Accountant for tax
purposes.
(o) Real Property- The Company does not own any real property. The premises
presently occupied by the Company is leased, pursuant to a written Lease
therefore. The Company has not been the subject of any zoning, variances, and/or
local use permits.
(p) Intellectual Property-
(i) The Company owns or has the right to use pursuant to license,
sub-licenses, agreement, or permission all Intellectual Property necessary for
the operation of its business as presently conducted. Each item of Intellectual
Property owned or used by the Company immediately prior to the Closing hereunder
will be owned or available for use by the Company subsequent to the Closing
hereunder;
(ii) To the best of the Shareholders' knowledge, the Company has not
interfered with, infringed upon, or misappropriated, any Intellectual Property
rights of third parties, and neither the Company nor its directors and officers
(any employees with responsibility for Intellectual Property matters) has ever
received any charge, complaint, claim, demand, or notice alleging any such
interference, infringement, misappropriation, or violation (including any claim
that the Company must license or refrain from using any Intellectual Property
rights of any third party), to the knowledge of the Shareholders and the
knowledge of the Company and its directors and officers (any employees with
responsibility for Intellectual Property matters), no third party has interfered
with, infringed upon, misappropriated, or otherwise come into conflict with any
Intellectual Property rights of the Company;
(iii) The Company has no patent registrations and/or applications
therefore. The Company has no trademark, service xxxx, and/or trade dress,
registrations and/or applications. The Company has no copyright registrations
and/or applications;
(iv) The Company has no manual or other written document detailing the
procedures for maintaining the secrecy of any trade secrets, except for the
employment and other agreements noted in the Schedule of Contracts.
(q) Tangible Assets- The Company owns or leases all buildings, machinery,
equipment, and other tangible assets necessary for the conduct of its business
as presently conducted. To the Shareholders' knowledge, each such tangible asset
has been maintained in accordance with normal industry practice, is in good
operating condition and repair (subject to normal wear and tear), and is
suitable for the purposes for which it presently is used. There are no
professional appraisals of any material property of the Company.
(r) Inventory- The inventory of the Company consists of manufactured and
purchased parts, goods in process, and finished goods, all of which is
merchantable and fit for the purpose for which it was procured, and none of
which is slow-moving, obsolete, damaged, or defective.
(s) Contracts- The Schedule of Contracts as annexed hereto, lists all
contracts and other agreements to which the Company is a party, including but
not limited to:
(i) any agreement (or group of related agreements) for the lease of
personal property to or from any person providing for lease payments;
(ii) any agreement (or group of related agreements) for the purchase or
sale of raw material, commodities, supplies, products, or other personal
property, or for the furnishing or receipt of services;
(iii) any agreement concerning a partnership or joint venture;
(iv) any agreement (or group of related agreements) under which it has
created, incurred, assumed, or guaranteed any indebtedness for borrowed money,
or any capitalized lease obligation, or under which it has imposed a Security
Interest on any of its assets, tangible or intangible;
(v) any agreement concerning confidentiality or non-competition;
(vi) any profit sharing, stock option, stock purchase, stock appreciation,
deferred compensation, severance, or other material plan or arrangement for the
benefit of the current or former directors, officers, and employees; (vii) any
collective bargaining agreement;
(viii) any agreement for the employment of any individual on a full-time,
part-time, consulting, or other basis;
(ix) any agreement under which it has advanced or loaned any amount to any
of the directors, officers, and employees other than in the Ordinary Course of
Business;
(x) any agreement under which the consequences of a default or termination
could have a materially adverse effect on the business, financial condition,
operations, results of operations, or future prospects of the Company.
The Company is not a party to any significant oral contracts and/or
commitments of any nature.
The Company has delivered to Manchester a correct and complete copy of each
written agreement listed in Schedule of Contracts (as amended to date). With
respect to each such agreement; (A) the agreement is legal, valid, binding,
enforceable, and in full force and effect; (B) the agreement will continue to be
legal, valid, binding, enforceable, and in full force and effect on identical
terms following the consummation of the transactions contemplated hereby subject
to the right, if any, of any third party to consent to such assignment; (C) to
its knowledge, no party is in breach or default; and no event has occurred which
with notice or lapse of time would constitute a breach or default, or permit
termination, modification, or acceleration, under the agreement; and (D) to its
knowledge, no party has repudiated any provision of the Agreement.
The Company is not a party to any contracts that are subject to
re-negotiations, nor are any contracts currently being re-negotiated. The
Company is not a party to any agreements that are not to be performed within
three (3) months of the date hereof, or involving in excess of Twenty-five
Thousand and 00/100 ($25,000.00) Dollars, whether or not entered into in the
Ordinary Course of Business, except (a) agreements for the sale of merchandise
and/or services entered into in the Ordinary Course of Business, and/or (b)
agreements referred to elsewhere in the within document. The Company is not
subject to any contracts pertaining to advertising or public relations agencies.
The Company is not a party to any agreements relating to the supply of materials
and/or raw materials, supplies and/or services of any nature. The Company is not
a party to any agreement relating to the acquisition of any business
constituting a part of the Company, or a sale or proposed sale of any businesses
owned by the Company within the past three (3) years. Except as described in the
Schedule of Contracts, the Company is not a party to any joint venture or other
type of partnership agreement. Except as described in the Schedule of Contracts,
the Company is not a party to any agreements with suppliers, independent agents,
sales persons, or others involving the payments of commissions or other
consideration or discounts with respect to the manufacture, sale, or
distribution of the Company's products or services. The Company is not a party
to any agreements restricting the abilities of the Company to compete in any
line of business with any person or entity, or committing the Company to
continue in any line of business. To its knowledge there are no present facts or
circumstances that may give rise to the cancellation or termination of, or
claims for damages or loss under any of the agreements to which the Company is
presently a party. The Company is not presently in the process of negotiation as
to any leases, licenses, agreements, and contracts, involving the payment by the
Company of more than Twenty-five Thousand and 00/100 ($25,000.00) Dollars, in
the aggregate. The Company is not a party to any agreements granting to the
Company any right of first refusal to acquire any business or assets, or
pursuant to which the Company has granted any such rights. The Company is not a
party to any contracts and/or arrangements for trucking and/or other types of
delivery, and as to any warehouse space other than presently used by the
Company. The Company is not presently a party to any material research and/or
development agreements. The Company is not a party to any technology license
agreements, either as Licensor or Licensee therein, except as described in the
Schedule of Contracts.
Accounts Receivable for purposes of the within Paragraph (t) (all parts),
shall be calculated "net" of applicable sales taxes.
(t) Notes and Accounts Receivable- All notes and accounts receivable of the
Company are reflected properly on the Company's books and records, are valid
receivables subject to no set offs or counterclaims, are current and to the
knowledge of the Shareholders are collectible and will be collected in
accordance with their terms at their recorded amounts, as adjusted for the
passage of time through the Closing Date and in accordance with the past custom
and practice of the Company.
(u) Powers of Attorney- There are no outstanding Powers of Attorney
executed on behalf of the Company.
(v) Insurance- The Schedule of Insurance Agreements annexed sets forth each
insurance policy (including policies providing property, casualty, liability,
and workers' compensation coverage and bond and surety arrangements) to which
the Company is currently a party, a named insured, or otherwise the beneficiary
of coverage: With respect to each such insurance policy: (A) the policy is
legal, valid, binding, enforceable, and in full force and effect; (B) the
Company is not in breach or default (including with respect to the payment of
premiums or the giving of notices), and no event has occurred which, with notice
or the lapse of time, would constitute such a breach or default, or permit
termination, modification, or acceleration, under the policy; and (C) no party
to the policy has repudiated any provision thereof.
(w) Product Warranty-Each product manufactured, sold, leased, or delivered
by the Company has been in conformity with all applicable contractual
commitments and all express and implied warranties, and the Company to the best
of Seller's knowledge, has no liability (and there is no basis for any present
or future action, suit, proceeding, hearing, investigation, charge, complaint,
claim, or demand against any of them giving rise to any liability) for
replacement or repair thereof or other damages in connection therewith as
adjusted for the passage of time through the Closing Date in accordance with the
past custom and practice. No product manufactured, sold, leased, or delivered by
the Company is subject to any guaranty, warranty, or other indemnity beyond the
applicable standard terms and conditions of the Company's sale or lease.
(x) Product Liability- To the best of Shareholders' knowledge, the Company
has no liability (and there is no basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand against
any of them giving rise to any liability) arising out of any injury to
individuals or property as a result of the ownership, possession, or use by it.
(y) Employees- To the best of the
Seller's knowledge no executive, key employee, or group of employees
of the Company has any plans to terminate employment. The Company is not a party
to or bound by any collective bargaining agreement, nor has it experienced any
strikes, grievances, claims of unfair labor practices, or other collective
bargaining disputes.
1. Joint Covenant, Warranty and Representation- The Shareholders (Xxxxxxxx
and Xxxx) and the Company herein covenant, warrant and represent that Xxxx, at
all times prior hereto:
(a) was not an officer, director, representative or employee of the
Company;
(b) did not perform any business function or services for the Company,
except for certain consulting services and independent sales representative
services; and
(c) had no familiarity with the business purposes or affairs of the
Company.
(z) Employee Benefits-
(a) Each such Employee Benefit Plan (and each related trust, insurance
contract, or fund) complies in form and in operation in all respects with the
applicable requirements of ERISA, the Code, and other applicable laws.
(b) To the best of Seller's knowledge, each such Employee Benefit Plan
which is an Employee Pension Benefit Plan meets the requirements of a "qualified
plan" under Code Sec. 401(a).
(c) The Company has delivered to the Purchaser correct and complete copies
of the plan documents and summary plan descriptions.
(d) The Company does not currently maintain, has never maintained, and has
no liability with respect to any Multi-employer Plan.
(e) The Schedule of Employee Benefit Plans annexed hereto sets forth all
other fringe benefits such as medical, health or life insurance plans provided
by the Company to its employees. The Company shall deliver a copy of all such
plans to Manchester prior to Closing.
(aa) Guaranties- The Company is not a guarantor or otherwise liable for any
liability or obligation (including indebtedness) of any other person, Company or
entity.
(bb) Environment, Health, and Safety- To the Shareholders' knowledge, the
Company has complied in all material respects with all Environmental, Health,
and Safety Laws, and no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, demand, or notice has been filed or commenced against
the Company alleging any failure so to comply. Without limiting the generality
of the preceding sentence, the Company has obtained and been in compliance in
all material respects with all of the terms and conditions of all permits,
licenses, and other authorizations which are required under, and has complied in
all material respects with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, Schedules, and timetables
which are contained in, all Environmental, Health, and Safety Laws.
(cc) Disclosure- The knowledge of the Company and the Shareholders'
representations and warranties contained in this Paragraph "Eighth", do not
contain any untrue statement of a material fact or omit to state any material
fact.
Ninth: Representations and Warranties of Manchester-
----------------------------------------------------
1. Manchester covenants, represents and warrants to the Company and the
Shareholders that the statements contained in Paragraph "Ninth", are correct and
complete as of the date of this Agreement and will be correct and complete as of
the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this Paragraph "Ninth").
(a) Organization of Manchester: Manchester is a corporation duly organized,
validly existing, and in good standing under the laws of the jurisdiction of the
State of New York.
(b) Authorization of Transaction: Manchester has full power and authority
(including full corporate power and authority) to execute and deliver this
Agreement and to perform its obligations hereunder. This Agreement constitutes
the valid and legally binding obligation of Manchester, enforceable in
accordance with its terms and conditions.
(c) Non-contravention: Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which Manchester is subject or any provision of
its charter or bylaws or (ii) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other arrangement to which
Manchester is a party or by which it is bound or to which any of its respective
assets is subject. Manchester needs not give any notice to, make any filing
with, or obtain any authorization, consent, or approval of any government or
governmental agency in order for the Parties to consummate the transactions
contemplated by this Agreement.
(d) Manchester shall pay to the Company all of its outstanding invoices at
or prior to the Closing.
Tenth: Conditions to Obligations to Close-
----------------------------------------------
A. Conditions to Obligation of Manchester- The obligation of Purchaser to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:
(i) The representations and warranties of the Shareholders and the Company
set forth in Paragraph "Eighth" above, shall be true and correct in all material
respects at and as of the Closing Date;
(ii) The Company and the Shareholders shall have performed and complied
with all of its covenants hereunder in all material respects through the
Closing;
(iii) No action, suit, or proceeding shall be pending before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator wherein an unfavorable injunction,
judgment, order, decree, ruling, or charge would (A) prevent consummation of any
of the transactions contemplated by this Agreement, (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation, (C) affect adversely the right of Purchaser to operate the
business of the Company conducted prior to the Closing, or (D) affect adversely
the Company's right to own its assets and to operate its business (and no such
injunction, judgment, order, decree, ruling, or charge shall be in effect).
(iv) All payables, obligations and liabilities of the Company that may
exist at time of Closing, shall be paid in full and satisfied either prior to or
simultaneously with the Closing; Provided, However, that Purchaser agrees to
assume and be liable for one-half of the Company's legal and accounting fees
relating to this transaction and for one-half of the Company's payroll costs for
the pay period ended October 30, 2001 and accordingly those liabilities which
Purchaser has assumed shall not be so paid by the Company or reflected in the
Closing Date Financial Statements.
Shareholders acknowledge that the Purchase Price payable to the
Shareholders (Paragraph "Second") will be reduced to the extent funds are used
by the Company for the purposes of this sub-paragraph (iv).
(v) The Seller shall have delivered to Manchester a certificate to the
effect that each of the conditions set forth in the within Paragraph, are
satisfied in all respects;
(vi) Manchester shall have received from counsel to the Company and the
Shareholders an opinion in form and substance as annexed hereto, addressed to
Manchester and dated as of the Closing Date;
(vii) All actions to be taken by the Shareholders and the Company in
connection with consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in form and
substance to Manchester.
Manchester may waive any condition specified in this Paragraph "Tenth: A.",
if it executes a writing so stating at or prior to the Closing.
B. Conditions to Obligation of the Shareholder- The obligation of the
Shareholder to consummate the transactions to be performed by them in connection
with the Closing is subject to satisfaction of the following conditions:
(i) The representations and warranties set forth in Paragraph "Ninth"
above, ----- shall be true and correct in all material respects at and as of the
Closing Date;
(ii) Each of Manchester and the Company shall have performed and complied
with all of its covenants hereunder in all material respects through the
Closing;
(iii) No action, suit, or proceeding shall be pending or threatened before
any court or quasi-judicial or administrative agency of any federal, state,
local, or foreign jurisdiction or before any arbitrator wherein an unfavorable
injunction, judgment, order, decree, ruling, or charge would (A) prevent
consummation or any of the transactions contemplated by the Agreement or (B)
cause any of the transactions contemplated by this Agreement to be rescinded
following consummation (and no such injunction, judgment order, decree, ruling,
or charge shall be in effect);
(iv) Manchester shall have delivered to the Shareholders a certificate to
the effect that each of the conditions specified above is satisfied in all
respects;
(v) The Shareholders shall have received from counsel to Manchester an
opinion in form and substance as annexed hereto;
(vi) All actions to be taken by Manchester in connection with consummation
of the transactions contemplated hereby and all certificates, opinions,
instruments, and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and substance to the
Shareholders.
Eleventh: Termination-
--------- ------------
A. Termination of Agreement-
1. The Parties may terminate this Agreement as provided below:
(i) The Parties may terminate this Agreement by mutual written consent at
any time prior to the Closing;
(ii) Manchester may terminate this Agreement by giving written notice to
the Shareholders at any time prior to the Closing (A) in the event the
Shareholders or the Company has breached any material representation, warranty,
or covenant contained in this Agreement in any material respect, Manchester has
notified the Seller of the breach, and the breach has continued without cure for
a period of ten (10) days after the notice of breach or (B) if the Closing shall
not have occurred on or before November 1, 2001;
(iii) The Shareholders or the Company may terminate this Agreement by
giving written notice to Manchester at any time prior to the Closing (A) in the
event Manchester has breached any material representation, warranty, or covenant
contained in this Agreement in any material respect, the Company has notified
Manchester of the breach, and the breach has continued without cure for a period
of ten (10) days after the notice of breach or (B) if the Closing shall not have
occurred on or before November 1, 2001.
Twelfth: Miscellaneous Provisions-
-------- ------------------------
(a) Scope of Agreement - The Parties do not intend to confer
any benefit hereunder on any person, firm or corporation, other than the
Shareholders and the Purchaser. Without limiting the generality of the
foregoing, each of the parties may, by written notice to the other and without
consent of any other person, firm or corporation (i) extend the time for
performance of any of the obligations or other acts of the other Party; (ii)
waive any inaccuracies in the representations and warranties of the other party
contained in this Agreement; (iii) waive compliance with any of the covenants of
the other party contained in this Agreement; or (iv) waive performance of any of
the obligations under this Agreement by the other party.
(b) Binding Agreement - This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns.
(c) Exhibits - All Exhibits, Schedules and Appendices annexed
hereto and the documents and instruments delivered simultaneously herewith and
at the Closing are expressly made a part of this Agreement as fully as though
completely set forth herein, and all references to this Agreement herein or in
any of such writings, shall be deemed to refer to and include all such writings.
(d) Entire Agreement, etc. - This Agreement constitutes the
entire understanding between the parties pertaining to the subject matter
hereof. No interpretation, change, termination or waiver of any of the
provisions hereof shall be binding upon either party unless in writing. No
waiver by either party of any provision of or default under this Agreement shall
affect the right of such party thereafter to enforce said provision or any other
provision hereof, or to exercise any right or remedy in the event of any other
default, whether or not similar. The invalidity of any provision hereof shall
not affect the validity of any other such provision.
(e) Further Instruments - On and after the Closing date, upon
the request of either party, the other party shall do all such further acts, and
shall execute, acknowledge and deliver all such further instruments and
documents, as may reasonably be necessary, desirable or appropriate to carry out
the transactions contemplated by this Agreement, all of such documents to be
reasonably satisfactory to such other Party's Counsel in form and content.
(f) Survival of Representations, etc. - The parties agree that
all of the representations, warranties, covenants, agreements and undertakings
contained in this Agreement shall survive Closing for a period of two (2) years.
Claims arising under or related to this Agreement which are not made during such
period are barred. Purchaser acknowledges that its sole remedy from any matter
arising from or in connection with this Agreement is pursuant to the terms of
the related Indemnity Agreement from Xxxxxxxx.
(g) Applicable Law - This Agreement and all the agreements
annexed hereto as exhibits shall be governed by and construed in accordance with
the laws of the State of New York.
(h) Venue - The venue of any action commenced by any party to
this agreement or any agreement annexed hereto as an exhibit shall be in a court
with subject matter jurisdiction situated in the County of Suffolk, State of New
York. For purposes hereof, this agreement and all agreements annexed hereto
shall be deemed to have been entered into within the County of Suffolk, State of
New York.
(i) Paragraph Headings - Paragraph headings have been inserted
herein for convenience only, and do not form a part of the Agreement.
(j) Counterparts - This Agreement may be executed in any
number of separate counterparts, each of which shall be deemed to be an original
and which together shall constitute one and the same instrument.
(k) Notices - Any payment, notices, request, instructions,
consent or other documents to be given hereunder shall be in writing and
delivered personally or sent by certified or registered mail, postage prepaid as
follows:
If to the Purchaser, addressed to:
Manchester Technologies, Inc.
000 Xxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
with a copy thereof addressed to:
Xxxx Xxxxxxxx, Esq.
Kressel, Rothlein, Xxxxx & Xxxx, LLC
000 Xxxxxxxx
Xxxxxxxxxx, Xxx Xxxx 00000
If to the Shareholders, addressed to:
Xxxxxxx X. Xxxxxxxx
0 Xxxxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
AND
Xxxxxx X. Xxxx
000 Xxxx Xxxxx Xxxx
Xxxxx Xxxxxxx, Xxxxxxxxxxxxx 00000
with a copy thereof addressed to:
Xxxxxx X. Xxxxx, Esq.
Xxxxxxxxx & Xxxxxxx, LLP
0000 Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Either party may change the persons and addresses to which any payment,
notice, request, instruction, consent or other document is to be sent to it by
giving written notice of any such change to the other party in the manner
provided for herein for giving notice. Any payment, notice, request,
instruction, consent or other document mailed hereunder shall be deemed to have
been received when mailed.
(l) Prior Agreements - Except for the letter of intent which
is deemed to have merged herein, the parties agree that all prior agreements
between the parties, whether oral or written, are herewith made null and void
and of no effect, legal or equitable.
(m) Press Releases and Public Announcements - No Party shall
issue any press release or make any public announcement relating to the subject
matter of this Agreement prior to the Closing without the prior written approval
of the other Party; Provided, However, that any Party may make any public
disclosure it believes in good faith is required by applicable law or any
listing or trading agreement concerning its publicly-traded securities (in which
case the disclosing Party will use reasonable best efforts to advise the other
party prior to making the disclosure).
(n) Amendments and Waivers - No amendment of any provision of
this Agreement shall be valid unless the same shall be in writing and signed by
the Purchaser, the Shareholders and the Company: No waiver by any Party of any
default, misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
(o) Severability - Any term or provision of this Agreement
that is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term of provision in
any other situation or in any other jurisdiction.
(p) Expenses and Tax Liability - Shareholders will be
responsible for any and all taxes that may be incurred based upon the
consideration received by them for the sale and transfer contemplated by this
Agreement.
(q) Construction - The Parties have participated jointly in
the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. Nothing in the
Schedules annexed to this Agreement shall be deemed adequate to disclose an
exception to a representation or warranty made herein unless such Schedule
identifies the exception with reasonable particularity and describes the
relevant facts in reasonable detail. Without limiting the generality of the
foregoing, the mere listing (or inclusion of a copy) of a document or other item
shall not be deemed adequate to disclose an exception to a representation or
warranty made herein (unless the representation or warranty has to do with the
existence of the document or other item itself). The Parties intend that each
representation, warranty, and covenant contained herein shall have independent
significance, if any Party has breached any representation, warranty, or
covenant contained herein in any respect, the fact that there exists another
representation, warranty, or covenant relating to the same subject matter
(regardless of the relative levels of specificity) which the Party has not
breached shall not detract from or mitigate the fact that the Party is in breach
of the first representation, warranty, or covenant.
(r) Specific Performance - Each of the Parties acknowledges
and agrees that the other Party would be damaged irreparably in the event any of
the provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, each of the Parties
agrees that the other Party shall be entitled to an injunction or injunctions to
prevent breaches of the provisions of this Agreement and to enforce specifically
this Agreement and the terms and provisions hereof in any action instituted in
any Court of the United States or any State hereof having jurisdiction over the
Parties and the matter (subject to the provisions set forth in Paragraph
"Twelfth: (s)" below), in addition to any other remedy to which it may be
entitled, at law or in equity.
(s) Submission to Jurisdiction - Each of the Parties submits
to the jurisdiction of any State or Federal Court sitting in Suffolk County, New
York, in any action or proceeding arising out of or relating to this Agreement
and agrees that all claims in respect of the action or proceeding may be heard
and determined in any such Court. Each Party also agrees not to bring any action
or proceeding arising out of or relating to this Agreement in any other Court.
Each of the Parties waives any defense of inconvenient forum to the maintenance
of any action or proceeding so brought and waives any bond, surety, or other
security that might be required of any other Party with respect thereto. Each
Party agrees that a final Judgment in any action or proceeding so brought shall
be conclusive and may be enforced by suit on the Judgment or in any other manner
provided by law or in equity.
IN WITNESS WHEREOF, the Company and the Purchaser have
executed this Agreement by its authorized officers and the Shareholders have
caused their individual signatures to be affixed hereto on the day and year
first above written.
In the Presence Of:
-------------------- --------------------
Xxxxxxx X. Xxxxxxxx
---------------------- --------------------
Xxxxxx X. Xxxx
Manchester Technologies, Inc.
By: s/ Xxxxxx Xxxxxx,
---------------------- ------------------------
Xxxxxx Xxxxxx, CFO
e.Track Solutions, Inc.
By: s/ Xxxxxxx X. Xxxxxxxx
--------------------- ---------------------------
Xxxxxxx X. Xxxxxxxx, President
E:\lawfirm\agreements\Business\Manchester-eTrack-acquisitionDPA.wpd
EXHIBIT 1
Shareholder Shares Percentage of Purchase Price
----------- ------ ----------------------------
Xxxxxxxx 2,000,000 97.08738%
Xxxx 60,000 2.91262%
EXHIBIT 2
Exceptions to Article "Eighth"
Representations and Warranties
The following matters shall be deemed to qualify each and every
representation and warranty of Article "Eighth":
1. The Company has issued options to purchase 236,750 shares of its
common stock under the Company's Stock Option Plan. The Company will enter into
agreements with each of the option holders to redeem and cancel their options
upon payment of a fixed dollar amount. These agreements will be contingent on
the closing of the Manchester transaction and will close concurrently therewith.
The payment due to the option holders will be treated as Company payables to be
satisfied as provided in Article "Tenth"A.(iv).
2. The Company will be entitled to make all reasonable efforts to xxxx
and collect its accounts receivable for work performed by the Company prior to
the Closing Date, even if contrary to the ordinary course of the Company's
business, which efforts shall be subject to Purchaser's prior approval, which
approval will not be unreasonably withheld.
3. The Company will be entitled to use all of its available cash at or
prior to the Closing to pay or prepay any or all of its payables, liabilities
and obligations, even if contrary to the ordinary course of the Company's
business.
4. The Company has suffered operating losses of $115,819.00 in the 2001
fiscal year through October 24, 2001, which pattern of losses is expected to
continue through the Closing Date.
5. The Company has made capital expenditures of less that $10,000.00 in the
2001 fiscal year.
6. The Company will accrue additional bonuses to employees other than
Xxxxxxxx, not to exceed $10,000.00 in the aggregate and same will appear as a
Company liability in the Closing date financials.
7. The Company has terminated the following employees:
Name Termination Date
---- ----------------
Xxxx Xxxxxx September 3, 2001
Xxxx X. Xxxxxx September 3, 2001
Xxxx Xxxxxxx September 3, 2001
E:\lawfirm\agreements\Business\Manchester-eTrack-acquisitionDPA.wpd
