ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("Agreement") dated as of this 2nd day of
August 2000, by and between ▇▇▇▇▇▇▇▇.▇▇▇, inc., a Nevada corporation having an
address at ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Purchaser") and
Copytron, Inc., a North Carolina corporation having an address at ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Seller").
W I T N E S S E T H :
WHEREAS, Seller is engaged in the quick printing business; and
WHEREAS, Purchaser desires to acquire, and Seller desires to sell,
convey, transfer, assign and deliver, its customer lists (the "Copytron
Assets"), free and clear of all Encumbrances (as hereinafter defined) and
without being subject to any liabilities, all upon the terms and subject to the
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises, representations,
warranties and covenants contained herein, and intending to be legally bound
hereby, the parties hereto agree as follows:
1. THE TRANSACTION.
1.1. Assets to be Sold.
(a) Subject to the terms and conditions of this Agreement,
Purchaser shall purchase from Seller, and Seller shall sell, convey, transfer,
assign and deliver to the Purchaser, on the Closing (as hereinafter defined),
for the consideration hereinafter provided, the Copytron Assets free and clear
of all Encumbrances (other than Encumbrances, if any, in favor of Seller) and
without being subject to any liabilities.
The term "Encumbrances" shall mean any liens, security interests,
options, rights of first refusal, easements, mortgages, charges, debentures,
indentures, deeds of trust, restrictions, agreements, licenses, leases, permits,
security agreements or any other encumbrances or other restrictions or
limitations on the use of personal property or irregularities in title to such
property.
1.2. Exclusion of Liabilities and Obligations. Notwithstanding anything
to the contrary in this Agreement, the Purchaser shall not assume any
liabilities, obligations or commitments of the Seller which arise or exist
before or after the Closing, whether absolute, accrued, contingent, known or
unknown or otherwise, and whether or not based on or arising out of or in
connection with the Seller's ownership, possession, use or operation of the
Copytron Assets prior to the Closing.
1.3. Purchase Price. Subject to the terms and conditions of this
Agreement and in reliance on the representations and warranties of the Seller
contained herein, the Purchaser will purchase the Copytron Assets for the total
purchase price ("Purchase Price") of One Million Three Hundred Thousand
($1,300,000.00), subject to adjustment and in accordance with the payment terms
described hereunder.
(a) Cash Payments. Purchaser will pay $300,000 of the Purchase
Price in cash as follows:
(i) $100,000 at the Closing (as defined in
Section 1.5 hereof);
(ii) $50,000 on August 14, 2000;
(iii) $50,000 on September 11, 2000; and
(iv) $100,000 on October 9, 2000.
All cash payments described herein shall be made and utilized in
accordance with the terms and provisions of Section 4.4 below.
(b) Initial Payment of Shares. At the Closing, Purchaser shall
deliver to Seller such number of shares of common stock of Purchaser (the
"Common Stock") as shall have a value of $700,000 (referred to herein as the
"Initial Tranche" or the "Original Shares"), subject to Section 4.5 below. The
value of the Original Shares shall be based upon the fair market value ("FMV")
of the Common Stock on the date of the Closing. As used throughout this
Agreement, FMV shall refer to the average per share market value of the Common
Stock on the American Stock Exchange at the close of trading on the ten (10)
trading days immediately preceding the Closing Date. The parties agreement with
respect to FMV shall be evidenced by a certificate stating the FMV, executed by
Purchaser and Seller and dated as of the date of the Closing. If at the close of
trading on the date that is one (1) year and one (1) day after the Closing (the
"First Post-Closing Date"), the Original Shares have a market price less than
FMV per share (adjusted for any stock splits), Purchaser shall promptly (but no
later than thirty (30) days) pay to Seller (or the former shareholders of Seller
if Seller is dissolved) either additional shares of Common Stock or cash, in
Purchaser's sole discretion, in an amount that, when combined with the value of
the Original Shares on the First Post Closing Date, will have an aggregate value
of $700,000. In the event that the Original Shares have a value in excess of FMV
per share on the First Post-Closing Date, then no further payment pursuant to
this Section 1.3(b) shall be required.
(c) Second Tranche.
(i) Promptly (but no later than thirty (30) days)
after the first anniversary of the Closing, Purchaser shall issue and deliver to
Seller (or the former shareholders of Seller if Seller is dissolved) such number
of shares of Common Stock as shall have a value of $150,000 (the "Second
Tranche"), subject to Section 1.3(c)(ii) below. The value of the Second Tranche
shall be based upon the per share market value of the Common Stock at the close
of trading on the first anniversary of the Closing. If on the date that is two
(2) years and one (1) day
after the Closing (the "Second Post-Closing Date"), the shares included in the
Second Tranche have a market price less than FMV per share (adjusted for any
stock splits), Purchaser shall promptly (but no later than thirty (30) days) pay
to Seller (or the former shareholders of Seller if Seller is dissolved) either
additional shares of Common Stock or cash, in Purchaser's sole discretion, in an
amount that, when combined with the value of the shares included in the Second
Tranche on the Second Post-Closing Date, will have an aggregate value of
$150,000 (or the dollar amount determined after application of Section
1.3(c)(ii)); provided however, that in the event that the Second Tranche has a
value in excess of FMV per share on the Second Post-Closing Date, then no
further payment pursuant to this Section 1.3(c) shall be required.
(ii) The Second Tranche will be subject to adjustment
in accordance with this Section 1.3(c)(ii). The first year revenue goal arising
out of or in any way connected to the Copytron Assets or any sales made by
Purchaser in Wake County, North Carolina; Orange County, North Carolina; Durham
County, North Carolina; and Chatham County, North Carolina (Wake County, Orange
County, Durham County and Chatham County are collectively the "North Carolina
Territory") is $1,300,000. In the event that actual revenues arising out of the
Copytron Assets and sales made by the Purchaser in the North Carolina Territory
are greater than $700,000, the Seller shall receive $0.25 of the Purchaser's
common stock for each dollar of such actual revenue in excess of $700,000, and
the resulting amount will be substituted in the place of the $150,000 value set
forth in Section 1.3(c)(i); provided however, that in no event shall the number
of shares included in the Second Tranche have a value in excess of $150,000.
Seller will not receive any shares under Section 1.3(c) in the event that the
actual revenues arising out of or in any way connected to the Copytron Assets or
sales made by Purchaser in the North Carolina Territory are less than $700,000.
(d) Third Tranche.
(i) Promptly (but no later than thirty (30) days)
after the second anniversary of the Closing, Purchaser shall issue and deliver
to Seller (or the former shareholders of Seller if Seller is dissolved) such
number of shares of Common Stock as shall have a value of $150,000 (the "Third
Tranche"), subject to Section 1.3(d)(ii) below. The value of the Third Tranche
shall be based upon the per share market value of the Common Stock at the close
of trading on the second anniversary of the Closing. If on the date that is
three (3) years and one (1) day after the Closing (the "Third Post-Closing
Date") the shares included in the Third Tranche have a market price less than
FMV per share (adjusted for any stock splits), Purchaser shall promptly (but no
later than thirty (30) days) pay to Seller (or the former shareholders of Seller
if Seller is dissolved) either additional shares of Common Stock or cash, in
Purchaser's sole discretion, in an amount that, when combined with the value of
the shares included in the Third Tranche on the Third Post Closing Date, will
have an aggregate value $150,000 (or the dollar amount determined after
application of Section 1.3(d)(ii)); provided, however, that in the event that
the Third Tranche has a value in excess of FMV per share on the Third
Post-Closing Date, then no further payment pursuant to this Section 1.3(d) shall
be required.
(ii) The Third Tranche will be subject to adjustment
in accordance with this Section 1.3(d)(ii). The second year revenue goal arising
out of or in any way connected to the Copytron Assets or any sales made by
Purchaser in the North Carolina Territory is $1,300,000. In the event that
actual revenues arising out of the Copytron Assets and
sales made by the Purchaser in the North Carolina Territory are greater than
$700,000, the Seller shall receive $0.25 of the Purchaser's common stock for
each dollar of such actual revenue in excess of $700,000, and the resulting
amount will be substituted in the place of the $150,000 value set forth in
Section 1.3(d)(i); provided however, that in no event shall the number of shares
included in the Third Tranche have a value in excess of $150,000. Seller will
not receive any shares under Section 1.3(d) in the event that the actual
revenues arising out of or in any way connected to the Copytron Assets or sales
made by Purchaser in the North Carolina Territory are less than $700,000.
(e) Additional Adjustment. Notwithstanding any provision to
the contrary contained herein, in the event that any creditors of the Seller
make any claims against the Purchaser as a result of its purchase of the
Copytron Assets, and Purchaser shall, as a result of a final judicial
determination, pay such creditors, then the aggregate value of the shares of
Common Stock to be delivered to Seller pursuant to Section 1.3(c) and Section
1.3(d) shall be reduced by the amount paid by Purchaser to any such creditor to
the extent that Purchaser is not compensated for making any such payment to
Seller's creditors under Section 4.5 hereof and the escrow agreement
contemplated thereby.
(f) Common Stock Appreciation. If on the date of issuance of
the Second or Third Tranche, as the case may be, the per share market value of
the shares to be issued in the Second Tranche or Third Tranche exceeds the FMV,
the number of shares of Common Stock issued to Seller in the Second Tranche or
the Third Tranche, will equal the quotient obtained by dividing (i) $150,000 (or
the dollar amounts determined by application of Section 1.3(c)(ii) and
1.3(d)(ii), respectively) by (ii) the FMV.
(g) Restricted Securities. All securities delivered by
Purchaser to Seller pursuant to this Agreement shall be subject to Rule 144
promulgated under the Securities Act of 1933, as amended (the "Act"); provided
however that Seller may dissolve and liquidate and transfer the securities
delivered by Seller to Purchaser to Seller's shareholders in connection with
such dissolution and liquidation. The stock certificates representing the
securities delivered hereunder shall bear a restrictive legend as follows:
The shares of stock represented by this certificate have not
been registered under the Securities Act of 1933, as amended
(the "Act"), or under the securities laws of any state, and
may not be sold or otherwise transferred unless and until
registered in compliance with the Act and any applicable state
securities laws, or unless in the opinion of counsel
satisfactory to ▇▇▇▇▇▇▇▇.▇▇▇, inc., such sale or transfer is
exempt from registration or is otherwise in compliance with
the Act.
(h) Secured Promissory Note and Security Agreement. The cash
payments described in Section 1.3(a)(ii), (iii) and (iv) above shall be
evidenced by a non-negotiable, secured promissory note (the "Note")
substantially in the form attached hereto as Exhibit A. Payments due under the
Note, together with the Purchaser's obligations hereunder and the documents
delivered herewith shall be secured by and subject to the terms and provisions
of a security agreement (the "Security Agreement") substantially in the form
attached hereto as Exhibit B. The parties agree and acknowledge that pursuant to
the terms of the Security
Agreement, Purchaser will grant to Seller a first priority security interest in
the Copytron Assets and Seller may file a UCC-1 financing statement with the
appropriate county and state clerk's offices in connection with such Security
Agreement.
(i) Disputes Regarding Calculations. In the event that the
parties disagree with any calculation conducted pursuant to this Section 1.3,
the parties shall use their best efforts for five (5) days to resolve such
disagreement. In the event that the parties can not resolve such disagreement
within the five-day period, then the matter shall be submitted to and resolved
by an accountant (the "Accountant") mutually selected by the parties. Each party
shall bear one-half of the costs and expenses of the Accountant.
1.4. Instruments of Transfer and Conveyance. The sale, conveyance,
transfer, assignment and delivery of the Copytron Assets shall be effected by
delivery on the Closing by the Seller of such assignments, conveyances or other
instruments of transfer and conveyance as the Purchaser shall reasonably deem
necessary to vest in Purchaser good title to the Copytron Assets, free and clear
of all Encumbrances, including, without limitation, a ▇▇▇▇ of sale ("▇▇▇▇ of
Sale") substantially in the form attached hereto as Exhibit C.
1.5. Closing. The closing ("Closing") of the transaction contemplated
by this Agreement shall take place by facsimile, mail and/or wire transfer on
August 2, 2000, or such other date as the parties may mutually agree upon
("Closing Date").
1.6. Consulting Agreement. The Purchaser shall execute a consulting
agreement with ▇▇▇▇ ▇▇▇▇▇ III ("Consultant") for a term of two (2) years,
renewable at the sole option of Purchaser, substantially in the form attached
hereto as Exhibit D.
1.7. Sublease. Seller shall execute and deliver to Purchaser a sublease
naming Purchaser as a subtenant of the premises currently occupied as a retail
store by Seller in Chapel Hill, North Carolina for a period of four (4) months
from the Closing, at the same monthly rental rate currently paid by Seller,
substantially in the form attached hereto as Exhibit E.
2. REPRESENTATIONS AND WARRANTIES BY THE SELLER
The Seller (which, for the purposes of this Section 2, shall include,
where applicable, any predecessor unincorporated entity or sole proprietorship
which may have operated the Copytron business prior to incorporation of the
Seller) represents and warrants as follows:
2.1. Organization and Good Standing of Seller. The Seller is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation, is qualified and in good standing in
any jurisdiction in which the Seller is required to be qualified and has all
requisite power and authority to (a) own, lease, license, and use its properties
and assets, and (b) transfer the Copytron Assets.
2.2. Power and Authority to Enter into Agreement. The Seller has all
requisite corporate power and authority to execute, deliver and perform this
Agreement and the
other agreements contemplated herein to which the Seller is or will be a party,
to perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby.
2.3. Due Authorization. The execution, delivery and performance by the
Seller of this Agreement and the other agreements contemplated herein to which
the Seller is or will be a party, and the consummation by Seller of the
transactions contemplated hereby and thereby, have been duly and validly
authorized and approved by all necessary corporate action of the Seller.
2.4. Due Execution; Enforceability. This Agreement has been, and the
other agreements contemplated herein, will be, prior to the Closing, duly and
validly executed and delivered by the Seller, and this Agreement is, and each of
the agreements contemplated herein will be, valid and binding obligations of the
Seller enforceable against the Seller in accordance with its terms, subject to
applicable bankruptcy, insolvency and other laws affecting the enforceability of
creditors' rights generally and general principles of equity.
2.5. Non-Conflict. The execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby, and the fulfillment or
compliance by Seller with the terms and conditions hereof do not and will not:
(i) violate any provisions of any judicial or administrative order, award,
judgment or decree or any statute, rule or regulation applicable to Seller or
the Copytron Assets; (ii) conflict with any terms, conditions, or provisions of
Seller's Articles of Incorporation, By-Laws or any amendments thereto; (iii)
conflict with or result in a breach of, constitute a default under, or result in
the acceleration of any agreement, note, bond, mortgage, indenture or instrument
by which the Copytron Assets are bound; (iv) require the consent or approval of
any governmental authority in connection with the execution and delivery by
Seller of this Agreement or the consummation by Seller of the transactions
contemplated hereby; or (v) except as set forth on Schedule 2.5, require the
consent of any party to any lease, license, distribution, agency, consulting,
employment, financing, lending, installment sale or conditional sale, security,
pledge, guarantee, or other agreement, arrangement, or understanding relating to
the business, or to which the Seller is a party, or to which any of Seller's
properties or assets, including the Copytron Assets, are subject.
2.6. Financial Statements. Attached hereto as Exhibit F are copies of
the financial statements previously delivered by Seller to Purchaser (the
"Financial Statements"). The Financial Statements are correct and complete and
are consistent with the books and records of Seller and present fairly the
financial position of Seller at the dates and for the periods stated in the
Financial Statements.
2.7. Absence of Undisclosed Liabilities; No Material Adverse Change.
Except as to the extent reflected (i) in the Financial Statements, and (ii) on
Schedule 2.7, Seller had no liabilities or obligations of any nature, whether
absolute, accrued, contingent or otherwise and whether due or to become due, or
arising out of any transaction of the Seller entered into prior to the Closing
or arising out of any state of facts existing prior to the Closing. Since June
1, 2000, there has been no material adverse change in the Seller's business or
in the results of
operations of the Seller's business and the Seller has conducted the business
only in the ordinary course and in a manner consistent with prior business
practices.
2.8. Title to Properties. Seller is the sole owner of the Copytron
Assets and has good and marketable title free and clear of Encumbrances of any
kind.
2.9. Contracts. The Seller has no presently existing material, written
contracts, agreements, loan agreements or commitments of any kind or nature
extending beyond the date of this Agreement, except as set forth on Schedule
2.9. The Seller has complied with all provisions of such contracts to which it
is a party, directly or indirectly, and it is not in default under any of such
contracts.
2.10. Restrictive Documents. The Seller is not subject to, or a party
to, any charter, by-law, mortgage, lien, lease, license, permit, agreement,
contract, instrument, law, rule, ordinance, regulation or order, or any other
restriction of any kind or character that: (a) would prevent consummation of the
transactions contemplated by this Agreement or any other agreement contemplated
herein or (b) does or would materially and adversely affect the value of the
Copytron Assets.
2.11. Claims; Litigation. There are no unresolved Claims (as defined
herein) and to the best knowledge of Seller, there are no threatened Claims.
Seller is not subject to any order entered in any lawsuit or proceeding which
has or may have an adverse effect on: (a) the Copytron Assets or (b) the
Seller's ability to consummate the transactions contemplated by this Agreement,
or any other agreement contemplated herein. The term "Claim(s)" shall mean any
assertions written or oral, disputed or undisputed, (i) that Seller has violated
any law, regulation, or order in connection with the Copytron Assets; (ii) that
Seller has failed to pay amounts due a claiming party or that Seller is
otherwise in default of an obligation against such a claiming party in an amount
in excess of $10,000 (except as set forth on Schedule 2.7); and (iii) in any
action, suit, proceeding at law or in equity, arbitration or administrative or
other proceeding or investigation by or before any governmental or other
instrumentality or agency, pending, against or affecting the Copytron Assets or
the Seller.
2.12. Warranties. There are no pending or, to the best knowledge of
Seller, threatened warranty claims relating to products at any time sold or
services at any time performed by the Seller relating to its business and the
Seller does not know of any basis for such claim.
2.13. Real Property. The Seller does not own, and has not owned, legal
or beneficial title to, any real property. The Seller leases certain real
property and copies of all such leases (including all amendments) have been
provided to Purchaser.
2.14. Employees; Collective Bargaining Agreements.
(a) Except as set forth on Schedule 2.14, all employees
employed by Seller as of the date hereof and at any time in the past are or have
been employees at will. Set
forth in the attached Schedule 2.14 is an accurate and complete list, as of July
12, 2000, of the names of all employees employed by Seller at any time since
January 1, 1999 together with the following information with respect to each
such employee: (i) job title, (ii) date of hire, (iii) base compensation, (iv)
additional compensation (or the terms thereof, if determined pursuant to a scale
or formula), if any, (v) accrued vacation time from through the date hereof, if
any, and (vi) to the Seller's knowledge, any other liability that Seller may
have to any of such employees. To Seller's knowledge, Seller has no liability to
any employee whose employment with the Seller was terminated.
(b) As of the date hereof and as of the Closing Date, Seller
is not conveying to Purchaser as part of the transaction contemplated by this
Agreement, any part of its business other than the Copytron Assets. Seller
acknowledges that Purchaser is not hiring any employee of Seller, except as
otherwise provided in this Agreement. Purchaser shall not be deemed to be a
joint employer, single employer, co-employer or successor employer with Seller.
Purchaser shall have no obligation to pay wages, severance pay, benefits
(including, without limitation, contributions or payments on account of any
under-funding with respect to any and all pension plans) or any other payment to
the employees of Seller. Any and all notices required to be given to employees
pursuant to the WARN Act or any other federal or state law shall be the sole
obligation of Seller.
(c) For purposes of this Section, the following definitions
shall apply: (i) "Seller" includes any entity which may be affiliated,
consolidated or considered with the Seller under Section 414(b), (c) or (m) of
the Internal Revenue Code of 1986, as amended (the "Code"), Title I or Title IV
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
and any predecessor thereto and any arrangement of any such entity which would
be a Benefit Plan, as defined below, if such entity were the Seller, shall be
considered a Benefit Plan, (ii) "Purchaser" includes any director, officer,
employee, agent, affiliate or assignee of Purchaser, and (iii) "Benefit Plan"
shall mean any employee plan, as defined in Section 3(3) of the ERISA, any plan,
as defined in Section 4975(e)(1) of the Code, and any other plan, program,
policy, practice, arrangement, contract or system (whether group or individual
or whether mandated by any law or otherwise) that provides for payments,
benefits or reimbursements to employees of Seller ("Employees"), former or
retired Employees, or their beneficiaries or dependents by virtue of such
Employee's employment by Seller.
(d) Not in limitation or qualification of the representation
in subsection "(c)" above, Purchaser shall have no liability with respect to the
Benefit Plans of Seller, if any, or with respect to Employees, former Employees,
their dependents and beneficiaries for all claims, obligations and liabilities
(including costs and expenses in connection therewith) relating to all Benefit
Plans and all terms, conditions and circumstances (including termination of
employment) of employment of Employees or former Employees. Without limitation
to the above language, the provisions of this Agreement and any action taken
with regard thereto is intended not to conform to, or in any way to invoke the
operation of, the "sale and assets exception" contained in Section 4204 of
ERISA, and Seller shall bear any withdrawal liability under Title IV of ERISA,
which it may incur as a result of the transactions contemplated herein.
(e) The Seller has not been and is not currently a party to
any collective bargaining agreement with respect to its business.
2.15. Creditor List. The attached Schedule 2.15 is a true and complete
list of all creditors of Seller, whether secured or unsecured, with addresses of
the creditors and the amounts owing as of the date indicated.
2.16. Shareholder and Officer List. The attached Schedule 2.16 is a
true and complete list of all shareholders and officers of the Seller.
2.17. Disclosure. Neither this Agreement, the Financial Statements nor
any Schedule, Exhibit, agreement, certificate or other document attached hereto
or thereto or delivered in accordance with the terms hereof or thereof contains
any untrue statement of material fact or omits any statement of material fact
necessary in order to make the statements contained herein or therein not
misleading. To the best of Seller's knowledge, there is no fact that materially
and adversely affects the value of the Copytron Assets which has not been set
forth in this Agreement, the Financial Statements, any Schedule, Exhibit,
agreement, certificate or other document attached hereto or thereto or delivered
in accordance with the terms hereof or thereof or any document or statement in
writing which has been supplied by or on behalf of the Seller in connection with
the transactions contemplated by this Agreement.
2.18. Compliance with Laws. Seller is not, nor is it suffering a
condition to exist which is in contravention or violation of any applicable law,
regulation or ordinance applicable to, or which is in contravention or violation
of any order, injunction or decree of any court or other governmental or
regulatory body relating to the Copytron Assets or its business, including but
not limited to the applicable bulk sales laws, and Seller has not received any
notice to the contrary from any person or agency.
2.19. Permissions. To the best of Seller's knowledge, Seller has
obtained all of the third party permissions necessary to publish the works and
products sold in the course of the Seller's business prior to the Closing.
Schedule 2.19 sets forth all amounts remaining due and unpaid by Seller in
connection with such permissions.
2.20. Taxes. Seller has paid or made adequate provisions for the
payment of all foreign, federal, state, municipal and local income, profits,
franchise, sales, use, occupancy, property, and other taxes, fees, assessments,
including interest and penalties or other payments, income, profits, and gross
receipts taxes required to be paid, accrued or reserved against it or with
respect to the Copytron Assets, and Seller has duly filed all tax reports and
returns required in connection therewith to be filed. There are no outstanding
tax liens or assessments of any nature against Seller and Seller is not liable
for any tax deficiencies of any predecessor corporations, affiliates or foreign
operations in any way affiliated with the Seller.
3. REPRESENTATIONS AND WARRANTIES BY PURCHASER.
3.1. Organization of Good Standing of Purchaser. The Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation, is qualified and in good standing in
any jurisdiction in which the
Purchaser is required to be qualified and has all requisite power and authority
to (a) own, lease, license, and use its properties and assets, and (b) purchase
the Copytron Assets.
3.2. Power and Authority to Enter into Agreement. Purchaser has all
requisite power and authority to execute, deliver, and perform this Agreement
and the other agreements contemplated herein to which it is or will be a party,
to perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby.
3.3. Due Authorization. The execution, delivery and performance by
Purchaser of this Agreement and the other agreements contemplated herein to
which it is or will be a party, and the consummation by it of the transactions
contemplated hereby and thereby, have been duly and validly authorized and
approved by all necessary corporate action of Purchaser.
3.4. Due Execution; Enforceability. This Agreement has been, and the
other agreements contemplated herein will be, prior to Closing, duly and validly
executed and delivered by Purchaser, and this Agreement is, and each of the
agreements contemplated herein will be, valid and binding obligations of
Purchaser enforceable against it in accordance with their terms, subject to
applicable bankruptcy, insolvency, and other laws affecting the enforceability
of creditors' rights generally and general principles of equity.
3.5. Non-Conflict. The execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby, and the fulfillment or
compliance by Purchaser with the terms and conditions hereof do not and will
not: (i) violate any provisions of any judicial or administrative order, award,
judgment or decree or any statute, rule or regulation applicable to Purchaser;
(ii) conflict with any terms, conditions, or provisions of Purchaser's
Certificate of Incorporation, By-Laws or any amendments thereto; (iii) conflict
with or result in a breach of, constitute a default under, or result in the
acceleration of any agreement, note, bond, mortgage, indenture or instrument by
which Purchaser is bound; (iv) require the consent or approval of any
governmental authority in connection with the execution and delivery by
Purchaser of this Agreement or the consummation by Purchaser of the transactions
contemplated hereby; or (v) require the consent of any party to any lease,
license, distribution, agency, consulting, employment, financing, lending,
installment sale or conditional sale, security, pledge, guarantee, or other
agreement, arrangement, or understanding relating to the business of, or to
which the Purchaser is a party. Purchaser is not, nor is it suffering a
condition to exist which is in contravention or violation of any applicable law,
regulation or ordinance applicable to, or which is in contravention or violation
of any order, injunction or decree of any court or other governmental or
regulatory body relating to its business, and Purchaser has not received any
notice to the contrary from any person or agency.
3.6. Hiring of Employees. The Purchaser agrees to retain at least one
(1) commercial salesperson, one (1) course pack salesperson, one (1) rights and
permissions analyst and one (1) customer service representative in connection
with the Copytron Assets, until all payments pursuant to this Agreement are
complete; provided, however, that the Purchaser is not required to retain any
current employees or consultants of Seller (except as otherwise provided herein)
to satisfy its obligations under this Section 3.6.
3.7. Restrictive Documents. The Purchaser is not subject to, or a party
to, any charter, by-law, mortgage, lien, lease, license, permit, agreement,
contract, instrument, law, rule, ordinance, regulation or order, or any other
restriction of any kind or character that would prevent consummation of the
transactions contemplated by this Agreement or any other agreement contemplated
herein.
3.8. Litigation. There are no unresolved Claims Against Purchaser and
to the best knowledge of Purchaser, there are no threatened Claims Against
Purchaser. Purchaser is not subject to any order entered in any lawsuit or
proceeding which has or may have an adverse effect on the Purchaser's ability to
consummate the transactions contemplated by this Agreement, or any other
agreement contemplated herein. The term "Claims Against Purchaser" shall mean
any assertions written or oral, disputed or undisputed, (i) that Purchaser has
failed to pay amounts due a claiming party or that Purchaser is otherwise in
default of an obligation against such a claiming party in an amount in excess of
$10,000; and (ii) in any action, suit, proceeding at law or in equity,
arbitration or administrative or other proceeding or investigation by or before
any governmental or other instrumentality or agency, pending, against or
affecting the Purchaser.
3.9. Warranties. There are no pending or, to the best knowledge of
Purchaser, threatened warranty claims relating to products at any time sold or
services at any time performed by the Purchaser relating to its business and the
Purchaser does not know of any basis for such claim.
3.10. Disclosure. Neither this Agreement, nor any Schedule, Exhibit,
agreement, certificate or other document attached hereto or thereto or delivered
in accordance with the terms hereof or thereof contains any untrue statement of
material fact or omits any statement of material fact necessary in order to make
the statements contained herein or therein not misleading.
3.11. Taxes. There are no outstanding tax liens or assessments of any
nature against Purchaser and Purchaser is not liable for any tax deficiencies of
any predecessor corporations, affiliates or foreign operations in any way
affiliated with the Purchaser.
3.12. Nature of Common Stock. All of the shares of Common Stock issued
to Seller (or to the former shareholders of Seller if Seller is dissolved), when
issued, will be duly authorized and validly issued, fully paid and
non-assessable and, assuming the accuracy of the representations and warranties
set forth in Section 7.1 and Section 7.2, will be issued in compliance with all
applicable federal and state securities laws. The Purchaser has reserved a
sufficient number of shares of its Common Stock to satisfy its obligations
pursuant to this Agreement. All of the shares of Common Stock issued to Seller
(or the former shareholders of Seller if Seller is dissolved), when issued, will
be free of any Encumbrances.
3.13. Securities Filings. None of the filings submitted by Purchaser
with the Securities and Exchange Commission contain any untrue statements of
material fact or omit a material fact necessary in order to make the statements
made, in light of the circumstances under which they were made, not misleading.
4. COVENANTS OF SELLER
Seller covenants and agrees as follows:
4.1. Confidentiality. Seller shall not disclose to any third party the
existence of this Agreement, the transaction contemplated by this Agreement, or
any termination of negotiations relating to the transaction contemplated hereby,
either by oral or written disclosure, without the prior written consent of the
Purchaser unless such disclosure is required to be made under applicable law and
excluding disclosure to the Seller's and Purchaser's accountants, attorneys,
consultants and parties whose consent to the transaction is required.
4.2. Release of Liens, Judgements and Liabilities. At or prior to
Closing, Seller shall have obtained from any creditor who has a lien on any of
the Copytron Assets or a judgement against the Seller, a release of such lien or
judgement and, if necessary to effectuate such release, a termination statement
or similar document in form suitable for filing with the official filing office
where such statement is required to be filed.
4.3. Restrictive Covenant. Seller, Consultant, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("▇.
▇▇▇▇▇▇"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ III ("▇. ▇▇▇▇▇▇") and ▇▇▇▇▇▇ ▇. Holding ("Holding")
(each of Seller, Consultant, ▇.▇▇▇▇▇▇, ▇. ▇▇▇▇▇▇ and Holding are individually a
"Restricted Party," and are collectively referred to as the "Restricted
Parties") each acknowledge that (i) the securities of Purchaser are listed on
the American Stock Exchange and are publicly traded and (ii) certain information
furnished by Purchaser in connection with the transactions contemplated by this
Agreement is of a confidential nature and may constitute inside information.
Accordingly, the Restricted Parties are prohibited from, and each agrees that it
shall not purchase or sell any securities of Purchaser (except for the Common
Stock issued to Seller pursuant to the terms of this Agreement), either directly
or indirectly, for the twelve (12) month period commencing as of the date of
this Agreement.
4.4. Payments to Creditors. Seller will use its best efforts to pay all
of Seller's creditors or negotiate extended payment terms with its creditors
within ninety (90) days of the Closing Date; provided however that any and all
such extended payment terms shall be satisfied by Seller within one (1) year and
thirty (30) days of the Closing Date.
Seller shall deliver to the Purchaser evidence of Seller's payments to
its creditors, in a form reasonably acceptable to Purchaser, including but not
limited to a copy of checks delivered to Seller's creditors together with any
transmittal letter in connection therewith, within five (5) days of making such
payments.
In the event that the cash payments due under Section 1.3(a) are
insufficient to pay all amounts due to Seller's creditors, Seller shall be
solely responsible for payment of any amounts remaining due to such creditors.
4.5. Escrow. The parties agree and acknowledge that Sixty Eight
Thousand Eighty-Five (68,085) shares of the common stock of Purchaser to be
issued to Seller pursuant to Section 1.3(b) shall be delivered to ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇ LLP ("P&S") as escrow agent,
to be held pursuant to the escrow agreement dated as of the Closing Date among
Purchaser, Seller and P&S. The common stock deposited pursuant to this Section
4.5 shall constitute the Escrow Fund and such deposit will be governed by the
terms set forth in the Escrow Agreement attached hereto as Exhibit G.
4.6. Rights and Remedies Upon Breach. Should any of the Restricted
Parties breach or threaten to commit a breach of any of the provisions of
Article 4 (the "Restrictive Covenants"), Purchaser shall have the following
rights and remedies (upon compliance with any necessary prerequisites imposed by
law for the availability of such remedies), each of the rights and remedies
being independent of the other and jointly and severally enforceable, and all of
the rights and remedies being in addition to, and not in lieu of, any other
rights and remedies available to Purchaser under law or in equity:
(a) The right and remedy to have the Restrictive Covenants
specifically enforced by any court having equity jurisdiction, including,
without limitation, the right to have restraining orders and injunctions
(preliminary, mandatory, temporary and permanent) entered against the Restricted
Parties preventing violations of such covenants, threatened or actual, and
whether or not then continuing, it being acknowledged and agreed that any such
breach will cause irreparable injury to Purchaser and that money damages will
not provide an adequate remedy to Purchaser;
(b) The right and remedy to require the Restricted Parties to
account for and pay over to Purchaser all compensation, profits, monies,
accruals, increments or other benefits derived or received by them primarily as
the result of any transactions constituting a breach of the Restrictive
Covenants. The Restricted Parties shall promptly account for and pay over such
sums to Purchaser.
5. CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATIONS
All obligations of Purchaser under this Agreement are subject to the
following conditions any or all of which may be waived in writing by Purchaser
at or prior to the Closing:
5.1. Representations and Warranties True at Closing. All
representations and warranties of Seller contained in this Agreement shall be
accurate when made and, in addition, shall be accurate as of the Closing as
though such representations and warranties were then made in exactly the same
language by Seller and regardless of the knowledge or lack thereof on the part
of Seller or changes beyond their control; as of the Closing, Seller shall have
performed and complied with all conditions required to be performed and complied
with by them at or before such time by this Agreement.
5.2. Opinion of Counsel. Seller shall deliver to Purchaser on the
Closing Date an opinion of Seller's counsel dated as of the Closing Date, in
form and substance satisfactory to counsel for Purchaser, substantially to the
effect that:
(a) The Seller is a corporation validly existing and in good
standing under the laws of the jurisdiction of its incorporation; and
(b) The provisions of the North Carolina Uniform Commercial
Code- Bulk Transfers law (N.C. Gen. Stat. Sec. 25-6-101 et. seq.) are not
applicable to the transfer of the Copytron Assets.
5.3. Transfer Documents and Other Closing Documents. The Seller shall
have delivered to the Purchaser at or prior to the Closing, the ▇▇▇▇ of Sale,
and such other documents as the Purchaser may reasonably request in order to
enable the parties to effect legal transfer of the Copytron Assets, to enable
Purchaser to determine whether the conditions to its obligations under this
Agreement have been met and otherwise to carry out the provisions of this
Agreement.
5.4. Legal Action. There shall not have been instituted or threatened
any legal proceeding (i) relating to, or seeking to prohibit, delay or otherwise
challenge the consummation of, the transactions contemplated by this Agreement,
or to obtain damages with respect thereto or (ii) that, if successful, could
diminish the value of the Copytron Assets to Purchaser.
5.5. Completion of Due Diligence. Purchaser shall have satisfactorily
completed, as determined in its sole discretion, its due diligence review of the
Seller's business. Seller expressly acknowledges and agree that Purchaser, as a
result of such investigation and examination, may determine at any time not to
proceed further with the transaction contemplated hereby and that Purchaser may
make such determination in its sole discretion and without incurring any
liability to Seller as a result. If Purchaser determines at any time not to
proceed, it shall so notify Seller in writing, and thereupon all obligations of
the parties under this letter shall terminate and be of no further force and
effect other than the obligations set forth in Section 4.3.
5.6. Consulting Agreement. ▇▇▇▇ ▇▇▇▇▇ III shall have entered into a
consulting agreement with Purchaser in the form attached as Exhibit D.
5.7. Material Adverse Affect. Since June 1, 2000, there shall have been
no event or development or series of events or developments which individually
or in the aggregate could be expected reasonably by Purchaser to have a material
adverse affect on the value or utility of the Copytron Assets for Purchaser's
purposes.
5.8. Sublease. Seller shall execute and deliver to Purchaser a sublease
naming Purchaser as a subtenant of the premises currently occupied as a retail
store by Seller in Chapel Hill, North Carolina, at the same monthly rental rate
currently paid by Seller, substantially in the form attached hereto as Exhibit
E.
6. CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS.
6.1. Representations and Warranties True at Closing. All
representations and warranties of Purchaser contained in this Agreement shall be
accurate when made and, in addition, shall be accurate as of the Closing as
though such representations and warranties were then made in exactly the same
language by Purchaser and regardless of the knowledge or lack thereof on the
part of Purchaser or changes beyond its control; as of the Closing, Purchaser
shall
have performed and complied with all conditions required to be performed and
complied with by it at or before such time by this Agreement.
6.2. Consulting Agreement. Purchaser shall have entered into a
consulting agreement with ▇▇▇▇ ▇▇▇▇▇ III in the form attached as Exhibit D.
6.3. Legal Action. There shall not have been instituted or threatened
any legal proceeding relating to, or seeking to prohibit, delay or otherwise
challenge the consummation of, the transactions contemplated by this Agreement,
or to obtain damages with respect thereto.
6.4. Material Adverse Affect. Since June 1, 2000, there shall have been
no event or development or series of events or developments which individually
or in the aggregate could be expected reasonably by Seller to have a material
adverse affect on the Purchaser's ability to consummate the transactions
contemplated by this Agreement or to fulfill its obligations hereunder.
6.5. Secured Promissory Note. Purchaser shall have executed and
delivered a secured promissory note and a security agreement in the forms
attached as Exhibit A and Exhibit B, respectively, together with UCC financing
statements in a form reasonably acceptable to Seller.
6.6. Sublease. Purchase shall have entered into a sublease agreement
with Seller in the form attached hereto as Exhibit E.
6.7. Payment of Purchase Price. Purchase shall have paid to Seller the
portion of the Purchase Price set forth in Section 1.3(a)(i) and 1.3(b).
7. REPRESENTATIONS AND WARRANTIES OF RESTRICTED PARTIES
Each of the Restricted Parties hereby represents and warrants to the
Purchaser as follows:
7.1. Access; Sophistication. Each Restricted Party has had an
opportunity to ask questions and receive answers concerning the terms and
conditions of this Agreement, and has had full access to such other information
concerning the Purchaser (including each of the Purchasers' quarterly reports
filed with the Securities and Exchange Commission to date) and the transactions
contemplated herein as such Restricted Party has requested. Each Restricted
Party is an "accredited investor," as such term is defined in Rule 501
promulgated under the Act. Each Restricted Party and such Restricted Party's
respective agents and representatives have such knowledge and experience in
financial and business matters as to enable them to utilize the information made
available to them in connection with the transactions contemplated hereby to
evaluate the merits and risks associated with their receipt of the Common Stock
pursuant to the terms of this Agreement and to make an informed decision with
respect thereto, and such an evaluation and informed decision has been made.
7.2. Investment Representation. Each Restricted Party is acquiring the
Common Stock to be received pursuant to this Agreement for such Restricted
Party's own account for investment only and not with a view to making a
distribution thereof within the meaning of the Act. Each Restricted Party agrees
not to sell or transfer such Common Stock, except in accordance with the legend
set forth in Section 1.3(g) hereof. Each Restricted Party is aware that such
Common Stock has not been registered under the Act or any state or other
jurisdiction's securities laws, and that such Common Stock must be held
indefinitely unless subsequently registered or an exemption from such
registration is available. Each Restricted Party acknowledges that investment in
the Common Stock received pursuant to this Agreement involves substantial risks,
including the risk of total loss of such Restricted Buyer's investment in such
Common Stock. Each Restricted Party represents that such Restricted Party (i) is
able to hold the Common Stock for an indefinite period of time; (ii) has
adequate means, other than the Common Stock, of providing for such Restricted
Party's current and foreseeable needs; (iii) has no foreseeable need to sell or
otherwise dispose of any of the Common Stock and (iv) has sufficient net worth
to sustain a loss of such Restricted party's entire investment in the Common
Stock in the event that such loss should occur.
8. INDEMNIFICATION .
8.1. Indemnification by Seller. Seller (or the former shareholders of
Seller if Seller dissolves) shall indemnify, defend and hold harmless Purchaser,
and Purchaser's respective officers, directors, employees, counsel, accountants
and agents, against and in respect of any and all claims, as and when incurred,
arising out of or based upon: (i) any breach of any representation, warranty,
covenant, or agreement of the Seller and Restricted Parties contained in this
Agreement (including the Exhibits and Schedules attached hereto), or any
certificates delivered pursuant to this Agreement, and (ii) any claims by
creditors of Seller which may be made against the Copytron Assets transferred to
Purchaser hereby on account of transactions occurring prior to the Closing;
provided however that the aggregate amount of the liability of Seller (or the
former stockholders of Seller if Seller is dissolved) shall be limited to the
extent of the Purchase Price actually received by the Seller (or the former such
stockholders of Seller if Seller is dissolved).
8.2. Indemnification by Purchaser. Purchaser agrees to indemnify,
defend and hold harmless Seller and Seller's respective officers, directors,
employees, counsel, accountants and agents, against and in respect of any and
all claims, as and when incurred, arising out of or based upon any breach of any
representation, warranty or covenant of Purchaser contained in this Agreement
(including the Exhibits and Schedules attached hereto), or any certificates
delivered pursuant to this Agreement.
8.3. Notice and Opportunity to Defend. Promptly after receipt by any
party hereto (the "Indemnitee") of notice of any demand, claim or circumstance
which, with the lapse of time, would give rise to a claim or the commencement
(or threatened commencement) of any action, proceeding or investigation (an
"Asserted Liability"), the Indemnitee shall give notice thereof (the "Claims
Notice") to the other party obligated to provide indemnification pursuant to
Section 8.1 or 8.2 (the "Indemnifying Party"). The Claims Notice shall describe
the Asserted Liability in reasonable detail, and shall indicate the amount
(estimated, if necessary) of the losses, liabilities, damages, deficiencies,
costs or expenses that have been or may be suffered by the Indemnitee.
The Indemnifying Party may elect to compromise or defend, at its own
expense and by its own counsel, any Asserted Liability; provided, however, that
if the Indemnifying Party elects to compromise or defend such Asserted
Liability, it shall within thirty (30) days after receipt of the Claims Notice
(or sooner, if the nature of the Asserted Liability so requires) notify the
Indemnitee of its intent to do so, and the Indemnitee shall cooperate, at the
expense of the Indemnifying Party, in the compromise of, or defense against,
such Asserted Liability. If the Indemnifying Party elects not to compromise or
defend the Asserted Liability, fails to notify the Indemnitee of its election as
herein provided or contests its obligation to indemnify under this Agreement,
the Indemnitee may pay, compromise or defend such Asserted Liability. The
Indemnifying Party may settle or compromise any claim without the consent of the
Indemnitee only if, as part of such settlement, the Indemnitee shall receive a
full and unconditional release reasonably satisfactory to the Indemnitee from
the Asserted Liability. If the Indemnifying Party chooses to defend any claim,
the Indemnitee shall make available to the Indemnifying Party any books, records
or other documents within its control that are necessary or appropriate for such
defense, and shall cooperate with the Indemnifying Party in the defense,
compromise and settlement of the Asserted Liability; provided however that the
Indemnitee may retain its own counsel, at its own expense, in the defense of the
Asserted Liability.
8.4. Duration. The indemnification set forth in this Article 8 shall
apply for a period of three (3) years from the Closing Date.
9. REGISTRATION RIGHTS.
9.1. Company Registration. If (but without any obligation to do so) the
Purchaser proposes to register (including for this purpose a registration
effected by the Purchaser for stockholders other than the Restricted Parties)
any of its stock or other securities under the Act (other than a registration
relating solely to the sale of securities to participants in a Purchaser stock
plan, a registration relating to a corporate reorganization or other transaction
under Rule 145 of the Act, a registration on any form that does not include
substantially the same information as would be required to be included in a
registration statement covering the sale of the Common Stock, or a registration
in which the only Common Stock being registered is Common Stock issuable upon
conversion of debt securities that are also being registered), the Purchaser
shall, at such time, promptly give each Restricted Party written notice of such
registration. Upon the written request of each Restricted Party (the
"Registration Notice") given within twenty (20) days after mailing of such
notice by the Purchaser in accordance with Section 10.4, the Purchaser shall,
subject to the provisions of Section 9.3, use all reasonable efforts to cause to
be registered under the Act all of the Common Stock issued to such Restricted
Party under the terms of this Agreement as of the date of the Registration
Notice that each such Restricted Party has requested to be registered. If a
Restricted Party decides not to include all of such Common Stock in such
registration by the Purchaser, such Restricted Party shall nevertheless continue
to have the right to include such Common Stock in any subsequent
registration statement as may be filed by the Purchaser (other than a
registration relating solely to the sale of securities to participants in a
Purchaser stock plan, a registration relating to a corporate reorganization or
other transaction under Rule 145 of the Act, a registration on any form that
does not include substantially the same information as would be required to be
included in a registration statement covering the sale of the Common Stock, or a
registration in which the only Common Stock being registered is Common Stock
issuable upon conversion of debt securities that are also being registered) upon
the terms and conditions set forth in this Article 9. Notwithstanding anything
to the contrary contained herein, the Restricted Parties may not include any of
the shares of Common Stock issued pursuant to this Agreement in any registration
until on or after October 1, 2000.
9.2. Right to Terminate Registration. The Purchaser shall have the
right to terminate or withdraw any registration initiated by it under Section
9.1 prior to the effectiveness of such registration whether or not any
Restricted Party has elected to include securities in such registration. The
expenses of such withdrawn registration shall be borne by the Purchaser.
9.3. Underwriting Requirements. In connection with any offering
involving an underwriting of shares of the Purchaser's capital stock, the
Purchaser shall not be required under this Article 9 to include any of the
Restricted Parties' securities in such underwriting unless they accept the terms
of the underwriting as agreed upon between the Purchaser and the underwriters
selected by it (or by other persons entitled to select the underwriters) and
enter into an underwriting agreement in customary form with an underwriter or
underwriters selected by the Purchaser, and then only in such quantity as the
underwriters determine in their sole discretion will not jeopardize the success
of the offering by the Purchaser. If the total amount of securities, including
the Common Stock issued pursuant to this Agreement, requested by stockholders to
be included in such offering exceeds the amount of securities sold other than by
the Purchaser that the underwriters determine in their sole discretion is
compatible with the success of the offering, then the Purchaser shall be
required to include in the offering only that number of such securities,
including the Common Stock issued pursuant to this Agreement, that the
underwriters determine in their sole discretion will not jeopardize the success
of the offering (the securities so included to be apportioned pro rata among the
selling Restricted Parties according to the total amount of securities entitled
to be included therein owned by each selling Restricted Party or in such other
proportions as shall mutually be agreed to by such selling Restricted Parties).
10. MISCELLANEOUS.
10.1. Further Documents; Cooperation. Each party shall cooperate and
take such action as may be reasonably requested by another party in order to
carry out the provisions and purpose of this Agreement. In addition, each party
shall use its respective best efforts and shall cooperate with the other party
to secure all necessary consents, approvals, authorizations, exemptions and
waivers from third parties as shall be required in order to effect the
transactions contemplated hereby, and each party shall otherwise use its
respective best efforts to cause the consummation of such transactions in
accordance with the terms and conditions hereof and to cause all conditions
contained in this Agreement to be satisfied. Each party further agrees to
deliver to the other party prompt written notice of any event or condition
known to such party, which if it existed on the date of this Agreement, would
result in any of the representations and warranties of such party contained
herein being untrue in any respect. Following the Closing, Seller from time to
time shall execute, acknowledge and deliver such other documents, certifications
and other assurances as Purchaser may request with respect to the assignment,
transfer and delivery of the Copytron Assets in order to consummate in full the
transactions provided for herein. The provisions of this Section shall survive
Closing.
10.2. Choice of Law. This Agreement and the provisions hereof shall be
construed in accordance with the laws of the State of New York without giving
effect to such state's rules governing the conflicts of laws, except for laws
relating specifically to bulk sales which shall be governed solely by the laws
of the State of North Carolina.
10.3. Merger; Modification. This Agreement, and the Schedules and
Exhibits attached hereto set forth the entire understanding of the parties with
respect to the subject matter hereof, supersede all existing agreements
concerning such subject matter, and may be modified only by a written instrument
duly executed by each party to be charged.
10.4. Notices. All notices and other communications given pursuant to
the provisions of this Agreement shall be in writing and shall be given: (i) by
mailing the same by certified mail or registered mail, return receipt requested,
postage prepaid, or (ii) by reputable overnight courier providing for receipted
delivery with instructions for next business day delivery. Except as may be
expressly otherwise provided in this Agreement, any such notice or other
communication given by mail shall be deemed to have been given and received on
the delivery date endorsed by the Postal Service on the return receipt, except
that any notice which is correctly addressed but which is returned by the Postal
Service as undeliverable shall be deemed to have been received on the earliest
date on which the Postal Service attempted delivery as indicated by Postal
Service endorsement on the return receipt form and any such notice or other
communication given by overnight courier as aforesaid shall be deemed given when
received or when receipt is refused. If sent to Purchaser, the same shall be
sent to the address set forth in the preamble of this Agreement or such other
address as the party shall have furnished in writing in accordance with the
provisions of this Section, with a copy given in the same manner to Camhy
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇,
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq. If sent to Seller, the same shall be sent to
the address sent forth in the preamble of this Agreement or such other address
as the party shall have furnished in writing in accordance with the provisions
of this Section, with a copy given in the same manner to ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
L.L.P., ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇.
▇'▇▇▇▇▇ III. Either party, by written notice to the other, may designate other
(and additional) addresses to which notices for the designating party shall be
sent.
10.5. Waiver. Any waiver by any party of a breach of any terms of this
Agreement shall not operate as or be construed to be a waiver of any other
breach of that term or of any breach of any other term of this Agreement. The
failure of a party to insist upon strict adherence to any term of this Agreement
on one or more occasions will not be considered a waiver or deprive that party
of the right thereafter to insist upon strict adherence to that term or any
other term of this Agreement. Any waiver must be in writing.
10.6. Brokerage. Seller and Purchaser represent and warrant that all
negotiations relative to this Agreement have been carried on by them directly
with each other, without the intervention of any person, and each will indemnify
the other and hold harmless against and in respect of any claim for brokerage or
other commission relative to this Agreement, or to the transaction contemplated
hereby. This Section shall survive Closing and termination of this Agreement.
10.7. Binding Effect. The provisions of this Agreement shall be binding
upon and inure to the benefit of the Purchaser and its successors and assigns,
the Seller and its successors and assigns.
10.8. No Third-Party Beneficiaries. This Agreement does not create, and
shall not be construed as creating, any rights enforceable by any person not a
party to this Agreement; provided however, that in the event of the dissolution
of Seller, the former shareholders of Seller may enforce the terms of this
Agreement.
10.9. Severability. If any provision of this Agreement is declared
invalid, illegal, or unenforceable, the balance of this Agreement shall remain
in effect, and if any provision is inapplicable to any person or circumstance,
it shall nevertheless remain applicable to all other persons and circumstances.
10.10. Dissolution of Seller. Seller shall provide Purchaser with no
less than ten (10) days prior written notice of its intention to dissolve.
10.11. Headings. The headings in this Agreement are solely for the
convenience of reference and shall be given no effect in the construction or
interpretation of this Agreement.
10.12. Survival. The parties hereto agree that the representations and
warranties, covenants and obligations contained in this Agreement, including but
not limited to those obligations provided in Section 8, shall survive for a
period of three years after the Closing Date.
10.13. Counterparts. This Agreement may be executed in any number of
counterparts (and by facsimile), each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first written above.
▇▇▇▇▇▇▇▇.▇▇▇, inc.
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Chief Financial Officer
COPYTRON, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇, III
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Name: ▇▇▇▇ ▇. ▇▇▇▇▇, III
Title: Managing Director
With respect to Section 4.3, 5.6, 7.1,
7.2, and 8.1
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇, III
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▇▇▇▇ ▇. ▇▇▇▇▇, III
With respect to Sections 4.3, 7.1, 7.2
and 8.1
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ III
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ III
/s/ ▇▇▇▇▇▇ ▇. Holding
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▇▇▇▇▇▇ ▇. Holding