PURCHASE AND SALE AGREEMENT
This Agreement is dated as of July 22, 1994 and is between
Synergistics, Inc., a Massachusetts corporation having its principal
place of business at ▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
("Seller") and Imaging Technology Corporation, a Delaware Corporation
having its principal place of business at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Buyer").
WHEREAS, Seller has been engaged in the development and
marketing of a computerized imaging photo identification card system (the
"Imaging System") over the past several years; and
WHEREAS, Seller has entered into agreements with various
entities to sell and service the Imaging System; and
WHEREAS, in recent years Seller has failed to profit
from the Imaging System and is desirous to sell substantially all of its
assets related to the Imaging System (the "ID Business"); and
WHEREAS, the Buyer is desirous to purchase the ID
Business on the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the mutual premises,
covenants, representations and warranties contained herein, Buyer and
Seller hereby agree as follows:
1. SALE AND PURCHASE OF ASSETS. Subject to the terms and
conditions hereof, Seller agrees to sell, convey, transfer, assign, grant
and deliver to Buyer, and Buyer agrees to purchase, acquire and accept
from Seller at the Closing (as defined in Section 7) on the date set
forth in Section 7 (the "Closing Date"), which is occurring
simultaneously with the date of the execution of this Agreement, all of
Seller's right, title and interest in and to all of the following assets
or rights related to the ID Business:
a. The computers, fixtures, machinery, equipment,
furniture, spare parts, supplies, materials and other personal property
used in conjunction with the ID Business, listed on Schedule 1 attached
hereto;
b. all inventories related to the ID Business
including all cameras, printers, computers, boards, and supplies listed
on Schedule 1 attached hereto,
c. all computer programs purchased and associated with
the ID Business and are listed on Schedule 1 attached hereto, and all
computer software developed by Seller associated solely with the ID
Business and the source codes therefor; provided however, the software
server developed by Sellerfor the purpose of networking imaging
computers to access control computers and the source codes therefor
shall be, and continue to be,shared by both Buyer and Seller;
d. all names, titles, copyrights, designs, licenses
and applications with respect to the foregoing, production records,
technical information, manufacturing and system integration know-how,
processes, trade secrets, and other proprietary rights and intangible
assets related to or used by Seller in connection with the ID Business;
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PAGE
e. all of Seller's right, title and interest in and to
all customer purchase order contracts, license agreements, service
contracts, letters of intent to purchase, pro forma invoices, proposals
to purchase, tradeout or barter agreements, and other contracts and
commitments, written or oral, in effect on the Closing Date relating to
the ID Business;
f. all files, books and records of Seller relating to
the ID Business, including, but not limited to, all customer names,
contacts and addresses, order history, supplier lists, promotional and
advertising materials, records of allformer customers, sales
correspondence and sales promotion lists relating to the ID Business;
g. all artwork related to all advertising and
promotional materials related to the ID Business and all artwork related
to customer ID card layouts; and
h. all customer deposits related to any ID Business
purchase orders which have not been fulfilled prior to the Closing Date
(collectively, the "Purchased Assets").
Notwithstanding the foregoing, it is the express intent
of the Buyer and the Seller that the Purchased Assets do not include any
property of the Seller, including computer hardware, computer software,
inventory, equipment, furniture, fixtures, names, titles, trademarks,
copyrights, patents, contracts, contract rights, files, books, records,
deposits, accounts receivable, and general intangibles, related to and
used in other divisions and aspects of Seller's business, including
without limitation, Seller's entry access control business.
The Purchased Assets shall not include the following:
accounts receivable generated by the ID Business from customers related
to shipments delivered and billed prior to the Closing Date; and cash on
hand or in banks generated by the ID Business.
2. ASSUMPTION OF LIABILITIES.
a. Liabilities Assumed. Buyer shall assume the
responsibility to support existing customers of the ID Business, but
solely on a best efforts basis in accordance with Buyer's policies and
procedures, then in effect, relative to customer support. Support
offered will initially include support to most existing installations,
but Buyer reserves the right, upon reasonable notice to both customer and
Seller, to discontinue support to systems no longer being marketed. Said
notice shall be given not less than ninety (90) days prior to the date
of the support discontinuance. In such cases where support to a
customer's system is being discontinued, Buyer will offer said customer
the opportunity to upgrade or replace their existing system with Buyer's
then current software. In the event that said customer is not satisfied
with alternatives presented by Buyer, Buyer agrees to review the matter
with the Seller, and Buyer and Seller then agree to extend best efforts,
together, to reach a solution acceptable to said customer. Buyer's
responsibility to review said matters with the Seller and to provide said
notices to Seller shall terminate one (1) year from the date of this
Agreement. Buyer reserves the right to charge customers reasonable fees
for aforementioned support services.
b. No Other Liabilities Assumed. Except for the
assumption of the liabilities set forth in Section 2(a), Buyer shall not
and does not assume any other liability or obligation of Seller, fixed
or contingent. Seller shall be responsible for all liabilities not
assumed by the Buyer and shall pay the same when and as they become due.
3. CONSIDERATION FOR ASSETS. The consideration for the
Purchased Assets shall consist of the obligations to be assumed by Buyer
as described in Section 2(a) and the following:
a. Purchase Price.
i. Subject to the maximum set forth in Section
3(b), Buyer shall pay to Seller a purchase price ("Purchase Price"),
which shall be paid in up to four installments, each being a contingent
payment ("Contingent Payment"). The Contingent Payments shall be
calculated as an amount equal to five percent (5%) of Buyer's Revenue,
as defined hereinafter, in excess of one million seven hundred and fifty
thousand dollars ($1,750,000) and shall be payable for the first four
years ("Contingent Payment Years"), subject to Section 3(b) below, in
which the Buyer's Revenue exceed $1,750,000. Contingent Payment Years
need not be sequential and need not occur within any predetermined time
frame, but they must be years in which the Buyer's Revenue is at least
$1,750,000. The first $1,750,000 in revenues in a Contingent Payment
Year shall be subtracted from Buyer's Revenue of said year, to yield the
net revenue that will be the basis for the 5% Contingent Payment. For
the purpose of this Section 3(a), the term "Buyer's Revenue" shall mean
the total gross revenue of Buyer, domestic and foreign, net of
commissions and fees paid to agents associated with foreign transactions
of Buyer derived from the operation of the ID Business, for each such
fiscal year, as determined by Buyer in accordance with accrual-based
generally accepted accounting principles consistently applied.
ii. Within one hundred and twenty (120) days after
the end of eachfiscal year of the Buyer, until four Contingent Payment
Years have been achieved or until the maximum as set forth in Section
3(b) has been reached, Buyer shall furnish to Seller a statement of
Buyer's Revenue for each fiscal year, calculated in accordance with
accrual-based generally accepted accounting principles consistently
applied, prepared and signed by Buyer's chief financial officer
certifying that said statement represents Buyer's Revenue for such fiscal
year, and a computation of the contingent Purchase Price due, if any,
with respect to such fiscal year. Each such statement shall be deemed
to be accepted by Seller sixty (60) days after its receipt unless within
such 60-day period Seller gives Buyer written notice ("Seller's Notice")
that Seller exercises its right to audit Buyer in accordance with Section
3(a)(iii). Within five days after the deemed acceptance of the
statement, Buyer shall pay to Seller the Contingent Purchase Price shown
on such statement, if any, by check or in another form acceptable to the
Seller.
iii. If Seller gives Seller's Notice with respect
to any statement of Buyer's revenue, Seller and its independent
accountants shall have the right on reasonable notice during business
hours and for a reasonable period of time not to exceed five business
days to review the books and records of Buyer and supporting work
papers, if any, for the purpose of verifying Buyer's Revenue as
reported on such statement.
iv. In the event Seller objects to any statement
of Buyer's Revenue, the parties shall in good faith attempt to resolve
any dispute. If the parties are unable to resolve such dispute, the
unresolved issues shall be submitted to arbitration.. Any such
arbitration proceeding shall be conducted in Boston, MA in accordance
with the rules of the American Arbitration Association in Boston, MA
then in effect.The decision of the arbitrators shall be binding and
conclusive on both parties. Each such party shall bear its own costs of
such arbitration.
b. Maximum Purchase Price. The maximum Purchase Price
that the Buyer shall pay in the aggregate shall be four hundred thousand
($400,000) dollars. Should the maximum be reached in less than four
years, the Buyer's obligations set forth in Section 3 shall be considered
completely satisfied, upon Seller receiving payment or payments totaling
$400,000.
4. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller
represents and warrants to Buyer as follows:
a. Organization and Power. Seller is a corporation
duly organized, validly existing and in good standing under the laws of
the Commonwealth of Massachusetts. Seller has the power and authority
to own it assets and to carry on its business as such business is now
conducted, and to execute,deliver and perform this Agreement and
consummate the transactions contemplated hereby.
b. Authorization. The execution, delivery and
performance of this Agreement and consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate
action on the part of the Seller. This Agreement and the agreements and
instruments delivered by Seller in connection herewith constitute the
legal, valid and binding obligation of Seller, enforceable against
Seller in accordance with their terms.
c. Ownership of the Purchased Assets. Seller has
good, clear and marketable title to the Purchased Assets and has the full
and unencumbered right and authority to sell and transfer the same to
Buyer. The Purchased Assets are free and clear of all claims, liens,
charges, security interests and encumbrances of every nature whatsoever.
d. Litigation. There is no claim, notice of claim,
legal action, decree, judgment, order, arbitration or other proceeding,
suit or governmental investigation pending or, to the best of Seller's
knowledge, threatened against Seller with respect to the Purchased Assets
or which would adversely affect the consummation of the transactions
contemplated hereby, including without limitation, any claim or, notice
of claim based on breach of contract or failure of the ID Business
software to perform in accordance with specifications.
e. Compliance with Laws. Seller has complied in all
material respects with all laws, regulations and orders and has obtained
all governmental permits or licenses, if any, required in connection with
the Purchased Assets, the violation of which could have a material
adverse effect on the Purchased Assets, and no notice or warning from any
governmental authority in respect of any failure or alleged failure by
Seller to comply with any such law, regulation or order has been received
by Seller. No permits, licenses, authorizations, variances, orders or
approvals of governmental or administrative authorities are required to
own, lease or operate the Purchased Assets.
f. Software Rights. Seller has and has had all
required rights to sell, copy and distribute versions of the ID Business
software sold, copied and distributed by it, including all graphics and
software modules thereof, through ownership, licenses or existence in the
public domain.
g. No Misrepresentation. No representation or
warranty of Seller contained in this Agreement and no schedule or other
document of Seller attached to this Agreement or furnished by Seller in
connection herewith contains a misstatement of material fact or omits to
state a material fact required to be stated in order to make the
statement contained therein, in the light of circumstances under which
made, not misleading. There is no fact relating to ID Business known to
Seller which Seller has not disclosed to Buyer which materially adversely
affects or, so far as Seller can now reasonably foresee, will materially
adversely affect the Purchased Assets or the Buyer's use thereof.
5. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer
hereby represents and warrants to Seller as follows:
a. Organization and Authority. Buyer is a corporation
duly organized, validly existing and in good standing under the laws of
the State of Delaware, and has the corporate power and authority to enter
into this Agreement and any related agreements and to consummate the
transactions contemplated hereby.
b. Authorization. The execution, delivery and
performance of this Agreement and consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate
action on the part of Buyer. This Agreement and the agreements and
instruments delivered by Buyer in connection herewith constitute the
legal, valid and binding obligations of Buyer, enforceable against Buyer
in accordance with their terms.
c. Litigation. There is no claim, legal action,
decree, judgment, order, arbitration or other proceeding, suit or
governmental investigation pending or, to Buyer's knowledge, threatened
against Buyer.
d. No Misrepresentation. No representation or
warranty of Buyer contained in this Agreement and no schedule or other
document of Buyer attached to this Agreement or furnished by Buyer in
connection herewith contains a misstatement of material fact or omits to
state a material fact required to be stated in order to make the
statement contained therein, in the light of circumstances under which
made, not misleading.
6. PARTICULAR AGREEMENTS OF THE PARTIES.
a. Business to be Operated in the Ordinary Course.
Seller agrees to carry on the business in the "Ordinary Course" up to the
Closing Date, and to be responsible for all obligations and liabilities
incurred in so doing, except that the Buyer has agreed to be responsible
for all consulting fees associated with ▇▇▇▇▇▇ ▇▇▇▇▇▇'▇ work incurred
after July 1, 1994. Seller shall be responsible for ▇▇. ▇▇▇▇▇▇'▇ fees,
as previously agreed between Seller and ▇▇. ▇▇▇▇▇▇, prior to and through
July 1, 1994.
b. Business Cooperation Where Appropriate. Seller and
Buyer agree to extend best efforts to promote, cooperate with and support
the business activities of the other. Parties agree to team and
cross-sell where possible and to share leads when appropriate.
c. Use of Name. Seller agrees that Buyer may use the
"Synergistics" name for a period of six months following the Closing
solely in a descriptive context and by using the words "Synergistics
Imaging Division, Division of Imaging Technology Corporation".
d. Transition Period. Seller and Buyer recognize that
during the transition period, mail, faxes, and telephone calls including
but not limited to sales inquires, purchase orders, telephone calls, and
checks and other forms of payment, and so forth (collectively "ID
Business Activity"), related to the ID Business, will likely be received
by the Seller, but will be the property of the Buyer. Seller agrees
that when ID Business Activity is received by Seller, Seller will, with
reasonable promptness, forward all such ID Business Activity to the
Buyer. When payments are received by Seller, belonging to Buyer, Seller
agrees that said payments will be delivered to Buyer within three days
of Seller's receipt thereof.
e. Nondisturbance of Employees. Neither party shall
try to hire, or interfere with the employment of, the remaining employees
of the other for a period of three (3) years.
7. CLOSING DATE. The Closing shall occur at the office of
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq., ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇,
simultaneously with the execution of this Agreement, on July 22, 1994 at
11:00 A.M. (the "Closing Date"). The Closing shall constitute the acts
which take place on the Closing Date by which the transactions
contemplated by this Agreement are consummated.
8. ADDITIONAL DOCUMENTS. At the Closing, or such other time
as indicated, in addition to this Agreement, the parties shall exchange
documents as follows:
a. Seller shall deliver to Buyer the following:
i. A duly executed ▇▇▇▇ of Sale and Assignment
covering all of the Purchased Assets;
ii. Within 10 business days of the Closing, a
certified copy of the resolutions duly adopted by the board of directors
of Seller authorizing and approving the execution, delivery and
performance of this Agreement, and the sale and transfer of the Purchased
Assets to Buyer;
iii. Within 10 business days of the Closing, a
Certificate of Good Standing of Seller; and
iv. Such other documents, instruments and writings
reasonably requested by Buyer at or prior to the Closing;
b. Buyer shall deliver to Seller the following;
i. Within 10 business days of the Closing, a
certified copy of the resolutions duly adopted by the board of directors
of Buyer authorizing and approving the execution, delivery and
performance of this Agreement, and the sale and transfer of the Purchased
Assets to Buyer;
ii. Within 10 business days of the Closing, a
Certificate of Good Standing of Buyer; and
iii. Such other documents, instruments and writings
reasonably requested by Seller at or prior to the Closing.
9. BULK SALES. Seller and Buyer hereby waive compliance
with the provisions of any applicable bulk transfer laws. Seller agrees
to use its best efforts to ensure that all debts, obligations and
liabilities relating to the ID Business and thePurchased Assets which
are not expressly assumed by Buyer under this Agreement, and which if not
paid and discharged will have a materially adverse effect on the ID
Business, will be paid and discharged by Seller.
10.BROKERS. the parties represent that they have not used
or retained any broker, agent, finder or adviser in this transaction.
Seller and Buyer will indemnify and hold the other harmless from and
against any claim for brokerage, finder's fee and other commissions or
compensation arising in connection with its use, if any, of any agent
, broker, finder or advisor in connection with this Agreement and the
transactions contemplated hereby.
11.INDEMNIFICATION.
a. Survival. The parties hereto agree that the
representations and the warranties contained herein shall survive for a
period of two years following the Closing.
b. Indemnification by Seller. Seller agrees to
indemnify, defend and hold harmless Buyer and its stockholders,
directors, employees and affiliates from and against any and all demands,
claims, complaints, actions or causes of action, suits, proceedings,
investigations, arbitrations, assessments, losses, damages, liabilities,
costs and expenses, including, but not limited to, interest, penalties
and reasonable attorneys' and accounting fees and disbursements, asserted
against, imposed upon or incurred by Buyer byreason of or resulting
from (i) any liability notexpressly assumed by Buyer hereunder, (ii) any
liability incurred or created in connection with the ID Business prior
to the Closing resulting from actions or conduct of the Seller, or (iii)
any breach of warranty, non-fulfillment of any agreement or
misrepresentations on the part of Seller contained herein, or any
material misrepresentation in or omission from any certificate, schedule,
exhibit, financial statement, document or other instrument or instruments
furnished to Buyer hereunder; provide that, in the case of
representations and warranties, Buyer has provided notice of a claim to
Seller no later than two years from the Closing. Buyer shall be entitled
to indemnification for Seller only to the extent that the aggregate of
all indemnity payments that would be payable to Buyer hereunder exceeds
$5,000.
c. Indemnification by Buyer . Buyer agrees to
indemnify, defend and hold harmless Seller and its stockholders,
directors, employees and affiliates from and against any and all demands,
claims, complaints, actions or causes of action , suits, proceedings,
investigations, arbitrations, assessments, losses, damages, liabilities,
costs and expenses, including, but not limited to, interest, penalties
and reasonable attorneys' fees and disbursements, asserted against,
imposed upon or incurred by Seller by reason of or resulting from (i) any
liability expressly assumed by Buyer hereunder, (ii) any liability
incurred or created in connection with the ID Business after the Closing
resulting from actions or conduct of the Buyer, or (iii) any breach of
warranty, non-fulfillment of any agreement or misrepresentations on the
part of Buyer contained herein, or any material misrepresentation in or
omission from any certificate, schedule, exhibit, financial statement,
document or other instrument or instruments furnished to Seller
hereunder; provided that, in the case of representations and warranties,
Seller has provided notice of a claim to Buyer no later that two years
from the Closing. Seller shall be entitled to indemnification from Buyer
only to the extent that the aggregate of all indemnity payments that
would be payable to Seller hereunder exceeds $5,000.
12.FURTHER ASSURANCES . Seller agrees that, at any time
from and after the date hereof it will, upon the request of Buyer,
execute and deliver all such further assignments, transfers, conveyances
and assurances as may be reasonably required for the assigning,
transferring, granting and conveying to Buyer any of the Purchased
Assets. If subsequent to the Closing Seller shall have in his possession
any asset or rights which should have been transferred to Buyer
hereunder, including any mail received after the Closing which relates
to the Purchased Assets, Seller will promptly deliver such assets or
rights to Buyer. In case Buyer receives checks for the payment of
accounts receivable that are the property of Seller and not being sold
or transferred to Buyer hereunder, Buyer will promptly deliver the checks
to Seller.
13.CONFIDENTIAL INFORMATION. From and after the date hereof:
a. Neither party shall directly or indirectly disclose
to any other person or entity, any information relating to any of the
Purchased Assets that is not generally known in the ID Business industry;
and
b. Neither party shall directly or indirectly disclose
to any other person or entity, any information known to that party
relating to any business activities of the other.
14.EXPENSES. Seller and Buyer shall bear their respective
expenses incurred in the negotiation and consummation of this
Agreement.
15.BENEFIT . Nothing in this Agreement, express or implied,
is intended to nor shall it confer on any person (including but not
limited to any employee of Seller) other than the parties hereto, any
rights, remedies, obligations or liabilities under or by reason of this
Agreement or arising out of the consummation of the transactions
contemplated hereby.
16.NOTICES. Any notice or other communication required or
permitted hereunder shall be sufficiently given if in writing and if
personally delivered or sent bycertified mail, postage prepaid,
addressed as follows:
a. To Seller:
Synergistics, Inc.
▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, President
with a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ Professional Corporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
tel ▇▇▇-▇▇▇-▇▇▇▇
fax ▇▇▇-▇▇▇-▇▇▇▇
b. To Buyer:
Imaging Technology Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇▇ Benz, President
tel ▇▇▇-▇▇▇-▇▇▇▇
fax ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
tel ▇▇▇-▇▇▇-▇▇▇▇
fax ▇▇▇-▇▇▇-▇▇▇▇
or to any party at such other address as such party may
have furnished to the others in writing, and any such notice or
communication shall be deemed to have been given as of the date so
delivered or mailed (except that a notice of a change of address shall
not be deemed to have been given until received by the addressee).
17.PUBLICITY. All publicity relating to the transactions
described in this Agreement will be subject to the mutual approval of
Seller and Buyer and, except as otherwise may be required by law, no
public announcement of the transactions described in this Agreement (or
communication thereof to any third party) will be made by either Seller
or Buyer without the consent of the other.
18.MISCELLANEOUS.
a. This Agreement and the documents referred to herein
or delivered pursuant hereto constitute the entire agreement of the
parties with respect to the subject matter hereof and supersede all
previous agreements and understandings. This Agreement may be modified
only by a subsequentwriting signed on behalf of each party hereto.
b. This Agreement shall be binding upon and inure to
the benefit of Buyer and Seller, their successors and assigns. Without
limiting the generality of the foregoing, Seller's rights to the Purchase
Price shall be binding upon an assignee or subsequent owner of the ID
Business, in substantially the same form and amount as if Buyer had
continued to own the ID Business. This Agreement may not be assigned by
either party without the consent of the other party hereto.
c. No waiver of any breach or default hereunder shall
be valid unless in writing and signed by the party giving such waiver,
and no such waiver shall be deemed a waiver of any subsequent breach or
default of the same or similar nature.
d. In case any one or more of the provisions (or
portions of the provisions) of this Agreement shall for any reason be
held to be invalid, illegal or unenforceable, such unenforceability shall
not affect any other provisions (or portions of the provisions) of this
Agreement and this Agreement shall be construed as if the invalid,
illegal or unenforceable provisions (or portions of the provisions) had
never been contained herein.
e. This Agreement shall be governed by and construed
in accordance with the laws of the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the parties have caused this
Agreement to be duly executed as of the day and year above written.
SYNERGISTICS, INC.
By _______________________________
President
IMAGING TECHNOLOGY CORPORATION
By ________________________________
President
