Definitive Stock Purchase Agreement between Manchester Technologies, Inc. and Shareholders of e.Track Solutions, Inc.

Summary

This agreement, dated November 1, 2001, is between Manchester Technologies, Inc. (the Purchaser), the shareholders of e.Track Solutions, Inc. (the Company), and the Company itself. The shareholders agree to sell 100% of their shares in e.Track Solutions, Inc. to Manchester Technologies. The agreement outlines the assets included in the sale, representations and warranties by the shareholders, and the process for finalizing the transaction. The purchase is subject to certain conditions, including the delivery and acceptance of financial statements and other standard closing requirements.

EX-10.17 4 etrackdpa.txt ETRACKDEFNITIVE PURCHASE AGREEMENT AGREEMENT, made this 1st day of November, 2001, by and between Manchester Technologies, Inc., a Corporation organized and existing under and by virtue of the laws of the State of New York, with a principal place of business at 160 Oser Avenue, Hauppauge, New York 11788 (hereinafter referred to as the "Purchaser or Manchester"), Anthony C. Mazzullo, an individual residing at 7 Chantilly Lane, Fairport, New York 14450, and Steven K. Ladd, an individual residing at 345 Blue Ridge Road, North Andover, Massachusetts 01845 (hereinafter referred to together as the "Shareholders"), e.Track Solutions, Inc., a Corporation organized and existing under the virtue of the laws of the State of New York, with a principal place of business at 1169 Pittsford-Victor Road, Building 3, Suite 220, Pittsford, New York 14534 (hereinafter referred to as the "Company"). W I T N E S S E T H: Whereas, the Shareholders are the sole stockholders, and Mazzullo is the sole director, and chief executive officer of the Company, and as such the Shareholders represent that they hold such capital stock without charge or lien against it, and Whereas, the Company is engaged in web page design and development, and offers consulting services for operational improvements, and Whereas, the Shareholders have made certain representations and warranties as to the "Company Assets" and "Company Liabilities" as more particularly defined in the within Agreement or Schedules annexed thereto, and Whereas, the Purchaser desires to purchase one hundred (100%) percent of the right, title and interest of the Shareholders in all of the capital stock of the Company. Now, Therefore, in consideration of the sum of Ten ($10.00) Dollar and other good and valuable consideration, receipt of which is hereby acknowledged, and in further consideration of the mutual agreements hereinafter set forth, the parties hereto agree as follows: Definitions: The following terms shall have the meaning hereby assigned in this Agreement as well as any other Agreement which is collateral hereto: "Assets" means all right, title, and interest in and to all of the assets of the Company or the Companies as set forth on Exhibit "A", including all of their (a) real property, leaseholds and sub-lease holds therein, improvements, fixtures, and fittings thereon, and easements, rights-of-way, and other appurtenants thereto (such as appurtenant rights in and to public streets), (b) tangible personal property (such as machinery, equipment, Inventory), (c) intellectual property owned by the Company, goodwill associated therewith, the trade names, licenses and sub-licenses granted with respect thereto, licenses obtained by the Company in respect of intellectual property of others, and rights thereunder, remedies against infringements thereof, and rights to protection of interests therein under the laws of all jurisdictions, (d) leases, sub-leases, and rights thereunder, (e) agreements, contracts, indentures, mortgages, instruments, security interests, guaranties, other similar arrangements, and rights thereunder, (f) accounts, notes, and other receivables, (g) securities, if any, (h) claims, deposits, prepayments, refunds, causes of action, choses in action, rights of recovery, rights of set off, and rights of recoupment (including any such item relating to the payment of Taxes), (i) franchises, approvals, permits, licenses, orders, registrations, certificates, variances, and similar rights obtained from governments and governmental agencies, (j) books, records, ledgers, files, documents, correspondence, lists, plats, architectural plans, drawings, and specifications, creative materials, advertising and promotional materials, studies, reports, and other printed or written materials, (k) any cash, (l) the corporate charters, qualifications to conduct business as a foreign corporation, arrangements with registered agents relating to foreign qualifications, taxpayer and other identifications numbers, seals, minute books, stock transfer books, blank stock certificates, and other documents relating to the organization, maintenance, and existence of the Company as a corporation; (m) any of the rights of the Company under this Agreement. "Adverse Consequences" means all actions, suits, proceedings, hearings, investigations, charges, complaints, claims, demands, injunctions, judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid in settlement, Liabilities, obligations, Taxes, liens, losses, expenses, and fees, including court costs and reasonable attorneys' fees and expenses. "Affiliate" has the meaning set forth in Rule 12b-2 of the regulations promulgated under the Securities Exchange Act. "Affiliated Group" means any affiliated group within the meaning of Code Sec. 1504(a) or any similar group defined under a similar provision of state, local, or foreign law. "Basis" means any past or present fact, situation, circumstance, status, condition, activity, practice, plan, occurrence, event, incident, action, failure to act, or transaction that to the knowledge of the Company or Shareholders forms or could form the basis for any specified consequence. "Cash" means cash and cash equivalents (including marketable securities and short term investments) calculated in accordance with GAAP applied on a basis consistent with the preparation of the Closing Date Financial Statements. "Closing" has the meaning set forth in Paragraph "Third" below. "Closing Date" has the meaning set forth in Paragraph "Third" below. "Closing Date Financial Statements" means the internally generated financial statements of the Company to be prepared by the Company at its cost reflecting the financial condition of the Company as of October 26, 2001, prepared in accordance with GAAP and in accordance with the Company's previous financial statements and to be delivered to the Parties within ninety (90) days of the Closing Date and accepted by the Parties in writing. In the event of a dispute regarding the Closing Date Financial Statements which cannot be resolved by the Parties within fifteen (15) days of delivery of the Closing Date Financial Statements, the Closing Date Financial Statements shall be reviewed by the Jericho, New York office of KPMG Peat Marwick, which costs of review shall be paid by the Purchaser. "Code" means the Internal Revenue Code of 1986, as amended. "Confidential Information" means any information concerning the businesses and affairs of the Company that is not already generally available to the public. "Controlled Group of Corporations" has the meaning set forth in Code Sec. 1563. "Employee Benefit Plan" means the e.Track Solutions, Inc. Profit Sharing Plan. "Employee Pension Benefit Plan" has the meaning set forth in ERISA Sec. 3(2) "Employee Welfare Benefit Plan" has the meaning set forth in ERISA Sec. 3(1). "Environmental, Health, and Safety Laws" means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Resource Conservation and Recovery Act of 1976, and the Occupational Safety and Health Act of 1970, each as amended, together with all other laws (including rules, regulations, codes, plans, injunctions, judgments, orders, decrees, rulings, and charges thereunder) of federal, state, local, and foreign governments (and all agencies thereof) concerning pollution or protection of the environment, public health and safety, or employee health and safety, including laws relating to emissions, discharges, releases, or threatened releases of pollutants, contaminants, or chemical, industrial, hazardous, or toxic materials or wastes into ambient air, surface water, ground water, or lands or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling of pollutants, contaminants, or chemical, industrial, hazardous, or toxic materials or wastes. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended. "Extremely Hazardous Substance" has the meaning set forth in Sec. 302 of the Emergency Planning and Community Right-to-Know Act of 1986, as amended. "GAAP" means United States generally accepted accounting principles as in effect from time to time. "Hart-Scott-Rodino Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. "Indemnified Party" has the meaning set forth in the Indemnity Agreements annexed hereto. "Indemnifying Party" has the meaning set forth in the Indemnity Agreements annexed hereto. "Intellectual Property" means (a) all inventions, (whether patentable or unpatentable and whether or not reduced to practice), all improvements thereto, and all patents, patent applications, and patent disclosures, together with all re-issuance, continuations, continuations-in-part, revisions, extensions, and re-examinations thereof, (b) all trademarks, service marks, trade dress, logos, trade names, and corporate names, together with all translations, adaptations, derivations, and combinations thereof and including all goodwill associated therewith, and all applications, registrations, and renewals in connection therewith, (c) all copyrightable works, all copyrights, and all applications, registrations, and renewals in connection therewith, (d) all mask works and all applications, registrations, and renewals in connection therewith, (e) all trade secrets and confidential business information (including ideas, research and development, know-how, formulas, compositions, manufacturing and production processes and techniques, technical data, designs, drawings, specifications, customer and supplier lists, pricing and cost information, and business and marketing plans and proposals), (f) all computer software (including data and related documentation), (g) all other proprietary rights, and (h) all copies and tangible embodiments thereof (in whatever form or medium). "Inventory" means all goods and works in process and finished goods, work, manufactured and purchased parts and supplies and other items deemed inventory in accordance with GAAP in the operation of the Company's business. "Knowledge" means actual knowledge after reasonable investigation. "Liabilities" means (a) all Liabilities of the Company as recorded on the June 30, 2001 balance sheet, and as adjusted for the business operation of the Company through the Closing Date in accordance with past custom and practice and in the Ordinary Course of Business of the Company and to be recorded on the Closing Date Financial Statements, and subject to the representations and warranties of Seller and the Company herein, (b) all obligations of the Company under the agreements, contracts, leases, licenses, and other arrangements referred to in the definition of Assets either (i) to furnish goods, services, and other non-Cash benefits to another party after the Closing of (ii) to pay for goods, services, and other non-Cash benefits that another party will furnish to it after the Closing, (c) any Liability of the Company for unpaid Taxes for periods prior to the Closing which were not due and payable prior to Closing, (d) any Liability or obligation under any insurance policy, health or medical or life insurance plan of the Company in effect as of the Closing Date, costs, amounts paid in settlement, losses, expenses, or otherwise and whether such indemnification is pursuant to any statute, charter documents, bylaw, agreement, or otherwise, any Liability of the Company for costs and expenses incurred in connection with the Agreement and the transactions contemplated hereby, any Liability or obligation of the Company under this Agreement, any Liability or obligation of the Company, the Employee Benefit Plan, any Liability resulting from any breach of contract, breach of warranty, tort infringement or violation of law. "Liability" means any liability (whether known or unknown, whether asserted or un-asserted, whether absolute or contingent, whether accrued or un-accrued, whether liquidated or unliquidated, and whether due or to become due), including any liability for Taxes. "Multi-employer Plan" has the meaning set forth in ERISA Sec. 3(37). "Ordinary Course of Business" means the ordinary course of business consistent with past custom and practice (including with respect to quantity and frequency), excluded therefrom is the transaction contemplated by the within Agreement. "Party" has the meaning set forth in the preface above. "Person" means an individual, a partnership, a corporation, an association, a joint stock Companies, a trust, a joint venture, an unincorporated organization, or a governmental entity (or any department, agency, or political subdivision thereof). "Pre-Tax Earnings" includes all revenues earned during the period less all expenses incurred or accrued during the period except for taxes computed on the basis of income. For purposes of this Agreement, Pre-Tax Profit shall not include amortization of goodwill. "Prohibited Transaction" has the meaning set forth in ERISA Sec. 406 and Code Sec. 4975. "Purchase Price" has the meaning set forth in Paragraph "Second" below. "Reportable Event" has the meaning set forth in ERISA Sec. 4043. "Security Interest" means any mortgage, pledge, lien, encumbrance, charge, or other security interest, other than (a) mechanic's, material men's and similar liens, (b) liens for Taxes not yet due and payable or for Taxes that the taxpayer is contesting in good faith through appropriate proceedings, (c) purchase money liens and liens securing rental payments under capital lease arrangements, and (d) other liens arising in the Ordinary Course of Business and not incurred in connection with the borrowing of money. "Shareholders" means Anthony C. Mazzullo and Steven K. Ladd, as Shareholders in e.Track Solutions, Inc. "Subsidiary" means any corporation with respect to which a specified Person (or a Subsidiary thereof) owns a majority of the common stock or has the power to vote or direct the voting of sufficient securities to elect a majority of the directors. "Tax" means any federal, state, local, or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental (including taxes under Code Sec. 59A), customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated, or other tax or any kind whatsoever, including any interest, penalty, or addition thereto, whether disputed or not. "Tax Return" means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any Schedule or attachment thereto, and including any amendment thereof. "Third Party Claim" has the meaning set forth in Paragraph "Eighth: (d)" below. First: Sale of Stock- The Sellers agree to sell, transfer and assign one hundred (100%) percent of the issued outstanding capital stock of the Company; to wit: 2,060,000 issued and outstanding shares of Common Stock in e.Track Solutions, Inc. (not including options with respect to 236,750 shares of Common Stock which will be redeemed by the Company at the Closing on the terms described in Exhibit 2), pursuant to the terms and conditions hereinafter set forth. Second: Purchase Price- The Purchaser agrees to buy all of the issued and outstanding shares of the capital stock of Seller constituting one hundred (100%) percent of all the issued and outstanding stock in the Company, for a Purchase Price of Two Hundred Ninety Thousand and 00/100 ($290,000.00) Dollars, less the amount paid against the Company's liabilities pursuant to Paragraph "Tenth A. (iv)". The parties shall execute at Closing a Settlement Statement reflecting final calculation of the Purchase Price. A. Purchase Price Set-off- Reference is herein made to a certain represented overpayments prepayments by the Company of Federal and New York State Income Tax, and/or available Federal and New York State Income Tax refunds from the carry-back of losses and/or value of tax deduction to Purchaser from the redemption of options and payment of bonuses referenced in Exhibit 2, allegedly in an amount exceeding $20,000.00 in the aggregate. Mazzullo, as a selling Shareholder, shall reimburse the Purchaser the amount of such tax benefit that is not received or credited on or before November 1, 2002, such reimbursement to be limited to a maximum of $20,000.00. This provision shall specifically survive the Closing of the transaction contemplated by the within Agreement. B. Apportionment of Purchase Price- The Purchase Price above set forth shall be allocated to each of the Shareholders as set forth on Exhibit "3", annexed hereto. Third: Closing - The Closing shall take place at the offices of Kressel, Rothlein, Walsh & Roth, LLC, 684 Broadway, Massapequa, New York 11758, Attorneys for the Purchaser, on or about November 1, 2001. The effective date of the within transaction shall be deemed October 26, 2001. A) At the Closing, the Shareholders shall deliver to the Purchaser: 1. Certificate - ----------- A certificate or certification dated the Closing date, signed by the Secretary of the Company setting forth: (a) The authorized, outstanding and unissued capital stock of the Company; (b) The names and addresses of the holders (of record and beneficially) of such authorized and outstanding stock, and the number of shares owned by each; (c) The names and addresses of all directors and officers of the Company; and (d) The names of the officers authorized to execute and deliver the documents and related instruments deliverable hereunder. 2. Stock Certificates- ------------------ Certificates for the respective Shareholder's stock, duly endorsed and with all necessary documentary transfer tax stamps affixed and canceled. The Company shall thereupon issue new certificates representing shares to be delivered to Purchaser. 3. Corporate Records- ----------------- The complete and correct corporate minute books, Certificate of Incorporation, By-Laws, stock certificates and stock transfer records of the Company, and a current Certificate of Good Standing issued by the State of Incorporation. 4. Resignations- The written resignation of Mazzullo as an officer and director of the Company, and all other officers and directors, if any, effective upon consummation of the Closing. 5. Contracts- --------- Originals of any and all written Contracts entered into by the Company, which are presently in effect. 6. Creditors- --------- A Schedule of all accounts payable by the Company as of the date of Closing which have accrued or been amended subsequent to the date of the within Agreement. 7. Warranties- ---------- (a) An Affidavit of Warranty and representation by each Shareholder individually 1) that he is the owner of the shares of stock being transferred to the Purchaser; 2) that he owns said stock free and clear of all encumbrances of any kind; 3) that said shares have not been hypothecated or in any way alienated; 4) that there are no actions, litigations, judgments or executions now in force or pending against the Shareholders or to the knowledge of the Shareholders or the Company, nor have any petitions in bankruptcy or arrangements been filed by or against the Shareholders or to the knowledge of the Shareholders or the Company; 5) that the sale of said stock does not render him insolvent; 6) that the Schedules of assets and liabilities are true and complete representations of the liabilities and assets of the Company, which Affidavit shall be furnished solely by Mazzullo. (b) 1) An Affidavit of Warranty by Mazzullo individually which Affidavit shall expressly warrant that the Lease to the Company, a copy of which is annexed hereto, is, in effect at the time of Closing; 2) that such tenancy is free and clear of any and all defaults; 3) that the tenancy established thereby is a valid leasehold interest as represented therein. 8. Indemnifications- ---------------- At Closing Seller will deliver indemnifications in the form set forth annexed hereto. 9. Schedule of Assets- ---------------------- A Schedule of any and all assets as of the date of Closing evidencing additions or deletions which have occurred subsequent to the execution of the within Agreement. 10. General Releases- a) The Shareholders and the Company shall deliver General Releases to each other in the form annexed; Provided, However, these Releases shall except therefrom liabilities from the within Agreement or any agreement delivered pursuant hereto or in connection herewith. B) At the Closing the Purchaser shall deliver the following: 1) An Indemnity Agreement in the form annexed. 2) Certified checks or appropriate wire transfers totaling $290,000.00. 3) Certificate of Resolution of the Board of Directors authorizing the within transaction. Fourth: Employment Agreement- Mazzullo, e.Track Solutions, Inc. and the Purchaser, simultaneously with the Closing, shall enter into an Employment Agreement in the form annexed hereto, and Purchaser shall deliver the Option Contract referred to therein. Fifth: Books and Records- All of the books and records, including but not limited to journals and work sheets, tax returns, bank statements, accountant's records, daily diaries, contracts and other materials used for the operation of the Company shall remain intact at the Company, and shall not be removed from the Company's office without the permission of the Purchaser. Sixth: Broker-Finder Indemnity- Each of the Parties hereto represents and warrants that it has not employed any broker or finder in connection with this Agreement, or the transaction contemplated hereby, and agrees to indemnify the other Party and hold it harmless from any and all liabilities (including, but not limited to, reasonable Attorneys fees and disbursements and Court costs paid or incurred in connection with any such liabilities) for brokerage commissions or finder's fees in connection with this Agreement asserted by any party based upon arrangements or agreements made or claimed to have been made by or in behalf of such indemnifying party. Seventh: A. Pre-Closing Obligations- Parties hereby covenant and agree to cause the following to occur from the date of execution hereof to the Closing: 1.1 The Shareholders and the Company shall afford to the Attorneys for the Purchaser and its authorized representatives, free and full access during regular business hours, and upon reasonable prior notice, to the books, records, personnel and properties of the Company. 1.2 Purchaser shall have the right to make copies of the general ledger, general journal, cash receipts and disbursements books, purchase book, accounts receivable and accounts payable records, payroll records, canceled checks, bank statements and copies of all city, state and federal tax returns filed by the Company. 1.3 The Company's business shall be conducted only in the ordinary course; provided that the Company may conduct the additional transactions described on Exhibit 2. 1.4 The Company shall maintain in force its insurance policies currently in effect as of the date hereof, except to the extent that they may be replaced with equivalent policies at lower rates approved by Mazzullo. If in the Purchaser's opinion, additional coverage is reasonably necessary to keep adequately insured all properties of the Company, Mazzullo shall cause the Company, at the written request of the Purchaser, and at the Company's expense, to obtain such additional insurance from financially sound and reputable insurers for a period ending no sooner than the close of business on the Closing date. 1.5 Without the prior written consent of the Purchaser, no change shall be made in the Certificate of Incorporation or By-Laws of the Company. 1.6 No Change shall be made in the Company's authorized, issued and outstanding capital stock, and no options, warrants, rights or calls shall be granted with respect to any shares of such capital stock, except as described on Exhibit 2. 1.7 No dividend or other distribution or payment shall be declared or made in respect of any shares of the Company's stock. 1.8 No contract, commitment, or other business transaction shall be entered into or terminated by the Company without Purchaser's prior written approval, except such as are in the ordinary course of business. 1.9 Except as expressly provided herein, the Company will not (i) mortgage, pledge or subject to lien or any other encumbrance any of its assets, tangible or intangible; (ii) sell or transfer any fixed assets; (iii) cancel any debts or claims except in each case in the ordinary course of business, or (iv) sell, assign or transfer any patents, trademarks, trade names, copyrights, licenses or other intangible assets. 1.10 The Company will not increase compensation to be paid or become payable to any officer, director, employee or agent (except regular or periodic increases or as described on Exhibit 2), nor enter into any purchase or sales Contract except in the regular course of business, or make any material change in sales, marketing, pricing or distribution policies. 1.11 Each of the Parties will use its best efforts to take all action and to do all things necessary, proper, or advisable in order to consummate and make effective the transactions contemplated by this Agreement. 1.12 The Company will keep its business and properties substantially intact, including its present operations, physical facilities, working conditions, and relationships with lessors, licensors, suppliers, customers, and employees. 1.13 Each party will give prompt written notice to the other Party of any material adverse development causing a breach of any of its own representations and warranties. B) Post-Closing Covenants- The Parties agree as follows with respect to the period following the Closing: (a) General:In case at any time after the Closing any further action is necessary or desirable to carry out the purposes of this Agreement, each of the Parties will take such further action (including the execution and delivery of such further instruments and documents) as the other Party reasonably may request, all at the sole cost and expense of the requesting Party (unless the requesting Party is entitled to indemnification therefore pursuant to the Indemnity Agreement annexed hereto). (b) Litigation Support: In the event and for so long as any Party actively is contesting or defending against any action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand in connection with (i) any transaction contemplated under this Agreement or between any other agreement collateral hereto, (ii) any fact, situation, circumstance, status, condition, activity, practice, plan, occurrence, event, incident, action, failure to act, or transaction on or prior to the Closing Date involving the business of the Company as conducted prior to the Closing Date, the other Party will cooperate with the contesting or defending Party and its counsel in the contest or defense, make available its personnel, and provide such testimony and access to its books and records as shall be necessary in connection with the contest or defense, all at the sole cost and expense of the contesting or defending Party (unless the contesting or defending Party is entitled to indemnification therefor under an Indemnity Agreement annexed hereto. Eighth: Representations and Warranties- Mazzullo and Company hereby covenant, represent and warrant to the Purchaser that subject to the qualifications in Exhibit 2 hereto, the statements contained in this Paragraph "Eighth" are true and correct , both as of the date hereof and as of the Closing date,( as though made then and as though the Closing Date were substituted for the date of this Agreement) as follows: 1. Corporate Matters (a) Valid Corporate Existence-e.Track Solutions, Inc. is a Corporation duly organized and validly existing and in good standing under the laws of the State of New York. The Company is not qualified to do business in any foreign country and any other States other than New York, and therefore the Company is not required to file tax returns in any other country or State other than New York, nor does the Company maintain an office in any other foreign country or State. (b) Authority- The Company has all requisite corporate power and authority to own its assets and properties, and to carry on its business as now conducted. Each Shareholder has the power and authority to enter into this Agreement, and to carry out the transactions contemplated hereby, including, without limitation, the authority to transfer the Company's stock as herein provided. The consent of any third party or parties, including any governmental agency or instrumentality, to the within proposed transaction, is not required. (c) Capitalization; Stockholders of the Company- The Company has the number of shares of authorized, issued and outstanding shares of capital stock as set forth below: e.Track Solutions, Inc. Common Stock, $0.01 par value per share 5,000,000 authorized, 2,060,000 issued. The Shareholders are together, the owners beneficially and of record of one hundred (100%) percent of all issued and outstanding capital stock of the Company. Except for options for 236,750 shares issued under the Company's Stock Option Plan, which options will be redeemed by the Company at the Closing as described on Exhibit 2. There are no outstanding options, Contracts, calls, demands, commitments, stock restriction agreements or encumbrances of any character relating to its capital stock in said Company, and no securities of the Company are outstanding which by their terms are convertible into capital stock. (d) Subsidiaries- The Company does not own any capital stock or any other interest in any other business entity, whether incorporated or unincorporated. (e) Enforceability- This Agreement constitutes a binding and enforceable agreement of the Shareholders and the Company. (f) Actions, Claims, etc.- There are no claims, suits, proceedings or investigations, governmental or private, pending or, so far as is known to the Shareholders, threatened, nor any order, injunction or decree outstanding, against or relating to the Company or its property, assets or business. Neither Shareholder knows or has any reasonable grounds to know of, any basis for any such claims, actions, suits, proceedings, investigations or orders, injunctions or decrees; and neither Shareholder is not knowingly in violation of any applicable law, regulation or ordinance and is not knowingly or otherwise in violation of any order, injunction or decree, or any other requirement of any governmental body or Court, relating to its property or business. (g) Collective Bargaining-Employees- The Company has no employment, union or collective bargaining agreements except as described in the "Schedule of Contracts". During the past three (3) Fiscal Years, the Company has had no "labor unrest" situations, and no pending or threatened labor strikes, or other labor troubles. During the past three (3) Fiscal Years, the Company has had no "unfair labor" practice complaints filed against them. At present, there are no pending or threatened requests for arbitration, grievance proceedings, labor disputes, strikes, or disturbances affecting the Company, and there have been no recent union negotiations. There are no retired employees of the Company who are presently receiving, or will be entitled to receive any payments of any nature except with respect to redemption of their options per Exhibit 2. There are no written or oral employment or consulting agreements to which the Company is a party to or bound by. There are no deferred compensation programs affecting any officers, directors, or employees of the Company. (h) Title to Assets- The Company has good and marketable title to, or a valid leasehold interest in, the properties and assets used by it, located on its premises, or shown on the most recent financial statements or acquired after the date thereof, free and clear of all Security Interest except as described below, except for properties and assets disposed of in the Ordinary Course of Business since the date of the most recent balance sheet. Without limiting the generality of the foregoing, the Company has good and marketable title to all of the Assets, free and clear of any Security Interest or restriction on transfer, except as follows: Security Interest held by Manufacturers and Traders Trust Company. (i) There has been no change in the accounting policies or procedures of the Company during the three (3) years prior to the date hereof. (j) Financial Statements- Attached hereto as Exhibit 1 are the internally generated balance sheet and statement of income as of and for the period from July 1, 2000 to June 30, 2001, collectively, the "2001 Financial Statements". The 2001 Financial Statements have been prepared in accordance with GAAP applied on a consistent basis throughout the periods covered thereby (except for the omission of footnote disclosure), present fairly the financial condition of the Company as of such dates and the results of operations of the Company for such periods, are correct and complete, and are consistent with the books and records of the Company (which books and records are correct and complete). (k) Events Subsequent to June 30, 2001 Financial Statements- Since the June 30, 2001 Financial Statements, there has not been any material adverse change in the business, financial condition, operations, results of operations, or future prospects of the Company except as described on Exhibit 2. Without limiting the generality of the foregoing, since that date and except as described on Exhibit 2: (i) The Company has not sold, leased, transferred, or assigned any of its assets, tangible or intangible, other than for a fair consideration in the Ordinary Course of Business; (ii) The Company has not entered into any agreement, contract, lease, or license (or series of related agreements, contracts, leases, and licenses) other than in the Ordinary Course of Business; (iii) No party has accelerated, terminated, modified, or canceled any agreement, contract, lease, or license (or series of related agreements, contracts, leases, and licenses) to which the Company is a party or are bound; (iv) The Company has not imposed any Security Interest upon any of its assets, tangible or intangible; (v) The Company has not made any capital expenditure (or series of related capital expenditures); (vi) The Company has not issued any note, bond, or other debt security or created, incurred, assumed, or guaranteed any indebtedness for borrowed money or capitalized lease; (vii) The Company has not delayed or postponed the payment of accounts payable and other Liabilities other than in the Ordinary Course of Business; (viii) The Company has not canceled, compromised, waived, or released any right or claim (or series of related rights, and claims) other than in the Ordinary Course of Business; (ix) The Company has not granted any license or sub-license of any rights under or with respect to any Intellectual Property other than in the Ordinary Course of Business; (x) Except for the stock held by the Shareholders, the Company has not issued, sold, or otherwise disposed of any of its capital stock, or granted any options, warrants, or other rights to purchase or obtain (including upon conversion, exchange, or exercise) any of its capital stock; (xi) The Company has not declared, set aside, or paid any dividend or made any distribution with respect to its capital stock (whether in cash or in kind) or redeemed, purchased, or otherwise acquired any of its capital stock; (xii) The Company has not experienced any material damage, destruction, or loss (whether or not covered by insurance) to its property; (xiii) The Company has not made any loan to, or entered into any other transaction with, any of the directors, officers, and employees of the Company other than in the Ordinary Course of Business; (xiv) The Company has not entered into any employment contract except as described in the Schedule of Contracts or collective bargaining agreement, written or oral, or modified the terms of any existing employment contract or collective bargaining agreement; (xv) The Company has not granted any increase in the base compensation of any of its directors, officers, and employees other than in the Ordinary Course of Business; (xvi) The Company has not adopted, amended, modified, or terminated any bonus, profit-sharing, incentive, severance, or other plan, contract, or commitment for the benefit of any of the directors, officers, and employees of the Company or taken any such action with respect to the existing Employee Benefit Plan; (xvii) The Company has not made any other change in employment terms for any of its directors, officers, and employees other than in the Ordinary Course of Business; (xviii) The Company has not made or pledged to make any charitable or other capital contribution other than in the Ordinary Course of Business; (xix) The Company has not paid any amount to any third party with respect to any Liability or obligation other than in the Ordinary Course of Business; (xx) There has not been any other material occurrence, event, incident, action, failure to act, or transaction other than in the Ordinary Course of Business involving the Company. (l) Undisclosed Liabilities- The Company does not have any Liability (and, to its and/or the Shareholders' knowledge, there is no Basis for any present or future action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand against any of them giving rise to any Liability), except for (i) Liabilities set forth on the face of the June 30, 2000 Financial Statements (rather than in any notes thereto) and (ii) Liabilities which have arisen after the June 30, 2001 Financial Statement in the Ordinary Course of Business (none of which results from, arises out of, relates to, is in the nature of, or was caused by any breach of contract, breach of warranty, tort, infringement, or violation of law). (m) Legal Compliance-To its knowledge the Company has materially complied with all applicable laws (including rules, regulations, codes, plans, injunctions, judgments, orders, decrees, rulings, and charges thereunder) of federal, state, local, and foreign governments (and all agencies thereof), and no action, suit, proceeding, hearing, investigation, charge, complaint, claim, demand, or notice has been filed or, to its and/or the Shareholders' knowledge, commenced against any of them alleging any failure so to comply except where failure to comply would not have any material adverse effect upon the Company or its business. (n) Tax Matters- (i) The Company has filed all Tax Returns that it was required to file prior to the Closing Date. All such Tax Returns were correct and complete in all respects. All Taxes owed by the Company for tax periods ended prior to the Closing Date (whether or not shown on any Tax Return) have been paid. The Company currently is not the beneficiary of any extension of time within which to file any Tax Return. No claim has ever been made by an authority in a jurisdiction where the Company does not file Tax Returns that it is or may be subject to taxation by that jurisdiction. There are no Security Interests affecting any of the assets of the Company that arose in connection with any failure (or alleged failure) to pay any Tax; (ii) The Company has withheld and paid all Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, creditor, stockholder, or other third party; (iii) Neither the Company nor any director nor officer (or employee responsible for Tax matters) expects any authority to assess any additional Taxes with respect to the Company for any period for which Tax Returns have been filed. There is no dispute or claim concerning any Tax Liability of the Company either (A) claimed or raised by any authority in writing or (B) as to which any directors and officers (and employees responsible for Tax matters) of the Company have any knowledge; (iv) The Company has not waived any statute of limitations as to liabilities or Taxes of any nature or agreed to any extension of time with respect to any liabilities or Tax assessments or deficiencies; (v) The Company has not filed a consent under Code Sec. 341(f) concerning collapsible corporations. The Company has not been a United States real property holding corporation within the meaning of Code Sec. 897(c)(2) during the applicable period specified in Code Sec. 987 (c)(1)(A)(ii). The Company has not been a member of an Affiliated Group filing a consolidated federal income Tax Return. The Company does not have any Liability for the Taxes of any Person under any provision of federal, state, local, or foreign law), as a transferee or successor by contract, or otherwise; (vi) There are no pending or threatened disputes with regard to tax matters involving the Company; (vii) There are no tax indemnification, tax sharing, or tax allocation agreements involving the Company and other members of an affiliated group, including any joint venture agreements that have the effect of tax allocations agreements; (viii) The Company has received no legal or accounting tax opinions during the three (3) years prior to the date hereof relating to the tax reporting of the Company other than determinations made by the Company Accountant for tax purposes. (o) Real Property- The Company does not own any real property. The premises presently occupied by the Company is leased, pursuant to a written Lease therefore. The Company has not been the subject of any zoning, variances, and/or local use permits. (p) Intellectual Property- (i) The Company owns or has the right to use pursuant to license, sub-licenses, agreement, or permission all Intellectual Property necessary for the operation of its business as presently conducted. Each item of Intellectual Property owned or used by the Company immediately prior to the Closing hereunder will be owned or available for use by the Company subsequent to the Closing hereunder; (ii) To the best of the Shareholders' knowledge, the Company has not interfered with, infringed upon, or misappropriated, any Intellectual Property rights of third parties, and neither the Company nor its directors and officers (any employees with responsibility for Intellectual Property matters) has ever received any charge, complaint, claim, demand, or notice alleging any such interference, infringement, misappropriation, or violation (including any claim that the Company must license or refrain from using any Intellectual Property rights of any third party), to the knowledge of the Shareholders and the knowledge of the Company and its directors and officers (any employees with responsibility for Intellectual Property matters), no third party has interfered with, infringed upon, misappropriated, or otherwise come into conflict with any Intellectual Property rights of the Company; (iii) The Company has no patent registrations and/or applications therefore. The Company has no trademark, service mark, and/or trade dress, registrations and/or applications. The Company has no copyright registrations and/or applications; (iv) The Company has no manual or other written document detailing the procedures for maintaining the secrecy of any trade secrets, except for the employment and other agreements noted in the Schedule of Contracts. (q) Tangible Assets- The Company owns or leases all buildings, machinery, equipment, and other tangible assets necessary for the conduct of its business as presently conducted. To the Shareholders' knowledge, each such tangible asset has been maintained in accordance with normal industry practice, is in good operating condition and repair (subject to normal wear and tear), and is suitable for the purposes for which it presently is used. There are no professional appraisals of any material property of the Company. (r) Inventory- The inventory of the Company consists of manufactured and purchased parts, goods in process, and finished goods, all of which is merchantable and fit for the purpose for which it was procured, and none of which is slow-moving, obsolete, damaged, or defective. (s) Contracts- The Schedule of Contracts as annexed hereto, lists all contracts and other agreements to which the Company is a party, including but not limited to: (i) any agreement (or group of related agreements) for the lease of personal property to or from any person providing for lease payments; (ii) any agreement (or group of related agreements) for the purchase or sale of raw material, commodities, supplies, products, or other personal property, or for the furnishing or receipt of services; (iii) any agreement concerning a partnership or joint venture; (iv) any agreement (or group of related agreements) under which it has created, incurred, assumed, or guaranteed any indebtedness for borrowed money, or any capitalized lease obligation, or under which it has imposed a Security Interest on any of its assets, tangible or intangible; (v) any agreement concerning confidentiality or non-competition; (vi) any profit sharing, stock option, stock purchase, stock appreciation, deferred compensation, severance, or other material plan or arrangement for the benefit of the current or former directors, officers, and employees; (vii) any collective bargaining agreement; (viii) any agreement for the employment of any individual on a full-time, part-time, consulting, or other basis; (ix) any agreement under which it has advanced or loaned any amount to any of the directors, officers, and employees other than in the Ordinary Course of Business; (x) any agreement under which the consequences of a default or termination could have a materially adverse effect on the business, financial condition, operations, results of operations, or future prospects of the Company. The Company is not a party to any significant oral contracts and/or commitments of any nature. The Company has delivered to Manchester a correct and complete copy of each written agreement listed in Schedule of Contracts (as amended to date). With respect to each such agreement; (A) the agreement is legal, valid, binding, enforceable, and in full force and effect; (B) the agreement will continue to be legal, valid, binding, enforceable, and in full force and effect on identical terms following the consummation of the transactions contemplated hereby subject to the right, if any, of any third party to consent to such assignment; (C) to its knowledge, no party is in breach or default; and no event has occurred which with notice or lapse of time would constitute a breach or default, or permit termination, modification, or acceleration, under the agreement; and (D) to its knowledge, no party has repudiated any provision of the Agreement. The Company is not a party to any contracts that are subject to re-negotiations, nor are any contracts currently being re-negotiated. The Company is not a party to any agreements that are not to be performed within three (3) months of the date hereof, or involving in excess of Twenty-five Thousand and 00/100 ($25,000.00) Dollars, whether or not entered into in the Ordinary Course of Business, except (a) agreements for the sale of merchandise and/or services entered into in the Ordinary Course of Business, and/or (b) agreements referred to elsewhere in the within document. The Company is not subject to any contracts pertaining to advertising or public relations agencies. The Company is not a party to any agreements relating to the supply of materials and/or raw materials, supplies and/or services of any nature. The Company is not a party to any agreement relating to the acquisition of any business constituting a part of the Company, or a sale or proposed sale of any businesses owned by the Company within the past three (3) years. Except as described in the Schedule of Contracts, the Company is not a party to any joint venture or other type of partnership agreement. Except as described in the Schedule of Contracts, the Company is not a party to any agreements with suppliers, independent agents, sales persons, or others involving the payments of commissions or other consideration or discounts with respect to the manufacture, sale, or distribution of the Company's products or services. The Company is not a party to any agreements restricting the abilities of the Company to compete in any line of business with any person or entity, or committing the Company to continue in any line of business. To its knowledge there are no present facts or circumstances that may give rise to the cancellation or termination of, or claims for damages or loss under any of the agreements to which the Company is presently a party. The Company is not presently in the process of negotiation as to any leases, licenses, agreements, and contracts, involving the payment by the Company of more than Twenty-five Thousand and 00/100 ($25,000.00) Dollars, in the aggregate. The Company is not a party to any agreements granting to the Company any right of first refusal to acquire any business or assets, or pursuant to which the Company has granted any such rights. The Company is not a party to any contracts and/or arrangements for trucking and/or other types of delivery, and as to any warehouse space other than presently used by the Company. The Company is not presently a party to any material research and/or development agreements. The Company is not a party to any technology license agreements, either as Licensor or Licensee therein, except as described in the Schedule of Contracts. Accounts Receivable for purposes of the within Paragraph (t) (all parts), shall be calculated "net" of applicable sales taxes. (t) Notes and Accounts Receivable- All notes and accounts receivable of the Company are reflected properly on the Company's books and records, are valid receivables subject to no set offs or counterclaims, are current and to the knowledge of the Shareholders are collectible and will be collected in accordance with their terms at their recorded amounts, as adjusted for the passage of time through the Closing Date and in accordance with the past custom and practice of the Company. (u) Powers of Attorney- There are no outstanding Powers of Attorney executed on behalf of the Company. (v) Insurance- The Schedule of Insurance Agreements annexed sets forth each insurance policy (including policies providing property, casualty, liability, and workers' compensation coverage and bond and surety arrangements) to which the Company is currently a party, a named insured, or otherwise the beneficiary of coverage: With respect to each such insurance policy: (A) the policy is legal, valid, binding, enforceable, and in full force and effect; (B) the Company is not in breach or default (including with respect to the payment of premiums or the giving of notices), and no event has occurred which, with notice or the lapse of time, would constitute such a breach or default, or permit termination, modification, or acceleration, under the policy; and (C) no party to the policy has repudiated any provision thereof. (w) Product Warranty-Each product manufactured, sold, leased, or delivered by the Company has been in conformity with all applicable contractual commitments and all express and implied warranties, and the Company to the best of Seller's knowledge, has no liability (and there is no basis for any present or future action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand against any of them giving rise to any liability) for replacement or repair thereof or other damages in connection therewith as adjusted for the passage of time through the Closing Date in accordance with the past custom and practice. No product manufactured, sold, leased, or delivered by the Company is subject to any guaranty, warranty, or other indemnity beyond the applicable standard terms and conditions of the Company's sale or lease. (x) Product Liability- To the best of Shareholders' knowledge, the Company has no liability (and there is no basis for any present or future action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand against any of them giving rise to any liability) arising out of any injury to individuals or property as a result of the ownership, possession, or use by it. (y) Employees- To the best of the Seller's knowledge no executive, key employee, or group of employees of the Company has any plans to terminate employment. The Company is not a party to or bound by any collective bargaining agreement, nor has it experienced any strikes, grievances, claims of unfair labor practices, or other collective bargaining disputes. 1. Joint Covenant, Warranty and Representation- The Shareholders (Mazzullo and Ladd) and the Company herein covenant, warrant and represent that Ladd, at all times prior hereto: (a) was not an officer, director, representative or employee of the Company; (b) did not perform any business function or services for the Company, except for certain consulting services and independent sales representative services; and (c) had no familiarity with the business purposes or affairs of the Company. (z) Employee Benefits- (a) Each such Employee Benefit Plan (and each related trust, insurance contract, or fund) complies in form and in operation in all respects with the applicable requirements of ERISA, the Code, and other applicable laws. (b) To the best of Seller's knowledge, each such Employee Benefit Plan which is an Employee Pension Benefit Plan meets the requirements of a "qualified plan" under Code Sec. 401(a). (c) The Company has delivered to the Purchaser correct and complete copies of the plan documents and summary plan descriptions. (d) The Company does not currently maintain, has never maintained, and has no liability with respect to any Multi-employer Plan. (e) The Schedule of Employee Benefit Plans annexed hereto sets forth all other fringe benefits such as medical, health or life insurance plans provided by the Company to its employees. The Company shall deliver a copy of all such plans to Manchester prior to Closing. (aa) Guaranties- The Company is not a guarantor or otherwise liable for any liability or obligation (including indebtedness) of any other person, Company or entity. (bb) Environment, Health, and Safety- To the Shareholders' knowledge, the Company has complied in all material respects with all Environmental, Health, and Safety Laws, and no action, suit, proceeding, hearing, investigation, charge, complaint, claim, demand, or notice has been filed or commenced against the Company alleging any failure so to comply. Without limiting the generality of the preceding sentence, the Company has obtained and been in compliance in all material respects with all of the terms and conditions of all permits, licenses, and other authorizations which are required under, and has complied in all material respects with all other limitations, restrictions, conditions, standards, prohibitions, requirements, obligations, Schedules, and timetables which are contained in, all Environmental, Health, and Safety Laws. (cc) Disclosure- The knowledge of the Company and the Shareholders' representations and warranties contained in this Paragraph "Eighth", do not contain any untrue statement of a material fact or omit to state any material fact. Ninth: Representations and Warranties of Manchester- - ---------------------------------------------------- 1. Manchester covenants, represents and warrants to the Company and the Shareholders that the statements contained in Paragraph "Ninth", are correct and complete as of the date of this Agreement and will be correct and complete as of the Closing Date (as though made then and as though the Closing Date were substituted for the date of this Agreement throughout this Paragraph "Ninth"). (a) Organization of Manchester: Manchester is a corporation duly organized, validly existing, and in good standing under the laws of the jurisdiction of the State of New York. (b) Authorization of Transaction: Manchester has full power and authority (including full corporate power and authority) to execute and deliver this Agreement and to perform its obligations hereunder. This Agreement constitutes the valid and legally binding obligation of Manchester, enforceable in accordance with its terms and conditions. (c) Non-contravention: Neither the execution and the delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will (i) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency, or court to which Manchester is subject or any provision of its charter or bylaws or (ii) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under any agreement, contract, lease, license, instrument, or other arrangement to which Manchester is a party or by which it is bound or to which any of its respective assets is subject. Manchester needs not give any notice to, make any filing with, or obtain any authorization, consent, or approval of any government or governmental agency in order for the Parties to consummate the transactions contemplated by this Agreement. (d) Manchester shall pay to the Company all of its outstanding invoices at or prior to the Closing. Tenth: Conditions to Obligations to Close- - ---------------------------------------------- A. Conditions to Obligation of Manchester- The obligation of Purchaser to consummate the transactions to be performed by it in connection with the Closing is subject to satisfaction of the following conditions: (i) The representations and warranties of the Shareholders and the Company set forth in Paragraph "Eighth" above, shall be true and correct in all material respects at and as of the Closing Date; (ii) The Company and the Shareholders shall have performed and complied with all of its covenants hereunder in all material respects through the Closing; (iii) No action, suit, or proceeding shall be pending before any court or quasi-judicial or administrative agency of any federal, state, local, or foreign jurisdiction or before any arbitrator wherein an unfavorable injunction, judgment, order, decree, ruling, or charge would (A) prevent consummation of any of the transactions contemplated by this Agreement, (B) cause any of the transactions contemplated by this Agreement to be rescinded following consummation, (C) affect adversely the right of Purchaser to operate the business of the Company conducted prior to the Closing, or (D) affect adversely the Company's right to own its assets and to operate its business (and no such injunction, judgment, order, decree, ruling, or charge shall be in effect). (iv) All payables, obligations and liabilities of the Company that may exist at time of Closing, shall be paid in full and satisfied either prior to or simultaneously with the Closing; Provided, However, that Purchaser agrees to assume and be liable for one-half of the Company's legal and accounting fees relating to this transaction and for one-half of the Company's payroll costs for the pay period ended October 30, 2001 and accordingly those liabilities which Purchaser has assumed shall not be so paid by the Company or reflected in the Closing Date Financial Statements. Shareholders acknowledge that the Purchase Price payable to the Shareholders (Paragraph "Second") will be reduced to the extent funds are used by the Company for the purposes of this sub-paragraph (iv). (v) The Seller shall have delivered to Manchester a certificate to the effect that each of the conditions set forth in the within Paragraph, are satisfied in all respects; (vi) Manchester shall have received from counsel to the Company and the Shareholders an opinion in form and substance as annexed hereto, addressed to Manchester and dated as of the Closing Date; (vii) All actions to be taken by the Shareholders and the Company in connection with consummation of the transactions contemplated hereby and all certificates, opinions, instruments, and other documents required to effect the transactions contemplated hereby will be reasonably satisfactory in form and substance to Manchester. Manchester may waive any condition specified in this Paragraph "Tenth: A.", if it executes a writing so stating at or prior to the Closing. B. Conditions to Obligation of the Shareholder- The obligation of the Shareholder to consummate the transactions to be performed by them in connection with the Closing is subject to satisfaction of the following conditions: (i) The representations and warranties set forth in Paragraph "Ninth" above, ----- shall be true and correct in all material respects at and as of the Closing Date; (ii) Each of Manchester and the Company shall have performed and complied with all of its covenants hereunder in all material respects through the Closing; (iii) No action, suit, or proceeding shall be pending or threatened before any court or quasi-judicial or administrative agency of any federal, state, local, or foreign jurisdiction or before any arbitrator wherein an unfavorable injunction, judgment, order, decree, ruling, or charge would (A) prevent consummation or any of the transactions contemplated by the Agreement or (B) cause any of the transactions contemplated by this Agreement to be rescinded following consummation (and no such injunction, judgment order, decree, ruling, or charge shall be in effect); (iv) Manchester shall have delivered to the Shareholders a certificate to the effect that each of the conditions specified above is satisfied in all respects; (v) The Shareholders shall have received from counsel to Manchester an opinion in form and substance as annexed hereto; (vi) All actions to be taken by Manchester in connection with consummation of the transactions contemplated hereby and all certificates, opinions, instruments, and other documents required to effect the transactions contemplated hereby will be reasonably satisfactory in form and substance to the Shareholders. Eleventh: Termination- - --------- ------------ A. Termination of Agreement- 1. The Parties may terminate this Agreement as provided below: (i) The Parties may terminate this Agreement by mutual written consent at any time prior to the Closing; (ii) Manchester may terminate this Agreement by giving written notice to the Shareholders at any time prior to the Closing (A) in the event the Shareholders or the Company has breached any material representation, warranty, or covenant contained in this Agreement in any material respect, Manchester has notified the Seller of the breach, and the breach has continued without cure for a period of ten (10) days after the notice of breach or (B) if the Closing shall not have occurred on or before November 1, 2001; (iii) The Shareholders or the Company may terminate this Agreement by giving written notice to Manchester at any time prior to the Closing (A) in the event Manchester has breached any material representation, warranty, or covenant contained in this Agreement in any material respect, the Company has notified Manchester of the breach, and the breach has continued without cure for a period of ten (10) days after the notice of breach or (B) if the Closing shall not have occurred on or before November 1, 2001. Twelfth: Miscellaneous Provisions- - -------- ------------------------ (a) Scope of Agreement - The Parties do not intend to confer any benefit hereunder on any person, firm or corporation, other than the Shareholders and the Purchaser. Without limiting the generality of the foregoing, each of the parties may, by written notice to the other and without consent of any other person, firm or corporation (i) extend the time for performance of any of the obligations or other acts of the other Party; (ii) waive any inaccuracies in the representations and warranties of the other party contained in this Agreement; (iii) waive compliance with any of the covenants of the other party contained in this Agreement; or (iv) waive performance of any of the obligations under this Agreement by the other party. (b) Binding Agreement - This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. (c) Exhibits - All Exhibits, Schedules and Appendices annexed hereto and the documents and instruments delivered simultaneously herewith and at the Closing are expressly made a part of this Agreement as fully as though completely set forth herein, and all references to this Agreement herein or in any of such writings, shall be deemed to refer to and include all such writings. (d) Entire Agreement, etc. - This Agreement constitutes the entire understanding between the parties pertaining to the subject matter hereof. No interpretation, change, termination or waiver of any of the provisions hereof shall be binding upon either party unless in writing. No waiver by either party of any provision of or default under this Agreement shall affect the right of such party thereafter to enforce said provision or any other provision hereof, or to exercise any right or remedy in the event of any other default, whether or not similar. The invalidity of any provision hereof shall not affect the validity of any other such provision. (e) Further Instruments - On and after the Closing date, upon the request of either party, the other party shall do all such further acts, and shall execute, acknowledge and deliver all such further instruments and documents, as may reasonably be necessary, desirable or appropriate to carry out the transactions contemplated by this Agreement, all of such documents to be reasonably satisfactory to such other Party's Counsel in form and content. (f) Survival of Representations, etc. - The parties agree that all of the representations, warranties, covenants, agreements and undertakings contained in this Agreement shall survive Closing for a period of two (2) years. Claims arising under or related to this Agreement which are not made during such period are barred. Purchaser acknowledges that its sole remedy from any matter arising from or in connection with this Agreement is pursuant to the terms of the related Indemnity Agreement from Mazzullo. (g) Applicable Law - This Agreement and all the agreements annexed hereto as exhibits shall be governed by and construed in accordance with the laws of the State of New York. (h) Venue - The venue of any action commenced by any party to this agreement or any agreement annexed hereto as an exhibit shall be in a court with subject matter jurisdiction situated in the County of Suffolk, State of New York. For purposes hereof, this agreement and all agreements annexed hereto shall be deemed to have been entered into within the County of Suffolk, State of New York. (i) Paragraph Headings - Paragraph headings have been inserted herein for convenience only, and do not form a part of the Agreement. (j) Counterparts - This Agreement may be executed in any number of separate counterparts, each of which shall be deemed to be an original and which together shall constitute one and the same instrument. (k) Notices - Any payment, notices, request, instructions, consent or other documents to be given hereunder shall be in writing and delivered personally or sent by certified or registered mail, postage prepaid as follows: If to the Purchaser, addressed to: Manchester Technologies, Inc. 160 Oser Avenue Hauppauge, New York 11788 with a copy thereof addressed to: Joel Rothlein, Esq. Kressel, Rothlein, Walsh & Roth, LLC 684 Broadway Massapequa, New York 11758 If to the Shareholders, addressed to: Anthony C. Mazzullo 7 Chantilly Lane Fairport, New York 14450 AND Steven K. Ladd 235 Blue Ridge Road North Andover, Massachusetts 01845 with a copy thereof addressed to: Steven R. Gersz, Esq. Underberg & Kessler, LLP 1800 Chase Square Rochester, NY 14604 Either party may change the persons and addresses to which any payment, notice, request, instruction, consent or other document is to be sent to it by giving written notice of any such change to the other party in the manner provided for herein for giving notice. Any payment, notice, request, instruction, consent or other document mailed hereunder shall be deemed to have been received when mailed. (l) Prior Agreements - Except for the letter of intent which is deemed to have merged herein, the parties agree that all prior agreements between the parties, whether oral or written, are herewith made null and void and of no effect, legal or equitable. (m) Press Releases and Public Announcements - No Party shall issue any press release or make any public announcement relating to the subject matter of this Agreement prior to the Closing without the prior written approval of the other Party; Provided, However, that any Party may make any public disclosure it believes in good faith is required by applicable law or any listing or trading agreement concerning its publicly-traded securities (in which case the disclosing Party will use reasonable best efforts to advise the other party prior to making the disclosure). (n) Amendments and Waivers - No amendment of any provision of this Agreement shall be valid unless the same shall be in writing and signed by the Purchaser, the Shareholders and the Company: No waiver by any Party of any default, misrepresentation, or breach of warranty or covenant hereunder, whether intentional or not, shall be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence. (o) Severability - Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term of provision in any other situation or in any other jurisdiction. (p) Expenses and Tax Liability - Shareholders will be responsible for any and all taxes that may be incurred based upon the consideration received by them for the sale and transfer contemplated by this Agreement. (q) Construction - The Parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement. Any reference to any federal, state, local, or foreign statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. The word "including" shall mean including without limitation. Nothing in the Schedules annexed to this Agreement shall be deemed adequate to disclose an exception to a representation or warranty made herein unless such Schedule identifies the exception with reasonable particularity and describes the relevant facts in reasonable detail. Without limiting the generality of the foregoing, the mere listing (or inclusion of a copy) of a document or other item shall not be deemed adequate to disclose an exception to a representation or warranty made herein (unless the representation or warranty has to do with the existence of the document or other item itself). The Parties intend that each representation, warranty, and covenant contained herein shall have independent significance, if any Party has breached any representation, warranty, or covenant contained herein in any respect, the fact that there exists another representation, warranty, or covenant relating to the same subject matter (regardless of the relative levels of specificity) which the Party has not breached shall not detract from or mitigate the fact that the Party is in breach of the first representation, warranty, or covenant. (r) Specific Performance - Each of the Parties acknowledges and agrees that the other Party would be damaged irreparably in the event any of the provisions of this Agreement are not performed in accordance with their specific terms or otherwise are breached. Accordingly, each of the Parties agrees that the other Party shall be entitled to an injunction or injunctions to prevent breaches of the provisions of this Agreement and to enforce specifically this Agreement and the terms and provisions hereof in any action instituted in any Court of the United States or any State hereof having jurisdiction over the Parties and the matter (subject to the provisions set forth in Paragraph "Twelfth: (s)" below), in addition to any other remedy to which it may be entitled, at law or in equity. (s) Submission to Jurisdiction - Each of the Parties submits to the jurisdiction of any State or Federal Court sitting in Suffolk County, New York, in any action or proceeding arising out of or relating to this Agreement and agrees that all claims in respect of the action or proceeding may be heard and determined in any such Court. Each Party also agrees not to bring any action or proceeding arising out of or relating to this Agreement in any other Court. Each of the Parties waives any defense of inconvenient forum to the maintenance of any action or proceeding so brought and waives any bond, surety, or other security that might be required of any other Party with respect thereto. Each Party agrees that a final Judgment in any action or proceeding so brought shall be conclusive and may be enforced by suit on the Judgment or in any other manner provided by law or in equity. IN WITNESS WHEREOF, the Company and the Purchaser have executed this Agreement by its authorized officers and the Shareholders have caused their individual signatures to be affixed hereto on the day and year first above written. In the Presence Of: -------------------- -------------------- Anthony C. Mazzullo ---------------------- -------------------- Steven K. Ladd Manchester Technologies, Inc. By: s/ Joseph Looney, ---------------------- ------------------------ Joseph Looney, CFO e.Track Solutions, Inc. By: s/ Anthony C. Mazzullo --------------------- --------------------------- Anthony C. Mazzullo, President E:\lawfirm\agreements\Business\Manchester-eTrack-acquisitionDPA.wpd EXHIBIT 1 Shareholder Shares Percentage of Purchase Price - ----------- ------ ---------------------------- Mazzullo 2,000,000 97.08738% Ladd 60,000 2.91262% EXHIBIT 2 Exceptions to Article "Eighth" Representations and Warranties The following matters shall be deemed to qualify each and every representation and warranty of Article "Eighth": 1. The Company has issued options to purchase 236,750 shares of its common stock under the Company's Stock Option Plan. The Company will enter into agreements with each of the option holders to redeem and cancel their options upon payment of a fixed dollar amount. These agreements will be contingent on the closing of the Manchester transaction and will close concurrently therewith. The payment due to the option holders will be treated as Company payables to be satisfied as provided in Article "Tenth"A.(iv). 2. The Company will be entitled to make all reasonable efforts to bill and collect its accounts receivable for work performed by the Company prior to the Closing Date, even if contrary to the ordinary course of the Company's business, which efforts shall be subject to Purchaser's prior approval, which approval will not be unreasonably withheld. 3. The Company will be entitled to use all of its available cash at or prior to the Closing to pay or prepay any or all of its payables, liabilities and obligations, even if contrary to the ordinary course of the Company's business. 4. The Company has suffered operating losses of $115,819.00 in the 2001 fiscal year through October 24, 2001, which pattern of losses is expected to continue through the Closing Date. 5. The Company has made capital expenditures of less that $10,000.00 in the 2001 fiscal year. 6. The Company will accrue additional bonuses to employees other than Mazzullo, not to exceed $10,000.00 in the aggregate and same will appear as a Company liability in the Closing date financials. 7. The Company has terminated the following employees: Name Termination Date ---- ---------------- Lisa Briggs September 3, 2001 Mark E. Curtis September 3, 2001 Mark Hopkins September 3, 2001 E:\lawfirm\agreements\Business\Manchester-eTrack-acquisitionDPA.wpd