ASSET PURCHASE AGREEMENT

Asset Purchase Agreement

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MCRAE INDUSTRIES INC | TOPAC U.S.A., INC. | CONNECTED OFFICE PRODUCTS, INC. | McRAE INDUSTRIES, INC.,

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Title: ASSET PURCHASE AGREEMENT
Governing Law: North Carolina Date: 9/10/2004
Industry: Computer Peripherals Law Firm: Kennedy Covington Lobdell & Hickman, L.L.P. Sector: Technology

ASSET PURCHASE AGREEMENT, Parties: mcrae industries inc , topac u.s.a. inc. , connected office products inc. , mcrae industries inc.

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EXHIBIT 2.1

ASSET PURCHASE AGREEMENT

by, between and among:

TOPAC U.S.A., INC.

a Delaware corporation,

CONNECTED OFFICE PRODUCTS, INC.

a Pennsylvania corporation,

and

McRAE INDUSTRIES, INC.,

a Delaware corporation,

McRAE OFFICE SOLUTIONS, INC.,

a North Carolina corporation

Dated as of September 9, 2004

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TABLE OF CONTENTS

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Page

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ARTICLE 1 - PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES.............. 1

1.1 Assets to be Sold................................................... 1

1.2 Liabilities to be Assumed........................................... 3

1.3 Consideration....................................................... 4

1.4 Adjustments......................................................... 5

1.5 Payment of Purchase Price........................................... 6

1.6 Closing............................................................. 7

1.7 Closing Conditions and Deliveries................................... 7

ARTICLE 2 - REPRESENTATIONS AND WARRANTIES OF MI AND SELLER..................... 8

2.1 Due Organization; No Subsidiaries................................... 9

2.2 Authority; Binding Nature of Agreements............................. 9

2.3 Non-Contravention; Consents......................................... 10

2.4 Financial Statements................................................ 10

2.5 Absence Of Changes.................................................. 10

2.6 Title To Assets..................................................... 12

2.7 Bank Accounts....................................................... 12

2.8 Receivables......................................................... 12

2.9 Customers........................................................... 13

2.10 Inventory........................................................... 13

2.11 Equipment........................................................... 13

2.12 Real Property....................................................... 13

2.13 Intellectual Property............................................... 14

2.14 Contracts........................................................... 14

2.15 Liabilities; Books and Records...................................... 15

2.16 Compliance with Legal Requirements.................................. 15

2.17 Tax Matters......................................................... 15

2.18 Employment Matters.................................................. 16

2.19 Benefit Plans; ERISA................................................ 17

2.20 Environmental Matters............................................... 17

2.21 Insurance........................................................... 17

2.22 Proceedings; Orders................................................. 18

2.23 Bulk Sales; Fraudulent Transfers.................................... 18

2.24 Absence of Undisclosed Liabilities.................................. 18

2.25 Broker's Commissions or Finder's Fees............................... 18

2.26 Certain Payments.................................................... 19

ARTICLE 3 - REPRESENTATIONS AND WARRANTIES OF PURCHASER AND TOPAC............... 19

3.1 Organization........................................................ 19

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3.2 Authority Relative to this Agreement................................ 19

3.3 Broker's Commissions or Finder's Fees............................... 20

3.4 Non-Contravention; Consents......................................... 20

3.5 Proceedings; Orders................................................. 20

ARTICLE 4 - COVENANTS........................................................... 20

4.1 Noncompetition; Nonsolicitation..................................... 20

4.2 Confidential Information............................................ 22

4.3 Governmental Filings................................................ 23

4.4 Legal Conditions.................................................... 23

4.5 Additional Actions.................................................. 23

4.6 Tax Matters......................................................... 23

4.7 Employment Matters.................................................. 24

4.8 Retention of and Access to Books and Records........................ 24

ARTICLE 5 - INDEMNIFICATION..................................................... 24

5.1 Indemnification..................................................... 24

5.2 Third Party Claims, Notice and Opportunity to Settle................ 25

5.3 Obligation to Offset................................................ 26

5.4 Non-Third Party Claims.............................................. 27

5.5 Payments............................................................ 27

ARTICLE 6 - DISPUTE RESOLUTION.................................................. 27

6.1 Notice.............................................................. 27

6.2 Arbitrator.......................................................... 27

6.3 Pre-Hearing Conference.............................................. 28

6.4 Discovery........................................................... 28

6.5 Briefs and Hearing.................................................. 28

6.6 Decision............................................................ 28

6.7 Costs............................................................... 28

ARTICLE 7 - GENERAL PROVISIONS.................................................. 29

7.1 Public Announcements................................................ 29

7.2 Notices............................................................. 29

7.3 Section Headings, Construction...................................... 29

7.4 Counterparts........................................................ 30

7.5 Integration......................................................... 30

7.6 Governing Law....................................................... 30

7.7 Amendment........................................................... 30

7.8 Assignment.......................................................... 30

7.9 Severability........................................................ 30

7.10 Attorney's Fees..................................................... 30

7.11 Expenses............................................................ 30

7.12 Waiver.............................................................. 31

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7.13 No Strict Construction.............................................. 31

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EXHIBITS:

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EXHIBIT A - DEFINITIONS......................................................... A-1 -- A-10

EXHIBIT B - BILL OF SALE, GENERAL ASSIGNMENT AND ASSUMPTION AGREEMENT

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iii

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ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT (this "AGREEMENT") is entered into as of

September 9, 2004 by, between and among, TOPAC U.S.A., INC., a Delaware

corporation ("TOPAC"), CONNECTED OFFICE PRODUCTS, INC., a Pennsylvania

corporation and a wholly owned subsidiary of TOPAC ("PURCHASER"), McRae

Industries, Inc., a Delaware corporation ("MI"), and McRae Office Solutions,

Inc., a North Carolina corporation ("MOS,"or "SELLER"). Capitalized terms used

in this Agreement are defined in EXHIBIT A attached hereto and incorporated by

reference.

RECITALS

WHEREAS, MOS, a wholly-owned subsidiary corporation of MI, is a

corporation engaged in the business of selling and servicing copiers, facsimile

machines, duplicators, other office equipment, document solutions and software

and related spare parts and supplies; and

WHEREAS, MI owns all of the shares of stock of MOS; and

WHEREAS, MI and Seller wish to sell, transfer and assign all of the

Acquired Assets and Assumed Liabilities to Purchaser, and Purchaser wishes to

purchase, acquire, and assume all of the Acquired Assets and Assumed Liabilities

on the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the promises and mutual covenants

contained herein and other good and valuable consideration, the receipt and

sufficiency of which are hereby acknowledged, the parties hereby agree as

follows.

AGREEMENT

The parties to this Agreement, intending to be legally bound, agree as

follows:

ARTICLE 1 - PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES

1.1 Assets to be Sold. Subject to the provisions of Section 1.4(e),

Seller shall sell, assign, transfer, convey and deliver to Purchaser, at the

Closing, good and valid title to the Acquired Assets, free and clear of any

Encumbrances, on the terms and subject to the conditions set forth in this

Agreement. For purposes of this Agreement, "ACQUIRED ASSETS" shall mean and

include the properties, rights, interests and other tangible and intangible

assets, wherever located, owned by Seller, and whether or not required to be

reflected on a balance sheet prepared in accordance with GAAP, related to, used

in, or necessary for the conduct of the Acquired Business; provided, however,

that the Acquired Assets shall not include any Excluded Assets. Without limiting

the generality of the foregoing, the Acquired Assets shall include the following

assets of Seller:

(a) all Seller's accounts receivable and notes receivable;

(b) all inventories of Seller, and all rights to collect from

customers (and to retain) all fees and other amounts payable, or that may become

payable, to Seller with respect to

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services performed by or on behalf of Seller on or prior to the Closing Date in

each case to the extent related to, used in, arising from, or necessary for the

conduct of the Acquired Business;

supplies, spare parts, vehicles, furniture, fixtures, improvements and other

tangible assets of Seller related to, used in, or necessary for the conduct of

the Acquired Business (including the Acquired Business Leased Equipment);

(d) all leasehold interests in the Real Property Leases;

(e) all advertising and promotional materials, customer lists,

supplier lists, mailing addresses, telephone numbers, e-mail addresses and other

sales-related materials possessed by Seller related to, used in, or necessary

for the conduct of the Acquired Business;

(f) all Intellectual Property Rights of Seller related to, used

in, or necessary for the conduct of the Acquired Business, including all of

Seller's internet websites;

(g) all rights of Seller and MI under the Acquired Business

Contracts;

(h) all claims (including claims for past infringement of the

Intellectual Property Rights and Intellectual Property) and causes of action of

Seller against other Persons (regardless of whether or not such claims and

causes of action have been asserted by Seller) pertaining to or arising out of

the Acquired Assets or the Acquired Business, and all rights of indemnity,

warranty rights, rights of contribution, rights to refunds, rights of

reimbursement and other rights of recovery possessed by Seller (regardless of

whether such rights are currently exercisable) pertaining to or arising out of

the Acquired Assets or the Acquired Business;

(i) all Books and Records relating to the Acquired Assets and

Acquired Business;

(j) all rights of Seller relating to deposits and prepaid

expenses, claims for refunds and rights to offset related to the Acquired

Business;

(k) all other assets contained on the Reference Balance Sheet,

including cash, other than any such assets sold or otherwise disposed of by

Seller in the Ordinary Course of Business after the date of the Reference

Balance Sheet, and the proceeds of any such sales or dispositions;

(l) all goodwill of the Acquired Business; and

(m) all other intangible assets owned by Seller in connection with

the conduct of the Acquired Business.

(n) Notwithstanding anything herein to the contrary, the following

assets of Seller shall not be sold or transferred hereunder, shall be excluded

from the definition of Acquired Assets and Acquired Business, and shall remain

the property of Seller (the "EXCLUDED ASSETS"):

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(i) stock books, stock ledgers, minute books, Tax Returns

and Tax records of Seller;

(ii) those Seller Contracts, if any, listed on Schedule

1.1(x);

(iii) all rights to causes of action, lawsuits, judgments,

claims and demands of any nature, and all counterclaims, rights of setoff,

rights of indemnification and affirmative defenses to any claims that may be

brought against Seller by third parties, of Seller against other Persons

(regardless of whether or not such claims and causes of action have been

asserted by Seller) pertaining to or arising out of the Excluded Assets or the

Excluded Liabilities, and all rights of indemnity, warranty rights, rights of

contribution, rights to refunds, rights of reimbursement and other rights of

recovery possessed by Seller (regardless of whether such rights are currently

exercisable) pertaining to or arising out of the Excluded Assets or the Excluded

Liabilities;

(iv) all right, title and interest in and to (A) the

Retained Trademarks, (B) all domain names owned by MI or Seller, together with

the registrations thereof, and (C) all email addresses, owned by MI or Seller,

that incorporate any such domain name in any manner (all of the foregoing, the

"EXCLUDED INTELLECTUAL PROPERTY"); provided, however, that on the Closing Date,

MI, Seller, Purchaser and TOPAC shall execute and deliver an agreement (the

"LICENSE AGREEMENT") pursuant to which Purchaser and TOPAC shall be granted a

temporary license to use certain Excluded Intellectual Property, including the

name "McRae Office Solutions, Inc." and the domain name "gomcrae.com", on the

terms and conditions set forth in the License Agreement;

(v) all rights under any Transaction Agreement; and

(vi) those assets, if any, listed on Schedule 1.1(x).

1.2 Liabilities to be Assumed. For purposes of this Agreement "ASSUMED

LIABILITIES" shall mean ONLY the following liabilities of Seller, which

Purchaser will assume and agree to pay, perform or discharge:

(a) Those liabilities, trade accounts payable, accrued and unpaid

expenses of Seller on the Reference Balance Sheet or incurred in the Ordinary

Course of Business following the date of the Reference Balance Sheet; and

(b) The obligations of Seller and MI to be performed after the

Closing Date under the Acquired Business Contracts, but only to the extent such

obligations (i) do not arise from, or relate to, any Breach by Seller of any

provision of any of the Acquired Business Contracts (other than a Breach arising

from failure to obtain any required Consent from any third party in connection

with the assignment and transfer of such Acquired Business Contracts to

Purchaser pursuant to this Agreement), (ii) do not arise from or relate to any

event, circumstance or condition occurring or existing on or prior to the

Closing Date that, with notice or lapse of time, would constitute or result in a

Breach of any of the Acquired Business Contracts, or (iii) are ascertainable (in

nature and amount) solely by reference to the express terms of the Acquired

Business Contracts;

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forth in this Section 1.2, the Assumed Liabilities shall not include, Purchaser

shall not be required to assume or to pay, perform or discharge, and Seller

shall be solely responsible to pay, perform and discharge the following:

(i) any Liability of Seller arising out of or relating to

the execution, delivery or performance of any of the Transaction Agreements;

(ii) any Liability of Seller arising from or relating to

any action taken by Seller, or any failure on the part of Seller to take any

action, at any time after the Closing Date not related to an Acquired Asset or

Assumed Liability;

(iii) any Liability of Seller for the payment of any Tax

(except those specifically allocable or assumed by Purchaser pursuant to Section

4.6(d)), to the extent that such Liability is not on the Reference Balance

Sheet;

(iv) any Liability of Seller to any employee or former

employee of Seller under or with respect to any Employee Benefit Plan, profit

sharing plan, dental plan, or for severance pay, or otherwise, to the extent

such Liability is not on the Reference Balance Sheet, including accrued and

unused vacation time under Seller's vacation plan for Business Employees;

(v) any Liability of Seller to any Affiliate of Seller or

any other Related Party;

(vi) any Liability for intercompany payables of Seller;

(vii) any Liability incurred under the Acquired Business

Contracts prior to the date of the Reference Balance Sheet and not reflected on

the Reference Balance Sheet; and

(viii) any other Liability that is not an Assumed Liability.

For purposes of this Agreement, all Liabilities not expressly listed in the

definition of Assumed Liabilities, including the items described in (i) through

(vii) above, are referred to as "EXCLUDED LIABILITIES," and notwithstanding

anything in this Agreement to the contrary, except for the Assumed Liabilities,

MI and Seller agree that Purchaser shall not be obligated to assume or perform,

and is not assuming, and that Seller shall be responsible for performing and

satisfying, or otherwise discharging, at its sole expense, and without

liability, cost, loss or expense to Purchaser, all liabilities and obligations

of Seller, including the Excluded Liabilities, but excluding the Assumed

Liabilities, whether the Excluded Liabilities are known or unknown, fixed or

contingent, certain or uncertain, and whether they have arisen prior to or may

arise at any time after the Closing. No assumption by Purchaser of any of the

Assumed Liabilities shall relieve or be deemed to relieve Seller or MI from any

obligation or Liability under this Agreement with respect to any representations

or warranties made by Seller and MI to Purchaser.

1.3 Consideration.

(a) The "PURCHASE PRICE" shall consist of the sum of the following

amounts:

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(i) Eleven Million Dollars ($11,000,000.00) payable to

Seller in the amounts and at the times described in Section 1.5 and as may be

adjusted in accordance with Section 1.4 (the "CASH PRICE"); and

(ii) The aggregate amount of the Assumed Liabilities.

(b) The Assumed Liabilities shall be assumed by Purchaser at

Closing.

1.4 Adjustments.

(a) No later than sixty (60) days following the Closing Date, MI

shall cause Seller, at MI's expense, to prepare and deliver to TOPAC, the

Reference Balance Sheet. Acquired Assets included on the Reference Balance Sheet

shall include the same categories of assets as included on the Financial

Statements (set forth at Schedule 2.4) and shall not be supplemented by the

inclusion of additional intangible assets or tax-related assets that are not

working capital in nature - by way of example, and not by way of limitation,

deferred tax assets that are recurring in nature shall not be supplemented in

the Reference Balance Sheet.

(b) During the sixty (60) days after delivery of the Reference

Balance Sheet, Purchaser, TOPAC and their Representatives shall have the right

to review and audit the entries on the Reference Balance Sheet. Purchaser, TOPAC

and their Representatives shall have the right to review the workpapers of

Seller used in preparing the Reference Balance Sheet and Purchaser, TOPAC and

their Representatives shall have full access to the Books and Records of Seller

for the purpose of verifying the accuracy and fairness of the Reference Balance

Sheet; provided, however, that nothing herein shall be deemed to supersede or

waive any representation or warranty of MI or Seller made in Article 2 hereof.

Within sixty (60) days after receipt of the Reference Balance Sheet, Purchaser

or TOPAC may dispute any amounts reflected on the Reference Balance Sheet or the

calculation of the Net Book Value and its components, but only on the basis of

its belief that the amounts reflected on the Reference Balance Sheet were not

arrived at in accordance with this Agreement or resulted from a mistake,

omission or error. In the case of such dispute, Purchaser or TOPAC must notify

MI or Seller in writing of each disputed item, specifying the amount thereof in

dispute and setting forth, in reasonable detail, the basis for such dispute.

Purchaser or TOPAC of a dispute with respect to the Reference Balance Sheet, MI

or Seller notifies Purchaser or TOPAC of a disagreement as to Purchaser's or

TOPAC's dispute, the items in dispute shall be resolved in accordance with the

terms of this Agreement by the Charlotte, North Carolina offices of a "Big 4"

accounting firm (the "ACCOUNTANTS") mutually acceptable to Seller and TOPAC;

provided, however, that the Accountants shall not assign any partner, member or

employee of the firm who has performed services for, or who is or was a regular

member of the audit team of, Purchaser, TOPAC, MI, or Seller during the five (5)

years immediately prior to the Closing Date. The Accountants shall review the

disputed matters and as promptly as practicable, deliver to Purchaser or TOPAC

and MI or Seller a statement in writing setting forth their conclusion as to the

resolution of such disputed items (which may include other items related to, or

impacted by, the resolution of the disputed items), and such determination shall

be final and binding upon Purchaser and TOPAC as well as MI and Seller without

any further right of appeal. Fifty percent

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(50%) of the fees and expenses of the Accountants for resolving such dispute

shall be paid by Purchaser and TOPAC, and fifty percent (50%) of such fees and

expenses shall be paid by MI and Seller.

(d) The Reference Balance Sheet shall be deemed accepted by

Purchaser and TOPAC to the extent that neither Purchaser nor TOPAC notifies MI

or Seller of a dispute within the 60-day period in accordance with Section

1.4(b). The modifications to any item on the Reference Balance Sheet or the

calculation of the Net Book Value set forth in the notice from Purchaser or

TOPAC delivered pursuant to Section 1.4(b) shall be deemed accepted by MI and

Seller to the extent that MI and Seller do not notify Purchaser or TOPAC of a

disagreement within the 15-day period in accordance with Section 1.4(c).

(e) If the Reference Balance Sheet indicates that the aggregate

Net Book Value is less than Seven Million Two Hundred Thousand Dollars

($7,200,000.00), then there shall be a dollar-for-dollar deduction from the

Holdback. If the Net Book Value as indicated on the Reference Balance Sheet is

more than Seven Million Two Hundred Thousand Dollars ($7,200,000.00), then

within five (5) business days Seller shall be entitled to receive or retain from

the Acquired Assets cash and marketable securities (valued as set forth on the

Reference Balance Sheet) in an amount equal to the amount above Seven Million

Two Hundred Thousand Dollars ($7,200,000.00); if such cash or marketable

securities shall be insufficient to cover such amount above Seven Million Two

Hundred Thousand Dollars ($7,200,000.00), then within five (5) business days

Seller shall be entitled to withhold or cause to be transferred back to Seller

inventory (valued as set forth on the Reference Balance Sheet) from the Acquired

Assets in the amount of such deficiency and TOPAC shall immediately purchase

such inventory for the amount of such deficiency. In the event that any

deduction during the Holdback Period exceeds the amount of the Holdback, then MI

or Seller shall, jointly and severally, pay Purchaser any such excess amount

within five (5) business days of written notification by Purchaser to MI and

Seller.

1.5 Payment of Purchase Price.

(a) The Purchase Price shall be paid to Seller as follows:

(i) Wire of Funds at Closing. At the Closing, Purchaser

shall wire transfer immediately available funds to Seller, pursuant to Seller's

wiring instructions, the amount of Nine Million Nine Hundred Thousand Dollars

($9,900,000.00).

(ii) Holdback. Purchaser shall withhold payment of the

Holdback (as defined below) for a period of one (1) year after the Closing (the

"HOLDBACK PERIOD") as security against any Liabilities (which exceed a basket of

Seventy-Five Thousand Dollars ($75,000.00) in the aggregate) arising out of

Adjustments under, or Breaches of, this Agreement during the Holdback Period.

Purchaser may deduct from the Holdback any amount deemed necessary to satisfy

any such Liability, up to and including the full amount of the Holdback,

provided, however, that prior to making any deductions from the Holdback,

Purchaser shall provide thirty (30) day's prior written notice to MI and Seller

of any proposed deduction to the Holdback. In the event that MI and Seller

Dispute the deduction, the parties must resort to the Dispute resolution

procedures prescribed in Article 6 prior to the deduction being effected. The

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Holdback shall be held by Purchaser during the Holdback Period. At the end of

the Holdback Period, Purchaser shall pay interest on the amount of the Holdback,

for the entire Holdback Period, to Seller at the rate of two percent (2%) simple

interest per annum. If at the end of the Holdback Period a Dispute exists,

Purchaser shall continue to withhold payment of that portion of the Holdback

equal to the principal amount in Dispute until the Dispute is resolved. Interest

shall continue to accrue in favor of Seller on the portion of the Holdback not

distributed to Seller. One (1) year after the Closing Date, Purchaser (or TOPAC)

shall pay to Seller the Holdback amount of One Million One Hundred Thousand

Dollars ($1,100,000.00) (the "HOLDBACK"), less any offsets, Adjustments or

Disputed amounts as provided herein, plus the interest described above, by wire

transfer of immediately available funds. All Disputed amounts shall remain with

Purchaser until the Dispute is resolved at which time Purchaser shall pay to

Seller any portion of such amounts it is not entitled to retain.

(iii) Assumption of Liabilities. At Closing Purchaser shall

assume or pay off all the Assumed Liabilities.

(b) Allocation of Purchase Price. The Purchase Price shall be

allocated as follows:

(i) Ten Million Four Hundred Fifty Thousand Dollars

($10,450,000.00) of the Cash Price (the "ASSET ALLOCATION") plus the amount of

the Assumed Liabilities shall be allocated for the Acquired Assets.

(ii) Five Hundred Fifty Thousand Dollars ($550,000.00)

(the "NON-COMPETE ALLOCATION") shall be allocated for a three (3) year

non-competition agreement described in Article 4, to be entered into by

Purchaser, TOPAC, MI, and Seller.

(iii) For federal and state income tax purposes, TOPAC,

Purchaser, MI, and Seller agree to allocate the purchase price among the

Acquired Assets in amounts equal to the Closing Date book values thereof (for

Acquired Assets having Closing Date book values), in accordance with GAAP, with

the balance being allocated to goodwill and/or intangibles.

Seller for, any sales taxes, use taxes, transfer taxes, documentary charges,

recording fees or similar taxes, charges, fees or expenses that may become

payable in connection with the transfers of the Acquired Assets to Purchaser or

in connection with any of the other Transactions. However, Purchaser shall not

be responsible for any of MI's or Seller's income taxes.

1.6 Closing. The Closing shall take place via facsimile transmission of

executed Transaction Documents and shall be deemed effective as of 11:59 p.m.

eastern time on the Closing Date. All proceedings to take place at the Closing

shall take place simultaneously, and no delivery shall be considered to have

been made until all such deliveries have been made.

1.7 Closing Conditions and Deliveries. At the Closing:

(a) Seller shall execute and deliver a Bill of Sale and General

Assignment and Assumption Agreement, substantially in the form of EXHIBIT B

hereto;

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(b) Seller shall execute and deliver to Purchaser such other bills

of sale, endorsements, assignments, certificates of title, any and all other

instruments of conveyance and transfer as shall be reasonably requested by

Purchaser in order to effectively convey and transfer to Purchaser the Acquired

Assets or to evidence such conveyance and transfer, and any other documents as

may (in the reasonable judgment of Purchaser or its counsel) be necessary or

appropriate in the judgment of Purchaser's counsel to assign, convey, transfer

and deliver to Purchaser good and valid title to the Acquired Assets free and

clear of any Encumbrances;

from the secretary of state of North Carolina, its state of incorporation, dated

as of a date that is within five (5) business days of the Closing Date;

(d) MOS shall deliver to Purchaser a copy of its articles of

incorporation and all amendments thereto, and a copy of its bylaws and all

amendments thereto, all certified by the secretary of MOS as correct and

complete as of the Closing Date;

(e) MI and MOS shall each deliver to Purchaser a copy of

resolutions of each of MI's and MOS's boards of directors (and stockholders if

required) approving the Transactions, certified by each of MI's and MOS's

secretaries as correct and complete as of the Closing Date;

(f) Purchaser and Seller shall execute and deliver a lease

agreement with respect to Seller's corporate offices (the "LEASE AGREEMENT");

(g) Purchaser and/or TOPAC shall deliver the amount set forth in

Section 1.5(a)(i) by wire transfer of immediately available funds; and

(h) Purchaser shall execute and deliver the LICENSE AGREEMENT.

ARTICLE 2 - REPRESENTATIONS AND WARRANTIES

OF MI AND SELLER

As a material inducement to TOPAC and Purchaser to enter into this

Agreement, with the understanding that TOPAC and Purchaser will be relying

thereon in consummating the Transactions, each of MI and Seller, jointly and

severally, represent and warrant as of the Closing Date, to and for the benefit

of Purchaser Indemnitees as follows below. On or prior to the Closing Date,

Seller shall have delivered to TOPAC and Purchaser a disclosure schedule

(collectively referred to as the "DISCLOSURE SCHEDULES" and individually as a

"SCHEDULE"), which

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Disclosure Schedules include certain information specifically required to be

provided by this Article 2 and disclose certain exceptions to the

representations and warranties contained in this Article 2; provided that any

such exceptions are specifically referenced in the relevant representation and

warranty so modified. It is understood and agreed that nothing in any Schedule

herein shall in any way increase Purchaser's Liability hereunder; and,

Purchaser's only Liabilities hereunder shall be those specific and limited

Assumed Liabilities, and no other.

2.1 Due Organization; No Subsidiaries. MOS is a corporation duly

organized, validly existing and in good standing under the laws of the State of

North Carolina. Seller is qualified, authorized, registered or licensed to do

business as a foreign corporation in any jurisdiction where its business

requires such qualification, except in jurisdictions, if any, where the failure

to be so qualified (a) would not result in a Material Adverse Effect or (b)

would not result in a Breach of any of the other representations, warranties or

covenants set forth in this Agreement. Seller has the requisite corporate power

and authority to own, use or lease its properties and to carry on its business

as it is now being conducted and as it is now proposed to be conducted. Seller

is not in default in any material respect in the performance, observation or

fulfillment of any provision of its articles of incorporation or bylaws. Seller

has delivered to (or made available for inspection by) Purchaser accurate and

complete copies of its articles of incorporation and bylaws, including all

amendments thereto, and they are all in full force and effect.

Neither MI nor Seller controls, directly or indirectly, nor does either MI or

Seller have any direct or indirect equity participation or other interest in,

any corporation, partnership, trust or other business entity that would be a

Non-compete Business Service. Neither MI nor Seller nor, to the Knowledge of

Seller, any of MI's or Seller's employee's immediate family members has any

material interest in any entity which is a vendor or customer of Seller.

Ownership of not more than one percent (1%) of the voting stock of a corporation

whose stock is traded on a national securities exchange or over-the-counter

shall not of itself constitute a violation of this Section 2.

2.2 Authority; Binding Nature of Agreements. Each of MI and Seller has

the absolute and unrestricted right, power and authority to enter into and to

each perform the obligations under each of the Transaction Agreements to which

it is a party (other than the power and authority to assign any Acquired

Business Contracts that require third party consent to be assigned as a result

of the Transactions); and the execution, delivery and performance by each of MI

and Seller of the Transaction Agreements to which it is a party have been duly

authorized by all necessary action on the part of MI and Seller and their

respective stockholders, board of directors, and officers and no other corporate

proceedings on the part of MI or Seller are necessary, as a matter of law or

otherwise, to authorize the Transaction Agreements. Each Transaction Agreement

to which MI or Seller is a party on the date hereof, and each other Transaction

Agreement upon execution at Closing, constitutes the legal, valid and binding

obligation of MI and Seller, enforceable against MI and Seller in accordance

with its terms, except as (a) such enforcement may be subject to bankruptcy,

insolvency, reorganization, moratorium or similar laws now or hereinafter in

effect relating to creditors' rights generally or to general principles of

equity, and (b) the remedy of specific performance and injunctive and other

forms of equitable relief may be subject to equitable defenses and to the

discretion of the court before which any proceeding therefor may be brought.

<PAGE>

2.3 Non-Contravention; Consents. Neither the execution and delivery of

any of the Transaction Agreements, nor the consummation or performance of any of

the Transactions, will directly or indirectly (with or without notice or lapse

of time):

(a) Contravene, conflict with or result in a violation of, or give

any Governmental Body or other Person the right to challenge any of the

Transactions or to exercise any remedy or obtain any relief under, any Legal

Requirement or any Order to which MI, Seller, or any of the Acquired Assets, is

subject;

(b) Except as such may be caused by a failure to obtain the

consent of any third party, (i) contravene, conflict with or result in a

violation or breach of, or result in a default under (or give rise to any right

of termination, cancellation or acceleration or guaranteed payments), any

provision of any Acquired Business Contract; (ii) give any Person the right to

(A) declare a default or exercise any remedy under any Acquired Business

Contract, (B) accelerate the maturity or performance of any Acquired Business

Contract, or (C) cancel, terminate or modify any Acquired Business Contract; or

(iii) result in the imposition or creation of any Encumbrance upon or with

respect to any of the Acquired Assets;

or bylaws (or other similar charter documents) of either MI or Seller;

2.4 Financial Statements. MI and Seller have delivered the Financial

Statements (set forth at Schedule 2.4) to TOPAC and Purchaser.

2.5 Absence Of Changes. Except as set forth on Schedule 2.5, since May

1, 2004, concerning the Acquired Business:

(a) No event has occurred that could reasonably be expected to

have a Material Adverse Effect on Seller;

(b) There has not been any material loss, damage or destruction to

any of the Acquired Assets (whether or not covered by insurance);

any extraordinary reserve with respect to, any account receivable or other

indebtedness included in the Acquired Assets except in the Ordinary Course of

Business;

(d) No material Acquired Business Contract has been amended or

terminated;

(e) Seller has not caused any of the Acquired Assets to become

subject to any Liability except in the Ordinary Course of Business;

(f) Seller has not changed any of its methods of accounting or

accounting practices in any respect, or changed outside accountants;

(g) Seller has not entered into any transaction or taken any other

action, in each case related to the Acquired Business outside the Ordinary

Course of Business, except as related to the Transactions;

<PAGE>

(h) There has not been any declaration, setting aside or payment

of any dividend or other distribution of cash or other assets of Seller, other

than repayment of intercompany debt in the Ordinary Course of Business and

salaries and bonuses paid in the Ordinary Course of Business and consistent with

past practices, to MI or to any affiliate or Representative of MI, and since the

date of the Reference Balance Sheet Seller has not paid any dividend or

otherwise transferred any assets (in the form of repayment of intercompany debt

or otherwise) to MI;

(i) There has not been any acquisition, whether by merger or

consolidation with, or purchase of a substantial portion of the assets of, or by

any other manner, any business or corporation, partnership, association or other

business organization or division thereof or other acquisition or agreement to

acquire any capital or other assets which are material, either individually or

in the aggregate, to Seller;

(j) There has not been agreement by Seller to enter into any

material lease or extension of any material lease with respect to any real or

personal property except in the Ordinary Course of Business;

(k) There has not been any labor dispute or difficulty concerning

the Business Employees which is reasonably likely to result in any Material

Adverse Effect, and to the Knowledge of Seller, no such dispute or difficulty is

now threatened;

(l) No material asset has been sold, leased or disposed of (except

inventory sold in the Ordinary Course of Business) and no material asset has

been mortgaged, pledged or subjected to any lien, charge, factoring agreement or

other Encumbrance;

(m) No indebtedness has been incurred by Seller, except such as

may have been incurred in the Ordinary Course of Business and consistent with

past practice;

(n) Other than in the Ordinary Course of Business, there has not

been any increase in excess of Five Thousand Dollars ($5,000.00) in the

compensation payable, or which could become payable by either MI or Seller to

any Business Employee or to any directors, officers, distributors, dealers, or

sales representatives;

(o) Seller has not entered into, or agreed to enter into, or

amend, any employment, severance, or termination agreement;

(p) There has not been any loan made or agreed to be made by

Seller, nor has Seller become liable or agreed to become liable as a guarantor

with respect to any loan, nor has Seller guaranteed the repayment of any debt

securities, nor has Seller paid or become liable for the prepayment or other

penalties in connection with the early retirement of any of such Seller's

indebtedness for borrowed money except in the Ordinary Course of Business;

(q) There has not been any waiver by Seller of any right of

material value or any payment, direct or indirect, or cancellation of any

material debt, liability or other obligation or claim except in the Ordinary

Course of Business;

<PAGE>

2.6 Title To Assets.

(a) Seller has good and valid title to, or in the case of leased

property, have a valid leasehold interest in, all of the Acquired Assets

(whether real or personal, tangible or intangible). No Affiliate of either MI or

Seller (other than MI and Seller) or any Related Party has title to, or in the

case of leased property a leasehold interest in, any of the Acquired Assets.

None of such Acquired Assets is subject to any Encumbrances (including

tax-related Encumbrances), except Encumbrances related to and arising out of

Assumed Liabilities. All of the Acquired Assets are in the exclusive possession

and control of Seller (except leased property in the possession of third party

lessee/end users under valid leases) and Seller has the unencumbered right to

use and sell to Purchaser all of the Acquired Assets without interference from

others (other than the power and authority to assign any Acquired Business

Contracts that require third party consent to be assigned as a result of the

Transactions). No actions, proceedings or transactions have been commenced or

undertaken by MI or Seller which give, or would give, rights to any Person,

other than Purchaser, in any of the Acquired Assets or interfere with the

consummation of the Transactions.

(b) At the Closing Date, Seller shall transfer to Purchaser good

and valid title to all Acquired Assets, free and clear of any Encumbrances.

together with Purchaser's rights under this Agreement and the other Transaction

Agreements, constitute all the assets, properties, rights and goodwill necessary

to carry on the Acquired Business as conducted on the date of this Agreement, it

being understood that the Excluded Assets will be retained by Seller and that

such Excluded Assets have been used in Seller's businesses prior to Closing.

(d) Neither MI nor Seller nor any of their Affiliates has any

agreement, absolute or contingent, written or oral, with any other Person to

effect any acquisition transaction or to sell or otherwise transfer any of the

Acquired Assets or any line of business or material asset relating to the

Acquired Business or MI's or Seller's obligations under the Transaction

Agreements.

2.7 Bank Accounts. Schedule 2.7 accurately sets forth, with respect to

each account related to the Acquired Business and which is an Acquired Asset,

and maintained by or for the benefit of Seller at any bank or other financial

institution: (a) the name and location of the institution at which such account

is maintained; (b) the name in which such account is maintained and the account

number of such account; (c) a description of such account and the purpose for

which such account is used; (d) the rate of interest being earned on the funds

in such account; and (e) the names of all individuals authorized to draw on or

make withdrawals from such account. There are no safe deposit boxes or similar

arrangements related to the Acquired Business and maintained by or for the

benefit of Seller.

2.8 Receivables. Schedule 2.8 provides an accurate and complete

breakdown and aging of all accounts receivable (showing amounts due in thirty

(30) day aging categories), notes receivable, other receivables prepaid expenses

and other current assets of Seller related to the Acquired Business as of the

date of the Reference Balance Sheet. All accounts receivable related to the

Acquired Business that are reflected on the Reference Balance Sheet represented,

valid

<PAGE>

obligations arising from sales actually made or services actually performed by

Seller in the Ordinary Course of Business. Except to the extent of any reserves

set forth on the Reference Balance Sheet, there is no contest, claim, defense,

right, or setoff, other than returns in the Ordinary Course of Business of

Seller, under any Contract with any account debtor of an account receivable

relating to the amount or validity of such account receivable.

2.9 Customers. Schedule 2.9 accurately identifies and provides a

complete breakdown of the fifteen (15) largest (by dollar volume) copier,

facsimile, and duplicator customers of Seller, together with the amount of sales

made to each such customer during the most recent fiscal year. None of such

customers has given notice to Seller of an intention to cancel, cease dealing

with, fail to renew, terminate or materially impair its business relationship

with the Seller, or otherwise reduce the volume of business transacted by such

customer with the Seller below historical levels. Seller has no Knowledge of any

event that would precipitate the impairment, cancellation, or termination of, or

the failure to renew, or entitle such customer to terminate, such business

relationship except for any impairment, cancellation, or termination, or failure

to renew caused by the Transactions.

2.10 Inventory. Schedule 2.10 provides a listing of all inventory of

Seller related to the Acquired Business as of the as of the date of the

Reference Balance Sheet, which such listing is true and correct in all material

respects. All of such inventory (other than any such inventory disposed by

Seller in the Ordinary Course of Business following the date of the Reference

Balance Sheet) and any inventory acquired by Seller in the Ordinary Course of

Business following the date of the Reference Balance Sheet: (a) physically

exists; (b) except to the extent of any reserves set forth on the Reference

Balance Sheet, is of such quality and quantity as to be usable and saleable by

the Seller in the Ordinary Course of Business; (c) has been priced using the

specific identification method; and (d) except to the extent of any reserves set

forth on the Reference Balance Sheet, is free of any material defect, damage, or

deficiency. None of the inventory to be included in the Acquired Assets will be

pledged or subject to any Encumbrance.

2.11 Equipment. Schedule 2.11 provides a listing of all equipment,

vehicles and furniture owned by Seller related to, or deemed necessary by Seller

for the conduct of the Acquired Business as of the date of the Reference Balance

Sheet, which such listing is true and correct in all material respects. Schedule

2.11 also accurately identifies all material tangible assets leased to Seller

and related to or necessary for the conduct of the Acquired Business ("ACQUIRED

BUSINESS LEASED EQUIPMENT") and lists each lease for Acquired Business Leased

Equipment ("EQUIPMENT LEASE"). Each asset identified or required to be

identified in Schedule 2.11 (other than any such equipment disposed by Seller in

the Ordinary Course of Business following the date of the Reference Balance

Sheet) and any equipment acquired by Seller in the Ordinary Course of Business

following the date of the Reference Balance Sheet (a) is in good condition and

repair (ordinary wear and tear excepted); and (b) complies with and is being

operated and otherwise used in material compliance with all applicable Legal

Requirements.

2.12 Real Property. Except as set forth on Schedule 2.12, there is no

real property or any interest in real property which is used in connection with

the Acquired Business, except for the leaseholds for the real property on which

the Acquired Business is operated (the "REAL PROPERTY LEASES") and the portion

of MI's corporate headquarters facility that is occupied by Seller and that

following the Closing will be leased to Purchaser pursuant to the Lease

<PAGE>

Agreement. Seller enjoys peaceful and undisturbed possession of such premises.

Schedule 2.12 sets forth the following information with respect to the premises

covered by the Real Property Leases and the facilities located thereon: address,

square footage and type of space.

2.13 Intellectual Property. In the operation of the Acquired Business, to

the Knowledge of Seller, Seller has not infringed, and is not now infringing,

any patent, trade name, trademark, service mark, copyright, trade secret,

technology, know-how or process belonging to any other Person. Neither MI nor

Seller has received any written notice or other indication of any such claim of

infringement. Except for Seller's Intellectual Property and the Excluded

Intellectual Property, there are no Trademarks or Copyrights owned by either MI

or Seller that are used in the operation of the Acquired Business as now

conducted. To the Knowledge of Seller, Seller owns, or holds adequate licenses

or other rights to use, all Intellectual Property used in the operation of the

Acquired Business as now conducted (other than any such Intellectual Property

that constitutes Excluded Intellectual Property) and that use does not and will

not conflict with, infringe on or otherwise violate any rights of others. To the

extent transferable, all of such Intellectual Property (other than any such

Intellectual Property that constitutes Excluded Intellectual Property) is

included in the Acquired Assets being sold to Purchaser hereunder and MI and

Seller shall execute any documents reasonably necessary to effect the transfer

of such Intellectual Property to Purchaser; any non-transferable Intellectual

Property shall be listed in Schedule 2.13. Except as set forth in the Acquired

Business Contracts and pursuant to "off-the-shelf" software products, Seller is

not a party to any license, agreement or arrangement, with respect to any

trademarks, service marks, trade names, or applications for them, or any

copyrights.

2.14 Contracts. Schedule 2.14 identifies each Acquired Business Contract

other than customer contracts, a listing of which was included on the "Customer

Contract List" dated as of the Closing Date previously provided by Seller to

Purchaser. Except as set forth on Schedule 2.14(x)-1, MI and Seller have

delivered or made available to Purchaser accurate and complete copies of all

Acquired Business Contracts, including all amendments thereto. Each Acquired

Business Contract is valid and in full force and effect and is enforceable in

accordance with its terms and, subject to any required Consents, will be

assigned to the Purchaser on the Closing Date without such assignment

constituting any material breach, default, acceleration, modification,

termination or cancellation thereof. Except as a result of failure to obtain

consents with respect to the transfer thereof, Seller has not and, to the

Knowledge of Seller, the other party to such Acquired Business Contract has not,

violated or breached, or declared or committed any default under, any Acquired

Business Contract; and to the Knowledge of Seller, no event has occurred, and no

circumstance or condition exists, that would (with or without notice or lapse of

time) (i) result in a violation or breach of any of the provisions of any

Acquired Business Contract, (ii) give any Person the right to declare a default

or exercise any remedy under any Acquired Business Contract, (iii) give any

Person the right to accelerate the maturity or performance of any Acquired

Business Contract, or (iv) give any Person the right to cancel, terminate or

modify any Acquired Business Contract. Neither MI nor Seller has received any

notice or other communication (in writing or otherwise) regarding any actual,

alleged, possible or potential violation or breach of, or default under, any

Acquired Business Contract nor has Seller waived any material right under any

Acquired Business Contract. Except as a result of failure to obtain consents

with respect to the transfer thereof, the performance of the Acquired Business

Contracts will not result in any violation of or failure to comply with any

Legal Requirement. To the Knowledge of Seller, no Person is renegotiating, or

<PAGE>

has the right to renegotiate any amount paid or payable to Seller under any

Acquired Business Contract or any other term or provision of any Acquired

Business Contract. Except as set forth on Schedule 2.14(x), the Acquired

Business Contracts, together with Purchaser's rights under this Agreement and

the other Transaction Agreements, collectively constitute all of the Contracts

necessary to enable Purchaser to conduct the Acquired Business in the same

manner in which such business is currently being conducted. The terms of

Seller's private label dealer agreement with GE Capital are substantially

similar to Seller's private label dealer agreement with First Citizens Bank &

Trust except that per the GE Capital agreement, GE Capital, rather than

Seller, controls the determination of fair market value for purposes of

determining the cost to a customer of terminating a lease early.

2.15 Liabilities; Books and Records. Seller has not, at any time, (a)

made a general assignment for the benefit of creditors, (b) filed, or had filed

against it, any bankruptcy petition or similar filing, (c) suffered the

attachment or other judicial seizure of all or a substantial portion of its

assets, (d) admitted in writing its inability to pay its debts as they become

due, or (e) taken or been the subject of any action that may have an adverse

effect on its ability to comply with or perform any of the covenants or

obligations under any of the Transaction Agreements. Seller's Books and Re

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