EXHIBIT 10.59
ASSET PURCHASE AGREEMENT
DATED AS OF
MAY 19, 2001
BY AND BETWEEN
DC HOLDINGS, INC.
AND
XXXXXXXXX.XXX, INC.
ASSET PURCHASE AGREEMENT
Asset Purchase Agreement (the "Agreement") dated as of May 19, 2001, by and
between Xxxxxxxxx.xxx, Inc., a Nevada corporation ("Seller") and DC Holdings,
Inc., a California corporation ("Buyer"),.
Whereas, Seller conducts various computer-related businesses including
a business (the "Business") which operates as a web site developer;
and
Whereas, Buyer desires to purchase substantially all of the assets of
the Business from Seller, and Seller desires to sell substantially all
of the assets of the Business to Buyer, upon the terms and subject to
the conditions hereinafter set forth;
Now, therefore, in consideration of the foregoing and the representations,
warranties, covenants and agreements herein contained, the parties hereto agree
as follows:
1) PURCHASE AND SALE
a) Purchase and Sale. Upon the terms and subject to the conditions of this
Agreement, Buyer agrees to purchase from Seller and Seller agrees to sell,
transfer, assign and deliver, or cause to be sold, transferred, assigned
and delivered, to Buyer at closing on the Closing Date, all of the Seller's
then existing assets as they relate to the Business, as a going concern
reflected on the attached Schedule 1.1 "Purchased Asset Schedule" dated as
of May 19, 2001, with such changes therein that have occurred in the
ordinary course of the Seller's business between May 19, 2001 and the
Closing Date ("Purchased Assets").
i) The Purchased Assets shall specifically include, but not be limited
to:
(1) the common stock of Coolwheels owned by the Seller on the date of
Closing; and
(2) the assumption by Buyer of the Sellers rights under any
Promissory Notes made in favor of Seller by Coolwheels.
(3) All assets listed on the Xxxx of Sale.
(i) office equipment of the Seller including, without
limitation, Seller's telephone system, computer systems,
tools and supplies of Seller's repair department,
advertising signs, catalogs and sales literature;
(ii) leasehold improvements not deemed to be the property of
Seller's landlord including, without limitations, trade
fixtures;
(iii) rights to use the trade names "Western Technologies Group"
and "WesTech" for such period of time as Buyer deems
necessary;
(iv) all goodwill associates with the Business and the Purchased
Asset together with the right to represent to third parties
that Buyer is the successor to the Business; and
(v) all other assets on the attached Schedule 1.1 "Purchased
Asset Schedule".
ii) However, regardless of anything to contrary contained herein, the
Purchased Assets shall not include those receivables of the
Business that are on the books and records of the Seller on the
date of Closing.
b) Assumption of Liabilities. Upon the terms and subject to the
conditions of this Agreement, Buyer agrees, effective at the Closing
Date, to assume all of the liabilities of Seller as set forth on
Schedule 1.2, as the same existed on May 19, 2001 with such changes
therein that have occurred in the ordinary course of the Seller's
business between May 19, 2001 and the Closing Date ("Assumed
Liabilities"). Buyer shall assume and agree to pay and discharge all
of the Seller's liabilities and obligations related to the Business to
the extent provided for in that separate Assignment and Assumption
Agreement attached hereto as Exhibit A including, but not limited to,
the following:
i) All of the Seller's liabilities and obligations as of May 19,
2001 which are reflected or reserved against in the Seller's
Asset Statement as of that date, including but not limited to
Seller's payroll obligations of the Business as of May 19, 2001
for the payroll period beginning May 19, 2001 and including an
amount equal to one week hold back and all accrued vacation pay;
ii) All of the Seller's liabilities and obligations arising in the
ordinary conduct of its business
between May 19, 2001, and the Closing;
iii) All the Seller's liabilities and obligations of the Business in
respect of contracts and commitments entered into in the ordinary
course of the Seller's business at any time before or after May
19, 2001 and before closing;
iv) All facilities and personal property leases described on Schedule
1.2 attached hereto;
v) All accrued salary expenses on the books and records of Seller as
of May 19, 2001 relating to Xxx Xxxxxxx, Xxxxx Xxxxxxxx and Xxx
Xxxxxx.
vi) That certain promissory note by and between Xxxxx and the Seller.
(Should such note not be assumable or require Xxxxx'x permission
for assumption by Buyer and should Xxxxx not grant such
permission, the purchase price shall be adjusted accordingly.);
and
c) Excluded Liabilities. Notwithstanding any provision in this Agreement
or any other writing to the contrary, Buyer is assuming only the
Assumed Liabilities and is not assuming any other liability or
obligation of Seller (or any predecessor owner of all or part of its
business and assets) of whatever nature, whether presently in
existence or arising hereafter. All such other liabilities and
obligations shall be retained by and remain obligations and
liabilities of Seller. Specifically, Buyer shall not assume or be
liable for any liability of Seller in respect of:
i) Any profit derived from the sale provided for by this Agreement;
ii) The preparation of filing in any tax returns in the payment of
any taxes, license fees, or any other charges levied, assessed,
or imposed upon the Seller's business or property before the
Closing Date, except that Buyer shall pay Seller at closing the
amount shown to be accrued and owing for taxes on the schedule of
accounts payable;
iii) Any state, local or federal taxes resulting from the sale of the
assets contemplated by this transaction.
d) Purchase Price.
i) The purchase price for the Purchased Assets (the "Purchase
Price") shall be the value of the Assumed Liabilities, Net
Revenue Payments, and any other consideration, if any, provided
for hereunder.
ii) The Purchase Price shall be allocated among the Purchased Assets
as agreed by the parties, such agreement to be completed prior to
the day of closing. Buyer and Seller shall reflect such
allocation in any filing pursuant to Section 1060 of the Internal
Revenue Code or any regulation thereafter. The Purchase Price
shall be allocated among the Purchased Assets as agreed by the
parties, such agreement to be completed prior to the day of
closing. Buyer and Seller shall reflect such allocation in any
filing pursuant to Section 1060 of the Internal Revenue Code or
any regulation thereafter.
e) Net Revenue Payments.
i) In addition to the Purchase Price, for the first five (5) years
after Closing, Buyer shall pay to Seller on a quarterly basis an
amount equal to:
(1) Seven percent (7%) of Buyer's net revenue, defined as gross
xxxxxxxx less cost for any hardware or outside services but
including all revenue for xxxxxxxx for Westech employees,
for the period May 19, 2001 to December 31, 2001;
(2) Six percent (6%) of Buyer's net revenue, defined as gross
xxxxxxxx less cost for any hardware or outside services but
including all revenue for xxxxxxxx for Westech employees, in
period January 1, 2002 to December 31, 2002;
(3) Five percent (5%) of Buyer's net revenue, defined as gross
xxxxxxxx less cost for any hardware or outside services but
including all revenue for xxxxxxxx for Westech employees, in
the period January 1, 2003 to December 31, 2003;
(4) Four percent (4%) of Buyer's net revenue, defined as gross
xxxxxxxx less cost for any hardware or outside services but
including all revenue for xxxxxxxx for Westech employees, in
the period January 1, 2004 to December 31, 2004; and
(5) Three percent (3%) of Buyer's net revenue, defined as gross
xxxxxxxx less cost for any hardware or outside services but
including all revenue for xxxxxxxx for Westech employees, in
the period January 1, 2005 to December 31, 2005.
ii) In no instance shall any payment in any quarter under this
Section (1)(e) be less than twenty-five thousand dollars
($30,000).
iii) In no instance shall the cumulative payments by Buyer to Seller
under this Section (1)(e) exceed seven hundred fifty thousand
dollars ($750,000).
iv) Buyer shall evidence its indebtedness under this Section (1)(e)
by means of executing a Promissory Note, a copy of which is
attached as Exhibit B and secured by a Security Agreement, a copy
of which is attached as Exhibit C.
f) Closing. The closing (the "Closing") of the purchase and sale of the
Purchased Assets and the assumption of the Assumed Liabilities
hereunder shall take place at the offices of Buyer in El Segundo,
California, at 10:00 a.m. on or before May 19, 2001, or at such other
time or place as Buyer and Seller may agree. In addition, for
convenience of the parties, the actual execution of documents my take
place after May 19, 2001.
g) Payroll Advance. Seller agrees to advance Buyer such sums as are
needed by Buyer to meet Buyer's payroll in the period from May 19,
2001 to May 30, 2001. Buyer agrees to enter into a
Promissory note substantially in the form attached hereto as Exhibit D
evidencing such advance and the terms and conditions for its repayment
and as secured by a Security Agreement, a copy of which is attached as
Exhibit E.
h) Seller and Buyer shall enter into an Assignment and Assumption
Agreement substantially in the form attached hereto as Exhibit A, and
Seller shall deliver to Buyer such general warranty deeds, bills of
sale, endorsements, consents, assignments and other good and
sufficient instruments of conveyance and assignment (the "Conveyance
Documents") as the parties and their respective counsel shall deem
reasonably necessary or appropriate to vest in Buyer all right, title
and interest in, to and under the Purchased Assets.
i) Seller shall deliver to Buyer a certified copy of the resolution by
the Seller's board of directors certifying that Seller has authorized
the execution, delivery of performance and the transaction
contemplated herein and authorizing the officers of Seller to execute
this Agreement.
j) Seller shall provide to Buyer at closing a Certificate of Good
Standing dated not more than thirty (30) days prior to the Closing
Date.
k) Seller will deliver to Buyer on the Closing Date an officer's
certificate certifying that Seller has taken all corporate action
necessary to authorize the transactions contemplated by this
Agreement.
l) Buyer shall deliver to Seller a certified copy of the resolution by
the Buyer's board of directors certifying that Buyer has authorized
the execution, delivery of performance and the transaction
contemplated herein and authorizing the officers of Buyer to execute
this Agreement.
m) Buyer will deliver to Seller on the Closing Date an officer's
certificate certifying that Buyer has taken all corporate action
necessary to authorize the transactions contemplated by this
Agreement.
n) Seller shall have the right to audit the books and records of Buyer
during normal business hours so long as the Buyer has any obligations
to Seller outstanding under any promissory note.
o) Buyer agrees that any invoices issued by Seller on or after May 19,
2001 with respect to the Business which are credited back to Seller
after such invoicing occurs shall be repaid to Seller by Buyer within
thirty (30) days of such crediting.
p) Buyer shall provide to Seller at closing a Certificate of Good
Standing dated not more than thirty (30) days prior to the Closing
Date.
2) REPRESENTATIONS AND WARRANTIES OF THE SELLER
a) Seller hereby represents and warrants to Buyer that:
i) Organization and Good Standing. The Seller is a corporation duly
incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation, and has all corporate
powers and all material governmental licenses, authorizations,
consents and approvals required to carry on its business as now
conducted.
ii) Corporate Authorization. The execution, delivery and performance
by Seller of this Agreement and the consummation by Seller of the
transactions contemplated hereby and thereby are within Seller's
corporate powers and have been duly authorized by all necessary
corporate action on the part of Seller. This Agreement
constitutes a valid and binding agreement of Seller.
iii) Sufficiency of and Title to the Purchased Assets. To the best of
its knowledge, upon consummation of the transactions contemplated
hereby, Buyer will have acquired good and marketable title in and
to, or a valid leasehold interest in, each of the Purchased
Assets.
b) Warranties.
i) Seller has made no warranties to customers of the Business other
than customary implied warranties and those warranties set forth
on printed materials provided with the products sold to such
customers.
ii) Seller provides no representations or warranties as to the
conditions of the Purchased Assets and Buyer is buying them in an
"as is", "where is" condition.
3) REPRESENTATIONS AND WARRANTIES OF BUYER
a) Buyer hereby represents and warrants to Seller that:
i) Organization and Good Standing. Buyer is a corporation duly
incorporated, validly existing and in good standing under the
laws of California and is qualified in each jurisdiction where
the nature of its business or the ownership of property requires
such qualification except where such failure to qualify shall not
have a material adverse effect on the business or financial
ability of the Buyer and has all corporate powers and all
material governmental licenses, authorizations, consents and
approvals required to carry on its business as now conducted;
ii) Corporate Authorization. The execution, delivery and performance
by Buyer of this Agreement and the consummation by Buyer of the
transactions contemplated hereby are within the corporate powers
of Buyer and have been duly authorized by all necessary corporate
action on the part of Buyer and constitutes a valid and binding
agreement of Buyer enforceable in accordance with its terms
subject to the laws of bankruptcy and those laws affecting
creditors rights generally;
iii) No Violation of Other Agreements. Neither the execution and
delivery of the Purchase Agreement nor the consummation of the
transaction contemplated thereby (1) violates any provision of
the Certificate of Incorporation or Bylaws (or other governing
instrument) of the Buyer; (2) breaches or constitutes a default
(or an event) that, with notice or lapse of time or both, would
constitute a default under any agreement of the Buyer with any
other person to the extent that any such default would constitute
a material adverse effect upon the Company, or (3) violates any
statute, law, regulation, or rule or order applicable to the
Buyer;
iv) No Consents Required. No consent, approval or authorization of,
or declaration, filing, or registration with, any state or
federal authorities is required in connection with the execution,
delivery and performance of the Purchase Agreement or the
consummation of the transaction contemplated thereby; and
4) TAX MATTERS
a) Tax Definitions. The following terms, as used herein, have the
following meanings:
i) "Code" means the Internal Revenue Code of 1986, as amended.
ii) "Post-Closing Tax Period" means any Tax period (or portion
thereof) ending after the Closing Date.
iii) "Pre-Closing Tax Period' means any Tax period (or portion
thereof) ending on or before the close of business on the Closing
Date.
iv) "Proration Date" means the Closing Date.
v) "Tax" means any net income, alternative or add-on minimum tax,
gross income, gross receipts, sales, use, ad valorem, franchise,
capital, paid-up capital, profits, greenmail, license,
withholding, payroll, employment, excise, severance, stamp,
occupation, premium, property, environmental or windfall profit
tax, custom, duty or other tax, governmental fee or other like
assessment or charge or any kind whatsoever, together with any
interest or any penalty, addition to tax or additional amount
imposed by any governmental authority (domestic or foreign)
responsible for the imposition of any such tax.
b) Tax Cooperation: Allocation of Taxes.
i) Buyer and Seller agree to furnish or cause to be furnished to
each other, upon request, as promptly as practicable, such
information and assistance relating to the Purchased Assets as is
reasonably necessary for the filing of all Tax returns, and
making of any election related to Taxes, the preparation for any
audit by any taxing authority, and the prosecution or defense of
any claim, suit or proceeding relating to any Tax return. Seller
and Buyer shall cooperate with each other in the conduct of any
audit or other proceeding related to Taxes involving the
Purchased Assets and each shall execute and deliver such powers
of attorney and other documents as are necessary to carry out the
intent of this Section.
ii) All real property taxes, personal property taxes and similar ad
valorem obligations (except for those Taxes which are accrued on
Seller's financial statements delivered to Buyer hereunder, which
taxes shall constitute a portion of the Assumed Liabilities)
levied with respect to the Purchased Assets for a taxable period
which includes (but does not end on) the Proration Date
(collectively, the "Apportioned Obligations") shall be
apportioned between Seller and Buyer as of the Proration Date and
accrued on Seller's financial statements delivered to Buyer
hereunder based on the number of days of such taxable period
included in the Pre-Closing Tax Period and the number of days of
such taxable period included in the Post-Closing Period. Seller
shall be liable for the proportionate amount of such
taxes that is attributable to the Pre-Closing Tax Period, and
Buyer shall be liable for the proportionate amount of such taxes
that is attributable to the Post-Closing Tax Period. Within
ninety (90) days after the Closing, Seller and Buyer shall
present a statement to the other setting forth the amount of the
tax liability so accrued under this Section (4)(b)(ii) together
with such supporting evidence as is reasonably necessary to
calculate the proration amount. The proration amount shall to the
extent such adjustment would have resulted in a net worth
adjustment at the Closing Date, be used to calculate an
adjustment to the purchase price under Section (1)(d)(i).
Thereafter, Seller shall notify Buyer upon receipt of any xxxx
for real or personal property taxes relating to the Purchased
Assets, part or all of which are attributable to the Post-Closing
Tax Period, and shall promptly deliver such xxxx to Buyer who
shall pay the same to the appropriate taxing authority, provided
that if such xxxx covers a Pre-Closing Tax Period, Seller shall
also remit prior to the due date of assessment to Buyer payment
for the proportionate amount of such xxxx that is attributable to
the Pre-Closing Tax Period shall constitute another adjustment
under Section (1)(d)(i).
5) COVENANTS OF SELLER
a) No Solicitations. Unless and until the occurrence of an Event of
Default by Buyer under any instrument evidencing or securing any
indebtedness which arose in connection with the transaction
contemplated hereby, Seller and each of the principal shareholders of
Seller, shall not, for a period of one (1) year following the Closing
Date, employ or solicit, either directly or indirectly, the
performance of services by any employee of Buyer, which employee was
employed by the Seller on the date of Closing.
b) Telephone Numbers. Seller will make commercially reasonable efforts to
assist Buyer in transferring Seller's current telephone and facsimile
numbers to Buyer as of the Closing Date.
c) Name. Seller shall allow Buyer to use the name "Western Technology
Group" and "WesTech" at no cost to Buyer, for such time as Buyer deems
necessary.
d) Utilities. Seller will make commercially reasonable efforts to assist
Buyer in transferring Seller's current water, sewage and electrical
services (collectively "Utilities") to Buyer as of the Closing Date.
Seller shall accrue on its financial statements all charges for
Utilities incurred prior to and on the Closing Date. Buyer agrees that
it shall be obligated for charges for Utilities incurred subsequent to
the Closing Date.
e) Release of Liens. Seller will take all action necessary prior to the
Closing Date to release any and all liens or other encumbrances on the
Purchased Assets and the Inventory Assets, if any, including, without
limitation, causing any necessary UCC-2 Termination Statements to be
filed.
6) COVENANTS OF BUYER
a) Most Favored Customer Status. For any services that Seller purchases
from Buyer after the Closing, Buyer will sell such services to Seller
at prices and under such terms and conditions as Buyer sells to its
most favored customers.
b) Utilize Seller for Purchases. After the Closing, Buyer will buy from
Seller, and Seller agrees to sell to Buyer, such hardware and software
as Buyer may request from Seller, in such cases as
both Buyer and Seller agree that such a transaction is mutually
advantageous to both Buyer and Seller.
c) Commission to Seller for Referrals. Buyer will pay to Seller a
commission equal to ten percent (10%) of the gross profit, as measured
by generally accepted accounting principals, of any sale referred to
Buyer by Seller.
d) Website Hosting for Seller. At no cost to Seller, Buyer will host all
of Seller's current websites (including but not limited to the website
for Wareforce and xXxxxxx.xxx) for a period of two (2) years from the
date of Closing at service levels no less than those in existence on
the date of Closing. Should average traffic volume on Seller's sites
for any consecutive thirty (30) day period during this two (2) year
period on Seller's websites exceed one hundred and fifty percent
(150%) of the traffic volume on such sites during the thirty (30)
consecutive days prior to Closing, Buyer and Seller agree to negotiate
in good faith additional charges for such additional traffic.
e) Provision of Web Consulting Services. During the two (2) year period
from the date of Closing, from time to time as Seller requests, Buyer
will provide at no cost to Seller, or such entity or entities as
Seller designates, web consulting, design, etc. in amounts that will
be mutually agreed upon for monthly work and which will not exceed
three hundred thousand dollars ($300,000) during the two (2) year
period. For calculating the value of such services, Buyer shall xxxx
Seller at the rate of seventy-five dollars ($75) per hour and the
monthly billing for such services shall not exceed twenty-five
thousand dollars ($25,000).
7) INDEMNIFICATION
a) Indemnification of Seller. Effective on the Closing Date and
thereafter, Buyer shall indemnify and hold harmless Seller and its
directors, officers, employees and agents, and shareholders from and
against any and all liabilities, damages, losses, penalties,
deficiencies, expenses and costs incurred by any of them, including
without limitation reasonable attorneys' and accountants' fees
(hereafter individually a "Loss" and collectively "losses"), arising
from or in connection with:
i) any claim made or litigation instituted by a third party relating
to Buyer's ownership rights in and to the Purchased Assets;
ii) any liability or obligation of Buyer which relates to the
ownership or use of any of the Purchased Assets or the conduct of
the Business subsequent to the Closing Date including liabilities
arising out of the Assumed Liabilities, including but not limited
to liabilities arising from or relating thereto;
iii) any claim first made or litigation instituted by a third party
relating to Buyer's conduct of the Business notice for which
claim or litigation is received by Buyer or Seller subsequent to
the Closing Date;
iv) any taxes imposed on Buyer, the Business or any of the Purchased
Assets for any period subsequent to the Closing;
v) any and all actions, suits, proceedings, demands, assessments or
judgments, costs and expenses reasonably arising out of any of
the foregoing matters set forth in this Section (7)(a); and
vi) the breach by Buyer of any representations or warranties made by
Buyer herein or in any document given by Buyer in connection with
the consummation of the transaction contemplated hereby.
b) Indemnification of Buyer. Effective on the Closing Date and
thereafter, the Seller shall, jointly and severally, indemnify and
hold harmless Buyer and its directors, officers, employees and agents,
from and against any and all Losses arising from or in connection
with:
i) any claim made or litigation instituted by a third party relating
to Seller's conduct of the Business notice of which claim or
litigation has been received by Seller prior to or after the
Closing Date; or
ii) any and all actions, suits, proceedings, demands, assessments or
judgments, costs and expenses reasonably arising out of any of
the foregoing matters set forth in this Section (7)(b)(ii) except
to the extent such losses shall arise in connection with or
constitute Assumed Liabilities hereunder.
c) Indemnification Procedure.
i) Claims for Indemnification. Except for Third Party Claims
described below, if an event giving rise to indemnification
hereunder shall have occurred or is threatened, the indemnified
party promptly shall deliver to the indemnifying party written
notice thereof, stating that such event has occurred or is
threatened, describing such event in reasonable detail and
specifying or reasonably estimating the amount of the prospective
Loss and the method of computation thereof (a "Claim"), all with
reasonable particularity and containing a reference to the
provisions of the this Agreement in respect of which such right
of indemnification is claimed or has arisen (the "Notice of
Claim"). For purposes hereof, any Claim for indemnification shall
be deemed to have been made as of the date on which the Notice of
Claim is delivered in accordance with the terms of this Section.
ii) In the event the indemnifying party shall in good faith dispute
the validity of all or any amount of a Claim for indemnification
as set forth in the Notice of Claim, the indemnifying party
shall, within thirty (30) days after delivery of the Notice of
Claim, execute and deliver to the indemnified party a notice
setting forth with reasonable particularity the grounds, amount
of, and basis upon which the Claim is disputed (the "Dispute
Statement").
iii) In the event the Indemnifying party shall within thirty (30) days
deliver to the indemnified party a Dispute Statement, then the
portion of the claim described in the Notice of Claim disputed by
the indemnifying party (the "Disputed Liability") shall not be
due and payable except in accordance with a final and
unappealable judgment or decision of a court or arbitration
tribunal of competent jurisdiction, or a written agreement
between the indemnifying party and the indemnified party
stipulating the amount of the Admitted Liability (as defined
below).
iv) In the event the indemnifying party shall not within thirty (30)
days after receipt of the Notice of Claim deliver to the
indemnified party a Dispute Statement identifying a Disputed
liability, then the amount of the claim described in the Notice
of Claim, or if a Dispute Statement is delivered, the portion
thereof not disputed as a Disputed Liability, shall be deemed to
be admitted (the "Admitted Liability") and shall, upon the
incurring of an actual Loss arising therefrom, immediately be due
and payable.
d) Settlement of Third Party Claims. If the indemnified party shall
receive notice of any Claim by a third party which is or may be
subject to indemnification (a "Third Party Claim"), the indemnified
party shall give the indemnifying party prompt written notice of such
Third Party Claim and shall permit the indemnifying party, at its
option, to participate in the defense of such Third Party Claim by
counsel of its own choice and at its expense. If, however, the
indemnifying party acknowledges in writing to the indemnified party
the indemnifying party's obligation to indemnify the indemnified party
hereunder against all Losses that may result from such Third Party
Claim (subject to the limitations set forth herein), then the
indemnifying party shall be entitled, at its option, to assume and
control the defense of such Third Party Claim at its expense and
through counsel of its choice after delivery of written notification.
i) In the event the indemnifying party exercises its right to
undertake the defense of any such Third Party Claim, the
indemnified party shall cooperate with the indemnifying party in
such defense and make available to the indemnifying party, at the
indemnifying party's expense, all witnesses, pertinent records,
materials and information in its possession or under its control
relating thereto as is reasonably required by the indemnifying
party. However, no such Third Party Claim may be settled by the
indemnifying party without the written consent of the indemnified
party, unless the settlement involves only the payment of money
by the indemnifying party. Similarly, no Third Party Claim shall
be settled by the indemnified party without the written consent
of the indemnifying party.
ii) In the event the indemnified party is, directly or indirectly,
conducting the defense against any such Third Party Claim, the
indemnifying party shall cooperate with the indemnified party in
such defense and make available to it all such witnesses,
records, materials and information in its possession or under its
control relating thereto as is reasonably required by the
indemnified party.
8) MISCELLANEOUS
a) Conditions Precedent. This Agreement can be terminated by either party
upon written notice to the other party, in the event that any of the
following shall not have occurred on or before the Closing Date:
i) Seller have obtained the consent of its lenders to the
transactions contemplated herein.
b) Dispute Resolution.
i) Any and all disputes or differences pertaining to or arising out
of this Agreement or the breach, termination or invalidity
thereof, shall be finally and exclusively settled by binding
arbitration in accordance with the Commercial Arbitration Rules
of the American Arbitration Association. The arbitration shall be
held in Los Angeles, California before one arbitrator appointed
in accordance with said rules. Judgment upon an award rendered
may be entered in any court having jurisdiction or application
may be made to such court for a judicial acceptance of the award
and an order of enforcement, as the case may be. The prevailing
party in any such proceeding shall be entitled to its actual
attorneys' fees and all other costs in connection with the
arbitration and enforcement of the arbiter's award.
ii) Either party may, without inconsistency with this Agreement, seek
from a court any interim or provisional relief that may be
necessary to protect the rights or property of that party,
pending the establishment of the arbitral tribunal or pending the
arbitral tribunal's determination of the merits of the
controversy.
c) Expenses. Except as otherwise provided herein, all costs and expenses
incurred in connection with this Agreement shall be paid by the party
incurring such cost or expense.
d) Notices. Any notices required or permitted to be given hereunder shall
be in writing and shall be deemed delivered (i) two (2) days after
being deposited in the mails, (ii) one day after being, deposited with
an express overnight courier service or (iii) the same day notice is
sent by electronic facsimile transmission if such transmission is made
by 5:00 p.m. local time or one day after being sent by facsimile
transmission if such transmission is made after 5:00 p.m., addressed:
if to Buyer, to:
DC Holdings, Inc.
0000 Xxxxxx Xxxx
Xxxxxx, XX 00000
With a copies to:
Xxx Xxxxxxx
00000 Xx. Xxxxxxx
Xxxxx Xxxxx, XX 00000
if to Seller, to:
Xxxxxxxxx.xxx, Inc.
0000 Xxxxxxxxx Xxxxxx, Xxxxx 000
Xx Xxxxxxx, XX 00000
Phone: 000.000.0000
Fax: 000.000.0000.
e) Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided that neither party may
assign, delegate or otherwise transfer any of its rights or
obligations under this Agreement without the consent of the other
party hereto.
f) Governing Law. This Agreement shall be construed in accordance with
and governed by the law of the State of California.
g) Counterparts: Effectiveness. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the
same effect as if the signatures thereto and hereto were upon the same
instrument.
h) Captions. The captions herein are included for convenience of
reference only and shall be ignored in the construction or
interpretation hereof.
i) Entire Agreement. This Agreement, constitutes the entire agreement
between the parties with respect to the subject matter hereof and
supersedes all prior agreements, understandings and negotiations, both
written and oral, between the parties with respect to the subject
matter of this Agreement No representation, inducement, promise,
understanding, condition or warranty not set forth herein has been
made or relied upon by either party hereto. Neither this Agreement nor
any provision hereof is intended to confer upon any Person other than
the parties hereto any rights or remedies hereunder.
In witness whereof, the parties hereto here caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
BUYER: SELLER:
DC HOLDINGS, INC. XXXXXXXXX.XXX, INC.
By: /s/ Xxx Xxxxxxx By: /s/ Xxx Xxxxxxxx
---------------------------- ------------------------------
Name: Xxx Xxxxxxx Name: Xxx Xxxxxxxx
-------------------------- ----------------------------
Title: President Title: SVP & General Counsel
------------------------- ---------------------
EXHIBIT A
ASSIGNMENT AND ASSUMPTION AGREEMENT
Assignment and Assumption Agreement, dated as of May 19, 2001, between DC
Holdings, Inc., a California corporation ("Buyer"), and Xxxxxxxxx.xxx, Inc.
("Seller"), a Nevada corporation.
WITNESSETH
Whereas, Buyer and Seller have concurrently herewith consummated the
purchase by Buyer of the Purchased Assets pursuant to the terms and conditions
of the Asset Purchase Agreement dated May 19, 2001 between Buyer and Seller,
(the "Asset Purchase Agreement"); capitalized terms not otherwise defined herein
shall have the meaning given them in the Asset Purchase Agreement;
Whereas, pursuant to the Asset Purchase Agreement, Buyer has agreed to
purchase the Purchased Assets and to assume certain liabilities and obligations
of Seller with respect to the Purchased Assets;
Now, therefore, in consideration of the sale and purchase of the Purchased
Assets and in accordance with the terms of the Asset Purchase Agreement, Buyer
and Seller agree as follows:
c) Seller does hereby sell, transfer, assign and deliver to Buyer
all of the right, title and interest of Seller in, to and under
the Purchased Assets.
d) Buyer does hereby accept and assume all the right, title and
interest of Seller in, to and under all of the Purchased Assets
and the Lease and Buyer assumes and agrees to pay, perform and
discharge promptly and fully when due all of the Assumed
Liabilities.
This Agreement shall be construed in accordance with and governed by the
laws of the State of California, without regard to the conflicts of law rules of
such state.
This Agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original, but all of which together shall constitute
one and the same instrument.
In witness whereof, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
BUYER: SELLER:
DC HOLDINGS, INC. XXXXXXXXX.XXX, INC.
By: /s/ Xxx Xxxxxxx By: /s/ Xxx Xxxxxxxx
----------------------------- ------------------------------
Name: Xxx Xxxxxxx Name: Xxx Xxxxxxxx
--------------------------- ----------------------------
Title: President Title: SVP & General Counsel
-------------------------- ---------------------
EXHIBIT B
PROMISSORY NOTE
Up to $750,000 May 19, 2001
FOR VALUE RECEIVED, the undersigned, DC Holdings, Inc., a California
corporation ("DC"), promises to pay to the order of Xxxxxxxxx.xxx, Inc.
(hereinafter "Lender") its successors and assigns, at 0000 Xxxxxxxxx Xxxxxx,
Xxxxx 000, Xx Xxxxxxx, Xxxxxxxxxx 00000 or at such other place as the holder
hereof may designate in writing, in lawful money of the United States of
America, within thirty (30) days after the last day of each calendar quarter an
amount equal to:
(1) Seven percent (7%) of DC's net revenue, defined as gross xxxxxxxx
less cost for any hardware or outside services but including all
revenue for xxxxxxxx for Westech employees, for the period from
May 19, 2001 to December 31, 2001;
(2) Six percent (6%) of DC's net revenue, defined as gross xxxxxxxx
less cost for any hardware or outside services but including all
revenue for xxxxxxxx for Westech employees, for the period from
January 1, 2002 to December 31, 2002;
(3) Five percent (5%) of DC's net revenue, defined as gross xxxxxxxx
less cost for any hardware or outside services but including all
revenue for xxxxxxxx for Westech employees, for the period from
January 1, 2003 to December 31, 2003;
(4) Four percent (4%) of DC's net revenue, defined as gross xxxxxxxx
less cost for any hardware or outside services but including all
revenue for xxxxxxxx for Westech employees, for the period from
January 1, 2004 to December 31, 2004; and
(5) Three percent (3%) of DC's net revenue, defined as gross xxxxxxxx
less cost for any hardware or outside services but including all
revenue for xxxxxxxx for Westech employees, for the period from
January 1, 2005 to December 31, 2005.
ii) In no instance shall any payment in any quarter under this Note be
less than thirty thousand dollars ($30,000).
iii) In no instance shall the cumulative payments under this Note exceed
seven hundred fifty thousand dollars ($750,000).
DC may prepay this Note if more any party who is not a shareholder in DC as
of May 19, 2001 acquires more than fifty percent (50%) of DC's common stock.
There shall be no penalty for prepayment. However, should this Note be prepaid,
the amount of such prepayment shall equal five hundred thousand dollars
($500,000).
This Note is made without interest. However, in the event that any payment
owed hereunder is late, Lender or its successors or assigns shall have the right
to charge DC interest on any past due amount at the maximum rate allowed by law.
This Note is secured by a Security Agreement of even date herewith pledging
certain property of DC.
If payment of any installment of principal is not paid when due hereunder,
or upon the occurrence of any Event of Default described in any agreement
evidencing or securing this Note (collectively "Loan Documents") (such event
hereinafter an "Event of Default"), then Lender or any holder hereof shall have
the right and option to declare the unpaid principal and interest balance
hereunder immediately due and payable, without notice.
Time shall be of the essence in the payment of any sums due hereunder and
the performance of any covenants or agreements contained herein or in the Loan
Documents.
Acceptance of any payment in an amount less than the amount due shall be
deemed an acceptance on account only, and the failure to pay the entire amount
then due shall be and continue to be an Event of Default under this Note.
Upon any Event of Default, neither the failure of the holder to promptly
exercise its right to declare the outstanding principal balance and accrued
unpaid interest hereunder to be immediately due and payable, nor the failure of
the holder to demand strict performance of any obligation of any person who may
be liable hereunder, or any guarantor hereof, shall constitute a waiver of any
such rights. In addition, any waiver of any rights which shall be given by the
holder must and shall be in writing, and signed by the holder and then shall be
enforceable only to the extent specifically set forth in writing. Waiver with
reference to one event shall not be construed as continuing or as a bar to or a
waiver of any right or remedy as to a subsequent event.
The remedies of the holder, as provided herein, by law and in any Loan
Documents, are not exclusive and shall be cumulative and concurrent and may be
pursued singly, successively, or together, at the sole discretion of the holder
and may be exercised as often as the occasion therefore shall occur; and the
failure to exercise any such right or remedy shall in no event be construed as a
waiver or release thereof.
The undersigned and all endorsers, guarantors, or any other person who may
be liable hereunder, hereby jointly and severally waive presentment for payment,
demand, notice of nonpayment, notice of protest and protest of this Note,
diligence in collection or bringing suit,
and all endorsers, guarantors or any other person who may be liable hereunder
consent to any and all extensions of time, renewals, waivers or modifications
that may be granted by the holder with respect to payment or other provisions of
this Note, said Loan Documents, and to the release of any collateral or any part
thereof, with or without substitution.
The undersigned, its successors or assigns, shall pay on demand all costs
and expenses, including reasonable attorney's fees, incurred by the holder in
enforcing collection of the indebtedness evidenced by this Note.
Notwithstanding any provision in this Note or in the Loan Documents to the
contrary, nothing herein or therein shall be construed so as to permit or
require the payment of interest in excess of the highest rate of interest
permitted to be charged in connection with the laws of the State of California.
In the event that the interest in excess of such maximum rate of interest is
received, then such excess shall be automatically applied to the principal
balance due hereunder.
The laws of the State of California shall govern this Note.
IN WITNESS WHEREOF, the undersigned has executed this Note the day and year
first written above.
DC HOLDINGS, INC.
/s/ Xxx Xxxxxxx
----------------------------------
Name: Xxx Xxxxxxx
----------------------------
Title: President
---------------------------
EXHIBIT C
SECURITY AGREEMENT
THIS SECURITY AGREEMENT made this 19th day of May, 2001, by DC Holdings,
Inc. a California corporation (the Debtor) having its principal presently
located at 0000 Xxxxxx Xxxx, Xxxxxx, Xxxxxxxxxx 00000 (whether one or more,
hereinafter referred to as the "Debtor"), in favor of Xxxxxxxxx.xxx, Inc., its
successors and assigns, whose address is 0000 Xxxxxxxxx Xxxxxx, Xxxxx 000, Xx
Xxxxxxx, Xxxxxxxxxx 00000 (hereinafter referred to as the "Secured Party").
W I T N E S S E T H:
WHEREAS, Debtor is indebted to the Secured Party in the principal amount of
up to $750,000, as evidenced by its Promissory Note in said amount (hereinafter
referred to as the "Note") of even date herewith executed and delivered by
Debtor in connection with the sale of the assets of Xxxxxxxxx.xxx, Inc. which
are related to its WesTech division to Debtor pursuant to a Purchase Agreement
of even date (the "Purchase Agreement"); and
WHEREAS, the sale of the assets of Xxxxxxxxx.xxx, Inc. to the Debtor is
conditioned upon the Debtor further securing the Note by, giving to Secured
Party a security interest in the property described on Schedule "A".
NOW, THEREFORE, in consideration for making of the loan and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties do hereby agree as follows:
1. SECURITY INTEREST:
1.1 In consideration of the above mentioned sale, Debtor hereby grants to
Secured Party a security interest (hereinafter referred to as the "Security
Interest") in all of the property of the Debtor described in Exhibit A whether
now owned or hereafter acquired together with any proceeds thereof (hereinafter
referred to as the "Collateral").
1.2 This Security Agreement and the rights hereby (granted shall secure the
following (hereinafter collectively referred to as the "Obligations"):
(a) The principal of, the interest on, and any other sums due under
the Note, and any renewals, extensions or modifications thereof; and
(b) The statutory costs of all legal proceedings brought by the
Secured Party to enforce the Note, all other costs and expenses paid or incurred
by the Secured Party in respect of or in connection with the Collateral, and any
other sums that may become due and payable hereunder by the Debtor; and
(c) Any and all indebtedness, obligations and liabilities of any kind
and nature of the Debtor (or if more than one, by either Debtor) to Secured
Party, direct or indirect, absolute or contingent, due or to become due, now
existing or hereafter arising.
2. DEBTOR WARRANTS, COVENANTS AND AGREES:
The Debtor hereby warrants, covenants and agrees that:
2.1 The Collateral covered by this Security Agreement is used or purchased
for use primarily for business purposes.
2.2 Although proceeds of Collateral are covered by this Security Agreement,
this shall not be construed to mean that Secured Party consents to any sale of
such property.
2.3 The Collateral will be located at the offices of Debtor listed on
Exhibit A attached hereto and made part hereof (collectively the "Premises").
Except for purposes of replacement and repair of the equipment and for sale of
the inventory in the ordinary course of business, the Debtor will not remove its
Collateral from the Premises, or allow it to be removed, from said Premises
without the prior written consent of the Secured Party. The Debtor will promptly
give written notice to the Secured Party of any cessation of its business
conducted at the location and of any loss or damage by fire or other casualty to
any substantial part of the Collateral.
2.4 The Debtor will, at all reasonable times, allow the Secured Party or
its representatives free and complete access to all of the Debtor's records, for
such inspection and examination as the Secured Party deems necessary. The Debtor
shall also upon request of the Secured Party from time to time submit up-to-date
schedules of the items comprising the Collateral owned by it in such detail as
the Secured Party shall reasonably require.
2.5 The Debtor at its cost and expense will protect and defend this
Agreement, all of the rights of the Secured Party hereunder, and the Collateral
owned by it against the claims and demands of all other parties.
2.6 The Debtor will at all times keep and maintain the Collateral owned by
it in good order, repair and condition, and will promptly replace any part
thereof that from time to time may become obsolete, badly worn, or in a state of
disrepair, or, if supplies, be consumed in the normal course of the Debtor's
business operations. All such replacements shall be free of any other lien,
security interest or encumbrance of any nature. The Debtor may sell or dispose
of only that part of the Collateral that Debtor is obligated to replace, and,
unless Secured Party then agrees otherwise in writing, all proceeds from any
such sale or disposition in excess of the amount expended for such replacements
shall promptly be paid over by the Debtor to the Secured Party to be applied
against the sums secured hereby, whether or not such sums are then due and
payable.
2.7 The Secured Party or its representatives may at any and all reasonable
times inspect the Collateral and may enter upon any and all Premises where the
same is kept or might be located.
2.8 The Debtor will not, without obtaining the prior written consent of
Secured Party, transfer or permit any transfer of the Collateral owned by it or
any part thereof to be made, or any interest therein to be created by way of a
sale (except as permitted above), or by way of a grant of a security interest,
or by way of a levy or other judicial process. Notwithstanding anything
contained herein to the contrary the Secured Party agrees that it will
subordinate any security interest herein granted to any security interest
required of Debtor by any financial institution.
2.9 The Debtor will promptly notify Secured Party of any levy, distraint or
other seizure by legal process or otherwise of any part of its Collateral, and
of any threatened or filed claims or proceedings that might in any way affect or
impair any of the terms of this Agreement.
2.10 The Secured Party at all times shall have a perfected security
interest in the Collateral that shall be prior to any other interests therein.
Debtor will do all acts and things, and will execute, and file, all instruments
(including Security Agreements, Financing Statements, Continuation Statements,
etc.) requested by, the Secured Party to establish, maintain and continue the
perfected Security Interest of Secured Party in the Collateral, and will
promptly on demand, pay all costs and expenses of filing and recording,
including the costs of any searches deemed necessary by Secured Party from time
to time to establish and determine the validity and the continuing priority of
the Security Interest of Secured Party, and also pay all other claims and
charges that in the opinion of Secured Party might prejudice, imperil or
otherwise affect the Collateral or its security interest therein.
2.11 The Debtor at its expense will obtain and maintain in force insurance
policies covering losses or damage to its Collateral. The insurance policies to
be obtained by the Debtor shall be in form and amounts acceptable to Secured
Party. The Secured Party is hereby irrevocably appointed the Debtor's attorney
in fact to endorse any check or draft that may be payable to the Debtor, alone
or jointly with other payees, so that the Secured Party may collect the proceeds
payable for any loss under such insurance. The proceeds of such insurance, less
any costs and expenses incurred or paid by the Secured Party in the collection
thereof shall be applied in the sole discretion of the Secured Party, either
toward the cost of the repair or replacement of the items damaged or destroyed,
or on account of any sums secured hereby, whether or not then due or payable.
2.12 The Secured Party may, at its option, and without any obligation to do
so, pay, perform and discharge any and all amounts, costs, expenses and
liabilities herein agreed to be paid or performed by Debtor, and all amounts
expended by the Secured Party, in so doing shall become part of the Obligations
secured hereby, and shall be immediately due and payable by Debtor to
the Secured Party upon demand therefore, and shall bear interest at the interest
rate, as defined in the Note, from the dates of such expenditures until paid.
2.13 Debtor will give Secured Party immediate written notice of any change
in location of Debtor's chief executive office.
3. EVENTS OF DEFAULT:
The occurrence of any of the following events shall constitute and is hereby
defined to be, an "Event of Default":
3.1 Any failure or neglect to observe or perform any of the terms,
provisions, promises, agreements or covenants of this Security Agreement and the
continuance of such failure or neglect after notice thereof to the Debtor; or
3.2 Any failure of the maker to pay any installment of principal and/or
interest, or any other sum due under the Note or of Debtor to pay any other
Obligations secured hereby, at the time such installment shall become due and
payable.
3.3 Any warranty, representation or statement contained in this Security
Agreement made or furnished to the Secured Party by or on behalf of the Debtor,
which shall be or shall prove to have been materially false when made or
furnished; or
4. SECURED PARTY'S REMEDIES:
Upon the occurrence of any Event of Default hereunder, Secured Party shall have
the following rights and remedies, at any time after giving notice and after the
expiration of the grace period provided herein:
4.1 The Secured Party may, at its option, declare all or any part of the
Obligations immediately due and payable and Debtor shall on demand by Secured
Party deliver the Collateral to the Secured Party. Secured Party may, without
further notice or demand and without legal process, take possession of the
Collateral wherever found and, for this purpose, may enter upon said Real
Property or upon any other property occupied by or in the control of the Debtor.
The Secured Party may require the Debtor to assemble the Collateral and make it
available to the Secured Party at a place to be designated by the Secured Party
that is reasonably convenient to both parties.
4.2 The Secured Party may pursue any legal remedy available to collect all
sums secured hereby and to enforce its title in and right to possession of the
Collateral, and to enforce any and all other rights or remedies available to it,
and no such action shall operate as a waiver of any other right or remedy of the
Secured Party under the terms hereof, or under the laws of the State of
California.
4.3 Debtor waives any requirements of presentment, protest, notices of
protest, notices of dishonor, and all other formalities. Debtor waives all
rights and/or privilege it might otherwise have to require Secured Party to
proceed against or exhaust the Collateral encumbered hereby or by any other
security document or instrument securing said Note or to proceed against any
guarantor of such indebtedness, or to pursue any other remedy available to
Secured Party in any particular manner or order under the legal or equitable
doctrine or principle of marshalling and/or suretyship and further agrees that
Secured Party may proceed against any or all of the Collateral encumbered hereby
or by any other security document or instrument securing said Note in the event
of default and after expiration of any applicable grace period following notice
in such order and manner as Secured Party in its sole discretion may determine.
Any Debtor that has signed this Security Agreement as a surety or accommodation
party, or that has subjected its property to this Security Agreement to secure
the indebtedness of another hereby expressly waives any defense arising by
reason of any disability or other defense of the maker or by reason of the
cessation from any cause whatsoever of the liability of maker, and waives the
benefit of any statutes of limitation affecting the enforcement hereof.
4.4 The Secured Party, upon obtaining possession of the Collateral or any
part thereof, may sell the same at public or private sale either with or without
having such Collateral at the place of sale, and with notice to Debtor as
provided in paragraph 4.6 herein. The proceeds of such sale, after deducting
therefor all expenses of the Secured Party in taking, storing, repairing and
selling the Collateral (including reasonable attorneys' fees) shall be applied
to the payment of any part or all of the obligations and any other indebtedness
or liability of the Debtor to the Secured Party, and any surplus thereafter
remaining shall be paid to the Debtor, or any other person that may be legally
entitled thereto. In the event of a deficiency, between such net proceeds from
the sale of Collateral and the total amount owing by the Debtor under the
Obligations, the Debtor (or if more than one, jointly and severally) will
promptly upon demand pay the amount of such deficiency to the Secured Party.
4.5 At any sale, public or private, of the Collateral or any part thereof,
made in the enforcement of the rights and remedies hereunder of the Secured
Party; the Secured Party may, so far as may be lawful, purchase any part or
parts of the Collateral or all thereof offered at such sale.
4.6 Secured Party shall give Debtor reasonable notice of any sale or other
disposition of the Collateral or any part thereof. Debtor agrees that notice and
demand shall be conclusively deemed to be reasonable and effective if such
notice is mailed by registered or certified mail postage prepaid, to the Debtor
at the address above given, or at such other address as the Debtor may designate
hereafter by written notice to the Secured Party, at least ten (10) days prior
to such sale or other disposition.
4.7 The Secured Party shall have all the rights and remedies afforded a
Secured Party under the California Uniform Commercial Code and all other legal
or equitable remedies provided by the laws of the United States and the State of
California.
5. MISCELLANEOUS PROVISIONS:
5.1 No Event of Default hereunder by Debtor shall be deemed to have been
waived by the Secured Party except by a writing to that effect signed on behalf
of the Secured Party by an officer thereof and no waiver of any such Event of
Default shall operate as a waiver of any such Event of Default shall operate as
a waiver of any other Event of Default on a future occasion, or as a waiver of
that Event of Default after written notice thereof and demand by Secured Party
for strict performance of this Agreement. All rights, remedies and privileges of
the Secured Party hereunder shall be cumulative and not alternative, and shall,
whether or not specifically so expressed, inure to the benefit of the Secured
Party, its successors and assigns, and all obligations of the Debtor shall bind
its successors and legal representatives.
5.2 Until an Event of Default and expiration of any applicable grace
period, the Debtor may retain possession of the Collateral and may use it in any
lawful manner not inconsistent with this Security Agreement or with the
provisions of any policies of insurance thereon.
5.3 The terms herein shall have the meanings in and be construed under the
California Commercial Code and all issues arising hereunder shall be governed by
the laws of the State of California. Whenever possible each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
5.4 No modification, rescission, waiver, release or amendment of any
provision of this Security Agreement shall be made except by a written agreement
subscribed by Debtor and a duly authorized officer of Secured Party.
5.5 This Security Agreement shall remain in full force and effect until all
of the indebtedness of the Debtor to the Secured Party, and any extensions or
renewals thereof shall be paid in full.
5.6 Secured Party and Debtor as used herein shall include the heirs,
executors or administrator, or successors or assigns of those parties. The
provisions of this Agreement shall apply to the parties according to the context
hereof and without regard to the number or gender of words and expressions used
herein.
5.7 A carbon, photographic or other reproduced copy of this Security
Agreement and/or any financing statement relating hereto shall be sufficient for
filing and/or recording as a financing statement.
IN WITNESS WHEREOF, this Security Agreement has been executed and delivered
on behalf of and in the name of Debtor on the date indicated above.
SECURED PARTY: DEBTOR:
Xxxxxxxxx.xxx, Inc. DC Holdings, Inc.
By: /s/ Xxx Xxxxxxxx By: /s/ Xxx Xxxxxxx
----------------------------- --------------------------------
Name: Xxx Xxxxxxxx Name: Xxx Xxxxxxx
--------------------------- ------------------------------
Its: SVP & General Counsel Its: President
---------------------------- -------------------------------
SCHEDULE "A"
EXHIBIT D
PROMISSORY NOTE
$21,076.94 May 19, 2001
FOR VALUE RECEIVED, the undersigned, DC Holdings, Inc., a California
corporation ("DC"), promises to pay to the order of Xxxxxxxxx.xxx, Inc.
(hereinafter "Lender") its successors and assigns, at 0000 Xxxxxxxxx Xxxxxx,
Xxxxx 000, Xx Xxxxxxx, Xxxxxxxxxx 00000 or at such other place as the holder
hereof may designate in writing, in lawful money of the United States of
America, no later than June 1, 2001 an amount equal to TWENTY-ONE THOUSAND
SEVENTY SIX DOLLARS AND NINETY-FOUR CENTS ($21,076.94).
There shall be no penalty for prepayment.
This Note is made without interest. However, in the event that any payment
owed hereunder is late, Lender or its successors or assigns shall have the right
to charge DC interest on any outstanding principal at the maximum rate allowed
by law.
This Note is secured by a Security Agreement of even date herewith pledging
certain property of DC.
If payment of any installment of principal is not paid when due hereunder,
or upon the occurrence of any Event of Default described in any agreement
evidencing or securing this Note (collectively "Loan Documents") (such event
hereinafter an "Event of Default"), then Lender or any holder hereof shall have
the right and option to declare the unpaid principal and interest balance
hereunder immediately due and payable, without notice.
Time shall be of the essence in the payment of any sums due hereunder and
the performance of any covenants or agreements contained herein or in the Loan
Documents.
Acceptance of any payment in an amount less than the amount due shall be
deemed an acceptance on account only, and the failure to pay the entire amount
then due shall be and continue to be an Event of Default under this Note.
Upon any Event of Default, neither the failure of the holder to promptly
exercise its right to declare the outstanding principal balance and accrued
unpaid interest hereunder to be immediately due and payable, nor the failure of
the holder to demand strict performance of any obligation of any person who may
be liable hereunder, or any guarantor hereof, shall constitute a waiver of any
such rights. In addition, any waiver of any rights which shall be given by the
holder must and shall be in writing, and signed by the holder and then shall be
enforceable only to the extent specifically set forth in writing. Waiver with
reference to one event shall not be construed as continuing or as a bar to or a
waiver of any right or remedy as to a subsequent event.
The remedies of the holder, as provided herein, by law and in any Loan
Documents, are not exclusive and shall be cumulative and concurrent and may be
pursued singly, successively, or together, at the sole discretion of the holder
and may be exercised as often as the occasion therefore shall occur; and the
failure to exercise any such right or remedy shall in no event be construed as a
waiver or release thereof.
The undersigned and all endorsers, guarantors, or any other person who may
be liable hereunder, hereby jointly and severally waive presentment for payment,
demand, notice of nonpayment, notice of protest and protest of this Note,
diligence in collection or bringing suit, and all endorsers, guarantors or any
other person who may be liable hereunder consent to any and all extensions of
time, renewals, waivers or modifications that may be granted by the holder with
respect to payment or other provisions of this Note, said Loan Documents, and to
the release of any collateral or any part thereof, with or without substitution.
The undersigned, its successors or assigns, shall pay on demand all costs
and expenses, including reasonable attorney's fees, incurred by the holder in
enforcing collection of the indebtedness evidenced by this Note.
Notwithstanding any provision in this Note or in the Loan Documents to the
contrary, nothing herein or therein shall be construed so as to permit or
require the payment of interest in excess of the highest rate of interest
permitted to be charged in connection with the laws of the State of California.
In the event that the interest in excess of such maximum rate of interest is
received, then such excess shall be automatically applied to the principal
balance due hereunder.
The laws of the State of California shall govern this Note.
IN WITNESS WHEREOF, the undersigned has executed this Note the day and year
first written above. DC HOLDINGS, INC.
/s/ Xxx Xxxxxxx
---------------------------------------
Name: Xxx Xxxxxxx
---------------------------------
Title: President
--------------------------------
EXHIBIT E
SECURITY AGREEMENT
THIS SECURITY AGREEMENT made this 19th day of May, 2001, by DC Holdings,
Inc. a California corporation (the Debtor) having its principal presently
located at 0000 Xxxxxx Xxxx, Xxxxxx, Xxxxxxxxxx 00000 (whether one or more,
hereinafter referred to as the "Debtor"), in favor of Xxxxxxxxx.xxx, Inc., its
successors and assigns, whose address is 0000 Xxxxxxxxx Xxxxxx, Xxxxx 000, Xx
Xxxxxxx, Xxxxxxxxxx 00000 (hereinafter referred to as the "Secured Party").
W I T N E S S E T H:
WHEREAS, Debtor is indebted to the Secured Party in the principal amount of
TWENTY-ONE THOUSAND SEVENTY-SIX DOLLARS AND NINETY FOUR CENTS ($21,076.94), as
evidenced by its Promissory Note in said amount (hereinafter referred to as the
"Note") of even date herewith executed and delivered by Debtor in connection
with the Secured Party's advancing such sums to cover Debtor's payroll for the
period from May 19, 2001 to May 30, 2001 as part of the sale of the assets of
Xxxxxxxxx.xxx, Inc. which are related to its WesTech division to Debtor pursuant
to a Purchase Agreement of even date (the "Purchase Agreement"); and
WHEREAS, the advancement of sums by Xxxxxxxxx.xxx, Inc. to the Debtor is
conditioned upon the Debtor further securing the Note by, giving to Secured
Party a security interest in the property described on Schedule "A".
NOW, THEREFORE, in consideration for making of the loan and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties do hereby agree as follows:
i. SECURITY INTEREST:
i.7 In consideration of the above mentioned sale, Debtor hereby grants to
Secured Party a security interest (hereinafter referred to as the
"Security Interest") in all of the property of the Debtor described in
Exhibit A whether now owned or hereafter acquired together with any
proceeds thereof (hereinafter referred to as the "Collateral").
i.7 This Security Agreement and the rights hereby (granted shall secure the
following (hereinafter collectively referred to as the "Obligations"):
i. The principal of, the interest on, and any other sums due under the
Note, and any renewals, extensions or modifications thereof; and
(b) The statutory costs of all legal proceedings brought by the Secured
Party to enforce the Note, all other costs and expenses paid or incurred by the
Secured Party in
respect of or in connection with the Collateral, and any other sums that may
become due and payable hereunder by the Debtor; and
i. Any and all indebtedness, obligations and liabilities of any kind and
nature of the Debtor (or if more than one, by either Debtor) to
Secured Party, direct or indirect, absolute or contingent, due or to
become due, now existing or hereafter arising.
i. DEBTOR WARRANTS, COVENANTS AND AGREES:
The Debtor hereby warrants, covenants and agrees that:
i.7 The Collateral covered by this Security Agreement is used or purchased
for use primarily for business purposes.
i.7 Although proceeds of Collateral are covered by this Security
Agreement, this shall not be construed to mean that Secured Party
consents to any sale of such property.
i.7 The Collateral will be located at the offices of Debtor listed on
Exhibit A attached hereto and made part hereof (collectively the
"Premises"). Except for purposes of replacement and repair of the
equipment and for sale of the inventory in the ordinary course of
business, the Debtor will not remove its Collateral from the Premises,
or allow it to be removed, from said Premises without the prior
written consent of the Secured Party. The Debtor will promptly give
written notice to the Secured Party of any cessation of its business
conducted at the location and of any loss or damage by fire or other
casualty to any substantial part of the Collateral.
i.7 The Debtor will, at all reasonable times, allow the Secured Party or
its representatives free and complete access to all of the Debtor's
records, for such inspection and examination as the Secured Party
deems necessary. The Debtor shall also upon request of the Secured
Party from time to time submit up-to-date schedules of the items
comprising the Collateral owned by it in such detail as the Secured
Party shall reasonably require.
i.7 The Debtor at its cost and expense will protect and defend this
Agreement, all of the rights of the Secured Party hereunder, and the
Collateral owned by it against the claims and demands of all other
parties.
i.7 The Debtor will at all times keep and maintain the Collateral owned by
it in good order, repair and condition, and will promptly replace any
part thereof that from time to time may become obsolete, badly worn,
or in a state of disrepair, or, if supplies, be consumed in the normal
course of the Debtor's business operations. All such replacements
shall be free of any other lien, security interest or encumbrance of
any nature. The Debtor may sell or dispose of only that part of the
Collateral that Debtor is
obligated to replace, and, unless Secured Party then agrees otherwise
in writing, all proceeds from any such sale or disposition in excess
of the amount expended for such replacements shall promptly be paid
over by the Debtor to the Secured Party to be applied against the sums
secured hereby, whether or not such sums are then due and payable.
i.7 The Secured Party or its representatives may at any and all reasonable
times inspect the Collateral and may enter upon any and all Premises
where the same is kept or might be located.
i.7 The Debtor will not, without obtaining the prior written consent of
Secured Party, transfer or permit any transfer of the Collateral owned
by it or any part thereof to be made, or any interest therein to be
created by way of a sale (except as permitted above), or by way of a
grant of a security interest, or by way of a levy or other judicial
process. Notwithstanding anything contained herein to the contrary the
Secured Party agrees that it will subordinate any security interest
herein granted to any security interest required of Debtor by any
financial institution.
i.7 The Debtor will promptly notify Secured Party of any levy, distraint
or other seizure by legal process or otherwise of any part of its
Collateral, and of any threatened or filed claims or proceedings that
might in any way affect or impair any of the terms of this Agreement.
2.10 The Secured Party at all times shall have a perfected security
interest in the Collateral that shall be prior to any other interests therein.
Debtor will do all acts and things, and will execute, and file, all instruments
(including Security Agreements, Financing Statements, Continuation Statements,
etc.) requested by, the Secured Party to establish, maintain and continue the
perfected Security Interest of Secured Party in the Collateral, and will
promptly on demand, pay all costs and expenses of filing and recording,
including the costs of any searches deemed necessary by Secured Party from time
to time to establish and determine the validity and the continuing priority of
the Security Interest of Secured Party, and also pay all other claims and
charges that in the opinion of Secured Party might prejudice, imperil or
otherwise affect the Collateral or its security interest therein.
i.7 The Debtor at its expense will obtain and maintain in force insurance
policies covering losses or damage to its Collateral. The insurance
policies to be obtained by the Debtor shall be in form and amounts
acceptable to Secured Party. The Secured Party is hereby irrevocably
appointed the Debtor's attorney in fact to endorse any check or draft
that may be payable to the Debtor, alone or jointly with other payees,
so that the Secured Party may collect the proceeds payable for any
loss under such insurance. The proceeds of such insurance, less any
costs and expenses incurred or paid by the Secured Party in the
collection thereof shall be applied in the sole discretion of the
Secured Party, either
toward the cost of the repair or replacement of the items damaged or
destroyed, or on account of any sums secured hereby, whether or not
then due or payable.
i.7 The Secured Party may, at its option, and without any obligation to do
so, pay, perform and discharge any and all amounts, costs, expenses
and liabilities herein agreed to be paid or performed by Debtor, and
all amounts expended by the Secured Party, in so doing shall become
part of the Obligations secured hereby, and shall be immediately due
and payable by Debtor to the Secured Party upon demand therefore, and
shall bear interest at the interest rate, as defined in the Note, from
the dates of such expenditures until paid.
i.7 Debtor will give Secured Party immediate written notice of any change
in location of Debtor's chief executive office.
i. EVENTS OF DEFAULT:
The occurrence of any of the following events shall constitute and is hereby
defined to be, an "Event of Default":
i.7 Any failure or neglect to observe or perform any of the terms,
provisions, promises, agreements or covenants of this Security
Agreement and the continuance of such failure or neglect after notice
thereof to the Debtor; or
i.7 Any failure of the maker to pay any installment of principal and/or
interest, or any other sum due under the Note or of Debtor to pay any
other Obligations secured hereby, at the time such installment shall
become due and payable.
i.7 Any warranty, representation or statement contained in this Security
Agreement made or furnished to the Secured Party by or on behalf of
the Debtor, which shall be or shall prove to have been materially
false when made or furnished; or
i. SECURED PARTY'S REMEDIES:
Upon the occurrence of any Event of Default hereunder, Secured Party shall have
the following rights and remedies, at any time after giving notice and after the
expiration of the grace period provided herein:
i.7 The Secured Party may, at its option, declare all or any part of the
Obligations immediately due and payable and Debtor shall on demand by
Secured Party deliver the Collateral to the Secured Party. Secured
Party may, without further notice or demand and without legal process,
take possession of the Collateral wherever found and, for this
purpose, may enter upon said Real Property or upon any other property
occupied by or in the control of the Debtor. The Secured Party may
require the Debtor to assemble the
Collateral and make it available to the Secured Party at a place to be
designated by the Secured Party that is reasonably convenient to both
parties.
i.7 The Secured Party may pursue any legal remedy available to collect all
sums secured hereby and to enforce its title in and right to
possession of the Collateral, and to enforce any and all other rights
or remedies available to it, and no such action shall operate as a
waiver of any other right or remedy of the Secured Party under the
terms hereof, or under the laws of the State of California.
i.7 Debtor waives any requirements of presentment, protest, notices of
protest, notices of dishonor, and all other formalities. Debtor waives
all rights and/or privilege it might otherwise have to require Secured
Party to proceed against or exhaust the Collateral encumbered hereby
or by any other security document or instrument securing said Note or
to proceed against any guarantor of such indebtedness, or to pursue
any other remedy available to Secured Party in any particular manner
or order under the legal or equitable doctrine or principle of
marshalling and/or suretyship and further agrees that Secured Party
may proceed against any or all of the Collateral encumbered hereby or
by any other security document or instrument securing said Note in the
event of default and after expiration of any applicable grace period
following notice in such order and manner as Secured Party in its sole
discretion may determine. Any Debtor that has signed this Security
Agreement as a surety or accommodation party, or that has subjected
its property to this Security Agreement to secure the indebtedness of
another hereby expressly waives any defense arising by reason of any
disability or other defense of the maker or by reason of the cessation
from any cause whatsoever of the liability of maker, and waives the
benefit of any statutes of limitation affecting the enforcement
hereof.
i.7 The Secured Party, upon obtaining possession of the Collateral or any
part thereof, may sell the same at public or private sale either with
or without having such Collateral at the place of sale, and with
notice to Debtor as provided in paragraph 4.6 herein. The proceeds of
such sale, after deducting herefore all expenses of the Secured Party
in taking, storing, repairing and selling the Collateral (including
reasonable attorneys' fees) shall be applied to the payment of any
part or all of the obligations and any other indebtedness or liability
of the Debtor to the Secured Party, and any surplus thereafter
remaining shall be paid to the Debtor, or any other person that may be
legally entitled thereto. In the event of a deficiency, between such
net proceeds from the sale of Collateral and the total amount owing by
the Debtor under the Obligations, the Debtor (or if more than one,
jointly and severally) will promptly upon demand pay the amount of
such deficiency to the Secured Party.
i.7 At any sale, public or private, of the Collateral or any part thereof,
made in the enforcement of the rights and remedies hereunder of the
Secured Party; the Secured Party may, so far as may be lawful,
purchase any part or parts of the Collateral or all thereof offered at
such sale.
i.7 Secured Party shall give Debtor reasonable notice of any sale or other
disposition of the Collateral or any part thereof. Debtor agrees that
notice and demand shall be conclusively deemed to be reasonable and
effective if such notice is mailed by registered or certified mail
postage prepaid, to the Debtor at the address above given, or at such
other address as the Debtor may designate hereafter by written notice
to the Secured Party, at least ten (10) days prior to such sale or
other disposition.
i.7 The Secured Party shall have all the rights and remedies afforded a
Secured Party under the California Uniform Commercial Code and all
other legal or equitable remedies provided by the laws of the United
States and the State of California.
i. MISCELLANEOUS PROVISIONS:
i.7 No Event of Default hereunder by Debtor shall be deemed to have been
waived by the Secured Party except by a writing to that effect signed
on behalf of the Secured Party by an officer thereof and no waiver of
any such Event of Default shall operate as a waiver of any such Event
of Default shall operate as a waiver of any other Event of Default on
a future occasion, or as a waiver of that Event of Default after
written notice thereof and demand by Secured Party for strict
performance of this Agreement. All rights, remedies and privileges of
the Secured Party hereunder shall be cumulative and not alternative,
and shall, whether or not specifically so expressed, inure to the
benefit of the Secured Party, its successors and assigns, and all
obligations of the Debtor shall bind its successors and legal
representatives.
i.7 Until an Event of Default and expiration of any applicable grace
period, the Debtor may retain possession of the Collateral and may use
it in any lawful manner not inconsistent with this Security Agreement
or with the provisions of any policies of insurance thereon.
i.7 The terms herein shall have the meanings in and be construed under the
California Commercial Code and all issues arising hereunder shall be
governed by the laws of the State of California. Whenever possible
each provision of this Agreement shall be interpreted in such manner
as to be effective and valid under applicable law, but if any
provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of
such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
i.7 No modification, rescission, waiver, release or amendment of any
provision of this Security Agreement shall be made except by a written
agreement subscribed by Debtor and a duly authorized officer of
Secured Party.
i.7 This Security Agreement shall remain in full force and effect until
all of the indebtedness of the Debtor to the Secured Party, and any
extensions or renewals thereof shall be paid in full.
i.7 Secured Party and Debtor as used herein shall include the heirs,
executors or administrator, or successors or assigns of those parties.
The provisions of this Agreement shall apply to the parties according
to the context hereof and without regard to the number or gender of
words and expressions used herein.
i.7 A carbon, photographic or other reproduced copy of this Security
Agreement and/or any financing statement relating hereto shall be
sufficient for filing and/or recording as a financing statement.
IN WITNESS WHEREOF, this Security Agreement has been executed and delivered
on behalf of and in the name of Debtor on the date indicated above.
SECURED PARTY: DEBTOR:
Xxxxxxxxx.xxx, Inc. DC Holdings, Inc.
By: /s/ Xxx Xxxxxxxx By: /s/ Xxx Xxxxxxx
---------------------------- --------------------------------
Name: Xxx Xxxxxxxx Name: Xxx Xxxxxxx
-------------------------- ------------------------------
Its: SVP & General Counsel Its: President
--------------------------- -------------------------------
SCHEDULE "A"
SCHEDULE 1.1
PURCHASED ASSET SCHEDULE
The Purchased Assets shall consist of, as the same may exist on the Closing
Date, all:
(x) office equipment of the Seller including, without limitation, Seller's
telephone system, computer systems, tools and supplies of Seller's
repair department, advertising signs, catalogs and sales literature;
(xi) leasehold improvements not deemed to be the property of Seller's
landlord including, without limitations, trade fixtures;
(xii) rights to use the trade names "Western Technologies Group" and "WesTech"
for such period of time as Buyer deems necessary;
(xiii) all goodwill associates with the Business and the Purchased Asset
together with the right to represent to third parties that Buyer is the
successor to the Business; and
SCHEDULE 1.2
ASSUMED LIABILITIES
The following shall comprise the Assumed Liabilities:
(ii) Accrued vacation for all employees of record as of closing date.
(iii) Lease of facility at 0000 Xxxxxx Xxxx, Xxxxxx, XX 00000
XXXX OF SALE OF BUSINESS
This Xxxx of Sale of Business is delivered pursuant to that certain Asset
Purchase Agreement (the "Agreement"), dated May 19, 2001, between DC Holdings,
Inc. (the "Buyer") and Xxxxxxxxx.xxx, Inc. (the "Seller"), providing for the
purchase by Buyer of substantially all of the assets of Seller. All capitalized
terms used herein shall have the meanings set forth in the Agreement.
For value received, Seller hereby sells, assigns and transfers to Buyer the
following assets of Seller pertaining to or used in the Business, wherever
located, whether known or unknown, and whether or not on the books and records
of Seller:
(i) office equipment of the Seller including, without limitation, Seller's
telephone system, computer systems, tools and supplies of Seller's repair
department, advertising signs, catalogs and sales literature;
(ii) leasehold improvements not deemed to be the property of Seller's landlord
including, without limitations, trade fixtures;
(iii) rights to use the trade names "Western Technologies Group" and "WesTech"
for such period of time as Buyer deems necessary;
(iv) all goodwill associates with the Business and the Purchased Asset together
with the right to represent to third parties that Buyer is the successor to the
Business; and
(xiv) all other assets on the attached Schedule 1.1 "Purchased Asset Schedule".
In witness whereof, the undersigned has executed this Xxxx of Sale of
Business in El Segundo, California, effective as of May 19, 2001.
XXXXXXXXX.XXX, INC.
By: /s/ Xxx Xxxxxxxx
-----------------------------
Name: Xxx Xxxxxxxx
---------------------------
Title: SVP & General Counsel
--------------------------
XXXXXXXXX.XXX, INC.
OFFICERS CERTIFICATE
I, Xxx X. Xxxxxxxx, hereby certify (i) that I am the Secretary of
Xxxxxxxxx.xxx, Inc. (the "Seller"), (ii) that I am authorized to deliver this
Officer's Certificate, and (iii) that the Seller has authorized all corporate
action necessary on its part to authorized the transactions contemplated by the
Asset Purchase Agreement, dated May 19, 2001, between DC Holdings, Inc. and
Seller.
Dated: May 19, 2001 XXXXXXXXX.XXX, INC.
By: /s/ Xxx Xxxxxxxx
-----------------------------
Name: Xxx X. Xxxxxxxx
Title: Secretary
