EXHIBIT 10.39
XXXX OF SALE
This Xxxx of Sale ("Agreement") is made in consideration of the sum of One
Million Two Hundred Thousand Dollars ($1,170,000) paid to Deutsche Financial
Services Corporation (hereinafter "Seller" or "DFS") by Wareforce Incorporated
(hereinafter "Buyer") and for other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, including the payment of up to
One Million Two Hundred Thousand Dollars ($1,200,000.00) pursuant to the terms
of the Promissory Note delivered by Buyer to Seller concurrently herewith (the
"Note") and attached hereto as Exhibit "A" and incorporated herein by reference
(collectively the "Sale Price"). Seller, in furtherance of its rights as secured
creditor following a default, hereby sells and conveys to Buyer all of the
right, title and interest owned by Pacific Online Computers, Inc (hereinafter
"PO") in and to the following described goods:
i) Intangible Assets. PO's customer lists, phone numbers, marketing
materials, outstanding purchase orders, rights to use the trade names
"Online Connecting Point", "CoreTeks" and "Ops Track" and any associated
trademarks, service marks, logos and the like, accounting records,
service records, customer records and other intangible assets as defined
herein owned by PO and any and all other intangible assets owned by PO
necessary for the continuation of the business after the Closing.
Specifically excluded from the assets purchased is the name "Pacific
Online Computers, Inc", tax refunds owed to PO, PO's prepaids, insurance
claims/proceeds, lawsuit
proceeds, third party actions and causes of action, as well as all
accounts, rebates, vendor credits, price protection payments, warranty
payments, or any other payments owed PO from any of its vendors,
customers, or from any other source whatsoever.
ii) Fixed Assets. All of PO's fixed assets including furniture, fixtures,
and equipment including leasehold improvements, desktop computers,
servers, laptops, printers, copiers, faxes, office supplies, telephone
equipment, firewalls, LAN/WAN, accessories, peripherals, communication
gear, and demo lab equipment (including any and all existing Cisco lab
equipment) and all software currently used by PO, whether PO's licenses
for such software are current or not. Buyer agrees that its use of the
"Trend" software and its subsidiary programs, hardware and connections
will be for a period of no more than sixty (60) days after this Xxxx of
Sale. Specifically excluded from the assets purchased is the cabin owned
by PO and located in Cleveland National Park, all vehicles registered
with the Department of Motor Vehicles, as well as those assets leased to
PO or owned by third parties which were used by PO.
iii) Ops Track System. The Ops Track system, including all of the computer
code, database schemes, linked code to backend database systems (such as
"Trend"), computer listings and all other related assets required for
the operation of Ops Track. These assets specifically include any and
all intellectual property and licensing rights owned by PO.
(1) Buyer grants Seller the right to license the Ops Track source code
to up to ten (10) additional entities for a ninety (90) day period
following the date hereof. Seller shall ensure that the licenses
granted to the licensees of this code is for their use only, and
shall state that they may not sublicense the code or grant use of
their Ops Track system to others.
(2) Buyer will make no warranties or have any liability to support
this code for any such licensee, unless Buyer agrees otherwise.
(3) Notwithstanding anything else to the contrary contained in this
agreement, Seller will not license the Ops Track code to any other
computer reseller in California.
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(4) Notwithstanding anything else to the contrary contained in this
agreement, Seller agrees to grant to Buyer a right of first
refusal prior to the license of the Ops Track code to any other
party so long as Buyer agrees to meet the terms and conditions of
license as did the potential licensee.
Collectively, all of the assets described above as being purchased by
Buyer are referred to herein as the "Purchased Assets". DFS hereby
acknowledges receipt of $200,000.00 paid by Buyer as a deposit against
the payment of $1,200,000.00 described above. Thus, Buyer will remit the
sum of $1,000,000.00 to DFS at Closing and DFS agrees that it will then
advance a sum, not to exceed, $315,836.57 to PO for their payment of
payroll, vacation pay, sales tax and reasonable and necessary business
expenses incurred by PO's employees prior to closing. Buyer will be
responsible for sales commissions owed. Based on the forgoing, DFS will
receive at least the sum of $684,163.43 as the net proceeds from the
$1,000,000.00 to be paid at closing to be applied to PO's indebtedness
to DFS. In addition, DFS acknowledges receipt of $100,000.00 advanced by
Buyer to DFS for the acquisition of inventory to fill orders for
customers.
Sales Returns. In order to reimburse Buyer for any returns in the first
ninety (90) days after Closing for sales made by PO prior to Closing,
Seller agrees that Buyer may deduct such costs (or lost profits), both
net of inventory costs, incurred by Buyer from the principal balance
owing under the Note. Such reimbursements will be taken by the Buyer as
a credit against the outstanding balance of the Note.
This sale and conveyance is made WITHOUT WARRANTY, EXPRESS OR IMPLIED,
AS TO ANY MATTER WHATSOEVER, INCLUDING THE QUALITY, CONTENT OR
CONDITION OF THE GOODS, THERE ARE NO WARRANTIES, EXPRESS OR IMPLIED, AS
TO MERCHANTABILITY, OR FITNESS OF THE GOODS FOR A PARTICULAR PURPOSE.
Buyer buys the goods described above in an "AS IS" and "WHERE IS"
condition subject to the applicable provisions of the Uniform
Commercial Code, including, but not limited to, Section 9-504. Buyer
agrees that in no event shall Seller be liable for any direct,
indirect, incidental or consequential damages in connection with this
sale, whatsoever or howsoever caused.
Seller will sell inventory owned by PO to Buyer from the date here until the
close of business on July 10, 2000 at PO's landed cost or the current
distribution price, which ever is lower. Buyer will pay DFS for all inventory
purchased by Buyer within thirty (30) days from the date of sale. To secure
payment of all of Buyer's future debts to DFS, Buyer grants DFS a security
interest in all of Buyer's inventory purchased from DFS and all proceeds thereof
("Collateral"). Buyer will sign and deliver to DFS a UCC-1 Financing Statement
within 3 days of Closing of this sale to be recorded in all appropriate
jurisdictions, including
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without limitation the California Secretary of State's Office. Buyer will pay
finance charges to DFS on all principal debt outstanding for inventory sales
more than 30 days at the per annum rate of 18%. In the event of a default:
(a) DFS may at any time at DFS' election, without notice or demand to Buyer,
do any one or more of the following: declare all or any part of the debt
Buyer owes DFS for inventory sales immediately due and payable, together
with all costs and expenses of DFS' collection activity, including,
without limitation, all reasonable attorneys' fees; exercise any or all
rights under applicable law (including, without limitation, the right to
possess, transfer and dispose of the Collateral); and/or cease extending
any additional credit to Buyer (DFS' right to cease extending credit
shall not be construed to limit the discretionary nature of this credit
facility).
(b) Buyer will segregate and keep the Collateral in trust for DFS, and in
good order and repair, and will not sell, rent, lease, consign,
otherwise dispose of or use any Collateral, nor further encumber any
Collateral.
(c) Upon DFS' oral or written demand, Buyer will immediately deliver the
Collateral to DFS, in good order and repair, at a place specified by
DFS, together with all related documents; or DFS may, in DFS' sole
discretion and without notice or demand to Buyer, take immediate
possession of the Collateral together with all related documents.
(d) DFS may, without notice, apply a default finance charge to Buyer's
outstanding principal indebtedness equal to the default rate specified
in Buyer's financing program with DFS, if any, or if there is none so
specified, at the lesser of 3% per annum above the rate in effect
immediately prior to the default, or the highest lawful contract rate of
interest permitted under applicable law.
All of DFS' rights and remedies are cumulative. DFS' failure to exercise
any of DFS' rights or remedies hereunder will not waive any of DFS'
rights or remedies as to any past, current or future default.
Buyer agrees that if DFS conducts a private sale of any Collateral by requesting
bids from 10 or more Buyers or distributors in that type of Collateral, any sale
by DFS of such Collateral in bulk or in parcels within 120 days of: (a) DFS'
taking possession and control of such Collateral; or (b) when DFS is otherwise
authorized to sell such Collateral; whichever occurs last, to the bidder
submitting the highest cash bid therefor, is a commercially reasonable sale of
such Collateral under the Uniform Commercial Code. Buyer agrees that the
purchase of any Collateral by a Vendor, as provided in any agreement between DFS
and the Vendor, is a commercially reasonable disposition and private sale of
such Collateral under the Uniform Commercial Code, and no request for bids shall
be required. Buyer further agrees that 7 or more days prior written notice will
be commercially reasonable notice of any public or private sale (including any
sale to a Vendor). Buyer irrevocably waives any requirement that DFS retain
possession and not dispose of any
Collateral until after an arbitration hearing, arbitration award, confirmation,
trial or final judgment. If DFS disposes of any such Collateral other than as
herein contemplated, the commercial reasonableness of such disposition will be
determined in accordance with the laws of the state governing this Agreement.
Buyer grants DFS an irrevocable power of attorney to: execute or endorse on
Buyer's behalf any checks, financing statements, instruments pertaining to the
Collateral; supply any omitted information and correct errors in any documents
between DFS and Buyer; initiate and settle any insurance claim pertaining to the
Collateral; and do anything to preserve and protect the Collateral and DFS'
rights and interest therein.
Buyer cannot assign its interest in this Agreement without DFS' prior written
consent, although DFS may assign or participate DFS' interest, in whole or in
part, without Buyer's consent. This Agreement will protect and bind DFS' and
Buyer's respective heirs, representatives, successors and assigns.
Except as otherwise stated herein, all notices, arbitration claims, responses,
requests and documents will be sufficiently given or served if mailed or
delivered: (a) to Buyer at Buyer's principal place of business specified above;
and (b) to DFS at 000 Xxxxxxxxx Xxxxxx Xxxxx, Xx. Xxxxx, Xxxxxxxx 00000-0000,
Attention: General Counsel, or such other address as the parties may hereafter
specify in writing.
ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR FROM
ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBTS
ARE NOT ENFORCEABLE. TO PROTECT BUYER AND DFS FROM MISUNDERSTANDING OR
DISAPPOINTMENT, ALL AGREEMENTS COVERING SUCH MATTERS ARE CONTAINED IN THIS
WRITING, WHICH IS THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN
THE PARTIES, EXCEPT AS SPECIFICALLY PROVIDED HEREIN OR AS THE PARTIES MAY LATER
AGREE IN WRITING TO MODIFY IT. THERE ARE NO UNWRITTEN AGREEMENTS BETWEEN THE
PARTIES.
Buyer irrevocably waives notice of: DFS' acceptance of this Agreement,
presentment, demand, protest, nonpayment, nonperformance, and dishonor. Buyer
and DFS irrevocably waive all rights to claim any punitive and/or exemplary
damages.
If any provision of this Agreement or its application is invalid or
unenforceable, the remainder of this Agreement will not be impaired or affected
and will remain binding and enforceable.
Buyer acknowledges that it has received a true and complete copy of this
Agreement. Buyer acknowledges that it has read and understood this Agreement.
Notwithstanding anything herein to the contrary: (a) DFS may rely on any
facsimile copy, electronic data transmission or electronic data storage of this
Agreement, any Statement of Transaction, billing statement, invoice from a
Vendor, financial statements or other reports, and (b) such facsimile copy,
electronic data transmission or electronic data storage will be deemed an
original, and the best
evidence thereof for all purposes, including, without limitation, under this
Agreement or any other agreement between DFS and Buyer, and for all evidentiary
purposes before any arbitrator, court or other adjudicatory authority.
Time is of the essence regarding Buyer's performance of its obligations to DFS
notwithstanding any course of dealing or custom on DFS' part to grant extensions
of time. Buyer's liability under this Agreement is direct and unconditional and
will not be affected by the release or nonperfection of any security interest
granted hereunder. DFS will have the right to refrain from or postpone
enforcement of this Agreement or any other agreements between DFS and Buyer
without prejudice and the failure to strictly enforce these agreements will not
be construed as having created a course of dealing between DFS and Buyer
contrary to the specific terms of the agreements or as having modified, released
or waived the same. The express terms of this Agreement will not be modified by
any course of dealing, usage of trade, or custom of trade which may deviate from
the terms hereof. If Buyer fails to pay any taxes, fees or other obligations
which may impair DFS' interest in the Collateral, or fails to keep the
Collateral insured, DFS may, but shall not be required to, pay such taxes, fees
or obligations and pay the cost to insure the Collateral, and the amounts paid
will be: (a) an additional debt owed by Buyer to DFS, which shall be subject to
finance charges as provided herein; and (b) due and payable immediately in full.
Buyer agrees to pay all of DFS' reasonable attorneys' fees and expenses incurred
by DFS in enforcing DFS' rights hereunder. The Section titles used in this
Agreement are for convenience only and do not define or limit the contents of
any Section.
BINDING ARBITRATION.
1. Any controversy or claim arising out of or relating to this Agreement,
the relationship resulting in or from this agreement or the breach of
any duties hereunder will be settled by binding arbitration in
accordance with the Commercial Arbitration Rules of The American
Arbitration Association, 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000-0000. The parties agree that all arbitrators selected will be
attorneys with at least 5 years of secured lending experience. The site
of all arbitration participatory hearings will be in Los Angeles,
California. Any award rendered by the arbitrator(s) may be entered as a
judgment or order and enforced by either party in any court having
jurisdiction thereof. If either party brings or appeals any judicial
action to vacate or modify any award rendered pursuant to arbitration
and the party bringing or appealing such action does not prevail, such
party will pay all of the costs and expenses (including, without
limitation, court costs, arbitrators' fees and expenses and reasonable
attorneys' fees) incurred by the other party in defending such action.
Additionally, if either party brings any action for judicial relief in
the first instance without pursuing arbitration prior thereto, the party
bringing such action for judicial relief will be liable for and will
immediately pay to the other party all of the other party's costs and
expenses (including, without
limitation, court costs and reasonable attorneys' fees) to stay or
dismiss such judicial action and/or remove it to arbitration. The
failure of either party to exercise any rights granted hereunder shall
not operate as a waiver of any of those rights. The laws of the state of
California will govern this Agreement; provided, however, that the
Federal Arbitration Act ("FAA"), to the extent inconsistent, will
supercede the laws of such state and govern. This Agreement concerns
transactions involving commerce among the several states. In the event
that the arbitration set forth above is invalid or unenforceable, we and
you irrevocably submit to the jurisdiction of the courts located within
such state and agree that all legal proceedings will be tried in a court
of competent jurisdiction by a judge without a jury. Buyer and Seller
waive any right to a jury trial in any such proceeding.
INVALIDITY/UNENFORCEABILITY OF BINDING ARBITRATION. IF THIS AGREEMENT IS FOUND
TO BE NOT SUBJECT TO ARBITRATION, ANY LEGAL PROCEEDING WITH RESPECT TO ANY
DISPUTE WILL BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE WITHOUT A
JURY. BUYER AND DFS WAIVE ANY RIGHT TO A JURY TRIAL IN ANY SUCH PROCEEDING.
In witness whereof, Buyer and Seller have executed this Xxxx of Sale by their
duly authorized representatives this 9th day of June, 2000.
Buyer: Seller:
Wareforce Incorporated Deutsche Financial Services
Corporation
By: /s/ Xxx Xxxxxxxx By: M Xxxxxx
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Title: VP, General Counsel & Secretary Title: Branch Manager
