EXHIBIT 10.16
AGREEMENT
THIS AGREEMENT (this "Agreement") is made and entered as of the 11th
day of December, 1998 by and between Xxxxx Xxxxxxx USA, Inc., a Missouri
corporation with its principal office at 0000 Xxxxxxxx Xxxxxx, Xx. Xxxxx,
Xxxxxxxx 00000 ("Butcher"), Xxxxxxx Xxx International, Inc., a Maryland
corporation having its principal office at 0000 Xxxxxxx Xxxxx, Xxxxxxxxx,
Xxxxxxxx 00000 ("Fox"), Xxxxxxx-Xxx, LLC, a Maryland limited liability company
with its principal office at 0000 Xxxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxx 00000 ("BF
LLC"), Positive Asset Remarketing, Inc., a Massachusetts corporation with its
principal office at 000 Xxxxxx Xxxxxxxxxx Xxxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000
("PAR"), and xxxxXxxxx.xxx, Inc., a Delaware corporation with its principal
office at 0000 Xxxxxxxx Xxxxxx, Xx. Xxxxx, Xxxxxxxx 00000 (the "Company")
(hereinafter collectively referred to from time to time as the "Parties").
RECITALS
x. Xxxxxxx, Xxx, XX LLC and PAR are the principal organizers of the
Company and hereby desire to set forth and confirm the basic terms and
conditions on which the Parties shall manage and conduct the business
of the Company.
NOW, THEREFORE, in consideration of the premises, and for other good and
valuable consideration (the receipt, adequacy and sufficiency of which are
hereby acknowledged by the Parties by their execution hereof), the Parties
hereto agree as follows:
i. Principal Business Activities. The Company has been formed for the
express purposes set forth in the Company's Certificate of Incorporation.
Subject to the provisions of its Certificate of Incorporation, the Company shall
conduct the following principal activities and provide Global 2000 and other
major corporations with the following services:
o Expert financial valuation and evaluation services for the
identification of corporate assets;
o The development of customized on-line asset management
programs based on the ORBIT System technology and to include
the listing of all applicable corporate assets on a standard
database for the internal marketing, sale and/or trading of
identified corporate assets;
o The sale and/or trading of identified corporate assets between
a company's authorized operating units, divisions and
facilities on a worldwide basis;
o The on-line marketing, remarketing and sales of corporate
assets on a global business basis, to include the development
of an Internet and Electronic commerce platform for
business-to-business on-line auctions and other historically
utilized marketing efforts; and
o The off-line marketing, remarketing and sales of corporate
assets subsequent to on-line marketing, remarketing and sales
efforts.
ii. ORBIT System Software License.
(i) The Company shall hold and own an exclusive worldwide,
perpetual license to the ORBIT System and any improvements thereto and component
parts thereof (non-exclusive for the electric and gas utility industry and
restricted for electricity related trade applications in the states of
Pennsylvania, New Jersey, Maryland, Delaware and Massachusetts pursuant to the
terms and conditions of a license agreement between BarterOne, L.L.C. and PECO
Energy Company, through its subsidiary Energy Trading Company) for the
development of an Internet based Electronic Business platform as a specific
business-to-business custom application service for on-line Corpo
rate/Investment Asset recovery operations, including, without limitation, the
following activities as they relate to same (i) private corporate
extranet/intranet distribution and Corporate/Investment Asset registration
services, (ii) management, on-line and off-line marketing, remarketing and sales
of corporate/investment assets of companies both as an internal mechanism for
the redistribution of corporate assets and a general business-to-business
commercial remarketing facilitator, (iii) registered on-line
business-to-business open bid process for the resale of corporate assets, and
(iv) virtual web based center for product sales and liquidation services, as
well as the inclusive license rights to utilize the system on a worldwide basis
and at any of the Company's or the Company's clients' locations and on any
number of central processing units. The ORBIT System shall at the time of
transfer to the Company include an auction component. If such a component has
not at that time been developed in connection with the ORBIT System, PAR shall
at such time assign and/or transfer to the company, at no additional cost to the
Company, an exclusive worldwide, perpetual license to the WWWX auction software
currently owned by PAR, for use by the Company on the same terms as the ORBIT
System. PAR hereby expressly agrees that any auction component subsequently
developed in connection with the ORBIT System will be deemed to be a part of the
ORBIT System software licensed to PAR and therefore subject to the assignment
and/or transfer of same to the Company, and any such component shall be promptly
delivered to the Company.
(ii) For purposes of this Agreement, Corporate/Investment
Assets shall mean assets directly or indirectly belonging to any entity and/or
employed or utilized in connection with any entity's business activities,
including, without limitation, equipment, machinery, inventory, etc., and
component parts thereof, excepting diamonds and/or other precious gems, in
finished or unfinished form, precious metals, in raw or finished form, jewelry,
currency in any form, oil, gas, coal and electric power, telecommunications,
cable and water services, and excepting with respect to the use of WWWX auction
software only, computers and computer parts and components sold directly to
Computer Internet Auctions, a Massachusetts corporation ("CIA"), but no other
person or entity, pursuant to the WWWX auction software master license between
PAR and CIA as in effect on the date hereof. PAR hereby represents to Butcher,
Fox and Xxxxxxx-Xxx, LLC that no person or entity, including CIA, has or will
have the right, pursuant to the WWWX auction software master license or
otherwise, to use or sublicense the WWWX auction software for asset recovery
operations similar to those to be performed by the Company.
iii. Other Licenses. The Company may also hold and own exclusive and
non-exclusive licenses to other products or services that from time to time may
become available to, or be developed by, the Company and which can be utilized
to create new and/or enhanced methodologies and
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practices for the redistribution and remarketing of corporate/investment assets
and the functionality of an on-line virtual auction center for identifiable
customer bases, both industrial and commercial.
iii. Company Stock Ownership.
(i) Subject to and conditioned upon receipt by the Company of
the consideration therefor as described in paragraphs (b) and (c) of this
Section 3, fifty percent (50%) of the voting capital stock (i.e., Class A Common
Stock) of the Company shall be issued to and owned by PAR and fifty percent
(50%) of the voting capital stock (i.e., Class A Common Stock) of the Company
shall be issued to and owned by BF LLC. The Company shall have no other classes
or series of voting stock. Upon execution of a Strategic Marketing Agreement
between the Company and Admiral Asset Group, Inc. ("Admiral"), and subject to
and conditioned upon receipt by the Company of the consideration therefor as
described in paragraph (d) of this Section 3, and upon the written approval of
the Parties, Admiral will receive a 2% non-voting equity position in the Company
through the ownership of shares of the Company's Class B Common Stock. Nothing
in this Agreement or in any other document shall preclude the issuance of shares
of Class B Common Stock to any other person or entity as the Parties may
mutually agree in writing from time to time. The consideration for the issuance
of the Company's capital stock as aforesaid shall be as follows:
(ii) PAR shall transfer or caused to be transferred to the
Company, as licensee, an exclusive worldwide, perpetual license to the ORBIT
System and the WWWX auction software, as contemplated in Section 2(a) of this
Agreement, without licensing/royalty and/or transaction fees and with the
associated source code to enable specific customization to be developed as
required by the Company's operations. In addition, PAR shall provide or cause to
be provided to the Company the necessary services and material to present the
ORBIT System to targeted companies and to market the Company through its planned
distribution channels, which such services and materials shall be deemed to be
part of the consideration paid by PAR for the initial issuance of voting capital
stock of the Company. After the date hereof, PAR shall, as the Company may
request from time to time, provide or cause to be provided the necessary
services to manage the ATLAS System, customize and brand the ORBIT System as
needed (subject to the ORBIT System software license received by the Company by
or on behalf of PAR), and develop any applicable trade related transactions,
which such services shall not be deemed to be part of the consideration paid by
PAR for the initial issuance of voting capital stock of the Company but shall be
provided at PAR's expense until such time as the Company is financially able to
independently sustain its own operations or until sufficient third party funding
is received. At such time, it is expressly understood and agreed that any
reasonable costs and expenses incurred by PAR in connection with providing such
services to the Company shall, subject to the review of such costs and expenses
by the Parties and receipt of the written approval of the Parties with respect
thereto, be invoiced to the Company by PAR on a quarterly basis and shall
thereupon be paid by the Company to PAR.
(iii) BF LLC shall deliver to the Company an affidavit or
other legally binding instrument stating that BF LLC, through the combined,
complete and extensive global corporate operations and networks of its members
and their affiliates, will provide access to its appropriate lists of industrial
and commercial clients on a global basis. In addition, BF LLC shall provide to
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the Company the expertise and capability, including the time and efforts of its
members, to introduce appropriate clients to the business activities of the
Company, which such services shall be deemed to be part of the consideration
paid by BF LLC for the initial issuance of voting capital stock of the Company.
From and after the date hereof, BF LLC shall provide to or on behalf of the
Company services with respect to the inventorying, valuing, marketing and
selling of Corporate/Investment Assets which such services shall not be deemed
to be part of the consideration paid by BF LLC for the initial issuance of
voting capital stock of the Company but shall be provided at BF LLC's expense
until such time as the Company is financially able to independently sustain its
own operations or until sufficient third party funding is received. At such
time, it is expressly understood and agreed that any reasonable costs and
expenses incurred by or on behalf of BF LLC in connection with providing such
services to or on behalf of the Company shall, subject to the review of such
costs and expenses by the Parties and receipt of the written approval of the
Parties with respect thereto, be invoiced to the Company by BF LLC on a
quarterly basis and shall thereupon be paid by the Company to BF LLC.
(iv) The consideration paid to the Company by Admiral for the
non-voting capital stock of the Company will be deemed to consist of the
services rendered by Admiral in facilitation of the development and
establishment of the business relationship giving rise to the Company.
(v) The Parties hereby expressly acknowledge and agree that
the property contributed to the Company by BF LLC, as hereinabove described,
shall for all purposes be equivalent in value to the property contributed to the
Company by PAR, as hereinabove described. Furthermore, the Parties hereby
expressly acknowledge and agree that, upon dissolution of the Company, the
Company shall return or distribute to PAR and BF LLC the respective property
previously contributed to the Company by PAR and BF LLC, as the case may be, and
the value of the property contributed by each of the Parties as and to the
extent returned to each of the Parties shall for all purposes be equivalent.
iv. Cross-Marketing Activities: Commercial Exclusivity. The Parties
acknowledge and agree that (i) the Company will market and promote the various
products and services of each of the Parties; (ii) each of the Parties will
exclusively use and promote the various products and services offered by each of
the other Parties as required in their respective business activities; (iii)
Xxxxxxx- Xxx will exclusively use the Company and/or PAR, or any transferee or
assignee of all of the Company stock issued to PAR, for all of the Internet
electronic business applications of BF LLC; and (iv) PAR, and any transferee or
assignee of any Company stock issued to PAR, will exclusively use the Company
and/or BF LLC, or any transferee or assignee of all of the Company stock issued
to BF LLC, for valuation and disposition of corporate/investment assets and
related activities of PAR and any such assignee or transferee.
v. Expenses. The Parties acknowledge and agree that they will be
individually responsi ble for any and all of their respective expenses
pertaining to the initial activities of the Company and agree to the same until
such time as the Company is financially able to independently sustain its own
operations or until sufficient third party funding is received. At such time,
the Company shall reimburse each of the Parties for their respective accrued
initial activity expenses, provided such
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expenses are reasonable and reimbursement therefor is approved in writing by all
of the Parties. Expenses reasonably incurred by PAR in connection with the
development of the ATLAS System through customization of the ORBIT System shall
be submitted to each of the Parties promptly after execution hereof and, if and
to the extent approved by all of the Parties in writing, shall be xxxx bursed by
the Company to PAR at such time as the Company is financially able to
independently sustain its own operations or until sufficient third party funding
is received. Notwithstanding the foregoing or anything else herein to the
contrary, it is expressly understood and agreed that any and all costs related
to the development of the following shall not be reimbursable or reimbursed: (a)
the ORBIT System technology, (b) the customer lists of Butcher; and (c) the
customer lists of Fox. The Parties will each make key personnel available to
develop a business plan, operating budget and pilot program for the Company.
vi. Additional Capital Needs. The Parties acknowledge and agree that
their respective financial advisors shall work with each other and the Company
to analyze the market for third party funding of the Company's operations and to
introduce the Company to identified funding sources and brokers for a possible
initial public offering of the Company capital stock, in all events subject to
any and all limitations set forth in the Company's Certificate of Incorporation
and Bylaws. Any initial public offering of the Company's capital stock shall
occur only upon the mutual written agreement of the Parties. The Parties agree
that the transfer of any equity interest in the Company shall be mutually agreed
to in writing and may result in a dilution of the Parties' respective owner ship
interests.
vii. New Business Opportunities. The Parties recognize the board of
directors of the Company may from time to time consider new business
opportunities related to the ORBIT System software licensed to the Company. The
Parties further recognize that the Company may, subject to the directors'
fiduciary duties to the Company and its stockholders and subject to the
provisions of the Company's Certificate of Incorporation and Bylaws, sublicense
aspects of the Company's ORBIT System software license to other persons or
entities, including the Parties or any of them, to use such software for
purposes not deemed beneficial to the Company and/or consistent with its
business activities, on such terms as the board of directors of the Company may
deem to be in the best interests of the Company.
viii. AMD Test Listing. The Parties acknowledge and agree that Butcher,
prior to the date hereof, has made available to PAR and Global Trade Group, Inc.
("GTG") and/or their respective affiliates, certain information concerning
Butcher's independent liquidation transactions with Advanced Micro Devices, Inc.
("AMD") and that such information has been made available to PAR, GTG and/or
their respective affiliates and included on or in connection with the Auction,
Tracking & Logistical Asset Support (ATLAS) System for test purposes only.
Accordingly, the Parties hereby expressly acknowledge and agree that any and all
commissions, fees and other amounts paid and/or earned in connection with the
AMD transaction, whether before or after the date hereof, and regardless of
whether or not Butcher may hereafter permit in its sole judgment the channeling
of any such amounts through the ATLAS System or otherwise, again for test
purposes only, shall be the sole and exclusive property of Butcher and that no
amounts shall be due to the Company, PAR, GTG, BF LLC or any other entity, by
AMD, Butcher or any other entity, in connection with such transactions.
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Without limiting the foregoing, should Butcher in its sole judgment choose not
to permit the channel ing of any AMD transaction amounts through the ATLAS
System, any and all commissions, fees and other amounts paid and/or earned in
connection with the AMD transaction, whether before or after the date hereof,
shall be paid to and retained by Butcher and no amount shall be payable or paid
to or otherwise retained by the Company, PAR, GTG, BF LLC or any other entity in
connection with such transaction.
ix. Press Release. The Parties will mutually agree upon the form and
content of any press releases or written public announcements regarding this
Agreement, the organization and manage ment of the Company or any related
matters.
x. No Adverse Business Impact. Notwithstanding anything herein to the
contrary, the Parties hereby expressly understand and agree that under no
circumstances shall the business and activities of the Company be permitted to
interfere with or adversely impact the business and activities of Butcher, Fox,
BF LLC and/or PAR, subject to the assignment and/or transfer of the ORBIT System
and WWWX Auction software licenses from PAR to the Company.
xi. Miscellaneous.
(i) The terms and conditions of this Agreement may not be
amended, modified or extended, nor may any of its terms be waived, except by a
written instrument signed by all of the Parties.
(ii) For the convenience of the Parties, this Agreement may be
executed in multiple counterparts, each of which will be deemed an original, and
all of which will be deemed to be one and the same. A telecopy or facsimile
transmission of a signed counterpart of this Agreement will be sufficient to
bind the party or parties whose signature(s) appear thereon.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date first
above.
XXXXX XXXXXXX USA, INC.
By:/s/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx, President
XXXXXXX XXX INTERNATIONAL, INC.
By: /s/ Xxxxxxx X. Xxx
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Xxxxxxx X. Xxx, President
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XXXXXXX-XXX, LLC
By: /s/ Xxxxxxx X. Xxx
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Xxxxxxx X. Xxx, Manager
By:/s/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx, Manager
POSITIVE ASSET REMARKETING, INC.
By: /s/ Xxxxxxxx X. Xxxxx
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Xxxxxxxx X. Xxxxx
Executive Vice President
XXXXXXXXX.XXX, INC.
By: /s/ Xxxxxx Xxxx
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Xxxxxx Xxxx, President
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