EXHIBIT
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT
By and Between
BXI CORPORATION, as Seller
and
TAHO ENTERPRISES, INC., as Purchaser
Dated: As of September 24, 1999
Business:
BXI Retail Barter Exchange
INDEX
ARTICLE PAGE
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I DEFINITIONS 1
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1.1. Definitions 1
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II AGREEMENT TO PURCHASE AND SELL 4
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2.1. Purchase and Sale 4
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III PURCHASE PRICE 5
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3.1. Purchase Price 5
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IV REPRESENTATIONS, WARRANTIES AND COVENANTS 6
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4.1. Seller's Representations and Warranties 6
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4.2. Seller's Covenants 12
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4.3. Purchaser's Representations 14
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4.4. Survival Beyond Closing 15
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V INSPECTION PERIOD AND CLOSING DATE 15
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5.1. Inspection of Property 15
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5.2. Termination Rights 15
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5.3. Closing 16
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VI PROPRIETARY INFORMATION 16
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6.1. Books and Records 16
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6.2. Commercial Agreements and Exhibits 16
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6.3. Confidentiality 17
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VII CONDITIONS PRECEDENT 17
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7.1. Conditions Precedent to Purchaser's Obligations 17
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7.2. Conditions Precedent to Seller's Obligations 17
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VIII EVENTS OCCURRING AT CLOSING18
8.1. Seller's Performance 18
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8.2. Purchaser's Performance 19
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IX PRORATIONS AND ADJUSTMENTS 19
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9.1. Prorations 19
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9.2. Seller's Costs 22
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9.3. Purchaser's Costs 22
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9.4. Initial Closing Statement 23
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9.5. Allocation of Purchase Price 23
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X OPERATIONS PRIOR TO CLOSING 23
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10.1. Maintenance and Operations 23
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XI RISK OF LOSS 24
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11.1. General Statement 24
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11.2. Procedure on Loss 24
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11.3. Condemnation 24
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XII LIABILITIES 24
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12.1. Treatment of Seller's Liabilities 24
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XIII COMMISSION AND FEES 25
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13.1. Indemnity 25
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XIV DEFAULT AND REMEDIES 25
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14.1 Deposit; Payment to Purchaser 25
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14.2 Purchaser's Default; Liquidated Damages 25
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14.3 Seller's Default 26
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XV RIGHTS OF ESCROW AGENT 27
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15.1. Rights of Escrow Agent 27
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XVI MISCELLANEOUS PROVISIONS 29
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16.1. Integration of Agreement 29
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16.2. Binding Effect 29
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16.3. Waiver: Modification 29
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16.4. Governing Law 29
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16.5. Headings 29
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16.6. Counterparts 30
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16.7. Notices 30
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16.8. Assignment 31
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16.9. Partial Invalidity 31
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16.10. Time of the Essence 31
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16.11. Termination 32
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16.12. Confidentiality 32
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16.13. Preservation of Goodwill 32
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16.14. Arbitration 33
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16.15. Attorney's Fees 33
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16.16. Post Closing Cooperation 33
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LIST OF EXHIBITS
Exhibit A - Accounts Receivable
Exhibit B - Broker Contracts
Exhibit C - Client Contracts
Exhibit D - Employment Agreements
Exhibit E - Other Commercial Agreements
Exhibit F - FF&E
Exhibit G - Inventories
Exhibit H - Leases & Deposits
Exhibit I - Licenses and Permits
Exhibit J - Client Balances
Exhibit K - Accounts Payable and Other Liabilities
Exhibit L - Litigation or Proceedings
Exhibit M - Regarding Intangibles and Trade Secrets
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ASSET PURCHASE AGREEMENT
BXI RETAIL BARTER EXCHANGE
THIS ASSET PURCHASE AGREEMENT (hereinafter called the "Agreement"), is entered
into effective as of the 24th day of September, 1999, between BXI Corporation, a
Nevada corporation, IME, Inc., a Nevada corporation, and ITEX Corporation, a
Nevada corporation on the one hand, (hereinafter collectively referred to as the
"Seller"), and TAHO Enterprises, Inc., a Massachusetts corporation on the other
hand (hereinafter called the "Purchaser").
WITNESSETH
In consideration of the mutual covenants, agreements, benefits and burdens
hereinafter set forth, and other good and valuable consideration, paid by
Purchaser to Seller, the receipt and sufficiency of which are hereby
acknowledged, it is agreed that:
ARTICLE I
DEFINITIONS
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1.1. Definitions. In this Agreement and Exhibits, the following terms shall have
the following meanings:
"Accounts Receivable" means all of the Seller's accounts receivable
and any other rights to payment arising out of the operation of the
Business (as hereafter defined) in the ordinary course of business
and unpaid as of the Closing Date.
"Assets" means all of the assets, properties, and businesses of BXI
Corporation of every kind, character and description, whether
tangible, intangible, real, personal or mixed, and wherever located,
including (but not limited to); all of the goodwill; trade names of
BXI and any variations thereof, including BX International Inc.,
Business Exchange International, BXI Trade Exchange; all computer
code, passwords and related materials concerning XXX.xx and
XXXxxxx.xxx; barter memberships; Client lists; Client Contracts;
Broker Contracts; Bank Accounts; Leases; leasehold improvements;
furniture, fixtures and equipment; vehicles; Inventories; Accounts
Receivable; Books and Records; Prepaid Expenses; Licenses and
Permits; Intangibles; and all other assets, properties or rights of
BXI Corporation of any kind, character or description owned, used or
held for use (whether or not exclusively) in connection with BXI
Corporation's Business, but excluding Commercial Agreements which are
not assumed by Purchaser pursuant to the terms hereof.
"Bank Accounts' means all of the bank or other accounts relating to
the Business, including operating, reserve and other accounts,
money-market accounts, certificates of deposit and similar accounts.
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"Books and Records" means all financial and other books and records (
including computer data) which are maintained by Seller or its agents
in connection with the operation of the Business. The term includes
all papers, statements, computerized database, information, writings
and records in Seller's care, custody, or control relating to any or
all of the Assets the Business and the operation thereof, including
(but not limited to) all computer programs, records, blueprints,
specifications, office manuals, software manuals, user guides,
personnel and labor relation records, sales records, marketing
materials and accounting and financial records.
"Broker(s)" means all of the Area Brokers of BXI whether franchisees,
licensees or independent contractors, however designated and wherever
located, that have been or are part of the Business of Seller.
"Broker Contracts" means all of the written contracts and agreements
with each Broker relating to the Business.
"Business" means all of the retail barter, corporate barter, trade
exchange, media, account receivable or other credit or barter
transactions, and any other businesses, activities and operations of
Seller, however designated and wherever located.
"Client" means all of the members, clients, customers, contractors,
vendors, businesses or other persons who are users of Seller's barter
exchange.
"Client Contracts" means all of the written contracts with each
Client relating to the Business.
"Closing" and "Closing Date" shall have the meaning set forth in
Section 5.3.
"Commercial Agreements" shall mean all Broker Contracts, Client
Contracts, Leases, employment, maintenance and service agreements,
consulting agreements, franchise and license agreements, and all
other written contracts and agreements oral or written relating to
the Business.
"Confidential Information" shall mean information, including (i) the
terms and conditions of the transaction contemplated by this
Agreement and (ii) the statements, computer output, agreements,
documents and all other materials that Seller provides or makes
available to Purchaser, or has provided or made available to
Purchaser, with respect to Seller or the Business, or any portion
thereof.
"Deposit" shall have the meaning set forth in Section 3.2.
"Effective Date" shall mean September 24, 1999.
"Escrow Agent" shall mean any escrow agent acceptable to the parties.
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"FF&E" shall have the meaning set forth in Section 2.1.(e).
"Governmental Authorities" shall mean the federal government, the
State of California, all local jurisdictions in which the Business is
conducted, and any governmental agency connected with any of them
which has jurisdiction over the Business.
"Inspection Period" shall mean that period of time commencing on the
Effective Date through and including December 15, 1999.
"Intangibles" means all goodwill, trade names, contract rights,
trademarks, service marks, copyrights, patent rights, licenses,
computer programs, XXX.xx, XXXxxxx.xxx, mailing lists, client lists,
proprietary information, logos, processes, techniques, brand names,
trade secrets, technical know-how, choses in action and other
intangibles, including (without limitation) (i) tort or insurance
proceeds arising out of any damage or destruction of any of the
assets between the Effective Date and the Closing Date (as
hereinafter defined); (ii) all choses in action, claims, accounts and
rights of Seller arising out of the Business; and (iii) all right,
title, and interest of Seller in the Leases, contracts, and other
Commercial Agreements to be assumed by Purchaser pursuant to the
terms hereof which are used by Seller in (or owned by Seller and
useful in) the operation of the Business, but excluding any
Commercial Agreements not assumed by the Purchaser pursuant to the
terms hereof.
"Inventories" means all of Seller's inventory of barter credits or
trade scrip (however designated) and all consumer merchandise,
consignment merchandise, media and other inventory, and other goods
and materials, a summary of which items currently on hand is attached
hereto as Exhibit G (hereinafter referred to collectively as the
"inventories"). Owned inventory and consignment merchandise shall be
separately set forth in said Exhibit.
"Leases" shall mean all real property leases and amendments thereto
with respect to the Premises, equipment leases and all other leases,
conditional sales contracts, option rights and licenses with respect
to the Assets of Business.
"Licenses and Permits" shall have the meaning set forth in Section
2.1(f).
"Permits" shall mean approvals, certificates of occupancy, licenses
and permits issued by Governmental Authorities which are used or
relating to the ownership, operation, use or development of the
Assets, Business or Premises.
"Prepaid Expenses" shall mean all prepaid expenses and other prepaid
items, credits, rights, benefits or similar assets arising out of the
Business.
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"Premises" shall mean the leased office space at 0000 Xxxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxxxx.
"Property" shall mean the Assets, Business and Leased Premises of BXI
Corporation in the most comprehensive way as described in Section
2.1.
"Proprietary Information" shall mean the Books and Records and all
other documents and materials, including all financial records and
all sales and marketing information in connection with the management
or operation of the Business.
"Purchase Price" shall have the meaning set forth in Section 3.1.
"Purchaser" shall mean TAHO Enterprises, Inc. or its permitted
designee as hereafter defined.
"Seller" shall only mean BXI Corporation when referring to the
Assets, Business and Property of Seller which are the subject of the
Agreement, and shall collectively refer to BXI Corporation, IME, Inc.
and ITEX Corporation when referring to the rights, benefits,
protections, obligations, representations, warranties and covenants
of the parties hereto. IME, Inc. is the owner of all of the issued
and outstanding shares of BXI Corporation (see Exhibit L) and ITEX
Corporation is the sole shareholder of IME, Inc. Only the Assets,
Business and Property of BXI Corporation are included in the sale and
purchase hereunder. BXI Corporation is the sole transferor of these
Assets, Business and Property to Purchaser. However, IME, Inc. and
ITEX Corporation are included in the term "Seller" when referring to
all of the rights, benefits, obligations and covenants set forth
herein, including (without limitation) the indemnification provisions
hereof based upon the ownership of BXI Corporation and IME, Inc. as
set forth in this paragraph..
"Seller Indemnitees" shall mean Seller and all of its directors,
officers, employees, agents, attorneys, brokers and affiliates.
"To Seller's knowledge" or words of similar import shall mean (i) the
knowledge of Xxxxxx Xxxxxxx and Xxxxxx Xxxxxx, Jr. of BXI Corporation
and Xxxxxxx X. Xxxxxxxxxxx and Xxxxxx Xxxxxxx of ITEX Corporation,
after making due inquiry; and (ii) all written information, data,
reports, correspondence, and other written materials in Seller's
possession pertaining to the Business.
ARTICLE II
AGREEMENT TO PURCHASE AND SELL
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2.1 Purchase and Sale. Subject to and upon the terms and conditions hereinafter
set forth, Purchaser hereby agrees to purchase from Seller, and Seller hereby
agrees to sell to Purchaser, the following described property (hereinafter
called the "Property"):
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All of the Assets of the Business, including (without limitation) all
of the goodwill of the Business and all of the Accounts Receivable, Bank
Accounts, Books and Records, Inventories and Intangibles.
All of the Commercial Agreements of the Business, except any Commercial
Agreements not assumed by Purchaser pursuant to the terms hereof.
All of the leasehold interest and rights to the Premises upon which the
Business is conducted, including (without limitation) all facilities,
improvements, fixtures, signs, and logos used therein by Seller, together will
all rights, easements, privileges and benefits in any way benefitting or
appertaining thereto.
All of Seller's right, title and interest in to (i) all leases and
other occupancy agreements, and (ii) all leased systems and equipment under the
Commercial Agreements, together, with respect to each, all security deposits and
damage deposits, if any, deposited by Seller as tenants or lessees in connection
with the Leases and Commercial Agreements ("Tenant Deposits"), except any Leases
not assumed by Purchaser pursuant to the terms hereof.
All of Seller's right, title and interest in and to all personal
property owned by the Seller and used in the ownership, operation and
maintenance of the Business or Premises including, without limitation, all of
Seller's right, title and interest in and to all fixtures, chattels, furniture,
furnishing, works of art, appliances, machinery, building supplies, files,
vehicles, records, apparatus, equipment, computers and Inventories as well as
Seller's right, title and interest in and to all other personal property
presently located on and used in the operation of the Business (all of the above
property included in the sale being hereinafter called "furniture, fixtures and
equipment" or FF&E").
The entire Business and all contract rights, permits, licensee, trade
names, goodwill, Client base, Client lists, the Broker Contracts, Client
Contracts, computer programs, and all other Assets (as broadly defined herein)
relating to the Business, and the rights, fees, deposits and the services
rendered in connection therewith.
ARTICLE III
PURCHASE PRICE
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3.1 Purchase Price. The purchase price (hereinafter called the "Purchase Price")
for the Property shall be Four Million United States Dollars (US$4,000,000.00)
payable as set forth herein, plus Purchaser's assumption of the liabilities and
Leases and Commercial Agreements stated in Exhibit K hereto. Purchaser has made
a deposit of Xxx Xxxxxxx Xxxxx Xxxxxxxx Xxxxxx Xxxxxx Dollars (US$150,000.00).
The balance of the Purchase Price, subject to credits, adjustments and
prorations in accordance with the terms of this Agreement, shall be paid to and
as directed by Seller by wire transfer or certified bank funds on the Closing
Date.
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ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS
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4.1. Seller's Representations and Warranties. Seller make the following
representations and warranties to Purchaser which shall remain true and correct
as of the Closing.
(a) Authority of Seller. Seller has, and on the Closing
Date will have, the right, power, and authority to enter into, deliver and
perform under this Agreement and instruments and documents delivered or to be
delivered by Seller hereunder and to sell the Assets and Business in accordance
with the terms and conditions of this Agreement.
(b) Good Standing. Sellers ITEX Corporation and IME, Inc.
and BXI Corporation are duly organized, validly existing and in good standing
under the laws of the State of Nevada, and each has all requisite right and
power to own and operate the Assets and Business.
(c) No Conflict. No consent or approval is required in
order for Seller to consummate the transactions contemplated herein, except for
formal shareholder approval of the sale of Assets which will be obtained from
IME, Inc. The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated herein will not conflict with,
breach, result in a default under, or violate Seller's articles of
incorporation, its bylaws or any material agreement to which Seller is a party
or by which it or the Assets and Business to be transferred hereunder are or may
be bound or affected in any manner.
(d) Compliance. The execution, delivery, and performance
of this Agreement by Seller (i) shall not violate any applicable laws,
regulations or rules, and (ii) shall not violate or constitute a breach of or
default under any judicial or regulatory decree or order binding on Seller, or
any contract, agreement, or instrument to which Seller is a party.
(e) Valid and Binding. This Agreement and all documents
to be delivered by Seller pursuant to this Agreement, when executed and
delivered, shall constitute the legal, valid, and binding obligation of Seller,
enforceable in accordance with their respective terms, subject only to
bankruptcy, insolvency, moratorium, or similar laws.
(f) Leases. To Seller's knowledge, there are no Leases in
effect with respect to the Assets or Business or any portion thereof and to
which Seller is a party, except as listed on Exhibit H. The copies of the Leases
delivered to Purchaser by Seller during the Inspection Period are true, correct
and complete copies, including amendments thereto. All of the Leases are valid
and in full force, and there does not exist any default or event that would with
or without notice or lapse of time or both constitute a default under any of
these Leases.
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(g) Commercial Agreements. Seller has attached a list of
the Broker Contracts (Exhibit B), Client Contracts (Exhibit C), Employment
Agreements (Exhibit D), and all other Commercial Agreements, including all
consulting, service, maintenance and other contracts (Exhibit E) that are in
effect and to which Seller is a party. In each Exhibit, Seller has set forth the
names of the contracting parties, date and term and a general description of the
type of agreement, including (without limitation) a statement of all of the
material terms of any oral agreement. The copies of the Commercial Agreements
delivered to Purchaser by Seller during the Inspection Period are true, correct
and complete copies, including amendments thereto.
(h) Licenses and Permits. To Seller's knowledge, the
permits and licenses listed on Exhibit I are all of the Licenses and Permits in
effect with respect to the Assets and Business. Seller has not received any
written notice from any Governmental Authorities that Seller or the Assets or
Business are in violation of any of the Licenses and Permits.
(i) Accounts Receivable. Seller has attached hereto as
Exhibit A a summary list of the Accounts Receivable as of the Effective Date
referring to computer printouts supplied to Purchaser and setting forth the name
of the obligor, balance, age of the receivable, the split with any Broker, and
Seller's estimate of collectability for each material receivable. The Accounts
Receivable reflected on Exhibit A and the Accounts Receivable created after the
date thereof are valid and genuine and arise from bona fide sales and deliveries
of goods, performance of services or other transactions in the ordinary course
of Seller's Business. The Accounts Receivable are collectable in their full
amounts in that Seller has not entered into any agreement to forgive or discount
the amount listed in Exhibit A. Seller will provide an updated list of Accounts
Receivable dated December 21, 1999.
(j) Books and Records. Seller has disclosed and made
available to Purchaser all of the Books and Records relating to the Business.
The copies of the Books and Records made by or for Purchaser during the
Inspection Period are true, correct and complete copies. Seller shall disclose
to Purchaser any material change in the Books and Records between the end of the
Inspection Period and the Closing, at Closing.
(k) FF&E and Inventories. Seller has attached a list of
the FF&E (Exhibit G) as of the Effective Date, including a description of owned,
leased or consigned property, which represents all of the FF&E and Inventories
owned by Seller and which are in good and operable condition, normal wear and
tear excepted. Seller will provide an updated list of Inventories dated December
21, 1999.
(l) Intangibles. Seller owns the rights to its goodwill,
other tangibles and any trademark, service xxxx, trade name, copyright, or brand
name used in its Business except as otherwise disclosed in Exhibit M hereto. No
person other than Seller owns any trademarks, trademark registrations,
applications, service marks, trade names,
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copyrights, copyright registration, or applications or brand names, the use of
which is necessary or contemplated in connection with the operation of the
Business or the performance of any Commercial Agreement to which Seller is a
party.
(m) Trade Secrets. Seller shall deliver to Purchaser the
originals and all copies of all of the trade secrets and proprietary information
used by Seller in, or owned by Seller and useful in, the operation of its
Business, including all software, computer programs, mailing lists, Client
lists, processes, know-how, and other technical data, including the specific
location of each trade secret's documentation, and its complete description,
specifications, charts, procedures, and other material relating to it. Each
trade secret's documentation is current, accurate, and sufficient in detail and
content to identify an explain and then to allow its full and proper use by
Purchaser without reliance on the special knowledge or memory of others except
as otherwise disclosed on Exhibit M hereto. The Seller is the sole owner of each
of these trade secrets free and clear of any liens, encumbrances, restrictions,
or legal or equitable claims of others. The Seller has taken all reasonable
security measures to protect the secrecy, confidentiality, and value of these
trade secrets. Any of Seller's employees and any other persons who, either alone
or in concert with other, developed, invented, discovered, derived, programmed,
or designed these secrets or who have knowledge of or access to information
relating to them, have been put on notice and have entered into appropriate
agreements that these secrets are proprietary to Seller and not to be divulged
or misused. To Seller's knowledge, all these trade secrets are presently valid
and protectable and have not been used, divulged, or appropriated for the
benefit of any past or present employees or other persons to the detriment of
Seller of the Business.
(n) Client Balances. Seller has delivered to Purchaser a
list of the Client account balances on or about the Effective Date and as
summarized on Exhibit J hereto. The Client account balances represent all of the
account balances of Clients in the system and are not materially inaccurate.
Seller will provide an updated list of Client account balances dated December
21, 1999.
(o) Liabilities. Seller has attached a list of the
Payables (as defined in Section 9.1) and all other known liabilities relating to
the Business as of on or about the Effective Date as Exhibit K hereto. Seller
has included in Exhibit K a disclosure of all material contingent liabilities of
the Business. Seller will provide an updated list of Payables and liabilities
dated December 21, 1999.
(p) Litigation. Except as provided in Exhibit L, Seller
is not a party to, either as plaintiff or defendant, and to Seller's knowledge,
the Assets and Business are not the subject of, any litigation or administrative
proceeding, by or before any court, governmental instrumentality or agency
including, without limitation, any tax appeal, and Seller has not received any
notice of threatened litigation if such litigation or proceeding affects the
Assets or Business or if the result of such proceeding could be binding on
Purchaser. The parties acknowledge and agree that Seller is engaged in
litigation with Xxx
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Xxxxxxxxx et. al. (Case No. 99-09114 Arizona Superior Court, Maricopa County).
Purchaser has agreed to assume the liability for any settlement costs and legal
or other fees in connection with this litigation from and after the Effective
Date hereof. Purchaser will, if required, establish an escrow reserve to remove
the preliminary injunction prohibiting the sale of Assets. Purchaser shall be
allowed to negotiate a settlement with the plaintiffs and/or Xxxx Xxxxxx to end
the litigation (at least as to Seller). Seller shall fully cooperate with
Purchaser to defend the litigation in Seller's name, prevail in the litigation,
minimize attorney's fees and other costs and/or reach a settlement. All
litigation decisions from and after the Effective date shall be approved by
Purchaser, which approval shall not be unreasonably withheld. Purchaser may
intervene in the litigation at any time as the real party in interest. Seller
shall assign its rights under the counterclaims against Yarmak and plaintiffs to
Purchaser at any time upon the request of Purchaser.
The parties also acknowledge the commencement of
arbitration before the American Arbitration Association in San Francisco,
California, No. 74-181-1133-99 styled Barter Holdings, Inc., Claimant v. BXI
Corporation, IME Corporation [sic] and ITEX Corporation, Respondents. The claim
is for alleged breach of an Asset Purchase Agreement dated June 13, 1999 for the
sale of the assets of BXI Corporation. Relief prayed for includes (i) for
specific performance of the Purchase Agreement or, alternatively, refund of
$100,000 deposit, transaction costs and benefit-of-the-bargain damages; (ii)
general damages according to proof; and (iii) costs and attorneys fees.
Purchaser is not assuming any liability or obligation in connection with this
matter.
(q) Proprietary Information. To Seller's knowledge, the
Proprietary Information made available to Purchaser prior to or during the
Inspection Period is or will be either original copies or true, correct and
complete photocopies thereof and constitute information necessary for
Purchaser's examination as part of Purchaser's investigation during the
Inspection Period.
(r) Compliance with Law. Seller has not received any
notice or information indicating that the Assets or Business or an portion
thereof are not in compliance with all laws, regulations, ordinances, or orders
applicable thereto.
(s) Repair Obligations. Seller has not received any
notice from any lessor, insurance company or Governmental Authority requiring
any repairs or other construction work to be performed on or with respect to the
Assets or Premises.
(t) Title to Personalty. Seller has good and marketable
title to all of the Assets, Business, Accounts Receivable, Inventories, FF&E,
Intangibles and other Assets (except as otherwise disclosed in writing), and
such title shall be transferred to Purchaser at the Closing free of liens,
security interests, leases, pledges, encumbrances, equities, restrictions,
claims, conditions or agreements, except for those disclosed in Exhibit K or
Exhibit L or in the other schedules or Exhibits to this Agreement and which
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are assumed by Purchaser as set forth in Exhibit K hereto. All the Assets are in
good operating condition and repair, ordinary wear and tear excepted. Seller is
in possession of all Property leased to it from others. Except as set forth on
the appropriate schedule or Exhibit listing such assets, no shareholder,
officer, director or employee of Seller, nor spouse, child, or other relative of
any of these persons, or any third party known to Seller, owns or has any
interest directly or indirectly in any of the Assets owned by or leased to
Seller or any contract rights, copyrights, patents, trademarks, trade names, or
trade secrets or other Intangibles owed or licensed by Seller.
(u) Purchase Rights. As of the Effective Date, except for
this Agreement and as disclosed on Exhibit L, Seller has not entered into any
agreement, or granted any option, for the purchase of the Assets or Business or
the stock or other securities of Seller.
(v) Client Base. Seller has provided to Purchaser as
reflected in Exhibits C and J a correct and current list of all clients of
Seller together with a summary of trade purchases and sales made by each client
and the cash activity of each client during the period through November 30,
1999. Except as indicated by the Exhibits or transaction summaries, Seller has
no information indicating that any of these Clients intend to cease doing
business with Seller or materially alter the amount of the business that they
are presently doing with Seller. However, there are no guarantees or warranties
by Seller as to the expected future of level of business of any Clients or of
the Clients as a whole.
(w) Employment Contracts. Exhibit D to this Agreement is
a list of all employment contracts, collective bargaining agreements, and all
pension, bonus, profit-sharing, stock option, or other agreements or
arrangements providing for employee remuneration or benefits to which Seller is
a party or by which Seller is bound. All these contracts and arrangements are in
full force and effect and neither Seller nor any other party is in default under
them. There have been no claims or defaults and, to Seller's knowledge, there
are not facts or conditions which continued or on notice will result in a
default under these contracts or arrangements. There is no pending, or to
Seller's knowledge, threatened labor dispute, strike, or work stoppage affecting
the Business. It is expressly understood that Purchaser is not assuming any
obligation of Seller relating to any existing employment contracts, except as
provided in Exhibit K hereof . Seller acknowledges that Purchaser shall not be
responsible for any business, occupation, withholding, or similar tax, or for
any taxes of any kind related to any period before the Closing Date. Seller has
paid all applicable withholding and payroll taxes on its employees through the
Effective Date and will pay in the times and manner prescribed by applicable law
all such amounts through the Closing Date.
(x) Financial Statements. The financial information
provided to Purchaser by Seller has been prepared in accordance with generally
accepted accounting principles consistently followed by Seller throughout the
periods indicated, and fairly present the financial position of Seller as of the
dates of the income statements and balance
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sheets included in the financial statements, and the results of operations for
the respective periods indicated. Seller has no liabilities or obligations of
any nature, known or unknown, absolute, accrued, contingent, or otherwise of the
type required to be reflected or disclosed in the balance sheets, or the notes
thereto, that were not fully reflected or reserved against in the financial
statements.
(y) Tax Returns and Audits. Within the times and in the
manner prescribed by law, Seller has filed all domestic and foreign federal,
state, and local tax returns required by law and has paid all taxes,
assessments, and penalties due and payable. To Seller's knowledge, there are no
tax audits of the Business or of Seller in effect. Further, there are no
outstanding tax liens affecting the Assets or the Business.
(z) Insurance Policies. Through ITEX Corporation, BXI
Corporation has maintained and now maintains (i) insurance on all the Assets of
a type customarily insured, covering property damage and loss of income by fire
or other casualty and (ii) adequate insurance protection against all
liabilities, claims and risks against which it is customary to insure.
(aa) Other Contracts. Except as set forth in the Exhibits
hereto, Seller is not bound by and the Assets and Business are not subject to
any agreement, any indenture, mortgage, deed of trust, lease, pledge,
encumbrance, restriction or any other contract that is material in nature,
duration, or amount.
(bb) Employment Information. Exhibit D provides all
necessary information regarding the employees of Seller, including names,
addresses, any written or oral employment agreements, the term of employment,
the rates of compensation payable to each employee, all vacation time, sick
leave, and other paid time off accrued for each of them through the Effective
Date. No other person except independent contractors, accountants, auditors, and
attorneys regularly performs compensable services for Seller, and any contracts
with such other persons are disclosed in Exhibit D or E.
(cc) Cash on Hand. Seller shall provide a list of all
bank accounts and cash on hand to Purchaser on or before December 15, 1999 and
an updated list two (2) days before the Closing Date. Seller's schedule shall
list (i) the names and addresses of all persons holding signatory authority or a
power of attorney on behalf of Seller and (ii) the names and addresses of all
banks or other financial institutions in which Seller has an account, deposit,
or safe deposit box with the names of all persons authorized to draw on these
accounts or deposits or who have access to these boxes. All monies and rights
associated with or contained in the foregoing scheduled accounts shall be for
the future utilization by Purchaser in the Business, subject only to ordinary
and necessary business expenses which are payable in the normal course of
operations.
(dd) Documents Delivered Each copy or original of any
agreement, contract, or other instrument which is identified in any Exhibit
delivered by Seller or its
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counsel to Purchaser (or its counsel or representative), whether before or after
the execution hereof, is in fact what it is purported to be by Seller and has
not been amended, canceled, or otherwise modified.
(ee) Full Disclosure. None of the representations made by
Seller or made in any statement, document, letter, certificate, or memorandum
furnished or to be furnished by Seller or on its behalf contains or will contain
any untrue statement of a material fact or omits any material fact, the omission
of which would make the statements made misleading. Except as provided in the
Exhibits hereto, there is no fact, event or proceeding known to Seller which
materially adversely affects the Assets or the income, conditions, liabilities,
operations or prospects of the Business.
(ff) Corporate Approval. The execution and delivery of
this Agreement by Seller and the performance of its covenants and obligations
under it shall have been duly authorized by all necessary parties, including
(without limitation) directors, officers, and shareholders, by the requisite
vote in accordance with Seller's Articles of Incorporation, by-laws, and State
laws and Purchaser shall have received copies of all resolutions pertaining to
the authorization duly certified or notarized.
4.2. Seller's Covenants. Seller hereby covenants as follows:
(a) Operation of Property through the Closing. Seller
agrees that between the Effective Date and the earlier of the Closing or
termination of this Agreement:
(1) Modifications of Commercial Agreements. The
Commercial Agreements will not be amended or terminated by Seller, and no other
agreements affecting the Assets or Business after the Closing or any portion
thereof will be entered into by Seller without the prior written consent of
Purchaser (which consent will not be unreasonable withheld, delayed or
conditioned); excepting, however, (i) customary Client and Broker Contracts in
the ordinary course of the Business, on terms and at rates not less favorable to
Seller than the terms and rates generally charged by Seller on the Effective
Date; (ii) other Commercial Agreements in the ordinary course of customary
Business for at-will employment of necessary staff, maintenance, services and
ordinary and necessary business operations; and (iii) sales and purchases of
Inventories in the ordinary course of the Business, including maintaining
Inventories at levels necessary for customary services to be performed prior to
or within sixty (60) days after the Closing Date, at rates comparable to those
previously paid by Seller or at rates paid by comparable barter exchanges for
such products, supplies and services.
(2) Insurance Policies. All existing insurance
policies (or replacements thereof) affecting the Assets and Business or any
portion thereof will be kept in full force and effect through and including the
Closing Date.
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(3) Alterations. No alterations to the physical
condition of the Premises costing in excess of an aggregate amount of $10,000.00
will be made without the prior written consent of Purchaser (which consent will
not be unreasonably withheld, delayed or conditioned).
(4) Operations and Services. Seller will manage,
operate and maintain the Business in a commercially reasonable manner and in
substantially the same manner as the Business was operated and maintained on the
Effective Date. All services with respect to the Business that are required to
by provided will be provided through the Closing Date in order to maintain
existing Clients and Brokers and to operate the Business as before.
(5) Renewal of Permits and Licenses. Seller will use
its best efforts to keep in full force and effect and renew, when necessary, all
Permits and Licenses required in operation of the Business..
(6) Assets. None of the Assets of the Business,
including (without limitation) Broker and Client Contracts, Client lists, trade
names, goodwill and FF&E have been or will be sold, transferred or removed from
except in the ordinary course of the Business and except to the extent that
Account Receivables are collected and Inventories are sold for equivalent value
or are consumed or replacements are made in the ordinary course of the Business.
(7) Notices. Seller shall promptly notify Purchaser
of any notice from any Governmental Authorities regarding violation of any law
relating to the Assets or Business or any notice regarding any litigation of any
kind relating to the Assets or Business.
(b) Indemnification. Except for the liabilities assumed
by Purchaser pursuant to Exhibit K, Seller (including BXI Corporation, IME, Inc.
and ITEX Corporation) shall indemnify, defend and hold harmless Purchaser and
all of its directors, officers, employees, attorneys and affiliates
(collectively, Purchaser and said other indemnitees are referred to herein as
the "Purchaser Indemnitees") from and against any and all loss, damage, claim,
cost or expense and any other liability whatsoever (including, without
limitation, reasonable attorneys' fees, charges and costs) incurred by reason of
(i) any third party claim, demand or litigation relating to the Property and
arising or allegedly arising from acts, omissions, events, conditions, or
occurrences that existed or occurred prior to the Closing or (ii) any breach by
Seller of any of its representations or obligations under this Agreement. In
addition, and without limiting the generality of the foregoing, Seller shall
defend, indemnify and hold harmless the Purchaser Indemnitees from and against
any and all loss, damage, claim cost or expense and any other liability
whatsoever (including, without limitation, reasonable attorneys' fees, charges
and costs) arising out of Seller's failure to perform all of Seller's
obligations up to the Closing under the Leases, Commercial Agreements and
Licenses and Permits to the extent any of the foregoing is
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assigned to Purchaser and under any other agreement or with respect to any other
right assigned to Purchaser.
(c) Assignment of Leases and Commercial Agreements.
Seller shall assign and transfer to Purchaser at Closing, and Purchaser shall
assume, Seller's rights and obligations under all Leases, Commercial Agreements
and Security Deposits listed on the Exhibits hereto or which Purchaser has, on
or before the expiration of the Inspection Period, elected to assume by sending
written notice to Seller of such assumption. Except for those leases, agreements
and liabilities, all other Leases, Commercial Agreements and liabilities shall
be terminated or paid by Seller effective as of the Closing Date. Seller shall
provide Purchaser with written evidence of such termination as of the Closing
Date in form and substance reasonably satisfactory to Purchaser. Seller and
Purchaser shall each pay 50% of all fees and expenses relating to the assignment
of the Leases. Commercial Agreements and Security Deposits listed in the
Exhibits hereto or otherwise assumed by Purchaser.
4.3. Purchaser's Representations. Purchaser makes the following representations,
warranties and covenants to Seller which shall remain true and correct as of the
Closing.
(a) Existence. Purchaser is duly organized, validly
existing corporation organized and in good standing under the laws of the State
of Massachusetts and qualified to do business in the State of California or will
be so qualified at the time of Closing.
(b) Authority. Purchaser has, and on the Closing Date
will have, the right, power and authority to enter into and perform this
Agreement and all instruments and documents delivered or to be delivered by
Purchaser hereunder.
(c) Compliance. The execution, delivery, and performance
of this Agreement by Purchaser (i) shall not violate any provision of the
organizational documents of Purchaser or any applicable laws, regulations or
rules, (ii) shall not violate or constitute a breach of or default under any
judicial or regulatory decree or order binding on Purchaser, or any contract,
agreement, or instrument which Purchaser is a party.
(d) Valid and Binding. This Agreement and all documents
to be delivered by Purchaser pursuant to this Agreement, when executed and
delivered, shall constitute the legal, valid, and binding obligation of
Purchaser, enforceable in accordance with their respective terms, subject only
to bankruptcy, insolvency, moratorium, or similar laws.
(e) Indemnification. Purchaser shall indemnify, defend
and hold harmless Seller (including BXI Corporation, IME, Inc. and ITEX
Corporation) and all of their directors, officers, employees, attorneys, brokers
and affiliates (collectively, Seller and said other indemnitees are referred to
herein as the "Seller Indemnitees") from and against any and all loss, damage,
claim, cost or expense and any other liability whatsoever
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(including, without limitation, reasonable attorneys' fees, charges and costs)
incurred by reason of (i) any third party claim, demand or litigation relating
to the Property and arising or allegedly arising from acts, omissions, events,
conditions, or occurrences that occur subsequent to the Closing, or (ii) any
breach by Purchaser of any of its obligations under this Agreement. In addition,
and without limiting the generality of the forgoing, Purchaser shall defend,
indemnify and hold harmless the Seller Indemnitees from and against any and all
loss, damage, claim, cost or expense and any other liability whatsoever
(including, without limitation, reasonable attorneys' fees, charges and costs)
arising out of Purchaser's failure to perform all of Purchaser's obligations
subsequent to the Closing with respect to the liabilities assumed by Purchaser
and under the Leases, Commercial Agreements and Licenses and Permits to the
extent any of the foregoing is assigned to Purchaser and under any other
agreement or with respect to any other right assigned to Purchaser.
4.4 Survival Beyond Closing. All representations, warranties, covenants and
agreements contained in this Agreement shall survive the Closing and be binding
on and fully enforceable at law or in equity by the parties hereto and their
successors and assigns.
ARTICLE V
INSPECTION PERIOD AND CLOSING DATE
----------------------------------
5.1. Inspection of Property. Commencing on the first day of the Inspection
Period, Seller shall provide Purchaser with access to the Books and Records and
the opportunity to make such independent factual, physical and legal
examinations and inquires as Purchaser deems necessary and desirable with
respect to the Business and the transaction contemplated hereby. Commencing on
the first day of the Inspection Period and thereafter until the Closing Date,
Seller shall provide Purchaser and its representatives and agents with adequate
opportunity to become fully acquainted with the nature and condition, in all
respects, of the Business. Seller shall provide all information reasonably
requested by Purchaser and shall afford access to the Books and Records at all
reasonable times. Purchaser agrees to pay all costs and expenses of conducting
its due diligence and making any tests, analyses and investigations. Purchaser
further agrees to indemnify and hold harmless Seller and Seller Indemnitees from
and against any and all claims of damage or injury resulting from Purchaser's
entering upon the Premises and/or from Purchaser's conduct of such examinations.
5.2. Termination Rights. Except as otherwise provided in Section 14.1, Purchaser
may elect to terminate this Agreement by giving notice to Seller, on or before
5:00 p.m. Pacific Time on the last day of the Inspection Period. Purchaser may
so elect to terminate this Agreement for any reason whatsoever whereupon this
Agreements shall be null and void and Purchaser and Seller shall be released
from any further obligation or liability under this Agreement except as set
forth in this Agreement. If Purchaser fails to give notice to Seller that it
elects to terminate, then Purchaser shall be deemed to have elected to proceed
with the transaction and the Deposit shall be deemed non-refundable except as
expressly provided in this Agreement. If Purchaser terminates this Agreement in
accordance with this Section 5.2,
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then Purchaser shall receive a refund of the Deposit together with all accrued
interest, if any, whereupon this Agreement shall be terminated without any
further obligation of either party to the other. In such event, Purchaser shall
deliver to Seller copies of any written reports prepared for Purchaser in
connection with Purchaser's due diligence.
5.3 Closing. The purchase and sale contemplated by this Agreement shall be
consummated at settlement (hereinafter called the "Closing"), which shall take
place on or before December 24, 1999. The Closing shall take place at the
offices of the Purchaser at 5:00 p.m. (local time in such city) or at such other
location and time as may be mutually agreed upon by Seller and Purchaser. Seller
and Purchaser, at their respective options, may effect Closing by mail or
overnight courier. Purchaser has the right to waive or shorten the Inspection
Period and other conditions and contingencies set forth herein. In such event,
Purchaser may require an earlier Closing Date than set forth above. The Closing
Date shall then be five (5) business days after the date that Purchaser gives
written notice to Seller of the Closing Date ( if earlier than the Closing Date
provided above).
ARTICLE VI
PROPRIETARY INFORMATION
-----------------------
6.1. Books and Records. Commencing on the Effective Date, Seller shall
immediately make available to Purchaser all Books and Records, bank statements,
receipts, checks and other information and records necessary to conduct
Purchaser's due diligence examination of the Property. On or before December 15,
1999, Seller shall deliver to Purchaser copies of all financial and trade
reports by month through November 1999 and annually for the last two (2) years;
financial statements (audited or unaudited) for the last two (2) fiscal years;
and Seller's filed tax returns for all taxable years beginning on or after
January 1, 1997.
6.2 Commercial Agreements and Exhibits. On or before December 24, 1999, Seller
shall deliver to Purchaser the final form of all of the Exhibits referred to
herein which shall be attached hereto. Seller shall simultaneously deliver
copies of all of the documents and agreements referred to therein and any other
information reasonably requested by Purchaser, including ( without limitation)
copies of:
(i) All Leases, employment agreements, consulting contracts,
and other Commercial Agreements in effect on the Effective Date;
(ii) A representative Client Contract, all contracts that
materially differ from Seller's standard Client Contract, and Client Contracts
for all substantial Clients;
(iii) A complete, Client list and detail of all Client
balances on or about the Effective Date;
(iv) All Broker Contracts;
(v) All Licenses and Permits in effect on the Effective Date;
(vi) All Documents, synopses of court filings and other
materials relating to any liabilities, litigation or administrative proceedings
by or against Seller as set forth Exhibit K and L;
(vii) Any other writing or information concerning the Assets
and Business
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reasonably requested by Purchaser.
6.3. Confidentiality. Purchaser shall treat all of the information received from
Seller concerning the Business as the
Confidential Information of Seller and shall not disclose any such information
to any third parties or use such information for any purpose other than its due
diligence as provided herein.
ARTICLE VII
CONDITIONS PRECEDENT
--------------------
7.1. Conditions Precedent to Purchaser's Obligations. The Closing and the
obligation of Purchaser to purchase the Assets and Business are subject to
satisfaction of the following conditions:
(a) Seller's Deliveries. Seller shall have delivered the
items set forth in Section 8.1.
(b) Title. All title objections required to be cured by
Seller shall have been cured.
(c) Representations, Warranties and Covenants. Seller
shall not have breached any of Seller's representations, warranties and
covenants set forth in this Agreement.
(d) Termination of Commercial Agreements. All Commercial
Agreements shall have been terminated by Seller effective as of the Closing
Date, except those agreements that Purchaser assumes in writing pursuant to
Exhibit K or the terms hereof.
The conditions set forth in this Section 7.1 are solely
for the benefit of Purchaser and may be waived only by Purchaser. Purchaser
shall at all times have the right to waive any condition. Any such waiver or
waivers shall be in writing and shall be delivered to Seller and Escrow Agent.
Neither Seller nor Purchaser shall act or fail to act for the purpose of
permitting or causing any condition to fail.
7.2. Conditions Precedent to Seller's Obligations. The Closing and Seller's
obligations with respect to the transactions contemplated by this Agreement are
subject to the satisfaction of the following conditions:
(a) Purchaser's Deliveries. Purchaser shall have
delivered the items described in Section 8.2.
(b) Representations, Warranties and Covenants. Purchaser
shall not have breached any of Purchaser's representations, warranties and
covenants set forth
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in this Agreement.
ARTICLE VIII
EVENTS OCCURRING AT CLOSING
---------------------------
8.1. Seller's Performance. At Closing, Seller shall deliver to Purchaser all of
the following, the delivery of which shall be a condition to Purchaser's
obligation to consummate the purchase of the Property:
(a) Xxxx of Sale. A Xxxx of Sale duly executed by the
Seller transferring all Assets and the Business free and clear of any liens,
security interests, lease, pledges or encumbrances except as assumed in writing
by Purchaser pursuant to Exhibit K or the terms hereof.
(b) Assignments. An Assignment of Leases, Commercial
Agreements, Security Deposits, Insurance Proceeds, Inventories, FF&E, Accounts
Receivable and other assets, tangible or intangible as provided herein, executed
and acknowledged by Seller and accompanied by all consents of lessors or third
parties required by this Agreement and the leased or other property assigned.
The originals of said Leases and Commercial Agreements are among the books and
records of the Seller which are to be transferred hereunder.
(c) Bank Accounts. Title to all bank accounts relating to
the Business and a power of attorney or other means of depositing all receipts
and paying all expenses of the Business after the Closing Date.
(d) Assignment of Intangibles. The trade name, goodwill,
Client lists, trade secrets and any intellectual property rights relating to the
Business including copyrights, patents, trademarks and the like shall be
assigned and transferred to Purchaser through appropriate instruments of
transfer.
(e) Form of Notice. A form of notice to all Brokers,
current Clients and other third parties of the sale contemplated herein.
(f) Closing Statement. A closing statement as provided in
Section 9.4.
(g) Possession. Possession of all the Assets shall be
delivered to Purchaser at Closing, subject to any Leases and new leases as are
entered into in conformity with the provisions of this Agreement.
(h) Miscellaneous. Such other instruments as may
reasonably be required to consummate the transactions contemplated by this
Agreement. At any time before or after the Closing Date, Seller shall execute,
acknowledge, and deliver any further deeds, assignments, conveyances, and other
assurances, documents, and instruments of
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transfer reasonably requested by Purchaser and shall take any other action
consistent with the terms of this Agreement that may be reasonably requested by
Purchaser for the purpose of assigning, transferring, renting, conveying, and
confirming to Purchaser or reducing to possession any or all property and assets
to be assigned, conveyed and transferred to Purchaser under this Agreement. If
requested by enforce in its own name for the benefit of Purchaser all claims,
rights, or benefits under this section shall be solely at Purchaser's expense
unless the prosecution or enforcement is made necessary by a reach of this
Agreement by Seller.
8.2 Purchaser's Performance. At the Closing and contemporaneously with Seller's
compliance with the provisions of Section 8.1 above, Purchaser shall:
(a) Payment of Purchase Price. Deliver to the Escrow
Agent the balance of the Cash Portion of the Purchase Price, adjusted for the
adjustments and prorations provided herein.
(b) Payment of Certain Costs. Deliver to the Escrow Agent
or other applicable party the amount of money required for the payment of such
costs, expenses and other items as are required to be paid by Purchaser
hereunder.
(c) Assumptions. Assume, on and after the Closing, all of
Seller's obligations with respect to the liabilities set forth in Exhibit K and
which are to be assumed by Purchaser hereunder and any other Leases, Commercial
Agreements and Licenses and Permits which Seller is required by Purchaser to
assign to Purchaser or which Purchaser has agreed in writing to assume.
(d) Closing Statement. Execute the Closing Statement.
(e) Resale Certificate. Deliver to Seller a Resale
Certificate pursuant to the California Sales and Use Tax Law.
(f) Miscellaneous. Execute and deliver such other
instruments as may reasonably be required to consummate the transactions
contemplated by this Agreement.
ARTICLE IX
PRORATIONS AND ADJUSTMENTS
--------------------------
9.1 Prorations. At Closing, the following adjustments and prorations shall be
computed as of the Cut-Off Time (as hereafter defined), and the cash balance of
the Purchase Price shall be adjusted to reflect such prorations. Net credits in
favor of Purchaser shall be deducted from the balance of the Purchase Price at
the Closing and net credits in favor of Seller shall be paid in cash at the
Closing. Unless otherwise indicated below, Purchaser shall receive a credit for
any of the following items to the extent the
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same are accrued but unpaid as of the Cut-Off Time and to the extent the same
relate to any period of time prior to the Cut-Off Time (whether or not due,
owing or delinquent as of the Cut-Off Time). All adjustments to the Purchase
Price made at Closing will be based on the Closing Statement, subject to
post-Closing adjustments pursuant to Section 9.4.
(a) Intent of Prorations Provisions. The intent of the
prorations and adjustments provided for herein is that, except for liabilities
set forth in Exhibit K which are assumed by Purchaser or otherwise assumed by
Purchaser in writing, Seller shall bear all liabilities, costs and expenses of
ownership and operation of the Business accruing through 12:01 a.m. Pacific Time
on the day after the day of Closing (the "Cut-Off Time"), and Purchaser shall
bear all such liabilities, costs and expenses accruing thereafter.
(b) Payables. All of Seller's accounts payable incurred
in the ordinary course of business in connection with the ownership and
operation of the Business, including amounts payable to vendors and other trade
payables and amounts payable to Brokers and other third parties as of the
Cut-Off Time, are herein called the "Payables." Seller agrees that between the
Effective Date and the Closing Date all Payables shall be paid and discharged in
the ordinary course of business. Any Payables accrued and outstanding as of the
Cut-Off Time shall be paid by Purchaser and Purchaser shall receive a credit for
the amount of such Payables. Purchaser agrees that after the Closing Date all
Payables shall be paid by it in the ordinary course of business. Any Payables
accrued and outstanding as of not more than thirty (30) days prior to the
Cut-Off Time but not billed or discovered until after the Closing Date shall be
paid by Purchaser at such time as such are billed or discovered.
(c) Cash. Seller shall receive a credit for all cash in
the bank accounts, cash registers, vaults, safes and/or "xxxxx cash boxes" as of
the Cut-Off Time.
(d) Taxes and Assessments. Real and personal property
taxes, assessments and all other public or governmental charges (including
charges, assessments, liens or encumbrances for sewer, water, drainage or other
public improvements completed or commenced on or prior to the date of Closing)
which have been paid or are payable for any time period in which either Seller
and Purchaser shall have title shall be adjusted and apportioned as of the
Cut-Off Time. Seller acknowledges its responsibility for the payment at or prior
to Closing (or giving Purchaser credit therefore at Closing) of the items listed
in the preceding sentence which are payable for any time period in which Seller
has title. If the exact amount of taxes is not known at Closing, the proration
will be based on the prior year's taxes and shall be adjusted directly between
Seller and Purchaser once actual figures become available after Closing as
provided in Section 9.4. Where a tax appeal for any of the items described in
the first sentence hereof is pending at Closing by Seller, a subsequent
adjustment will be made between Seller and Purchaser based upon a re-proration
of real estate taxes in accordance with the results of such appeal, including,
without limitation, the costs and fees of any person or company retained by
Seller to appeal such taxes and assessments, shall also be prorated between
Purchaser and Seller.
-23-
Seller shall be responsible for all of its federal, state or local income,
franchise, sales or similar taxes applicable to the transaction contemplated by
this Agreement or relating to periods on or before the Closing Date.
(e) Deposits. All deposits collected by Seller as of the
Cut-Off Time, if any , which are allocable to the period after the Cut-Off Time
shall be paid by Seller to Purchaser at Closing. However, Purchaser shall not
receive a credit for deferred revenue or client prepayments and will continue to
service such clients per the Client Contracts after the Closing Date. Seller
shall recognize all of the income attributable to such deferred revenue or
prepayments for all income tax purposes, and shall pay for and indemnify, defend
and hold harmless Purchaser from any adverse tax consequences to Purchaser
associated therewith.
(f) Utilities. All utilities and telephone and telex, if
transferable, shall be adjusted and apportioned as of the Cut-Off Time. Readings
will be secured for all utilities as close as practicable to the Cut-Off Time,
Seller and Purchaser agree to finalize adjustments for these charges after
Closing as soon as final bills become available as provided in Sections 9.1 and
9.4.
(g) Fees for Licenses and Permits. Fees paid or payable,
if any, for Licenses and Permits to the extent such Licenses and Permits are
transferred to Purchaser shall be adjusted and apportioned as of the Cut-Off
Time.
(h) Inventories. To the extent that the value of all
Inventories on the Closing Date, as calculated by agents for Purchaser and
Seller utilizing Purchaser's method of accounting for Inventories is less than
the value of par levels at the end of the Inspection Period or as otherwise
determined by Purchaser and Seller prior to expiration of the Inspection Period,
Purchaser shall receive a credit against the Purchase Price in an amount equal
to any such deficiency.
(i) Employee Benefits. Except for accrued vacation time
of employees which shall be assumed by Purchaser as set forth herein, Seller
shall be responsible for payment of all compensation and other benefits (
including, without limitation, payroll taxes, any severance pay, vacation pay,
sick pay or personal leave or any other compensation payable under any employee
benefit plan (as defined in Section 3.3 of the Employee Retirement Income and
Security Act of 1974, as amended from time to time) maintained by Seller other
than accrued items for employees hired by Purchaser, and for all compensation
accrued in respect of, all employees (any beneficiaries thereof) for the period
through the Cut-Off Time. Seller shall retain all liabilities and obligations,
including tax obligations, with respect to all employees (including all
beneficiaries thereof) arising out of the operation of the Business prior to the
Closing Date. Purchaser shall receive a credit for compensation and payroll
taxes payable up to the Cut-Off Time and which is paid by Purchaser. Purchaser
shall be responsible for the payment of all compensation and other benefits with
respect to all employees hired by Purchaser which
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accrue after the Closing Date.
To aid in the transition between operation of the
Business by Seller and by Purchaser, Purchaser shall inform Seller, in writing
and not later than the end of the Inspection Period, of the names of the current
employees of Seller who Purchaser intends to hire after Closing.
(j) Miscellaneous. Except as provided in Exhibit K or
otherwise acknowledged by Purchaser in writing, all other similar amounts
payable by Seller shall be prorated at Closing and thereafter assumed by
Purchaser. In the event that accurate prorations and other adjustments cannot be
made at the Closing because current bills or statements are not obtainable, the
parties shall prorate on the best available information, subject to adjustment
upon receipt of the final xxxx or statement as provided in Section 9.4.
9.2 Seller's Costs. Seller shall pay the following costs and expenses in
connection with the Closing:
(a) Costs of obtaining any required title curative
documents;
(b) Any Recording or transfer fees;
(c) One-half (1/2) of any escrow or closing fees charged
by the Escrow Agent if utilized for purposes of Closing;
(d) Seller's legal expenses;
(e) Costs incurred in preparation of the Exhibits;
(f) State, county and municipal transfer, stamp and gains
taxes;
(g) All sales or use taxes relating to the transfer of
the FF&E or other Assets, except that Purchaser shall obtain a Seller's permit
pursuant to the California Sales and Use Tax Law and deliver to Seller the
Resale Certificate;
(h) Any other costs incurred by Seller.
9.3 Purchaser's Costs. Purchaser shall pay the following costs and expenses in
connection with the Closing:
(a) One-half (1/2) of the escrow or closing fees charged
by the Escrow Agent;
(b) Purchaser's legal expenses;
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(c) Any other costs incurred by Purchaser.
9.4 Initial Closing Statement. (a) Seller and Purchaser shall cause their
respective representatives to make such inventories, examinations and audits of
the Business, and of the Books and Records, as the parties may deem necessary to
make the adjustments and prorations required under this Section 9, or under any
other provisions of this Agreement. Based upon such audits and inventories, the
parties will prepare and deliver no later than the day of Closing a closing
statement ( the "Closing Statement"). The Closing Statement shall contain the
parties' best estimate of the amounts of the items requiring the prorations and
adjustments in this Agreement. The amounts set forth on the Closing Statement
shall be the basis upon which the prorations and adjustments provided for herein
shall be made at the Closing. Except as modified by the final report described
below, the Closing Statement shall be binding and conclusive on all parties
hereto to the extent of the items covered by the Closing Statement.
(b) Within ninety (90) days following the Closing Date,
the Purchaser shall deliver a final report to Seller setting forth the final
determination of all items to be included on the Closing Statement. In the event
that, at any time within said sixty (60) day period, either party discovers any
items which should have been included in the Closing Statement but were omitted
therefrom, such items shall be adjusted in the same manner as if their existence
had been know at the time of the preparation of the Closing Statement. The
foregoing limitation shall not apply to any item which, by its nature, cannot be
finally determined within the period specified. However, no further adjustments
shall be made in any event beyond six (6) months after the Closing Date.
9.5 Allocation of Purchase Price. The allocation of the Purchase Price pursuant
to Internal Revenue Code Section 1060 shall be reasonably determined by
Purchaser and set forth on the Closing Statement. Purchaser and Seller shall
consistently report the transaction on its tax returns in accordance with the
allocation of the Purchase Price set forth on the Closing Statement.
ARTICLE X
OPERATIONS PRIOR TO CLOSING
---------------------------
10.1 Maintenance and Operations. At Seller's expense, Seller shall maintain the
Business and Premises substantially in their present condition, subject to
normal wear and tear. All of Seller's insurance policies including, without
limitation, fire and any additional hazard insurance, shall be maintained in
effect until Closing and shall be terminated by Seller effective on the day
after the Closing Date. Seller shall retain any insurance refunds due to this
termination. Seller shall maintain all Leases, Commercial Agreements and
Licenses and Permits in full force and effect. Subject to Article X of this
Agreement, all risk of loss or damage to the Business (including, but not
limited to, loss by any Act of God, human event, fire, windstorm or other
casualty) shall rest with Seller until the
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Closing Date.
ARTICLE XI
RISK OF LOSS
------------
11.1 General Statement. Risk of loss or damage form fire or other casualty is
assumed by Seller until the Closing, subject to the specific provisions of
Section 11.2 herein below.
11.2 Procedure on Loss. If at any time between the Effective Date and the
Closing Date on the date of Closing any portion of the Property has been damaged
as a result of any fire, accident or other casualty or act of God, to such an
extent that the cost of repairs therefor is not greater than an amount equal to
Fifty Thousand Dollars ($50,000.00), as determined by an insurance adjuster
acceptable to Seller and Purchaser, Purchaser shall perform under this Agreement
with no adjustment to the Purchase Price and all applicable casualty insurance
proceeds shall be assigned to Purchaser and Seller shall reimburse Purchaser for
the amount of Seller's insurance deductible. If, however, such cost of repair,
as determined by the insurance adjuster, is in excess $50,000, Purchaser shall,
at its option, either: (i) complete Purchaser's obligations hereunder with no
adjustment to the Purchase Price and collect all available applicable insurance
proceeds and Seller shall reimburse Purchaser for the amount of Seller's
insurance deductible, or (ii) cancel this Agreement and receive a refund of the
Deposit and all interest accrued thereon, if any, in which event no party shall
have any further rights or obligations hereunder except as otherwise provided
herein.
11.3 Condemnation. In the event any portion of the Property is condemned or is
the subject of a condemnation proceeding by any governmental authority under its
power of eminent domain such that the Purchaser, in Purchaser's sole opinion,
cannot economically operate the Business without cost or loss, Purchaser may
elect to: (i) proceed to purchase the remaining portion of the Property with no
adjustment to the Purchase Price, in which event Seller shall assign to
Purchaser all of Seller's right, title and interest in and to any condemnation
awards, whether pending or already paid , or (ii) terminate this Agreement, in
which event the Deposit and all interest earned thereon shall be returned to
Purchaser and no party shall have any further rights or obligations hereunder.
ARTICLE XII
LIABILITIES
-----------
12.1. Treatment of Seller's Liabilities. Except for the liabilities stated in
Exhibit K or otherwise assumed by Purchaser in writing, any and all other
liabilities of the Business incurred prior to the Cut-Off Time on the Closing
Date shall be the sole responsibility of Seller. Only Payables incurred in the
ordinary course of the Business shall be assumed by Purchaser and prorated and
adjusted under Article IX. Purchaser may assume other liabilities of Seller
under other Commercial Agreements by electing in writing to receive an
assignment of such other Commercial Agreements, including other leases,
licenses, and
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employment contracts pursuant to the terms hereof. Purchaser shall
have no liability, cost or expense whatsoever for any and all liabilities of
Seller incurred prior to the Cut-Off Time on the Closing Date and not expressly
assumed by Purchaser pursuant to the provisions hereof.
ARTICLE XIII
COMMISSIONS AND FEES
--------------------
13.1 Indemnity. Each party hereto represents and warrants to the other that it
has not agreed to pay and is not bound to pay any broker, agent or finder in
connection with the transaction contemplated herein. Each party agrees to
indemnify and hold the other harmless from all claims of any broker, agent or
finder arising by reason of the breach of this representation and warranty that
neither has used the services of any broker, agent or finder in connection with
this Agreement. The indemnities provided herein shall survive any termination of
this Agreement for any reason whatsoever and the Closing.
ARTICLE XIV
DEFAULT AND REMEDIES
--------------------
14.1. Deposit; Payment to Purchaser. The Deposit shall be
returned to Purchaser in the event the transaction contemplated herein cannot
proceed due to the valid order of a court of competent jurisdiction enjoining
the Closing and such injunction is not lifted or otherwise dissolved prior to
March 1, 2000. In the event that any such injunction is not lifted or otherwise
dissolved by this date, this Agreement and all obligations hereunder shall
terminate pursuant to Section 5.2 except as otherwise provided herein.
14.2. Purchaser's Default; Liquidated Damages. If prior to the
Closing, Purchaser fails to meet, comply with, or perform any covenant,
agreement, representation, warranty, or obligation on its part required within
the time limits and in the manner required in this Agreement (notwithstanding
any disclosure by Purchaser as to the untruth or incorrectness of any
representation or warranty), and such failure was not caused by Seller's default
under this Agreement, Seller shall give written notice thereof to Purchaser
immediately after Seller becomes aware of such failure and the following
provisions shall apply:
If the cost to cure such failure, or the amount of
damages incurred by Seller on account of such failure, is reasonably expected to
be less than $20,000.00, then the failure shall be deemed to be an immaterial
breach by Purchaser which shall not delay the Closing or allow Seller to
exercise its remedies set forth in this Section 14.2; provided, however, that
Purchaser within a reasonable period of time not to exceed fifteen (15) days
after receiving Seller's notice of such failure shall either cure such failure
or compensate Seller for the damages incurred by Seller on account thereof.
If the cost to cure such failure, or the amount of
damages
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incurred by Seller on account of such failure, is reasonably expected to be
$20,000.00 or more, then the failure shall be deemed to be a material breech by
Purchaser; provided, however, the Purchaser shall have the right within a
reasonable period of time not to exceed fifteen (15) days after receiving notice
of such failure either to cure such failure or to compensate Seller for the
damages incurred by Seller on account thereof. If Purchaser does not effect such
cure or compensation within said period of time, then Purchaser shall be in
default and Seller shall have the right to terminate this Agreement. In such
event, as Seller's sole remedy, Seller shall have the right to give Purchaser
written notice of Purchaser's default whereupon the Deposit, together with the
interest earned thereon, shall be liquidated damages and not a penalty.
PURCHASER AND SELLER EACH ACKNOWLEDGE THAT IT WOULD BE DIFFICULT TO ASCERTAIN
THE ACTUAL DAMAGES AS TO LOSS OF THE VALUE OF THE BARGAIN, CERTAIN CARRYING COST
AND OTHER INDIRECT COSTS AND OTHER INDIRECT COSTS WHICH WOULD BE SUFFERED BY
SELLER IF PURCHASER DEFAULTS IN CONSUMMATING THE PURCHASE AND SALE CONTEMPLATED
BY THIS AGREEMENT. THEREFORE, IT IS STIPULATED BY THE PARTIES HERETO THAT THE
DEPOSIT AND THE INTEREST EARNED THEREON REPRESENT A REASONABLE ESTIMATE OF THE
PROBABLE LOSS TO SELLER RESULTING FROM ANY SUCH DEFAULT BY PURCHASER.
ACCEPTED AND AGREED TO: ACCEPTED AND AGREED TO:
/s/ Xxxxxx X. Xxxxxxx, Pres. /s/ Xxxx St. Xxxxxx , Pres.
------------------------------------ --------------------------------
Seller Purchaser
14.3. Seller's Default. In the event Seller breaches any
representation or warranty or its obligation to close hereunder then Purchaser's
remedies shall be as set forth in this Section 14.3. If prior to the Closing,
Seller fails to meet, comply with, or perform any covenant, agreement,
representation, warranty, or obligation on its part required within the time
limits and in the manner required in this Agreement (notwithstanding any
disclosure by Seller as to the untruth or failure was not caused by Purchaser's
default under this Agreement, Purchaser shall give written notice thereof to
Seller promptly after Purchaser becomes aware of such failure and the following
provisions shall apply:
If the cost to cure such failure, or the amount of
damages incurred by Purchaser on account of such failure, is reasonably expected
to be less than $20,000.00, then the failure shall be deemed to be an immaterial
breach by Seller which shall not delay the Closing or allow Purchaser to
exercise any of the remedies set forth in this Section 14.3; provided, however,
that Seller within a reasonable period of time not to exceed fifteen (15) days
after receiving Purchaser's notice of such failure shall either cure such
failure or compensate Purchaser for the damages incurred by Purchaser on account
thereof.
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If the cost to cure such failure, or the amount of
damages incurred by Purchaser on account of such failure, is reasonably expected
to be $20,000.00 or more, then the failure shall be deemed to be a material
breach by Seller; provided, however, that Seller shall have the right within
fifteen (15) days after receiving notice of such failure either to cure such
failure or compensate Purchaser for the damages incurred by Purchaser on account
thereof provided that if such failure is not capable of cure within fifteen (15)
days and Seller is proceeding diligently to effectuate a cure, the time within
which to cure may be extended for an additional fifteen (15) days. If Seller
does not effect such cure or compensation with said period of time, then Seller
shall be in default and Purchaser shall have the right at its option to (i) seek
specific performance of this Agreement or (ii) terminate this Agreement and
recover all of Purchaser's damages on account of Seller's breach of this
Agreement.
ARTICLE XV
RIGHTS OF ESCROW AGENT
----------------------
15.1 Rights of Escrow Agent.
Escrow Agent shall be entitled to rely upon, and shall be
fully protected from all liability, loss, cost, damage or expense in acting or
omitting to act pursuant to, any instruction, order, judgment, certification,
affidavit, demand, notice, opinion, instrument or other writing delivered to it
which the Escrow Agent in good faith believes to be genuine, without being
required to determine the authenticity of such document, the correctness of any
fact stated therein, the propriety of the service thereof or the capacity,
entity, or authority of any party purporting to sign or deliver such document.
The duties of Escrow Agent are only as herein
specifically provided, and are purely ministerial in nature. This Agreement sets
forth all the obligations of Escrow Agent with respect to any and all matters,
pertinent to the escrow contemplated hereunder and no additional obligations of
Escrow Agent shall be implied from the terms of this Agreement or any other
Agreement. Escrow Agent shall incur no liability in connection with the
discharge of its obligations under this Agreement or otherwise in connection
therewith, except such liability as may arise from the negligence or willful
misconduct of Escrow Agent.
Escrow Agent shall not be liable for any action taken or
omitted to be taken by Escrow Agent reasonably and in good faith in accordance
with the advice of counsel.
Escrow Agent shall not be bound by any modification,
cancellation or rescission of this Agreement unless in writing and signed by
Escrow Agent.
Escrow Agent shall be the "reporting party" with respect
to the Escrow
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Funds, the closing proceeds delivered to Escrow Agent or income on any of the
foregoing. Escrow Agent shall comply with the provisions of Section 468B (g) in
the Internal Revenue Code of 1986, as amended, and any regulations promulgated
thereunder. Such authority shall include, without limitation, (i) the filing of
tax returns (including information returns) with respect to any funds or income
thereon, (ii) the payment of any tax. Interest or penalties imposed thereon,
(iii) the withholding of any amounts which are required to be withheld and (iv)
the payment over such withheld amounts to the appropriate taxing authority. The
parties to this Agreement, other than the Escrow Agent, shall provide the Escrow
Agent with all information necessary to enable Escrow Agent to comply with the
foregoing. Escrow Agent may withdraw from the funds held in escrow any amounts
necessary to pay all applicable income or withholding taxes (plus interest and
penalties thereon) that are required to be paid.
Escrow Agent is acting as a stakeholder only with respect
to all documents and funds delivered in escrow to it. If any dispute arises as
to whether Escrow Agent is obligated to deliver any escrowed documents or funds
or as to whom any escrowed documents or funds are to be delivered, Escrow Agent
shall not be required to make any delivery, but in such receipt by Escrow Agent
may hold such documents and funds until parties which have, or claim to have, an
interest therein, directing the disposition of such documents and funds or
in-kind documents and funds in the absence of such authorization, Escrow Agent
may hold such documents and funds until receipt of certified copy of a final
judgment of a court of competent jurisdiction providing for the disposition of
such documents and funds. Escrow Agent may require, as a condition to the
disposition of such documents and/or funds, pursuant to written instructions. If
such written instructions and indemnification are not commenced, within thirty
(30) days after receipt by Escrow Agent of notice of any such dispute and
diligently continued, or if the Escrow Agent is uncertain as to which party or
parties are entitled to the documents and/or funds until receipt of (x) such
written instruments and indemnification or (y) a certified copy of a final
judgment of a court of competent jurisdiction providing far the disposition of
the documents and/or funds, or (ii) deposit the documents and/or funds in the
registry of a court of the foregoing, Escrow Agent may, but shall not be
required to, institute legal proceedings of any kind.
Seller and Purchaser agree to reimburse Escrow Agent on
demand for, and to indemnify and hold Escrow Agent harmless against and with
respect to, any and all loss, liability, damage or expense ( including, without
limitation, attorney's fees and costs) that Escrow Agent may suffer or incur in
connection with the entering into this Agreement and performance of its
obligations under this Agreement and performance of its obligations
under this Agreement or otherwise in connection therewith, except to the extent
such loss, liability, damage or expense arises from the negligence or willful
misconduct of Escrow Agent.
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Escrow Agent and any successor escrow agent may at any
time resign as such by delivering the documents and funds held by it to either
(i) any successor escrow agent designated by all the parties hereto (other than
Escrow Agent) in writing, or (ii) any court having competent jurisdiction. Upon
its resignation and delivery of the documents and funds as provided in this
paragraph, Escrow Agent shall be discharged of, and from, any and all further
obligations arising in connection with the escrow contemplated by this
Agreement.
Escrow Agent shall not have the right to represent any
party hereto in any dispute between the parties hereto with respect to any
escrowed documents or funds.
Nothing in this Agreement, express or implied, shall give
to anyone, other than the parties hereto and their respective permitted
successor and assigns, any benefit, or any legal or equitable right, remedy or
claim, under or in respect of this Agreement or the escrow contemplated hereby.
ARTICLE XVI
MISCELLANEOUS PROVISIONS.
-------------------------
16.1. Integration of Agreement. This Agreement constitutes the entire agreement
between the parties with respect to the transactions contemplated herein, and it
supersedes all prior discussions, understandings or agreements between the
parties.
16.2. Binding Effect. This Agreement shall be binding without any further act,
consent or approval and shall be binding upon and inure to the benefit of the
parties hereto, and their respective successors, personal representatives, heirs
and assigns.
16.3. Waiver; Modification. Failure by Purchaser or Seller to insist upon or
enforce any of their respective rights hereunder shall not constitute a waiver
thereof, except as provided for herein. No waiver of or modification or
amendment to any of the provisions of this Agreement shall be valid unless in
writing and executed by the parties against whom it is sought to be enforced.
16.4. Governing Law. This Agreement shall be construed, interpreted and enforced
in accordance with the laws of the State of California without regard to the
laws of conflict of laws.
16.5. Headings. The paragraphs or section headings herein are for convenience of
reference only and shall not be deemed to vary the content of this Agreement or
the covenants, agreements, representations and warranties herein set forth or
limit the provisions or scope thereof.
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16.6. Counterparts. This Agreement may be executed in as many counterparts as
may be required and it shall not be necessary that the signature of, on behalf
of, each party, or appear on more than one counterpart. All counterparts shall
collectively constitute a single agreement. Any signature sent by facsimile
transmission shall be effective as an original signature.
16.7. Notices. All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered, sent by Federal Express or other comparable overnight
courier, or mailed by first class, registered or certified mail, return receipt
requested, postage prepaid:
If to Seller:
BXI Corporation
0000 Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx
ITEX Corporation
00000 Xxxxxxxxx Xxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxxx, Xxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxxxx Xxxxxxxxxxx
with a copy to:
Xxxxxxx Xxxxxx, Esq.
General Counsel
ITEX Corporation
X.X. Xxx 0000
Xxxxxxxx, Xxxxxx 00000-0000
Phone: (000) 000-0000
Fax: (000) 000-0000
or to such other address as may have been furnished by Seller to Purchaser in
writing.
If to Purchaser:
TAHO Enterprises, Inc.
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XX Xxx 00
Xxxxxx Xxxxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxx St. Xxxxxx
with a copy to:
Xxxxxx & Xxxx, LLP
00 Xxxxxx Xxxxx
Xxxxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxx Xxxx
or to such other address as may have been furnished by Purchaser to Seller in
writing.
Any notice, request, consent or other communications shall be deemed
complete and effective upon receipt or refusal to accept delivery as indicated
in the return receipt or in the receipt of Federal Express or other overnight
courier service.
16.8. Assignment. Neither party shall have the right to assign this Agreement to
any other person or entity without the other party's approval thereto, which
approval may be withheld in such other party's its sole and absolute discretion.
Notwithstanding the foregoing, upon written notice to Seller, Purchaser shall
have the right to assign its interest in this Agreement to an affiliate or
principal of Purchaser or any entity in which Purchaser or any affiliate or
principal of Purchaser has an interest.
16.9. Partial Invalidity. If any provision or provisions in this Agreement is
found by a court of law to be in violation of any applicable local, state or
federal ordinance, statute, law, administrative or judicial decision, or public
policy, and if such court should declare such portion, provision or provisions
of this Agreement to be illegal, invalid, unlawful, void or unenforceable as
written, then such portion provision or provisions shall be given force to the
fullest possible extent that they are legal, valid and enforceable, that the
remainder of this Agreement shall be construed as if such illegal, invalid,
unlawful, void or unenforceable portion, provision or provisions were not
contained therein, and that the rights, obligations and interest of Purchaser
and Seller under the remainder of this Agreement shall continue in all force and
effect.
16.10. Time of the Essence. Time shall be of the essence with respect to all of
the terms, conditions and provisions of this Agreement.
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16.11. Termination. Upon termination of this Agreement for any reason by either
party, Purchaser shall have the obligation to return to Seller all information
and documents obtained from Seller or from Purchaser's inspections and Purchaser
agrees that it shall not disclose to any third party the contents thereof after
their return to Seller. Purchaser shall deliver to Seller copies of all written
reports which may have been prepared at Purchaser's request.
16.12. Confidentiality. It is understood that neither Purchaser nor Seller nor
any entity directly or indirectly controlled by either of them will make any
disclosure or publicity release pertaining to the existence of this Agreement or
the subject matter contained herein, except to Purchaser's and Seller's
professional advisors, for the financing of the purchase hereunder, for the
performance of Seller's and Purchaser's obligations hereunder, or with the
written consent of the other party.
16.13. Preservation of Goodwill. Following the Closing, Seller shall restrict
its activities and the activities of any persons controlled by Seller so that
Purchaser's reasonable expectations with respect to the goodwill, business
reputation, employee relations, current Brokers, Clients, and prospects
connected with the Assets, Business and Property of BXI Corporation will not be
materially impaired.
(a) In furtherance but not in limitation of this general
obligation, for a period of three (3) years after the Closing Date, BXI
Corporation agrees not to compete or interfere, directly or indirectly, with the
Business or Purchaser by: (i) engaging in the retail barter, corporate barter,
trade exchange or any other business similar or related to the Business
transferred to Purchaser hereunder, except as provided in Section 15.13 (e);
(ii) soliciting any of the Brokers or Clients of the Business; (iii) damaging or
interfering with the operation of the Business by Purchaser; (iv) soliciting
employees, vendors or other third parties away from the Business; or (v) using
in any way or allowing any other person to use any of the trade secrets, current
mailing lists, Client lists and other proprietary information of the Business.
(b) The parties intend that the covenants contained
herein shall be construed as a series of separate covenants, one for each local
market in which Seller currently does business. Except for geographic coverage,
each covenant shall be deemed identical in terms to the covenant contained
herein. If, in any judicial proceeding, the court shall refuse to enforce any of
the separate covenants deemed included in this section, then this unenforceable
covenant shall be deemed eliminated from these provisions for purposes of the
other separate covenants to be enforced.
(c) Seller will not disclose or allow any other persons
to disclose to any person, corporation, business entity of any form, either
directly or indirectly, or use for its own benefits any proprietary, non-public
information of the Business (including trade secrets, price lists, pricing data,
mailing information to the extent that it is
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not otherwise readily available public information) unless Purchaser first
grants written permission or unless required by court or administrative order or
other lawful process.
(d) The provisions of this Section 15.13 shall be
enforceable by injunction, in addition to all other rights and remedies of
Purchaser in the event of Seller's breach hereof. Any proceedings to enforce the
provisions of this Section 15.13 may be through legal action in courts of law in
any appropriate jurisdiction and venue or through binding arbitration as
provided herein.
(e) Notwithstanding any other provisions hereof, the
parties acknowledge and agree that ITEX is engaged and will continue to be
engaged in the retail barter, corporate barter, trade exchange and other
businesses similar or related to the Business transferred to Purchaser
hereunder. Nothing contained herein shall in any way restrict or limit the right
and ability of ITEX Corporation or its subsidiaries to continue to carry on its
own retail barter, corporate barter, trade exchange and other businesses,
including by competing with the Business transferred to Purchaser hereunder.
However, ITEX shall not (i) solicit the Clients (known to it to be Clients),
current Brokers, and employees of the Business; (ii) use the proprietary,
non-public information transferred to Purchaser hereunder; (iii) wrongfully
damage or interfere with the operation of the Business by Purchaser; or (iv) do
other prohibited acts in accordance with the provisions hereof.
(f) If any court or other tribunal determines that any of
the provisions of this Section 15.13 is invalid or unenforceable as written,
then the parties hereto expressly agree that the terms of this Section shall be
deemed modified to the extent necessary to be valid and enforceable.
16.14. Arbitration. Except as provided in Section 15.3 (d), any and all disputes
arising out of this Agreement shall be decided by binding arbitration in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association in Los Angeles, California.
16.15. Attorney's Fees. In the event that any party is required to retain the
services of any attorney to enforce or defend any matter or claim arising out of
or in connection with this Agreement, including any dispute decided by
arbitration, then the prevailing party (as evidenced by the court's judgement or
arbitrator's award) shall be entitled to receive its reasonable attorney's fees
and costs from the other party.
16.16. Post-Closing Cooperation. Purchase and Seller shall cooperate with each
other after the Closing with respect to all financial and tax reporting and
other aspects of the transaction. ITEX Corporation's auditors shall have access
to all Books and Records and reasonable use of Purchaser's employees for
purposes of preparing Seller's financial
-36-
statements through the Closing Date and for tax reporting purposes. Each party
shall cooperate and assist the other with respect to reasonable information
requests concerning the Clients, Brokers, assumed liabilities, litigation and
other aspects of the Business.
IN WITNESS WHEREOF, the parties have duly executed this
agreement on the dates indicated next to the signature of each, effective as of
the day and year first above written.
SELLER: PURCHASER:
BXI CORPORATION TAHO ENTERPRISES, INC.
By /s/ Xxxxxx X. Xxxxxxx By /s/ Xxxx St. Xxxxxx
--------------------------------- ---------------------------------
Xxxxxx X. Xxxxxxx, President Xxxx St. Xxxxxx, President
IME, INC.
By /s/Xxxxxxx Xxxxxxxxxxx
---------------------------------
Xxxxxxx Xxxxxxxxxxx, President
ITEX CORPORATION
By /s/ Xxxxxxx Xxxxxxxxxxx
---------------------------------
Xxxxxxx Xxxxxxxxxxx, President and CEO
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