CONFIDENTIAL TREATMENT REQUESTED.
Confidential portions of this document have been redacted
and have been separately filed with the Commission.
CONTRACT FOR THE PURCHASE OF
TORONTO CORPORATE OFFICE
AND USE OF ITEX CLIENT INFORMATION
THIS AGREEMENT OF PURCHASE AND SALE is effective as of the 7th day of
August, 2003, by and among 44 Trade Corporation, a Delaware corporation, with
its principal place of business at 00 Xxxxxxxxxx Xxxxx, Xxxxxxxxxxx, XX 00000
("Purchaser"), and ITEX Corporation, a Nevada corporation, with its principal
place of business at 0000 Xxxxxxx Xxx, Xxxxxxxxxx, XX ("Seller").
Background
Seller operates a barter network system in the United States and
Canada, and desires to sell to Purchaser certain assets and liabilities of
Seller's business and grant to Purchaser the non-exclusive right and license to
utilize certain ITEX Proprietary Information. Purchaser desires to acquire
certain of the assets and liabilities of Seller's business and be granted the
non-exclusive right and license to utilize certain ITEX Proprietary Information
on the terms and conditions hereinafter set forth.
IN CONSIDERATION of the foregoing and the mutual covenants herein
contained, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto, intending to be legally bound hereby, agree as follows.
1. DEFINITIONS
The following words shall have the following meanings when used in this
Agreement:
1.1 AFFILIATE - "Affiliate" means (a) any company owned or controlled
to the extent of at least fifty percent (50%) of its issued and voting capital
by a party to this Agreement and any other company so owned or controlled
(directly or indirectly) by any such company or the owner of any such company,
or (b) any partnership, joint venture or other entity directly or indirectly
controlled by, controlling, or under common control of, to the extent of fifty
percent (50%) or more of voting power (or otherwise having power to control its
general activities), a party to this Agreement, but in each case only for so
long as such ownership or control shall continue.
1.2 ASSETS - "Assets" shall mean all of the assets of the Seller listed
on Exhibit A attached hereto. The Purchaser acknowledges that certain of the
purchased Assets are not owed by the Seller but are leased from third parties
and that for these assets the Purchaser is not purchasing the assets outright
but is purchasing the Seller's leasehold interest.
1.3 BUSINESS - "Business" shall mean all operations and arrangements
relating to the conduct of Seller's Business Unit.
1.4 BUSINESS UNIT - "Business Unit" shall mean all contracts relating
to the Toronto corporate office owned by Seller, all related costs, services and
charges, and all of Seller's
employees supporting the trade network of clients assigned to the corporate
office. Those employees are listed on Exhibit B attached hereto.
1.5 CLOSING DATE - "Closing Date" means the 7th day of August, 2003, or
such other date as the parties may agree as to the date upon which the
completion of the sale and purchase of the ASSETS hereunder shall take place;
and
1.6 LIABILITIES - "Liabilities" shall mean all of the liabilities of
the Seller set forth in Paragraph 3.5 below and listed on Exhibit C attached
hereto.
1.7 PROPRIETARY INFORMATION - "Proprietary Information" means (i) the
ITEX client list provided to Purchaser of approximately 700 clients, with trade
and cash balances listed, the receipt of which is acknowledged by Purchaser; and
(ii) all of Seller's trade secrets, information, and know-how, now owned,
licensed or controlled or hereafter acquired, developed, owned, licensed or
controlled by Seller or any of its Affiliates in the operation of the Business
Unit (including without limitation, techniques, procedures and processes,
programs, ideas, analytical methodology, schematics, software design and
architecture, computer code, internal documentation, design and function
specifications, analysis and performance information, benchmarks, software
documents, and other technical, business, product, marketing and financial
information, plans and data relating to the operation of the Business Unit).
1.8 TRANSACTION DATE - "Transaction Date" shall mean August 7,
2003.
2. PURCHASE AND SALE; GRANT OF LICENSE
2.1 Subject to the terms and conditions of this Agreement, Seller
hereby agrees to sell and Purchaser hereby agrees to purchase on the Closing
Date the Assets and assume the Liabilities. The Purchaser acknowledges that
certain of the purchased Assets are not owed by the Seller but are leased from
third parties and that for these assets the Purchaser is not purchasing the
assets outright but is purchasing the Seller's leasehold interest.
2.2 Subject to the terms and conditions of this Agreement, Seller
hereby grants to Purchaser the non-exclusive right and license in Ontario,
Canada to utilize the Proprietary Information, including without limitation the
ITEX client list previously provided to Purchaser of approximately 700 clients,
with trade and cash balances listed for use by Purchaser in carrying out its
duties under this Agreement in connection with development, management and
maintenance of an ITEX retail trade exchange based in Xxxxxxx, Xxxxxxx, Xxxxxx.,
3. CONSIDERATION
3.1 In consideration of the purchase and sale and grant of license
referenced above and described in Exhibit H Purchaser shall provide Seller the
following compensation on or before the Closing Date:
(a) The amount of $600,000 USD, payable according to the terms of the
Secured Promissory Note attached hereto as Exhibit D. The note shall be
secured by a general
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security interest in the properties, assets, trademarks and rights of
the Purchaser as evidenced by the Security Agreement in the form set
forth in Exhibit E which shall be filed under the Uniform Commercial
Code or registered under the Personal Property Security Act (Ontario)
in first position.
(b) As provided in Paragraph 3.5 below, Purchaser assumes the
Liabilities under the obligations set forth on Exhibit C attached
hereto and agree to make payments for such Liabilities in accordance
with their terms as and when due.
3.2 Allocation of Purchase Price - The Seller and the Purchaser agree
that the purchase price shall be allocated among the Purchased Assets in
accordance with Exhibit F and that they will prepare and file their respective
tax returns in a manner consistent with such allocation.
3.3 Transfer Taxes - The Purchaser shall be liable for and shall pay
all federal and provincial sales taxes, goods and services taxes, and transfer
taxes, duties or other like charges payable upon and in connection with the
transfer of the Purchased Assets by the Seller to the Purchaser.
3.4 Employees - The Purchaser agrees to offer to employ the employees
of the Seller listed in Exhibit B on terms and conditions not less favorable, in
the aggregate, than as are presently enjoyed by such employees including,
without limiting the generality of the foregoing, rates of pay, benefits,
severance entitlements and recognition of vacation entitlement earned but not
taken as at the Closing Date by such employees. Purchaser shall be liable for
and assumes any liability of Seller with respect to any earned or accrued
vacation pay or severance benefits to which the Employees listed on Exhibit B
may be entitled under federal or provincial law, and shall indemnify and hold
harmless Seller from and against the full amount of any losses incurred by
Seller with respect to these employment claims.
3.5 Assumption of Liabilities
-------------------------
(a) On the Transaction Date, Purchaser assumes the liabilities and
obligations of the Seller in connection with the contracts and leases
that form part of the purchased Assets, including without limitation
the leases of the premises located at 0000 Xxxxxxx Xxxx, Xxxxx 000,
Xxxxxxxxxxx, Xxxxxxx;
(b) On the Transaction Date, Purchaser also assumes the liabilities and
obligations of the Seller in connection with telephone and fax lines,
T-1 lines and other business related services at the premises
referenced in paragraph (a) above;
(c) Purchaser also assumes all Obligations of the Seller accruing after
the Closing Date in respect of the purchased Assets.
(d) On the Transaction Date, Purchaser also assumes any liability of
Seller with respect to any earned or accrued vacation pay or severance
benefits to which the Employees listed on Exhibit B may be entitled
under federal or provincial law, as set forth in Paragraph 3.4 above;
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With respect to each of these Liabilities set forth in this Paragraph
3.5 or on Schedule C, Purchaser shall indemnify and hold harmless Seller from
and against the full amount of any losses incurred by Seller with respect to
claims based on the Liabilities.
From time to time after the date of this Agreement, Purchaser shall,
without further consideration, execute and deliver such other instruments and
take such other action as Seller may reasonably request to carry out the terms
and provisions of Purchaser's assumption of the Liabilities. Purchaser assumes
no obligation with respect to any other liabilities of the Seller to any third
party or with respect to any liabilities to an individual or entity other than
those listed above.
4. DELIVERY OF ASSETS
4.1 All Assets purchased hereunder shall be delivered by Seller to
Purchaser on the Closing Date at Seller's present place of business in Ontario,
Canada, at which time title and risk of loss with respect to the Assets shall
pass to Purchaser.
5. OWNERSHIP AND USE OF PROPRIETARY INFORMATION
5.1 During the term of this Agreement, Purchaser will use its
reasonable best efforts to utilize the Proprietary Information only for
Purchaser's anticipated management and ownership of the ITEX retail trade
exchange in Xxxxxxx, Xxxxxxx, or for those other locations specifically
identified by Seller in writing.
5.2 As between the parties, Seller retains ownership of all right,
title and interest in the Proprietary Information and all copies and portions
thereof. The grant of a license in this Agreement to the Proprietary Information
does not constitute a sale of the Proprietary Information or any portion or copy
of it to Purchaser.
5.3 Purchaser agrees that the Seller shall be entitled to refer
selected visitors to Purchaser to view the ITEX trade exchange at Purchaser's
location(s), provided reasonable advance notice is provided to Purchaser and
such viewing times shall be at the convenience of Purchaser.
6. CONFIDENTIALITY
6.1 Purchaser acknowledges that the Proprietary Information and other
information about the Seller's business or activities that is proprietary and
confidential, including all business, financial, technical and other information
of a party which, by the nature of the circumstances surrounding the disclosure,
ought in good faith to be treated as confidential and any non-public information
provided by Seller will be deemed to be the "Confidential Information" and will
not be disclosed without the written consent of Seller. Purchaser shall not
during the term of this Agreement and for a period of five (5) years after its
termination, use (except as expressly authorized by this Agreement) or disclose
Confidential Information without the prior written consent of Seller, provided
however, that Confidential Information will not include information that (i) is
in or enters the public domain without breach of this Agreement, (ii) Purchaser
lawfully receives from a third party without restriction on disclosure and
without breach of a nondisclosure
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obligation, or (iii) Purchaser knew prior to receiving such information from the
disclosing party or develops independently. Purchaser will take all reasonable
measures to maintain the confidentiality of the Confidential Information in its
possession or control, but in no event shall the measures be less than the
measures it uses to maintain the confidentiality of its own information of
similar importance. Notwithstanding the foregoing, Purchaser may disclose
Confidential Information (i) to the extent required by a court of competent
jurisdiction or other governmental authority or otherwise as required by law or
(ii) on a "need-to-know" basis under an obligation of confidentiality to its
legal counsel, accountants, banks and other financing sources and their
advisors.
7. ADDITIONAL COVENANTS
7.1 Trade accounts and trade inventory. A new operating account will
be established ***. The inventory accounts will be the property of Purchaser and
are set forth in Exhibit G. ***
7.2 Trade Account Deficit. Purchaser acknowledges that there is a
trade deficit in the Business, however, Purchaser assumes no liability for its
payment.
7.3 Broker or Franchise Contract. Purchaser will execute a standard
Independent Licensed Broker Contract upon closing. When Seller completes the
franchise registration with the Province of Ontario, Purchaser will execute the
applicable franchise agreement designated by Seller. Such franchise agreement
will not materially increase any financial burden set forth under the terms of
this agreement. ***
7.4 Further Assurances. Seller from time to time after the Closing
Date, at Purchaser's request, will execute, acknowledge and deliver to Purchaser
such other instruments of conveyance and transfer and will take such other
actions and execute and deliver such other documents, certifications and further
assurances as Purchaser or Seller may reasonably require in order to vest more
effectively in Purchaser, or to put Purchaser more fully in possession of, any
of the Assets, or to better enable Purchaser to complete, perform or discharge
any of the assumed Liabilities. Each of the Parties will cooperate with the
other and execute and deliver to the other parties such other instruments and
documents and take such other actions as may be reasonably requested from time
to time by any other party to this Agreement as necessary to carry out, evidence
and confirm the intended purposes of this Agreement.
8. TERM AND TERMINATION
8.1 The License to use ITEX Proprietary Information and right of
Purchaser to operate an ITEX retail trade exchange granted by this Agreement is
effective until terminated earlier as provided in Exhibit H, Independent Retail
Brokerage Agreement attached herein.
8.2 Upon termination, the Purchaser shall immediately return any and
all Proprietary Information and all copies and extracts of the foregoing.
--------------
*** Confidential material redacted and filed separately with the Commission.
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8.3 This Agreement may be terminated for any reason upon the
mutual agreement of the parties.
9. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants as of the date of this Agreement
and as of the Transaction Date to Purchaser as an inducement to enter into this
Agreement:
9.1 STATUS -- Seller is a corporation duly organized and existing and
in good standing under the laws of the State of Nevada, which has full power and
authority to own or lease its property and assets and to carry on its business
as it has been, and is, conducted.
9.2 CORPORATE AUTHORITY -- Seller has full power and authority to enter
into this Agreement and to consummate the transactions contemplated herein.
9.3 CORPORATE ACTION -- All necessary corporate action has been duly
taken by the Seller in order to authorize the execution and consummation of this
Agreement. Upon execution hereof by the Purchaser, this Agreement shall be the
legal, valid and binding obligation of the Seller enforceable in accordance with
its terms.
9.4 TITLE TO PROPERTY -- The Purchaser acknowledges that certain of the
Purchased Assets are not owed by the Seller but are leased from third parties
and that for these assets the Purchaser is not purchasing the assets outright
but is purchasing the Seller's leasehold interest. With respect to the remainder
of the Assets set forth in Exhibit A, Seller has good and marketable title to
the Assets to be transferred hereunder, free and clear of any liabilities,
liens, encumbrances, security interests, charges, imperfections of title or
restrictions of any kind or nature whatsoever.
9.5 EMPLOYMENT CONTRACTS - With respect to the Employees set forth in
Exhibit B, Seller is not a party to written contracts of employment or
collective bargaining agreements. Except for a health benefits plan, Seller is
not a party to any retirement plans or other employee benefit plans in effect
which cover the Employees.
9.6 CONFLICTS WITH OTHER AGREEMENTS - To its knowledge, neither the
execution and delivery of this Agreement nor the consummation of the sale and
other transactions contemplated hereunder will conflict with, or result in a
breach of, any of the terms and conditions or provisions of any law or any
regulation, order, writ, injunction or decree of any court or government
instrumentality or the corporate Charter or Bylaws of Seller, or of any
agreement or other instrument to which Seller is bound, or will constitute a
default or result in any lien or encumbrance on any of the assets being sold
hereunder.
9.7 NO BANKRUPTCY -- No proceeding has been commenced against or by the
Seller under the federal Bankruptcy Code or any similar state statute.
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10. REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants:
10.1 STATUS -- Purchaser is a corporation duly organized and existing
and in good standing under the laws of the State of Delaware, which has full
power and authority to own or lease its property and assets and to carry on its
business as contemplated by this Agreement.
10.2 CORPORATE AUTHORITY -- Purchaser has full power and authority to
enter into this Agreement and to consummate the transactions contemplated
herein.
10.3 CORPORATE ACTION -- All necessary corporate action has been duly
taken by the Purchaser in order to authorize the execution and consummation of
this Agreement. Upon execution hereof by the Seller, this Agreement shall be the
legal, valid and binding obligation of the Purchaser enforceable in accordance
with its terms.
11. CERTAIN SUBSTANTIVE PROVISIONS
11.1 Intentionally deleted
11.2 GST Election - If available, the parties shall execute and file an
election as to the payment of GST in respect of the transactions contemplated
hereby.
11.3 Bulk Sales Act Waiver - The Purchaser waives compliance by the
Seller with the provisions of the Bulk Sales Act (Ontario) and such other
similar legislation in other jurisdictions applicable to the Purchased Assets in
respect of the transactions contemplated hereby.
11.4 Business Records -- Seller shall transfer to Purchaser on the
Transaction Date all such business records of Seller pertaining to the Assets,
Liabilities and the Business as Purchaser deems necessary and valuable for the
continued operation of the Business.
11.5 INSTRUMENTS -- The sale, conveyance, transfer, assignment and
delivery of the Assets and assumption of the Liabilities hereunder shall be
effected upon or subsequent to the Closing Date by transfers of Certificates of
Title, Bills of Sale, Articles of Transfer, Assignment Agreements and such other
instruments of transfer and conveyance as may reasonably be requested by
Purchaser, in such form as Purchaser may reasonably request.
11.6 CONTRACTS -- Assignment of Contracts - To the extent the
assignment of any contract, lease, agreement or commitment to be assigned to the
Purchaser pursuant to the terms of this agreement shall require the consent of
any other party thereto or shall be subject to any equity or option in any other
person by reason of a request for permission to assign or transfer, this
agreement shall not constitute a contract to assign the same if an attempted
assignment would constitute a breach thereof or create any rights in other
persons not desired by the Purchaser. The Seller shall use its best efforts to
procure consents to any such assignment provided that if such consent is not
obtained, the Seller shall cooperate with the Purchaser in any reasonable
arrangement to provide the Purchaser with the benefit of any such contract.
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11.7 EMPLOYEES OF THE BUSINESS - Unless this Agreement has been
terminated in accordance with the provisions of Section 8, except with the prior
written approval of an authorized executive officer of Purchaser, Seller hereby
covenants that it will not, for period of thirty-six (36) months after the
execution of this Agreement, in any manner or capacity, hire or attempt to hire
any employee or former employee of the Business or induce or attempt to induce
any employee of the Business to terminate his employment with the Purchaser. In
the event of a breach of this covenant, the parties agree that the amount of
indemnification to be paid by Seller, as the case may be, under the provisions
of Section 12 hereof with respect to such breach shall be an amount equal to two
times the annual rate of salary being paid the employee or employees in question
at the time of the breach.
12. INDEMNIFICATION
12.1 Purchaser to Indemnify
(a) In accordance with and subject to the provisions of this Section
12.1, Purchaser shall indemnify and hold harmless Seller, its
officers, and directors from and against and in respect of any and
all claims, demands, losses, costs, expenses, liabilities, damages,
including interest, penalties, and reasonable attorney fees and
amounts paid in settlement, (collectively, "Indemnified Losses")
suffered or incurred by Seller, by reason of, or arising out of:
(i) any material breach of a representation or warranty contained in
this Agreement or other transaction documents to which Purchaser is
a party, or any failure by Purchaser to perform in connection
therewith, or the breach of any covenant or agreement in this
Agreement or other transaction documents, to which Purchaser is a
party, or any failure by Purchaser to perform in connection
therewith; and
(ii) the failure of Purchaser to pay, satisfy, discharge, perform
and fulfill any of the Obligations expressly assumed by the
Purchaser pursuant to this Agreement.
(b) Purchaser shall have no liability to Seller under this Agreement
except to the extent of the consideration set forth in Section 3, provided that
Seller shall be entitled to pursue any equitable remedy provided in this
Agreement or by law.
(c) The indemnities given in Section 12(a) and the right of Seller
to submit Claims shall expire six (6) months from the date full consideration
has been paid by Purchaser under this Agreement.
(d) Seller shall give written notice (the "Claim Notice") of any
Claim for indemnification under this section to Purchaser as promptly as
practicable, but in any event: (i) if such Claim relates to the assertion
against Seller of any claim by a third party (a "Third Party Claim"), within 30
days after the assertion of such Third Party Claim, or (ii) if such Claim is not
in respect of a Third Party Claim, within 30 days after the discovery of facts
upon which Seller intends to base a Claim for indemnification pursuant to this
section; provided, however, that the failure or delay to so notify Purchaser
shall not relieve Purchaser of any obligation or liability that Purchaser may
have to Seller
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except to the extent that Purchaser demonstrates that Purchaser's ability to
defend or resolve such Claim is adversely affected thereby. Any such Claim
Notice shall describe the facts and circumstances on which the asserted Claim
for indemnification is based. Subject to the rights of or duties to any insurer
or other third party having potential liability therefor, the Purchaser shall
have the right, upon written notice given to Seller within 30 days after receipt
of the notice from Seller of any Third Party Claim, to assume the defense or
handling of such Third Party Claim, at Purchaser's expense, in which case the
following provisions shall govern.
(e) Purchaser shall select counsel reasonably acceptable to Seller
in connection with conducting the defense or handling of such Third Party Claim,
and the Purchaser shall keep Seller timely apprised of the status of such Third
Party Claim. Purchaser shall not, without the prior written consent of Seller,
agree to a settlement of any Third Party Claim, unless (A) the settlement
provides an acceptable release and discharge of Seller and Seller is reasonably
satisfied with such discharge and release and (B) the Seller shall not have
reasonably objected to any such settlement on the ground that the circumstances
surrounding the settlement could result in an adverse impact on the business,
operations, assets, liabilities (absolute, accrued, contingent or otherwise),
condition (financial or otherwise) or prospects of Seller. Seller shall
cooperate with Purchaser and shall be entitled to participate in the defense or
handling of such Third Party Claim with its own counsel and at its own expense.
12.2. Seller to Indemnify
(a) In accordance with and subject to the provisions of this Section
12.2, Seller shall indemnify and hold harmless Buyer, its officers, and
directors from and against and in respect of any and all claims, demands,
losses, costs, expenses, liabilities, damages, including interest, penalties,
and reasonable attorney fees and amounts paid in settlement, (collectively,
"Indemnified Losses") suffered or incurred by Buyer, by reason of, or arising
out of:
(i) any misrepresentation or breach of any covenant or warranty of
the Seller hereunder or pursuant to any agreement, certificate or
document delivered by Seller pursuant hereto;
(ii) any liabilities of Seller, including any tax obligations prior
to closing date arising or incurred prior to the Closing Date except
the Liabilities expressly assumed by the Buyer pursuant to this
Agreement; and
(iii) any item scheduled as an exception to any representation or
warranty.
At the option of Purchaser, all payments due to Seller, if any, and
the assumption of Liabilities shall be subject to set-off in the amount of any
indemnification to which Purchaser is entitled under this Section 12.2.
13. MISCELLANEOUS
13.1 NOTICES -- Any notices, requests, demands or other communications
hereunder, shall be in writing and shall be deemed to have been duly given when
personally delivered or five
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(5) days after being mailed by United States registered or certified mail,
return receipt requested, postage prepaid, to the following addresses:
If to Seller:
Xxxxxx Xxxxx, Chairman of the Board
ITEX Corporation
0000 Xxxxxxx Xxx
Xxxxxxxxxx, XX 00000
If to Purchaser:
00 Xxxxxxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
With a copy to Xxxxxx X. Xxxxxx, Esq., 0000 Xxxxxxx Xxx, Xxxxxxxxxx, XX 00000,
or to such other address as either party may specify in writing to the other.
13.2 EXPENSES -- All costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such expenses. Each party shall be required to pay its own
expenses, including expenses of its counsel and accountants, even in the event
that the transactions that are the subject matter hereof are not consummated for
any reason whatsoever.
13.3 ENTIRE AGREEMENT, SUCCESSORS -- This Agreement, together with the
attached Exhibits and other contracts referenced in Section 7 of this Agreement,
constitutes the entire agreement between the parties and there are no
representations, warranties or commitments except as provided herein. This
Agreement supersedes all prior and contemporaneous agreements, understandings,
negotiations and discussions, whether written or oral. All of the terms and
provisions of this Agreement shall be binding upon and inure to the benefit of
and be enforceable by the respective heirs, personal representatives, successors
and permitted assigns of the parties hereto.
13.4 GOVERNING LAW -- This Agreement shall be governed by and construed
in accordance with the laws of the State of California, excluding its principles
of conflicts of laws, and the parties hereby irrevocably submit to the
jurisdiction and venue of the courts of Sacramento County, California to
adjudicate any dispute arising hereunder or relating hereto.
13.5 NO WAIVER -- No exercise of waiver, in whole or in part, of any
right or remedy provided for in this Agreement shall operate as a waiver of any
other right or remedy. No delay on the part of any party in the exercise of any
right or remedy shall operate as a waiver thereof.
13.6 PUBLICITY - Confidentiality - In the event of the termination of
this Agreement without consummation of the transactions contemplated hereby, the
Purchaser will use its best efforts to keep confidential any information (unless
in the public domain) obtained from the Seller. If this Agreement is so
terminated, promptly after such termination, all documents, working papers and
other written material obtained from one party in connection with this Agreement
and not
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theretofore made public (including all copies thereof), shall be returned to the
party which provided such material.
13.7 PUBLIC NOTICES - The parties agree that all notices to third
parties and all other publicity concerning the transactions contemplated by this
Agreement shall be jointly planned and coordinated and no party shall act
unilaterally in this regard without the prior approval of the other, such
approval not to be unreasonably withheld, unless such disclosure shall be
required to meet timely disclosure obligations of any party under applicable
securities laws and stock exchange rules in circumstances where prior
consultation with the other party is not practicable.
13.8 ACCOUNTING TERMS -- All accounting treatments and terms set forth
and used in this Agreement and not specifically defined in Section 1 hereof
shall be in accordance with Generally Accepted Accounting Principles (GAAP)
consistently applied.
13.9 LEGAL ADVICE -- Seller, and Purchaser acknowledge that they have
had the opportunity to consult with independent counsel of their choice with
regard to the transactions contemplated under this Agreement, prior to the
execution of this Agreement.
13.10 BACKGROUND; ENUMERATIONS AND HEADINGS -- The "Background,"
enumerations and headings contained in this Agreement are for convenience of
reference only and are not intended to have any substantive significance in
interpreting this Agreement.
13.11 NO BROKER -- Each party warrants and represents that it has not
dealt with or retained a broker in connection with this transaction and that no
entity or individual is entitled to receive a fee as the result of the
consummation of the transactions contemplated under this Agreement.
13.12 ASSIGNMENT -- This Agreement is not assignable by Seller.
13.13 NO THIRD-PARTY BENEFICIARIES -- This Agreement is written solely
to set forth the respective rights and obligations of the parties hereto and is
not intended to create or convey any rights whatsoever with respect to any third
party.
13.14 TIME -- Time shall be of the essence of this Agreement and of
every part hereof and no extension or variation of this Agreement shall operate
as a waiver of this provision.
13.15 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument.
[Signatures on following page]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the day and year first above written.
SELLER:
ITEX CORPORATION
/s/ Xxxxxx Xxxxx
----------------------
By: Xxxxxx Xxxxx
Chairman of the Board
PURCHASER:
44 TRADE CORPORATION
/s/ Xxxx Xxxxxxx
----------------------
By: Xxxx Xxxxxxx
President
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EXHIBIT INDEX
Exhibit No. Description
----------- -----------
A List of Assets
B List of Employees
C Employee Termination Agreement
D Promissory Note
E Security Agreement
F Allocation of Purchase Price
G Inventory Accounts
H Independent Brokerage Agreement
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Exhibit D
SECURED PROMISSORY NOTE
$600,000 Sacramento, CA
For valuable consideration, receipt of which is hereby acknowledged, 44 Trade
Corporation, a Delaware Corporation (the "Company"), hereby unconditionally
promises to pay to ITEX Corporation, or its registered assigns (the "Holder") in
lawful money of the United States of America and in immediately available funds
at Sacramento, CA the principal sum of Six Hundred Thousand Dollars ($600,000
(US)) together with interest on the outstanding principal amount at the rate of
3.0% per annum, as follows: Five Thousand Dollars ($5,000 (US)) will be withheld
twice each Cycle from payments ITEX Corporation is required to make to the
Company under its Independent Licensed Broker Agreement, for a total payment of
$10,000 each Cycle ("Cycle Payment"), except as provided below.
For purposes of this Note, "Cycle" means the four-week business cycle of ITEX
Corporation. Each ITEX fiscal year is divided into 13 Cycles. Cycle 3 commences
August 8, 2003. No payment shall be due in Cycle 1 of any year.
Payments to Holder will commence on September 11, 2003. In the event that a
payment during any Cycle is insufficient to pay the installment then due, the
Company will make up any difference by making payment in the form of a check or
wire transfer to Holder.
This Note is being issued in accordance with that certain Contract for the
Purchase of Toronto Corporate Office and Use of Itex Client Information dated
August 7, 2003, between the Company and ITEX Corporation (the "Purchase
Agreement"). Capitalized terms used but not otherwise defined in this Secured
Promissory Note (the "Note") have the respective meanings given to such terms in
the Purchase Agreement.
1. Principal. The entire unpaid principal amount of this Note shall be paid on
the Maturity Date. Promptly following the payment in full of this Note, the
Holder shall surrender this Note to the Company for cancellation.
2. Payments. All payments of principal and interest to be made by the Company in
respect of this Note shall be either: (a) withheld from payments ITEX
Corporation is required to make to the Company under its Independent Licensed
Broker Agreement; or (b) made in U.S. dollars by wire transfer to an account
designated by the Holder by written notice to the Company or by delivery to the
Holder, at the address set forth in the register maintained in the principal
office of the Company or such other address that the Holder provides to the
Company, or by a certified or official bank check payable to the order of the
Holder, not later than 12:00 p.m. Pacific Standard Time. If the due date of any
payment in respect of this Note would otherwise fall on a day that is not a
Business Day (as defined below), such due date shall be extended to the next
succeeding Business Day. All amounts payable under this Note shall be paid free
and clear of, and without reduction by reason of, any deduction, set-off or
counterclaim. The Company may prepay this Note in whole or in part prior to the
Maturity Date; provided, however, that the Company shall give the Holder thirty
(30)
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days prior written notice of the amount and date of such prepayment.
3. Events of Default. "Event of Default," wherever used herein, means any one of
the following events (whatever the reasons for such Event of Default and whether
it shall be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
3.1. in the event that payment is not made by the Company within 10
days of the due date of any payment due pursuant to this Note or upon any
default by the Company on any payment any of the other Notes (as defined below);
3.2. any material breach by the Company of any term, condition,
obligation, covenant, representation or warranty contained in this Note, the
Purchase Agreement or the Independent Licensed Broker Agreement;
3.3. the Company pursuant to or within the meaning of Bankruptcy Law
(as defined below): (i) commences a voluntary case for relief from its
creditors; (ii) consents to the entry of an order for relief against it in an
involuntary case for relief from its creditors; (iii) consents to the
appointment of a custodian of the Company or for any, all or substantially all
of the property of the Company; (iv) makes a general assignment for the benefit
of its creditors; or (v) admits in writing its inability generally to pay its
debts as they become due;
3.4. a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that: (i) is for relief against the Company in an involuntary
case; (ii) appoints a custodian of the Company or for any, all or substantially
all of the property of the Company; or (iii) orders the liquidation of the
Company;
3.5. the commencement of any proceeding or the filing of a petition by
or against the Company under any Bankruptcy Law for liquidation, reorganization
or adjustment of debts or for the modification or adjustment of the rights of
creditors;
3.6 any material levy, seizure or attachment of any property of the
Company;
3.7 (intentionally left blank)
3.8. the Company is generally not paying its debts as they become due;
3.9. the dissolution, consolidation, merger or transfer of a
substantial part of the property of the Company;
3.10. the Company ceases or threatens to cease to carry on all or a
substantial part of its business;
3.11. the Company is in breach of any material term, condition,
obligation, covenant, representation or warranty under any other material
agreement to which the Company is a party;
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3.12. the Company is in default of, or materially breached the terms
of, any of its indebtedness; or
3.13. the Company is sued by any of its existing or previous
shareholders, directors or officers.
4. Acceleration of Note. If an Event of Default occurs and is continuing, then
and in every such case the Holder may declare the outstanding principal amount
and accrued interest of this Note to be due and payable immediately, by a notice
in writing to the Company, and upon any such declaration such principal shall
become immediately due and payable. Notwithstanding the foregoing, if an Event
of Default referenced in Section 3.3 or 3.4 occurs, the outstanding principal
amount and accrued interest of this Note shall automatically become due and
payable immediately without any declaration or other action on the part of the
Holder all of which are hereby expressly waived by the Company. At any time
after the outstanding principal amount and accrued interest of this Note shall
become immediately due and payable and before a judgment or decree for payment
of the money due has been obtained, the Holder, by written notice to the
Company, may rescind and annul any acceleration and its consequences. Time is of
the essence hereof and if any Event of Default has occurred and is continuing,
the principal amount due under this Note shall: (i) continue as an obligation of
the Company until fully paid, and (ii) the Company further agrees to pay all
costs and expenses incurred by Holder in collecting or enforcing payment to the
extent allowed by law and all other sums owed by the Company under this Note or
under the Security Agreement (as defined in the Purchase Agreement). Payment may
be enforced and recovered in whole or in part at any time by one or more of the
remedies provided to Holder in this Note or the Security Agreement. The remedies
of Holder shall be cumulative and concurrent and may be pursued singularly,
successively or together, at the sole discretion of Holder, and may be exercised
as often as occasion therefore shall occur; and the failure to exercise any such
right or remedy shall in no event be construed as a waiver or release thereof.
5. All Notes Equal. This Note may be one of a series of duly authorized
Secured Promissory Notes of the Company or an Affiliate of the Company, of like
tenor and effect issued pursuant to the Purchase Agreement or another agreement
for purchase of assets of ITEX Corporation, except for variations necessary to
express the name of the maker, the principal amount of each Note, and the date
of issue (the "Notes"). All such Notes shall rank equally, without preference or
priority of any kind over one another, and all payments on account of principal
and interest with respect to any and all of the Notes shall be applied ratably
and proportionately to all outstanding Notes on the basis of the principal
amount of outstanding indebtedness represented thereby.
6. Security. All the obligations of the Company pursuant to this Note
shall be secured by a first priority security interest in all of the Company's
right, title, and interest in the tangible and intangible assets of the Company
including, but not limited to, all intellectual property assets owned by the
Company. The Company hereby agrees to execute all documents reasonably requested
by the Holder to evidence and protect the Holder's security interest in such
tangible and intangible assets, including, but not limited to, the Security
Agreement and the UCC Financing Statement or a General Security Agreement which
shall be registered under the Personal Property Security Act (Ontario). If an
Event of Default has occurred and is continuing, the Holder shall have, in
addition to any other rights under this Note, the Security Agreement and the UCC
Financing Statement, or
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the General Security Agreement or otherwise, all of the rights and remedies of a
secured creditor under the Uniform Commercial Code or the Personal Property
Security Act (Ontario).
7. Priority. This Note shall not be subordinate or junior to any of the
Company's obligations incurred prior to or after the date of this Note, except
as required or permitted by law or as otherwise agreed to by the Holder.
8. Definitions. The following terms shall have the meanings set forth below:
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or
state law or the law of any other jurisdiction for the relief of debtors,
including without limitation, Canadian federal or provincial law.
"Business Day" means a day other than Saturday, Sunday or any day on
which banks located in the State of California are authorized or obligated to
close.
9. Successors. All agreements of the Company in this Note shall bind its
successors and permitted assigns. This Note shall inure to the benefit of the
Holder and its successors and permitted assigns. This Note may be transferred by
the Holder at any time without the consent of the Company, subject to compliance
with applicable federal and state securities laws. The Holder shall give prior
written notice to the Company of any transfer of this Note.
10. Delegation. The Company shall not delegate or assign any of its obligations
hereunder without the prior written consent of Holder.
11. Waivers. The Company waives demand, presentment for payment, notice of
dishonor, protest, notice of protest and notice of non-payment of this Note. The
Holder shall not be deemed by any act of omission or commission to have waived
any of its rights or remedies hereunder unless such waiver is in writing and
expressly stated as such and signed by the Holder and then only to the extent
specifically set forth in the writing. A waiver of one event shall not be
construed as continuing or a bar to or wavier of any right or remedy to a
subsequent event.
12. Notices. All notices and other communications in respect of this Note
(including, without limitation, any modifications of, or requests, waivers or
consents under, this Note) shall be given or made in writing (including, without
limitation, by telecopy) at the Section entitled "Notices" specified in the
Purchase Agreement; or, as to either the Company or the Holder, at such other
address as shall be designated by such party in a notice to the other party.
Except as otherwise provided in this Note, all such communications shall be
deemed to have been duly given when transmitted by telecopier or personally
delivered or, in the case of a mailed notice, upon receipt, in each case given
or addressed as aforesaid.
13. Amendments, Waivers or Termination. Any term of this Note may be amended or
waived only with the written consent of the Company and the Holder. Any
amendment or waiver effected in accordance with this Section 13 shall be binding
upon the Holder and each transferee of this Note and the Company.
14. Governing Law. This Note and the rights and obligations of the parties
hereto shall be
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governed, construed and interpreted in accordance with the laws of the State of
California, without giving effect to principles of conflicts of law.
IN WITNESS WHEREOF, the Company has caused this Note to be signed by
its duly authorized officer as of the date set forth above.
THE COMPANY:
44 Trade Corporation
/s/ Xxxx Castoto
------------------------------
By: Xxxx Xxxxxxx, President
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Exhibit E
SECURITY AGREEMENT
This SECURITY AGREEMENT is made on this 7TH day of August, 2002 between 44 TRADE
CORPORATION, A DELAWARE CORPORATION ("Debtor"), and ITEX CORPORATION, a Nevada
corporation ("Secured Party").
WHEREAS, the Debtor has entered into a Contract for the Purchase of
Toronto Corporate Office and Use of Itex Client Information dated August 7, 2003
(the "Purchase Agreement") and the Secured Promissory Note executed and
delivered pursuant thereto, pursuant to which the Secured Party, subject to the
terms and conditions contained therein, has acted to extend credit to the
Debtor; and
WHEREAS, it is a condition precedent to the Secured Party's extending
credit to the Debtor under the Purchase Agreement that the Debtor execute and
deliver to the Secured Party a security agreement in substantially the form
hereof; and
WHEREAS, the Debtor wishes to grant a security interest in favor of the
Secured Party as herein provided;
NOW, THEREFORE, in consideration of the promises contained herein and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
1. Definitions. All capitalized terms used herein without definitions shall have
the respective meanings provided therefor in the Purchase Agreement. The term
"State," as used herein, means the State of New York. All terms defined in the
Uniform Commercial Code of the State and used herein shall have the same
definitions herein as specified therein. However, if a term is defined in
Article 9 of the Uniform Commercial Code of the State differently than in
another Article of the Uniform Commercial Code of the State, the term has the
meaning specified in Article 9. The term "Obligations," as used herein, means
all of the indebtedness, obligations and liabilities of the Debtor to the
Secured Party, individually or collectively, whether direct or indirect, joint
or several, absolute or contingent, due or to become due, now existing or
hereafter arising under or in respect of the Purchase Agreement and the Secured
Promissory Note executed and delivered pursuant thereto or in connection
therewith, or this Agreement (together, the "Loan documents"), and the term
"Event of Default," as used herein, means the failure of the Debtor to pay or
perform any of the Obligations as and when due to be paid or performed under the
terms of the Secured Promissory Note.
2. Grant of Security Interest.
------------------------------
2.1 The Debtor hereby grants to the Secured Party, to secure the
payment and performance in full of all of the Obligations, a security interest
in and so pledges and assigns to the Secured Party the following properties,
assets and rights of the Debtor, wherever located, whether now owned or
hereafter acquired or arising, and all proceeds and products thereof (all of the
same being hereinafter called the "Collateral"): all personal and fixture
property of every kind and nature including without limitation all goods
(including inventory, equipment and any accessions thereto), instruments
(including promissory notes), documents, accounts (including
health-care-insurance receivables), chattel paper (whether tangible or
electronic), deposit accounts, letter-of-credit rights (whether or not the
letter of credit is evidenced by a writing), commercial tort claims, securities
and all other investment property, supporting obligations, any other contract
rights or rights to the payment of money, insurance claims and proceeds, and all
general intangibles (including all payment intangibles). The Secured Party
acknowledges
-1-
that the attachment of its security interest in any additional commercial tort
claim as original collateral is subject to the Debtor's compliance with Section
4.7.
2.2 Trademark Security. As additional collateral, Debtor assigns to
Secured Party, a security interest in , and a mortgage upon, all of Debtor's
right, title and interest in, to and under the following property, in each case
whether now or hereafter existing or arising or in which Debtor now has or
hereafter owns, acquires or develops an interest and wherever located:
(i) all state (including common law), federal and foreign trademarks,
service marks and trade names, and applications for registration of such
trademarks, service marks and trade names (but excluding any application to
register any trademark, service xxxx or other xxxx xxxxx to the filing under
applicable law of a verified statement of use (or the equivalent) for such
trademark, service xxxx or other xxxx to the extent the creation of a security
interest therein or the grant of a mortgage thereon would void or invalidate
such trademark, service xxxx or other xxxx), all licenses relating to any of the
foregoing and all income and royalties with respect to any licenses, whether
registered or unregistered and wherever registered, all rights to xxx for past,
present or future infringement or unconsented use thereof, all rights arising
therefrom and pertaining thereto and all reissues, extensions and renewals
thereof;
(ii) the entire goodwill of or associated with the businesses now or
hereafter conducted by Debtor connected with and symbolized by any of the
aforementioned properties and assets;
(iii) all general intangibles and all intangible intellectual or other
similar property of Debtor of any kind or nature, associated with or arising out
of any of the aforementioned properties and assets and not otherwise described
above; and
(iv) all proceeds of any and all of the foregoing Collateral (including
license royalties, rights to payment, accounts receivable and proceeds of
infringement suits) and, to the extent not otherwise included, all payments
under insurance (whether or not Secured Party is the loss payee thereof) or any
indemnity, warranty or guaranty payable by reason of loss or damage to or
otherwise with respect to the foregoing Collateral.
2.3 Continuing Security Interest. Debtor agrees that this Agreement
shall create a continuing security interest in the Collateral which shall remain
in effect until terminated in
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accordance with Section 9.
-3-
3. Authorization to File Financing Statements. The Debtor hereby irrevocably
authorizes the Secured Party at any time and from time to time to file in any
filing office in any Uniform Commercial Code jurisdiction any initial financing
statements and amendments thereto that (a) indicate the Collateral (i) as all
assets of the Debtor or words of similar effect, regardless of whether any
particular asset comprised in the Collateral falls within the scope of Article 9
of the Uniform Commercial Code of the State or such jurisdiction, or (ii) as
being of an equal or lesser scope or with greater detail, and (b) provide any
other information required by part 5 of Article 9 of the Uniform Commercial Code
of the State, or such other jurisdiction, for the sufficiency or filing office
acceptance of any financing statement or amendment, including (i) whether the
Debtor is an organization, the type of organization and any organizational
identification number issued to the Debtor and, (ii) in the case of a financing
statement filed as a fixture filing or indicating Collateral as as-extracted
collateral or timber to be cut, a sufficient description of real property to
which the Collateral relates. The Debtor agrees to furnish any such information
to the Secured Party promptly upon the Secured Party's request.
4. Other Actions. To further the attachment, perfection and first priority of,
and the ability of the Secured Party to enforce, the Secured Party's security
interest in the Collateral, and without limitation on the Debtor's other
obligations in this Agreement, the Debtor agrees, in each case at the Debtor's
expense, to take the following actions with respect to the following Collateral:
4.1. Promissory Notes and Tangible Chattel Paper. If the Debtor shall
at any time hold or acquire any promissory notes or tangible chattel paper, the
Debtor shall forthwith endorse, assign and deliver the same to the Secured
Party, accompanied by such instruments of transfer or assignment duly executed
in blank as the Secured Party may from time to time specify.
4.2. Deposit Accounts. For each deposit account that the Debtor at any
time opens or maintains, the Debtor shall, at the Secured Party's request and
option, pursuant to an agreement in form and substance satisfactory to the
Secured Party, either (a) cause the depositary bank to comply at any time with
instructions from the Secured Party to such depositary bank directing the
disposition of funds from time to time credited to such deposit account, without
further consent of the Debtor, or (b) arrange for the Secured Party to become
the customer of the depositary bank with respect to the deposit account, with
the Debtor being permitted, only with the consent of the Secured Party, to
exercise rights to withdraw funds from such deposit account. The Secured Party
agrees with the Debtor that the Secured Party shall not give any such
instructions or withhold any withdrawal rights from the Debtor, unless an Event
of Default has occurred and is continuing, or would occur, if effect were given
to any withdrawal not otherwise permitted by the Loan Documents. The provisions
of this paragraph shall not apply to (i) any deposit account for which the
Debtor, the depositary bank and the Secured Party have entered into a cash
collateral agreement specially negotiated among the Debtor, the depositary bank
and the Secured Party for the specific purpose set forth therein, (ii) a deposit
account for which the Secured Party is the depositary bank and is in automatic
control, and (iii) deposit accounts specially and exclusively used for payroll,
payroll taxes and other employee wage and benefit payments to or for the benefit
of the Debtor's salaried employees.
4.3. Investment Property. If the Debtor shall at any time hold or
acquire any certificated securities, the Debtor shall forthwith endorse, assign
and deliver the same to the Secured Party, accompanied by such instruments of
transfer or assignment duly executed in blank as the Secured Party may from time
to time specify. If any securities now or hereafter acquired by the Debtor are
uncertificated and are issued to the Debtor or its nominee directly by the
issuer thereof, the Debtor shall immediately notify the Secured Party thereof
and, at the Secured Party's request and option, pursuant to an agreement in form
and substance satisfactory to the Secured Party, either (a) cause the issuer to
agree to comply with instructions from the Secured Party as to such securities,
without further consent of the Debtor or such nominee, or (b) arrange for the
Secured Party to become the registered owner of the securities. If any
securities,
-4-
whether certificated or uncertificated, or other investment property now or
hereafter acquired by the Debtor are held by the Debtor or its nominee through a
securities intermediary or commodity intermediary, the Debtor shall immediately
notify the Secured Party thereof and, at the Secured Party's request and option,
pursuant to an agreement in form and substance satisfactory to the Secured
Party, either (i) cause such securities intermediary or (as the case may be)
commodity intermediary to agree to comply with entitlement orders or other
instructions from the Secured Party to such securities intermediary as to such
securities or other investment property, or (as the case may be) to apply any
value distributed on account of any commodity contract as directed by the
Secured Party to such commodity intermediary, in each case without further
consent of the Debtor or such nominee, or (ii) in the case of financial assets
or other investment property held through a securities intermediary, arrange for
the Secured Party to become the entitlement holder with respect to such
investment property, with the Debtor being permitted, only with the consent of
the Secured Party, to exercise rights to withdraw or otherwise deal with such
investment property. The Secured Party agrees with the Debtor that the Secured
Party shall not give any such entitlement orders or instructions or directions
to any such issuer, securities intermediary or commodity intermediary, and shall
not withhold its consent to the exercise of any withdrawal or dealing rights by
the Debtor, unless an Event of Default has occurred and is continuing, or, after
giving effect to any such investment and withdrawal rights not otherwise
permitted by the Loan Documents, would occur. The provisions of this paragraph
shall not apply to any financial assets credited to a securities account for
which the Secured Party is the securities intermediary.
4.4. Collateral in the Possession of a Bailee. If any Collateral is at
any time in the possession of a bailee, the Debtor shall promptly notify the
Secured Party thereof and, at the Secured Party's request and option, shall
promptly obtain an acknowledgement from the bailee, in form and substance
satisfactory to the Secured Party, that the bailee holds such Collateral for the
benefit of the Secured Party, and that such bailee agrees to comply, without
further consent of the Debtor, with instructions from the Secured Party as to
such Collateral. The Secured Party agrees with the Debtor that the Secured Party
shall not give any such instructions unless an Event of Default has occurred and
is continuing or would occur after taking into account any action by the Debtor
with respect to the bailee.
4.5. Electronic Chattel Paper and Transferable Records. If the Debtor
at any time holds or acquires an interest in any electronic chattel paper or any
"transferable record," as that term is defined in Section 201 of the federal
Electronic Signatures in Global and National Commerce Act, or in Section 16 of
the Uniform Electronic Transactions Act as in effect in any relevant
jurisdiction, the Debtor shall promptly notify the Secured Party thereof and, at
the request and option of the Secured Party, shall take such action as the
Secured Party may reasonably request to vest in the Secured Party control, under
Section 9-105 of the Uniform Commercial Code, of such electronic chattel paper
or control under Section 201 of the federal Electronic Signatures in Global and
National Commerce Act or, as the case may be, Section 16 of the Uniform
Electronic Transactions Act, as so in effect in such jurisdiction, of such
transferable record. The Secured Party agrees with the Debtor that the Secured
Party will arrange, pursuant to procedures satisfactory to the Secured Party and
so long as such procedures will not result in the Secured Party's loss of
control, for the Debtor to make alterations to the electronic chattel paper or
transferable record permitted under UCC Section 9-105 or, as the case may be,
Section 201 of the federal Electronic Signatures in Global and National Commerce
Act or Section 16 of the Uniform Electronic Transactions Act for a party in
control to make without loss of control, unless an Event of Default has occurred
and is continuing or would occur after taking into account any action by the
Debtor with respect to such electronic chattel paper or transferable record.
4.6. Letter-of-Credit Rights. If the Debtor is at any time a
beneficiary under a letter of credit, the Debtor shall promptly notify the
Secured Party thereof and, at the request and option of the Secured Party, the
Debtor shall, pursuant to an agreement in form and substance satisfactory to the
Secured Party, either (i) arrange for the issuer and any confirmer or other
nominated person of such letter of credit to consent to an assignment to the
Secured Party of the proceeds of the letter of credit, or (ii) arrange for the
Secured Party to become the transferee beneficiary of
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the letter of credit, with the Secured Party agreeing, in each case, that the
proceeds of the letter to credit are to be applied as provided in the Loan
Documents.
4.7 Commercial Tort Claims. If the Debtor shall at any time hold or
acquire a commercial tort claim, the Debtor shall immediately notify the Secured
Party in a writing signed by the Debtor of the particulars thereof and grant to
the Secured Party in such writing a security interest therein and in the
proceeds thereof, all upon the terms of this Agreement, with such writing to be
in form and substance satisfactory to the Secured Party.
4.8. Other Actions as to Any and All Collateral. The Debtor further
agrees, at the request and option of the Secured Party, to take any and all
other actions the Secured Party may determine to be necessary or useful for the
attachment, perfection and first priority of, and the ability of the Secured
Party to enforce, the Secured Party's security interest in any and all of the
Collateral, including, without limitation, (a) executing, delivering and, where
appropriate, filing financing statements and amendments relating thereto under
the Uniform Commercial Code, to the extent, if any, that the Debtor's signature
thereon is required therefor, (b) causing the Secured Party's name to be noted
as secured party on any certificate of title for a titled good if such notation
is a condition to attachment, perfection or priority of, or ability of the
Secured Party to enforce, the Secured Party's security interest in such
Collateral, (c) complying with any provision of any statute, regulation or
treaty of the United States as to any Collateral if compliance with such
provision is a condition to attachment, perfection or priority of, or ability of
the Secured Party to enforce, the Secured Party's security interest in such
Collateral, (d) obtaining governmental and other third party waivers, consents
and approvals in form and substance satisfactory to Secured Party, including,
without limitation, any consent of any licensor, lessor or other person
obligated on Collateral, (e) obtaining waivers from mortgagees and landlords in
form and substance satisfactory to the Secured Party and (f) taking all actions
under any earlier versions of the Uniform Commercial Code or under any other
law, as reasonably determined by the Secured Party to be applicable in any
relevant Uniform Commercial Code or other jurisdiction, including any foreign
jurisdiction.
5. Representations and Warranties Concerning Debtor's Legal Status. The Debtor
has delivered to the Secured Party a certificate signed by the Debtor and
entitled "Perfection Certificate" (the "Perfection Certificate") attached as
Annex A. The Debtor represents and warrants to the Secured Party as follows: (a)
the Debtor's exact legal name is that indicated on the Perfection Certificate
and on the signature page hereof, (b) the Debtor is an organization of the type,
and is organized in the jurisdiction set forth in the Perfection Certificate,
(c) the Perfection Certificate accurately sets forth the Debtor's organizational
identification number or accurately states that the Debtor has none, (d) the
Perfection Certificate accurately sets forth the Debtor's place of business or,
if more than one, its chief executive office, as well as the Debtor's mailing
address, if different, (e) all other information set forth on the Perfection
Certificate pertaining to the Debtor is accurate and complete, and (f) that
there has been no change in any information provided in the Perfection
Certificate since the date on which it was executed by the Debtor.
6. Covenants Concerning Debtor's Legal Status. The Debtor covenants with the
Secured Party as follows: (a) without providing at least 30 days prior written
notice to the Secured Party, the Debtor will not change its name, its place of
business or, if more than one, chief executive office, or its mailing address or
organizational identification number if it has one, (b) if the Debtor does not
have an organizational identification number and later obtains one, the Debtor
shall forthwith notify the Secured Party of such organizational identification
number, and (c) the Debtor will not change its type of organization,
jurisdiction of organization or other legal structure.
7. Covenants Concerning Collateral. The Debtor covenants with the Secured Party
as follows: (a) the Collateral, to the extent not delivered to the Secured Party
pursuant to Xxxxxxx 0,
-0-
xxxx xx kept at those locations listed on the Perfection Certificate and the
Debtor will not remove the Collateral from such locations, without providing at
least thirty days prior written notice to the Secured Party, (b) except for the
security interest herein granted, the Debtor shall be the owner of or have other
rights in the Collateral free from any right or claim of any other person, lien,
security interest or other encumbrance, and the Debtor shall defend the same
against all claims and demands of all persons at any time claiming the same or
any interests therein adverse to the Secured Party, (c) the Debtor shall not
pledge, mortgage or create, or suffer to exist any right of any person in or
claim by any person to the Collateral, or any security interest, lien or
encumbrance in the Collateral in favor of any person, other than the Secured
Party, (d) the Debtor will keep the Collateral in good order and repair and will
not use the same in violation of law or any policy of insurance thereon, (e) the
Debtor will permit the Secured Party, or its designee, to inspect the Collateral
at any reasonable time, wherever located, (f) the Debtor will pay promptly when
due all taxes, assessments, governmental charges and levies upon the Collateral
or incurred in connection with the use or operation of such Collateral or
incurred in connection with this Agreement, (g) the Debtor will continue to
operate, its business in compliance with all applicable provisions of the
federal Fair Labor Standards Act, as amended, and with all applicable provisions
of federal, state and local statutes and ordinances dealing with the control,
shipment, storage or disposal of hazardous materials or substances, and (h) the
Debtor will not sell or otherwise dispose, or offer to sell or otherwise
dispose, of the Collateral or any interest therein except for sales and leases
of inventory in the ordinary course of business.
8. Insurance.
8. Insurance.
----------
8.1. Maintenance of Insurance. The Debtor will maintain with
financially sound and reputable insurers insurance with respect to its
properties and business against such casualties and contingencies as shall be in
accordance with general practices of businesses engaged in similar activities in
similar geographic areas. Such insurance shall be in such minimum amounts that
the Debtor will not be deemed a co-insurer under applicable insurance laws,
regulations and policies and otherwise shall be in such amounts, contain such
terms, be in such forms and be for such periods as may be reasonably
satisfactory to the Secured Party. In addition, all such insurance shall be
payable to the Secured Party as loss payee under a "standard" or "New York" loss
payee clause. Without limiting the foregoing, the Debtor will (i) keep all of
its physical property insured with casualty or physical hazard insurance on an
"all risks" basis, with broad form flood and earthquake coverages and electronic
data processing coverage, with a full replacement cost endorsement and an
"agreed amount" clause in an amount equal to 100% of the full replacement cost
of such property, (ii) maintain all such workers' compensation or similar
insurance as may be required by law, and (iii) maintain, in amounts and with
deductibles equal to those generally maintained by businesses engaged in similar
activities in similar geographic areas, general public liability insurance
against claims of bodily injury, death or property damage occurring, on, in or
about the properties of the Debtor; business interruption insurance; and product
liability insurance.
8.2. Insurance Proceeds. The proceeds of any casualty insurance in
respect of any casualty loss of any of the Collateral shall, subject to the
rights, if any, of other parties with an interest having priority in the
property covered thereby, (i) so long as no Default or Event of Default has
occurred and is continuing and to the extent that the amount of such proceeds is
less than $50,000 be disbursed to the Debtor for direct application by the
Debtor solely to the repair or replacement of the Debtor's property so damaged
or destroyed, and (ii) in all other circumstances, be held by the Secured Party
as cash collateral for the Obligations. The Secured Party may, at its sole
option, disburse from time to time all or any part of such proceeds so held as
cash collateral, upon such terms and conditions as the Secured Party may
reasonably prescribe, for direct application by the Debtor solely to the repair
or replacement of the Debtor's property so damaged or destroyed, or the Secured
Party may apply all or any part of such
-7-
proceeds to the Obligations with the commitment (if not then terminated) being
reduced by the amount so applied to the Obligations.
8.3. Continuation of Insurance. All policies of insurance shall provide
for at least 30 days prior written cancellation notice to the Secured Party. In
the event of failure by the Debtor to provide and maintain insurance as herein
provided, the Secured Party may, at its option, provide such insurance and
charge the amount thereof to the Debtor. The Debtor shall furnish the Secured
Party with certificates of insurance and policies evidencing compliance with the
foregoing insurance provision.
9. Collateral Protection Expenses; Preservation of Collateral.
9.1. Expenses Incurred by Secured Party. In the Secured Party's
discretion, if the Debtor fails to do so, the Secured Party may discharge taxes
and other encumbrances at any time levied or placed on any of the Collateral,
maintain any of the Collateral, make repairs thereto and pay any necessary
filing fees or insurance premiums. The Debtor agrees to reimburse the Secured
Party on demand for all expenditures so made. The Secured Party shall have no
obligation to the Debtor to make any such expenditures, nor shall the making
thereof be construed as the waiver or cure of any Default or Event of Default.
9.2. Secured Party's Obligations and Duties. Anything herein to the
contrary notwithstanding, the Debtor shall remain obligated and liable under
each contract or agreement comprised in the Collateral to be observed or
performed by the Debtor thereunder. The Secured Party shall not have any
obligation or liability under any such contract or agreement by reason of or
arising out of this Agreement or the receipt by the Secured Party of any payment
relating to any of the Collateral, nor shall the Secured Party be obligated in
any manner to perform any of the obligations of the Debtor under or pursuant to
any such contract or agreement, to make inquiry as to the nature or sufficiency
of any payment received by the Secured Party in respect of the Collateral or as
to the sufficiency of any performance by any party under any such contract or
agreement, to present or file any claim, to take any action to enforce any
performance or to collect the payment of any amounts which may have been
assigned to the Secured Party or to which the Secured Party may be entitled at
any time or times. The Secured Party's sole duty with respect to the custody,
safe keeping and physical preservation of the Collateral in its possession,
under Section 9-207 of the Uniform Commercial Code of the State or otherwise,
shall be to deal with such Collateral in the same manner as the Secured Party
deals with similar property for its own account.
10. Securities and Deposits. The Secured Party may at any time following and
during the continuance of a Default and Event of Default, at its option,
transfer to itself or any nominee any securities constituting Collateral,
receive any income thereon and hold such income as additional Collateral or
apply it to the Obligations. Whether or not any Obligations are due, the Secured
Party may following and during the continuance of a Default and Event of Default
demand, xxx for, collect, or make any settlement or compromise which it deems
desirable with respect to the Collateral. Regardless of the adequacy of
Collateral or any other security for the Obligations, any deposits or other sums
at any time credited by or due from the Secured Party to the Debtor may at any
time be applied to or set off against any of the Obligations then due and owing.
11. Notification to Account Debtors and Other Persons Obligated on Collateral.
The Debtor shall, at the request and option of the Secured Party, notify account
debtors and other persons obligated on any of the Collateral of the security
interest of the Secured Party in any account, chattel paper, general intangible,
instrument or other Collateral and that payment thereof is to be made directly
to the Secured Party or to any financial institution designated by the Secured
Party as the Secured Party's agent therefor, and the Secured Party may itself,
without notice to or demand upon the Debtor, so notify account debtors and other
persons obligated on Collateral.
-8-
After the making of such a request or the giving of any such notification, the
Debtor shall hold any proceeds of collection of accounts, chattel paper, general
intangibles, instruments and other Collateral received by the Debtor as trustee
for the Secured Party without commingling the same with other funds of the
Debtor and shall turn the same over to the Secured Party in the identical form
received, together with any necessary endorsements or assignments. The Secured
Party shall apply the proceeds of collection of accounts, chattel paper, general
intangibles, instruments and other Collateral received by the Secured Party to
the Obligations, such proceeds to be immediately credited after final payment in
cash or other immediately available funds of the items giving rise to them.
12. Power of Attorney.
12.1. Appointment and Powers of Secured Party. The Debtor hereby
irrevocably constitutes and appoints the Secured Party and any officer or agent
thereof, with full power of substitution, as its true and lawful
attorneys-in-fact with full irrevocable power and authority in the place and
stead of the Debtor or in the Secured Party's own name, for the purpose of
carrying out the terms of this Agreement, to take any and all appropriate action
and to execute any and all documents and instruments that may be necessary or
useful to accomplish the purposes of this Agreement and, without limiting the
generality of the foregoing, hereby gives said attorneys the power and right, on
behalf of the Debtor, without notice to or assent by the Debtor, to do the
following:
(a) upon the occurrence and during the continuance of a
Default or an Event of Default, generally to sell, transfer, pledge, make any
agreement with respect to or otherwise dispose of or deal with any of the
Collateral in such manner as is consistent with the Uniform Commercial Code of
the State and as fully and completely as though the Secured Party were the
absolute owner thereof for all purposes, and to do, at the Debtor's expense, at
any time, or from time to time, all acts and things which the Secured Party
deems necessary or useful to protect, preserve or realize upon the Collateral
and the Secured Party's security interest therein, in order to effect the intent
of this Agreement, all at least as fully and effectively as the Debtor might do,
including, without limitation, (i) the filing and prosecuting of registration
and transfer applications with the appropriate federal, state, local or other
agencies or authorities with respect to trademarks, copyrights and patentable
inventions and processes, (ii) upon written notice to the Debtor, the exercise
of voting rights with respect to voting securities, which rights may be
exercised, if the Secured Party so elects, with a view to causing the
liquidation of assets of the issuer of any such securities, and (iii) the
execution, delivery and recording, in connection with any sale or other
disposition of any Collateral, of the endorsements, assignments or other
instruments of conveyance or transfer with respect to such Collateral; and
(b) to the extent that the Debtor's authorization given in
Section 3 is not sufficient, to file such financing statements with respect
hereto, with or without the Debtor's signature, or a photocopy of this Agreement
in substitution for a financing statement, as the Secured Party may deem
appropriate and to execute in the Debtor's name such financing statements and
amendments thereto and continuation statements which may require the Debtor's
signature.
12.2. Ratification by Debtor. To the extent permitted by law, the
Debtor hereby ratifies all that said attorneys shall lawfully do or cause to be
done by virtue hereof. This power of attorney is a power coupled with an
interest and is irrevocable.
12.3. No Duty on Secured Party. The powers conferred on the Secured
Party hereunder are solely to protect its interests in the Collateral and shall
not impose any duty upon it to exercise any such powers. The Secured Party shall
be accountable only for the amounts that it actually receives as a result of the
exercise of such powers, and neither it nor any of its officers,
-9-
directors, employees or agents shall be responsible to the Debtor for any act or
failure to act, except for the Secured Party's own gross negligence or willful
misconduct.
13. Rights and Remedies. If an Event of Default shall have occurred and be
continuing, the Secured Party, without any other notice to or demand upon the
Debtor have in any jurisdiction in which enforcement hereof is sought, in
addition to all other rights and remedies, the rights and remedies of a secured
party under the Uniform Commercial Code of the State and any additional rights
and remedies which may be provided to a secured party in any jurisdiction in
which Collateral is located, including, without limitation, the right to take
possession of the Collateral, and for that purpose the Secured Party may, so far
as the Debtor can give authority therefor, enter upon any premises on which the
Collateral may be situated and remove the same therefrom. The Secured Party may
in its discretion require the Debtor to assemble all or any part of the
Collateral at such location or locations within the jurisdiction(s) of the
Debtor's principal office(s) or at such other locations as the Secured Party may
reasonably designate. Unless the Collateral is perishable or threatens to
decline speedily in value or is of a type customarily sold on a recognized
market, the Secured Party shall give to the Debtor at least five Business Days
prior written notice of the time and place of any public sale of Collateral or
of the time after which any private sale or any other intended disposition is to
be made. The Debtor hereby acknowledges that five Business Days prior written
notice of such sale or sales shall be reasonable notice. In addition, the Debtor
waives any and all rights that it may have to a judicial hearing in advance of
the enforcement of any of the Secured Party's rights and remedies hereunder,
including, without limitation, its right following an Event of Default to take
immediate possession of the Collateral and to exercise its rights and remedies
with respect thereto.
14. Standards for Exercising Rights and Remedies. To the extent that applicable
law imposes duties on the Secured Party to exercise remedies in a commercially
reasonable manner, the Debtor acknowledges and agrees that it is not
commercially unreasonable for the Secured Party (a) to fail to incur expenses
reasonably deemed significant by the Secured Party to prepare Collateral for
disposition or otherwise to fail to complete raw material or work in process
into finished goods or other finished products for disposition, (b) to fail to
obtain third party consents for access to Collateral to be disposed of, or to
obtain or, if not required by other law, to fail to obtain governmental or third
party consents for the collection or disposition of Collateral to be collected
or disposed of, (c) to fail to exercise collection remedies against account
debtors or other persons obligated on Collateral or to fail to remove liens or
encumbrances on or any adverse claims against Collateral, (d) to exercise
collection remedies against account debtors and other persons obligated on
Collateral directly or through the use of collection agencies and other
collection specialists, (e) to advertise dispositions of Collateral through
publications or media of general circulation, whether or not the Collateral is
of a specialized nature, (f) to contact other persons, whether or not in the
same business as the Debtor, for expressions of interest in acquiring all or any
portion of the Collateral, (g) to hire one or more professional auctioneers to
assist in the disposition of Collateral, whether or not the collateral is of a
specialized nature, (h) to dispose of Collateral by utilizing Internet sites
that provide for the auction of assets of the types included in the Collateral
or that have the reasonable capability of doing so, or that match buyers and
sellers of assets, (i) to dispose of assets in wholesale rather than retail
markets, (j) to disclaim disposition warranties, (k) to purchase insurance or
credit enhancements to insure the Secured Party against risks of loss,
collection or disposition of Collateral or to provide to the Secured Party a
guaranteed return from the collection or disposition of Collateral, or (l) to
the extent deemed appropriate by the Secured Party, to obtain the services of
other brokers, investment bankers, consultants and other professionals to assist
the Secured Party in the collection or disposition of any of the Collateral. The
Debtor acknowledges that the purpose of this Section 14 is to provide
non-exhaustive indications of what actions or omissions by the Secured Party
would fulfill the Secured Party's duties under the Uniform Commercial Code or
other law of the State or any other relevant jurisdiction in the Secured Party's
exercise of remedies against the Collateral and that other actions or omissions
by the Secured Party shall not be deemed to fail to fulfill such duties solely
on account of not being indicated in this Section 14.
-10-
Without limitation upon the foregoing, nothing contained in this Section 14
shall be construed to grant any rights to the Debtor or to impose any duties on
the Secured Party that would not have been granted or imposed by this Agreement
or by applicable law in the absence of this Section 14.
15. No Waiver by Secured Party. The Secured Party shall not be deemed to have
waived any of its rights or remedies in respect of the Obligations or the
Collateral unless such waiver shall be in writing and signed by the Secured
Party. No delay or omission on the part of the Secured Party in exercising any
right or remedy shall operate as a waiver of such right or remedy or any other
right or remedy. A waiver on any one occasion shall not be construed as a bar to
or waiver of any right or remedy on any future occasion. All rights and remedies
of the Secured Party with respect to the Obligations or the Collateral, whether
evidenced hereby or by any other instrument or papers, shall be cumulative and
may be exercised singularly, alternatively, successively or concurrently at such
time or at such times as the Secured Party deems expedient.
16. Proceeds of Dispositions; Expenses. The Debtor shall pay to the Secured
Party on demand any and all expenses, including reasonable attorneys' fees and
disbursements, incurred or paid by the Secured Party in protecting, preserving
or enforcing the Secured Party's rights and remedies under or in respect of any
of the Obligations or any of the Collateral. After deducting all of said
expenses, the residue of any proceeds of collection or sale or other disposition
of the Collateral shall, to the extent actually received in cash, be applied to
the payment of the Obligations in such order or preference as the Secured Party
may determine, proper allowance and provision being made for any Obligations not
then due. Upon the final payment and satisfaction in full of all of the
Obligations and after making any payments required by Sections 9-608(a)(1)(C) or
9-615(a)(3) of the Uniform Commercial Code of the State, any excess shall be
returned to the Debtor. In the absence of final payment and satisfaction in full
of all of the Obligations, the Debtor shall remain liable for any deficiency.
17. Overdue Amounts. Until paid, all amounts due and payable by the Debtor
hereunder shall be a debt secured by the Collateral and shall bear, whether
before or after judgment, interest at the rate of interest for overdue principal
set forth in the Loan Documents.
18. Governing Law; Consent to Jurisdiction. THIS AGREEMENT IS INTENDED TO TAKE
EFFECT AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA. The Debtor agrees that any
action or claim arising out of, or any dispute in connection with, this
Agreement, any rights, remedies, obligations, or duties hereunder, or the
performance or enforcement hereof or thereof, may be brought in the courts of
the State of California sitting in Sacramento County or any federal court
sitting therein and consents to the non-exclusive jurisdiction of such court and
to service of process in any such suit being made upon the Debtor by mail at the
address specified in the Purchase Agreement. The Debtor hereby waives any
objection that it may now or hereafter have to the venue of any such suit or any
such court or that such suit is brought in an inconvenient court. In the event
the Debtor commences any action in another jurisdiction or venue under any tort
or contract theory arising directly or indirectly from the relationship created
by this agreement, the Secured Party at its option shall be entitled to have the
case transferred to one of the jurisdictions and venues above-described, or if
such transfer cannot be accomplished under applicable law, to have such case
dismissed without prejudice.
-11-
19. Waiver of Jury Trial. THE DEBTOR WAIVES ITS RIGHT TO A JURY TRIAL WITH
RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH
THIS AGREEMENT, ANY RIGHTS, REMEDIES, OBLIGATIONS, OR DUTIES HEREUNDER, OR THE
PERFORMANCE OR ENFORCEMENT HEREOF OR THEREOF. Except as prohibited by law, the
Debtor waives any right which it may have to claim or recover in any litigation
referred to in the preceding sentence any special, exemplary, punitive or
consequential damages or any damages other than, or in addition to, actual
damages. The Debtor (i) certifies that neither the Secured Party nor any
representative, agent or attorney of the Secured Party has represented,
expressly or otherwise, that the Secured Party would not, in the event of
litigation, seek to enforce the foregoing waivers or other waivers contained in
this Agreement, and (ii) acknowledges that, in entering into the Purchase
Agreement and the other Loan Documents to which the Secured Party is a party,
the Secured Party is relying upon, among other things, the waivers and
certifications contained in this Section 19.
20. Miscellaneous. The headings of each section of this Agreement are for
convenience only and shall not define or limit the provisions thereof. This
Agreement and all rights and obligations hereunder shall be binding upon the
Debtor and its respective successors and assigns, and shall inure to the benefit
of the Secured Party and its successors and assigns. If any term of this
Agreement shall be held to be invalid, illegal or unenforceable, the validity of
all other terms hereof shall in no way be affected thereby, and this Agreement
shall be construed and be enforceable as if such invalid, illegal or
unenforceable term had not been included herein. The Debtor acknowledges receipt
of a copy of this Agreement.
IN WITNESS WHEREOF, intending to be legally bound, the Debtor has caused this
Agreement to be duly executed as of the date first above written.
44 TRADE CORPORATION
/s/ Xxxx Xxxxxxx
---------------------------
By: XXXX XXXXXXX, PRESIDENT
Date: August 7, 2003
--------------
Accepted:
ITEX CORPORATION
/s/ Xxxxxx Xxxxx
----------------------------------------
By: Xxxxxx Xxxxx, Chairman of the Board
CERTIFICATE OF ACKNOWLEDGMENT
STATE OF CALIFORNIA )
) ss.
COUNTY OF SACRAMENTO )
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Before me, the undersigned, a Notary Public in and for the county aforesaid, on
this ___ day of August, 2003, personally appeared Xxxx Xxxxxxx, to me known
personally, and who, being by me duly sworn, deposes and says that he is the
President of 44 Trade Corporation, and that said instrument was signed and
sealed on behalf of said corporation by authority of its Board of Directors, and
said Xxxx Xxxxxxx acknowledged said instrument to be the free act and deed of
said corporation.
Notary Public
---------------------------------------
My commission expires:
------------------------------
-13-
ANNEX A
PERFECTION CERTIFICATE
(UCC Financing Statements)
The undersigned, the President and Director of 44 Trade Corporation, a Delaware
corporation (the "Debtor"), hereby certifies, with reference to a certain
Security Agreement dated August 7, 2003 (the "Security Agreement") (terms
defined in such Security Agreement having the same meanings herein as specified
therein), between the Debtor and ITEX Corporation, a Nevada corporation (the "
Secured Party"), to the Secured Party as follows:
1. Name. The exact legal name of the Debtor as that name appears on its
[Certificate of Incorporation] is as follows:
2. Other Identifying Factors.
(a) The following is a mailing address for the Debtor:
(b) If different from its indicated mailing address, the Debtor's place
of business or, if more than one, its chief executive office is located at the
following address:
Address County State
(c) The following is the type of organization of the Debtor:
(d) The following is the jurisdiction of the Debtor's organization:
(e) The following is the Debtor's state issued organizational
identification number [state "None" if the state does not issue such a number]:
3. Other Names.
(a) The following is a list of all other names (including trade names
or similar appellations) used by the Debtor, or any other business or
organization to which the Debtor became the successor by merger, consolidation,
acquisition, change in form, nature or jurisdiction of organization or
otherwise, now or at any time during the past five years:
(b) Attached hereto as Schedule 3 is the information required in
Section 2 for any other business or organization to which the Debtor became the
successor by merger, consolidation, acquisition of assets, change in form,
nature or jurisdiction of organization or otherwise, now or at any time during
the past five years:
A-1
4. Other Current Locations.
(a) The following are all other locations in the United States of
America in which the Debtor maintains any books or records relating to any of
the Collateral consisting of accounts, instruments, chattel paper, general
intangibles or mobile goods:
Address County State
(b) The following are all other places of business of the Debtor in the
United States of America:
Address County State
(c) The following are all other locations in the United States of
America where any of the Collateral consisting of inventory or equipment is
located:
Address County State
(d) The following are the names and addresses of all persons or
entities other than the Debtor, such as lessees, consignees, warehousemen or
purchasers of chattel paper, which have possession or are intended to have
possession of any of the Collateral consisting of instruments, chattel paper,
inventory or equipment:
Name Mailing Address County State
5. Prior Locations.
(a) Set forth below is the information required by Section 4 (a) or (b)
with respect to each location or place of business previously maintained by the
Debtor at any time during the past five years in a state in which the Debtor has
previously maintained a location or place of business at any time during the
past four months:
Address County State
A-2
(b) Set forth below is the information required by Section 4(c) or (d)
with respect to each other location at which, or other person or entity with
which, any of the Collateral consisting of inventory or equipment has been
previously held at any time during the past twelve months:
Name Mailing Address County State
6. Fixtures. Attached hereto as Schedule 6 is the information required by UCC
Section 9-502(b) or Section 9-402(5) of each state in which any of the
Collateral consisting of fixtures are or are to be located and the name and
address of each real estate recording office where a mortgage on the real estate
on which such fixtures are or are to be located would be recorded.
7. Unusual Transactions. Except for those purchases, acquisitions and other
transactions described on Schedule 3 or on Schedule 7 attached hereto, all of
the Collateral has been originated by the Debtor in the ordinary course of the
Debtor's business or consists of goods which have been acquired by the Debtor in
the ordinary course from a person in the business of selling goods of that kind.
8. UCC Filings. A duly authorized financing statement, in a form acceptable to
the Secured Party and containing the indication of the Collateral set forth on
Schedule 8(A) has been duly filed in the central Uniform Commercial Code filing
office in the jurisdiction identified in Section 2(d) and in each real estate
recording office referred to on Schedule 6 hereto. Attached hereto as Schedule
8(B) is a true copy of each such filing duly acknowledged or otherwise
identified by the filing office.
9. Schedule of Filing. Attached hereto as Schedule 9 is a schedule setting forth
filing information with respect to the filings described in Section 8.
10. Filing Fees. All filing fees and taxes payable in connection with the
filings described in Section 8 have been paid.
IN WITNESS WHEREOF, I have hereunto signed this Certificate on August ___, 2003.
44 TRADE CORPORATION
----------------------------------------------
By: XXXX XXXXXXX, PRESIDENT
A-3
