EXHIBIT 10.3
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement, dated September 30, 1998 ("Agreement"), is
entered into by and among VIDEO CITY, INC., a Delaware corporation ("Buyer"),
GAME CITY, INC, a California corporation ("Seller"), YOUNG X. XXX and XXX X.
XXX, with reference to the following facts:
X. Xxxxx X. Xxx and Xxx X. Xxx (collectively, the "Shareholders") own all
of the outstanding shares of capital stock of Seller.
B. Seller owns and operates a retail video rental and sales store,
located in Bakersfield California (the "Store"), operating under the name "Video
City."
C. Buyer wishes to purchase substantially all of the assets of Seller
which are located in the Store.
D. Seller and the Shareholders wish to sell substantially all of the
assets of Seller to Buyer.
NOW, THEREFORE, in consideration of the representations, warranties,
agreements and covenants and subject to the terms and provisions contained
herein, the parties hereto agree as follows:
Article I
Purchase and Sale
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1.1 Purchase and Sale of Assets. Subject to the terms and conditions and
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on the basis of and in reliance upon the representations and warranties set
forth in this Agreement, Seller hereby sells, conveys, transfers and delivers to
Buyer, and Buyer hereby purchases from Seller, effective as of the Closing Date
(as hereinafter defined), the following assets, free and clear of all liens,
security interests and encumbrances:
(a) All of Seller's furniture, fixtures, signs, equipment, computer
hardware and software, supplies and other personal property located at the
Store (collectively, the "Equipment"), and all of Seller's right, title and
interest as tenant under the leases for each of the Equipment
(collectively, the "Equipment Leases");
(b) Seller's business and customer records, manuals, computer data,
books and advertising materials, telephone and facsimile numbers, goodwill
1.
(including the covenant not to compete from Seller and the Shareholders set
forth in Article VII), Seller's trade name and logo, intellectual property,
and all other intangible assets of Seller applicable to the Store since its
opening (the "Intangible Assets");
(c) All of Seller's right, title and interest as tenant under the
real property lease for the Store (the "Real Property Lease");
(d) Seller's video cassettes, video discs, video games, video players
and other items held for rent or sale located at the Store (the
"Inventory");
(e) All deferred charges, late fees, prepaid items, lease security
deposits, and credits of all kinds, including, without limitation, amounts
owed to Seller under rental agreements with Seller's customers that are
past due as of the Closing Date (as hereinafter defined); and
(f) Claims previously vested in Seller under insurance policies
applicable to the Store.
All of the foregoing items are sometimes referred to herein as the "Acquired
Assets."
1.2 Retained Assets. The Acquired Assets shall not include cash, or
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claims of Seller for refunds of federal and state income taxes.
1.3 Consideration and Payment. In full consideration for the transfer of
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the Acquired Assets, Buyer hereby delivers to Seller on the Closing Date, the
following (collectively, the "Purchase Price"):
(a) Cash in the amount of $7,500;
(b) The assumption by Buyer of certain of Seller's liabilities and
indebtedness to third parties in an amount not to exceed $87,500;
(c) The forgiveness by Buyer of Seller's indebtedness to Buyer in the
amount of $30,000; and
(d) A promissory note in the principal amount of $150,000 payable to
Seller or the Shareholders, in the form attached hereto as Exhibit A.
1.4 Closing. The Closing of the transactions contemplated by this
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Agreement (the "Closing") shall take place at the offices of Xxxx & Xxxxx
Professional
2.
Corporation, 0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx 00000.
All actions set forth in this Agreement to be taken on the Closing Date shall
occur on September ___, 1998 (the "Closing Date"), or such other date as the
parties hereto may mutually agree. At the Closing, all actions, each of which
shall be conditioned on the occurrence of the others, shall be deemed to take
place simultaneously.
1.5 Instruments of Conveyance and Transfer. Seller shall deliver to Buyer
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on the Closing Date, in connection with the execution and delivery of this
Agreement:
(a) (i) lease Assignment and Assumption Agreements relating to the
Real Property Lease and the Equipment Leases, (ii) a xxxx of sale covering
the remainder of the Acquired Assets in form and substance satisfactory to
Buyer, and (iii) such other bills of sale, endorsements, assignments and
other good and sufficient instruments of conveyance and delivery as Buyer
may reasonably request.
(b) All of Seller's contracts and commitments, books, files and
records and other data relating to the Acquired Assets or to the operation
of the Store. Seller agrees that on the Closing Date all steps shall be
taken as may be required to put Buyer in actual possession and operating
control of the Acquired Assets and the related business, to assure
continuity of operation of the Store.
(c) Any releases from any creditor of Seller holding a security
interest in any of the Acquired Assets.
1.6 Sales Taxes. Seller and Buyer shall execute and deliver to each other
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whatever documents may be required in order to exempt this transaction, to the
extent legally permissible, from the application of sales, use or transfer taxes
under the laws of the State of California. To the extent this transaction is
not so exempt, Seller shall pay such taxes and provide upon request evidence of
payment of same to Buyer.
1.7 Assumption of Certain Liabilities and Obligations. The liabilities of
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Seller being assumed and to be paid, and the obligations of Seller to be
performed or discharged, by Buyer are those and only those set forth herein (the
"Assumed Obligations"):
(a) the assumption of the tenant's obligations under the Real
Property Lease and the Equipment Leases
3.
from and after the Closing Date; and
(b) the assumption of certain liabilities and indebtedness as provided
in Sections 1.3(b) and 1.3(c) of this Agreement.
Such assumption or assumptions shall not in any way limit Buyer's right of
recourse for any breach of covenants, representations or warranties contained
herein. Nothing contained herein shall preclude Buyer from contesting, in good
faith, the duties and liabilities of Seller and Buyer to third parties.
1.8 Limitations on Assumption of Liabilities. Except as provided in this
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Agreement, and whether or not reflected on Seller's books, Buyer does not assume
any liability or obligation of the Store (a) to any of Seller's employees,
directors or shareholders; (b) not included in the Assumed Obligations; (c)
arising from any breach by Seller, or from any fact or transaction involving a
breach by Seller, of any covenant, agreement, representation or warranty
contained herein or incurred in connection with the transactions contemplated
hereby; (d) with respect to fees and expenses of Seller's counsel and other
experts employed by Seller; (e) involving the payment of any domestic (federal,
state or local) taxes on or measured by income, which are due or shall become
due as a result of the operation of the Store through the Closing Date; or (f)
in respect of or arising out of Seller's express or implied warranties with
respect to products rented or sold by the Store on or before the Closing Date.
1.9 Performance of Other Obligations. Seller shall perform, or cause to
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be performed, all of the obligations and pay and discharge all of the
liabilities of the Store not assumed by Buyer pursuant to Section 1.8 when and
as they become due and payable, except that Seller may contest, in good faith,
such obligations or liabilities. Seller shall, at its expense, take any and all
actions which may be necessary to prevent any person, firm or governmental
authority from having recourse against any of the Acquired Assets or against
Buyer.
1.10 Bulk Sales. Seller and the Shareholders agree to indemnify Buyer and
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hold it harmless against any claims and demands of whatever nature, including
reasonable counsel fees and costs in contesting the same, asserted against Buyer
relative to the Acquired Assets, by any creditor of Seller for noncompliance by
Seller with bulk sales laws or similar laws, if any, which may be applicable to
the sale or transfer of the Acquired Assets hereunder.
4.
1.11 Availability of Employees of the Business. Seller shall use its
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reasonable best efforts to keep available to Buyer for employment the services
of the employees of the Store.
1.12 Expenses. Whether the transactions contemplated by this Agreement
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shall be consummated or not, each party shall pay its own expenses incident to
this Agreement.
Article II
Representations and Warranties
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of Seller and the Shareholders
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Seller and the Shareholders, jointly and severally, represent and warrant
to Buyer that:
2.1 Due Organization, etc. Seller is duly organized, validly existing and
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in good standing under the laws of the State of California, and has full
corporate power to own its properties and conduct the business presently being
conducted by it.
2.2 Authority Relative to this Agreement; Consents. The execution,
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delivery and performance of this Agreement by Seller have been duly authorized
and approved by all requisite corporate action, and neither the execution nor
the delivery of this Agreement nor the consummation of the transactions
contemplated hereby by Seller, nor compliance with nor fulfillment of the terms
and provisions hereof, will, (a) conflict with or result in a breach of the
terms, conditions or provisions of or constitute a default under the Articles of
Incorporation or By-laws of Seller, or any material instrument, mortgage or deed
of trust evidencing or securing indebtedness for borrowed money, any financing
lease, judgment, order, award, decree or other restriction of any kind to which
Seller is a party or by which it is bound, (b) require the approval, consent,
authorization or other order or action of, or filing with, any court,
governmental authority or regulatory body, (c) require the consent, approval,
order or authorization of any person under any permit, license, agreement,
indenture or other instrument to which Seller is a party or by which any of its
properties are subject, except for the consent of the landlords and lessors
under the Real Property Lease and the Equipment Leases, or (d) require any
declaration, filing or registration with any governmental or regulatory
authority by Seller. Seller has full power and authority to do and perform all
acts and things required to be done pursuant to this Agreement. This Agreement
and each other agreement and instrument required to be delivered hereunder by
Seller,
5.
when duly executed and delivered by Seller, will constitute valid and binding
obligations of Seller and will be enforceable in accordance with their
respective terms.
2.3 Acquired Assets. Except as set out in Schedule 2.3, Seller is the
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sole owner of and has good title to all of the Acquired Assets and will transfer
the same to Buyer free and clear of all liens, encumbrances, claims and security
interests of any type or nature whatsoever. Each of the Equipment Leases and
the Real Property Lease are listed in Schedule 2.3. Seller has delivered to
Buyer a complete copy of each of the Equipment Leases and the Real Property
Lease. As of the date hereof, Seller has made all payments due under the
Equipment Leases and the Real Property Lease. The Equipment and other assets
included in the Acquired Assets are suitable for the uses in which they are
currently employed, are in good operating condition and are free from any
defects, except such minor defects as do not interfere with the continued use of
such properties and the Equipment in the conduct of the normal operations of the
Store, and the Inventory is of merchantable quality and has been maintained in a
commercially reasonable condition. With respect to the Real Property Lease
included in the Acquired Assets, there is no notice of cancellation or
termination under any option or right reserved to the lessor under the Real
Property Lease or any notice of default under the Real Property Lease, and no
event has occurred which, with notice or lapse of time or both, would constitute
a default under the Real Property Lease. Seller has not assigned its interest
under the Real Property Lease or subleased the premises demised thereby. The
present use of any leased premises pursuant to the Real Property Lease does not
depend on any variance, special exceptions or other special municipal approval
of limited duration for continuing legality. Since December 31, 1997, Seller
and the Shareholders have not sold, assigned, transferred, conveyed, leased,
mortgaged, pledged or otherwise disposed of or encumbered any assets of Seller,
or any interests therein, other than in the ordinary course of its business and
consistent with its past practices.
2.4 Compliance with Laws. Seller is in material compliance, and there
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exists no alleged noncompliance, with all applicable statutes, orders, rules and
regulations promulgated by governmental authorities relating in any material
respect to the Acquired Assets or the operation or conduct of the business of
the Store, including, without limitation, any applicable statute, order, rule or
regulation relating to (i) wages, hours, hiring, non-discrimination, promotion,
retirement, benefits, pensions and working conditions, (ii) air, water, toxic
substances or noise, (iii) health and safety or (iv) zoning and building
6.
codes, and Seller has not received any notice of alleged violation of any such
statute, order, rule or regulation. Schedule 2.4 lists all material governmental
licenses, permits, filings, authorizations, approvals and indicia of authority
and any pending applications for any thereof (and indicates whether each is
freely transferable to Buyer) relating to the conduct of business of the Store
held by Seller, and such licenses, permits, filings, authorizations, approvals
and indicia of authority are all the governmental licenses, permits, filings,
authorizations, approvals and indicia of authority necessary to conduct the
business of the Store or to use the Acquired Assets as currently conducted or
used.
2.5 Employees. Seller is not a party to any employment, noncompetition,
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collective bargaining or other agreements of any nature whatsoever with Seller's
current or past employees of the Store. Seller does not now have, and has never
maintained, any pension, profit sharing, fringe benefit or deferred compensation
plans covering any of its employees of the Store; and all of Seller's employees
are "at will" employees, and Seller will have paid Seller's employees all
compensation and benefits of any type or nature earned by them up to the Closing
Date.
2.6 Trademarks, etc. Seller owns, or is licensed under, the trademarks,
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trade names and copyrights as are useful and necessary to conduct the business
as now operated at the Store, and Seller is not currently in receipt of any
notice of conflict with the asserted right of others in such trademarks, trade
names or copyrights or the use thereof, nor has Seller licensed or otherwise
authorized any other person to use the name "Video City."
2.7 Litigation. There is no litigation, arbitration proceeding or
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governmental investigation pending, or so far as is known to Seller threatened,
or any judgment, lien, award, order or decree outstanding against, or relating
to the Store, the Acquired Assets or the transactions contemplated by this
Agreement, nor is there any basis known to Seller for any such litigation,
proceeding or investigation. Seller is not in default with respect to any order
of any court, governmental authority, or arbitration board or tribunal, with
respect to the Store.
2.8 Tax Returns and Audit. Seller has filed all federal, state and local
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tax returns which are required to be filed with respect to the operations of the
Store and has paid, or made provision for the payment of, all taxes which have
or may have been due pursuant to such returns or to assessments received
relative to operations of the Store other than taxes on or measured by income.
All federal,
7.
state and local franchise, sales, use, occupation, property, excise, or other
taxes attributable to the Store have been timely and fully paid or adequately
reserved. No deficiencies on any of Seller's tax returns or reports attributable
to or otherwise allocable to the Store have been threatened as of the date
hereof.
2.9 Powers of Attorney. No person has any power of attorney to act on
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behalf of the Store in connection with its properties or business affairs.
2.10 Transactions with Management. Schedule 2.10 hereto includes a
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complete and correct list and description of the amounts and other essential
terms of all indebtedness and other fixed or contingent obligations, liabilities
or commitments existing on the date hereof of the Store to or from any past or
current officer, director, employee or controlling shareholder of Seller or any
person related to, controlling, controlled by or under common control with
Seller. All transactions between such persons and the Store have been on terms
equivalent to those available from unrelated third parties.
2.11 Accuracy of Supplemental Information. The disclosure schedules and
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Seller's representations in the Assignment and Assumption Agreements relating to
the Real Property Lease and the Equipment Leases are true, accurate and complete
in all material respects. All financial information that Seller has provided or
will provide to Buyer in connection with Buyer's evaluation of this asset
purchase, including without limitation, the balance sheets of Seller as of
December 31, 1997 and as of May 31, 1998, and the statement of operations of
Seller during the year ended December 31, 1997 and during the five month period
ended May 31, 1998, is or will be true, accurate, and complete in all material
respects.
2.12 Inventory. The inventory of Seller reflected on the balance sheet of
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Seller as of December 31, 1997, as well as other inventory items acquired since
December 31, 1997 that are now the property of Seller, are of such quality and
held in such quantities as are being used and will be usable and salable or
rentable in the ordinary course of the business of Seller. Since December 31,
1997, Seller has continued to replenish its inventories in a normal and
customary manner consistent with practice prevailing in the retail video sales
and rental industry. Since December 31, 1997, Seller and the Shareholders have
not sold, assigned, transferred, conveyed, leased, mortgaged, pledged or
otherwise disposed of or encumbered any inventory of Seller's video cassettes,
video discs, video games, video players and other items held for rent or
8.
sale, other than in the ordinary course of its business and consistent with its
past practices.
2.13 Accuracy and Provision of Information. None of the documents or other
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information made available to Buyer or its affiliates, attorneys, accountants,
agents or representatives in connection with the transactions contemplated by
this Agreement contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements contained
therein not misleading. Seller has provided Buyer all material information
regarding its business and operations.
Article III
Representations and Warranties of Buyer
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Buyer represents and warrants to Seller and the Shareholders that (i) Buyer
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, (ii) the execution, delivery and performance of
this Agreement and of all documents or agreements referred to in or related to
this Agreement on the part of Buyer have been duly and effectively authorized by
the Board of Directors of Buyer, and (iii) this Agreement and each other
agreement and instrument required to be delivered hereunder by Buyer, when duly
executed and delivered by Buyer, will constitute valid and binding obligations
of Buyer and will be enforceable in accordance with their respective terms.
Article IV
Indemnification
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4.1 Indemnity by Seller and the Shareholders. Seller and the
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Shareholders, jointly and severally, shall indemnify, defend, and hold Buyer
harmless from and after the Closing Date against and in respect of:
(a) Any and all liabilities and obligations of, or claims against,
Seller and the Store not expressly assumed by Buyer; and
(b) Any and all damage, loss, deficiency, costs, and expenses
resulting from any misrepresentation, breach of warranty, or nonfulfillment
of any obligation on the part of Seller or the Shareholders under this
Agreement or from any misrepresentation in, omission from, or occasioned
by, any certificate or other instrument furnished or to be furnished to
Buyer under
9.
this Agreement prepared by or at the request of Seller or the Shareholders;
and
(c) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and legal and other expenses incident to any
of the foregoing; provided, however, that if any claim shall be asserted
against Buyer in respect of which Buyer proposes to demand indemnification,
Seller and the Shareholders shall be notified to that effect with
reasonable promptness after such assertion.
4.2 Indemnification for Personal Injury. Seller and the Shareholders
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agree to defend, indemnify and hold harmless Buyer against and in respect of any
claim for personal injury or property damage, where such personal injury or
property damage arose out of Seller's use, ownership, or operation prior to the
Closing Date of the Acquired Assets or the Store.
4.3 Indemnification by Buyer. Buyer agrees to defend, indemnify, and hold
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harmless Seller and the Shareholders against and in respect of any claims
arising out of Buyer's use, ownership or operation from and after the Closing
Date of the Acquired Assets or the Store, provided, however, if any claim shall
be asserted against Seller or the Shareholders in respect of which Seller or the
Shareholders proposes to demand indemnification, Buyer shall be notified to that
effect with reasonable promptness after such assertion.
Article V
Employee Relations and Benefits
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5.1 Pre-Closing Date Compensation and Benefits. Seller shall pay to or on
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behalf of its salaried and hourly employees who work at the Store all
compensation and benefits of any nature whatsoever owing to them on account of
any and all work performed as Seller's employees as of the Closing Date. Buyer
shall have no liability for any compensation, severance payments or benefits
due, owing or payable on the Closing Date to employees who work at the Store.
5.2 Termination and Rehiring. Seller shall terminate all of its employees
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at the Store as of the Closing Date. Seller shall be solely responsible for
complying with any applicable state or federal laws pertaining to Seller's
termination of its employees in connection with the transactions contemplated by
this Agreement. Buyer may
10.
offer employment to any or all of Seller's employees in its discretion
commencing on the Closing Date. Buyer shall be permitted to interview any or all
of Seller's employees at any time for such purpose.
5.3 No Rights to Employees. Nothing herein expressed or implied shall
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confer upon any employee of either Seller or Buyer any rights or remedies,
including, without limitation, any right to employment or continued employment
for any specified period.
Article VI
Actions to be Taken Subsequent to the Closing Date
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6.1 Further Assurances. Following the Closing, Seller shall, upon request
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by Buyer, (a) do, execute and deliver, or cause to be done, executed, and
delivered, all such further acts, deeds, assignments, transfers, conveyances,
powers of attorney and assurances and (b) use its best efforts to obtain all
authorizations, approvals, consents and waivers that may be reasonably required
for the conveyance, transfer, assignment, delivery, assurance and confirmation
to Buyer, of any or all of the Acquired Assets.
Seller authorizes Buyer to apply for and obtain recordation as necessary of
the evidences of transfer to Buyer of the Acquired Assets under this Agreement.
Seller shall (at Seller's expense) promptly perform such lawful acts and execute
such documents as Buyer may reasonably request to obtain the full benefits of
the transfer of ownership of the Acquired Assets, and shall cooperate with Buyer
to obtain for Buyer all non-transferable governmental permits and licenses
necessary or appropriate to conduct the business and operations of the Store.
6.2 Prorations. All rents and other charges under the Real Property
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Lease, the Equipment Leases, personal property taxes on the Acquired Assets,
utilities, and similar items shall be prorated between Buyer and Seller as of
the Closing Date. Seller and Buyer shall make such payments as may be required
in order to settle the prorations at the Closing if the information is available
to do so. Otherwise, Buyer and Seller shall settle the prorations between
themselves not later than 60 days after the Closing Date (except for those
percentage rent prorations which must await the expiration of a longer period of
time in order to compute) by submitting appropriate documentation and payments
to one another. If the Real Property Lease requires the payment of percentage
rent, Seller and Buyer shall prorate the required payment based on their
respective sales during the period
11.
with respect to which percentage rent is payable.
Article VII
Covenant Not To Compete
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For a period commencing on the Closing Date and ending five years
thereafter, Seller and the Shareholders jointly and severally agree that neither
they nor any of their affiliates shall own, operate, control, license, or have
an interest in any retail video store business located within a five mile radius
of the Store. The parties agree that Buyer's damages for a violation of this
covenant will be difficult to ascertain with precision. Therefore, in addition
to whatever other relief may be available under applicable law, Buyer shall be
entitled to specifically enforce the provisions of this Article VII, and Seller
and the Shareholders waive any defense based on a claim that Buyer has or may
have an adequate remedy at law for a violation of this Article.
For the purposes of this Article VII, the following words shall have the
following meanings:
(a) "affiliate" means any person managed or controlled by Seller or the
Shareholders, any person in which Seller or the Shareholders hold more than a
five percent interest, or any person who holds more than a five percent interest
in Seller or in any affiliate of the Shareholders or Seller; provided however,
the foregoing shall not include Buyer and its affiliates;
(b) "person" means any individual, corporation, partnership, limited
liability company, trust, proprietor-ship, or other entity; and
(c) "retail video store" means a retail business which engages in a
business which is the same as or similar to the business that Seller has engaged
in through the operation of the Store.
Article VIII
Miscellaneous
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8.1 Entire Agreement. The entire agreement between the parties is
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incorporated into this Agreement and the documents referenced herein. This
Agreement supersedes any and all prior agreements and understandings between the
parties with respect to the subject matter hereof. This
12.
Agreement may not be modified or amended except by a written document duly
executed by the party against whom such modification or amendment is sought to
be enforced.
8.2 Governing Law. This Agreement shall be governed by and construed in
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accordance with the laws of the State of California.
8.3 Notices. All notices, requests, demands and other communications
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hereunder shall be in writing, including telegrams, and shall have been deemed
duly given if personally delivered, 24 hours after being sent by facsimile
transmission or by a nationally recognized overnight courier service (e.g.,
Federal Express) for next day delivery or 72 hours after being sent by
registered or certified mail, postage prepaid, return receipt requested:
If to Buyer: Video City, Inc.
0000 Xxxxxxxx Xxxxxxxxx
Xxxxxxxxxxx, Xxxxxxxxxx 00000
Attention: President
With a copy to: Xxxx & Xxxxx
0000 Xxxxxxx Xxxx Xxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxx
If to Seller or
the Shareholders: Game City, Inc.
00000 Xxxxxxxxxxx Xxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxx X. Xxx
Any party may change its address for notices by written notice to the other
parties.
8.4 Survival of Representations and Warranties. All representations and
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warranties made by the parties in this Agreement or in any document, statement,
certificate, schedule or exhibit furnished or to be furnished pursuant hereto,
or in connection with the transactions contemplated hereby, shall survive the
Closing and any investigation made at any time with respect thereto.
8.5 Captions; Pronouns, Singular and Plural. The captions of Articles and
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Sections in this Agreement are for the convenience of the parties and shall not
affect the meaning or interpretation of this Agreement. Each pronoun used
herein includes the masculine, feminine, neuter, singular and plural as required
by the context in which used.
13.
8.6 Taxes. The parties agree to comply with the provisions of Section
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1060 of the Internal Revenue Code of 1986, as amended, and to file applicable
reports and returns on a basis consistent with the allocations agreed upon by
the parties.
8.7 Broker. Neither Seller nor the Shareholders has been represented by
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any business or other broker in connection with the sale and purchase covered by
this Agreement and no commissions of any kind shall become due as a result of
this sale and purchase. Any claimed commissions shall be paid by the party who
the broker proves engaged such party.
8.8 Waiver. No waiver of any provision of this Agreement shall be deemed,
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or shall constitute, a waiver of any other provision, whether or not similar,
nor shall any waiver constitute a continuing waiver. No waiver shall be binding
unless executed in writing by the party making the waiver.
8.9 Negotiations. This Agreement constitutes the product of negotiations
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of the parties hereto and enforcement hereof will be interpreted in a neutral
manner and not more strongly for or against any party based upon the source of
draftsmanship hereof.
8.10 Expenses. Each party hereto shall pay its own legal, accounting, out-
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of-pocket and other expenses incident to this Agreement and to any action taken
by such party in preparation for carrying this Agreement into effect.
14.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
BUYER:
VIDEO CITY, INC.
By /s/ Xxxxxx X. Xxx
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Xxxxxx X. Xxx
Chief Executive Officer
SELLER:
GAME CITY, INC.
By /s/ Young X. Xxx
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Young X. Xxx
President
THE SHAREHOLDERS:
/s/ Young X. Xxx
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Young X. Xxx
/s/ Xxx X. Xxx
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Xxx X. Xxx
15.
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement, dated September ___, 1998 ("Agreement"), is
entered into by and among VIDEO CITY, INC., a Delaware corporation ("Buyer"),
GAME CITY, INC, a California corporation ("Seller"), YOUNG X. XXX and XXX X.
XXX, with reference to the following facts:
X. Xxxxx X. Xxx and Xxx X. Xxx (collectively, the "Shareholders") own all
of the outstanding shares of capital stock of Seller.
B. Seller owns and operates a retail video rental and sales store, located
in Bakersfield California (the "Store"), operating under the name "Video City."
C. Buyer wishes to purchase substantially all of the assets of Seller
which are located in the Store.
D. Seller and the Shareholders wish to sell substantially all of the
assets of Seller to Buyer.
NOW, THEREFORE, in consideration of the representations, warranties,
agreements and covenants and subject to the terms and provisions contained
herein, the parties hereto agree as follows:
Article I
Purchase and Sale
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1.1 Purchase and Sale of Assets. Subject to the terms and conditions and
---------------------------
on the basis of and in reliance upon the representations and warranties set
forth in this Agreement, Seller hereby sells, conveys, transfers and delivers to
Buyer, and Buyer hereby purchases from Seller, effective as of the Closing Date
(as hereinafter defined), the following assets, free and clear of all liens,
security interests and encumbrances:
(a) All of Seller's furniture, fixtures, signs, equipment, computer
hardware and software, supplies and other personal property located at the
Store (collectively, the "Equipment"), and all of Seller's right, title and
interest as tenant under the leases for each of the Equipment
(collectively, the "Equipment Leases");
(b) Seller's business and customer records, manuals, computer data,
books and advertising materials, telephone and facsimile numbers, goodwill
1.
(including the covenant not to compete from Seller and the Shareholders set
forth in Article VII), Seller's trade name and logo, intellectual property,
and all other intangible assets of Seller applicable to the Store since its
opening (the "Intangible Assets");
(c) All of Seller's right, title and interest as tenant under the real
property lease for the Store (the "Real Property Lease");
(d) Seller's video cassettes, video discs, video games, video players
and other items held for rent or sale located at the Store (the
"Inventory");
(e) All deferred charges, late fees, prepaid items, lease security
deposits, and credits of all kinds, including, without limitation, amounts
owed to Seller under rental agreements with Seller's customers that are
past due as of the Closing Date (as hereinafter defined); and
(f) Claims previously vested in Seller under insurance policies
applicable to the Store.
All of the foregoing items are sometimes referred to herein as the "Acquired
Assets."
1.2 Retained Assets. The Acquired Assets shall not include cash, or
---------------
claims of Seller for refunds of federal and state income taxes.
1.3 Consideration and Payment. In full consideration for the transfer of
-------------------------
the Acquired Assets, Buyer hereby delivers to Seller on the Closing Date, the
following (collectively, the "Purchase Price"):
(a) Cash in the amount of $7,500;
(b) The assumption by Buyer of certain of Seller's liabilities and
indebtedness to third parties in an amount not to exceed $87,500;
(c) The forgiveness by Buyer of Seller's indebtedness to Buyer in the
amount of $30,000; and
(d) A promissory note in the principal amount of $150,000 payable to
Seller or the Shareholders, in the form attached hereto as Exhibit A.
1.4 Closing. The Closing of the transactions contemplated by this
-------
Agreement (the "Closing") shall take place at the offices of Xxxx & Xxxxx
Professional
2.
Corporation, 0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx 00000.
All actions set forth in this Agreement to be taken on the Closing Date shall
occur on September ___, 1998 (the "Closing Date"), or such other date as the
parties hereto may mutually agree. At the Closing, all actions, each of which
shall be conditioned on the occurrence of the others, shall be deemed to take
place simultaneously.
1.5 Instruments of Conveyance and Transfer. Seller shall deliver to Buyer
--------------------------------------
on the Closing Date, in connection with the execution and delivery of this
Agreement:
(a) (i) lease Assignment and Assumption Agreements relating to the
Real Property Lease and the Equipment Leases, (ii) a xxxx of sale covering
the remainder of the Acquired Assets in form and substance satisfactory to
Buyer, and (iii) such other bills of sale, endorsements, assignments and
other good and sufficient instruments of conveyance and delivery as Buyer
may reasonably request.
(b) All of Seller's contracts and commitments, books, files and
records and other data relating to the Acquired Assets or to the operation
of the Store. Seller agrees that on the Closing Date all steps shall be
taken as may be required to put Buyer in actual possession and operating
control of the Acquired Assets and the related business, to assure
continuity of operation of the Store.
(c) Any releases from any creditor of Seller holding a security
interest in any of the Acquired Assets.
1.6 Sales Taxes. Seller and Buyer shall execute and deliver to each other
-----------
whatever documents may be required in order to exempt this transaction, to the
extent legally permissible, from the application of sales, use or transfer taxes
under the laws of the State of California. To the extent this transaction is
not so exempt, Seller shall pay such taxes and provide upon request evidence of
payment of same to Buyer.
1.7 Assumption of Certain Liabilities and Obligations. The liabilities of
-------------------------------------------------
Seller being assumed and to be paid, and the obligations of Seller to be
performed or discharged, by Buyer are those and only those set forth herein (the
"Assumed Obligations"):
(a) the assumption of the tenant's obligations under the Real Property
Lease and the Equipment Leases
3.
from and after the Closing Date; and
(b) the assumption of certain liabilities and indebtedness as provided
in Sections 1.3(b) and 1.3(c) of this Agreement.
Such assumption or assumptions shall not in any way limit Buyer's right of
recourse for any breach of covenants, representations or warranties contained
herein. Nothing contained herein shall preclude Buyer from contesting, in good
faith, the duties and liabilities of Seller and Buyer to third parties.
1.8 Limitations on Assumption of Liabilities. Except as provided in this
----------------------------------------
Agreement, and whether or not reflected on Seller's books, Buyer does not assume
any liability or obligation of the Store (a) to any of Seller's employees,
directors or shareholders; (b) not included in the Assumed Obligations; (c)
arising from any breach by Seller, or from any fact or transaction involving a
breach by Seller, of any covenant, agreement, representation or warranty
contained herein or incurred in connection with the transactions contemplated
hereby; (d) with respect to fees and expenses of Seller's counsel and other
experts employed by Seller; (e) involving the payment of any domestic (federal,
state or local) taxes on or measured by income, which are due or shall become
due as a result of the operation of the Store through the Closing Date; or (f)
in respect of or arising out of Seller's express or implied warranties with
respect to products rented or sold by the Store on or before the Closing Date.
1.9 Performance of Other Obligations. Seller shall perform, or cause to
--------------------------------
be performed, all of the obligations and pay and discharge all of the
liabilities of the Store not assumed by Buyer pursuant to Section 1.8 when and
as they become due and payable, except that Seller may contest, in good faith,
such obligations or liabilities. Seller shall, at its expense, take any and all
actions which may be necessary to prevent any person, firm or governmental
authority from having recourse against any of the Acquired Assets or against
Buyer.
1.10 Bulk Sales. Seller and the Shareholders agree to indemnify Buyer and
----------
hold it harmless against any claims and demands of whatever nature, including
reasonable counsel fees and costs in contesting the same, asserted against Buyer
relative to the Acquired Assets, by any creditor of Seller for noncompliance by
Seller with bulk sales laws or similar laws, if any, which may be applicable to
the sale or transfer of the Acquired Assets hereunder.
4.
1.11 Availability of Employees of the Business. Seller shall use its
-----------------------------------------
reasonable best efforts to keep available to Buyer for employment the services
of the employees of the Store.
1.12 Expenses. Whether the transactions contemplated by this Agreement
--------
shall be consummated or not, each party shall pay its own expenses incident to
this Agreement.
Article II
Representations and Warranties
------------------------------
of Seller and the Shareholders
------------------------------
Seller and the Shareholders, jointly and severally, represent and warrant
to Buyer that:
2.1 Due Organization, etc. Seller is duly organized, validly existing and
---------------------
in good standing under the laws of the State of California, and has full
corporate power to own its properties and conduct the business presently being
conducted by it.
2.2 Authority Relative to this Agreement; Consents. The execution,
----------------------------------------------
delivery and performance of this Agreement by Seller have been duly authorized
and approved by all requisite corporate action, and neither the execution nor
the delivery of this Agreement nor the consummation of the transactions
contemplated hereby by Seller, nor compliance with nor fulfillment of the terms
and provisions hereof, will, (a) conflict with or result in a breach of the
terms, conditions or provisions of or constitute a default under the Articles of
Incorporation or By-laws of Seller, or any material instrument, mortgage or deed
of trust evidencing or securing indebtedness for borrowed money, any financing
lease, judgment, order, award, decree or other restriction of any kind to which
Seller is a party or by which it is bound, (b) require the approval, consent,
authorization or other order or action of, or filing with, any court,
governmental authority or regulatory body, (c) require the consent, approval,
order or authorization of any person under any permit, license, agreement,
indenture or other instrument to which Seller is a party or by which any of its
properties are subject, except for the consent of the landlords and lessors
under the Real Property Lease and the Equipment Leases, or (d) require any
declaration, filing or registration with any governmental or regulatory
authority by Seller. Seller has full power and authority to do and perform all
acts and things required to be done pursuant to this Agreement. This Agreement
and each other agreement and instrument required to be delivered hereunder by
Seller,
5.
when duly executed and delivered by Seller, will constitute valid and binding
obligations of Seller and will be enforceable in accordance with their
respective terms.
2.3 Acquired Assets. Except as set out in Schedule 2.3, Seller is the
---------------
sole owner of and has good title to all of the Acquired Assets and will transfer
the same to Buyer free and clear of all liens, encumbrances, claims and security
interests of any type or nature whatsoever. Each of the Equipment Leases and the
Real Property Lease are listed in Schedule 2.3. Seller has delivered to Buyer a
complete copy of each of the Equipment Leases and the Real Property Lease. As of
the date hereof, Seller has made all payments due under the Equipment Leases and
the Real Property Lease. The Equipment and other assets included in the Acquired
Assets are suitable for the uses in which they are currently employed, are in
good operating condition and are free from any defects, except such minor
defects as do not interfere with the continued use of such properties and the
Equipment in the conduct of the normal operations of the Store, and the
Inventory is of merchantable quality and has been maintained in a commercially
reasonable condition. With respect to the Real Property Lease included in the
Acquired Assets, there is no notice of cancellation or termination under any
option or right reserved to the lessor under the Real Property Lease or any
notice of default under the Real Property Lease, and no event has occurred
which, with notice or lapse of time or both, would constitute a default under
the Real Property Lease. Seller has not assigned its interest under the Real
Property Lease or subleased the premises demised thereby. The present use of any
leased premises pursuant to the Real Property Lease does not depend on any
variance, special exceptions or other special municipal approval of limited
duration for continuing legality. Since December 31, 1997, Seller and the
Shareholders have not sold, assigned, transferred, conveyed, leased, mortgaged,
pledged or otherwise disposed of or encumbered any assets of Seller, or any
interests therein, other than in the ordinary course of its business and
consistent with its past practices.
2.4 Compliance with Laws. Seller is in material compliance, and there
--------------------
exists no alleged noncompliance, with all applicable statutes, orders, rules and
regulations promulgated by governmental authorities relating in any material
respect to the Acquired Assets or the operation or conduct of the business of
the Store, including, without limitation, any applicable statute, order, rule or
regulation relating to (i) wages, hours, hiring, non-discrimination, promotion,
retirement, benefits, pensions and working conditions, (ii) air, water, toxic
substances or noise, (iii) health and safety or (iv) zoning and building
6.
codes, and Seller has not received any notice of alleged violation of any such
statute, order, rule or regulation. Schedule 2.4 lists all material governmental
licenses, permits, filings, authorizations, approvals and indicia of authority
and any pending applications for any thereof (and indicates whether each is
freely transferable to Buyer) relating to the conduct of business of the Store
held by Seller, and such licenses, permits, filings, authorizations, approvals
and indicia of authority are all the governmental licenses, permits, filings,
authorizations, approvals and indicia of authority necessary to conduct the
business of the Store or to use the Acquired Assets as currently conducted or
used.
2.5 Employees. Seller is not a party to any employment, noncompetition,
---------
collective bargaining or other agreements of any nature whatsoever with Seller's
current or past employees of the Store. Seller does not now have, and has never
maintained, any pension, profit sharing, fringe benefit or deferred compensation
plans covering any of its employees of the Store; and all of Seller's employees
are "at will" employees, and Seller will have paid Seller's employees all
compensation and benefits of any type or nature earned by them up to the Closing
Date.
2.6 Trademarks, etc. Seller owns, or is licensed under, the trademarks,
---------------
trade names and copyrights as are useful and necessary to conduct the business
as now operated at the Store, and Seller is not currently in receipt of any
notice of conflict with the asserted right of others in such trademarks, trade
names or copyrights or the use thereof, nor has Seller licensed or otherwise
authorized any other person to use the name "Video City."
2.7 Litigation. There is no litigation, arbitration proceeding or
----------
governmental investigation pending, or so far as is known to Seller threatened,
or any judgment, lien, award, order or decree outstanding against, or relating
to the Store, the Acquired Assets or the transactions contemplated by this
Agreement, nor is there any basis known to Seller for any such litigation,
proceeding or investigation. Seller is not in default with respect to any order
of any court, governmental authority, or arbitration board or tribunal, with
respect to the Store.
2.8 Tax Returns and Audit. Seller has filed all federal, state and local
---------------------
tax returns which are required to be filed with respect to the operations of the
Store and has paid, or made provision for the payment of, all taxes which have
or may have been due pursuant to such returns or to assessments received
relative to operations of the Store other than taxes on or measured by income.
All federal,
7.
state and local franchise, sales, use, occupation, property, excise, or other
taxes attributable to the Store have been timely and fully paid or adequately
reserved. No deficiencies on any of Seller's tax returns or reports attributable
to or otherwise allocable to the Store have been threatened as of the date
hereof.
2.9 Powers of Attorney. No person has any power of attorney to act on
------------------
behalf of the Store in connection with its properties or business affairs.
2.10 Transactions with Management. Schedule 2.10 hereto includes a
----------------------------
complete and correct list and description of the amounts and other essential
terms of all indebtedness and other fixed or contingent obligations, liabilities
or commitments existing on the date hereof of the Store to or from any past or
current officer, director, employee or controlling shareholder of Seller or any
person related to, controlling, controlled by or under common control with
Seller. All transactions between such persons and the Store have been on terms
equivalent to those available from unrelated third parties.
2.11 Accuracy of Supplemental Information. The disclosure schedules and
------------------------------------
Seller's representations in the Assignment and Assumption Agreements relating to
the Real Property Lease and the Equipment Leases are true, accurate and complete
in all material respects. All financial information that Seller has provided or
will provide to Buyer in connection with Buyer's evaluation of this asset
purchase, including without limitation, the balance sheets of Seller as of
December 31, 1997 and as of May 31, 1998, and the statement of operations of
Seller during the year ended December 31, 1997 and during the five month period
ended May 31, 1998, is or will be true, accurate, and complete in all material
respects.
2.12 Inventory. The inventory of Seller reflected on the balance sheet of
---------
Seller as of December 31, 1997, as well as other inventory items acquired since
December 31, 1997 that are now the property of Seller, are of such quality and
held in such quantities as are being used and will be usable and salable or
rentable in the ordinary course of the business of Seller. Since December 31,
1997, Seller has continued to replenish its inventories in a normal and
customary manner consistent with practice prevailing in the retail video sales
and rental industry. Since December 31, 1997, Seller and the Shareholders have
not sold, assigned, transferred, conveyed, leased, mortgaged, pledged or
otherwise disposed of or encumbered any inventory of Seller's video cassettes,
video discs, video games, video players and other items held for rent or
8.
sale, other than in the ordinary course of its business and consistent with its
past practices.
2.13 Accuracy and Provision of Information. None of the documents or other
-------------------------------------
information made available to Buyer or its affiliates, attorneys, accountants,
agents or representatives in connection with the transactions contemplated by
this Agreement contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements contained
therein not misleading. Seller has provided Buyer all material information
regarding its business and operations.
Article III
Representations and Warranties of Buyer
---------------------------------------
Buyer represents and warrants to Seller and the Shareholders that (i) Buyer
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, (ii) the execution, delivery and performance of
this Agreement and of all documents or agreements referred to in or related to
this Agreement on the part of Buyer have been duly and effectively authorized by
the Board of Directors of Buyer, and (iii) this Agreement and each other
agreement and instrument required to be delivered hereunder by Buyer, when duly
executed and delivered by Buyer, will constitute valid and binding obligations
of Buyer and will be enforceable in accordance with their respective terms.
Article IV
Indemnification
---------------
4.1 Indemnity by Seller and the Shareholders. Seller and the
----------------------------------------
Shareholders, jointly and severally, shall indemnify, defend, and hold Buyer
harmless from and after the Closing Date against and in respect of:
(a) Any and all liabilities and obligations of, or claims against,
Seller and the Store not expressly assumed by Buyer; and
(b) Any and all damage, loss, deficiency, costs, and expenses
resulting from any misrepresentation, breach of warranty, or nonfulfillment
of any obligation on the part of Seller or the Shareholders under this
Agreement or from any misrepresentation in, omission from, or occasioned
by, any certificate or other instrument furnished or to be furnished to
Buyer under
9.
this Agreement prepared by or at the request of Seller or the Shareholders;
and
(c) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and legal and other expenses incident to any
of the foregoing; provided, however, that if any claim shall be asserted
against Buyer in respect of which Buyer proposes to demand indemnification,
Seller and the Shareholders shall be notified to that effect with
reasonable promptness after such assertion.
4.2 Indemnification for Personal Injury. Seller and the Shareholders
-----------------------------------
agree to defend, indemnify and hold harmless Buyer against and in respect of any
claim for personal injury or property damage, where such personal injury or
property damage arose out of Seller's use, ownership, or operation prior to the
Closing Date of the Acquired Assets or the Store.
4.3 Indemnification by Buyer. Buyer agrees to defend, indemnify, and hold
------------------------
harmless Seller and the Shareholders against and in respect of any claims
arising out of Buyer's use, ownership or operation from and after the Closing
Date of the Acquired Assets or the Store, provided, however, if any claim shall
be asserted against Seller or the Shareholders in respect of which Seller or the
Shareholders proposes to demand indemnification, Buyer shall be notified to that
effect with reasonable promptness after such assertion.
Article V
Employee Relations and Benefits
-------------------------------
5.1 Pre-Closing Date Compensation and Benefits. Seller shall pay to or on
------------------------------------------
behalf of its salaried and hourly employees who work at the Store all
compensation and benefits of any nature whatsoever owing to them on account of
any and all work performed as Seller's employees as of the Closing Date. Buyer
shall have no liability for any compensation, severance payments or benefits
due, owing or payable on the Closing Date to employees who work at the Store.
5.2 Termination and Rehiring. Seller shall terminate all of its employees
------------------------
at the Store as of the Closing Date. Seller shall be solely responsible for
complying with any applicable state or federal laws pertaining to Seller's
termination of its employees in connection with the transactions contemplated by
this Agreement. Buyer may
10.
offer employment to any or all of Seller's employees in its discretion
commencing on the Closing Date. Buyer shall be permitted to interview any or all
of Seller's employees at any time for such purpose.
5.3 No Rights to Employees. Nothing herein expressed or implied shall
----------------------
confer upon any employee of either Seller or Buyer any rights or remedies,
including, without limitation, any right to employment or continued employment
for any specified period.
Article VI
Actions to be Taken Subsequent to the Closing Date
--------------------------------------------------
6.1 Further Assurances. Following the Closing, Seller shall, upon request
------------------
by Buyer, (a) do, execute and deliver, or cause to be done, executed, and
delivered, all such further acts, deeds, assignments, transfers, conveyances,
powers of attorney and assurances and (b) use its best efforts to obtain all
authorizations, approvals, consents and waivers that may be reasonably required
for the conveyance, transfer, assignment, delivery, assurance and confirmation
to Buyer, of any or all of the Acquired Assets.
Seller authorizes Buyer to apply for and obtain recordation as necessary of
the evidences of transfer to Buyer of the Acquired Assets under this Agreement.
Seller shall (at Seller's expense) promptly perform such lawful acts and execute
such documents as Buyer may reasonably request to obtain the full benefits of
the transfer of ownership of the Acquired Assets, and shall cooperate with Buyer
to obtain for Buyer all non-transferable governmental permits and licenses
necessary or appropriate to conduct the business and operations of the Store.
6.2 Prorations. All rents and other charges under the Real Property
----------
Lease, the Equipment Leases, personal property taxes on the Acquired Assets,
utilities, and similar items shall be prorated between Buyer and Seller as of
the Closing Date. Seller and Buyer shall make such payments as may be required
in order to settle the prorations at the Closing if the information is available
to do so. Otherwise, Buyer and Seller shall settle the prorations between
themselves not later than 60 days after the Closing Date (except for those
percentage rent prorations which must await the expiration of a longer period of
time in order to compute) by submitting appropriate documentation and payments
to one another. If the Real Property Lease requires the payment of percentage
rent, Seller and Buyer shall prorate the required payment based on their
respective sales during the period
11.
with respect to which percentage rent is payable.
Article VII
Covenant Not To Compete
-----------------------
For a period commencing on the Closing Date and ending five years
thereafter, Seller and the Shareholders jointly and severally agree that neither
they nor any of their affiliates shall own, operate, control, license, or have
an interest in any retail video store business located within a five mile radius
of the Store. The parties agree that Buyer's damages for a violation of this
covenant will be difficult to ascertain with precision. Therefore, in addition
to whatever other relief may be available under applicable law, Buyer shall be
entitled to specifically enforce the provisions of this Article VII, and Seller
and the Shareholders waive any defense based on a claim that Buyer has or may
have an adequate remedy at law for a violation of this Article.
For the purposes of this Article VII, the following words shall have the
following meanings:
(a) "affiliate" means any person managed or controlled by Seller or the
Shareholders, any person in which Seller or the Shareholders hold more than a
five percent interest, or any person who holds more than a five percent interest
in Seller or in any affiliate of the Shareholders or Seller; provided however,
the foregoing shall not include Buyer and its affiliates;
(b) "person" means any individual, corporation, partnership, limited
liability company, trust, proprietor-ship, or other entity; and
(c) "retail video store" means a retail business which engages in a
business which is the same as or similar to the business that Seller has engaged
in through the operation of the Store.
Article VIII
Miscellaneous
-------------
8.1 Entire Agreement. The entire agreement between the parties is
----------------
incorporated into this Agreement and the documents referenced herein. This
Agreement supersedes any and all prior agreements and understandings between the
parties with respect to the subject matter hereof. This
12.
Agreement may not be modified or amended except by a written document duly
executed by the party against whom such modification or amendment is sought to
be enforced.
8.2 Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of California.
8.3 Notices. All notices, requests, demands and other communications
-------
hereunder shall be in writing, including telegrams, and shall have been deemed
duly given if personally delivered, 24 hours after being sent by facsimile
transmission or by a nationally recognized overnight courier service (e.g.,
Federal Express) for next day delivery or 72 hours after being sent by
registered or certified mail, postage prepaid, return receipt requested:
If to Buyer: Video City, Inc.
0000 Xxxxxxxx Xxxxxxxxx
Xxxxxxxxxxx, Xxxxxxxxxx 00000
Attention: President
With a copy to: Xxxx & Xxxxx
0000 Xxxxxxx Xxxx Xxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxx
If to Seller or
the Shareholders: Game City, Inc.
________________________________
Bakersfield, California ________
Attention: President
Any party may change its address for notices by written notice to the other
parties.
8.4 Survival of Representations and Warranties. All representations and
------------------------------------------
warranties made by the parties in this Agreement or in any document, statement,
certificate, schedule or exhibit furnished or to be furnished pursuant hereto,
or in connection with the transactions contemplated hereby, shall survive the
Closing and any investigation made at any time with respect thereto.
8.5 Captions; Pronouns, Singular and Plural. The captions of Articles and
---------------------------------------
Sections in this Agreement are for the convenience of the parties and shall not
affect the meaning or interpretation of this Agreement. Each pronoun used
herein includes the masculine, feminine, neuter, singular and plural as required
by the context in which used.
13.
8.6 Taxes. The parties agree to comply with the provisions of Section
-----
1060 of the Internal Revenue Code of 1986, as amended, and to file applicable
reports and returns on a basis consistent with the allocations agreed upon by
the parties.
8.7 Broker. Neither Seller nor the Shareholders has been represented by
------
any business or other broker in connection with the sale and purchase covered by
this Agreement and no commissions of any kind shall become due as a result of
this sale and purchase. Any claimed commissions shall be paid by the party who
the broker proves engaged such party.
8.8 Waiver. No waiver of any provision of this Agreement shall be deemed,
------
or shall constitute, a waiver of any other provision, whether or not similar,
nor shall any waiver constitute a continuing waiver. No waiver shall be binding
unless executed in writing by the party making the waiver.
8.9 Negotiations. This Agreement constitutes the product of negotiations
------------
of the parties hereto and enforcement hereof will be interpreted in a neutral
manner and not more strongly for or against any party based upon the source of
draftsmanship hereof.
8.10 Expenses. Each party hereto shall pay its own legal, accounting, out-
--------
of-pocket and other expenses incident to this Agreement and to any action taken
by such party in preparation for carrying this Agreement into effect.
14.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
BUYER:
VIDEO CITY, INC.
By /s/ Xxxxxx X. Xxx
---------------------------------
Xxxxxx X. Xxx
Chief Executive Officer
SELLER:
GAME CITY, INC.
By /s/ Young X. Xxx
---------------------------------
Young X. Xxx
President
THE SHAREHOLDERS:
/s/ Young X. Xxx
-----------------------------------
Young X. Xxx
/s/ Xxx X. Xxx
-----------------------------------
Xxx X. Xxx
15.
