Exhibit 10.54
ASSET PURCHASE AGREEMENT
DATED AS OF
NOVEMBER 2, 2001
BY AND BETWEEN
BLM TECHNOLOGIES, INC.
AND
WAREFORCE INCORPORATED
ASSET PURCHASE AGREEMENT
Asset Purchase Agreement (the "Agreement") dated as of November 2, 2001
(referred to herein as the "Closing Date" or the "Effective Date"), by and
between Wareforce Incorporated, a California corporation ("Seller") and BLM
Technologies, Inc., a Minnesota corporation ("Buyer").
Whereas, Seller conducts various computer-related businesses
including a business (the "Business") which sells response
services primarily to various Mid-western and Florida entities
and is more commonly known as Seller's Response Services division
and includes all employees of the Seller's Response Services
division and other Branch-associated services personnel; and
Whereas, Buyer desires to purchase certain assets of the Business
from Seller, and Seller desires to sell certain assets of the
Business to Buyer, upon the terms and subject to the conditions
hereinafter set forth;
Now, therefore, in consideration of the foregoing and the
representations, warranties, covenants and agreements herein contained, the
parties hereto agree as follows:
1. PURCHASE AND SALE
a. Purchase and Sale. Upon the terms and subject to the conditions of
this Agreement, Buyer agrees to purchase from Seller and Seller agrees
to sell, transfer, assign and deliver, or cause to be sold,
transferred, assigned and delivered, to Buyer at closing on the
Closing Date, certain of the Seller's then existing assets as they
relate to the Business, as a going concern reflected on the attached
Schedule 1.1 "Purchased Asset Schedule" dated as of September 30,
2001, with such changes therein that have occurred in the ordinary
course of the Seller's business between September 30, 2001 and the
Closing Date ("Purchased Assets"). In addition, Seller shall assign to
Buyer all of the existing service agreements of the Business as of the
Closing Date.
i. The Purchased Assets Shall specifically include as the same
may exist on the Closing Date, all the assets of the Business
listed on the enclosed schedules summarized as follows. Only
assets appearing on the Schedules shall be considered
Purchased Assets:
a. office equipment at the various Response Services
locations of the Seller including, without
limitation, Seller's telephone system, computer
systems, tools and supplies of Seller's repair
department, advertising signs, catalogs and sales
literature;
See Schedule 1.1.4 - Fixed Assets
b. leasehold improvements at the various Response
Services locations of the Seller not deemed to be
the property of Seller's landlord including,
without limitations, trade fixtures;
See Schedule 1.1.4 - Fixed Assets
c. all of the Seller's inventories relating to the
Business, including without limitation, all raw
materials, work in process and office and other
supplies, whether on-site, held at any location
controlled by Seller or in transit to Seller;
See Schedule 1.1.3 - Inventories
d. all of the prepaid expenses, and unbilled costs
and fees of Seller relating to the Business;
See Schedule 1.1.5.1 - Prepaids
e. all goodwill associated with the Business and the
Purchased Asset together with the right to
represent to third parties that Buyer is the
successor to the Business and
f. any deposits made by Seller in conjunction with
the Business including but not limited to Security
Deposits for leased premises and/or equipment.
See Schedule 1.1.5.2 Deposits
x. xxxxx cash in possession of Buyer at Closing Date
which equals $500.00 or less.
h. Accounts receivable
1. See Schedule 1.1.2 Accounts Receivable
ii. However, regardless of anything to contrary contained herein,
the Purchased Assets shall not include:
1. all of the cash and cash equivalents of Seller, except
xxxxx cash not to exceed $500.
2. except for those listed on Schedule 1.1 attached hereto,
all of Seller's accounts and receivables as of the
closing date, including without limitation to accounts
receivable, loans receivable, and advances due from
customers, vendors, manufacturers, employees and others;
and the right to receive all payments, rights, and
privileges of Seller arising under the accounts and
receivables
3. all rebates, price protection, marketing development
funds, or special incentives due or earned from
manufacturers and vendors by Seller prior to Closing;
4. all of the trade names, service marks, trademarks,
patents, trade secrets, copyrights, and other
intellectual property rights of Seller, whether
registered, or unregistered;
5. all computer software and related licenses of Seller,
except for the specific software currently residing on
computers purchased by Buyer under this agreement
including FieldPro;
6. all internet domain names, URL's, web pages and all
programming of such web pages; and
7. all of the books and records of the Seller, except that
the Seller will provide the Buyer with certain records
relating solely to the Business.
b. Assumption of Liabilities. Upon the terms and subject to the
conditions of this Agreement, Buyer and Seller agree that Buyer shall
assume only those liabilities of the Business as shown on the attached
Schedule 1.2 "Assumed Liabilities" dated as of September 30, 2001
("Assumed Liabilities").
c. Excluded Liabilities. Notwithstanding any provision in this Agreement
or any other writing to the contrary, Buyer is assuming only the
Assumed Liabilities and is not assuming any other liability or
obligation of Seller (or any predecessor owner of all or part of its
business and assets) of whatever nature, whether presently in
existence or arising hereafter. All such other liabilities and
obligations shall be retained by and remain obligations and
liabilities of Seller. Specifically, Buyer shall not assume or be
liable for any liability of Seller in respect of:
i. Any profit derived from the sale provided for by this
Agreement;
ii. The preparation or filing of any tax returns in the payment of
any taxes, license fees, or any other charges levied,
assessed, or imposed upon the Seller's business or property
before the Closing Date, except that Buyer shall be
responsible for any amounts shown to be accrued and owing for
sales and use taxes on Schedule 1.2;
iii. Any state, local or federal taxes resulting from the sale of
the assets contemplated by this transaction; and
iv. Any liabilities in respect of the Seller's line of credit for
the Business in existence
immediately prior to the Closing Date.
v. Any liability in respect of Seller's employees which accrue or
occur on or before the Closing Date with the exception of
those liabilities of the Business as shown as the attached
Schedule 1.2 "Assumed Liabilities Schedule" dated as of
September 30, 2001. Specifically, the parties agree that
Seller shall pay employees of the Business through the Closing
Date and Buyer shall, as of the Closing Date, shall become
responsible for all (i) accrued vacations, (ii) accrued
salaries, and (iii) accrued commissions as itemized on
Schedule 1.2.
d. Equity Neutral. Notwithstanding anything else contained in this
Agreement, should
i. the value of the Purchased Assets as recorded on Schedule 1.1
be greater than the value of the Assumed Liabilities as
recorded on Schedule 1.2 PLUS $25,000, then the principal
amount of the Firm Note in Section 1(e)(iii)(2) below shall be
increased by the amount that the Purchased Assets exceeds the
sum of Assumed Liabilities PLUS $25,000. For example, if the
value of the Purchased Assets is $100,000 and the value of the
Assumed Liabilities is $10,000, then the principal amount of
the Firm Note shall be increased by $65,000 ($100,000 -
($10,000 + $25,000)); or
ii. the value of the Purchased Assets as recorded on Schedule 1.1
PLUS $25,000 be less than the value of the Assumed Liabilities
as recorded on Schedule 1.2, then the principal amount of the
Firm Note in Section 1(e)(iii)(2) below shall be decreased by
the amount that the sum of the Purchased Assets PLUS $25,000
is less than the Assumed Liabilities. For example, if the
value of the Purchased Assets is $10,000 and the value of the
Assumed Liabilities is $100,000, then the principal amount of
the Firm Note shall be decreased by $65,000 ($100,000 -
($10,000+$25,000)).
iii. In no event shall the amount of the Firm Note increase or
decrease called for in this Section 1(d) be greater than
$100,000.
iv. The valuations contemplated in this Section shall be finalized
and agreed to as part of the Final Accounting described infra
at Section 8(b).
e. Purchase Price.
i. The purchase price for the Purchased Assets (the "Purchase
Price") shall be $425,000 plus a percentage of future profits
as more fully defined in the Contingent Note below.
ii. The Purchase Price shall be allocated among the Purchased
Assets as agreed by the parties, such agreement to be
completed prior to the day of closing. Buyer and Seller shall
reflect such allocation in any filing pursuant to Section 1060
of the Internal Revenue Code or any regulation thereafter.
iii. The Purchase Price shall be paid by Buyer to Seller as
follows:
1. Cash
a. One payment at Closing of ONE HUNDRED AND TWENTY
THOUSAND DOLLARS AND NO CENTS ($120,000.00);
2. Firm Note
a. In the amount of THREE HUNDRED AND FIVE THOUSAND
DOLLARS AND NO CENTS ($305,000.00) with an
interest rate equal to the prime rate as published
in the Wall Street Journal on the Closing Date and
payable in forty-eight (48) equal monthly payments
with the first payment being due February 1, 2002
and the remaining payments being due on the 1st of
each month.
b. Buyer shall evidence its indebtedness under this
Section by means of executing a Promissory Note, a
copy of which is attached as Exhibit B and secured
by a Security Agreement, a copy of which is
attached as Exhibit C.
3. Contingent Note
a. In the amount of up to FIVE HUNDRED SEVENTY FIVE
THOUSAND DOLLARS AND NO CENTS ($575,000.00),
payable based on the Business' Earnings Before,
Amortization and Taxes ("EBAT"), (but excluding
costs for asset write-offs, other non-operating
expenses, salaries of any employee, consultant,
director or the like of Buyer who are not employed
by Buyer or Seller on the Closing Date and who are
also shareholders of Buyer without the prior
written consent of the Seller and other expenses
not related to the ordinary operation of the
Business), as measured by Generally Accepted
Accounting Principles (except that for purposes of
the calculation of EBAT hereunder, salaries of any
employee, consultant, director or the like of
Buyer who are also shareholders of Buyer shall be
initially calculated as of the amount such person
was earning on the Closing Date, and subsequently
calculated as of the amount such person was
earning on the Closing Date plus 5% for each year
after the Closing Date or the actual salary,
whichever is lower). Contingent Note payments, if
any, shall be according to the following schedule:
If EBAT is less than $50,000.00, no payment shall
be due;
If EBAT is equal to or greater than $50,000.00 but
less than $75,000.00, then Buyer shall pay to Seller
ten percent (10%) of the amount by which EBAT exceeds
$50,000.00;
If EBAT is equal to or greater than $75,000.00 but
less than $100,000.00, then Buyer shall pay to Seller
fifteen percent (15%) of the amount by which EBAT
exceeds $50,000.00; or
If EBAT is greater than $100,000.00, then Buyer
shall pay to Seller twenty-five percent (25%) of the
amount by which EBAT
exceeds $50,000.00.
b. Contingent Note payments, if any, shall be made in
each of the Buyer's four (4) full Fiscal Years
following the Closing Date. Buyer's Fiscal Year
("Fiscal Year") shall be the period of time
beginning on the first day of November and
continuing through the last day of October,
commencing in the year 2001, and continuing
thereafter.
c. Such amounts, if any are owed, shall be paid by
Buyer to Seller no later than 90 days following
the end of the Fiscal Year in which such EBAT was
earned.
d. Buyer shall evidence its indebtedness under this
Section by means of executing a Promissory Note, a
copy of which is attached as Exhibit D and secured
by a Security Agreement, a copy of which is
attached as Exhibit E.
e. In the event Buyer satisfies the Firm Note in full
within 1 year of the Closing Date, Seller shall
only be entitled to FIFTY PERCENT (50%) of the
amount calculated under the Contingent Note.
f. Closing. The closing (the "Closing") of the purchase and sale of the
Purchased Assets and the assumption of the Assumed Liabilities
hereunder shall take place simultaneously at the offices of Seller in
El Segundo, California, and the offices of Buyer's legal counsel in
St. Xxxx, MN at 2:00 PM Central Standard Time on November 2, 2001, or
at such other time or place as Buyer and Seller may agree.
g. Seller and Buyer shall enter into an Assignment and Assumption
Agreement substantially in the form attached hereto as Exhibit F, and
Seller shall deliver to Buyer such general warranty deeds, bills of
sale, endorsements, consents, assignments and other good and
sufficient instruments of conveyance and assignment (the "Conveyance
Documents") as the parties and their respective counsel shall deem
reasonably necessary or appropriate to vest in Buyer all right, title
and interest in, to and under the Purchased Assets.
h. Seller shall deliver to Buyer a certified copy of the resolution by
the Seller's board of directors certifying that Seller has authorized
the execution, delivery of performance and the transaction
contemplated herein and authorizing the officers of Seller to execute
this Agreement.
i. Seller shall provide to Buyer at closing a Certificate of Good
Standing dated not more than thirty- (30) days prior to the Closing
Date.
j. Seller will deliver to Buyer on the Closing Date an officer's
certificate certifying that Seller has taken all corporate action
necessary to authorize the transactions contemplated by this
Agreement.
k. Buyer shall deliver to Seller a certified copy of the resolution by
the Buyer's board of
directors certifying that Buyer has authorized the execution, delivery
of performance and the transaction contemplated herein and authorizing
the officers of Buyer to execute this Agreement.
l. Buyer will deliver to Seller on the Closing Date an officer's
certificate certifying that Buyer has taken all corporate action
necessary to authorize the transactions contemplated by this
Agreement.
m. Seller shall have the right to audit the books and records of Buyer
during normal business hours so long as the Buyer has any obligations
to Seller outstanding under any promissory note.
n. Buyer shall provide to Seller at closing a Certificate of Good
Standing dated not more than thirty-(30) days prior to the Closing
Date.
2. REPRESENTATIONS AND WARRANTIES OF THE SELLER
a. Seller hereby represents and warrants to Buyer that:
i. Organization and Good Standing. The Seller is a corporation
duly incorporated, validly existing and in good standing under
the laws of its jurisdiction of incorporation, and has all
corporate powers and all material governmental licenses,
authorizations, consents and approvals required to carry on
its business as now conducted.
ii. Corporate Authorization. The execution, delivery and
performance by Seller of this Agreement and the consummation
by Seller of the transactions contemplated hereby and thereby
are within Seller's corporate powers and have been duly
authorized by all necessary corporate action on the part of
Seller. This Agreement constitutes a valid and binding
agreement of Seller.
iii. Sufficiency of and Title to the Purchased Assets. On or before
Closing Date, Seller has good and marketable title to all of
the Purchased Assets, free and clear of all mortgages,
pledges, liens (including, without limitation, tax liens),
charges, security interest, claims, conditions, restrictions,
encumbrances and obligations, or any type, kind or nature
whatsoever. Seller is not a party to, nor are any of the
Assets bound by or subject to, any leases or other agreements
or instruments. To the best of Sellers knowledge, upon
consummation of the transactions contemplated hereby, Buyer
will have acquired good and marketable title in and to, or a
valid leasehold interest in, each of the Purchased Assets.
iv. Litigation. Seller is not currently a party to any litigation,
arbitration, or other claim adjudication process except as
identified on Exhibit A. Seller is not aware of any claims,
notice of claims, arbitration, investigation, hearing, or
other legal, administrative or governmental proceedings
related to the Purchased Assets or Seller.
v. Employee Benefit Plans, Etc. Except as disclosed in Exhibit A,
Seller is not a party to, and has not within the past five
years been a party to, any pension plan governed
by the Employee Retirement Income Security Act of 1974
("ERISA"). Seller acknowledges that as the Closing Date is
November 2, 2001, Buyer's employees who were Seller's
employees as of that date shall continue to be covered on
Seller's health insurance plans through November 30, 2001 and
Buyer agrees to reimburse Seller for any related out-of-pocket
costs associated with such coverage that do not exceed the
same expenses paid by the Seller for the preceding month.
vi. Customers. The books and records included in the Assets
contain a correct and complete list of each of the customers
of the Business who have purchased goods and/or services from
Seller during the three (3) year period ending on September
30, 2001. Seller has taken all commercially reasonable steps
to maintain the confidentiality of said customer lists.
vii. Disclosure. No representation or warranty made by Seller in
this Agreement or in any writing furnished or to be furnished
pursuant to or in connection with this Agreement knowingly
contains or will contain any untrue statement of a material
fact, or omits or will omit to state any material fact
required to make the statements herein or therein contained
not misleading. Seller has disclosed to Buyer all material
information known to Seller related to the Business, its
condition, operations and prospects.
viii. Brokers. The Seller has retained the services of Xxxxxx
Business Services to provide certain services relating to the
sale of assets contemplated by this Agreement. Seller is
solely responsible for all consideration and compensation to
be paid to Broker and Seller shall indemnify Buyer for any
claims by Broker related to the purchase and sale contemplated
by this Agreement.
b. Warranties.
i. Seller has made no warranties to customers of the Business
other than customary implied warranties and those warranties
set forth on printed materials provided with the products sold
to such customers.
ii. Seller provides no representations or warranties as to the
conditions of the Purchased Assets and Buyer is buying them in
an "as is", "where is" condition.
3. REPRESENTATIONS AND WARRANTIES OF BUYER
a. Buyer hereby represents and warrants to Seller that:
i. Organization and Good Standing. Buyer is a corporation duly
incorporated, validly existing and in good standing under the
laws of Minnesota and is qualified in each jurisdiction where
the nature of its business or the ownership of property
requires such qualification except where such failure to
qualify shall not have a material adverse effect on the
business or financial ability of the Buyer and has all
corporate powers and all material governmental licenses,
authorizations, consents and approvals required to carry on
its business as now conducted;
ii. Corporate Authorization. The execution, delivery and
performance by Buyer of this Agreement and the consummation by
Buyer of the transactions contemplated hereby are within the
corporate powers of Buyer and have been duly authorized by all
necessary corporate action on the part of Buyer and
constitutes a valid and binding agreement of Buyer enforceable
in accordance with its terms subject to the laws of bankruptcy
and those laws affecting creditors rights generally;
iii. No Violation of Other Agreements. Neither the execution and
delivery of the Purchase Agreement nor the consummation of the
transaction contemplated thereby (1) violates any provision of
the Articles of Incorporation or Bylaws (or other governing
instrument) of the Buyer; (2) breaches or constitutes a
default (or an event) that, with notice or lapse of time or
both, would constitute a default under any agreement of the
Buyer with any other person to the extent that any such
default would constitute a material adverse effect upon the
Company, or (3) violates any statute, law, regulation, or rule
or order applicable to the Buyer; and
iv. No Consents Required. No consent, approval or authorization
of, or declaration, filing, or registration with, any state or
federal authorities is required in connection with the
execution, delivery and performance of the Purchase Agreement
or the consummation of the transaction contemplated thereby.
4. TAX MATTERS
a. Tax Definitions. The following terms, as used herein, have the
following meanings:
i. "Code" means the Internal Revenue Code of 1986, as amended.
ii. "Post-Closing Tax Period" means any Tax period (or portion
thereof) ending after the Closing Date.
iii. "Pre-Closing Tax Period' means any Tax period (or portion
thereof) ending on or before the close of business on the
Closing Date.
iv. "Proration Date" means the Closing Date.
v. "Tax" means any net income, alternative or add-on minimum tax,
gross income, gross receipts, sales, use, ad valorem,
franchise, capital, paid-up capital, profits, greenmail,
license, withholding, payroll, employment, excise, severance,
stamp, occupation, premium, property, environmental or
windfall profit tax, custom, duty or other tax, governmental
fee or other like assessment or charge or any kind whatsoever,
together with any interest or any penalty, addition to tax or
additional amount imposed by any governmental authority
(domestic or foreign) responsible for the imposition of any
such tax.
b. Tax Cooperation: Allocation of Taxes.
i. Buyer and Seller agree to furnish or cause to be furnished to
each other, upon request, as promptly as practicable, such
information and assistance relating to the Purchased
Assets as is reasonably necessary for the filing of all Tax
returns, and making of any election related to Taxes, the
preparation for any audit by any taxing authority, and the
prosecution or defense of any claim, suit or proceeding
relating to any Tax return. Seller and Buyer shall cooperate
with each other in the conduct of any audit or other
proceeding related to Taxes involving the Purchased Assets and
each shall execute and deliver such powers of attorney and
other documents as are necessary to carry out the intent of
this Section.
ii. All real property taxes, personal property taxes and similar
ad valorem obligations (except for those Taxes which are
accrued on Seller's financial statements delivered to Buyer
hereunder, which taxes shall constitute a portion of the
Assumed Liabilities) levied with respect to the Purchased
Assets for a taxable period which includes (but does not end
on) the Proration Date (collectively, the "Apportioned
Obligations") shall be apportioned between Seller and Buyer as
of the Proration Date and accrued on Seller's financial
statements delivered to Buyer hereunder based on the number of
days of such taxable period included in the Pre-Closing Tax
Period and the number of days of such taxable period included
in the Post-Closing Period. Seller shall be liable for the
proportionate amount of such taxes that is attributable to the
Pre-Closing Tax Period, and Buyer shall be liable for the
proportionate amount of such taxes that is attributable to the
Post-Closing Tax Period. Within ninety (90) days after the
Closing, Seller and Buyer shall present a statement to the
other setting forth the amount of the tax liability so accrued
under this Section (4)(b)(ii) together with such supporting
evidence as is reasonably necessary to calculate the proration
amount. The proration amount shall to the extent such
adjustment would have resulted in a net worth adjustment at
the Closing Date, be used to calculate an adjustment to the
purchase price under Section (1)(d)(i). Thereafter, Seller
shall notify Buyer upon receipt of any xxxx for real or
personal property taxes relating to the Purchased Assets, part
or all of which are attributable to the Post-Closing Tax
Period, and shall promptly deliver such xxxx to Buyer who
shall pay the same to the appropriate taxing authority,
provided that if such xxxx covers a Pre-Closing Tax Period,
Seller shall also remit prior to the due date of assessment
to Buyer payment for the proportionate amount of such xxxx
that is attributable to the Pre-Closing Tax Period shall
constitute another adjustment under Section (1)(d)(i).
5. COVENANTS OF SELLER
a. Telephone Numbers. Seller will make commercially reasonable efforts to
assist Buyer in transferring Seller's current telephone and facsimile
numbers to Buyer as of the Closing Date.
b. Utilities. Seller will make commercially reasonable efforts to assist
Buyer in transferring Seller's current water, sewage and electrical
services (collectively "Utilities") to Buyer as of the Closing Date.
Seller shall accrue on its financial statements and be obligated for
all charges for Utilities incurred prior to and on the Closing Date.
Buyer agrees that it shall be obligated for charges for Utilities
incurred subsequent to the Closing Date.
c. Release of Liens. Seller shall obtain and present suitable
documentation prior to the Closing Date evidencing the release of any
and all liens or other encumbrances on the Purchased Assets, if any,
including, without limitation, causing any necessary UCC-2 Termination
Statements to be filed.
d. Leases. Seller will use its best efforts to work with Buyer to assign
or sublease facilities as more fully described on Exhibit A. Seller
shall indemnify Buyer from any and claims related to leases for
facilities located in Detroit, MI and Plymouth, MN except for claims
solely related to Buyer's occupancy of the Plymouth, MN facility from
the Closing Date until the last day of tenancy.
e. Non-Competition. Seller shall not, for a period commencing on the
Closing Date and continuing until the 365th day following the payment
in full of all obligations due under Sections (1)(e)(iii)(2) and
(1)(e)(iii)(3) above, solicit Buyer's Response Services customers that
were customers of Seller of as of the Closing Date for the purchase of
response services from Seller.
f. Accounts Payable Pool Funding. Seller acknowledges that as of the
Closing Date certain accounts payable for which Seller will remain
solely responsible of the Business will remain unpaid. To ensure that
there is no resultant interruption in the Business after Buyer
purchases it, Buyer and Seller each agree to use their best efforts to
jointly define and prioritize key unpaid vendors and the Seller will
make payments to the same so that the Business is not interrupted. In
order to ensure funding for such payments, Seller shall set aside and
pay the following amounts it collects after Closing from the accounts
receivable of the Business collected:
Percent Set Aside From Collection
Month of Accounts Receivable of Business
----- ----------------------------------
November, 2001 15.0%
December 2001 17.5%
January 2002 20.0%
February 2002 22.5%.
Seller shall also use $50,000 of funds received at closing to pay key
unpaid vendors as soon as commercially reasonable. The percentages
specified herein are intended to be minimum payment allocations to key
unpaid vendors, rather than maximum payment amounts. In the event
Seller has not made the minimum payment allocation called for
hereunder and a key unpaid vendor provides written notice of intent to
cease doing business with Buyer due to existing accounts payable, and
Seller fails to make sufficient payment arrangements to prevent such a
business cutoff within 10 business days of receipt of such notice,
Buyer may, at its option immediately make such payment and shall be
entitled to an immediate set-off for payments due pursuant to the Firm
Note plus a penalty of twenty-five percent (25%) of such payments
made. Such set-off shall be deducted from the next payments(s) due
pursuant to the Firm Note.
6. COVENANTS OF BUYER
a. No Solicitations. Buyer, its Directors and Officers, shall not, for a
period of one (1) year following the payment in full of all
obligations due under Sections (1)(e)(iii)(2) and (1)(e)(iii)(3)
above, employ or solicit, either directly or indirectly, the
performance of services by any employee of Seller with the exception
that Buyer agrees to offer employment to all employees of Seller who
are employed by the Business as of the Closing Date.
b. Non-Competition. Buyer shall not, for a period commencing on the
Closing Date and continuing until the 365th day following the payment
in full of all obligations due under Sections (1)(e)(iii)(2) and
(1)(e)(iii)(3) above, solicit non-Seller's Response Services division
customers of Seller that were customers of Seller of as of the Closing
Date.
c. Most Favored Customer Status. For any services that Seller purchases
from Buyer after the Closing, Buyer will sell such services to Seller
at prices and under such terms and conditions as Buyer sells to its
most favored customers for similar classes of trade.
d. Right to Audit. Buyer agrees that Seller, at Seller's own expense, may
have access to Buyer's books and records for audit purposes only
during normal business hours at Buyer's corporate headquarters on a
quarterly basis for such time as Buyer has any portion of the notes
called for herein outstanding to Seller. However, notwithstanding
anything else to the contrary contained herein, should Buyer be in
default under any of the notes hereunder, then such audit shall at
Buyer's expense.
e. Collection of Receivables. Buyer agrees that it shall use commercially
reasonable efforts to collect on behalf of Seller, at no cost to
Seller, those trade receivables outstanding as of the Closing Date. In
addition, Buyer and Seller agree to mutually determine when such
collection efforts are no longer needed.
f. Accounting Cooperation. Buyer agrees that for a commercially
reasonable period as mutually agreed to by Buyer and Seller, Buyer
shall cooperate with Seller to provide assistance to Seller for any
financial audits, tax audits, and the like having to do with the
Business. Additionally, Buyer shall make available at Buyer's
corporate headquarters to Seller all books and records of the Business
for such purposes.
g. Leases. Buyer agrees to remain in Seller's Plymouth, Minnesota
facility through January 31, 2002. Buyer shall pay to Seller Seller's
actual lease costs for the months of November and December 2001 and
shall pay an amount for January 2002 equal to the monthly rent amount
that Buyer has leased substitute space commencing February 1, 2002.
Buyer shall furnish to Seller a copy of an executed lease agreement
evidencing replacement space Buyer intends to occupy February 1, 2002.
Seller covenants to pay rent to the Plymouth, MN landlord ("Landlord")
on time as required by its lease through January 31, 2002. In the
event Buyer is notified by Landlord that Seller has failed to make
timely rent payment, Buyer may, at its option immediately make such
payment and shall be entitled to an immediate set-off for payments due
pursuant to the Firm Note plus a penalty of twenty-five percent (25%)
of the amount of rent paid. Such set-off shall be deducted from the
next payment(s) due pursuant to the Firm Note.
7. INDEMNIFICATION
a. Indemnification of Seller. Effective on the Closing Date and
thereafter, Buyer shall indemnify and hold harmless Seller and its
directors, officers, employees and agents, and shareholders from and
against any and all liabilities, damages, losses, penalties,
deficiencies, expenses and costs incurred by any of them, including
without limitation reasonable attorneys' and accountants' fees
(hereafter individually a "Loss" and collectively "losses"), arising
from or in connection with:
i. any claim made or litigation instituted by a third party
relating to Buyer's ownership rights in and to the Purchased
Assets arising on or after the Closing Date;
ii. any liability or obligation of Buyer which relates to the
ownership or use of any of the Purchased Assets or the conduct
of the Business subsequent to the Closing Date including
liabilities arising out of the Assumed Liabilities, including
but not limited to liabilities arising from or relating
thereto;
iii. any claim first made or litigation instituted by a third party
relating to Buyer's conduct of the Business notice for which
claim or litigation is received by Buyer or Seller subsequent
to the Closing Date;
iv. any taxes imposed on Buyer, the Business or any of the
Purchased Assets for any period subsequent to the Closing
Date;
v. any and all actions, suits, proceedings, demands, assessments
or judgments, costs and expenses reasonably arising out of any
of the foregoing matters set forth in this Section (7)(a); and
vi. the breach by Buyer of any representations or warranties made
by Buyer herein or in any document given by Buyer in
connection with the consummation of the transaction
contemplated hereby.
b. Indemnification of Buyer. Effective on the Closing Date and
thereafter, the Seller shall, jointly and severally, indemnify and
hold harmless Buyer and its directors, officers, employees and agents,
from and against any and all Losses arising from or in connection
with:
i. any claim made or litigation instituted by a third party
relating to Seller's conduct of the Business notice of which
claim or litigation has been received by Seller prior to or
after the Closing Date; or
ii. any and all actions, suits, proceedings, demands, assessments
or judgments, costs and expenses reasonably arising out of any
of the foregoing matters set forth in this Section (7)(b)
except to the extent such losses shall arise in connection
with or constitute Assumed Liabilities hereunder.
iii. any claim first made or litigation instituted by a third party
relating to Seller's conduct of the Business prior to Closing
Date;
iv. any taxes imposed on Buyer, the Business or any of the
Purchased Assets for any period prior to the Closing;
v. the breach by Seller of any representations or warranties made
by Seller herein or in any document given by Seller in
connection with the consummation of the transaction
contemplated hereby.
c. Indemnification Procedure.
i. Claims for Indemnification. Except for Third Party Claims
described below, if an event giving rise to indemnification
hereunder shall have occurred or is threatened, the
indemnified party promptly shall deliver to the indemnifying
party written notice thereof, stating that such event has
occurred or is threatened, describing such event in reasonable
detail and specifying or reasonably estimating the amount of
the prospective Loss and the method of computation thereof (a
"Claim"), all with reasonable particularity and containing a
reference to the provisions of the this Agreement in respect
of which such right of indemnification is claimed or has
arisen (the "Notice of Claim"). For purposes hereof, any Claim
for indemnification shall be deemed to have been made as of
the date on which the Notice of Claim is delivered in
accordance with the terms of this Section.
ii. In the event the indemnifying party shall in good faith
dispute the validity of all or any amount of a Claim for
indemnification as set forth in the Notice of Claim, the
indemnifying party shall, within thirty (30) days after
delivery of the Notice of Claim, execute and deliver to the
indemnified party a notice setting forth with reasonable
particularity the grounds, amount of, and basis upon which the
Claim is disputed (the "Dispute Statement").
iii. In the event the Indemnifying party shall within thirty (30)
days deliver to the indemnified party a Dispute Statement,
then the portion of the claim described in the Notice of Claim
disputed by the indemnifying party (the "Disputed Liability")
shall not be due and payable except in accordance with a final
and unappealable judgment or decision of a court or
arbitration tribunal of competent jurisdiction, or a written
agreement between the indemnifying party and the indemnified
party stipulating the amount of the Admitted Liability (as
defined below).
iv. In the event the indemnifying party shall not within thirty
(30) days after receipt of the Notice of Claim deliver to the
indemnified party a Dispute Statement identifying a Disputed
liability, then the amount of the claim described in the
Notice of Claim, or if a Dispute Statement is delivered, the
portion thereof not disputed as a Disputed Liability, shall be
deemed to be admitted (the "Admitted Liability") and shall,
upon the incurring of an actual Loss arising therefrom,
immediately be due and payable.
d. Settlement of Third Party Claims. If the indemnified party shall
receive notice of any Claim by a third party which is or may be
subject to indemnification (a "Third Party Claim"), the indemnified
party shall give the indemnifying party prompt written notice of such
Third Party Claim and shall permit the indemnifying party, at its
option, to participate in the defense of such Third Party Claim by
counsel of its own choice and at its expense. If, however, the
indemnifying party acknowledges in writing to the indemnified party
the indemnifying party's obligation to indemnify the indemnified party
hereunder against all Losses that may result from such Third Party
Claim (subject to the limitations set forth herein), then the
indemnifying party shall be entitled, at its option, to assume and
control the defense of such Third Party Claim at its expense and
through counsel of its choice after delivery of written notification.
i. In the event the indemnifying party exercises its right to
undertake the defense of any
such Third Party Claim, the indemnified party shall cooperate
with the indemnifying party in such defense and make available
to the indemnifying party, at the indemnifying party's
expense, all witnesses, pertinent records, materials and
information in its possession or under its control relating
thereto as is reasonably required by the indemnifying party.
However, no such Third Party Claim may be settled by the
indemnifying party without the written consent of the
indemnified party, unless the settlement involves only the
payment of money by the indemnifying party. Similarly, no
Third Party Claim shall be settled by the indemnified party
without the written consent of the indemnifying party.
ii. In the event the indemnified party is, directly or indirectly,
conducting the defense against any such Third Party Claim, the
indemnifying party shall cooperate with the indemnified party
in such defense and make available to it all such witnesses,
records, materials and information in its possession or under
its control relating thereto as is reasonably required by the
indemnified party.
8. MISCELLANEOUS
a. Final Accounting. The parties shall agree on a final accounting that
shall calculate and account for transactions occurring between
September 30, 2001 and the Closing Date. Such accounting shall include
a credit to Buyer for services provided subsequent to the Closing Date
for which Seller received pre-payment. Buyer and Seller agree to use
best efforts to complete such accounting within thirty (30) calendar
days after the Execution Date. Buyer and Seller shall each by
responsible for their own out of pocket or other expenses they incur
in creating the final accounting.
b. Due Diligence. Buyer specifically acknowledges that its Officers have
been employed by Seller for an extended period prior to making an
offer for the Business and therefore has not asked for any specific
due diligence period.
c. Survival of Representations, Warranties, and Covenants Unless
specifically excluded from this paragraph, the Representations,
Warranties, and Covenants contained herein shall survive the
consummation of the transactions hereunder and shall be binding upon
the parties to this Agreement, their successors and assigns for a
period of two (2) years following the Closing Date.
d. Dispute Resolution.
i. Any and all disputes or differences pertaining to or arising
out of this Agreement or the breach, termination or invalidity
thereof, shall be finally and exclusively settled by binding
arbitration in accordance with the Commercial Arbitration
Rules of the American Arbitration Association. The arbitration
shall be held in Los Angeles, California, before one
arbitrator appointed in accordance with said rules. The
arbitrator shall be a licensed California attorney with
substantial prior experience with Asset Purchase Agreements,
and corporation sales disputes. Judgment upon an award
rendered may be entered in any court having jurisdiction or
application may be made to such court for a judicial
acceptance of the award and an order of enforcement, as the
case may be. The prevailing party in any such proceeding shall
be entitled to its actual attorneys' fees and all other costs
in connection with the
arbitration and enforcement of the arbiter's award.
ii. Either party may, without inconsistency with this Agreement,
seek from a court any interim or provisional relief that may
be necessary to protect the rights or property of that party,
pending the establishment of the arbitral tribunal or pending
the arbitral tribunal's determination of the merits of the
controversy.
e. Expenses. Except as otherwise provided herein, all costs and expenses
incurred in connection with this Agreement shall be paid by the party
incurring such cost or expense.
f. Notices. Any notices required or permitted to be given hereunder shall
be in writing and shall be deemed delivered (I) two (2) days after
being deposited in the mails, (ii) one day after being, deposited with
an express overnight courier service or (iii) the same day notice is
sent by electronic facsimile transmission if such transmission is
completed by 5:00 p.m. local time of receiver or one day after being
sent by facsimile transmission if such transmission is made after 5:00
p.m., addressed:
if to Buyer, to:
BLM Technologies, Inc.
0000 Xxxxxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
if to Seller, to:
Wareforce Incorporated
0000 Xxxxxxxxx Xxxxxx, Xxxxx 000
Xx Xxxxxxx, XX 00000
Phone: 000.000.0000
Fax: 000.000.0000.
g. Successors and Assigns.
The provisions of this Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and
assigns: provided that neither party may assign, delegate or otherwise
transfer any of its rights or obligations under this Agreement without
the consent of the other party hereto. Notwithstanding the foregoing,
no consent shall be required for any assignment by Seller to Congress
Financial Corporation (Western), a California corporation ("Congress")
of its rights to payment under this Agreement or any note, instrument
or agreement related hereto. Upon notice from Congress of the
occurrence of an uncured event of default under the agreements
governing the financing provided by Congress to Seller, Buyer agrees
to make any payments due to Seller under this Agreement or any note,
instrument or agreement related hereto, directly to Congress and
without offset or counterclaim other those rights of offset contained
in Sections 1(e)iii3e, 5(f) and 6(g) that Buyer may have under this
Agreement. The parties agree that Congress shall have no obligations
or rights except receipt of payments due pursuant to the Firm Note or
Contingent Note.
h. Governing Law. This Agreement shall be construed in accordance with
and governed by the
law of the State of Minnesota.
i. Counterparts: Effectiveness. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the
same effect as if the signatures thereto and hereto were upon the same
instrument.
j. Captions. The captions herein are included for convenience of
reference only and shall be ignored in the construction or
interpretation hereof.
k. Entire Agreement. This Agreement, constitutes the entire agreement
between the parties with respect to the subject matter hereof and
supersedes all prior agreements, understandings and negotiations, both
written and oral, between the parties with respect to the subject
matter of this Agreement No representation, inducement, promise,
understanding, condition or warranty not set forth herein has been
made or relied upon by either party hereto. Neither this Agreement nor
any provision hereof is intended to confer upon any Person other than
the parties hereto any rights or remedies hereunder.
In witness whereof, the parties hereto here caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
BUYER: SELLER:
BLM Technologies, INC. WAREFORCE INCORPORATED
By: /s/ Xxxxxx Xxxxxxxxx By: /s/ Xxx Xxxxxx
---------------------------- -------------------------
Name: Xxxxxx Xxxxxxxxx Name: Xxx Xxxxxx
Title: President Title: President
SCHEDULE 1.1
PURCHASED ASSETS
The Purchased Assets shall consist of, as the same may exist on the Closing
Date, all:
The assets of the Business listed on the enclosed
schedules summarized as follows. Only assets appearing on the
Schedules shall be considered Purchased Assets;
1. office equipment at the various Response Services
locations of the Seller including, without limitation, Seller's
telephone system, computer systems, tools and supplies of
Seller's repair department, advertising signs, catalogs and sales
literature;
See Schedule 1.1.4 - Fixed Assets
2. leasehold improvements at the various Response Services
locations of the Seller not deemed to be the property of Seller's
landlord including, without limitations, trade fixtures; See
Schedule 1.1.4 - Fixed Assets
3. all of the Seller's inventories relating to the
Business, including without limitation, all raw materials, work
in process and office and other supplies, whether on-site, held
at any location controlled by Seller or in transit to Seller;
See Schedule 1.1.3 - Inventories
4. all of the prepaid expenses, and unbilled costs and fees
of Seller relating to the Business;
See Schedule 1.1.5.1 - Prepaids
5. all goodwill associated with the Business and the
Purchased Asset together with the right to represent to third
parties that Buyer is the successor to the Business and
6. any deposits made by Seller in conjunction with the
Business including but not limited to Security Deposits for
leased premises and/or equipment.
See Schedule 1.1.5.2 Deposits
7. xxxxx cash in possession of Buyer at Closing Date which
equals $500.00 or less.
8. Accounts receivable
See Schedule 1.1.2 Accounts Receivable
SCHEDULE 1.2
ASSUMED LIABILITIES
Accrued Vacation - See Vacation and Sick Leave Report dated 10/16/01
Accrued Commissions - See A/C #1-2008-0 as of September 30, 2001 and dated
10/22/01
Accrued Salaries - See September Accrual A/C #1-2205-0
Deferred Revenue and Deposits
See Schedule 3.1 - Current Billing Period
See Schedule 3.2 - Smurfit Stone Container - A/C# 1-2024-3 as of
September 30, 2001
See Schedule 3.3 - Maintenance Pre-Payments - A/C# 2230-101010
EXHIBIT A
Leased Premises - See Wareforce, Inc. Lease Commitment, September 30, 2001
dated 10/30/01
Leased Equipment - See Wareforce, Inc. Lease Commitment, September 30, 2001
dated 10/30/01
Balance Sheet - See September Balance Sheet dated 10/23/01 9:45 AM
Litigation - Seller is not a party to any litigation specific to the
Purchased Assets or the Business. Seller was a party to an arbitration action
related to a former officer of the Business but such arbitration is being
settled concurrently with the closing of the transaction referred to in this
Agreement. Seller is on notice of a dispute with regard to the Detroit facility
once occupied by the Business and has agreed to indemnify Buyer in that regard.
(See Section 5d). Seller is a party to various litigation relative to its
business as it relates to the Los Angeles Unified School District and other
litigation incidental to its business.
ERISA Plans - Seller currently has a Stock Option/Profit Sharing Plan in
place. In the past five years, Seller also has purchased the stock or assets of
several businesses that also had plans subject to ERISA. These plans were either
terminated or rolled into Seller's plan.
EXHIBIT B
PROMISSORY NOTE
$305,000 November 2, 2001
FOR VALUE RECEIVED, the undersigned, BLM Technologies, Inc., a Minnesota
corporation ("BLM"), promises to pay to the order of Wareforce Incorporated
(hereinafter "Lender") its successors and assigns, at 0000 Xxxxxxxxx Xxxxxx,
Xxxxx 000, Xx Xxxxxxx, Xxxxxxxxxx 00000 or at such other place as the holder
hereof may designate in writing, in lawful money of the United States of
America, THREE HUNDRED AND FIVE THOUSAND DOLLARS AND NO CENTS ($305,000.00),
payable as follows:
forty-eight (48) equal monthly payments with the first payment being
due on February 1, 2002 and the remaining payments being due on the 1st
of each month.
This Note is made with interest at the prime rate published in the Wall
Street Journal on the date first written above. However, in the event that any
payment owed hereunder is late, Lender or its successors or assigns shall have
the right to charge BLM interest on any past due amount at the maximum rate
allowed by law.
This Note is secured by a Security Agreement of even date herewith
pledging certain property of BLM.
If payment of any installment of principal is not paid when due
hereunder, or upon the occurrence of any Event of Default described in any
agreement evidencing or securing this Note (collectively "Loan Documents") (such
event hereinafter an "Event of Default"), then Lender or any holder hereof shall
have the right and option to declare the unpaid principal and interest balance
hereunder immediately due and payable, following written notice of default to
BLM, and only in the event that BLM fails to cure the Event of Default within 10
days after receipt of such notice.
BLM shall be entitled to prepay the principal balance and interest
accrued at any time without penalty.
Time shall be of the essence in the payment of any sums due hereunder
and the performance of any covenants or agreements contained herein or in the
Loan Documents.
Acceptance of any payment in an amount less than the amount due shall be
deemed an acceptance on account only, and the failure to pay the entire amount
then due shall be and continue to be an Event of Default under this Note.
Upon any Event of Default, neither the failure of the holder to promptly
exercise its right to declare the outstanding principal balance and accrued
unpaid interest hereunder to be immediately due and payable, nor the failure of
the holder to demand strict performance of any obligation of any person who may
be liable hereunder, or any guarantor hereof, shall constitute a waiver of any
such rights. In addition, any waiver of any rights which shall be given by the
holder must and shall be in writing, and signed by the holder and then shall be
enforceable only to the extent specifically set forth in writing. Waiver with
reference to one event shall not be construed as continuing or as a bar to or a
waiver of any right or remedy as to a subsequent event.
The remedies of the holder, as provided herein, by law and in any Loan
Documents, are not exclusive and shall be cumulative and concurrent and may be
pursued singly, successively, or together, at the sole discretion of the holder
and may be exercised as often as the 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.
The undersigned and all endorsers, guarantors, or any other person who
may be liable hereunder, hereby jointly and severally waive presentment for
payment, demand, notice of nonpayment, notice of protest and protest of this
Note, diligence in collection or bringing suit, and all endorsers, guarantors or
any other person who may be liable hereunder consent to any and all extensions
of time, renewals, waivers or modifications that may be granted by the holder
with respect to payment or other provisions of this Note, said Loan Documents,
and to the release of any collateral or any part thereof, with or without
substitution.
The undersigned, its successors or assigns, shall pay on demand all
costs and expenses, including reasonable attorney's fees, incurred by the holder
in enforcing collection of the indebtedness evidenced by this Note.
Notwithstanding any provision in this Note or in the Loan Documents to
the contrary, nothing herein or therein shall be construed so as to permit or
require the payment of interest in excess of the highest rate of interest
permitted to be charged in connection with the laws of the State of Minnesota.
In the event that the interest in excess of such maximum rate of interest is
received, then such excess shall be automatically applied to the principal
balance due hereunder.
The laws of the State of Minnesota shall govern this Note.
IN WITNESS WHEREOF, the undersigned has executed this Note the day and
year first written above.
BLM Technologies, INC.
By: /s/ Xxxxxx Xxxxxxxxx
-------------------------
Name: Xxxxxx Xxxxxxxxx
Title: President
EXHIBIT C
SECURITY AGREEMENT
THIS SECURITY AGREEMENT made this 2nd day of November, 2001, by BLM
Technologies, Inc. a Minnesota corporation (the Debtor) having its principal
offices presently located at 0000 Xxxxxxxxx Xxxxx, Xxxxxxxxxxx, XX 00000
(whether one or more, hereinafter referred to as the "Debtor"), in favor of
Wareforce Incorporated, its successors and assigns, whose address is 0000
Xxxxxxxxx Xxxxxx, Xxxxx 000, Xx Xxxxxxx, Xxxxxxxxxx 00000 (hereinafter referred
to as the "Secured Party").
WITNESSETH:
WHEREAS, Debtor is indebted to the Secured Party in the principal amount
of up to $305,000, as evidenced by its Promissory Note in said amount
(hereinafter referred to as the "Note") of even date herewith executed and
delivered by Debtor in connection with the sale of the assets of Wareforce
Incorporated which are related to its Seller's Response Services division to
Debtor pursuant to a Purchase Agreement of even date (the "Purchase Agreement");
and
WHEREAS, the sale of the assets of Wareforce Incorporated to the Debtor
is conditioned upon the Debtor further securing the Note by, giving to Secured
Party a security interest in the property described on Exhibit A attached hereto
and made part hereof.
NOW, THEREFORE, in consideration for making of the loan and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties do hereby agree as follows:
1. SECURITY INTEREST:
1.1 In consideration of the above-mentioned sale, Debtor hereby grants to
Secured Party a security interest (hereinafter referred to as the "Security
Interest") in all of the property of the Debtor described in Schedule A whether
now owned or hereafter acquired together with any proceeds thereof (hereinafter
referred to as the "Collateral") subordinate to Buyer's Working Capital Lender
and any security interests asserted therein.
1.2 This Security Agreement and the rights hereby granted shall secure the
following (hereinafter collectively referred to as the "Obligations"):
(a) The principal of, the interest on, and any other sums due under
the Note, and any renewals, extensions or modifications thereof; and
(b) The statutory costs of all legal proceedings brought by the
Secured Party to enforce the Note, all other costs and expenses paid or incurred
by the Secured Party in respect of or in connection with the Collateral, and any
other sums that may become due and payable hereunder by the Debtor; and
(c) Any and all indebtedness, obligations and liabilities of any kind
and nature of the Debtor (or if more than one, by either Debtor) to Secured
Party, direct or indirect, absolute or contingent, due or to become due, now
existing or hereafter arising.
2. DEBTOR WARRANTS, COVENANTS AND AGREES:
The Debtor hereby warrants, covenants and agrees that:
2.1 The Collateral covered by this Security Agreement is used or purchased
for use primarily for business purposes.
2.2 Although proceeds of Collateral are covered by this Security Agreement,
this shall not be construed to mean that Secured Party consents to any sale of
such property.
2.3 The Collateral will be located at the offices of Debtor listed on
Schedule A (collectively the "Premises"). Except for purposes of replacement and
repair of the equipment and for sale of the inventory in the ordinary course of
business, the Debtor will not remove its Collateral from the Premises, or allow
it to be removed, from said Premises without the prior written consent of the
Secured Party. The Debtor will promptly give written notice to the Secured Party
of any cessation of its business conducted at the location and of any loss or
damage by fire or other casualty to any substantial part of the Collateral.
2.4 The Debtor will, at all reasonable times, allow the Secured Party or
its representatives free and complete access to all of the Debtor's records, for
such inspection and examination as the Secured Party deems necessary. The Debtor
shall also upon request of the Secured Party from time to time submit up-to-date
schedules of the items comprising the Collateral owned by it in such detail as
the Secured Party shall reasonably require.
2.5 The Debtor at its cost and expense will protect and defend this
Agreement, all of the rights of the Secured Party hereunder, and the Collateral
owned by it against the claims and demands of all other parties.
2.6 The Debtor will at all times keep and maintain the Collateral owned by
it in good order, repair and condition, and will promptly replace any part
thereof that from time to time may become obsolete, badly worn, or in a state of
disrepair, or, if supplies, be consumed in the normal course of the Debtor's
business operations. All such replacements shall be free of any other lien,
security interest or encumbrance of any nature except as otherwise provided for
herein. The Debtor may sell or dispose of only that part of the Collateral that
Debtor is obligated to replace, and, unless Secured Party then agrees otherwise
in writing, all proceeds from any such sale or disposition in excess of the
amount expended for such replacements shall promptly be paid over by the Debtor
to the Secured Party to be applied against the sums secured hereby, whether or
not such sums are then due and payable.
2.7 The Secured Party or its representatives may at any and all reasonable
times inspect the Collateral and may enter upon any and all Premises where the
same is kept or might be located.
2.8 The Debtor will not, without obtaining the prior written consent of
Secured Party, transfer or permit any transfer of the Collateral owned by it or
any part thereof to be made, or any interest therein to be created by way of a
sale (except as permitted above), or by way of a grant of a security interest,
or by way of a levy or other judicial process. Notwithstanding anything
contained herein to the contrary the Secured Party agrees that it will
subordinate any security interest herein granted to any security interest
required of Debtor by any financial institution or any other major manufacturer,
vendor or distributor with a secured financing program in place.
2.9 The Debtor will promptly notify Secured Party of any levy, distraint or
other seizure by legal process or otherwise of any part of its Collateral, and
of any threatened or filed claims or proceedings that might in any way affect or
impair any of the terms of this Agreement.
2.10 The Secured Party at all times shall have a perfected security interest
in the Collateral that shall be prior to any other interests therein. Debtor
will do all acts and things, and will execute, and file, all instruments
(including Security Agreements, Financing Statements, Continuation Statements,
etc.) requested by, the Secured Party to establish, maintain and continue the
perfected Security Interest of Secured Party in the Collateral, and will
promptly on demand, pay all costs and expenses of filing and recording,
including the costs of any searches deemed necessary by Secured Party from time
to time to establish and determine the validity and the continuing priority of
the Security Interest of Secured Party, and also pay all other claims and
charges that in the opinion of Secured Party might prejudice, imperil or
otherwise affect the Collateral or its security interest therein.
2.11 The Debtor at its expense will obtain and maintain in force insurance
policies covering losses or damage to its Collateral. The insurance policies to
be obtained by the Debtor shall be in form and amounts acceptable to Secured
Party. The Secured Party is hereby irrevocably appointed the Debtor's attorney
in fact to endorse any check or draft that may be payable to the Debtor, alone
or jointly with other payees, so that the Secured Party may collect the proceeds
payable for any loss under such insurance. The proceeds of such insurance, less
any costs and expenses incurred or paid by the Secured Party in the collection
thereof shall be applied in the sole discretion of the Secured Party, either
toward the cost of the repair or replacement of the items damaged or destroyed,
or on account of any sums secured hereby, whether or not then due or payable.
2.12 The Secured Party may, at its option, and without any obligation to do
so, pay, perform and discharge any and all amounts, costs, expenses and
liabilities herein agreed to be paid or performed by Debtor, and all amounts
expended by the Secured Party, in so doing shall become part of the Obligations
secured hereby, and shall be immediately due and payable by Debtor to the
Secured Party upon demand therefore, and shall bear interest at the interest
rate, as defined in the Note, from the dates of such expenditures until paid.
2.13 Debtor will give Secured Party immediate written notice of any change
in location of Debtor's chief executive office.
3. EVENTS OF DEFAULT:
The occurrence of any of the following events shall constitute and is hereby
defined to be, an "Event of Default":
3.1 Any failure or neglect to observe or perform any of the terms,
provisions, promises, agreements or covenants of this Security Agreement and the
continuance of such failure or neglect after notice thereof to the Debtor; or
3.2 Any failure of the maker to pay any installment of principal and/or
interest, or any other sum due under the Note or of Debtor to pay any other
Obligations secured hereby, at the time such installment shall become due and
payable.
3.3 Any warranty, representation or statement contained in this Security
Agreement made or furnished to the Secured Party by or on behalf of the Debtor,
which shall be or shall prove to have been
materially false when made or furnished.
4. SECURED PARTY'S REMEDIES:
Upon the occurrence of any Event of Default hereunder, Secured Party shall have
the following rights and remedies, at any time after giving notice and after the
expiration of the grace period provided herein:
4.1 The Secured Party may, at its option, declare all or any part of the
Obligations immediately due and payable and Debtor shall on demand by Secured
Party deliver the Collateral to the Secured Party. Secured Party may, without
further notice or demand and without legal process, take possession of the
Collateral wherever found and, for this purpose, may enter upon said Real
Property or upon any other property occupied by or in the control of the Debtor.
The Secured Party may require the Debtor to assemble the Collateral and make it
available to the Secured Party at a place to be designated by the Secured Party
that is reasonably convenient to both parties.
4.2 The Secured Party may pursue any legal remedy available to collect all
sums secured hereby and to enforce its title in and right to possession of the
Collateral, and to enforce any and all other rights or remedies available to it,
and no such action shall operate as a waiver of any other right or remedy of the
Secured Party under the terms hereof, or under the laws of the State of
Minnesota.
4.3 Debtor waives any requirements of presentment, protest, notices of
protest, notices of dishonor, and all other formalities. Debtor waives all
rights and/or privilege it might otherwise have to require Secured Party to
proceed against or exhaust the Collateral encumbered hereby or by any other
security document or instrument securing said Note or to proceed against any
guarantor of such indebtedness, or to pursue any other remedy available to
Secured Party in any particular manner or order under the legal or equitable
doctrine or principle of marshaling and/or suretyship and further agrees that
Secured Party may proceed against any or all of the Collateral encumbered hereby
or by any other security document or instrument securing said Note in the event
of default and after expiration of any applicable grace period following notice
in such order and manner as Secured Party in its sole discretion may determine.
Any Debtor that has signed this Security Agreement as a surety or accommodation
party, or that has subjected its property to this Security Agreement to secure
the indebtedness of another hereby expressly waives any defense arising by
reason of any disability or other defense of the maker or by reason of the
cessation from any cause whatsoever of the liability of maker, and waives the
benefit of any statutes of limitation affecting the enforcement hereof.
4.4 The Secured Party, upon obtaining possession of the Collateral or any
part thereof, may sell the same at public or private sale either with or without
having such Collateral at the place of sale, and with notice to Debtor as
provided in paragraph 4.6 herein. The proceeds of such sale, after deducting
therefore all expenses of the Secured Party in taking, storing, repairing and
selling the Collateral (including reasonable attorneys' fees) shall be applied
to the payment of any part or all of the obligations and any other indebtedness
or liability of the Debtor to the Secured Party, and any surplus thereafter
remaining shall be paid to the Debtor, or any other person that may be legally
entitled thereto. In the event of a deficiency, between such net proceeds from
the sale of Collateral and the total amount owing by the Debtor under the
Obligations, the Debtor (or if more than one, jointly and severally) will
promptly upon demand pay the amount of such deficiency to the Secured Party.
4.5 At any sale, public or private, of the Collateral or any part thereof,
made in the enforcement of the rights and remedies hereunder of the Secured
Party; the Secured Party may, so far as may be lawful, purchase any part or
parts of the Collateral or all thereof offered at such sale.
4.6 Secured Party shall give Debtor reasonable notice of any sale or other
disposition of the Collateral or any part thereof. Debtor agrees that notice and
demand shall be conclusively deemed to be reasonable and effective if such
notice is mailed by registered or certified mail postage prepaid, to the Debtor
at the address above given, or at such other address as the Debtor may designate
hereafter by written notice to the Secured Party, at least ten (10) days prior
to such sale or other disposition.
4.7 The Secured Party shall have all the rights and remedies afforded a
Secured Party under the Minnesota Uniform Commercial Code and all other legal or
equitable remedies provided by the laws of the United States and the State of
Minnesota.
5. MISCELLANEOUS PROVISIONS:
5.1 No Event of Default hereunder by Debtor shall be deemed to have been
waived by the Secured Party except by a writing to that effect signed on behalf
of the Secured Party by an officer thereof and no waiver of any such Event of
Default shall operate as a waiver of any such Event of Default shall operate as
a waiver of any other Event of Default on a future occasion, or as a waiver of
that Event of Default after written notice thereof and demand by Secured Party
for strict performance of this Agreement. All rights, remedies and privileges of
the Secured Party hereunder shall be cumulative and not alternative, and shall,
whether or not specifically so expressed, inure to the benefit of the Secured
Party, its successors and assigns, and all obligations of the Debtor shall bind
its successors and legal representatives.
5.2 Until an Event of Default and expiration of the 10 day grace period
provided for in the Note, the Debtor may retain possession of the Collateral and
may use it in any lawful manner not inconsistent with this Security Agreement or
with the provisions of any policies of insurance thereon.
5.3 The terms herein shall have the meanings in and be construed under the
Minnesota Commercial Code and all issues arising hereunder shall be governed by
the laws of the State of Minnesota. Whenever possible each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
5.4 No modification, rescission, waiver, release or amendment of any
provision of this Security Agreement shall be made except by a written agreement
subscribed by Debtor and a duly authorized officer of Secured Party.
5.5 This Security Agreement shall remain in full force and effect until all
of the indebtedness of the Debtor to the Secured Party, and any extensions or
renewals thereof shall be paid in full.
5.6 Secured Party and Debtor as used herein shall include the heirs,
executors or administrator, or successors or assigns of those parties. The
provisions of this Agreement shall apply to the parties according to the context
hereof and without regard to the number or gender of words and expressions used
herein.
5.7 A carbon, photographic or other reproduced copy of this Security
Agreement and/or any financing statement relating hereto shall be sufficient for
filing and/or recording as a financing statement.
IN WITNESS WHEREOF, this Security Agreement has been executed and delivered
on behalf of and in the name of Debtor on the date indicated above.
SECURED PARTY: DEBTOR:
Wareforce Incorporated BLM Technologies, Inc.
By: /s/ Xxx Xxxxxx By: /s/ Xxxxxx Xxxxxxxxx
--------------------------- ------------------------------
Name: Xxx Xxxxxx Name: Xxxxxx Xxxxxxxxx
Its: President Its: President
SCHEDULE A
Schedule A - Premises
00000xx Xxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxxx
Schedule A - Assets
See Schedule 1.1
EXHIBIT D
PROMISSORY NOTE
Up to $575,000 November 2, 2001
FOR VALUE RECEIVED, the undersigned, BLM Technologies, Inc., a Minnesota
corporation ("BLM"), promises to pay to the order of Wareforce Incorporated
(hereinafter "Lender") its successors and assigns, at 0000 Xxxxxxxxx Xxxxxx,
Xxxxx 000, Xx Xxxxxxx, Xxxxxxxxxx 00000 or at such other place as the holder
hereof may designate in writing, in lawful money of the United States of
America, an amount up to FIVE HUNDRED SEVENTY FIVE THOUSAND DOLLARS AND NO CENTS
($575,000.00), payable based on the Business' Earnings Before, Amortization and
Taxes ("EBAT"), (but excluding costs for asset write-offs, other non-operating
expenses, salaries of any employee, consultant, director or the like of Buyer
who are not employed by Buyer or Seller on the Closing Date and who are also
shareholders of Buyer without the prior written consent of the Seller and other
expenses not related to the ordinary operation of the Business) , as measured by
Generally Accepted Accounting Principles (except that for purposes of the
calculation of EBAT hereunder, salaries of any employee, consultant, director or
the like of Buyer who are also shareholders of Buyer shall be initially
calculated as of the amount such person was earning on the Closing Date, and
subsequently calculated as of the amount such person was earning on the Closing
Date plus 5% for each year after the Closing Date or the actual salary,
whichever is lower). Contingent Note payments, if any, shall be according to the
following schedule:
If EBAT is less than $50,000.00, no payment shall be due;
If EBAT is equal to or greater than $50,000.00 but less than
$75,000.00, then Buyer shall pay to Seller ten percent (10%)
of the amount by which EBAT exceeds $50,000.00;
If EBAT is equal to or greater than $75,000.00 but less than
$100,000.00, then Buyer shall pay to Seller fifteen percent
(15%) of the amount by which EBAT exceeds $50,000.00; or
If EBAT is greater than $100,000.00, then Buyer shall pay to
Seller twenty-five percent (25%) of the amount by which EBAT
exceeds $50,000.00.
Contingent Note payments, if any, shall be made in each of the Buyer's
four (4) full Fiscal Years following the Closing Date. Buyer's fiscal year
("Fiscal Year") shall be the period of time beginning on the first day of
November and continuing through the last day of October, commencing in the year
2001, and continuing thereafter.Any such payments due and owning shall made no
later than 90 days following the end of the Fiscal Year in which such EBAT was
earned.
In the event Buyer satisfies the Firm Note in full within 1 year of the
Closing Date, Seller shall only be entitled to FIFTY PERCENT (50%) of the amount
calculated under the Contingent Note.
The maximum amount of principle BLM shall be required to pay to Lender
under this Note is FIVE HUNDRED SEVENTY FIVE THOUSAND XXXXXXX AND NO CENTS
($575,000.00).
This Note is made without interest. However, in the event that any
payment owed hereunder is late, Lender or its successors or assigns shall have
the right to charge BLM interest on any outstanding principal at the maximum
rate allowed by law.
This Note is secured by a Security Agreement of even date herewith
pledging certain property of BLM.
If payment of any installment of principal is not paid when due
hereunder, or upon the occurrence of any Event of Default described in any
agreement evidencing or securing this Note (collectively "Loan Documents") (such
event hereinafter an "Event of Default"), then Lender or any holder hereof shall
have the right and option to declare the unpaid principal and interest balance
hereunder immediately due and payable, without notice.
Time shall be of the essence in the payment of any sums due hereunder
and the performance of any covenants or agreements contained herein or in the
Loan Documents.
Acceptance of any payment in an amount less than the amount due shall be
deemed an acceptance on account only, and the failure to pay the entire amount
then due shall be and continue to be an Event of Default under this Note.
Upon any Event of Default, neither the failure of the holder to promptly
exercise its right to declare the outstanding principal balance and accrued
unpaid interest hereunder to be immediately due and payable, nor the failure of
the holder to demand strict performance of any obligation of any person who may
be liable hereunder, or any guarantor hereof, shall constitute a waiver of any
such rights. In addition, any waiver of any rights which shall be given by the
holder must and shall be in writing, and signed by the holder and then shall be
enforceable only to the extent specifically set forth in writing. Waiver with
reference to one event shall not be construed as continuing or as a bar to or a
waiver of any right or remedy as to a subsequent event.
The remedies of the holder, as provided herein, by law and in any Loan
Documents, are not exclusive and shall be cumulative and concurrent and may be
pursued singly, successively, or together, at the sole discretion of the holder
and may be exercised as often as the 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.
The undersigned and all endorsers, guarantors, or any other person who
may be liable hereunder, hereby jointly and severally waive presentment for
payment, demand, notice of nonpayment, notice of protest and protest of this
Note, diligence in collection or bringing suit, and all endorsers, guarantors or
any other person who may be liable hereunder consent to any and all extensions
of time, renewals, waivers or modifications that may be granted by the holder
with respect to payment or other provisions of this Note, said Loan Documents,
and to the release of any collateral or any part thereof, with or without
substitution.
The undersigned, its successors or assigns, shall pay on demand all
costs and expenses, including reasonable attorney's fees, incurred by the holder
in enforcing collection of the indebtedness evidenced by this Note.
Notwithstanding any provision in this Note or in the Loan Documents to
the contrary, nothing herein or therein shall be construed so as to permit or
require the payment of interest in excess of the highest rate of interest
permitted to be charged in connection with the laws of the State of Minnesota.
In the event that the interest in excess of such maximum rate of interest is
received, then such excess shall be automatically applied to the principal
balance due hereunder.
The laws of the State of Minnesota shall govern this Note.
IN WITNESS WHEREOF, the undersigned has executed this Note the day and
year first written above.
BLM Technologies, INC.
By: /s/ Xxxxxx Xxxxxxxxx
-------------------------
Name: Xxxxxx Xxxxxxxxx
Title: President
EXHIBIT E
SECURITY AGREEMENT
THIS SECURITY AGREEMENT made this 2nd day of November, 2001, by BLM
Technologies, Inc. a Minnesota corporation (the Debtor) having its principal
offices presently located at 0000 Xxxxxxxxx Xxxxx, Xxxxxxxxxxx, XX 00000
(whether one or more, hereinafter referred to as the "Debtor"), in favor of
Wareforce Incorporated, its successors and assigns, whose address is 0000
Xxxxxxxxx Xxxxxx, Xxxxx 000, Xx Xxxxxxx, Xxxxxxxxxx 00000 (hereinafter referred
to as the "Secured Party").
WITNESSETH:
WHEREAS, Debtor is indebted to the Secured Party for the payment to Secured
Party of an amount up to FIVE HUNDRED SEVENTY FIVE THOUSAND DOLLARS AND NO CENTS
($575,000.00), payable based on the Business' Earnings Before, Amortization and
Taxes ("EBAT"), (but excluding costs for asset write-offs, other non-operating
expenses, salaries of any employee, consultant, director or the like of Buyer
who are not employed by Buyer or Seller on the Closing Date and who are also
shareholders of Buyer without the prior written consent of the Seller and other
expenses not related to the ordinary operation of the Business) , as measured by
Generally Accepted Accounting Principles (except that for purposes of the
calculation of EBAT hereunder, salaries of any employee, consultant, director or
the like of Buyer who are also shareholders of Buyer shall be initially
calculated as of the amount such person was earning on the Closing Date, and
subsequently calculated as of the amount such person was earning on the Closing
Date plus 5% for each year after the Closing Date or the actual salary,
whichever is lower). Contingent Note payments, if any, shall be according to the
following schedule:
If EBAT is less than $50,000.00, no payment shall be due;
If EBAT is equal to or greater than $50,000.00 but less than
$75,000.00, then Buyer shall pay to Seller ten percent (10%)
of the amount by which EBAT exceeds $50,000.00;
If EBAT is equal to or greater than $75,000.00 but less than
$100,000.00, then Buyer shall pay to Seller fifteen percent
(15%) of the amount by which EBAT exceeds $50,000.00; or
If EBAT is greater than $100,000.00, then Buyer shall pay to
Seller twenty-five percent (25%) of the amount by which EBAT
exceeds $50,000.00.
Contingent Note payments, if any, shall be made in each of the four (4)
full Fiscal Years following the Closing Date. Buyer's fiscal year ("Fiscal
Year") shall be the period of time beginning on the first day of November and
continuing through the last day of October, commencing in the year 2001, and
continuing thereafter.Any such payments due and owning shall made no later than
90 days following the fiscal year in which such EBAT was earned, and
WHEREAS, the payment of sums to Wareforce Incorporated by the Debtor is
conditioned upon the Debtor further securing the Note by giving to Secured Party
a security interest in the property described on Schedule A attached hereto and
made a part hereof.
NOW, THEREFORE, in consideration for making of the loan and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties do hereby agree as follows:
1. SECURITY INTEREST
1.1. In consideration of the above-mentioned sale, Debtor hereby grants
to Secured Party a security interest (hereinafter referred to as the
"Security Interest") in all of the property of the Debtor described
in Schedule A whether now owned or hereafter acquired together with
any proceeds thereof (hereinafter referred to as the "Collateral")
subordinate to Buyer's Working Capital Lender and any security
interests asserted therein.
1.2. This Security Agreement and the rights hereby granted shall secure
the following (hereinafter collectively referred to as the
"Obligations"):
1.2.1. The principal of, the interest on, and any other sums due
under the Note, and any renewals, extensions or modifications
thereof; and 1.2.2. The statutory costs of all legal
proceedings brought by the Secured Party to enforce the Note,
all other costs and expenses paid or incurred by the Secured
Party in respect of or in connection with the Collateral, and
any other sums that may become due and payable hereunder by
the Debtor; and
1.2.3. Any and all indebtedness, obligations and liabilities of any
kind and nature of the Debtor (or if more than one, by either
Debtor) to Secured Party, direct or indirect, absolute or
contingent, due or to become due, now existing or hereafter
arising.
2. DEBTOR WARRANTS, COVENANTS AND AGREES:
2.1. The Debtor hereby warrants, covenants and agrees that:
2.2. The Collateral covered by this Security Agreement is used or
purchased for use primarily for business purposes.
2.3. Although proceeds of Collateral are covered by this Security
Agreement, this shall not be construed to mean that Secured Party
consents to any sale of such property.
2.4. The Collateral will be located at the offices of Debtor listed on
Exhibit A attached hereto and made part hereof (collectively the
"Premises"). Except for purposes of replacement and repair of the
equipment and for sale of the inventory in the ordinary course of
business, the Debtor will not remove its Collateral from the
Premises, or allow it to be removed, from said Premises without the
prior written consent of the Secured Party. The Debtor will promptly
give written notice to the Secured Party of any cessation of its
business conducted at the location and of any loss or damage by fire
or other casualty to any substantial part of the Collateral.
2.5. The Debtor will, at all reasonable times, allow the Secured Party or
its representatives
free and complete access to all of the Debtor's records, for such
inspection and examination as the Secured Party deems necessary. The
Debtor shall also upon request of the Secured Party from time to
time submit up-to-date schedules of the items comprising the
Collateral owned by it in such detail as the Secured Party shall
reasonably require.
2.6. The Debtor at its cost and expense will protect and defend this
Agreement, all of the rights of the Secured Party hereunder, and the
Collateral owned by it against the claims and demands of all other
parties.
2.7. The Debtor will at all times keep and maintain the Collateral owned
by it in good order, repair and condition, and will promptly replace
any part thereof that from time to time may become obsolete, badly
worn, or in a state of disrepair, or, if supplies, be consumed in
the normal course of the Debtor's business operations. All such
replacements shall be free of any other lien, security interest or
encumbrance of any nature. The Debtor may sell or dispose of only
that part of the Collateral that Debtor is obligated to replace,
and, unless Secured Party then agrees otherwise in writing, all
proceeds from any such sale or disposition in excess of the amount
expended for such replacements shall promptly be paid over by the
Debtor to the Secured Party to be applied against the sums secured
hereby, whether or not such sums are then due and payable.
2.8. The Secured Party or its representatives may at any and all
reasonable times inspect the Collateral and may enter upon any and
all Premises where the same is kept or might be located.
2.9. The Debtor will not, without obtaining the prior written consent of
Secured Party, transfer or permit any transfer of the Collateral
owned by it or any part thereof to be made, or any interest therein
to be created by way of a sale (except as permitted above), or by
way of a grant of a security interest, or by way of a levy or other
judicial process. Notwithstanding anything contained herein to the
contrary the Secured Party agrees that it will subordinate any
security interest herein granted to any security interest required
of Debtor by any financial institution or any other major
manufacturer, vendor or distributor with a secured financing program
in place.
2.10. The Debtor will promptly notify Secured Party of any levy, distraint
or other seizure by legal process or otherwise of any part of its
Collateral, and of any threatened or filed claims or proceedings
that might in any way affect or impair any of the terms of this
Agreement.
2.11. The Secured Party at all times shall have a perfected security
interest in the Collateral that shall be prior to any other
interests therein. Debtor will do all acts and things, and will
execute, and file, all instruments (including Security Agreements,
Financing Statements, Continuation Statements, etc.) requested by,
the Secured Party to establish, maintain and continue the perfected
Security Interest of Secured Party in the Collateral, and will
promptly on demand, pay all costs and expenses of filing and
recording, including the costs of any searches deemed necessary by
Secured Party from time to time to establish and determine the
validity and the continuing priority of the Security Interest of
Secured Party, and also pay all other claims and charges that in the
opinion of Secured Party might prejudice, imperil or otherwise
affect the Collateral or its security interest therein.
2.12. The Debtor at its expense will obtain and maintain in force
insurance policies
covering losses or damage to its Collateral. The insurance policies
to be obtained by the Debtor shall be in form and amounts acceptable
to Secured Party. The Secured Party is hereby irrevocably appointed
the Debtor's attorney in fact to endorse any check or draft that may
be payable to the Debtor, alone or jointly with other payees, so
that the Secured Party may collect the proceeds payable for any loss
under such insurance. The proceeds of such insurance, less any costs
and expenses incurred or paid by the Secured Party in the collection
thereof shall be applied in the sole discretion of the Secured
Party, either toward the cost of the repair or replacement of the
items damaged or destroyed, or on account of any sums secured
hereby, whether or not then due or payable.
2.13. The Secured Party may, at its option, and without any obligation to
do so, pay, perform and discharge any and all amounts, costs,
expenses and liabilities herein agreed to be paid or performed by
Debtor, and all amounts expended by the Secured Party, in so doing
shall become part of the Obligations secured hereby, and shall be
immediately due and payable by Debtor to the Secured Party upon
demand therefore, and shall bear interest at the interest rate, as
defined in the Note, from the dates of such expenditures until paid.
2.14. Debtor will give Secured Party immediate written notice of any
change in location of Debtor's chief executive office.
3. EVENTS OF DEFAULT:
3.1. The occurrence of any of the following events shall constitute and
is hereby defined to be, an "Event of Default":
3.1.1. Any failure or neglect to observe or perform any of the
terms, provisions, promises, agreements or covenants of this
Security Agreement and the continuance of such failure or
neglect after notice thereof to the Debtor; or
3.1.2. Any failure of the maker to pay any installment of principal
and/or interest, or any other sum due under the Note or of
Debtor to pay any other Obligations secured hereby, at the
time such installment shall become due and payable; or
3.1.3. Any warranty, representation or statement contained in this
Security Agreement made or furnished to the Secured Party by
or on behalf of the Debtor, which shall be or shall prove to
have been materially false when made or furnished.
4. SECURED PARTY'S REMEDIES:
4.1. Upon the occurrence of any Event of Default hereunder, Secured Party
shall have the following rights and remedies, at any time after
giving notice and after the expiration of the grace period provided
herein:
4.1.1. The Secured Party may, at its option, declare all or any part
of the Obligations immediately due and payable and Debtor
shall on demand by Secured Party deliver the Collateral to
the Secured Party. Secured Party may, without further notice
or demand and without legal process, take possession of the
Collateral wherever found and, for this purpose, may enter
upon said Real Property or upon any other property occupied
by or in
the control of the Debtor. The Secured Party may require the
Debtor to assemble the Collateral and make it available to
the Secured Party at a place to be designated by the Secured
Party that is reasonably convenient to both parties.
4.1.2. The Secured Party may pursue any legal remedy available to
collect all sums secured hereby and to enforce its title in
and right to possession of the Collateral, and to enforce any
and all other rights or remedies available to it, and no such
action shall operate as a waiver of any other right or remedy
of the Secured Party under the terms hereof, or under the
laws of the State of Minnesota.
4.1.3. Debtor waives any requirements of presentment, protest,
notices of protest, notices of dishonor, and all other
formalities. Debtor waives all rights and/or privilege it
might otherwise have to require Secured Party to proceed
against or exhaust the Collateral encumbered hereby or by any
other security document or instrument securing said Note or
to proceed against any guarantor of such indebtedness, or to
pursue any other remedy available to Secured Party in any
particular manner or order under the legal or equitable
doctrine or principle of marshaling and/or suretyship and
further agrees that Secured Party may proceed against any or
all of the Collateral encumbered hereby or by any other
security document or instrument securing said Note in the
event of default and after expiration of any applicable grace
period following notice in such order and manner as Secured
Party in its sole discretion may determine. Any Debtor that
has signed this Security Agreement as a surety or
accommodation party, or that has subjected its property to
this Security Agreement to secure the indebtedness of another
hereby expressly waives any defense arising by reason of any
disability or other defense of the maker or by reason of the
cessation from any cause whatsoever of the liability of
maker, and waives the benefit of any statutes of limitation
affecting the enforcement hereof.
4.1.4. The Secured Party, upon obtaining possession of the
Collateral or any part thereof, may sell the same at public
or private sale either with or without having such Collateral
at the place of sale, and with notice to Debtor as provided
herein. The proceeds of such sale, after deducting therefrom
all expenses of the Secured Party in taking, storing,
repairing and selling the Collateral (including reasonable
attorneys' fees) shall be applied to the payment of any part
or all of the obligations and any other indebtedness or
liability of the Debtor to the Secured Party, and any surplus
thereafter remaining shall be paid to the Debtor, or any
other person that may be legally entitled thereto. In the
event of a deficiency, between such net proceeds from the
sale of Collateral and the total amount owing by the Debtor
under the Obligations, the Debtor (or if more than one,
jointly and severally) will promptly upon demand pay the
amount of such deficiency to the Secured Party.
4.1.5. At any sale, public or private, of the Collateral or any part
thereof, made in the enforcement of the rights and remedies
hereunder of the Secured Party; the Secured Party may, so far
as may be lawful, purchase any part or parts of the
Collateral or all thereof offered at such sale.
4.1.6. Secured Party shall give Debtor reasonable notice of any sale
or other disposition of the Collateral or any part thereof.
Debtor agrees that notice and demand shall be conclusively
deemed to be reasonable and effective if such notice is
mailed by registered or
certified mail postage prepaid, to the Debtor at the address
above given, or at such other address as the Debtor may
designate hereafter by written notice to the Secured Party,
at least ten (10) days prior to such sale or other
disposition.
4.1.7. The Secured Party shall have all the rights and remedies
afforded a Secured Party under the Minnesota Uniform
Commercial Code and all other legal or equitable remedies
provided by the laws of the United States and the State of
Minnesota.
5. MISCELLANEOUS PROVISIONS:
5.1. No Event of Default hereunder by Debtor shall be deemed to have been
waived by the Secured Party except by a writing to that effect
signed on behalf of the Secured Party by an officer thereof and no
waiver of any such Event of Default shall operate as a waiver of any
such Event of Default shall operate as a waiver of any other Event
of Default on a future occasion, or as a waiver of that Event of
Default after written notice thereof and demand by Secured Party for
strict performance of this Agreement. All rights, remedies and
privileges of the Secured Party hereunder shall be cumulative and
not alternative, and shall, whether or not specifically so
expressed, inure to the benefit of the Secured Party, its successors
and assigns, and all obligations of the Debtor shall bind its
successors and legal representatives.
5.2. Until an Event of Default and expiration of any applicable grace
period, the Debtor may retain possession of the Collateral and may
use it in any lawful manner not inconsistent with this Security
Agreement or with the provisions of any policies of insurance
thereon.
5.3. The terms herein shall have the meanings in and be construed under
the Minnesota Commercial Code and all issues arising hereunder shall
be governed by the laws of the State of Minnesota. Whenever possible
each provision of this Agreement shall be interpreted in such manner
as to be effective and valid under applicable law, but if any
provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of
such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Agreement.
5.4. No modification, rescission, waiver, release or amendment of any
provision of this Security Agreement shall be made except by a
written agreement subscribed by Debtor and a duly authorized officer
of Secured Party.
5.5. This Security Agreement shall remain in full force and effect until
all of the indebtedness of the Debtor to the Secured Party, and any
extensions or renewals thereof shall be paid in full.
5.6. Secured Party and Debtor as used herein shall include the heirs,
executors or administrator, or successors or assigns of those
parties. The provisions of this Agreement shall apply to the parties
according to the context hereof and without regard to the number or
gender of words and expressions used herein.
5.7. A carbon, photographic or other reproduced copy of this Security
Agreement and/or any financing statement relating hereto shall be
sufficient for filing and/or recording as a financing statement.
IN WITNESS WHEREOF, this Security Agreement has been executed and delivered
on behalf of and in the name of Debtor on the date indicated above.
SECURED PARTY: DEBTOR:
Wareforce Incorporated BLM Technologies, Inc.
By: /s/ Xxx Xxxxxx By: /s/ Xxxxxx Xxxxxxxxx
---------------------------- ----------------------------
Name: Xxx Xxxxxx Name: Xxxxxx Xxxxxxxxx
Its: President Its: President
SCHEDULE A
Schedule A - Premises
00000xx Xxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxxx
Schedule A - Assets
See Schedule 1.1
EXHIBIT F
ASSIGNMENT AND ASSUMPTION AGREEMENT
This Assignment and Assumption Agreement, dated as of November 2, 2001, is
entered into by and between BLM Technologies, Inc., a Minnesota corporation
("Buyer"), and Wareforce Incorporated ("Seller"), a California corporation.
WITNESSETH
Whereas, Buyer and Seller have concurrently herewith consummated the
purchase by Buyer of the Purchased Assets pursuant to the terms and conditions
of the Asset Purchase Agreement dated November 2, 2001 between Buyer and Seller,
(the "Asset Purchase Agreement"); capitalized terms not otherwise defined herein
shall have the meaning given them in the Asset Purchase Agreement;
Whereas, pursuant to the Asset Purchase Agreement, Buyer has agreed to
purchase the Purchased Assets and to assume Assumed Liabilities of Seller with
respect to the Purchased Assets;
Now, therefore, in consideration of the sale and purchase of the Purchased
Assets and in accordance with the terms of the Asset Purchase Agreement, Buyer
and Seller agree as follows:
a) Seller does hereby sell, transfer, assign and deliver to Buyer
all of the right, title and interest of Seller in, to and under
the Purchased Assets.
b) Buyer does hereby accept and assume all the right, title and
interest of Seller in, to and under all of the Purchased Assets
and Buyer assumes and agrees to pay, perform and discharge
promptly and fully when due all of the Assumed Liabilities.
This Agreement shall be construed in accordance with and governed by the
laws of the State of Minnesota, without regard to the conflicts of law rules of
such state.
This Agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original, but all of which together shall constitute
one and the same instrument.
In witness whereof, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
BUYER: SELLER:
BLM Technologies, INC. WAREFORCE INCORPORATED
By: /s/ Xxxxxx Xxxxxxxxx By: /s/ Xxx Xxxxxx
---------------------------- ----------------------------
Name: Xxxxxx Xxxxxxxxx Name: Xxx Xxxxxx
Title: President Title: President
XXXX OF SALE OF BUSINESS
This Xxxx of Sale of Business is delivered pursuant to that certain Asset
Purchase Agreement (the "Agreement"), dated November 2, 2001, between BLM
Technologies, Inc. (the "Buyer") and Wareforce Incorporated (the "Seller"),
providing for the purchase by Buyer of certain assets of Seller. All capitalized
terms used herein shall have the meanings set forth in the Agreement.
For value received, Seller hereby sells, assigns and transfers to Buyer the
following assets of Seller pertaining to or used in the Business, wherever
located, whether known or unknown, and whether or not on the books and records
of Seller as the same may exist on the Closing Date, all:
The assets of the Business listed on the enclosed schedules summarized
as follows. Only assets appearing on the Schedules attached to the
Agreement shall be considered Purchased Assets;
1. office equipment at the various Response Services locations of
the Seller including, without limitation, Seller's telephone
system, computer systems, tools and supplies of Seller's repair
department, advertising signs, catalogs and sales literature;
See Schedule 1.1.4 - Fixed Assets
2. leasehold improvements at the various Response Services locations
of the Seller not deemed to be the property of Seller's landlord
including, without limitations, trade fixtures;
See Schedule 1.1.4 - Fixed Assets
3. all of the Seller's inventories relating to the Business,
including without limitation, all raw materials, work in process
and office and other supplies, whether on-site, held at any
location controlled by Seller or in transit to Seller;
See Schedule 1.1.3 - Inventories
4. all of the prepaid expenses, and unbilled costs and fees of
Seller relating to the Business;
See Schedule 1.1.5.1 - Prepaids
5. all goodwill associated with the Business and the Purchased Asset
together with the right to represent to third parties that Buyer
is the successor to the Business and
6. any deposits made by Seller in conjunction with the Business
including but not limited to Security Deposits for leased
premises and/or equipment.
See Schedule 1.1.5.2 Deposits
7. xxxxx cash in possession of Buyer at Closing Date which equals
$500.00 or less.
8. Accounts receivable
See Schedule 1.1.2 Accounts Receivable
In witness whereof, the undersigned has executed this Xxxx of
Sale of Business in El Segundo, California, effective as of November 2,
2001.
WAREFORCE INCORPORATED
By: /s/ Xxx Xxxxxx
----------------------------
Name: Xxx Xxxxxx
Title: President
WAREFORCE INCORPORATED
OFFICER'S CERTIFICATE
I, Xxx Xxxxxx, hereby certify (i) that I am the Assistant
Secretary of Wareforce Incorporated (the "Seller"), (ii) that I am
authorized to deliver this Officer's Certificate, and (iii) that the
Seller has authorized all corporate action necessary on its part to
authorized the transactions contemplated by the Asset Purchase
Agreement, dated November 2, 2001, between BLM Technologies, Inc. and
Seller.
Dated: November 2, 2001 WAREFORCE INCORPORATED
By: /s/ Xxx Xxxxxx
------------------------
Name: Xxx Xxxxxx
Title: Secretary
BLM TECHNOLOGIES, INC.
OFFICER'S CERTIFICATE
I, Xxxxxx Xxxxxxxxx, hereby certify (i) that I am the Secretary of BLM
Technologies, Inc. (the "Buyer"), (ii) that I am authorized to deliver this
Officer's Certificate, and (iii) that the Buyer has authorized all corporate
action necessary on its part to authorized the transactions contemplated by the
Asset Purchase Agreement, dated November 2, 2001, between Buyer and Wareforce
Incorporated.
Dated: November 2, 2001 BLM Technologies, INC.
By: /s/ Xxxxxx Xxxxxxxxx
--------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Secretary