EXHIBIT 2.11
ASSET PURCHASE AGREEMENT
By
and
Among
EPICEDGE, INC.,
and
TUMBLE INTERACIVE MEDIA, INC.,
<PAGE>
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement') is made effective as of July
19, 2000, by and between EPICEDGE, INC., a Texas corporation, with its principal
place of business at 3200 Wilcrest, Suite 370, Houston, Texas 77042
("Purchaser") and TUMBLE INTERACTIVE MEDIA. INC. a New York corporation with its
principal place of business at 24 East 23rd Street, New York, New York 10010,
("Seller"), and it sole stockholder Charles C. Vornberger ("Stockholder").
RECITALS
A. Seller conducts a business located at 24 East 23rd Street, New
York, New York 10010 .
B. Purchaser desires to buy and Seller desires to sell Seller's
assets pursuant to the terms and conditions of this Agreement.
C. The parties expect that this Agreement will further advance
their respective business objectives, including, without limitation, integration
of the business operations of Seller with the business operations of Purchaser,
including, without limitation, the expansion of Purchaser's "one-stop" approach
to offering e-business consulting services, and to better capitalize both
businesses in order to more effectively compete in the marketplace.
NOW, THEREFORE, in consideration of the premises and the mutual
promises made herein, and in consideration of the representations, warranties,
and covenants contained herein, the parties agree as follows:
1. Definitions. As used in this Agreement, the following terms
have the meanings indicated:
1.01. Assets: The assets to be sold and transferred by Seller to
Purchaser pursuant to this Agreement consisting of the assets of Seller
pertaining to Seller's Business as reflected on the balance sheet of Seller
prepared as of May 31, 2000, (the "Balance Sheet"). The Assets shall include,
but not be limited to, the following:
a. All furniture, fixtures, equipment, leasehold improvements and
supplies of Seller located at and used by Seller in the operation of Seller's
Business owned by Seller at the address stated above, which are further
identified in and by the books and records of Seller;
b. All merchandise inventory owned and/or acquired through
Seller's Business or otherwise located at the address stated above as of the
Closing;
c. All outstanding accounts receivable including but not limited
to the Accounts Receivable set forth in Schedule 1.01(e) of Seller, as of the
Closing, together with all evidence of the indebtedness owed to Seller arising
out of Seller's Business;
d. Seller's right to use the name "Tumble Interactive Media" and
any name so similar as to require the consent of Seller to its rightful use, for
any lawful purpose, and all trademarks, trade names, signage, marketing symbols
and logos;
e. All client lists of present or former clients, all mailing
lists, all business records relating to the operations of Seller's Business
(including all records relating to clients), and all telephone numbers and
listings used by Seller in Seller's Business, and all intangibles and other
rights and privileges of Seller desirable or useful to the Purchaser for the
purpose of continuing Seller's Business and maintaining and retaining the
existing clients of Seller;
f. A leasehold interest in the premises occupied by Seller's
Business at 24 East 23rd Street, New York, New York 10010, as evidenced by the
Lease Agreement included as Schedule 1.0l.f to this Agreement;
<PAGE>
g. The goodwill and going concern value of Seller and all
licenses and permits of or pertaining to Seller's Business;
h. The benefits of all amounts previously paid by Seller for
advertising, design fees, rent, services, or interest relating to Seller's
Business or the Assets, to the extent that they extend or are to be performed
after the Closing;
i. All of Seller's rights in, to, and under, and all of Seller's
rights related to, including without limitation all rights to all relationships
related to, Seller's Business;
j. Seller's rights under all contracts, including all leases and
non-competition agreements;
k. All technical outlines and records (including all plans,
drawings, diagrams, notes, reports, memoranda, and other similar documents), and
any and all know-how and software and other technology, including all contracts,
licenses, authorizations, permits, and other documents necessary for Seller's
Business; and
l. All trade secrets, inventions, patents, copyrights, trade
names, business names, trade marks, and other intangible assets used by Seller.
1.02. Closing: The consummation of the transactions contemplated
by this Agreement.
1.03. Common Stock: The $.001 par value per share voting common
stock of Purchaser.
1.04. GAAP: Generally accepted accounting principles.
1.05. Liabilities: Those liabilities of Seller to be assumed by
Purchaser pursuant to this Agreement, which consist of those liabilities of
Seller specifically disclosed on Schedule 1.05. Purchaser shall not assume any
liabilities, contingent or certain of Seller unless incurred and disclosed in
the manner provided in this paragraph 1.05. In addition, Purchaser is not
assuming (i) any expenses, liabilities, or obligations of Seller arising out of
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby (nor may Seller pay any of such expenses out of
the Assets) except for up to $50,000 of Seller's reasonable legal expenses which
will be paid by Purchaser upon receipt of an itemized invoice from Seller's
counsel, (ii) any liabilities or obligations of Seller relating to federal,
state, or local income or other taxes attributable to the transactions
contemplated hereby or the conduct of the Seller's Business, except for any
accrued sales tax attributable to this asset acquisition, or (iii) any
obligation of Seller to pay a fee to any agent, broker, or finder.
1.06. Material Adverse Effect: A material adverse effect on
the business, property, financial condition, prospects or results of operations
taken as a whole.
1.07. Seller's Business: The business and such other related
activities as carried on by Seller at 24 East 23rd Street, New York, New York
10010.
2. Agreement to Sell and Purchase. Subject to the terms and
conditions of this Agreement, Purchaser agrees to purchase, and the Seller
agrees to sell, transfer, convey, assign, and deliver to Purchaser at Closing,
the Assets, free and clear of all liabilities, liens, conditions, and
encumbrances.
2.01. The Closing. The closing of the transactions contemplated
by this Agreement shall take places at the offices of Brewer & Pritchard, P.C.,
Three Riverway 18th Floor Houston, Texas 77056, commencing at 9:00 a.m. local
time on July 19, 2000, or such other date as the parties may mutually determine
(the "Closing").
2
<PAGE>
3. Purchase Price. The purchase price in consideration of the
sale, transfer, conveyance, assignment, and delivery of the Assets to Purchaser,
subject to the terms and conditions of this Agreement, shall be (i) Three
hundred Twenty Five Thousand Dollars ($325,000) to be paid to Seller at Closing
by the Purchaser, and (ii) 250,000 shares of Purchaser's common stock.
3.01 Consideration. The consideration to be paid pursuant to
paragraph 3 herein and the assumption of the liabilities referred to in
Paragraph 1.05 shall constitute all the consideration to be paid by Purchaser in
connection with the transactions contemplated by this Agreement.
3.02 Deliveries at Closing. At the Closing, the Seller shall
deliver to the Purchaser the various certificates, instruments and documents
transferring ownership of the Assets from the Seller to the Purchaser, and the
Purchaser shall deliver the cash consideration referred to in Paragraph 3 (i)
above to the Seller and the shares referred to in Paragraph 3 (ii) above to
Robert N. Cooperman, Esq., as escrow agent to be held in escrow subject to the
terms and conditions of the Escrow Agreement attached hereto as Exhibit 3.02,
and the various instruments referred to in this Agreement.
3.03 Agree to Allocate. The parties agree to allocate the Assets
acquired for all purposes, including financial accounting and tax purposes, in
accordance with the mutual agreement of their respective accountants.
4. Assumption of Liabilities. In connection with the purchase of
the Assets hereunder, Purchaser hereby specifically assumes only those
Liabilities of Seller specifically disclosed on Schedule 1.05. Purchaser shall
not assume any liabilities, contingent or certain, of Seller except pursuant to
the provisions of Section 1.05 and this Section 4 of this Agreement. At Closing,
Purchaser shall execute and deliver an Assumption Agreement in the form attached
hereto as Exhibit 4.
5. Representations and Warranties of the Seller. Seller hereby
agrees, represents, and warrants to Purchaser, on the date of this Agreement and
on the Closing Date, as follows:
5.01. Ownership. Except for the Citibank line of credit, Seller
is the beneficial owner of the Assets and has good and marketable title to and
the absolute right to sell, assign, and transfer the Assets to Purchaser, free
and clear of any interests, security interest, claims, liens, pledges,
penalties, charges, encumbrances, buy-sell agreements, or other rights of any
party whatsoever of every kind and character. Upon delivery of and payment of
the purchase price in accordance with this Agreement, good and marketable title
thereto shall be delivered to Purchaser, free and clear of any interest,
security interest, claims, liens, pledges, penalties, charges, encumbrances,
buy-sell agreements, or other rights of any party whatsoever, except for the
Citibank line of credit.
5.02. Valid Existence. Seller is duly organized, validly
existing, and in good standing under the laws of the State of New York and has
full power and authority (including all licenses, franchises, permits, and other
authorizations that are legally required) to own its properties and to engage in
the business and activities now conducted by it. Seller is in good standing in
each jurisdiction in which the failure to be so qualified will have a Material
Adverse Effect.
5.03. Due Authorization; Consent of Third Parties. Seller has
the right, power, legal capacity, and authority to enter into and perform
Seller's obligations under this Agreement and, except as set forth on Schedule
5.03 to this Agreement, no approval or consent of any person other than the
Seller is necessary in connection with the execution, delivery, or performance
of this Agreement. Without limiting the generality of the foregoing, the board
of directors of the Seller and its stockholder has duly authorized the
execution, delivery and performance of this Agreement by the Seller. This
Agreement constitutes the valid and legally binding obligation of the Seller,
enforceable in accordance with its terms and conditions. The Seller has good and
marketable title to all of the Assets, free and clear of any security interest
or restriction on transfer except as set forth on Schedule 5.03.
3
<PAGE>
5.04. Use of Assets. All of the Assets are located at 24 East
23rd Street, New York, New York 10010. Seller has had no other business address
within the three years prior to the Closing, except Leonard Street, 6th Floor,
New York, New York, 10013. The furniture, fixtures, improvements, leaseholds,
inventory, equipment and other Assets of Seller are in good operating condition
and repair, reasonable wear and tear excepted. The Assets are being utilized by
Seller in conformity with all applicable laws, ordinances and regulations. The
Accounts Receivable listed in Schedule 1.01(e) have been collected, or are and
will be good and collectible, in each case at the aggregate recorded amounts
thereof without right of recourse, defense, deduction, return of goods or
services, counterclaim, offset, or setoff on the part of the obligor, and, if
not collected, can reasonably be anticipated to be paid within 90 days of the
date incurred.
5.05. Absence of Liens. The Assets are free and clear of
restrictions on or conditions to transfer or assignment, and are free and clear
of liens, pledges, charges, encumbrances, equities, claims, conditions, or
restrictions, except for (i) those restrictions, conditions or liens disclosed
in Paragraph 5.01 to this Agreement; and (ii) any lien for current taxes not yet
due and payable.
5.06. Litigation. Except as set forth in Schedule 5.06, there is
not any suit, action, arbitration, or legal, administrative, or other proceeding
or governmental investigation, pending or threatened (in the form of threats
made to representatives of Seller), against or affecting Seller or any of the
Assets, including but not limited to any action or claim under any federal,
state, local or other governmental act, rule, regulation, or any interpretations
thereof, relating to environmental matters or the protection of the safety and
health of persons connected with Seller's Business (including but not limited to
the transportation, treatment, storage, recycling, disposal, or release into the
environment of hazardous or toxic materials or waste), or any basis on which any
proceeding or investigation against Seller might reasonably be undertaken or
brought. The Seller has informed Purchaser of, and upon request has furnished or
made available to Purchaser copies of all relevant court papers and other
documents relating to, the matters set forth in Schedule 5.06. Included in
Schedule 5.06 is a list of all suits, actions, arbitrations, or other
proceedings or investigations in which Seller has been involved during the five
year period immediately preceding the Closing. Seller is not in default with
respect to any order, writ, injunction, or decree of any federal, state, local,
or foreign court, department, agency, or instrumentality. The Seller is not
presently engaged in any legal action to recover monies due to the Seller, for
damages sustained by the Seller, or amounts owed to the Seller. During the five
year period immediately preceding the Closing, the Seller has neither received
nor been a party to any notice of violations, orders, claims, citations,
complaints, penalties, assessments, court, or other proceedings, administrative,
civil or criminal, at law or in equity, with respect to alleged violations of
any federal, state, or local environmental law, regulation, ordinance, standard,
permit, or order in connection with the conduct of its business or otherwise.
5.07. Employment Contracts. Schedule 5.07 to this Agreement is a
list of all of Seller's employment contracts, collective bargaining agreements,
royalty agreements, and pension, bonus, profit sharing, or other agreements
providing for employee remuneration or benefits, and all consulting, commission
and fee agreements with independent contractors. Seller shall be solely
responsible for any withdrawal or other liability, which may be imposed in
connection with any pension, profit sharing, or other employee benefit plan of
Seller. A list of all commissions, and consulting and other fees due or to
become due and owing are set forth on Schedule 5.07. A complete copy of each of
the agreements listed on Schedule 5.07 has been provided to Purchaser.
5.08 Insurance. Schedule 5.08 sets forth an accurate and complete
list and brief description of all policies of fire and extended coverage,
liability, and the forms of similar insurance or indemnity bonds held by Seller.
Seller is not in default with respect to any provisions of any such policy or
indemnity bond and has not failed to give any notice or present any claim
thereunder in due and timely fashion, which failure or failures to give such
notice or present such claim, individually or in the aggregate, could materially
adversely affect the Assets. All such policies and bonds are (i) in full force
and effect, (ii) with insurance companies believed by Seller to be financially
sound and reputable, (iii) are sufficient for compliance by Seller with all
requirements of law and of all agreements and instruments to which Seller is a
party, (iv) provide that they will remain in full force and effect through the
respective dates set forth in Schedule 5.08, and (v) will not in any significant
respect be affected by, and will not terminate or lapse by reason of, the
transactions contemplated by this Agreement. Schedule 5.08 sets forth an
4
<PAGE>
accurate and complete list of all accident or other liability claims received by
or known by Seller for the three year period immediately preceding the Closing,
as well as a description of the status of each such claim. Such claims are
covered by one or more insurance policies set forth in Schedule 5.08.
5.09. Contracts, Agreements and Instruments. Schedule 5.09
accurately and completely sets forth the information required to be contained
therein. Seller has furnished to Purchaser:
5.09.01. The Articles of Incorporation, Bylaws and other
organizational documents of Seller and all amendments
thereto, as presently in effect, certified by the
president of Seller;
5.09.02. True and correct copies of all material contracts,
agreements and other instruments referred to in
Schedule 5.09;
5.09.03. True and correct written descriptions of all service,
material supply, distribution, agency, financing or
other arrangements or understandings referred to in
Schedule 5.09.
Except for matters which, in the aggregate, would not have a Material Adverse
Effect or are otherwise disclosed in the Agreement, to the knowledge of Seller,
no other party to any such contract, agreement, instrument, leases, or license
is now in violation or breach of, or in default with respect to complying with,
any material provision thereof, and each such contract, agreement, instrument,
lease, or license contained in the Schedules hereto is in full force and effect
and is the legal, valid, and binding obligation of the parties thereto and is
enforceable as to them in accordance with its terms. Each such service, supply,
distribution, agency, financing, or other arrangement or understanding contained
in the Schedules hereto is a valid and continuing arrangement or understanding,
except for matters which, in the aggregate, would not have a Material Adverse
Effect; neither Seller, nor any other party to any such arrangement or
understanding has given notice of termination or taken any action inconsistent
with the continuance of such arrangement or understanding, except for matters
which, in the aggregate, would not have a Material Adverse Effect; and the
execution, delivery, and performance of this Agreement will not prejudice any
such arrangement or understanding in any way contained in the Schedules hereto,
except for matters which, in the aggregate, would not have a Material Adverse
Effect. Seller is not a member of a customer or user organization or of a trade
association which relationship would be materially affected by the execution and
performance of this Agreement.
5.10. Compliance With Law; Taxes. Seller has complied with, and
is not in violation of any (i) term or provision of its Articles of
Incorporation or Bylaws; (ii) term or provision of any applicable judgment,
decree, order, statute, injunction, rule, ordinance; or (iii) foreign, United
States, state or local statutes, laws, rules, or regulations. Seller has timely
filed all federal, state, and local tax returns required to be filed and all
such returns are complete and correct. The Seller has made timely payment of all
such taxes when due and payable and has paid all interest, penalties,
deficiencies, and assessments, if any, levied or assessed against it. Seller has
duly withheld, collected, and timely paid to the proper governmental authorities
all taxes required to be withheld and collected by it. There are no agreements
for extension of the time of assessment of payment of any taxes of Seller. No
waiver of any statute of limitations has been executed by the Seller. There are
no examinations by the Internal Revenue Service of Seller presently in process
and the tax returns of Seller for any year(s) open to such examination. All
accrued but unpaid federal, state, and local income and other taxes of Seller
for the period ended as of the Closing and all prior periods will be paid by
Seller. Any sales tax imposed as a result of this transaction will be paid by
Purchaser to Seller for remittance to the appropriate taxing authority.
5.11. Permits and Licenses. Seller has all permits, licenses, and
other similar authorizations necessary for the conduct of its business as now
being conducted by it, and it is not in default in any respect under any such
permits, licenses, or authorizations. All permits, licenses, and other similar
authorizations necessary for the conduct of Seller's business as now being
conducted by it are as set forth in Schedule 5.11. Except as set forth in
Schedule 5.11, no royalties, commissions, or fees are payable by Seller to any
person by reason of the ownership or use of any intangible property. Except as
set forth in Schedule 5.11, Seller is the sole and exclusive owner of all of the
5
<PAGE>
Assets, does not use any of the Assets by the consent of any other person and is
not required to and does not make any payments to others with respect thereto.
Except as set forth in Schedule 5.11, there are no material licenses,
sub-licenses, or agreements relating to the use of any intangible property now
in effect, and Seller has no knowledge that any intangible property is being
infringed by others. No claim that would have a Material Adverse Effect on the
business of the Seller is pending or, to the knowledge of Seller, threatened, or
has been made since Seller's inception to the effect that, nor does Seller have
any knowledge that the operation of Seller's Business or any method, process,
part, or material that Seller employs, conflicts in any material way with, or
infringes in any material way upon any rights of the type enumerated above,
owned by others.
5.12. Employees. Schedule 5.12 is a list of the names of all
employees of Seller, stating the amounts or rates of compensation payable to
each.
5.13. No Violation of Employee Contracts. No employee of Seller
is in violation of any term of any employment contract, non-competition
agreement, or any other contract or agreement or any restrictive covenant with,
or any other common law obligation to, a former employer relating to the right
of any such employee to be employed by Seller because of the nature of the
business conducted by Seller or of the use of trade secrets or proprietary
information of others. There is neither pending nor, to the knowledge of Seller,
threatened, any actions, suits, proceedings, or claims with respect to any
contract, agreement, covenant, or obligation referred to in the preceding
sentence.
5.14. Hazardous Materials. The Seller is not in the business of
possession, transportation, or disposal of hazardous materials. If and to the
extent that Seller's Business has involved the possession, transportation, or
disposal of hazardous materials, the Seller has complied with any and all
applicable laws, ordinances, rules, and regulations and has not and will not be
the basis of any claim or proceeding against, or any liability of, Seller with
respect to the period prior to the Closing. To the knowledge of Seller, no
employee of Seller has been exposed to hazardous materials such that exposure
could cause damage to such employee.
5.15. Interest in Competitors. Except as set forth in Schedule
5.15 to this Agreement, no shareholder, officer, director, or employee of
Seller, nor any spouse or child of any shareholder, officer, director, or any
employee with authority to enter into con-tracts on behalf of Seller, has any
direct or indirect interest in any competitor, supplier, or customer of Seller
or in any person from whom or to whom Seller leases any real or personal
property, or in any other person with whom Seller is doing business.
5.16. Financial Condition. Seller has delivered to Purchaser true
and correct copies of the following: the unaudited balance sheet and statement
of income of Seller for the fiscal years ended December 31, 1998 and 1999; and
an unaudited balance sheet ("Seller's Last Balance Sheet"), for the five months
ended May 31, 2000 (Seller's Last Balance Sheet Date"). Each such balance sheet
presents fairly the financial condition, assets and liabilities of Seller as of
its date; each such statement of income presents fairly the results of
operations of Seller for the period indicated. The financial statements referred
to in this Section 5.16 have been prepared in accordance with the books and
records of the Seller, are correct and complete in all material respects.
5.17. Bulk Sale. Purchaser will suffer no loss, cost, or expense
by the non-compliance of the parties hereto with the Bulk Transfer Act of the
State of New York.
5.18. Changes or Events. Except as set forth in Schedule 5.18,
since Seller's Last Balance Sheet Date, none of the following has occurred:
5.18.01 Any material transaction by Seller not in the ordinary
course of business;
5.18.02 Any material capital expenditure by Seller;
5.18.03 Any changes in the condition (financial or otherwise),
liabilities, assets, or business or in any business
relationships of Seller, including relationships with
suppliers or customers, that, when considered
individually or in the aggregate, might reasonably be
expected to have a Material Adverse Effect;
5.18.04 The destruction of, damage to, or loss of any asset
of Seller (regardless of whether covered by insurance)
that, when considered individually or in the
aggregate, might reasonably be expected to have a
Material Adverse Effect;
6
<PAGE>
5.18.05 Any labor disputes that, when considered individually
or in the aggregate, might reasonably be expected to
have a Material Adverse Effect;
5.18.06 Any change in accounting methods or practices
(including, without limitation, any change in
depreciation or amortization policies or rates) by
Seller, except for any such changes as were required
by law;
5.18.07 Any increase in the salary or other compensation
payable or to become payable by Seller to any
employee, or the declaration, payment, or commitment
or obligation of any kind for the payment by Seller of
a bonus or other additional salary or compensation to
any such person;
5.18.08 The material amendment or termination of any material
contract, agreement, or license to which Seller is a
party, except in the ordinary course of business;
5.18.09 Any loan by Seller to any person or entity, or the
guaranteeing by Seller of any loan other than loans
made in the ordinary course of business;
5.18.10 Any mortgage, pledge, or other encumbrance of any
asset of Seller except in the ordinary course of
business;
5.18.11 The waiver or release of any right or claim of Seller,
except in the ordinary course of business;
5.18.12 Any other events or conditions of any character within
the knowledge of Seller that, when considered
individually or in the aggregate, have or might
reasonably be expected to have a Material Adverse
Effect;
5.18.13 Any loss or, to the knowledge of Seller, any
threatened loss of any permit, license,
qualification, special charter or certificate of
authority held or enjoyed or formerly held or enjoyed
by Seller which loss has had or upon occurrence
might reasonably be expected to have a Material
Adverse Effect;
5.18.14 To the knowledge of Seller, any statute, regulation,
order, ordinance or other law the adoption or
rescission of which might reasonably be expected to
have a Material Adverse Effect;
5.18.15 Any failure on the part of Seller to operate its
business in the ordinary course and consistent with
past practices so as to preserve its business
organization intact, to retain the services of its
employees and to preserve its goodwill and
relationships with suppliers, creditors, customers,
and others having business relationships with it;
5.18.16 Any action taken or omitted to be taken by Seller
which would cause (after lapse of time, notice or
both) the breach, default, or acceleration of any
right, contract, commitment, or other obligation of
Seller; or
5.18.17 Any agreement by Seller to do any of the things
described in the preceding clauses 5.18.01 through
5.18.16.
5.19. No Defaults. Except as set forth in Schedule 5.19, the
consummation of the transactions contemplated by this Agreement will not result
in or constitute any of the following: (i) a breach of any term or provision of
any other agreement of Seller that will not be waived or released at Closing;
(ii) a default or an event that will not be waived or released at Closing, and
that, with notice or lapse of time or both, would be a default, breach, or
violation of the Articles of Incorporation or Bylaws of Seller or of any lease,
7
<PAGE>
license, promissory note, conditional sales contract, commitment, indenture,
mortgage, deed of trust, or other agreement, instrument, or arrangement to which
Seller is a party or by which Seller or the Assets is bound; (iii) an event that
will not be waived or released at Closing and that would permit any party to
terminate any agreement or to accelerate the maturity of any in-debtedness or
other obligation of Seller; (iv) the creation or imposition of any lien, charge,
or encumbrance on any of the Assets; or (v) a violation of any law or any rule
or regulation of any administrative agency or governmental body, of any order,
writ, injunction or decree of any court, administrative agency or governmental
body to which Seller is subject.
5.20. Liabilities. No liabilities of Seller will be assumed by or
transferred to Purchaser pursuant to the transactions contemplated by this
Agreement, nor will any of the Assets to be acquired by Purchaser pursuant to
this Agreement be subject to any liabilities, nor will Purchaser otherwise be
liable for any liabilities of Seller, except those liabilities provided for in
Section 4 of this Agreement, and the Seller shall take no action prior to
Closing that would increase the amount of any of the liabilities provided for in
Section 4. The amounts payable with respect to Liabilities listed on Schedule
1.05 to this Agreement are the maximum amounts payable with respect to such
Liabilities.
5.21. No Prohibited Payments. Neither Seller nor any employee,
or agent of Seller, has made or authorized any payment of funds of Seller or on
behalf of Seller prohibited by law and no funds of seller have been set aside to
be used for any payment prohibited by law.
5.22. Seller's Capital Stock. Charles C. Vornberger (the
"Stockholder) owns 100% of the issued and outstanding capital stock of Seller
(the "Seller's Stock"). The Seller's Stock is not owned or held in violation of
any preemptive right of any other person or entity, is validly authorized,
validly issued, fully paid and non-assessable and is owned of record and
beneficially by the Stockholder. The shares of Seller's Stock held by the
Stockholder are held free and clear of all liens, security interests, pledges,
charges, encumbrances, voting agreements, and voting trusts. There is
outstanding no security or other instrument convertible into or exchangeable for
capital stock of Seller.
5.23 Non-Distributive Intent. Seller and/ or the Stockholder is
receiving the shares of Purchaser's Common Stock to be issued hereunder to its
own account (and not for the account of others) for investment and not with a
view to the distribution thereof. Neither Seller nor the Stockholder will sell
or otherwise dispose of such shares without registration under the Securities
Act of 1933, as amended (the "Act"), or an exemption therefrom, and the
certificate or certificates representing such shares will contain a legend to
the foregoing effect. The Seller and the Stockholders further acknowledge and
agree that such shares shall be restricted from resale for a period of 12 months
after the Closing date. By virtue of their position, Seller and the Stockholder
have access to the kind of financial and other information about Purchaser as
would be contained in a registration statement filed under the Act, including
reports filed pursuant to the Securities Exchange Act of 1934 as set forth in
Paragraph 6.05. Seller and the Stockholder understand that they may not sell or
otherwise dispose of such shares in the absence of either a registration
statement under the Act or an exemption from the registration provisions of the
Act.
5.24. Completeness of Disclosure. No representation or warranty
and no Schedule, Exhibit, or certificate prepared by Seller pursuant hereto and
no statement made or other document prepared by Seller and furnished to
Purchaser by Seller contains any untrue statement of a material fact or omits or
will omit any material fact necessary in order to make the statements contained
therein not misleading.
6. Representations and Warranties of Purchaser. Purchaser hereby
agrees, represents, and warrants to Seller, on the date of this Agreement and on
the Closing Date, as follows:
6.01. Organization. Purchaser is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Texas and
authorized to do business in the State of Texas and in every other jurisdiction
in which its ownership, leasing, licensing, or use of property or assets or the
conduct of it business makes such qualification necessary, except where the
failure to do so would not have a Material Adverse Effect.
8
<PAGE>
6.02. Due Authorization; Third Party Consents. Purchaser has the
right, power, legal capacity, and authority to enter into and perform its
obligations under this Agreement and, except as set forth on Schedule 6.02 to
this Agreement, no approval or consent of any person other than the Purchaser is
necessary in connection with the execution, delivery, or performance of this
Agreement. The execution, delivery, and performance of this Agreement by the
Purchaser has been duly authorized by its board of directors and no other
corporate proceedings on the part of Purchaser are necessary to authorize this
Agreement or the consummation of the transactions contemplated hereby. This
Agreement constitutes a legal and binding obligation of the Purchaser, and is
valid and enforceable against the Purchaser in accordance with its terms.
6.03. No Violation. The consummation of the transactions
contemplated by this Agreement will not result in or constitute any of the
following: (i) a breach of any term or provision of any other agreement of
Purchaser that will not be waived or released at Closing; (ii) a default or an
event that will not be waived or released at Closing and that, with notice or
lapse of time or both, would be a default, breach, or violation of the
Certificate of Incorporation or Bylaws of Purchaser or of any lease, license,
promissory note, conditional sales contract, commitment, indenture, mortgage,
deed of trust, or other agreement, instrument, or arrangement to which Purchaser
is a party or by which Purchaser or the property of Purchaser is bound; or (iii)
a violation of any law or any rule or regulation of any administrative agency or
governmental body or any order, writ, injunction, or decree of any court,
administrative agency or governmental body to which Purchaser is subject.
6.04. Capitalization. As of the date hereof, the total number of
shares of capital stock Purchaser is authorized to issue is 50,000,000. As of
July 14, 2000, 27,138,571 are issued and outstanding and 5,660,360 shares of
Purchaser common stock are reserved for issuance upon exercise of outstanding
options and warrants. The Purchaser common stock is not owned or held in
violation of any preemptive right of any other person or entity.
6.05. Financial Condition. Purchaser (i) has delivered to Seller
true and correct copies of its Form 10-K for the fiscal year ended December 31,
1999, as amended ("Form 10-K/A") and (ii) has delivered its Form 10-Q for the
three months ended March 31, 2000 ("Form 10-Q"). The Form 10-K/A and Form 10-Q
present fairly the financial condition, assets, liabilities, and stockholders'
equity of Purchaser as of its date; each such statement of income and statement
of retained earnings presents fairly the results of operations of Purchaser for
the period indicated; and each such statement of changes in financial position
presents fairly the information purported to be shown therein. The financial
statements referred to in this Section 6.05 have been prepared in accordance
with GAAP consistently applied throughout the periods involved, are correct and
complete in all material respects and are in accordance with the books and
records of Purchaser.
6.06. Continuity of Business. It is the present intent of
Purchaser not to dispose of any significant portion of its or Seller's Assets,
except in the ordinary course of business or to eliminate any duplicative
facilities or excess capacity.
6.07. Completeness of Disclosure. No representation or warranty
and no Schedule, Exhibit, or certificate prepared by Purchaser pursuant hereto
and no statement made or other document prepared by Purchaser and furnished to
Seller by Purchaser contains any untrue statement of a material fact or omits or
will omit any material fact necessary in order to make the statements contained
therein not misleading.
7. Conditions to Obligations of Purchaser. The obligations
of Purchaser under this Agreement are subject, at the option of Purchaser, to
the following conditions:
7.01. Accuracy of Representations and Compliance With Conditions.
All representations and warranties of Seller contained in this Agreement shall
be accurate when made and, in addition, shall be accurate as of the Closing as
though such representations and warranties were then made by Seller. As of the
Closing, Seller shall have performed and complied with all covenants and
agreements and satisfied all conditions required to be performed and complied
with by Seller at or before such time by this Agreement.
9
<PAGE>
8.02. Closing Documents. In connection with the Closing,
Seller shall deliver to Purchaser the following items:
8.02.01. A General Assignment and Bill of Sale in the
form attached hereto as Exhibit 8.02.01
endorsements, assignments, and other
instruments of transfer in form and
substance reasonably satisfactory to
Purchaser and its counsel in order to
transfer all right, title and interest in
the Assets to Purchaser;
8.02.02. Evidences of title or ownership of the
Assets, including drafts, warehouse
receipts and licenses;
8.02.03. Data and records relating to the Assets;
8.02.04. Except as described in Schedule 1.05,
evidence (including, if applicable, the
delivery of duly executed UCC-3 Termination
Statements) reasonably satisfactory to
Purchaser and its counsel, of the
satisfaction and discharge by Seller of all
existing liens, claims, and encumbrances
upon or affecting the Assets; and
8.02.05. Such other instruments and documents
in form and content reasonably
satisfactory to counsel for Purchaser, as
may be necessary or appropriate to (i)
effectively transfer and assign to and
vest in Purchaser good and marketable title
to the Assets and/or to consummate more
effectively the transactions contemplated
hereby and (ii) in order to enable
Purchaser to determine whether the
conditions to Seller's obligations under
this Agreement have been met and otherwise
to carry out the provisions of this
Agreement.
8.03. Review of Proceedings. All actions, proceedings,
instruments, and documents required to carry out this Agreement, or any
agreement incidental thereto and all other related legal matters shall be
subject to the reasonable approval of counsel to Purchaser, and Seller shall
have furnished such counsel such documents as such counsel may have reasonably
requested for the purpose of enabling them to pass upon such matters.
8.04. Legal Action. There shall not have been instituted
or threatened any legal proceeding relating to, or seeking to prohibit or
otherwise challenging the consummation of, the transactions contemplated by this
Agreement or related agreements or to obtain substantial damages with respect
thereto.
8.05. No Governmental Action. There shall not have been any
action taken, or any law, rule, regulation, order, or decree proposed,
promulgated, enacted, entered, enforced, or deemed applicable to the
transactions contemplated by this Agreement by any federal, state, local, or
other governmental authority or by any court or other tribunal, including the
entry of a preliminary or permanent injunction, which, in the reasonable
judgment of Purchaser:
8.05.01. Makes any of the transactions contemplated
by this Agreement illegal;
8.05.02. Results in a delay, which affects the
ability of Purchaser to consummate any
of the transactions contemplated by this
Agreement;
8.05.03. Requires the divestiture by Purchaser of a
material portion of the business of
either Purchaser taken as a whole, or of
Seller taken as a whole; and
8.05.04. Otherwise prohibits, restricts, or delays
consummation of any of the transactions
contemplated by this Agreement or impairs
the contemplated benefits to Purchaser of
the transactions contemplated by this
Agreement.
10
<PAGE>
8.06. Contractual Consents Needed. The parties to this Agreement
shall have obtained at or prior to the Closing all consents required for the
consummation of the transactions contemplated by this Agreement from any party
to any contract, agreement, instrument, lease, license, arrangement, or
understanding to which any of them or any subsidiary is a party, or to which any
of their respective businesses, properties, or assets are subject, except where
the failure would not have a Material Adverse Effect. On or before September 15,
2000, Purchaser shall substitute for Seller with respect to the Citibank line of
credit and shall arrange for Charles Vornberger to be removed as guarantor
thereof.
8.07. Other Agreements. Agreements set forth as exhibits or
schedules to this Agreement shall have been duly authorized, executed, and
delivered by the parties thereto at or prior to the Closing, shall be in full
force and effect, valid and binding upon the parties thereto, and enforceable by
them in accordance with their terms at the Closing, and no party thereto at any
time from the execution thereof until immediately after the Closing shall have
been in violation of or in default in complying with any material provision
thereof. The lease agreement (at paragraph R14M) permits an assignment of the
lease (without requiring the landlord's consent) in connection with a sale of
the Business provided that Purchaser's net worth is at least equal to Seller's.
8.08. Non-Distributive Intent. Purchaser shall have received
from the Seller and the Stockholder executed letters of non-distributive intent,
substantially in the form of Schedule 8.08.
8.09. Employment Agreements, Non-Competition and
Non-Solicitation Agreements. Charles C. Vornberger shall have entered into the
employment agreements and non- competition and non-solicitation agreements in
the form attached hereto as Exhibit 8.09.
8.10. Board and Shareholder Approval. The Board of Directors
and shareholders of Seller shall have approved the transactions contemplated
herein.
9. Conditions to Obligations of Seller. The obligations of
Seller under this Agreement are subject, at the option of Seller, to the
following conditions:
9.01. Accuracy of Representations and Compliance With Conditions.
All representations and warranties of Purchaser contained in this Agreement
shall be accurate when made and shall be accurate as of the Closing as though
such representations and warranties were then made by Purchaser. As of the
Closing, Purchaser shall have performed and complied with all covenants and
agreements and satisfied all conditions required to be performed and complied
with by any of them at or before such time by this Agreement.
9.02. Review of Proceedings. All actions, proceedings,
instruments, and documents required to carry out this Agreement, or any
agreement incidental thereto and all other related legal matters shall be
subject to the reasonable approval of counsel to Seller and Purchaser shall have
furnished such counsel such documents as such counsel may have reasonably
requested for the purpose of enabling them to pass upon such matters.
9.04. Legal Action. There shall not have been instituted or
threatened any legal proceeding relating to, or seeking to prohibit or otherwise
challenging the consummation of, the transactions contemplated by this Agreement
or related agreements set forth as an exhibit hereto, or to obtain substantial
damages with respect thereto.
9.05. No Governmental Action. There shall not have been any
action taken, or any law, rule, regulation, order, or decree proposed,
promulgated, enacted, entered, enforced, or deemed applicable to the
transactions contemplated by this Agreement by any federal, state, local, or
other governmental authority or by any court or other tribunal, including the
entry of a preliminary or permanent injunction, which, in the reasonable
judgment of Seller:
9.05.01. Makes any of the transactions contemplated by this
Agreement illegal;
9.05.02. Results in a delay which affects the ability
of Seller to consummate any of the transactions contemplated by this Agreement;
11
<PAGE>
9.05.03. Requires the divestiture by the Seller or the
Stockholders of any of the shares of Purchaser's Common Stock;
Imposes material limitations on the ability of the Seller or the Stockholders to
effectively exercise full rights of ownership of the shares of Common Stock
including the right to vote the shares on all matters properly presented to the
stockholders of Purchaser; or
Otherwise prohibits, restricts, or delays consummation of any of the
transactions contemplated by this Agreement or impairs the contemplated benefits
to Seller or the Stockholders of the transactions contemplated by this
Agreement.
9.06. Contractual Consents Needed. The Parties to this Agreement
shall have obtained at or prior to the Closing all consents required for the
consummation of the transactions contemplated by this Agreement from any party
to any contract, agreement, instrument, lease, license, arrangement, or
understanding to which any of them or any subsidiary is a party, or to which any
of their respective businesses, properties, or assets are subject, except where
the failure would not have a Material Adverse Effect.
9.07. Other Agreements. Agreements set forth as exhibits or
schedules to this Agreement shall have been duly authorized, executed, and
delivered by the Parties thereto at or prior to the Closing, shall be in full
force, valid and binding upon the Parties thereto, and enforceable by them in
accordance with their terms at the Closing, and no party thereto at any time
from the execution thereof until immediately after the Closing shall have been
in violation of or in default in complying with any material provision thereof.
9.08. Board Approval. The Board of Directors of Purchaser
shall have approved the transactions contemplated herein.
9.09. Employment Agreements. On or before Closing, Charles C.
Vornberger shall enter into an employment agreement in the form attached hereto
as Exhibit 8.09.
10. Covenants and Agreements of Seller. Seller covenants and agrees as
follows:
10.01. Public Statements. Before Seller shall release any
information concerning this Agreement or the transactions contemplated by this
Agreement which is intended for or may result in public dissemination thereof,
Seller shall cooperate with Purchaser, shall furnish drafts of all documents or
proposed oral statements to Purchaser for comment, and shall not release any
such information without the written consent of Purchaser. Nothing contained
herein shall prevent Seller from furnishing any information to any governmental
authority if required to do so by law.
10.02. Consents Without any Condition. Seller shall not make
any agreement or understanding with a third party not in the ordinary course of
business without approval in writing by Purchaser.
10.03. Access. Seller will afford the officers, counsel, agents,
investment bankers, accountants, and other representatives of Purchaser, free
and full access to the plans, properties, books, and records of Seller; will
permit them to make extracts from and copies of such books and records; and will
from time to time furnish Purchaser with such additional financial and operating
data and other information as to the financial condition, results of operations,
business, properties, assets, liabilities, or future prospects of Seller as
Purchaser from time to time may request. Seller will also cause the public
accountants of Seller to make available to Purchaser and its public accountants
the work papers relating to the audits of Seller.
10.04. Conduct of Business. Seller will conduct its affairs so
that at the Closing, no representation or warranty of Seller will be inaccurate,
no covenant or agreement of Seller will be breached, and no condition in this
Agreement will remain unfulfilled by reason of the actions or omissions of
Seller.
10.05. Notice of Changes. Until the Closing or the earlier
rightful termination of this Agreement, Seller will immediately advise Purchaser
in a detailed written notice of any fact or occurrence or any pending or
threatened occurrence of which any of them obtains knowledge and which (if
12
<PAGE>
existing and known at the date of the execution of this Agreement) would have
been required to be set forth or disclosed in or pursuant to this Agreement or
an exhibit or schedule hereto, which (if existing and known at any time prior to
or at the Closing) would make the performance by any party of a covenant
contained in this Agreement impossible or make such performance materially more
difficult than in the absence of such fact or occurrence, or which (if existing
and known at the time of the Closing) would cause a condition to any party's
obligations under this Agreement not to be fully satisfied.
11. Covenants and Agreements of Purchaser. Purchaser covenants
and agrees as follows:
11.01. Public Statements. Before Purchaser shall release any
information concerning this Agreement or the transactions contemplated by this
Agreement which is intended for or may result in public dissemination thereof,
it shall cooperate with Seller, shall furnish drafts of all documents or
proposed oral statements to Seller for comments, and shall not release any such
information without the written consent of Seller. Nothing contained herein
shall prevent Purchaser from furnishing any information to any governmental
authority if required to do so by law.
11.02. Consents Without any Condition. Purchaser shall not make
any agreement or understanding with a third party not in the ordinary course of
business not approved in writing by Seller as a condition for obtaining any
consent, authorization, approval, order, license, certificate, or permit
required for the consummation of the transactions contemplated by this
Agreement.
11.03. Conduct of Business. Purchaser will conduct its affairs so
that at the Closing no representation or warranty of Purchaser will be
inaccurate, no covenant or agreement of Purchaser will be breached, and no
condition in this Agreement will remain unfulfilled by reason of the actions or
omissions of Purchaser.
11.04. Notice of Changes. Until the Closing or the earlier
rightful termination of this Agreement, Purchaser will immediately advise Seller
in a detailed written notice of any fact or occurrence or any pending or
threatened occurrence of which it obtains knowledge and which (if existing and
known at the date of the execution of this Agreement) would have been required
to be set forth or disclosed in or pursuant to this Agreement or an exhibit or
schedule hereto, which (if existing and known at any time prior to or at the
Closing) would make the performance by any party of a covenant contained in this
Agreement impossible or make such performance materially more difficult than in
the absence of such fact or occurrence, or which (if existing and known at the
time of the Closing) would cause a condition to any party's obligations under
this Agreement not to be fully satisfied.
12. Miscellaneous.
12.01. Brokerage and Other Fees. The parties agree that there are
no brokerage arrangements or fee obligations, in writing or otherwise, with
respect to the transactions set forth in this Agreement. Each party shall be
responsible for the fees of their respective professionals (including, without
limitation, legal and accounting fees) engaged to assist in the preparation,
negotiation and counseling with respect, and relating, to this Agreement and
consummation of the transactions contemplated herein, as well as their
respective out-of-pocket expenses except Purchaser agrees to pay for the
preparation of the necessary transfer documents to accomplish the transactions
herein, and certain of Seller's legal expenses as set forth in Section 1.05.
12.02. Further Actions. At any time and from time to time, the
parties agree, at their expense, to take such actions and to execute and deliver
such documents as may be reasonably necessary to effectuate the purposes of this
Agreement.
12.03. Availability of Equitable Remedies. Since a breach of the
provisions of this Agreement could not adequately be compensated by money
damages, the parties shall be entitled before, and only before, Closing, in
addition to any other right or remedy available to them, to an injunction
restraining such breach or a threatened breach and to specific performance of
any such provision of this Agreement; and in either case, no bond or other
security shall be required in connection therewith, and the parties hereby
consent to the issuance of such an injunction and to the ordering of specific
performance.
13
<PAGE>
12.04. Survival. Except for the provisions of the Escrow
Agreement set forth in Exhibit 3.2, the covenants, agreements, representations,
and warranties contained in or made pursuant to this Agreement shall survive for
a period of 24 months from the Closing date, irrespective of any investigation
made by or on behalf of any party (the "Survival Date"). No claim for
indemnification may be brought pursuant to this Section 12.04 unless asserted by
written notice as provided herein by the party claiming indemnification on or
before the Survival Date.
12.05. Modification. The Agreement and the schedules and exhibits
hereto set forth the entire understanding of the parties with respect to the
subject matter hereof supersede all existing agreements among them concerning
such subject matter, and may be modified only by a written instrument duly
executed by the Parties.
12.06. Notices. Any notice or other communication required or
permitted to be given hereunder shall be in writing and shall be mailed by
certified mail, return receipt requested (or by the most nearly comparable
method if mailed from or to a location outside of the United States), or
delivered against receipt to the party to whom it is to be given at the address
of such party set forth in the preamble or signature pages to this Agreement
with a copy to such party's attorney. Any notice or other communication given by
certified mail (or by such comparable method) shall be deemed given at the time
of mailing (or comparable act), except for a notice changing a party's address,
which will be deemed given at the time of receipt thereof.
12.07. Waiver. Any waiver by any party of a breach of any
provision of this Agreement shall not operate as or be construed to be a waiver
of any other breach of that provision or of any breach of any other provision of
this Agreement. The failure of a party to insist upon strict adherence to any
term of this Agreement on one or more occasions will not be considered a waiver
or deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement. Any waiver must be in writing
and, in the case of a corporate party, be authorized by a resolution of the
Board of Directors or by an officer of the waiving party.
12.08. Binding Effect. The provisions of this Agreement shall
be binding upon and inure to the benefit of each party's respective successors,
assigns, heirs, and personal representatives.
12.09. No Third-Party Beneficiaries. This Agreement does not
create, and shall not be construed as creating, any rights enforceable by any
person not a party to this Agreement.
12.10. Severability. If any provision of this Agreement is
invalid, illegal, or unenforceable, the balance of this Agreement shall remain
in effect, and if any provision is inapplicable to any person or circumstance,
it shall nevertheless remain applicable to all other persons and circumstances.
12.11. Headings. The headings of this Agreement are solely for
convenience of reference and shall be given no effect in the construction or
interpretation of this Agreement.
12.12. Counterparts, Governing Law. This Agreement may be
executed in any number of counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument. It shall be governed by and construed in accordance with the laws of
the State of Texas without giving effect to conflict of laws.
12.13. Indemnification. Seller and Stockholder shall, indemnify,
defend and hold harmless Purchaser and each of its officers, directors, agents
and affiliates from and against any damage, loss, claim, liability, cost or
expense, including fees and disbursements of counsel, accountants, experts and
other consultants (collectively, "Damages"), resulting from, arising out of,
based upon or occasioned by any misstatement or omission from any representation
by, or any breach of warranty, covenant or agreement of, Seller or the
Stockholder contained herein. Purchaser shall, indemnify, defend and hold
harmless Seller and the Stockholder from and against any Damages, resulting
from, arising out of, based upon or occasioned by any misstatement or omission
from any representation by, or any breach of warranty, covenant or agreement of,
Purchaser contained herein.
14
<PAGE>
12.14 Indemnification Procedures. Promptly after receipt by
Purchaser, on the one hand, or Seller on the other hand (in any such case, the
"Indemnitee"), of notice of any action, suit, proceeding, audit, claim or
potential claim (any of which is hereinafter individually referred to as a
"Circumstance"), which could give rise to a right to indemnification for damages
pursuant to Section 12.13, the Indemnitee shall give the party who may become
obligated to provide indemnification hereunder (the "Indemnitor") written notice
describing the Circumstance in reasonable detail; provided, that failure of an
Indemnitee to give such notice to the Indemnitor shall not relieve the
Indemnitor from any of its indemnification obligations hereunder unless (and
then only to the extent) that the failure to give such notice prejudices the
defense of the Circumstance by the Indemnitee. Such Indemnitor shall have the
right, at its option and upon its acknowledgment to the Indemnitee of
Indemnitor's liability to indemnify Indemnitee in respect of such asserted
liability, to compromise or defend, at its own expense and by its own counsel,
any such matter involving the asserted liability of the Indemnitee; provided,
that any such compromise (i) shall include as a unconditional term thereof the
giving by the claimant or the plaintiff to such Indemnitee of a release from all
liability in respect of such claim and (ii) shall not result in the imposition
on the Indemnitee of any remedy other than monetary damages to be paid in full
by the Indemnitor pursuant to this Section 12.14. If any indemnitor shall
undertake to compromise or defend any such asserted liability, it shall promptly
notify the Indemnitee of its intention to do so, and the Indemnitee agrees to,
and to cause its own independent counsel to, cooperate fully with the Indemnitor
and its counsel in the compromise of, or defense against, any such asserted
liability. All reasonable out-of-pocket costs and expenses incurred by the
Indemnitee in connection with such cooperation (including, without limitation,
the reasonable fees and expenses of the Indemnitee's own independent counsel)
shall be borne by the Indemnitor. In any event, the Indemnitee shall have the
right to participate with its own counsel (the reasonable fees and expenses of
which will be borne by Indemnitor) in the defense of such asserted liability;
provided that if with respect to a Circumstance, Indemnitor shall have
acknowledged Indemnitor's liability to indemnify Indemnitee if and to the extent
of any loss arising out of such Circumstance and Indemnitor shall be diligently
defending such matter, Indemnitor shall not be obligated to indemnify Indemnitee
for the cost of Indemnitee's participation in such defense, including
Indemnitee's attorney's fees. Under no circumstances shall the Indemnitee
compromise any such asserted liability without the written consent of the
Indemnitor (which consent shall not be unreasonably withheld), unless the
Indemnitor shall have failed or refused to undertake the defense of any such
asserted liability after a reasonable period of time has elapsed following the
notice of a Circumstance received by such Indemnitor pursuant to this Section
12.14.
12.15 Other Indemnification Provisions. The foregoing
indemnification provisions under this Section 12 are in addition to any
statutory, equitable or common law remedy any party may have for breach of
representation, warranty or covenant.
12.16 Escrow Fund. As security for the conclusion of the Hugeclick
litigation, at the Closing, the Escrow Agent shall take deposit of the
consideration set forth in paragraph 3(ii). The escrow shall be for the period
of two years from the date hereof, and shall be administered subject to the
terms and conditions of Exhibit 3.2.
IN WITNESS WHEREOF, the parties have duly executed this Agreement
effective as of the date written in the preamble of this Agreement.
EPICEDGE, INC.
By: /s/ Charles H. Leaver, Jr.
-----------------------------
Name: Charles H. Leaver, Jr.
Title: Chief Executive Officer
TUMBLE INTERACTIVE MEDIA, INC.
By: /s/ Charles C. Vornberger
-----------------------------
Name: Charles C. Vornberger
Title: President
STOCKHOLDER
By: /s/ Carales C. Vornberger
-----------------------------
CHARLES C. VORNBERGER
15
EXHIBIT 5.1
OPINION OF FOX, ROTHSCHILD, O'BRIEN & FRANKEL, LLP
October ____, 2000
EpicEdge, Inc.
3200 Wilcrest, Suite 370
Houston, TX 77042
Re: EpicEdge, Inc. Registration Statement on Form S-3 for
Resale of 4,607,065 Shares of Common Stock
Ladies and Gentlemen:
We have acted as counsel to EpicEdge, Inc., a Texas corporation (the
"Company"), in connection with the registration for resale of 4,607,065 shares
of Common Stock (the "Shares"), as described in the Company's Registration
Statement on Form S-3 ("Registration Statement") filed with the Securities and
Exchange Commission under the Securities Act of 1933, as amended (the "Act").
This opinion is being furnished in accordance with the requirements of
Item 16 of Form S-3 and Item 601(b)(5)(i) of Regulation S-K.
We have reviewed the Company's charter documents, the corporate
proceedings taken by the Company in connection with the original issuance and
sale of the Shares and a certificate of a Company officer regarding (among other
things) the Company's receipt of consideration upon the original issuance and
sale of the Shares. Based on such review, we are of the opinion that the Shares
are duly authorized, validly issued, fully paid and nonassessable.
We consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement and to the reference to this firm under the caption
"Legal Matters" in the prospectus which is part of the Registration Statement.
In giving this consent, we do not thereby admit that we are within the category
of persons whose consent is required under Section 7 of the Act, the rules and
regulations of the Securities and Exchange Commission promulgated thereunder or
Item 509 of Regulation S-K.
This opinion letter is rendered as of the date first written above and
we disclaim any obligation to advise you of facts, circumstances, events or
developments which hereafter may be brought to our attention and which may
alter, affect or modify the opinion expressed herein. Our opinion is expressly
limited to the matters set forth above and we render no opinion, whether by
implication or otherwise, as to any other matters relating to the Company or the
Shares.
Very truly yours,
/s/ FOX, ROTHSCHILD, O'BRIEN & FRANKEL, LLP
--------------------------------------------
Fox, Rothschild, O'Brien & Frankel, LLP
