Exhibit 2.1
==============================================================
ASSET PURCHASE
AND
ASSIGNMENT AND ASSUMPTION AGREEMENT
by and between
EDGE TECHNOLOGY GROUP, INC.,
a Delaware corporation
and
VISUAL EDGE, INC.
a Delaware corporation
Dated: July 24, 2001
================================================================
ASSET PURCHASE AND ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSET PURCHASE AND ASSIGNMENT AND ASSUMPTION AGREEMENT
(this "Agreement") is made and entered into this 24th day of
July, 2001, by and between EDGE TECHNOLOGY GROUP, INC., a
Delaware corporation (the "Company"), and VISUAL EDGE, INC., a
Delaware corporation (the "Purchaser").
WITNESSETH:
WHEREAS, the Company desires to sell, and the Purchaser
desires to purchase, certain of the tangible and intangible
assets in connection with the Company's "One-on-One with Xxxx
Xxxxxx" golf lesson CD-Rom and video production business (the
"Business"), in accordance with the terms and conditions set
forth herein.
NOW THEREFORE, in consideration of the covenants, warranties
and representations set forth below, the parties hereto, each
intending to be legally bound, agree as follows:
AGREEMENT
1. Definitions. For purposes of this Agreement,
capitalized terms have the meanings defined herein.
2. Agreement to Purchase and Sell. Subject to the terms
and conditions of this Agreement, contemporaneous herewith the
parties will deliver into the Escrow pursuant to Section 3 below
the Escrow Materials and, effective as of the Escrow Settlement
Date and subject to the terms and conditions of this Agreement
and the Escrow Agreement, the Company hereby sells, assigns,
transfers, conveys and delivers to the Purchaser the assets
associated with the Business specifically described on Schedule 1
attached hereto (collectively, the "Purchased Assets"), free and
clear of any and all claims and liabilities, whether known or
unknown, contingent or otherwise, including but not limited to
liens, encumbrances and security interests (except for (a) liens
in favor of the Company to secure the Promissory Note hereinafter
described, (b) liens imposed by mandatory provisions of law such
as for materialmen's, mechanic's, warehousemen's) and (c) future
obligations to be performed under contracts contained within the
Purchased Assets (the "Allowed Liens"). The "Escrow Settlement
Date" shall mean the earlier of (i) the date the Company delivers
written notice, in its sole determination, to the Escrow Agent
that the Escrow Settlement Date has occurred, (ii) the 21st day
following the mailing of an information statement (in lieu of a
proxy statement) describing the transactions contemplated in this
Agreement to the holders of common stock of the Company in
compliance with the proxy rules of the Securities and Exchange
Commission, which require the Company to provide 20 days' notice
to all of its stockholders before acting upon a written consent
of a majority of stockholders, or (iii) the date on which the
Company holds its 2001 Annual Meeting of Shareholders pursuant to
which a majority of its shareholders approve this Agreement. If
the Escrow Settlement Date has not previously occurred pursuant
to clause (i) in the immediately preceding sentence, the Company
covenants and agrees to immediately deliver notice to the Escrow
Agent that the condition specified in clause (ii) or (iii) of the
immediately preceding sentence has occurred upon satisfaction of
such condition. If the Escrow Settlement Date has not occurred
in any event by September 14, 2001, this Agreement shall
terminate and
1
the parties shall receive their respective Escrow Materials in
accordance with the Escrow Agreement.
3. Escrow; Closing; Escrow Settlement.
a) Delivery into Escrow. In accordance with Paragraph
5(b) herein, contemporaneous herewith (I) the Purchaser will
deposit with the U.S. Trust Company of Texas, N.A. (the
"Escrow Agent") (i) the Promissory Note and Security
Agreement in the forms annexed hereto as Exhibit A and
Exhibit B (a Form UCC-1 Financing Statement to be attached
to the Security Agreement) (collectively referred to as the
"Escrow Documents"), each undated and to be dated as of the
Escrow Settlement Date and (ii) $123,000 of the Initial Cash
Payment, all of which to be held and administered pursuant
to the terms of the Escrow Agreement attached hereto as
Exhibit C and (II) the Company will deposit with the Escrow
Agent a Xxxx of Sale and Assignment in the form attached
hereto as Exhibit D (collectively, the documents and funds
placed into escrow are referred to as the "Escrow
Materials").
b) Release from Escrow. The Escrow Materials will be
released as follows on the Escrow Settlement Date, in
accordance with the Escrow Agreement:
i) The Escrow Agent will be instructed to date
the Xxxx of Sale and Assignment, and the Promissory
Note and the Security Agreement as of the Escrow
Settlement Date.
ii) The Escrow Agent shall deliver the Promissory
Note, the Security Agreement and Initial Cash Payment
to the Company and the Xxxx of Sale and Assignment to
the Purchaser.
iii) By mutual agreement between the Purchaser and
the Company, on or prior to the Escrow Settlement Date,
the Company may deliver written instructions to the
Escrow Agent to disburse a portion of the Initial Cash
Payment to certain creditors of the Company who are not
otherwise part of the Existing Assumed Liabilities.
iv) Further, the Company and the Purchaser will
cooperate such that on the Escrow Settlement Date the
Company will facilitate payment, out of the Initial
Cash Payment, of certain creditors of the Company who
do not represent Existing Assumed Liabilities
contemporaneous or immediately following the Escrow
Settlement Date, following delivery of appropriate
documentation by the Purchaser as to the status of such
creditor, the amount owed and verification that the
liability is not an Existing Assumed Liability.
c) Effective Date of Purchase and Sale Transaction.
Notwithstanding anything to the contrary herein, the
effective date of the transfer of the Purchased Assets,
assumption of Existing Assumed Liabilities (retroactive to
April 1, 2001), and consummation of the transactions
contemplated by this Agreement shall be the Escrow
Settlement Date, and all of the transactions contemplated
hereunder are deemed to have
2
been made simultaneously; provided, however, for accounting
and financial reporting purposes the Escrow Settlement Date
shall be deemed to have occurred for all purposes as of the
close of business on June 30, 2001, to the extent allowable
under applicable accounting conventions, and both parties
hereby agree to account for financial reporting purposes for
the transactions contemplated herein consistent therewith.
4. Assumption of Certain Liabilities.
a) Existing Assumed Liabilities. It is the intention
of the parties hereto that income, revenue, expenses, and
liabilities of the Business be allocated to the Purchaser
from April 1, 2001 to the date hereof, and that from the
date hereof through the Escrow Settlement Date such income,
revenue, expenses, and liabilities of the Business be
allocated to the Purchaser through the Management Agreement
described below, and that prior to April 1, 2001, any and
all income, revenue, expenses and liabilities, whether known
or unknown, foreseen or unforeseen, contingent or otherwise,
associated in any manner with the Purchased Assets or
Business shall remain the sole property and responsibility
of the Company, and all such liabilities shall be timely
satisfied to the sole reasonable discretion of Purchaser and
all such revenue shall be collected or retained by the
Company to its sole reasonable satisfaction. Therefore,
effective as of the Escrow Settlement Date, the Purchaser
hereby assumes and agrees to undertake, pay, perform and/or
discharge when due all liabilities and obligations related
to the Purchased Assets and the Business, whether known,
unknown, contingent or otherwise and which arose and
occurred beginning on April 1, 2001 through the Escrow
Settlement Date, including, without limitation, all claims,
costs, awards, damages (whether actual, consequential,
punitive, or otherwise) and costs of defense in connection
with that certain employment-related lawsuit in connection
with the Business in which Xxxxxx Landatino is plaintiff
other than the Company Portion of Landatino Obligations (as
hereinafter defined) (collectively, the "Existing Assumed
Liabilities"); provided, however, the Purchaser shall be
allowed an offset to such liabilities to the extent they
have been paid out of income and revenues of the Business
generated and collected through the Escrow Settlement Date.
For purposes of this Agreement, the term "Liability"
shall mean any commitments, debts, liabilities, obligations
(including contract and capitalization lease obligations),
accounts payable, payroll and other employment expenses,
accrued expenses of any nature whatsoever, losses, damages
and costs whether any of the foregoing are known or unknown,
secured or unsecured, asserted or unasserted, absolute or
contingent, direct or indirect, accrued or unaccrued,
liquidated or unliquidated and/or due or to become due).
The Purchaser shall not assume or otherwise agree to
undertake, pay, perform and/or discharge when due any
Liability or obligation of the Company (other than the
Existing Assumed Liabilities) whether known, unknown,
contingent or otherwise and which arose and accrued prior to
April 1, 2001 (including but not limited to the accrued
liabilities and debt set forth on the attached Schedule 4(a)
and collectively referred to herein as the "Retained
Liabilities"). Schedule 4(a) represents the parties' best
current
3
estimate of such liabilities and obligations, and the
Purchaser and the Company agree to work together in good
faith to verify such amounts. The Company shall retain and
pay, perform and/or discharge when due all such verified
Retained Liabilities. It is agreed and understood that
unpaid wages due and owing the aforesaid Xxxxxx Landatino as
of March 31, 2001 in the approximate amount of $11,500 (the
"Company Portion of Landatino Obligations") constitute
Retained Liabilities.
The Purchaser shall also assume and agree to pay,
perform and/or discharge all Liabilities associated with the
Business and the Purchased Assets that arise and occur after
the Escrow Settlement Date (the "Future Business
Liabilities"). The Purchaser agrees to pay all Existing
Assumed Liabilities prior to paying any Future Business
Liabilities.
b) Further Assurances. At or after the Escrow
Settlement Date, and without further consideration, the
Company shall execute and deliver to the Purchaser such
further instruments of conveyance and transfer as the
Purchaser may reasonably request in order to more
effectively convey and transfer any of the Purchased Assets
to the Purchaser or to aid, assist, collect and reduce to
possession any of the Purchased Assets and exercise rights
with respect thereto. Further, the Company and the
Purchaser shall in good faith identify the specific Retained
Liabilities, Existing Assumed Liabilities, and Future
Business Liabilities for proper allocation of payments.
c) Management Agreement. During the period of time
between the date hereof and the Escrow Settlement Date,
management and operation of the Business and the Purchased
Assets, along with allocation of income, revenue, expenses,
and liabilities of the Business, shall be maintained by the
Purchaser and conducted pursuant to the Management Agreement
attached hereto as Exhibit E which shall be executed
contemporaneously with this Agreement.
5. Purchase Price.
a) Purchase Price. The aggregate purchase price to
be paid for the Purchased Assets will be (i) an initial cash
payment in the amount of $243,000 U.S. (the "Initial Cash
Payment") and the delivery by the Purchaser to the Company
of a Promissory Note in the amount of $250,000, in each case
as described in Section 3 above, and (ii) payment of
$3,000,000 (the "Royalty Cash Consideration"), on the terms
described under subsection (b) below. The Initial Cash
Payment has been calculated by starting with an initial cash
payment of $300,000, and reducing that amount by $57,000
(which represents amounts paid by the Purchaser for
liabilities accruing prior to April 1, 2001 as estimated on
Schedule 7(d) hereto) as further specified in Section 7(d).
The Initial Cash Payment shall be paid as follows: upon
execution hereof, $120,000 in available Federal funds shall
be deposited by wire transfer into an account designated by
the Company, and $123,000 shall be placed in the Escrow
Account as described in Section 3 above. It is understood
and agreed that the $120,000 represents amounts that have
been paid by the Company for expenses and liabilities
accruing before March 31, 2001 in connection with the
Business which are included in the Schedules attached hereto
4
pertaining to Company obligations and therefore were
earmarked to be paid by the Company from the proceeds of the
Initial Cash Payment.
b) Payment of the Royalty Cash Consideration. The
Purchaser shall make payment of the Royalty Cash
Consideration in periodic quarterly payments (the "Quarterly
Payments") equal to the Gross Revenues (defined below) for
the preceding quarter multiplied by the applicable Royalty
Percentage. For purposes of this Agreement, the applicable
Royalty Percentage shall be one of the following:
i) 3% during the period after April 1, 2001 and
continuing until the total amount of the Gross Revenues
accumulating since April 1, 2001 (the "Cumulative Gross
Revenues") shall have reached ten million dollars
($10,000,000);
ii) 4% during the period after Cumulative Gross
Revenues have exceeded $10,000,000 and continuing until
the Cumulative Gross Revenues have reached twenty
million dollars ($20,000,000); and
iii) 5% during the period after the Cumulative
Gross Revenues have exceeded twenty million dollars
($20,000,000).
"Gross Revenues" shall mean all revenues of Purchaser or its
affiliates directly or indirectly attributable to the
Business or Purchased Assets (and the products created
therefrom), but shall not include revenues of Purchaser or
its affiliates unrelated to the Business or the Purchased
Assets that are attributable to business activities separate
and distinct from the Business.
For purposes of calculating the Quarterly Payments, if at
during anytime during the quarter for which the calculation
is being made the Cumulative Gross Revenues shall have
exceeded one of the levels set forth in subparagraphs
4(c)(i) through (iii), the higher Royalty Percentage shall
be applied to all Gross Revenues generated for such quarter.
c) Duration of the Quarterly Payment Obligations.
The Purchaser shall be obligated to make the Quarterly
Payments from April 1, 2001 until the occurrence of the
earlier of the following events:
i) the Cumulative Quarterly Payments shall have
reached three million dollars ($3,000,000); or
ii) the Purchaser shall have paid an amount to
the Company in immediately available funds equal to the
difference between the Royalty Cash Consideration minus
all Quarterly Payments made by the Purchaser as of such
date (a "Terminating Payment").
d) Allocation of Purchase Price. The Purchaser and
the Company agree that they will allocate the Purchase Price
among the Purchased Assets for all purposes
5
relevant to the calculation of federal or state taxes, to be
set forth in a separate written instrument.
e) Allocation of Purchase Price to Specific
Liabilities and Obligations. The Purchaser and the Company
agree that the items set forth in the attached Schedule 5(e)
represent pre-April 1, 2001 current "Critical Liabilities"
and obligations (and therefore not Existing Assumed
Liabilities) which must be immediately satisfied by the
funds delivered as the Initial Cash payment and the funds
delivered to satisfy the Promissory Note, and that both the
Company and Purchaser shall use reasonable efforts to timely
satisfy these Liabilities and obligations. The Purchaser
and the Company agree that instructions shall be given to
the Escrow Agent to immediately release any funds necessary
to satisfy any Liabilities or obligations set forth on the
attached Schedule 5(e).
6. Representations and Warranties of the Company. The
Company represents and warrants to the Purchaser as follows:
a) Organization. The Company is a corporation duly
formed, validly existing and in good standing under laws of
the State of Delaware.
b) Enforceability and Authority. This Agreement, the
Xxxx of Sale and Assignment, the Management Agreement, the
Escrow Agreement and the Security Agreement have been duly
executed and delivered by the Company and constitute legal,
valid and binding obligations of the Company, enforceable
against the Company in accordance with their respective
terms, except as may be limited by bankruptcy,
reorganization, fraudulent conveyance, insolvency and
similar laws of general application relating to or affecting
the enforcement of rights of creditors and subject to
general principles of equity. The Company has full power
and authority (both legal and corporate) to execute and
deliver this Agreement, the Xxxx of Sale and Assignment, the
Management Agreement, the Escrow Agreement and the Security
Agreement and to perform its obligations hereunder and
thereunder, and all required approvals of the Board of
Directors and the stockholders of the Company have been duly
and properly obtained.
c) Title of Assets. The Purchased Assets shall be
transferred free and clear of all Retained Liabilities,
liens, security interests or other encumbrances
(collectively, "Liens"), other than any Liens created out of
or arising under the Existing Assumed Liabilities or Allowed
Liens.
d) Acknowledgments. Except for the representations
and warranties contained in this Section 6, the Purchased
Assets are being conveyed to the Purchaser on an "AS IS",
"WHERE IS" and "WITH ALL FAULTS" basis. Further, the
Purchaser acknowledges and agrees that this Agreement
contains all of the representations and warranties of the
Company concerning the Purchased Assets and the Existing
Assumed Liabilities and that no additional representations
or warranties are expressed or implied. Except as set forth
in this Section 6, NO WARRANTIES OR REPRESENTATIONS, EITHER
EXPRESS OR IMPLIED, ARE MADE WITH RESPECT TO MAINTENANCE,
REPAIR, CONDITION, DESIGN OR MARKETABILITY OF THE
6
PURCHASED ASSETS AND THE COMPANY HEREBY DISCLAIMS, AND THE
PURCHASER HEREBY ACKNOWLEDGES NOT RECEIVING, (1) ANY IMPLIED
OR EXPRESS WARRANTY OF MERCHANTABILITY, (2) ANY IMPLIED OR
EXPRESS WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE, AND
(3) ANY IMPLIED OR EXPRESS WARRANTY OF CONFORMING TO MODELS
OR SAMPLES.
7. Representations, Warranties and Acknowledgments of the
Purchaser. The Purchaser hereby represents and warrants to the
Company as follows:
a) Organization. The Purchaser is a corporation duly
formed, validly existing and in good standing under laws of
the State of Delaware.
b) Enforceability and Authority. This Agreement, the
Management Agreement, the Escrow Agreement, the Promissory
Note and the Security Agreement that have been executed by
the Purchaser, have been duly executed and delivered by the
Purchaser and constitute legal, valid and binding
obligations of the Purchaser, enforceable against the
Purchaser in accordance with their respective terms, except
as may be limited by bankruptcy, reorganization, fraudulent
conveyance, insolvency and similar laws of general
application relating to or affecting the enforcement of
rights of creditors and subject to general principles of
equity. The Purchaser has full power and authority (both
legal and corporate) to execute and deliver this Agreement,
the Management Agreement, the Escrow Agreement, the
Promissory Note and the Security Agreement and to perform
its obligations hereunder and thereunder, and all required
approvals of the Board of Directors of the Purchaser and the
shareholders of the Purchaser have been duly and properly
obtained.
c) Acknowledgments. The Purchaser acknowledges and
agrees that the Purchased Assets are being conveyed to the
Purchaser on an "AS IS", "WHERE IS" and "WITH ALL FAULTS"
basis as set forth in Section 6(d) hereof and further
acknowledges and agrees to the other limitations of
representation and warranties of the Company therein
specified.
(d) Specific Liabilities and Obligations Previously
Paid. The Purchaser warrants and represents that the
liabilities and obligations set forth in Schedule 7(d)
constitute the parties' best current estimate of liabilities
and obligations incurred by the Company prior to April 1,
2001 and which have been paid and fully satisfied by the
Purchaser from sources or revenues other than from the
Company and the Business. The Purchaser and the Company
agree to work together in good faith to verify such amounts,
and further agree to make appropriate adjustments to the
Initial Cash Payment should verification of these amounts
result in a discrepancy from Schedule 7(d).
8. Additional Covenants.
a) Employment. The Purchaser shall employ all of the
individuals who are identified on Schedule 8(a) attached
hereto, securing a release of the Company as of the
7
date hereof from such individuals from any severance
obligation, or obligation for accrued vacation or other
similar amounts.
b) No Dividends by the Purchaser. As long as the
Purchaser has an obligation to make Quarterly Payments to
the Company, the Purchaser shall not declare or pay any
dividend on, or make any payment on account of, any capital
stock of the Purchaser, or make any other distributions in
respect thereof, either directly or indirectly, whether in
cash or property or in obligations of the Purchaser in any
quarter unless and until the Purchaser has made payment to
the Company of the Quarterly Payment due and payable during
such quarter and is not delinquent in making payment of the
Quarterly Payment due during any previous quarter.
c) Change of Control. As long as the Purchase has an
obligation to make Quarterly Payments to the Company, the
Purchaser shall not enter into or consummate any agreement
of merger, consolidation, liquidation, dissolution, or other
business combination or an agreement by which the Purchaser
will sell, convey, lease, assign, transfer or otherwise
dispose of a majority of its business or assets or any other
transaction or series of transactions, which would result in
the Purchaser's stockholders who were stockholders
immediately prior to such transaction(s) owning, directly or
indirectly, securities representing less than 51% of the
combined voting power of the Purchaser's then outstanding
securities (a "Fundamental Change"); provided, however, that
the Purchaser may enter into an agreement which would result
in a Fundamental Change if, prior to, or simultaneously with
the consummation of such transaction, the Purchaser makes a
Terminating Payment to the Company pursuant to the
provisions of Section 5(d)(ii) above.
d) Relationship Between the Parties. Notwithstanding
anything to the contrary herein, (i) the Purchaser shall not
hold itself out as a partner, or other affiliate of the
Company after the date hereof; and (ii) the Company shall
not hold itself out as a partner, or other affiliate of the
Purchaser after the date hereof. The parties further
acknowledge that the Purchaser's corporate name is similar
to the Company's former name (Visual Edge Systems, Inc.).
Accordingly, the parties agree to cooperate with respect to
any confusion that might arise to clarify that the Purchaser
is not a successor to, or otherwise related to, the Company
and that the Company is not responsible for Purchaser's
liabilities or obligations. Such cooperation shall include,
without limitation, forwarding mail, packages, and
responding to inquiries which are a result of the name
similarity.
e) Access to Books and Records. As long as the
Purchaser has an obligation to make Quarterly Payments to
the Company, the Purchaser agrees to provide the Company
with the right to visit the Purchaser's premises during
regular working hours to inspect the books and records of
the Purchaser and the right to conduct an independent audit
of the financial records of the Purchaser upon written
request of the Company. The Company agrees to bear all
costs associated with such an independent audit; provided,
however, if the results of the independent audit indicate
that the financial
8
records of the Purchaser are materially incorrect, then the
Purchaser and not the Company shall bear the costs of such
independent audit.
f) Cooperation with Respect to Governmental Filings.
The Purchaser agrees to provide information to the Company
and the reasonable cooperation necessary for the Company to
make appropriate disclosures in its periodic and annual
reports to be filed under the Securities Exchange Act of
1934, as amended, related to the transactions contemplated
by this Agreement and related to the Business. Such
cooperation shall include the Purchaser providing reasonable
access to the Company to review and make copies of the books
and records included within the Purchased Assets.
g) Consents. The Purchaser agrees to obtain the
necessary consents to assign any lease, agreements and other
contractual arrangements that form a part of the Purchased
Assets. The Company shall provide reasonable cooperation
with the Purchaser in obtaining such consents.
Notwithstanding anything to the contrary contained herein or
any of the other instruments executed in connection with
this transaction, it shall be a condition precedent to the
consummation of the transactions contemplated by this
Agreement that, on or before the Escrow Settlement Date,
the Purchaser shall have (i) obtained the consent of Xxxx
Xxxxxx and Great White Shark Enterprises, Inc.
(collectively, "Xxxxxx") for transfer to the Purchaser of
the Company's license to use Xxxx Xxxxxx'x name, likeness
and endorsement and certain trademarks owned by him in
connection with the production and promotion of the
Business, (ii) a release of the Company by Xxxxxx from all
of the Company's obligations under its license agreement
with Xxxxxx from and after April 1, 2001, and (iii) paid in
full of all amounts due and owing Xxxxxx as of the Escrow
Settlement Date. The Purchaser agrees to make its best
efforts to obtain such consent and release upon execution of
this Agreement.
The Company shall remain responsible for amounts owing
to Xxxxxx for the time periods prior to April 1, 2001 which
is listed on Schedule 5(e), in the approximate amount of
$42,990.
h) Patent Assignment. Effective as of the Escrow
Settlement Date, the Company shall effect the transfer, at
the Purchaser's cost, of any patent forming a part of the
Purchased Assets to the Purchaser, and the Company grants
the Purchaser a royalty-free license hereunder and pursuant
to the general management rights of the Purchaser described
in the Management Agreement to use the patent thereunder
pending such transfer.
9. Indemnification.
a) Indemnification from the Company. The Company
consents and agrees to defend, indemnify and hold the
Purchaser, its officers, directors, agents, attorneys and
accountants harmless for, from and against any and all
damages, losses which shall include any diminution in value,
liabilities (absolute and contingent), payments,
obligations, penalties, claims, litigation, demands,
defenses, judgments, suits, proceedings, costs,
disbursements or expenses (including, without limitation,
fees,
9
disbursements and expenses of attorneys, accountants and
other professional advisors and of expert witnesses and
costs of investigation and preparation) of any kind or
nature whatsoever (collectively, "Damages"), directly or
indirectly resulting from, relating to or arising out of (i)
any breach or nonperformance (partial or total) of any
covenant or agreement or any breach of any representation or
warranty of the Company contained in this Agreement; or (ii)
any Retained Liability.
b) Indemnification from the Purchaser. The Purchaser
consents and agrees to defend, indemnify and hold the
Company, its officers, directors, agents, attorneys and
accountants harmless for, from and against any and all
Damages directly or indirectly resulting from, relating to
or arising out of (i) any breach or nonperformance (partial
or total) of or inaccuracy in any representation or warranty
or covenant or agreement of the Purchaser contained in this
Agreement, (ii) any Existing Assumed Liability, (iii) any
Future Business Liability, or (iv) any act or omission of
the Purchaser or its agents, servants, employees and
contractors arising out of the Purchaser's operation and
ownership of the Purchased Assets after April 1, 2001.
10. Survival. Unless otherwise stated in this Agreement,
the representations, warranties, and acknowledgments set forth
herein shall survive the execution and delivery of this Agreement
and the other agreements and instruments referenced herein for a
period of two (2) years from the effective date hereof, which
shall be the last date of execution of the parties hereto;
however, the covenants and indemnifications herein shall
indefinitely survive. The representations, warranties, covenants
and indemnifications contained herein shall not be affected by
any investigation, verification, approval or subsequent notice
made by or on behalf of any party hereto. No specific
representation or warranty shall limit the generality or
applicability of a more general representation or warranty.
11. Expenses; Brokers.
a) Expenses. Each of the parties hereto shall pay
its own legal, accounting and other expenses incurred in
connection herewith and the transactions contemplated
hereby.
b) Brokers. Each of the parties hereto represents
and warrants that no finder, broker or other person is
entitled to any commission, fee or other compensation in
connection with any of the transactions contemplated by this
Agreement.
12. Severable Provisions; Enforceability. Each provision of
this Agreement is intended to be severable. If any provision
hereof shall be declared by a court of competent jurisdiction to
be illegal, unenforceable or invalid for any reason whatsoever,
such illegality, unenforceability or invalidity will not affect
the validity of the remainder of this Agreement or any applicable
provision.
13. Governing Law. THIS AGREEMENT WILL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAW OF THE STATE
OF TEXAS, REGARDLESS OF ANY CONFLICT OF LAW RULES TO THE
CONTRARY.
10
14. Entire Agreement. This Agreement, the exhibits and
schedules attached hereto and the Ancillary Documents constitute
the entire Agreement among the parties with respect to the
purchase and sale of the Purchased Assets, the assumption of the
Existing Assumed Liabilities and the other matters referenced
herein. This Agreement, therefore, supersedes any and all prior
agreements, arrangements, communications, and representations,
whether oral or written, among the parties, or any of them,
relating to the subject matters hereof.
15. Construction. The parties hereto acknowledge that each
party was represented by legal counsel, or had the opportunity to
obtain legal counsel, in connection with this Agreement and that
each party and each party's counsel, as applicable, have reviewed
and revised this Agreement, or have had an opportunity to do so,
and that any rule of construction to the effect that ambiguities
are to be resolved against the drafting party shall not be
employed in the interpretation of this Agreement.
16. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their
respective permitted assigns, legal representatives, executors,
heirs and successors.
17. Amendment, Modification or Waiver. No amendment,
modification or waiver of any condition, provision or term of
this Agreement shall be valid or of any effect unless made in
writing, signed by the party or parties to be bound and
specifying with particularity the nature and extent of such
amendment, modification or waiver.
18. No Third-Party Beneficiaries or Expansion of Rights.
Except for the provisions of Section 9 (Indemnification),
notwithstanding anything contained herein to the contrary,
nothing in this Agreement, express or implied, is intended to or
shall be construed to confer upon, or give to, any person,
partnership, corporation or other entity other than the Company
or the Purchaser, any remedy or claim under or by reason of this
Agreement or any terms, covenants or conditions hereof, and all
the terms, covenants and conditions, promises and agreements
contained in this Agreement shall be for the sole and exclusive
benefit of each of the Company and the Purchaser.
19. Notices. Any notice or other communication required or
permitted to be given to any party pursuant to this Agreement
shall be in writing and shall be deemed to have been delivered:
(b) if by facsimile, upon delivery with proof of successful
transmission; (c) if hand-delivered, upon delivery against
receipt or upon refusal to accept the notice; or (d) if delivered
by Federal Express or other similar courier, one (1) day after
deposited with such courier, postage prepaid, in each case,
addressed to such party at the address set forth below:
a) If to the Company:
Edge Technology Group, Inc.
0000 Xxxxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
11
With a copy to:
Xxxxx & Xxxxxx LLP
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Facsimile: 000-000-0000
Telephone: 000-000-0000
b) If to the Purchaser:
Visual Edge, Inc.
000 Xxxxxx Xxxx, Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
Attention: Xxxxxx Xxxxx
With a copy to:
Xxxxxx, South & Xxxxxxxxx, P.A.
0000 Xxx Xx., Xxxxx 000
Xxxxxx Xxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxx, Esq.
Facsimile: 407-539-2679
Telephone: 000-000-0000
or to such other place as the respective addressee may have
designated in a written notice to the other party as provided in
this Section. Notices may be given by each party's respective
legal counsel.
20. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same
instrument.
21. Execution by Facsimile; Delivery of Original Signed
Agreement. This Agreement may be executed by facsimile, and shall
be deemed effectively executed upon the receipt by the Purchaser
and the Company of the last page of this Agreement duly executed
by the other parties hereto. Each party to this Agreement agrees
to deliver two (2) original, inked and signed copies of this
Agreement within four (4) days of faxing the executed last page
hereof.
22. Public Releases/Confidentiality. No news release,
public or private announcement, or advertising material concerned
with this Agreement or the transactions contemplated hereby shall
be issued by either party without the prior written consent of
the other party; provided, however, the Company may, in its sole
discretion, make a press release or other public announcement
concerning this Agreement if, in the reasoned opinion of the
Company's counsel, such disclosure is required by applicable
securities laws. The parties agree that this Agreement, the terms
and conditions embodied herein, as well as any information
discovered or learned by a party in connection with the
negotiation or consummation of this Agreement, and all other
matters surrounding the relationship between the parties shall be
deemed confidential.
12
Accordingly, the parties agree to maintain
such items and information confidentially and not to disclose
such items or information to third parties or to use such items
or information for any purpose other than the consummation of the
transactions contemplated hereby.
23. Mediation. Any dispute involving this Agreement, the
transactions contemplated hereby or the business relationship
between the parties (each, a "Dispute"), if not resolved
informally through negotiation between the parties, will be
submitted to non-binding mediation. The parties will mutually
determine who the mediator will be from a list of mediators
obtained from the American Arbitration Association ("AAA") office
located in Dallas, Texas. If the parties are unable to agree on
the mediator, the mediator will be selected by the AAA. Any
negotiation or mediation conducted pursuant to this Section 23
will take place in Dallas, Texas.
24. Attorneys' Fees. In the event of any dispute between
the parties to this Agreement, the prevailing party shall be
entitled to recover from the non-prevailing party its attorneys'
fees, paralegal fees, investigative fees and costs, through all
tribunals, appeals, bankruptcy proceedings and collections. All
such fees shall be reasonable in relation to the time expended.
[Signature Page Follows]
13
IN WITNESS WHEREOF, the Purchaser and the Company have
executed and delivered this Agreement as of the day and year
first above written.
Company:
EDGE TECHNOLOGY GROUP, INC.,
a Delaware corporation
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxxx
----------------------------
Title: President & CEO
---------------------------
Purchaser:
VISUAL EDGE, INC.
a Delaware corporation
By: /s/ Xxxxxx Xxxxx
-------------------------------
Name: Xxxxxx Xxxxx
-----------------------------
Title: President
----------------------------
14
List of Schedules and Exhibits
------------------------------
Schedule 1 - List of Assets
Schedule 4(a) - List of Retained Liabilities
Schedule 5(e) - List of Critical Liabilities
Schedule 7(d) - Payments Made on March 31, 2001 Debt Schedule of
Monies Advanced by VE
Schedule 8(a) - List of Employees/Releases
Exhibit A - Promissory Note
Exhibit B - Security Agreement
Exhibit C - Escrow Agreement
Exhibit D - Xxxx of Sale and Assignment
Exhibit E - Management Agreement
15
EXHIBIT A
---------
(Promissory Note)
TO
ASSET PURCHASE AGREEMENT
AND
ASSIGNMENT AND ASSUMPTION AGREEMENT
by and between
EDGE TECHNOLOGY GROUP, INC.
a Delaware corporation
and
VISUAL EDGE, INC.,
a Delaware corporation
PROMISSORY NOTE
$250,000.00 September 10, 0000
Xxxxxx, Xxxxx
FOR VALUE RECEIVED, on or before October 22, 2001 ("Maturity
Date"), the undersigned (hereinafter referred to as "Buyer"),
promises to pay to the order of Edge Technology Group, Inc.
("Seller") at its offices at 0000 Xxx Xxxxxx, 0000 Xxxxxxxxxxxx
Xxxxx, Xxxxxx, Xxxxx 00000, the principal amount of TWO HUNDRED
FIFTY THOUSAND AND 00/100 DOLLARS ($250,000.00) ("Total Principal
Amount"), together with interest thereon until paid at a fixed
rate per annum equal to eight percent (8.0%), calculated on the
basis of actual days elapsed in a year of 365 or 366 days, as
applicable.
The principal of and all accrued but unpaid interest on this
Promissory Note ("Note") shall be due and payable on the Maturity
Date.
Buyer may from time to time prepay all or any portion of the
principal of this Note without premium or penalty. Unless
otherwise agreed to in writing, or otherwise required by
applicable law, payments will be applied first to unpaid accrued
interest, then to principal, and any remaining amount to any
unpaid collection costs. All prepayments shall be applied to the
indebtedness owing hereunder in such order and manner as Seller
may from time to time determine in its sole discretion. All
payments and prepayments of principal of or interest on this Note
shall be made in lawful money of the United States of America in
immediately available funds, at the address of Seller indicated
above, or such other place as the holder of this Note shall
designate in writing to Buyer. If any payment of principal of or
interest on this Note shall become due on a day which is not a
Business Day (as hereinafter defined), such payment shall be made
on the next succeeding Business Day and any such extension of
time shall be included in computing interest in connection with
such payment. As used herein, the term "Business Day" shall mean
any day other than a Saturday, Sunday or any other day on which
national banking associations in the United States of America are
authorized to be closed.
This Note has been executed and delivered pursuant to that
certain Asset Purchase and Assignment and Assumption Agreement of
even date herewith by Seller (the "Asset Purchase Agreement") and
that certain Security Agreement (herein so called). This Note,
the Asset Purchase Agreement and the Security Agreement, and all
other documents evidencing, securing, governing, guaranteeing
and/or pertaining to this Note, including but not limited to
those documents described above, are hereinafter collectively
referred to as the "Loan Documents." The holder of this Note is
entitled to the benefits and security provided in the Loan
Documents. Amounts due under this Note shall not be offset by
any amounts owed to Buyer.
Buyer agrees that upon the occurrence of any one or more of
the following events of default ("Event of Default"):
(a) failure of Buyer to pay the principal of or interest
on this Note or on any other indebtedness of Buyer to Seller
when due; or
(b) the bankruptcy or insolvency of, the assignment for
the benefit of creditors by, or the appointment of a receiver
for any of the property of, or the liquidation, termination,
dissolution or death or legal incapacity of, any party liable
for the payment of this Note, whether as maker, endorser,
guarantor, surety or otherwise;
the holder of this Note may, at its option, without further
notice or demand, (i) declare the outstanding principal balance
of and accrued but unpaid interest on this Note at once due and
payable, (ii) pursue any and all other rights, remedies and
recourses available to the holder hereof, including but not
limited to any such rights, remedies or recourses under the Loan
Documents, at law or in equity or (iii) pursue any combination of
the foregoing.
The failure to exercise the option to accelerate the
maturity of this Note or any other right, remedy or recourse
available to the holder hereof upon the occurrence of an Event of
Default hereunder shall not constitute a waiver of the right of
the holder of this Note to exercise the same at that time or at
any subsequent time with respect to such Event of Default or any
other Event of Default. The rights, remedies and recourses of
the holder hereof, as
1
provided in this Note and in any of the other Loan Documents,
shall be cumulative and concurrent and may be pursued separately,
successively or together as often as occasion therefore shall
arise, at the sole discretion of the holder hereof. The
acceptance by the holder hereof of any payment under this Note
which is less than the payment in full of all amounts due and
payable at the time of such payment shall not (i) constitute a
waiver of or impair, reduce, release or extinguish any right,
remedy or recourse of the holder hereof, or nullify any prior
exercise of any such right, remedy or recourse, or (ii) impair,
reduce, release or extinguish the obligations of any party liable
under any of the Loan Documents as originally provided herein or
therein.
If this Note is placed in the hands of an attorney for
collection, or is collected in whole or in part by suit or
through probate, bankruptcy or other legal proceedings of any
kind, Buyer agrees to pay, in addition to all other sums payable
hereunder, all costs and expenses of collection, including but
not limited to reasonable attorneys' fees.
Buyer and any and all endorsers and guarantors of this Note
severally waive presentment for payment, notice of nonpayment,
protest, demand, notice of protest, notice of intent to
accelerate, notice of acceleration and dishonor, diligence in
enforcement and indulgences of every kind and without further
notice hereby agree to renewals, extensions, exchanges or
releases of collateral, taking of additional collateral,
indulgences or partial payments, either before or after maturity.
THIS NOTE HAS BEEN EXECUTED UNDER, AND SHALL BE CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.
BUYER:
VISUAL EDGE, INC.
By: /s/ Xxxxxx Xxxxx
--------------------------------
Name: Xxxxxx Xxxxx
------------------------------
Title: President
-----------------------------
EXHIBIT B
---------
(Security Agreement)
TO
ASSET PURCHASE AGREEMENT
AND
ASSIGNMENT AND ASSUMPTION AGREEMENT
by and between
EDGE TECHNOLOGY GROUP, INC.
a Delaware corporation
and
VISUAL EDGE, INC.,
a Delaware corporation
SECURITY AGREEMENT
This Security Agreement (the "Agreement") dated __________,
2001 between VISUAL EDGE, INC., a Delaware corporation
("Debtor"), and EDGE TECHNOLOGY GROUP, INC., a Delaware
corporation ("Secured Party"), recites and provides as follows:
INTRODUCTORY PROVISIONS
A. Debtor and Secured Party are entering into that certain
Asset Purchase and Assignment and Assumption Agreement of even
date herewith, among other agreements (such agreement as it may
be amended, renewed, extended, restated, replaced or otherwise
modified, the "Asset Purchase Agreement") pursuant to which
Debtor has executed the Promissory Note (the "Note" or the
"Loan") of even date in the original principal amount of
$250,000.00 payable by Debtor to the order of Secured Party.
B. As a condition to entering into the Asset Purchase
Agreement and making the Loan to Debtor, Secured Party has
required that Debtor grant to Secured Party a security interest
in certain hereinafter described property owned by Debtor to
secure the payment and performance of certain obligations of
Debtor to Secured Party, including its obligations under the
Asset Purchase Agreement and Note.
NOW, THEREFORE, in consideration of the premises and for
other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged and confessed, the
parties hereto agree as follows:
1. Security Interest. Debtor hereby grants to Secured
Party security interests in and to any and all present or future
rights of Debtor in and to all of the following rights, interests
and property (all of the following being herein sometimes called
the "Collateral"): (a) any and all inventory, merchandise, goods
and other personal property now owned or hereafter acquired by
Debtor which are held for sale or lease or are furnished or are
to be furnished under a contract of service, and all raw
materials, work-in-process and materials used or consumed or to
be used or consumed in Debtor's business, whether now owned or
hereafter acquired; (b) any and all accounts, accounts
receivable, and contract rights of Debtor now existing or
hereafter arising; (c) any and all equipment now owned or
hereafter acquired by Debtor, together with all additions,
attachments, substitutions, replacements or improvements thereto,
thereof, or therefore, (d) any and all general intangibles,
chattel paper, securities, documents and instruments of Debtor
now owned or hereafter acquired; (e) any and all rights, titles,
and interests now owned or hereafter acquired by Debtor in and to
any leases covering real property, equipment, or other personal
property, or any interest therein; (f) all copyrights, works
protectable by copyright, copyright registrations, copyright
applications, copyright licenses, patents, patent applications,
patentable inventions, patent licenses, trademarks, trade names,
company names, business names, trade styles, service marks,
logos, other business identifiers, trademark licenses, trade
secrets, proprietary information and customer lists of Debtor;
(g) all of Debtor's books, records, data, plans, manuals,
computer software, computer tapes, computer disks, computer
programs, source codes and all rights of Debtor to retrieve data
and other information from third parties; (h) all accounts,
general intangibles, chattel paper, and proceeds arising from or
by virtue of, or out of the sale or other disposition of, or
collections with respect to,
1
or any insurance payable with respect to, all or any part of the
Collateral described in subsections (a) through (g) preceding;
and (i) all other instruments, documents, chattel paper, goods
and other personal property of Debtor now in the possession of,
and at any time and from time to time hereafter delivered to
Secured Party or its agents.
2. The Obligations. This Agreement is being executed and
delivered to secure, and the security interests herein granted
(the "Security Interests") shall secure, full payment and
performance of (a) all of the indebtedness, obligations and
liabilities owing to Secured Party by Debtor under the Asset
Purchase Agreement and all renewals, extensions and modifications
thereof; (b) all of the indebtedness, obligations and liabilities
owing to Secured Party by Debtor under the Note and all renewals,
extensions and modifications thereof and (c) all indebtedness and
liabilities of Debtor to Secured Party at any time arising under
the terms of this Security Agreement, or any other agreement
securing the Note (all of such debts, indebtedness, liabilities
and duties referred to in this paragraph 2 are hereinafter
collectively referred to as the "Obligations").
3. Representations and Warranties of Debtor. Debtor
represents and warrants to Secured Party that: (a) Debtor is the
owner of the Collateral; (b) the Security Interests are first and
prior security interests in and to all of the Collateral; and (c)
no dispute, right of setoff, counterclaim, or defenses exist with
respect to all or any part of the Collateral.
4. Affirmative Covenants of Debtor. So long as any part
of the Obligations remain unpaid or unperformed, Debtor covenants
and agrees to: (a) use the Collateral with reasonable care,
skill, and caution; (b) keep the tangible Collateral in good
repair, working order, and condition, and promptly make all
necessary repairs and replacements to that end; (c) pay, before
delinquent, all taxes and other assessments lawfully levied
against all or any of the Collateral, except such as are being
contested in good faith and by appropriate proceedings; (d) keep
the Collateral fully insured in such amounts, and against such
risks as is customary and prudent in Debtor's industry, and with
such insurers as may be satisfactory to Secured Party, with the
loss payable to Secured Party as its interest may appear, and
from time to time, at the request of Secured Party, furnish to
Secured Party satisfactory proof of maintenance of such insurance
and the payment of premiums thereon, and, if requested by Secured
Party, deposit with the latter certificates evidencing such
insurance, provided that in the event of a breach by Debtor of
any of the provisions of this clause, Secured Party may at its
option maintain insurance on only Secured Party's interest in the
Collateral, any cost incurred thereby by Secured Party to be part
of the Obligations; (e) from time to time, and at any time,
promptly execute and deliver to Secured Party all assignments,
certificates and supplemental documents, and do all other acts or
things as Secured Party may reasonably request in order to more
fully evidence and perfect the Security Interests herein created;
(f) promptly furnish such information as Secured Party may
reasonably request concerning the Collateral; (g) allow Secured
Party to inspect the Collateral and all records of Debtor
relating thereto, and to make and take away copies of such
records; (h) promptly in writing notify Secured Party of any
change in any fact or circumstance warranted or represented by
Debtor herein or of any breach of this Agreement or the Note; and
(i) promptly in writing notify Secured Party of any claim,
action, or proceeding affecting title to the Collateral, or any
part thereof, or the Security Interests herein created, and at
the request of Secured Party, appear in and defend, at Debtor's
expense, any such action or proceeding.
2
5. Negative Covenants of Debtor. Debtor further covenants
and agrees that, without the prior written consent of Secured
Party, Debtor will not (a) except for sale of finished goods
inventory in the ordinary course of business, sell, assign or
transfer any of Debtor's rights in the Collateral; (b) create any
other security interest in, mortgage or otherwise encumber the
Collateral, or any part thereof, or permit the same to be or
become subject to any lien, attachment, execution, sequestration,
other legal or equitable process or any encumbrance of any kind
or character, except the Security Interests herein created and
the Bank Lien; (c) use the Collateral, or permit the same to be
used, for any unlawful purpose or in any manner inconsistent with
the provisions or requirements of any insurance policy required
hereunder; and (d) move or allow the Collateral, or any part
thereof, to be moved across any state boundary before (i) written
notice describing the current location, the proposed removal and
the proposed new location is given to and received by Secured
Party thirty (30) days in advance of a proposed removal and (ii)
written consent of Secured Party to the removal of such
Collateral in such manner and to such location is received by
Debtor.
6. Default. As used herein, the term "Event of Default"
has the meaning given to such term in the Note, all of the terms,
covenants, conditions and provisions of which are incorporated
herein by reference the same as if set forth herein verbatim,
which terms, covenants, conditions, and provisions shall continue
in full force and effect until the Obligations are paid and
performed in full.
7. Remedies. Upon the occurrence of an Event of Default,
in addition to any and all other rights and remedies which
Secured Party may then have hereunder, under the Uniform
Commercial Code of the State of Texas or of any other pertinent
jurisdiction (the "Code"), or otherwise, Secured Party may, at
its option: (a) enter upon the premises where any of the
Collateral not in the possession of Secured Party or its agent is
located and take possession thereof and remove the same, with or
without judicial process; (b) reduce its claim to judgment or
foreclose or otherwise enforce the Security Interests, in whole
or in part, by any available judicial procedure; (c) after
notification, if any, provided for herein, sell, lease, or
otherwise dispose of, at the offices of Secured Party, on the
premises of Debtor, or elsewhere, all or any part of the
Collateral, in its then condition or following any commercially
reasonable preparation or processing, and any such sale or other
disposition may be as a unit or in parcels, by public or private
proceedings, and by way of one or more contracts (it being agreed
that the sale of any part of the Collateral shall not exhaust
Secured Party's power of sale, but sales may be made from time to
time, and at any time, until all of the Collateral has been sold
or until the Obligations have been paid and performed in full),
and at any such sale it shall not be necessary to exhibit any of
the Collateral; (d) at its discretion, surrender any policies of
insurance on the Collateral in satisfaction of the Obligations
whenever the circumstances are such that Secured Party is
entitled to do so under the Code or otherwise; and (f) exercise
any and all other rights, remedies, and privileges it may have
under any other documents or agreements securing payment of the
Loan or that it may have under law.
Any and all proceeds ever received by Secured Party from any
sale or other disposition of the Collateral, or any part thereof,
or the exercise of any other remedy pursuant hereto shall be
applied by Secured Party to the Obligations in such order and
manner as Secured Party, in its sole discretion, may deem
appropriate, notwithstanding any directions or instructions to
the contrary by Debtor; if such proceeds are not sufficient to
pay the Obligations in full, Debtor shall remain liable to
Secured Party for the deficiency.
3
With respect to any of the Collateral that is or becomes
accounts, contract rights, instruments, or chattel paper, Secured
Party, without notice to Debtor, shall be entitled, but not
obligated, at any time and from time to time after the occurrence
of an Event of Default, to notify and direct the account debtor
or obligor thereon to thereafter make all payments on such
Collateral directly to Secured Party, regardless of whether
Debtor was previously making collections thereon. Each account
debtor and obligor making payment to Secured Party hereunder
shall be fully protected in relying on the written statement of
Secured Party that it then holds the Security Interests that
entitles it to receive such payment, and the receipt of Secured
Party for such payment shall be full acquittance therefor to the
one making such payment.
For purposes of enabling Secured Party to exercise its
rights and remedies under this Agreement and enabling Secured
Party and its successors and assigns to enjoy the full benefits
of the Collateral, effective upon the occurrence of an Event of
Default, Debtor hereby grants to Secured Party an irrevocable,
nonexclusive license (exercisable without payment of royalty or
other compensation to Debtor) to use, assign, license or
sublicense any copyrights, patents, trademarks or other
intellectual property constituting Collateral, including in such
license reasonable access to all media in which any of the
licensed items may be recorded or stored and all computer
programs used for the completion or printout thereof. This
license shall also inure to the benefit of all successors,
assigns and transferees of Secured Party.
8. Costs, Risks. Should any part of the tangible
Collateral come into the possession of Secured Party, whether
before or after the occurrence of an Event of Default, Secured
Party may use or operate such Collateral for the purpose of
preserving it or its value, or pursuant to the order of a court
of appropriate jurisdiction or in accordance with any other
rights held by Secured Party in respect of the Collateral.
Debtor covenants to promptly reimburse and pay to Secured Party,
at Secured Party's request, the amount of all expenses (including
the cost of any insurance and payment of taxes or other charges
and reasonable attorneys' fees) incurred by Secured Party in
connection with its custody, preservation, use, or operation of
the Collateral, and all such expenses, costs, taxes, and other
charges shall be a part of the Obligations and shall bear
interest at the then applicable rate of interest set forth in the
Note from the date incurred until the date repaid to Secured
Party. It is agreed, however, that the risk of loss or damage to
such Collateral is on Debtor, and Secured Party shall have no
liability whatsoever for failure to obtain or maintain insurance,
nor to determine whether any insurance ever in force is adequate
as to amount or as to the risks insured.
9. Notice. Reasonable notification of the time and place
of any public sale of the Collateral, or reasonable notification
of the time after which any private sale or other intended
disposition of the Collateral is to be made (including retention
thereof in satisfaction of the Obligations), shall be sent to
Debtor and to any other person entitled under the Code to notice.
It is agreed that notice sent or given at least fifteen (15)
calendar days prior to the taking of the action to which the
notice relates to Debtor at its address set forth in the Asset
Purchase Agreement is reasonable notification and notice for the
purposes of this paragraph.
10. Rights Cumulative. All rights and remedies of Secured
Party hereunder are cumulative of each other and of every other
right or remedy which Secured Party may otherwise have at law or
in equity or under any other contract or other writing for the
enforcement of the
4
Security Interests herein or in the collection of the Note or the
Obligations, and the exercise of one or more rights or remedies
shall not prejudice or impair in any manner the concurrent or
subsequent exercise of other rights or remedies.
11. Assignment. The rights, powers and interests held by
Secured Party hereunder, together with the Security Interests in
the Collateral, may be transferred and assigned by Secured Party,
in whole or in part, at such time and upon such terms as Secured
Party may deem advisable so long as prior written notice is given
to Debtor.
12. Further Assurances. At any time and from time to time,
upon the request of Secured Party, and at the sole expense of
Debtor, Debtor shall promptly execute and deliver all such
further agreements, documents and instruments and take such
further action as Secured Party may reasonably deem necessary or
appropriate to preserve and perfect its security interest in and
pledge and collateral assignment of the Collateral and carry out
the provisions and purposes of this Agreement or to enable
Secured Party to exercise and enforce its rights and remedies
hereunder with respect to any of the Collateral. Without
limiting the generality of the foregoing, Debtor shall (a)
execute and deliver to the Secured Party such financing
statements as Secured Party may from time to time require; (b)
deliver and pledge to Secured Party all documents (including,
without limitation, documents of title) evidencing inventory or
equipment and cause Secured Party to be named as lienholder on
all documents of title; (c) deliver and pledge to Secured Party
all instruments and chattel paper of Debtor with any necessary
endorsements; and (d) execute and deliver to the Secured Party
such other agreements, documents and instruments as the Secured
Party may require to perfect and maintain the validity,
effectiveness and priority of the Security Interests intended to
be created by the Loan Papers. Debtor authorizes Secured Party
to file one or more financing or continuation statements, and
amendments thereto, relating to all or any part of the Collateral
without the signature of Debtor where permitted by law. A
carbon, photographic or other reproduction of this Agreement or
of any financing statement covering the Collateral or any part
thereof shall be sufficient as a financing statement and may be
filed as a financing statement.
13. No Waivers. No failure on the part of Secured Party to
exercise, and no delay in exercising, any right, power or remedy
hereunder shall operate as a waiver thereof; nor shall any single
or partial exercise by Secured Party of any right, power or
remedy hereunder preclude any other or further exercise thereof
or the exercise of any other right, power or remedy.
14. Binding Effect. This Agreement shall be binding on
Debtor and Debtor's successors and permitted assigns and shall
inure to the benefit of Secured Party, and Secured Party's
successors and assigns.
15. Termination. This Agreement and the Security Interests
in the Collateral will terminate when the Obligations secured
hereby have been paid in full by extinguishment thereof but not
by renewal, modification or extension thereof.
16. Governing Law. The law governing this Agreement will
be that of the internal laws of the State of Texas in force on
the date of execution of this Agreement without regard to
conflict of law principles. All obligations of Debtor under the
terms of this Agreement shall be performable in Dallas County,
Texas.
5
17. Notice. Any notice, request, instruction or other
document required or permitted to be delivered hereunder by
either party hereto to the other shall be in writing and shall be
delivered or mailed in the manner set forth in the Asset Purchase
Agreement.
18. Severability. If any provision of this Agreement is
held to be illegal, invalid, or unenforceable under present or
future laws effective during the term of this Agreement, the
legality, validity, and enforceability of the remaining
provisions of this Agreement shall not be affected thereby.
19. Counterparts. This Agreement has been executed in a
number of identical counterparts, each of which, for all
purposes, is to be deemed an original, and all of which
collectively constitute one agreement, but in making proof of
this Agreement, it shall not be necessary to produce or account
for more than one such counterpart.
20. Number and Gender of Words. Whenever herein the
singular number is used, the same shall include the plural where
appropriate, and words of any gender shall include each other
gender where appropriate.
[SIGNATURE PAGE FOLLOWS]
6
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the day, month and year first
above written.
DEBTOR:
VISUAL EDGE, INC.
By: /s/ Xxxxx Xxxxx
-------------------------------
Name: Xxxxx Xxxxx
-----------------------------
Title: President
---------------------------
SECURED PARTY:
EDGE TECHNOLOGY GROUP, INC.
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------------
Name: Xxxxxx Xxxxxxx
------------------------------
Title: President & CEO
-----------------------------
7
EXHIBIT C
---------
(Escrow Agreement)
TO
ASSET PURCHASE AGREEMENT
AND
ASSIGNMENT AND ASSUMPTION AGREEMENT
by and between
EDGE TECHNOLOGY GROUP, INC.
a Delaware corporation
and
VISUAL EDGE, INC.,
a Delaware corporation
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement") is made as of July
24, 2001 by and among EDGE TECHNOLOGY GROUP, INC. ("Edge"),
VISUAL EDGE, INC. ("Visual Edge") and U.S. TRUST COMPANY OF
TEXAS, N.A. ("Escrow Agent")
WHEREAS, Edge and Visual Edge have entered into that certain
Asset Purchase and Assignment and Assumption Agreement (the
"Asset Purchase Agreement") as of the date hereof; and
WHEREAS, Edge and Visual Edge desire to engage the Escrow
Agent and the Escrow Agent desires to provide the escrow services
called for pursuant to Section 3 of the Asset Purchase Agreement.
NOW, THEREFORE, in consideration of mutual convenants and
agreements contained herein, the parties hereto hereby agree as
follows:
1. Appointment of Escrow Agent; Escrow Funds.
(a) Edge and Visual Edge hereby appoint the Escrow Agent,
and the Escrow Agent hereby agrees to act, as the agent of
such parties in performing the duties of the Escrow Agent
provided for herein.
(b) On the date hereof, Visual Edge or Edge, as applicable,
has deposited with the Escrow Agent the documents set forth
on Schedule A attached hereto (the "Escrow Documents") and
Visual Edge has deposited immediately available funds in the
amount of $123,000 (together with accrued interest or other
investment income, the "Escrow Funds"). The Escrow
Documents and the Escrow Funds are collectively referred to
as the "Escrow Materials." The Escrow Materials shall be
held and distributed by the Escrow Agent in accordance with
the provisions contained herein.
(c) As compensation for the Escrow Agent's services
hereunder, the Escrow Agent has been paid $3,500 (the
"Escrow Fee") by the parties out of the Escrow Funds.
2. Investments; Distributions.
The Escrow Agent shall invest the Escrow Funds in (i) the
Excelsior Money Market Fund, (ii) other money market funds, (iii)
Treasury Bills, (iv) other direct obligations of the United
States of America or any agency thereof, or (v) commercial paper
with the best rating by Standard & Poor's Corporation or Xxxxx'x
Investors Service, Inc.
Escrow Agent shall continue to invest and reinvest the
principal amount of the Escrow Funds until delivery of such
Escrow Funds as provided herein. The parties acknowledge that
the Escrow Agent shall not be liable for any diminution in value
of the Escrow Funds as a result of losses from investments made
pursuant to this Agreement.
1
3. Disbursement of Escrow Materials. The Escrow Agent shall
deliver the Escrow Materials in accordance with the following
instructions:
(a) Upon written instruction from Edge, the Escrow Agent
shall date the Xxxx of Sale and Assignment, the Promissory
Note, and the Security Agreement as of the date such
instruments are released from Escrow.
(b) Upon written instructions from Edge, the Escrow Agent
shall deliver the dated Promissory Note, the Security
Agreement and Escrow Funds (including interest earned
thereon) to Edge, and shall deliver the dated Xxxx of Sale
and Assignment to Visual Edge.
(c) Upon written instructions from Edge, the Escrow Agent
shall make a distribution of the Escrow Funds in such
amounts as Edge may request from time to time, prior to the
final release from Escrow of the Escrow Materials.
(d) If the Escrow Settlement Date as defined in the Asset
Purchase Agreement shall not have occurred by September 14,
2001, the Escrow Agent shall (i) deliver the undated Xxxx of
Sale and Assignment to Edge, and (ii) deliver the then-
existing balance of the Escrow Funds, undated Promissory
Note, the undated Security Agreement, and the UCC-1 to
Visual Edge.
4. Escrow Period. The escrow created hereby shall remain in
existence until the date upon which all of the Escrow Materials
have been distributed in accordance herewith (such period being
referred to herein as the "Escrow Period"). Following the
expiration of the Escrow Period and distribution in accordance
herewith of the Escrow Materials, the Escrow created hereby shall
terminate. Upon termination of the Escrow Agreement, the Escrow
Agent shall be discharged of all responsibility hereunder at such
time as the Escrow Agent shall have completed its duties
hereunder, provided, however, the Escrow Agent's rights to
indemnity and to receive payment of its fees and expenses shall
survive any termination of the Escrow Agreement.
5. Indemnity. The Escrow Agent shall be indemnified and held
harmless by Edge and Visual Edge from and against any and all
liability, including all expenses reasonably incurred in its
defense, to which the Escrow Agent shall be subjected by reason
of any action taken or omitted or any investment or disbursement
of any part of the Escrow Materials made by the Escrow Agent
pursuant to this Agreement, unless caused by the gross negligence
or willful misconduct of the Escrow Agent. This right of
indemnification shall survive the termination of this Agreement
and/or the resignation or removal of the Escrow Agent.
6. Escrow Agent's Rights and Responsibilities. To induce the
Escrow Agent to act hereunder, it is further agreed that:
(a) The Escrow Agent shall not be under any duty to
exercise any greater degree of care with respect to the
property to be held and administered by the Escrow Agent
hereunder than such Escrow Agent shall exercise with respect
to other such property held or administered by the Escrow
Agent in its normal course of business. The Escrow Agent
undertakes to perform such duties as are specifically set
forth in this Agreement, and the Escrow Agent shall not be
liable except for the performance of such duties as are
specifically set forth in this Agreement, and no implied
covenants or
2
obligations shall be read into this Agreement with
respect to or involving the Escrow Agent. The Escrow Agent
is not a party to any other agreement and the Escrow Agent
shall not be subject to any other agreement even though
reference thereto may be made herein. In no event shall the
Escrow Agent be liable for punitive, consequential or
speculative damages.
(b) The Escrow Agent may act upon advice of counsel in
reference to any matter connected herewith and shall not be
liable for any acts or omissions while acting in good faith
and exercising reasonable judgment (including, without
limitation, pursuant to such advice).
(c) The Escrow Agent shall not be liable in any respect on
account of the identity, authority or rights of the parties
executing or delivering or purporting to execute or deliver
this Agreement or any documents or papers deposited or
called for hereunder.
(d) The Escrow Agent is hereby expressly authorized to
disregard any and all warnings given by any of the parties
hereto or by any other person, excepting only orders or
process of courts of law, and is hereby expressly authorized
to comply with and obey orders, judgments or decrees of any
court. In case the Escrow Agent obeys or complies with any
such order, judgment or decree of any court, the Escrow
Agent shall not be liable to any of the parties hereto or to
any other person by reason of such compliance,
notwithstanding any such order, judgment or decree being
subsequently reversed, modified, annulled, set aside,
vacated or found to have been entered without jurisdiction.
(e) The Escrow Agent is authorized to rely on the written
instructions of any executive officer of Edge as being the
act of Edge.
(f) This Agreement sets forth the exclusive duties of the
Escrow Agent with respect to any and all matters pertinent
hereto and no implied duties or obligations of the Escrow
Agent shall be read into this Agreement.
(g) The Escrow Agent shall not be called upon to advise any
party as to its rights and obligations hereunder.
(h) The Escrow Agent shall be fully protected in acting in
accordance with any written instructions given to it
hereunder and believed by it to have been executed by the
proper parties. The Escrow Agent's duties shall be
determined only with reference to this Agreement and
applicable laws and the Escrow Agent is not charged with any
duties or responsibilities in connection with any other
document or agreement.
(i) All parties acknowledge and agree that the Escrow Agent
is acting solely and exclusively as a depository hereunder.
(j) The provisions of this Section 5 shall survive the
termination of the Escrow Period.
7. Resignation of Escrow Agent. The Escrow Agent, or any
successor, may resign as Escrow Agent hereunder by giving written
notice thereof to Edge and Visual Edge. Such
3
resignation shall become effective following such written notice
upon the earlier of the appointment by Edge and Visual Edge of a
successor Escrow Agent that accepts the appointment and agrees to
be bound by the provisions of this Agreement or 30 days after the
date of delivery of such notice, whichever shall first occur.
Upon the effectiveness of such resignation, all duties of the
Escrow Agent so resigning shall cease. Edge and Visual Edge
shall have the right to terminate the appointment of the Escrow
Agent hereunder by giving written notice thereof to the Escrow
Agent, specifying the date upon which such termination shall take
effect. A condition precedent to such termination shall be the
designation of a successor Escrow Agent that has accepted the
appointment and agreed to be bound by the provisions of this
Agreement. In the event of such termination, the Escrow Agent
shall turn over and deliver to such successor Escrow Agent the
Escrow Materials, and any other sums, records or instruments held
by it under this Agreement. In the event of any merger or
similar transaction involving the Escrow Agent, the successor to
the Escrow Agent shall become the Escrow Agent without further
action being required.
8. Notices. All notices and other communications pursuant to
this Agreement shall be in writing and shall be deemed given if
delivered personally, sent by nationally recognized, overnight
courier, or mailed by certified mail (return receipt requested),
postage prepaid, or sent by facsimile (followed by a copy sent by
courier or registered or certified mail) to the parties at the
following addresses (or at such other address for a party as
shall be specified by notice hereunder):
To Edge:
Edge Technology Group, Inc.
0000 Xxxxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
With a copy to:
Xxxxx & Xxxxxx LLP
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Facsimile: 000-000-0000
Telephone: 000-000-0000
To Visual Edge:
Visual Edge, Inc.
000 Xxxxxx Xxxx, Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
Attention: Xxxxxx Xxxxx
4
With a copy to:
Xxxxxx, South & Xxxxxxxxx, P.A.
0000 Xxx Xx., Xxxxx 000
Xxxxxx Xxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxx, Esq.
Facsimile: 407-539-2679
Telephone: 000-000-0000
To the Escrow Agent:
U.S. Trust Company of Texas, N.A.
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxx, Corporate Trust
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
All such notices and other communications shall be deemed to
have been received (a) in the case of personal delivery, on the
date of such delivery, (b) in the case of delivery by nationally
recognized, overnight courier, on the business day following
dispatch, (c) in the case of mailing, on the 5th business day
following such mailing, and (d) in the case of a facsimile, when
the party receiving such facsimile shall have confirmed receipt
of the communication (or when the copy sent by courier or
certified mail shall have been deemed to have been received
pursuant to clause (a), (b) or (c)).
9. Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of the
parties hereto.
10. Governing Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of Texas
without regard to conflict of laws principles. Venue shall be in
Dallas County.
11. Prevailing Party. In the event of any dispute which results
in a suit or other legal proceeding to construe or enforce any
provision of this Agreement or because of an alleged breach,
default or misrepresentation in connection with any of the
provisions of this Agreement, the parties agree that the
prevailing party or parties (in addition to all other amounts and
relief to which such party or parties may be entitled to recover)
may recover from the non-prevailing party or parties reasonable
attorneys' fees and other costs incurred in any action or
proceeding.
12. Counterparts. This Agreement may be executed by facsimile
signature and in any number of counterparts, each of which when
so executed shall constitute an original hereof, but all of which
together shall constitute one agreement.
13. Amendments. No amendment, modification or waiver of any
provision of this Escrow Agreement nor consent to any departure
by any Person from the provisions hereof shall be effective in
any event unless the same shall be in writing and signed by each
of Edge, the
5
Escrow Agent and Visual Edge and then any such waiver or consent
shall be effective only in the specific instance and purpose for
which given.
[SIGNATURE PAGE FOLLOWS]
6
IN WITNESS WHEREOF the undersigned have executed this
Agreement as of the day and year first above written.
"Escrow Agent"
U.S. TRUST COMPANY OF TEXAS, N.A.
By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxxx
------------------------------
Title: Vice President
-----------------------------
"Edge"
EDGE TECHNOLOGY GROUP, INC.
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxxx
------------------------------
Title: President & CEO
-----------------------------
"Visual Edge"
VISUAL EDGE, INC.
By: /s/ Xxxxx Xxxxx
--------------------------------
Name: Xxxxxx Xxxxx
------------------------------
Title: President
-----------------------------
Schedule A
----------
Escrow Documents
----------------
1. Promissory Note
2. Security Agreement
3. Xxxx of Sale and Assignment
4. UCC-1
EXHIBIT D
---------
(Xxxx of Sale)
TO
ASSET PURCHASE AGREEMENT
AND
ASSIGNMENT AND ASSUMPTION AGREEMENT
by and between
EDGE TECHNOLOGY GROUP, INC.
a Delaware corporation
and
VISUAL EDGE, INC.,
a Delaware corporation
XXXX OF SALE
THIS XXXX OF SALE ("Xxxx of Sale") effective as of this ___
day of ______________, 2001 is made by Edge Technology Group,
Inc., a Delaware corporation ("Assignor"), in favor of Visual
Edge, Inc., a Delaware corporation ("Assignee").
WHEREAS, Assignor and Assignee have entered into that
certain Asset Purchase Agreement, dated as of July ___, 2001 (the
"Asset Purchase Agreement"), pursuant to which, among other
things, Assignee will purchase from Assignor the Purchased Assets
(as such term is defined in the Asset Purchase Agreement), and
WHEREAS, in order to effectuate the sale, purchase and
assignment of the Purchased Assets, Assignor is executing and
delivering this Xxxx of Sale in favor of Assignee.
NOW, THEREFORE, in consideration of the premises, the mutual
covenants and agreements contained herein and other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound hereby,
Assignor hereby agrees as follows:
A G R E E M E N T S:
1. Conveyance of Assets. On and subject to the terms and
conditions of this Xxxx of Sale and of the Asset Purchase
Agreement, Assignor hereby SELLS, CONVEYS, TRANSFERS, ASSIGNS and
DELIVERS unto Assignee and its successors and assigns, forever,
all the Purchased Assets as set forth in Schedule 1 annexed
hereto.
2. Defined Terms. All capitalized terms used herein and not
defined shall have the meanings assigned to them in the Asset
Purchase Agreement.
3. Further Assurances. From time to time, as and when
requested by Assignee, Assignor shall execute and deliver, or
cause to be executed and delivered, such documents and
instruments and shall take, or cause to be taken, such further or
other actions as may be reasonably necessary to carry out the
purposes of this Xxxx of Sale.
4. Controlling Agreement. It is contemplated that Assignor
may, at any time or from time to time, execute, acknowledge and
deliver one or more separate instruments of assignment and
conveyance relating to certain of the Purchased Assets. No such
separate instrument of assignment or conveyance shall limit the
scope and effect of this Xxxx of Sale. In the event that any
conflict or ambiguity exists as between this Xxxx of Sale and
any such separate instrument of assignment, the terms and
provisions of this Xxxx of Sale shall govern and be controlling.
5. Governing Law; Disputes. The validity, interpretation and
performance of this Xxxx of Sale and any dispute concerned
herewith shall be governed by and construed in accordance with
the substantive laws of the State of Texas, excluding any
conflicts of law rule or principle which might refer same to
another jurisdiction. Any Disputes under this Xxxx of Sale shall
be settled in accordance with Section 23 of the Asset Purchase
Agreement.
1
6. Purchase Agreement. This Xxxx of Sale is executed pursuant
to the Asset Purchase Agreement and the terms and conditions of
the Asset Purchase Agreement, including the representations and
warranties concerning the Purchased Assets conveyed hereby, are
part of this Xxxx of Sale as if fully incorporated herein. The
Purchased Assets are transferred and sold subject to and with the
benefit of the representations, warranties and covenants
contained in the Purchase Agreement and subject to the Allowed
Liens referenced therein. Except as expressly set forth herein,
nothing contained herein shall be deemed or construed to grant
any greater rights or greater obligations on the Parties than are
provided in the Purchase Agreement. Nothing contained herein
shall be deemed or construed to reduce or diminish the rights or
obligations of the Parties that are provided in the Purchase
Agreement. Nothing contained in this Xxxx of Sale shall be
construed to expand, diminish or affect any statements,
certifications, representations, warranties, covenants,
obligations, agreements or indemnifications by the Parties under
the Purchase Agreement, each of which are to survive the Closing
under the Purchase Agreement as provided therein, and none of
which shall be deemed to have been merged into this Xxxx of Sale.
7. Successors and Assigns. This Xxxx of Sale shall bind
Assignor and its successors and assigns and inure to the benefit
of Assignee and its successors and assigns.
8. Amendment. This Xxxx of Sale may be amended, modified or
supplemented only by an instrument in writing executed by the
party against which enforcement of the amendment, modification or
supplement is sought.
9. Descriptive Headings. The descriptive headings of the
several paragraphs, subparagraphs and clauses of this Xxxx of
Sale were inserted for convenience only and shall not be deemed
to affect the meaning or construction of any of the provisions
hereof.
[Signature page follows]
2
EXECUTED EFFECTIVE as of the date first written above.
ASSIGNOR:
EDGE TECHNOLOGY GROUP, INC.,
a Delaware corporation
By: /s/ Xxxxxx X. Xxxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxxx
------------------------------
Title: President & CEO
-----------------------------
Schedule 1
Purchased Assets
EXHIBIT E
---------
(Management Agreement)
TO
ASSET PURCHASE AGREEMENT
AND
ASSIGNMENT AND ASSUMPTION AGREEMENT
by and between
EDGE TECHNOLOGY GROUP, INC.
a Delaware corporation
and
VISUAL EDGE, INC.,
a Delaware corporation
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT (this "Agreement") is made as of
this 24 day of July, 2001 (the "Effective Date"), by and between
EDGE TECHNOLOGY GROUP, INC., a Delaware corporation (the
"Company"), and VISUAL EDGE, INC., a Delaware corporation (the
"Manager"). The Manager and the Company are sometimes referred to
in this Agreement individually as a "Party" and collectively as
the "Parties." Capitalized terms shall have the meaning as
defined herein and in the Asset Purchase Agreement (as
hereinafter defined).
W I T N E S S E T H:
WHEREAS, contemporaneous with the execution of this
Agreement, the Company is entering into an Asset Purchase and
Assignment and Assumption Agreement (the "Asset Purchase
Agreement") whereby the Manager will purchase on the Escrow
Settlement Date from the Company, and the Company will convey to
the Manager certain assets (the "Assets") related to the
Company's "One-on-One with Xxxx Xxxxxx" golf lesson CD-Rom and
video production business (the "Business"); and
WHEREAS, pending the effectiveness of the transfer of the
Assets on the Escrow Settlement Date, the Company and the Manager
desire for the Manager to manage the Business and Assets; and
WHEREAS, the Manager is willing, on the terms and conditions
set forth herein, to provide to the Company the Management
Services (as hereafter defined).
NOW, THEREFORE, in consideration of the mutual promises of
each Party, and other good and valuable consideration, the
Parties hereto hereby agree as follows:
1. Term and Termination. The term of this Agreement shall
commence as of the Effective Date and shall continue until the
first to occur of any of the following events (the "Management
Term"):
(a) The Escrow Settlement Date shall not have occurred by
September 14, 2001;
(b) The Parties shall have mutually agreed to terminate this
Agreement; or
(c) The Escrow Settlement Date shall have occurred.
2. Management Services. During the Management Term, the Company
hereby retains the Manager and delegates all necessary authority
to the Manager, and the Manager hereby accept such delegated
authority and hereby agrees, to perform the following services
(the "Management Services") specifically with a view towards the
consummation of the Asset Purchase Agreement and the Manager's
subsequent operation of the Business:
a) The Manager shall have the authority to oversee the day-to-
day operations of the Business;
b) The Manager shall have the authority to make any changes in
the products and services to be offered in relation to the
Business;
c) The Manager shall have the authority to enter into and/or
terminate agreements on behalf of the Business;
d) The Manager shall have the authority, on behalf of the
Business, to ask, demand, receive and collect from time to time,
any and all monies, credits, claims or rights due or to become
due to the Business during the Management Term (the "Business
Revenues") and to use the Business Revenues to pay the Business
Expenses (as defined below);
e) The Manager shall have the responsibility, on behalf of the
Business, to make payments that the Business rightfully owes to
its clients, customers, creditors and employees, including the
Manager, and to other third parties during the Management Term
(the "Business Expenses");
1
f) The Manager shall have full power and authority, on behalf
of and for the benefit of the Business, to receive and open any
and all mails, cards, letters, facsimile transmissions and other
similar documents and items relating to the Business and to hold
themselves out in communications with third parties as the lawful
agents of the Business for the duration of the Management Term.
3. Effect of Termination.
a) In the event the Management Term is terminated because of
the occurrence of any of the events set forth in Section 1(a) or
(b), then all of the Business Revenues and Business Expenses
accruing during the Management Term shall remain the rights and
obligations of the Company, except that any portion of the
Business Expenses that represent compensation paid to employees
of the Manager or its affiliates during the Management Term shall
not be considered the obligations of the Company, and the Company
will be reimbursed by the Manager for any such compensation paid
to them during the Management Term from funds rightfully
belonging to the Business within thirty (30) days following the
event which caused such termination of the Management Term.
b) In the event the Management Term is terminated because the
Escrow Settlement Date has occurred (pursuant to Section 1(c)),
then the Company and the Manager will each take all necessary
action to insure that all of the Business Revenues and the
Business Expenses accruing during the Management Term shall be
assigned to and assumed by the Manager.
4. Waiver and Indemnification
a) The Company hereby expressly and irrevocably releases and
waives any and all rights, causes of action and objections that
the Company may have against the Manager, their respective
partners, affiliates, agents, servants, employees, successors and
assigns in respect of any claim, demand, or judgment arising out
of or relating to the Management Services which results from any
act or omission of the Manager, its agents, servants, employees
and contractors that occurs in connection with this Agreement,
other than a claim for any action of Manager that constitutes
gross negligence or willful misconduct or is a material breach of
this Agreement.
b) The Manager hereby agrees to defend, indemnify and hold
harmless the Company, its respective members, partners, managers,
principals, officers, affiliates, agents, servants, employees,
successors and assigns, including costs of defense and legal
fees, with respect to (i) any third-party claim, demand or
judgment against the Company, its agents, servants, employees and
contractors that arises due to any misrepresentation, gross
negligence or recklessness by Manager and (ii) any breach of this
Agreement or the Asset Purchase Agreement by the Manager.
5. Notices. Any notice or communication required or permitted
to be given hereunder shall be in writing and shall be deemed
given or delivered when delivered personally by private courier,
; when actually delivered by nationally recognized overnight
delivery; or when sent by telecopy (provided, however, that it is
telephonically or electronically confirmed), addressed as
follows:
If to the Company:
Edge Technology Group, Inc.
0000 Xxxxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attn: President
2
With a Copy To:
Xxxxx & Xxxxxx LLP
c/o Xxxxxx X. Xxxxxxx
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Tel. 000.000.0000
Fax.000.000.0000
If to the Manager:
Visual Edge, Inc.
000 Xxxxxx Xxxx, Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
Attn: Xxxxxx Xxxxx
With a Copy To:
Xxxxxx, South & Xxxxxxxxx, P.A.
c/o Xxxxxxx X. Xxxxxxxxx
0000 Xxx Xx., Xxxxx 000
Xxxxxx Xxxx, Xxxxxxx 00000
Tel. 000.000.0000
Fax. 000.000.0000
or such other address as such Party may indicate by a notice
delivered to the other Parties hereto in the manner herein
provided.
6. Assignment. This Agreement shall inure to the benefit of
the Manager and the Company and shall be binding upon their
respective successors and assigns. This Agreement may not be
assigned by any Party hereto, except with the prior written
consent of the other Parties; provided, however, that no such
assignment shall relieve such assigning Party from its
responsibilities hereunder in the event that such assignee
defaults under any of its obligations under this Agreement. Any
purported assignment contrary to the terms of this Agreement
shall be void.
7. Miscellaneous.
a) Entire Agreement. This Agreement sets forth the entire
agreement and understanding among the Parties as to the subject
matter hereof.
b) No Modification Except in Writing. This Agreement shall not
be changed, modified or amended except by a writing signed by the
Party to be charged, and this Agreement may not be discharged,
except by performance in accordance with its terms or by a
writing signed by the Party to which performance is to be
rendered.
c) Severability; Reformation. If any provision of this
Agreement or the application of any provision hereof to any
person or in any circumstances is held invalid, the remainder of
this Agreement and the application of such provision to other
persons or circumstances shall not be affected unless the
provision held invalid shall substantially impair the benefits of
the remaining portions of this Agreement. If any provision in
this Agreement, including, without limitation, any provision in
Section 4 hereof is unenforceable for any reason whatsoever, that
provision will be appropriately limited and reformed to the
maximum extent provided by applicable law. If the scope of any
provision contained herein is too broad to permit enforcement to
its full extent, then such provision shall be enforced to the
maximum extent permitted by law so as to be judged reasonable and
enforceable, and the Parties agree that such scope may be
modified by an arbitrator or judge in any proceeding to enforce
this Agreement.
3
d) Survival. All representations, warranties and agreements
contained herein shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of
any Party hereto, and shall survive the execution and delivery
hereof.
e) Governing Law; Venue. This Agreement shall be deemed to have
been made in, and shall be construed in accordance with the laws
of the State of Texas, U.S.A. and its validity, construction,
interpretation and legal effect shall be governed by the laws of
the State of Texas, U.S.A. applicable to contracts entered into
and performed entirely therein. The Parties hereby agree that any
dispute which may arise between or among them in connection with
this Agreement shall be adjudicated before a court located in
Dallas, Texas, and they hereby submit to the exclusive personal
jurisdiction of the courts of the State of Texas located in
Dallas, Texas and of the Federal District Court for the Northern
District of Texas with respect to any action or legal proceeding
commenced by any Party. Each of the Parties irrevocably waives,
to the fullest extent permitted by law, any objection which it
may now or hereafter have to the laying of the venue of any such
proceeding brought in such a court and any claim that any such
proceeding brought in such a court has been brought in an
inconvenient forum.
f) Captions; Construction. The captions appearing in this
Agreement are inserted only as a matter of convenience and for
reference and in no way define, limit or describe the scope and
intent of this Agreement or any of the provisions hereof. All
uses of the term "including" shall be construed as descriptive
and not a limitation of the item described. All words used
herein shall be construed to be of such gender as the
circumstances require.
g) Counterparts. This Agreement may be executed by facsimile
signature and two or more counterparts, each of which shall be
deemed an original but all which together shall constitute one
and the same instrument.
[SIGNATURE PAGE FOLLOWS]
4
IN WITNESS WHEREOF, the Parties have duly executed this
Agreement as of the date first above written.
THE MANAGER:
Visual Edge, Inc.
By: /s/ Xxxxxx Xxxxx
------------------------------
Name: Xxxxxx Xxxxx
-----------------------------
Title: President
----------------------------
THE COMPANY:
Edge Technology Group, Inc.
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxxx
-----------------------------
Title: President & CEO
-----------------------------
5
