INTERCOMPANY SETTLEMENT AGREEMENT BETWEEN APPLIED RESEARCH OF
MARYLAND, INC. AND ARSOFTWARE, INC. AND ARINTERNET, INC.
THIS AGREEMENT made this ___ day of __________, 1998, by and between
ARSoftware, Inc. and ARInternet, Inc. (hereinafter jointly and severally
referred to as the "Obligor") and Applied Research of Maryland, Inc.
(hereinafter referred to as the "ARM").
WHEREAS, ARM filed a Chapter 11 Petition in the U.S. Bankruptcy Court for
the District of Maryland; and
WHEREAS, ARM has claims against ARSoftware and ARInternet for
intercompany loans; and
WHEREAS, Obligor agrees to pay to ARM the sum of One-Hundred Fifty-
Thousand Dollars ($150,000.00) to settle said claims; and
WHEREAS, Obligor agrees to provide collateral to secure the payment of
its obligation to ARM; and
WHEREAS, a Plan of Reorganization was approved by the Bankruptcy Court on
the ___ day of __________, 1998 approving the settlement of the Parties.
NOW, THEREFORE, in consideration of the mutual representations, covenants
and agreements contained herein, and upon the terms and subject to the
conditions hereinafter set forth, the parties do hereby agree as follows:
1. Obligor agrees to pay to the Obligee the sum of One-Hundred Fifty
Thousand Dollars ($150,000.00), in thirty six (36) equal
installments of Four Thousand One Hundred and Sixty-Seven Dollars
($4,167.00) per month commencing the ___ day of __________, 1998 and
due and payable on the ___ day of each month thereafter until paid
in full. Obligor shall execute concurrent herewith a promissory
note, security agreement and financing statements. Obligor agrees to
execute any and all documents, and perform any other actions,
necessary for the Obligee to maintain a perfected security interest
in the agreed upon collateral. The amount to be paid by ARSoftware
and ARInternet is not subject to interest, however, in the event of
a default interest shall accrue at the rate of twelve percent (12%)
per annum. Further, in the event that payments are not timely made
a late fee equal to five percent (5%) of the monthly amount shall be
incurred.
2. If for any fiscal year the cash flow of ARS and ARI exceeds its
operating expenses and any debt service including the debt service
required under this Agreement, then one-half (1/2) of the surplus
of the Net Cash Flow shall be paid to the Obligee.
Net Cash Flow is defined as that sum remaining after the payment of
operating expenses, including debt service, on a consistent
historical basis. Net Cash Flow shall be supported by a Statement of
Cash Flow prepared in accordance with GAAP. The fiscal year-end for
ARSoftware and ARInternet is May 31, and the fiscal year ending May
31, 1998 shall be the base line. Commencing on September 1, 1998
and each year thereafter, if appropriate, the monthly payment shall
be increased by one-twelfth (1/12) of the net surplus, the total of
which shall equal one-half (1/2) of the Net Cash Flow. For each
fiscal year where there is a net surplus the payments shall continue
for twelve (12) consecutive months. The Statement of Cash Flow and
supporting documents shall be delivered to Xxxxx X. Xxxxxxx,
Greenan, Walker, Xxxxxxx & Xxxxxxx, Attorneys for Obligee commencing
August 31, 1998 and on the 31st day of August each year thereafter
until the promissory note is paid in full.
In calculating Net Cash Flow, future general administrative expenses
should not exceed as a percentage of sales the greater of those
years ended May 31, 1997 and May 31, 1998.
3. ARSoftware and ARInternet will be jointly and severally liable for
the settlement amount. The obligations of ARSoftware and ARInternet
will be secured by all of their assets, including equipment,
fixtures, accounts receivable, copy rights and intangibles.
4. In the event the stock or assets ARSoftware and/or ARInternet are
sold during the three (3) year payout period, the net proceeds of
any such sale, after payment of all costs of sale and payment to any
outstanding creditors of the sold entity including the Promissory
Note, shall be split equally between the Obligee and the
shareholders of the sold entity.
5. Dr. S.P.S. Anand shall guaranty the obligations of ARSoftware and
ARInternet as provided in this Agreement and will execute a Guaranty
concurrent herewith.
6. Failure of Obligor to abide by any of the terms of the Agreement
shall constitute a default. Should Obligor fail to cure any default
within ten (10) days of written notice of default, ARM may declare
the entire indebtedness due and payable, exercise all its rights
available pursuant to the Promissory Note, Security Agreement and
Guaranty and exercise any and all legal and equitable available to
it against Obligor and Guarantor.
7. All notices and other formal communications under this Agreement or
required by law shall be in writing and shall be by certified or
registered mail:
Notices to ARI and ARS, 0000 Xxxxxxxxx Xxxxx, Xxxxx 0000,
Xxxxxxxx, Xxxxxxxx 00000; and to ARM in c/o Xxxxx X. Xxxxxxx,
Esquire, Greenan, Walker, Xxxxxxx & Xxxxxxx, 0000 Xxx Xxxx
Xxxxx, 000, Xxxxxxxxx, Xxxxxxxx 00000.
8. Miscellaneous
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The parties hereto agree to cooperate fully in the execution,
acknowledgment and delivery of all instruments, pleadings and other
papers and to take such other action as may be necessary to further
carry out and fully accomplish the intent and purpose of this
Agreement.
This instrument contains the entire understanding and agreement
amount the parties concerning the subject matter of this Agreement,
and this Agreement supersedes and merges herein all prior and
contemporaneous understandings, agreements, covenants, negotiations
and representations concerning the subject matter of this Agreement.
Any party's failure to insist on compliance or enforcement of any
provision of this Agreement shall not affect its validity or any
other provision of this Agreement. The rights and remedies provided
herein and all other agreements, instruments and documents delivered
pursuant hereto or in connection herewith, are cumulative and are in
addition to and not exclusive of any rights or remedies provided by
law.
This Agreement shall be construed in accordance with the laws of the
State of Maryland.
Applied Research of Maryland, Inc.
By: ----------------------------------
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ARInternet, Inc.
By:
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ARSoftware, Inc.
By:
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