EXHIBIT 10.38
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT, dated as of June 25, 1997 (the
"Agreement"), is by and among IMNET SYSTEMS, INC., a Delaware corporation
("IMNET"), and XXXXXX XXXXX, resident of France who is the only stockholder (the
"Stockholder") of ADVISOFT CONSULTING SA, a societe anonyme organized under the
laws of France (the "Company").
W I T N E S S E T H:
WHEREAS, the Board of Directors of IMNET and the Stockholder have
determined that it is in the best interests of IMNET, the Stockholder and the
Company for the Company to be acquired by IMNET upon the terms and subject to
the conditions set forth herein; and
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, IMNET and the Stockholder hereby agree as follows:
ARTICLE 1
DEFINITIONS
1.1. Defined Terms. As used in this Agreement:
"Additional Purchase Price" is the additional amounts to be paid for
certain Company Stock as provided in Section 3.1 and Schedule 3.1 hereof.
"Assets" means all of the Company's assets, of every kind and nature.
"Base Amount" shall have the meaning ascribed to it in Section 7.6
hereof.
"Cash Portion" is a portion of the total consideration to be paid for
the Company Stock, as described at Section 3.1.
"Closing" and "Closing Date" shall have the meaning ascribed to such
terms in Section 3.6 hereof.
"Closing Documents" means this Agreement and all other documents to be
executed and delivered either simultaneously herewith or at Closing in
connection with the Transactions.
"Code" means the U.S. Internal Revenue Code of 1986, as amended.
"Company Stock" means the outstanding capital stock of the Company, as
described at Section 5.5 and Schedule 3.1 hereof.
"Consideration" is the price to be paid by IMNET for the Company Stock
as described in Section 3.1.
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"Customer Agreements" shall have the meaning ascribed to it in Section
5.10(c) hereof.
"Determination Price" shall be the value ascribed to certain IMNET
Common Stock for purposes of computing the number to be paid as part of the
purchase price for the Company Stock in accordance with Sections 3.1 and 3.3
hereof.
"Earn-Out Agreement" shall have the meaning ascribed to it in Section
3.1
"Employee Benefit Plan" shall have the meaning ascribed to it in
Section 5.20 hereof.
"Escrow Funds" shall have the meaning ascribed to it in Section 3.4
hereof.
"Exchange Act" shall mean the U.S. Securities and Exchange Act of 1934,
as amended, and all regulations promulgated pursuant thereto.
"Georgia Act" shall have the meaning ascribed to it in Section 10.1
hereof.
"Governmental Authority" shall include any and all governmental or
quasi-governmental bodies, agencies, bureaus, departments, boards, commissions,
instrumentalities or other entities having or asserting jurisdiction over IMNET,
the Company, or any Stockholder, as applicable.
"Historical Financials" shall have the meaning ascribed to it in
Section 5.8(a) hereof.
"IMNET Common Stock" is the Common Stock, par value $.01 per share, of
IMNET.
"IMNET Shares" means the shares of IMNET Common Stock issued as a
portion of the purchase price for the Company Stock as described in Section 3.1
hereof.
"Incorporated Software" shall have the meaning ascribed to it in
Section 5.10(a) hereof.
"Indemnity Escrow Agreement" means that certain indemnity escrow
agreement to be entered into at Closing by and among IMNET, the Stockholder and
SunTrust Bank, Atlanta as escrow agent.
"Intellectual Property" shall have the meaning ascribed to it in
Section 5.10(a) hereof.
"Intellectual Property Rights Agreements" shall have the meaning
ascribed to it in Section 5.10(b) hereof.
"Material Adverse Effect" means a material adverse effect upon, or a
material adverse change in (i) the business, assets, results of operations,
properties, financial condition or prospects of the Company, (ii) the legality,
validity, binding effect or enforceability of this Agreement, or (iii) the
ability of the Company to perform its obligations under this Agreement.
"Person" means an individual, corporation, partnership, trust, joint
venture, association or unincorporated organization or a Governmental Authority.
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"Revised Schedules" shall have the meaning ascribed to it in Section
8.10 hereof.
"SEC" shall mean the U.S. Securities and Exchange Commission.
"Securities Act" shall mean the U.S. Securities Act of 1933, as
amended, and all regulations promulgated pursuant thereto.
"Securities Filings" shall mean IMNET 's Annual Report on Form 10-K for
the year ended June 30, 1996, as amended, filed with the SEC, and all subsequent
filings with the SEC made by IMNET through the date hereof.
"Indemnified Claims" shall have the meaning ascribed to it in Section
7.1 hereof.
"Stockholder" means the sole stockholder of the Company. He is
identified in the preamble to this Agreement, and Schedule 3.1.
"Software" shall have the meaning ascribed to it in Section 5.10(a)
hereof.
"Stock Rights" shall have the meaning ascribed to it in Section 4.9
hereof.
"Termination Date" means June 30, 1997 or such other date on which this
Agreement shall be terminated pursuant to Section 11.1 hereof.
"Transactions" means the transactions contemplated by this Agreement.
ARTICLE 2
THE ACQUISITION
2.1. The Stock Purchase and Sale. At the Closing, and subject to and
upon the terms and conditions of this Agreement, IMNET shall purchase, and the
Stockholder shall sell, all, but not less than all, of the Company Stock. IMNET
shall pay as consideration therefor the Consideration for such Company Stock,
computed and delivered pursuant to Article 3 hereof.
ARTICLE 3
PURCHASE PRICE FOR THE COMPANY STOCK
3.1. Aggregate Consideration. The aggregate consideration for the
Company Stock ("Consideration") shall be U.S. $5,085,000 (FF29,846,000) (the
"Cash Portion"), plus shares of IMNET Common Stock, par value $.01 per share
("IMNET Common Stock") having an aggregate value equal to $2,000,000
(FF11,740,000) utilizing the Determination Price (the "IMNET Shares"), plus the
execution of an Earn-out Agreement between IMNET and Xx. XXXXX in the form of
Exhibit 3.1, all to be paid as specified on Schedule 3.1 hereto.
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3.2. Distribution of Consideration. At the Closing each share of
Company Common Stock shall be delivered to IMNET against payment of the Cash
Portion therefor (payable by check or wire transfer, but adjusted for the
escrow), the issuance and shipment of the IMNET Shares, and the obligation to
pay amounts due under the Earn-out Agreement. A part of the Cash Portion shall
be held in escrow by IMNET pursuant to Section 3.4 below. In lieu of delivering
fractional shares IMNET shall deliver an amount in cash based on the
Determination Price.
3.3. IMNET Shares; Determination Price. The aggregate number of IMNET
Shares shall be equal to that number of shares of IMNET Common Stock which
equals $2,000,000 (FF11,740,000) divided by the Determination Price. The
"Determination Price" shall be equal to the average of the closing sales price
for IMNET Common Stock reported on the Nasdaq Stock Market's National Market for
the ten (10) trading days ending one (1) trading day prior to the Closing Date;
provided, however, that if the Determination Price as calculated above would be
less than $15.00 (FF88.05), the total number of IMNET Shares shall equal One
Hundred Thirty Three Thousand Three Hundred and Thirty Three (133,333), and the
Determination Price shall be $15.00 (FF88.05). If the Determination Price is
$15.00 (FF88.05) due to the last provision of the preceding sentence, then
either IMNET or Stockholder may elect, by written notice, to terminate this
Agreement prior to Closing, and no party shall have any further obligations to
the others.
3.4. Escrow Funds. At the Closing, the Stockholder will pledge to IMNET
to be held in escrow as security for claims for indemnification hereunder, in
the aggregate, $350,000 (FF2,054,500) of the Cash Portion to be received by
Stockholder ("Escrow Funds"), until the first anniversary of the Closing Date,
all as provided in an indemnity escrow agreement by and among IMNET and the
Stockholder in the form of Exhibit 3.4 attached hereto (the "Indemnity Escrow
Agreement"). The Escrow Funds shall be pledged to IMNET in accordance with the
terms of the Indemnity Escrow Agreement and shall be a non-exclusive source of
funds, subject to IMNET 's right to offset against any breaches of any
representations, warranties or covenants of the Stockholder contained in this
Agreement or made pursuant hereto; provided that neither the Escrow Funds nor
IMNET 's offset rights shall limit the rights of IMNET at law, in equity or
under this Agreement.
3.5. Delivery of IMNET Shares. On the Closing Date, IMNET will instruct
its transfer agent to issue and deliver the IMNET Shares to the Stockholder.
3.6. Closing. The closing of the Transactions (the "Closing") shall
take place on or before June 30, 1997, at the offices of Moquet Borde Dieux
Geens & Associes, which is IMNET 's counsel, in Paris, France or another
mutually agreed upon location on the Business Day following compliance with or
waiver of the terms, conditions and contingencies contained herein or such other
date as is mutually agreed upon by IMNET, and Xx. XXXXX (such date to be herein
referred to as the "Closing Date"). All computations, adjustments, and transfers
for the purposes hereof shall be effective as of the close of business on the
Closing Date.
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ARTICLE 4
ADDITIONAL COVENANTS
4.1. Consents. On or before the Closing Date, the Stockholder shall
have obtained (or caused the Company to obtain) all third party consents and
approvals required with respect to the Company and/or the Stockholder for
consummation of the Transactions, including without limitation, those consents
listed on Schedule 4.1 hereof, but excluding such consents the failure of which
to obtain in the aggregate would not have a Material Adverse Effect.
4.2. Employment Agreements. Concurrently with the Closing, Xx. XXXXX
shall enter into an employment agreement with IMNET in the form of Exhibit
4.2(a) attached hereto and made a part hereof. Furthermore, at such time, the
individuals specified on Exhibit 4.2(b) shall resign the offices of the Company
set forth opposite their names on Exhibit 4.2(b). In the event that the
employment agreement with Xx. XXXXX described herein is of no force and effect
through either a judicial decree or through the administrative procedures of the
appropriate French authorities (ASSEDIC) due to the failure of IMNET to convert
Company from a societe anonyme (SA) to a societe a responsibilitie limitee
(SARL), IMNET shall pay to Xx. XXXXX the sum of FF 840,000. In addition, the
Company will purchase a private unemployment insurance policy for Xx. XXXXX if
government-provided unemployment insurance is unavailable to Xx. XXXXX due to
the above non-conversion of Company to a SARL.
4.3. Conduct of Business by Company Pending Closing. The Stockholder
covenants and agrees that, unless IMNET shall otherwise consent in writing or
except as otherwise set forth herein, between the date hereof and the Closing,
the business of the Company shall be conducted only in, and the Company shall
not take any action except in, the ordinary course of business and in a manner
consistent with past practice; and the Company will use its best efforts to
preserve intact the business organization of the Company, to keep available the
services of the present officers, employees and consultants of the Company and
to preserve the present relationships of the Company with customers, suppliers
and other persons with which the Company has significant business relations. The
Stockholder covenants that the Company and the Stockholder shall not, between
the date hereof and the Closing, directly or indirectly, do any of the following
without the prior written consent of IMNET :
(a) (i) issue, sell, pledge, dispose of, encumber, authorize,
or propose the issuance, sale, pledge, disposition, encumbrance or authorization
of any shares of capital stock of any class, or any options, warrants,
convertible securities or other rights of any kind to acquire any shares of
capital stock of, or any other ownership interest in, the Company; (ii) amend or
propose to amend the statuts of the Company; (iii) split, combine or reclassify
any outstanding share of the Company's capital stock, or declare, set aside or
pay any dividend or distribution payable in cash, stock, property or otherwise
with respect to the Company's capital stock (other than (i) the dividends,
aggregating FF 992,000, reserved as of December 31, 1996, to be paid during
1997, but prior to Closing, and (ii) directors' fees aggregating no more than
(FF 30,000)); (iv) redeem, purchase or otherwise acquire or offer to redeem,
purchase or otherwise acquire any shares of the Company's capital stock; or (v)
authorize or propose or enter into any contract, agreement, commitment or
arrangement with respect to any of the matters set forth in this Section 4.3(a);
(b) (i) acquire (by merger, consolidation, or acquisition of
stock or assets) any corporation, partnership or other business organization or
division thereof; (ii) except in the ordinary course of business and in a manner
consistent with past practices, sell, pledge, dispose of, or encumber or
authorize or propose the sale, pledge, disposition or encumbrance of any Assets;
(iii) enter into any material contract or agreement, except in the ordinary
course of - [continued on next page]
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business consistent with past practice; (iv) authorize any capital expenditure
outside the ordinary course of business; or (v) enter into or amend any
contract, agreement, commitment or arrangement with respect to any of the
matters prohibited by this Section 4.3(b);
(c) take any action other than in the ordinary course of
business and in a manner consistent with past practice (none of which actions
shall be untimely, unreasonable or unusual) with respect to increasing
compensation of any officer, director, stockholder or employee or with respect
to the grant of any severance or termination pay (otherwise than pursuant to
policies of the Company in effect on the date hereof and fully disclosed to
IMNET prior to the date hereof) or with respect to any increase of benefits
payable under its severance or termination pay policies in effect on the date
hereof;
(d) make any payments except in the ordinary course of
business and in amounts and in a manner consistent with past practice (none of
which payments shall be unreasonable or unusual), under any Employee Benefit
Plan or otherwise to any employee of, or independent contractor or consultant
to, the Company, enter into any Employee Benefit Plan, any employment or
consulting agreement, grant or establish any new awards under any such existing
Employee Benefit Plan or agreement, or adopt or otherwise amend any of the
foregoing;
(e) take any action except in the ordinary course of business
and in a manner consistent with past practice or make any change in its methods
of management, distribution, marketing, accounting or operating (or practices
relating to payment of trade accounts or to other payments);
(f) except in the ordinary course of business or as permitted
herein, take any action to incur or increase prior to Closing any indebtedness
for borrowed money from banks or other financial institutions or cancel, without
payment in full, any notes, loans or receivables except in the ordinary course
of business;
(g) loan or advance monies to any Person under any
circumstance whatsoever except for credit transactions with customers on terms
consistent with past practices; or
(h) do any act or omit to do any act which would reasonably be
expected to cause a breach of any contract, commitment or obligation of the
Company.
4.4. Expenses. All of the expenses incurred by IMNET in connection with
the authorization, preparation, execution and performance of this Agreement and
other agreements referred to herein, including, without limitation, all fees and
expenses of agents, representatives, brokers, counsel and accountants for IMNET,
shall be paid by IMNET. All expenses incurred by the Stockholder in connection
with the authorization, preparation, execution and performance of this Agreement
and the other agreements referred to herein, including without limitation, all
fees and expenses of advisors, agents, representatives, brokers, counsel and
accountants shall be borne by the Stockholder. To the extent permitted by French
law, the Company will bear the expenses of stock transfer fees, trademark
transfers and supervisory board expenses.
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4.5. Notification of Certain Matters.
(a) The Stockholder shall give (or cause the Company to give)
prompt written notice to IMNET of the following:
(i) the occurrence or nonoccurrence of any event
whose occurrence or nonoccurrence would be likely to cause either (A) any
representation or warranty of Stockholder contained in this Agreement to be
untrue or inaccurate in any material respect at any time from the date hereof to
the Closing, or (B) directly or indirectly, any Material Adverse Effect; or
(ii) any material failure of Stockholder the Company,
any officer, director, employee or agent thereof, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by them
hereunder.
(b) Stockholder agrees to give a copy of such notice to the
Company, in writing, of any such occurrence or nonoccurrence described at
Section 4.5(a) that comes to Stockholder's attention.
(c) IMNET shall give prompt notice to Stockholder of the
following:
(i) the occurrence or nonoccurrence of any event
whose occurrence or nonoccurrence would be likely to cause either (A) any
representation or warranty of IMNET contained in this Agreement to be untrue or
inaccurate in any material respect at any time from the date hereof to the
Closing, or (B) directly or indirectly, any change in or effect on the business
of IMNET that is or will be materially adverse to the business, operations,
properties (including intangible properties), condition (financial or
otherwise), assets, liabilities or regulatory status of IMNET, or (C) a material
adverse effect upon the legality, validity, binding effect or enforceability of
this Agreement, or the ability of IMNET to perform its respective obligations
hereunder;
(ii) Any material failure of IMNET, or any officer,
director, employee or agent thereof, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder.
(d) Notwithstanding the foregoing, the delivery of any notice
pursuant to this Section shall not waive or release the Stockholder from his
representations or warranties under this Agreement; provided, however, that
neither the Company nor the Stockholder shall be liable to IMNET for changes in
facts and circumstances not caused by an act or omission of the Company or
Stockholder in violation of any representation, warranty or covenant in this
Agreement.
4.6. Public Announcements.
(a) Except for any public announcement relating to the
Transactions previously made by IMNET, as may be required by law or as provided
in this Section, each of the Company, the Stockholder and IMNET agree that until
the consummation of the Transactions,
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each of such parties will not, and will direct its directors, officers,
employees, representatives and agents who have knowledge of the Transactions not
to, disclose to any Person who is not a participant in discussions concerning
the Transactions (other than Persons whose consent is required to be obtained
hereunder who shall be instructed to maintain confidentiality), any of the
terms, conditions or other facts with respect to the Transactions. The
Stockholder shall also cause the Company to observe the obligations undertaken
by them in this Section 4.6.
(b) The Stockholder shall obtain the prior oral or written
consent of IMNET before issuing any press release or otherwise making any public
statements with respect to the Transactions and shall not issue any such press
release or make any such public statement prior to receiving such consent,
except as may be in the good faith belief of the party issuing such press
release required by law. The parties acknowledge and agree that IMNET expects to
issue a press release with respect to the Transactions immediately after
execution of this Agreement.
4.7. No Negotiations. The Stockholder and the Company covenant that
subject to the termination provisions contained herein, from and after the date
hereof, neither the Company nor its officers or directors nor anyone acting on
behalf of the Company or such Persons, or any Stockholder shall, directly or
indirectly, solicit, engage in discussions or negotiations with, or provide any
information to, any Person, firm or other entity or group (other than IMNET or
its representatives) concerning any merger, sale of substantial assets, purchase
or sale of shares of capital stock or similar transaction involving the Company.
4.8. Confidentiality. Until the Closing, IMNET shall cause its
respective employees, agents, counsel, accountants, consultants and other
representatives to hold in strict confidence any and all information obtained
from the Company or the Stockholder and to not disclose any such information
(unless such information is or becomes ascertainable from public sources or
public disclosure of such information is in the good faith judgment of IMNET
required by law); provided, however, that nothing contained herein shall limit
the right of any such persons to disclose any such information to IMNET or their
respective employees, agents, representatives, counsel, accountants, financial
advisors and/or underwriters for the purpose of obtaining their advice and
assistance as to the consummation of the Transactions. In the event the Closing
does not occur, and this Agreement terminates, each party shall return the other
party's confidential information, retaining no copies.
4.9. Termination of Stock Rights. Any and all convertible securities,
options, warrants, or other contracts, commitments, agreements, understandings,
arrangements or restrictions by which the Company is bound to issue any
additional shares of its capital stock or other securities (collectively, "Stock
Rights") are described on Schedule 4.9 hereto. The Stockholder shall cause each
of the Stock Rights (if any) to be terminated by the Company on or before the
Closing, at no cost to the Company.
4.10. Disclosures Required by Law. In the event that any party
hereunder makes an announcement or disclosure under Section 4.6 or 4.8 that it
deems to be required by law, such party shall provide all other parties
hereunder one business day's prior written notice of the content thereof as well
as the legal requirement necessitating the announcement or disclosure.
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4.11. Registration of Agreement with Tax Authorities. Within one month
after the Closing, IMNET shall register the Stock Purchase Agreement with
appropriate tax authorities in France, and pay the requisite registration
duties.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES AS
TO THE COMPANY AND THE STOCKHOLDER
In order to induce IMNET to enter into this Agreement and consummate
the Transactions, the Stockholder represents and warrants to IMNET as follows,
each of which warranties and representations is material to and relied upon by
IMNET :
5.1. Organization and Authority of Company. The Company is a societe
anonyme duly organized and validly existing under the laws of France. The
Company is not required to be qualified as a foreign entity in any other
jurisdiction where its failure to qualify would have a Material Adverse Effect.
The Company has all necessary corporate power and authority to own, lease and
operate its properties and conduct its business as it is currently being
conducted. The Company does not own, directly or indirectly, any equity interest
in any corporation, partnership, joint venture, or other entity and does not
have any subsidiaries, which for purposes of this Agreement means any
corporation or other legal entity of which the Company (either alone or through
or together with any other affiliate of the Company) owns, directly or
indirectly, more than 50% of the stock or other equity interests the holders of
which are generally entitled to vote for the election of the board of directors
or other governing body of such corporation or other legal entity.
5.2. Corporate Power and Authority; Due Authorization. The Stockholder
has full power and authority to execute and deliver this Agreement and each of
the Closing Documents to which the Stockholder is or will be a party and to
consummate the Transactions. Stockholder represents and warrants that
Stockholder is the lawful owner of, and has good and marketable title to, the
number of shares of the Company's outstanding capital stock as shown on Schedule
3.1 as being owned by Stockholder, free and clear of any mortgage, pledge,
claim, lien, charge, encumbrance or other right in any third party to purchase,
vote or direct the voting of, any shares thereof. Stockholder further represents
and warrants that the Stockholder and the number of shares of Company common
stock owned by such Stockholder are set forth on Schedule 3.1. and in the
Company's registre de mouvements de titres. The Stockholder has duly approved
and authorized the execution and delivery of this Agreement and each of the
Closing Documents and the consummation of the Transactions, and no other
proceeding is necessary to approve the Transactions. Assuming that this
Agreement and each of the Closing Documents to which IMNET is a party
constitutes a valid and binding agreement of IMNET this Agreement and each of
the Closing Documents to which the Company and/or Stockholder is a party
constitutes, or will constitute when executed and delivered, a valid and binding
agreement of the Company and/or Stockholder, as the case may be, in each case
enforceable in accordance with its terms, except as the enforceability thereof
may be limited by applicable bankruptcy, insolvency or other similar laws
relating to the enforcement of creditors' rights generally and by the
application of general principles of equity. The duly elected officers and
directors of the Company are set
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forth on Schedule 5.2 attached hereto. Copies of the Statuts and minutes of the
Company are contained in the minute books of the Company, and stock records are
contained in the Company's registre de mouvements de titres. True, correct and
complete copies of the minute books and the Company's registre de mouvements de
titres of the Company have been delivered to IMNET. The Stockholder represents
that he has recently acquired Company Stock from all of its prior owners and
that in connection therewith, Stockholder disclosed the nature and material
terms of this agreement. Stockholder did not fail to make any other disclosure
or to take any other action required by law in connection with acquisition of
the Company Stock from prior holders.
5.3. Sufficiency of Assets. All material assets and rights relating to
the Company's business are held solely by, and all agreements, obligations,
expenses and transactions relating to the Company's business have been entered
into, incurred and conducted solely by, the Company. Such assets and rights
constitute all of the assets and rights of any nature with which the Company has
conducted its business for the 12-month period prior to the date hereof, subject
only to additions and deletions in the ordinary course of business.
5.4. No Conflict; Required Consents. Assuming all consents, approvals,
authorizations and other actions listed on Schedule 4.1 hereto have been
obtained or taken, except as set forth on Schedule 5.4 hereto the execution and
delivery by Stockholder of this Agreement and the Closing Documents and the
consummation by the Company and Stockholder of the Transactions do not and will
not (a) require the consent, approval or action of, or any filing or notice to,
any Person or other entity or any public, Governmental Authority or judicial
authority; (b) violate in any material respect the terms of any instrument,
document or agreement to which the Company or Stockholder is a party, or by
which the Company or Stockholder or the property of the Company or Stockholder
is bound, or be in conflict in any material respect with, result in a material
breach of or constitute (upon the giving of notice or lapse of time or both) a
material default under any such instrument, document or agreement, or result in
the creation of any lien upon any of the property or assets of the Company or
Stockholder; (c) violate the Company's Statuts; or (d) violate any order, writ,
injunction, decree, judgment, ruling, law, rule or regulation of any federal,
state, county, municipal, or foreign court or Governmental Authority applicable
to the Company or Stockholder, or the business or assets of the Company. Neither
the Company nor Stockholder is subject to, or is a party to, any mortgage, lien,
lease, agreement, contract, instrument, order, judgment or decree or any other
material restriction of any kind or character which would prevent or hinder the
continued operation of the business of the Company after the Closing on
substantially the same basis as theretofore operated. The Stockholder will use
his best efforts to obtain all required consents at no cost to the Company.
5.5. Capitalization. The authorized capital stock of the Company
consists of 15,500 shares of common stock, 15,500 shares of which are
outstanding, and no shares of which are held in the treasury of the Company. All
outstanding shares of the Company's capital stock have been duly authorized, and
are validly issued, fully paid and nonassessable. No preemptive (whether
statutory or contractual) rights have been violated. The Stockholder is the sole
record and beneficial owner of all of the issued and outstanding capital stock
of the Company. No one other than the Stockholder has any beneficial or record
interest in the capital stock of the Company. The Company has no convertible
securities, options, warrants, or other contracts,
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commitments, agreements, understandings, arrangements or restrictions by which
it is bound to issue any additional shares of its capital stock or other
securities. All securities of the Company were offered and sold in compliance
with all requirements of applicable securities laws.
5.6. Compliance with Laws. The Company is in compliance with all
applicable laws, orders, rules and regulations of all governmental bodies and
agencies, except where such noncompliance has and will have, individually or in
the aggregate, no Material Adverse Effect. Neither the Company nor Stockholder
has received notice of any noncompliance with the foregoing, whether or not such
noncompliance will result in a Material Adverse Effect.
5.7. Licenses and Permits. The Company holds and is in compliance with
all licenses, permits, concessions, grants, franchises, approvals and
authorizations listed in Schedule 5.7 attached hereto and any other such
licenses, permits, etc., necessary or required for the use or ownership of the
Company's assets and the operation of the Company's business, and has made any
and all required filings with the Institut National de la Propriete Industrielle
(the "INPI"), except where the failure to hold such license, permit, concession,
grant, franchise, approval or authorization or to make such filing has and will
have, individually or in the aggregate, no Material Adverse Effect. Neither the
Company nor Stockholder has received notice of any violations in respect of any
such licenses, permits, concessions, grants, franchises, approvals,
authorizations or filings. No proceeding is pending or, to the knowledge of
Stockholder, threatened, which seeks revocation or limitation of any such
licenses, permits, concessions, grants, franchises, approvals or authorizations,
nor is there any basis therefor.
5.8. Financial Information.
(a) Prior to the date hereof, the Company and the Stockholder
have delivered to IMNET true, correct and complete copies of the audited
accounts of the Company as of December 31, 1995 and December 31, 1996 and for
the years then ended (collectively, the "Historical Financials"). Each balance
sheet (bilan) and its appendices (les Annexes) included in the Historical
Financials fairly presents in the reasonable opinion of the Stockholder the
financial position of the Company as of the respective dates thereof, and the
statements of operations (le compte de resultat) included in the Historical
Financials fairly present in the reasonable opinion of the Stockholder the
results of operations of the Company for the respective periods indicated and do
not contain, except as disclosed on Schedule 5.8, any material item of special
or nonrecurring income or other income not earned in the ordinary course of
Company's business. All "Historical Financials" are prepared in accordance with
French generally accepted accounting principles consistently applied.
(b) Except as and to the extent specifically disclosed in this
Agreement (and, in particular, as disclosed in, and subject to the
qualifications (if any) set forth in the other representations and warranties of
the Stockholder in this Article 5), on the date hereof, there are no liabilities
or obligations of the Company of any nature, whether liquidated, accrued,
absolute, contingent or otherwise except for those (i) that are specifically
reflected or reserved against as to amount in the latest balance sheet contained
in the Historical Financials, or (ii) that arose thereafter in the ordinary
course of business or (iii) that are specifically set forth on Schedule 5.8
attached hereto; and at the Closing, there will be no material liabilities or
obligations of the Company of any nature, whether liquidated, unliquidated,
accrued, absolute, contingent or
437366.8
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otherwise and whether due or to become due, including, without limitation, any
liability for taxes and interest, penalties and other charges, except for those
(A) that are specifically reflected or reserved against as to amount in the
latest balance sheet contained in the Historical Financials, or (B) that arise
after the date of such balance sheet in the ordinary course of business and in
compliance with this Agreement or (C) that are specifically set forth on
Schedule 5.8. Furthermore, except as set forth in the Historical Financials, or
elsewhere herein, neither the Company nor the Stockholder knows of any
reasonable basis for the assertion against the Company of any such liability or
obligation.
(c) The Company is not, nor has been during the twelve (12)
months immediately preceding the execution of this Agreement, insolvent (etat de
cessation des patiements) within the meaning of Law No. 85-98 of January 25,
1985. The Company has paid and is paying its debts as they become due.
5.9. Omitted.
5.10. Intellectual Property - Nature and Extent of Proprietary
Interest.
(a) Identification of Intellectual Property. Schedule 5.10(a)
contains a complete and accurate list (sufficient to identify them) of all
computer hardware related, software-related and other trademarks, trade names,
service marks and assumed names relating to the Company's business, and of the
Company's software ("Software"), including, without limitation, programs and
systems and related documentation, research projects, computer products under
development, computer hardware or software concepts owned and proprietary
intellectual property, processes, formulae and algorithms, including all
intellectual property used in the ownership, marketing, development,
maintenance, support and delivery of computer hardware and Software and
presently owned or licensed by the Company which are used or proposed to be used
or reserved for use by the Company in the Company's business ("Intellectual
Property"). Schedule 5.10(a) identifies certain third-party software and other
intellectual property (such as patents) which has been incorporated into the
Software (the "Incorporated Software"), but excludes certain other standard
third party software which is readily available to the general public (including
IMNET ) at a standard price. Except as specified on Schedule 5.10(a), the
Company has taken no measures to register, patent, copyright or otherwise
protect the Software or the Intellectual Property other than diligent efforts to
protect the confidentiality of the source code for the Software. Prior to or
concurrently with the Closing, Stockholder shall transfer to the Company any and
all rights to the trademark "Advisoft," as indicated on Schedule 5.10(a).
Schedule 5.10(a) indicates which trademarks have been registered with the
Institut National de la Propriete Industrielle.
(b) Sources of Ownership of Intellectual Property. The Company
acquired its entire and exclusive rights to the Software and the Intellectual
Property either through the efforts of its own employees and agents and
independent contractors (see Section 5.12), or pursuant to the license
agreements listed on Schedule 5.10(b), complete copies of which have been
delivered to IMNET (the "Intellectual Property Rights Agreements"). As to
Incorporated Software, the Company has the rights granted to it in the related
Intellectual Property Rights Agreements.
437366.8
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(c) Agreements; No Infringement. All of the Incorporated
Software which is computer software is properly licensed to the Company under a
user license or a software development agreement. All other such Intellectual
Property (if obtained from third parties) is likewise properly available to the
Company. The Software does not incorporate any software not listed on Schedule
5.10(a). Except as described in Schedule 5.10(c), to the knowledge of the
Stockholder, the Intellectual Property does not infringe on any patents or
copyrights of any Person and neither the Software (and related Intellectual
Property) as licensed, sublicensed or sold by the Company (including all
license, maintenance, service, purchase, and other agreements with customers,
complete copies of which have been provided to IMNET ("Customer Agreements")),
nor any patents, formulae, processes, knowledge, trade secrets, trademarks,
trade names, assumed names, copyrights, or designations used by the Company
specifically with regard to the Customer Agreements or the Software, infringe on
any trademark or other intellectual property rights of any Person, or violate
the terms of any agreements listed on Schedule 5.10(b), or on any other Schedule
attached hereto. Except as set forth in Schedule 5.10(c), neither the Company
nor the Stockholder has any knowledge of any asserted claims of third parties to
the ownership of any of the Intellectual Property, or a reasonable basis
therefor nor is there any pending or, to the Company's and the Stockholder's
knowledge, threatened claim against the Company or the Stockholder contesting
the validity of or their right to use any of the Software or the Intellectual
Property. Except as set forth in Schedule 5.10(c), in developing the Software
neither the Company nor the Stockholder incorporated any software programs or
features copyrighted to any other Person.
(d) Completeness of Schedules. Schedule 5.10(d) contains an
accurate and complete list of all material Software-related intellectual
property (or other Intellectual Property) license agreements and Software or
hardware maintenance or service agreements, if any, granted by the Company
relating to the Company's business to the extent that such are not already
listed on Schedule 5.10(b) or Schedule 5.11(a), including for each such license
or other agreement the names of the licensee, other party, or other customer and
dates of commencement and expiration (or other termination). Complete copies of
each such agreement have been delivered to IMNET by the Company.
(e) No Undisclosed Restrictions on Intellectual Property.
Except as set forth on Schedule 5.10(e), or specifically described elsewhere
herein or in any schedule hereto, the Software and Intellectual Property (A) are
owned solely and exclusively by the Company, and (B) are and at the Closing will
be, subject to no restriction on the Company's use, disclosure or marketing, nor
to any claim, lien or encumbrance whatsoever. Except as so disclosed, no other
party other than the Company has any rights to market any Software. To the
knowledge of the Stockholder, no party to any of the Customer Agreements nor any
consultant to a customer, is in possession of Software (or any other property of
the Company), or has made use of Software (or such other property), except as
permitted pursuant to agreements disclosed pursuant to this Agreement. To the
knowledge of the Stockholder, no party to any of the agreements described on
Schedule 5.10(b) nor any party (if any) who has received source code under a
Customer Agreement or under any related source code agreement is in possession
of Software, or to the Company's or the Stockholder's knowledge has made use of
such source code, except as permitted pursuant to such agreements.
437366.8
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(f) Intellectual Property is not in Public Domain. To the
knowledge of the Stockholder except as set forth on Schedule 5.10(f), none of
the elements of the Software and the Intellectual Property is in the public
domain.
(g) Third-Party Software Products Required to Utilize the
Software. For each item of Software, Schedule 5.10(g) lists the third-party
software required to be licensed by customers of the Company in order to utilize
that item of Software, including both applications and operating systems, and
third-party software, excluding Incorporated Property, required for IMNET to
develop, maintain and deliver the Software.
(h) Compliance of Software and Intellectual Property with
Performance Standards. All of the Software and the Intellectual Property which
is licensed by the Company under Customer Agreements complies in all material
respects with the performance representations with respect thereto contained in
the Company's user and technical manuals in effect at the time of the Customer
Agreements (as modified for the customer, if applicable), and, when used in
accordance with such user and technical manuals, performs in accordance with the
Customer Agreements in all material respects. Except as set forth on Schedule
5.10(h), such Software as is currently made available for licensing to or access
by customers is ready for installation and/or use in substantial conformance
with the capability and performance standards set forth in the user or
instruction manual associated with such Software. Each marketed Software system
is documented and the documentation supplied to each licensee or user of each
such system is sufficient in all material respects to enable a user reasonably
competent in such matters to operate, access and/or use such system as intended.
Nothing has come to the attention of the Company and the Stockholder to indicate
that the license agreements entered into by the Company for use of Intellectual
Property products by customers do not contain provisions for protection of the
Company's confidential information, trade secrets and proprietary rights which
the Company reasonably believes have been and will be sufficient to preserve the
Company's proprietary rights therein.
5.11. Prior Performance by the Company under Certain Agreements; No
Default.
(a) Customer Agreements; Reseller and Other Supplier
Agreements. Schedule 5.11(a) lists all existing Customer Agreements and reseller
and other supplier agreements to which the Company is a party, copies of which
have been provided to IMNET.
(b) Royalties, Commissions and Other Obligations. Except as
set forth on Schedule 5.11(b), the Company has no royalty, commission or similar
obligation relating to the Software, the Customer Agreements, the reseller and
other supplier agreements or the Intellectual Property.
(c) No Default. Except as specifically identified on Schedule
5.11(c) hereto, the Company is not in default in its obligations under any of
the agreements described on Schedule 5.10(b) or Schedule 5.11(a). To the
knowledge of the Company and the Stockholder, no other party to any such
agreement is in default thereunder, except as indicated on Schedule 5.11(c).
437366.8
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5.12. Additional Documentation of Intellectual Property Rights.
(a) Except as disclosed on Schedule 5.12(a), all of the
Company's personnel, including (without limitation) employees, agents,
consultants, and contractors, who have contributed to or participated in the
conception and/or development or enhancement of the Software or the Intellectual
Property have executed an assignment in favor of the Company substantially in
the form of Exhibit 5.12(a) attached hereto.
(b) Except as set forth on Schedule 5.12(b), to the knowledge
of the Company and the Stockholder:
(i) all individuals and entities who have had access
to the Software or the Intellectual Property as independent contractors and have
provided installation services for the Company have executed agreements
containing appropriate and adequate restrictions on disclosure and use of
Software;
(ii) all individuals or entities who have had access
to the Software or the Intellectual Property as independent contractors and have
provided conversion or other services (i.e., other than installation) for the
Company have executed agreements containing appropriate and adequate
restrictions on disclosure and use of Software;
(iii) all individuals or entities who have had access
to the Software or the Intellectual Property as independent contractors and have
provided contract programming services to the Company have executed agreements
containing appropriate and adequate restrictions on disclosure and use of
Software; and
(iv) all agreements restricting disclosure and use of
Software known to the Company which have been executed by employees or
independent contractors have been provided to IMNET.
(c) Except as specified on Schedule 5.12(c), and to the
knowledge of the Stockholder, none of the past or present employees or
independent contractors of the Company is in possession of Software or any other
property of the Company, nor has made unauthorized use of Software or the
Intellectual Property or any other property of the Company, except such as have
had and will have no Material Adverse Effect. To the knowledge of the
Stockholder, no party other than the Company, its employees and IMNET have
access to or possession of source code, except as disclosed in the Customer
Agreements. As between the Company and its employees and independent
contractors, the Company has all patrimoine rights to its software and other
intellectual property.
5.13. Absence of Certain Changes. Except as reflected on Schedule 5.13,
or elsewhere in this Agreement or specifically identified on any Schedules
hereto, and since December 31, 1996, the Company has not and at the Closing Date
will not have:
437366.8
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(a) Suffered a Material Adverse Effect, or become aware of any
circumstances which might reasonably be expected to result in such a Material
Adverse Effect; or suffered any material casualty loss to the Assets (whether or
not insured).
(b) Incurred any obligations specifically related to the
Assets (including Customer Agreements), except in the ordinary course of
business consistent with past practices.
(c) Permitted or allowed any of the Assets to be mortgaged,
pledged, or subjected to any lien or encumbrance, except liens or encumbrances
specifically excepted by the provisions of Section 5.15.
(d) Written down the value of any inventory, contract or other
intangible asset, or written off as uncollectible any notes or accounts
receivable or any portion thereof, except for write-downs and write-offs in the
ordinary course of business, consistent with past practice and at a rate no
greater than during the latest complete fiscal year; cancelled any other debts
or claims, or waived any rights of substantial value, or sold or transferred any
of its material properties or assets, real, personal, or mixed, tangible or
intangible, except in the ordinary course of business and consistent with past
practice.
(e) Purchased, sold, licensed or transferred or agreed to
purchase, sell, license or transfer, any of the Assets, except in the ordinary
course of business and consistent with past practice.
(f) To the Stockholder's knowledge, received notice of any
pending or threatened adverse claim or an alleged infringement of proprietary
material, whether such claim or infringement is based on trademark, copyright,
patent, license, trade secret, contract or other restrictions on the use or
disclosure of proprietary materials.
(g) Incurred obligations to refund money to customers, except
in the ordinary course of business, all of which will have no Material Adverse
Effect.
(h) Become aware of any event, condition or other circumstance
relating solely to the Assets (as opposed to any such event, condition, etc.
which is, for example, national or industry-wide in nature) which might
reasonably be expected to materially adversely affect the Assets.
(i) Made any capital expenditures or commitments, any one of
which is more than U.S. $20,000 (FF117,400), for additions to inventory,
property, plant, or equipment;
(j) Made any material change in any method of accounting or
accounting practice.
(k) Paid, loaned, guaranteed, or advanced any material amount
to, or sold, transferred, or leased any material properties or assets (real,
personal, or mixed, tangible or intangible) to, or entered into any agreement,
arrangement, or transaction with any of the Company's officers or directors, or
any business or entity in which any officer or director of
437366.8
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the Company, or any affiliate or associate of any of such Persons has any direct
or indirect interest;
(l) Agreed to take any action described in this Section 5.13;
5.14. Taxes. Except as set forth on Schedule 5.14, the Company has duly
filed all tax reports and returns required to be filed by it and has duly paid
all taxes and other charges due or claimed to be due from it by foreign,
federal, state, or local taxing authorities as reflected in such tax returns and
reports (including, without limitation, those due in respect of its properties,
income, franchise, licenses, sales, and payrolls); and there are no tax liens
upon any of the properties or assets, real, personal, or mixed, tangible or
intangible of the Company.
5.15. Title to Properties; Encumbrances; Inventory. Except as
specifically identified in the Schedules hereto and except for items leased or
licensed by the Company, or on Schedule 5.15 and further subject to Section
5.10, the Company has good, valid, and marketable title to all of the Assets.
All of the Assets are in the possession or under the control of the Company, and
none of the Assets are subject to any mortgage, pledge, lien, security interest,
conditional sale agreement, encumbrance, or charge of any kind except as set
forth on Schedule 5.15 or as specifically disclosed on the other Schedules
hereto and, except minor imperfections of title and encumbrances, if any, that
are not substantial in amount, do not materially detract from the value or
functional utility of the property subject thereto, and do not in any way
materially impair the value of the Assets. The Company's inventory is properly
valued, is not excessive or out of balance, and is in its possession or control.
5.16. Equipment. The Company's equipment, including any motor vehicles,
is identified on Schedule 5.16. Such equipment is in adequate operating
condition and repair subject to normal wear and tear, except as set forth on
Schedule 5.16. Schedule 5.16 also sets forth a list of all current material
maintenance agreements on the Company's equipment.
5.17. Fixed Assets. Schedule 5.17 contains an accurate and complete
description of all material fixed assets owned, leased, or used by the Company,
including, without limitation, real property, the plants and structures located
thereon, and the equipment located therein. To the Company's and the
Stockholder's knowledge, such plants, structures, and equipment are structurally
sound with no known defects and in good operating condition and repair subject
to normal wear and tear, and the Company has not received any written
notification that there is any violation of any building, zoning, or other law,
ordinance, or regulation in respect of such property, plants, or structures, and
to the best of the Company's and the Stockholder's knowledge no such violation
exists.
5.18. Leases. Schedule 5.18 contains a list of all leases pursuant to
which the Company leases real or personal property which is a part of the Assets
utilized by the Company in conducting the Company's business, copies of which
leases have been delivered to IMNET. All such leases are valid, binding, and
enforceable in accordance with their terms (subject to bankruptcy, equitable and
other considerations of general applicability), are in full force and effect,
and except as set forth on Schedule 5.18, no event has occurred which is a
default or which with the passage of time will constitute a default by the
Company thereunder, nor has any such event occurred to the knowledge of the
Company and the Stockholder which is a default
437366.8
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by any other party to such lease. All property leased by the Company as lessee
is in the possession of the Company. Except as indicated in Schedule 4.1 or
Schedule 5.18, no consent of any lessor is required in connection with the
Transactions.
5.19. Litigation. Except as set forth in Schedule 5.19, (i) there are
no actions, proceedings or regulatory agency investigations against the Company
or the Stockholder and, to the Company's and the Stockholder's knowledge,
involving the Assets pending (served) or threatened against the Company or the
Stockholder, (ii) neither the Company nor the Stockholder know of, or know of
any reasonable basis for, any such action, proceeding or investigation against
the Company or the Stockholder, and (iii) no such action, proceeding, or
regulatory agency investigation has been pending (served) during the three-year
period preceding the date of this Agreement. No assertion has ever been made to
the Company to the effect that the Company has any liability as a successor to a
third party's business or product line, and the Company and Stockholder know of
no basis for any such assertion.
5.20. Employee Benefit Plans
(a) Schedule 5.20(a) sets forth a true and complete list of
each "employee benefit plan" including any bonus, health insurance, insurance,
severance, profit sharing, pension, compensation, deferred compensation, stock
option, stock purchase, fringe benefit, severance, post-retirement, scholarship,
disability, sick leave, vacation, individual employment, commission, bonus,
payroll practice, retention, or other plan, agreement, policy, or arrangement
(each such plan, agreement, policy, or arrangement is referred to herein as an
"Employee Benefit Plan", and collectively, the "Employee Benefit Plans") for the
benefit of (i) directors or employees of the Company or any other persons
performing services for the Company, (ii) former directors or employees of the
Company or any other persons formerly performing services for the Company, or
(iii) beneficiaries of anyone described in (i) or (ii) (collectively, "Company
Employees") with respect to which the Company has any liability or obligation.
Except as disclosed on Schedule 5.20(a) attached hereto, there are no other
benefits for which the Company has any liability.
(b) The Company has delivered to IMNET, with respect to each
Employee Benefit Plan, true and complete copies of the documents embodying and
relating to the plan.
(c) The list of employees attached hereto as Schedule 5.20(c)
gives complete and accurate details on the age, seniority, position and gross
remuneration of each of such employee. The employees have received in full when
due all amounts payable to them under their contracts or applicable legislation.
There are no other Company Employees.
(d) Copies of the form of employment contracts with employees
have been provided to IMNET, and, except as set forth on Schedule 5.20(d), there
are no changes or amendments.
(e) With respect to each Employee Benefit Plan and except as
otherwise set forth on Schedule 5.20(e) attached hereto, each Employee Benefit
Plan complies with and has been maintained and operated in accordance with its
terms and the applicable provisions of
437366.8
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French Law, and no claim, lawsuit, arbitration or other action has been asserted
or instituted or threatened against the Company.
(f) The Company does not use the services of any consultant or
accountant other than those listed in Schedule 5.20(f) hereto and, accordingly,
is not required to pay any indemnification, compensation, or fees whatsoever,
except as provided for in said Exhibit.
(g) The Company has duly filed all required declarations,
returns and reports with social related authorities regarding employee benefits
in the manner provided for under applicable laws. All taxes and duties due and
payable by the Company have been fully paid on their due date or adequately
reserved for. There is no pending or threatened claim, reassessment or dispute
with respect to said taxes and duties with the relevant authorities.
(h) For the purposes of this Section 5.20, the terms "tax" and
"duty" shall refer, without limitation, to any direct or indirect levies
collected on behalf of the State or any local authority (such as corporate
income tax, valued-added tax, registration tax, customs duty and business tax
[taxe professionnelle]) and all social welfare charges (including but not
limited to charges on wages or other benefits as well as social security,
unemployment or retirement charges) and to any penalties or late payment
interest relating thereto. All labor laws and regulations applicable but not
limited to collectively representations of the employees, dismissal procedures,
payment of salaries and indemnities, use of temporary workers, employees'
disciplinary rules and procedures and keeping of books, registers and records
have been and are fully complied with in all material respects. There exists no
potential or actual collective or individual claims or disputes with respect to
those matters, other than those listed in Schedule 5.20(e).
(i) omitted.
(j) The consummation of the Transactions will not alone give
rise to any liability for any employee benefits, including, without limitation,
liability for severance pay, unemployment compensation, termination pay or
withdrawal liability, or accelerate the time of payment or vesting or increase
the amount of compensation or benefits due to any Company Employee.
(k) Since December 31, 1996 and through the date hereof,
except as set forth on Schedule 5.20(l) attached hereto, the Company has not,
nor will it, (i) institute or agree to institute any new employee benefit plan
or practice, (ii) make or agree to make any change in any Employee Benefit Plan,
(iii) make or agree to make any increase in the compensation payable or to
become payable by the Company to any Company Employee, or (iv) except pursuant
to this Agreement, and except for contributions required to provide benefits
pursuant to the provisions of the Employee Benefit Plans, pay or accrue or agree
to pay or accrue any bonus, percentage of compensation, or other like benefit
to, or for the credit of, any Company Employee.
(l) The Company's accrued sick leave and vacation time for its
employees is set forth on Schedule 5.20(m) attached hereto.
437366.8
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5.21. Contracts and Commitments.
(a) Except (i) as set forth in Schedule 5.21(a), and (ii) for
the Customer Agreements listed in Schedule 5.11(a), there are, and at the time
of Closing, will be no material unfulfilled obligations of the Company under any
Customer Agreements, including any maintenance and warranty obligations.
Schedule 5.21(a) sets forth all material unfulfilled obligations of the Company
to customers other than pursuant to the Customer Agreements listed in Schedule
5.11(a) and all commitments to potential customers or other third parties, and,
to the extent relevant, the remaining amount of the unpaid, or paid but
unearned, payment obligations relating to such unfulfilled obligations.
(b) To the Company's and the Stockholder's knowledge, the
Company is not in default nor is there any basis for any valid claim of default,
and no default has been asserted against the Company, or, by the Company, under
any Customer Agreements or Intellectual Property Rights Agreements.
(c) To the Company's and the Stockholder's knowledge, except
as set forth in the Intellectual Property Rights Agreements (set forth at
Schedules 5.10(b) and 5.10(e)), no aspect of the Company, its Assets, its
business or operations is of such character as would restrict IMNET from
carrying on the Company's business anywhere in the world.
(d) Except as identified in Schedule 5.21(a), the Company has
no consultant or independent contractor to whom it is paying compensation for
services on a regular or continuing basis.
(e) Except as disclosed herein, the Company has no material
contracts, commitments, arrangements, or understandings relating to its
business, operations, financial condition, or prospects. For purposes of this
Section 5.21(e), "material" means payment or performance of a service having a
value in excess of U.S. $25,000 (FF146,750) or a term in excess of one year.
(f) To the Company's and the Stockholder's knowledge, there
are no outstanding contracts, commitments or bids, or Software licensing,
development, sales or service proposals, that will result in any substantial
loss to the Company upon completion or performance thereof, after allowance for
normal direct licensing, development, distribution and other related expenses.
(g) There are no outstanding material lease or purchase
commitments of the Company which are not consistent with the Company's past
lease and purchase commitment practices.
(h) All accounts receivable of the Company whether reflected
in the Historical Financials or otherwise, represent amounts that have been
invoiced, sales or licenses actually made or granted in the ordinary course of
business, and neither the Company nor Stockholder is aware of any fact or
circumstance that would impair the collectibility of such accounts receivable
net of any reserve shown on the Company's most recent balance sheet included in
the
437366.8
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Historical Financials provided to IMNET (which reserve is adequate and was
calculated consistent with past practice).
5.22. Work-in-Process, Orders, Commitments and Returns.
(a) Except as set forth on Schedule 5.22(a), there are no
outstanding bids or proposals made by or on behalf of the Company to provide,
nor unfilled orders for, any products or services.
(b) Except as set forth on Schedule 5.22(b), as of the date
hereof, except for any claims specifically disclosed on other Schedules hereto,
to the Company's and the Stockholder's knowledge, there are no claims nor does
the Company reasonably expect to make or receive any claims to terminate
Customer Agreements, reseller or other supplier agreements, or material
licenses, services, purchase or other orders, or receive a refund relating to
Customer Agreements, reseller or other supplier agreements, purchase agreements,
licenses, maintenance agreements, or other fees by reason of alleged
dissatisfaction with the Company's capabilities or performance (including those
related to Software), or defective or unsatisfactory products or services. The
Company has accepted no orders for services, and has placed no Software (or any
other product) in the hands of customers under an understanding that such
services or products would be returnable or subject to refund in whole or in
part, except as specifically set forth in the Customer Agreements.
(c) Except as set forth on Schedule 5.22(c), neither the
Stockholder nor the Company have been notified that the consummation of the
Transactions will result in any material cancellations or withdrawals of
accepted and unfilled orders for Software or maintenance or other products or
services and the Stockholder will inform IMNET promptly upon receipt of any
notification to that effect received after the day hereof. To the knowledge of
the Company and the Stockholder, neither the execution of this Agreement nor the
consummation of the Transactions will result in any material cancellations or
withdrawals of accepted and unfilled orders for the license or sales of Software
services or merchandise. The consummation of the Transactions will not have an
adverse impact on the eligibility or competitive position, of the Company for
entering into contracts for the provision of products and services to the
Company's past, current and currently proposed future customers.
5.23. Tax Liens. There are no tax liens upon any of the Assets (other
than liens for current taxes not yet due).
5.24. Assets Necessary to Business. Except as described in Schedule
5.24, the Assets are all of the items in the reasonable judgment of the
Stockholder necessary to carry on the business of the Company as it is currently
conducted, to offer and sell the Company's products and services, to license and
maintain the Software, and to provide all services required under the Customer
Agreements in connection with the Company's business, assuming competent
personnel, general office facilities, and adequate computer facilities are
available.
5.25. Disclosure. No representation or warranty by the Stockholder
contained in this Agreement and no statement contained in any certificate or
schedule furnished to IMNET pursuant to the provisions hereof contains any
untrue statement of a material fact or omits to
437366.8
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state a material fact necessary in order to make the statements therein not
misleading. To the knowledge of the Company and the Stockholder, there is no
current event or condition of any kind or character pertaining to the Company
that may reasonably be expected to have a Material Adverse Effect, except as
disclosed herein.
5.26. Certain Other Contracts.
Except as disclosed on Schedule 5.26:
(a) The Company does not have (i) any outstanding contracts
with stockholders, directors, officers, employees, agents, consultants,
advisors, salesmen, sales representatives, distributors, suppliers, or dealers
that are not cancelable by it on notice of not longer than thirty days and
without material liability, penalty, or premium; (ii) any agreement or
arrangement providing for the payment of any material bonus or commission based
on sales or earnings; or (iii) any agreements that contain any material
severance or termination pay liabilities or obligations.
(b) The Company has not given any power of attorney relating
to the Assets (whether revocable or irrevocable) to any Person, firm, or
corporation for any purpose whatsoever, other than appointments (if any)
required by law as identified on Schedule 5.26.
(c) The Company is not paying, and has no obligation to pay,
any disability, medical expenses, pension, deferred compensation, or retirement
allowance to any Person.
(d) The Company is not in default nor, to the knowledge of the
Company and the Stockholder, is there any basis for any valid claim of default,
against the Company, or by the Company, under any material contracts, including
Customer Agreements, and reseller and other supplier agreements, made or
obligations owed by or to the Company.
(e) The Company is not a party to any material licensing
agreement relating to the Company's business either as purchaser, supplier,
licensor or licensee, except as set forth in the Schedules hereto.
5.27. IMNET 's Access and Inspection. On reasonable notice, the
Stockholder shall provide IMNET full access during normal business hours from
and after the date hereof until the Closing to all of the books and records of
the Company as they relate to the Company's business and the Assets, and shall
cause the Company to furnish such information concerning the business and
affairs of the Company as may be requested, in each case for the purpose of
making such continuing investigation of the Company and its respective
predecessors and the Assets as IMNET may desire. The Company and the Stockholder
shall cause personnel to assist IMNET in such continuing investigation and shall
cause their personnel, counsel, accountants and other non-employee
representatives to be reasonably available to IMNET in connection with its
continuing investigation.
5.28. Complete Documentation. Except as specifically indicated
elsewhere herein, all documents delivered (or to be delivered) by the Company or
the Stockholder to IMNET in connection herewith have been (or will be) complete
originals, or exact copies thereof.
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5.29. Ongoing Business. The Stockholder will cause the Company to
utilize its best efforts to keep its operations and business intact until the
Closing; to keep available to IMNET the services of its present employees; and
to preserve for IMNET the business relations of the suppliers and customers of
the Company and the business relations of the others with which the Company has
business relations, and otherwise preserve the Assets. Prior to Closing, the
Company will engage in no activities outside the ordinary course of business,
except as contemplated herein.
5.30. Advisors Fees. Except as set forth on Schedule 5.30, Stockholder
has not retained or utilized the services of any advisor, broker, finder or
intermediary, or paid or agreed to pay any fee or commission to any other Person
or entity for or on account of the Transactions, or had any communications with
any Person or entity which would obligate any party other than such Stockholder
to pay any such fees or commissions.
5.31. Bank Accounts. Schedule 5.31 contains a true, complete and
correct list showing the name and location of each bank or other institution in
which the Company has any deposit account or safe deposit box, together with a
listing of account numbers and names of all Persons authorized to draw thereon
or have access thereto.
5.32. Business Practices. Neither the Company, nor Stockholder, nor
anyone acting on their behalf has made any payment of funds of the Company
prohibited by law, and no funds of the Company have been set aside to be used
for any payment prohibited by law.
5.33. Insurance. The Company maintains property, fire, casualty,
general liability insurance and other forms of insurance relating to its assets
and the operation of its business against risks of the kind customarily insured
against and in amounts customarily insured (and, where appropriate, in amounts
not less than the replacement cost of the Company's assets). The Company shall
maintain such insurance policies in full force and effect through the Closing
Date. Schedule 5.33 lists all of the insurance policies maintained by the
Company, which schedule includes the name of the insurance company, the policy
number, a description of the type of insurance covered by such policy, the
dollar limit of the policy, and the annual premiums for such policy.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF
IMNET
In order to induce the Stockholder to enter into this Agreement and
consummate the Transactions, IMNET represents and warrants to the Stockholder as
follows, each of which representations and warranties is material to and relied
upon by the Stockholder:
6.1. Organization of IMNET. IMNET is a corporation duly organized and
validly existing under the laws of the State of Delaware, United States of
America, and has the corporate power to own its property and to carry on its
business as now being conducted by it.
437366.8
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6.2. Corporate Power and Authority; Due Authorization. IMNET has full
corporate power and authority to execute and deliver this Agreement and each of
the Closing Documents to which IMNET is or will be a party and to consummate the
Transactions. The Board of Directors of IMNET has duly approved and authorized
the execution and delivery of this Agreement and each of the Closing Documents
to which it is or will be a party and the consummation of the Transactions, and
no other corporate proceedings on the part of IMNET are necessary to approve and
authorize the execution and delivery of this Agreement and such Closing
Documents and the consummation of the transactions contemplated hereby and
thereby. Assuming that this Agreement and each of the Closing Documents to which
IMNET is a party constitutes a valid and binding agreement of Company and/or
Stockholder, as the case may be, this Agreement and each of the Closing
Documents to which IMNET is a party constitutes, or will constitute when
executed and delivered, a valid and binding agreement of IMNET in each case
enforceable against IMNET in accordance with its terms, except as the
enforceability thereof may be limited by applicable bankruptcy, insolvency or
similar laws relating to the enforcement of creditors' rights generally and by
the application of general principles of equity.
6.3. No Conflict; Consents. Except as set forth on Schedule 6.3 hereto,
the execution and delivery by IMNET of this Agreement, the Closing Documents to
which it is or will be a party and the consummation by IMNET of the Transactions
do not and will not (a) require the consent, approval or action of, or any
filing or notice to, any corporation, firm, Person or other entity or any
public, governmental or judicial authority; (b) violate in any material respect
the terms of any instrument, document or agreement to which IMNET is a party, or
by which IMNET or the property of IMNET is bound, or be in conflict in any
material respect with, result in a material breach of or constitute (upon the
giving of notice or lapse of time, or both) a material default under any such
instrument, document or agreement; (c) violate IMNET 's Certificate of
Incorporation or Bylaws; or (d) violate any order, writ, injunction, decree,
judgment, ruling, law or regulation of any federal, state, county, municipal, or
foreign court or governmental authority applicable to IMNET and relating to the
Transactions.
6.4. Brokers Fees and Expenses. IMNET has not retained or utilized the
services of any broker, finder, or intermediary, or paid or agreed to pay any
fee or commission to any other Person or entity for or on account of the
transactions contemplated hereby, or had any communications with any Person or
entity which would obligate the Stockholder to pay any such fees or commissions.
6.5. Absence of Material Changes. Except as set forth on Schedule 6.5
attached hereto, since March 31, 1997 there has not been any material adverse
change in the condition (financial or otherwise) of the business, operations,
condition, liabilities, assets or regulatory status of IMNET.
6.6. IMNET Shares to be Delivered. The IMNET Shares, when issued and
delivered to the Stockholder pursuant to this Agreement, will be duly
authorized, validly issued, fully paid and non-assessable shares of Common Stock
of IMNET. As of the Closing, the IMNET Shares will have been listed on the
Nasdaq Stock Market.
6.7. Accuracy of Securities Filings. IMNET has furnished the Securities
Filings to the Stockholder or their representatives. The Securities Filings
comply in all material respects
437366.8
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with the applicable requirements of the Securities Act and the Exchange Act,
and, as of the dates thereof, to IMNET 's knowledge, do not contain any untrue
statement of any material fact or omit to state a material fact required therein
to be stated or omit to state a material fact in order to make the statements
therein not misleading. All financial statements set forth in the Securities
Filings present fairly the financial condition of IMNET as of (or for the period
ending on) their respective dates.
6.8. Approvals. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby by IMNET will not require
the consent, approval, order or authorization of any governmental entity or
regulatory authority or any other Person under any statute, law, rule,
regulation, permit, license, agreement, indenture or other instrument to which
IMNET is a party or to which any of its properties are subject, except for such
consents, approvals, actions, filings or notices the failure of which to make or
obtain will not have a material adverse effect on the business, assets, results
of operation, properties, or financial condition of IMNET, and except for any
federal or state filings required by applicable securities laws, no declaration,
filing or registration with any governmental entity or regulatory authority is
required by IMNET in connection with the execution and delivery of this
Agreement, the consummation of the transaction contemplated hereby, or the
performance by IMNET of its obligations hereunder.
6.9. [Omitted].
6.10. Accuracy of Representations. No representation or warranty by
IMNET contained in this Agreement and no statement contained in any certificate
or schedule furnished to the Stockholder pursuant to the provisions hereof
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements therein not misleading.
ARTICLE 7
INDEMNIFICATION
7.1. Indemnification by Stockholder. The Stockholder hereby agrees to
indemnify and hold IMNET and the Company, and each of IMNET 's respective
affiliates, directors, officers, employees and agents (other than Stockholder),
harmless from and against all claims, liabilities, lawsuits, costs, damages or
expenses (including, without limitation, reasonable attorneys' fees and expenses
incurred in litigation or otherwise) arising out of and sustained by any of them
due to (a) any misrepresentation or breach of any representation, warranty,
covenant or agreement of any Stockholder contained in this Agreement or any
Closing Document; or (b) any liability or obligation relating to the operation
of the Company's business, the Transactions or the ownership or use of the
Assets, including, without limitation, any and all claims, liabilities, taxes,
debts, contracts, agreements, obligations, damages, costs and expenses, known or
unknown, fixed or contingent, claimed or demanded by third parties against IMNET
(or, after the Closing, the Company) arising out of the operation of the
Company's business, the Transactions, or the ownership or use of the Assets
through the Closing Date not specifically disclosed herein or in the Schedules
attached hereto or in any Closing Document or the schedules
437366.8
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attached thereto (collectively all claims described in this Section 7.1, being
"Indemnified Claims").
7.2. Indemnification by IMNET. IMNET hereby agrees to indemnify and
hold the Stockholder harmless from and against all claims, liabilities,
lawsuits, costs, damages or expenses (including without limitation reasonable
attorneys fees and expenses incurred in litigation or otherwise) arising out of
and sustained by any of them due to any misrepresentation or breach of any
representation, warranty, covenant or agreement of IMNET in this Agreement or
any Closing Document.
7.3. Provisions Regarding Indemnification. The indemnified party (or
parties) shall promptly notify the indemnifying party (or parties) of any claim,
demand, action or proceeding for which indemnification will or may be sought
under Section 7.1 or 7.2 of this Agreement and, if such claim, demand, action or
proceeding is a third party claim, demand, action or proceeding, the
indemnifying party will have the right, at its expense, to assume the defense
thereof using counsel, chosen by the indemnifying party, and who shall be
reasonably acceptable to the indemnified party. The indemnified party shall have
the right to participate in (at its own expense), but not control, the defense
of any such third party claim, demand, action or proceeding. In connection with
any such third party claim, demand, action or proceeding, the Stockholder and
IMNET shall cooperate with each other. No such third party claim, demand, action
or proceeding shall be settled without the prior written consent of the
indemnified party provided, however, that if a firm, written offer is made to
settle any such third party claim, demand, action or proceeding and the
indemnifying party proposes to accept such settlement and the indemnified party
refuses to consent to such settlement, then: (i) the indemnifying party shall be
excused from, and the indemnified party shall be solely responsible for, all
further defense of such third party claim, demand, action or proceeding; and
(ii) the maximum liability of the indemnifying party relating to such third
party claim, demand, action or proceeding shall be the amount of the proposed
settlement if the amount thereafter recovered from the indemnified party on such
third party claim, demand, action or proceeding is greater than the amount of
the proposed settlement.
7.4. Survival. The obligation of the indemnifying parties hereunder to
indemnify the other party in accordance with the provisions of Section 7 shall
remain in force for claims asserted within a period of three (3) years from the
Closing, with the exception of: (a) claims made in connection with tax, customs
and social security matters, as to which the obligations of the Stockholder
shall remain in force for a period equal to the applicable statutes of
limitations; or (b) claims as to title to the Company's Assets (Section 5.3), to
the Company Stock (Sections 5.2 and 5.5) as to which the obligation of the
Stockholder shall remain in force for a period equal to the applicable statute
of limitations for claims to be made against the Company or IMNET.
7.5. Right of Set-Off. Upon ten (10) business days written notice to
the Stockholder specifying in reasonable detail the basis therefor, IMNET shall,
subject to the limitations set forth in Section 7.6, have the right to set off
against amounts otherwise due to the Stockholder pursuant to the terms of the
Indemnity Escrow Agreement any amounts payable by the Stockholder pursuant to
the indemnification provisions in this Article 7; provided, however, that if the
Stockholder notifies the escrow agent under the Indemnity Escrow Agreement in
writing
437366.8
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within such ten (10) business day period of his objection to the indemnification
claim, such claim shall be administered pursuant to the terms of the Indemnity
Escrow Agreement. Said right of set-off, however, shall not be exclusive of any
other right or remedy IMNET may have with respect to indemnification under this
Agreement.
7.6. Indemnification Basket. Notwithstanding anything to the contrary
contained herein, IMNET will assert no claim against the Stockholder under this
Article 7 until the total of all Indemnified Claims equals or exceeds in the
aggregate $50,000 (FF293,500) (the "Base Amount"), at which time all Indemnified
Claims in excess of the Base Amount may be claimed in full and, if indemnifiable
under this Article 7, shall be indemnified in full.
7.7. Stockholder's Limit of Liability. Notwithstanding any other
provision in this Agreement to the contrary, the aggregate liability of the
Stockholder in respect of this Section 7 shall not exceed the aggregate amounts
agreed to be paid to the Stockholder hereunder, and under the Earn-out Agreement
and received by Stockholder, net of actual income taxes paid thereon by
Stockholder, as further adjusted by any taxes saved by Stockholder due to such
indemnifications, and except that there shall be no limit of liability for
remedies based upon fraud, intentional breach of a representation, warranty or
covenant, or for remedies based upon a breach of the representations and
warranties set forth in Section 5.2 or 5.5.
ARTICLE 8
CONDITIONS TO BE FULFILLED BEFORE
IMNET IS OBLIGATED TO CLOSE
Each and every obligation of IMNET under this Agreement to be performed
on or prior to the Closing shall be subject to the fulfillment, on or prior to
the Closing, of each of the following conditions:
8.1. Representations and Warranties True at Closing. The
representations and warranties made by the Stockholder in or pursuant to this
Agreement or given on their behalf hereunder shall be true and correct on and as
of the Closing Date with the same effect as though such representations and
warranties had been made or given on and as of the Closing Date.
8.2. Obligations Performed. The Stockholder shall have performed and
complied with all agreements and conditions required by this Agreement to be
performed or complied with by them prior to or at the Closing.
8.3. Consents. The Stockholder shall have obtained and delivered (or
caused the Company to obtain and deliver) to IMNET written consents of all
Persons or entities whose consent is required to consummate the Transactions,
including, without limitation, the consent of the Stockholder, and all of such
consents shall remain in full force and effect at and as of the Closing.
437366.8
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8.4. Closing Deliveries. The Company and/or the Stockholder shall have
delivered (or caused the Company to deliver) to IMNET each of the following,
together with any additional items which IMNET may reasonably request to effect
the transactions contemplated herein:
(a) documentation satisfactory to counsel to IMNET,
transferring all of the Company Stock to IMNET ;
(b) a certificate of the President of the Company certifying
as to the matters set forth in Sections 8.1, 8.2 and 8.3 hereof and as to the
satisfaction of all other conditions set forth in this Article 8;
(c) An Employment Agreement duly executed by Xx. XXXXX;
(d) written consents from all parties to all leases and
contracts whose consent to the Transactions is required;
(e) omitted;
(f) an opinion of counsel to the Company and the Stockholder
substantially in the form of Exhibit 8.4(f) attached hereto;
(g) the Indemnity Escrow Agreement executed by the
Stockholder, substantially in the form of Exhibit 3.4 attached hereto;
(h) the NonCompete Agreement executed by the Stockholder, in
substantially the form of Schedule 3.1.A attached hereto;
(i) the Earn-out Agreement, duly executed by Stockholder; and
(j) any other documents or agreements contemplated hereby
and/or necessary or appropriate to consummate the Transactions.
8.5. No Challenge. There shall not be pending or threatened any action,
proceeding or investigation before any court or administrative agency by any
government agency or any pending action by any other Person, challenging, or
seeking material damages in connection with the Transactions or the ability of
IMNET or any of its affiliates to own and operate the Company or otherwise
materially adversely affecting the business, assets, prospects, financial
condition or results of operations of the Company.
8.6. No Investigations of Company or Business. As of the Closing Date
there shall be no, and neither the Company nor any Stockholder shall have any
knowledge of any pending or threatened investigation by any municipal, state or
federal government agency or regulatory body with respect to the Company, the
Company's assets or the Company's business.
8.7. No Material Adverse Effect. Since December 31, 1996, there shall
have been no Material Adverse Effect.
437366.8
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8.8. Securities Laws. The parties shall have complied with all U.S. and
French, federal and state, securities laws applicable to the Transactions. All
permits or approvals required to carry out the Transactions shall have been
received.
8.9. Omitted.
8.10. Revised Schedules. The Company and the Stockholder shall have
provided IMNET with revised Schedules dated as of the Closing Date (the "Revised
Schedules"), with all material changes through such date duly noted thereon, and
the Revised Schedules will not contain any disclosures which (i) should have
been but were not disclosed on the Schedules attached hereto or (ii) set forth
material changes which in the opinion of IMNET, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect unless
such disclosures are approved in writing by IMNET.
8.11. Legality. No U.S. or French, federal or state statute, rule,
regulation, executive order, decree or injunction shall have been enacted,
entered, promulgated or enforced by any court or governmental authority which is
in effect and has the effect of making the Transactions, illegal or otherwise
prohibiting the consummation of the Transactions.
8.12. Regulatory Matters. All filings shall have been made and all
approvals shall have been obtained as may be legally required pursuant to
federal and state laws prior to the consummation of the Transactions and all
actions by or in respect of, or filings with, any governmental body, agency or
official or any other Person required to permit the consummation of the
Transactions so that the Company shall be able to continue to carry on the
business of the Company substantially in the manner now conducted by the Company
shall have been taken or made.
8.13. Repayment of Debts. At the Closing, all officers, directors,
stockholders and employees of the Company shall repay to the Company in full any
outstanding indebtedness owed to the Company by them or their families.
8.14. Termination of Stock Rights. All Stock Rights of the Company, if
any, shall be terminated on or before the Closing, without further liability or
obligation on behalf of the Company.
8.15. Releases. The Stockholder shall have executed a release in favor
of the Company in form reasonably satisfactory to IMNET and its counsel.
ARTICLE 9
CONDITIONS TO BE FULFILLED BEFORE
THE STOCKHOLDER IS OBLIGATED TO CLOSE
Each and every obligation of the Stockholder under this Agreement to be
performed on or prior to the Closing, shall be subject to the fulfillment, on or
prior to the Closing, of each of the following conditions:
437366.8
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9.1. Representations and Warranties True at Closing. The
representations and warranties made by IMNET in or pursuant to this Agreement or
given on its behalf hereunder shall be true and correct on and as of the Closing
Date with the same effect as though such representations and warranties had been
made or given on and as of the Closing Date.
9.2. Obligations Performed. IMNET shall have performed and complied
with all of its obligations under this Agreement which are to be performed or
complied with by it prior to or at the Closing.
9.3. Closing Deliveries. IMNET shall have delivered to the Stockholder
each of the following, together with any additional items which the Stockholder
may reasonably request to effect the Transactions:
(a) the Cash Portion of the purchase price, less amounts to be
held in escrow;
(b) the Indemnity Escrow Agreement, duly executed by IMNET ;
(c) the Earn-out Agreement, duly executed by IMNET ;
(d) a confirmation letter from IMNET 's transfer agent that
stock certificates representing the IMNET Shares in the name of Stockholder have
been issued, and placed in the hands of an independent third party delivery
service for delivery to the Stockholder;
(e) certified copies of the corporate resolutions of IMNET
authorizing the execution, delivery and performance of this Agreement by IMNET,
together with incumbency certificates with respect to the respective officers of
IMNET executing documents or instruments on behalf of IMNET ;
(f) a certificate of the President or Chief Executive Officer
of IMNET certifying as to the matters set forth in Sections 9.1 and 9.2 hereof
and as to the satisfaction of all other conditions set forth in this Article 9;
(g) the Employment Agreement with Xx. XXXXX duly executed by
the Company;
(h) opinion of counsel to IMNET substantially in the form of
Exhibit 9.3(h); and
(i) any other documents or agreements contemplated hereby
and/or necessary or appropriate to consummate the Transactions.
9.4. No Challenge. There shall not be pending or threatened any action,
proceeding or investigation before any court or administrative agency by any
government agency or any pending action by any other Person, challenging or
seeking material damages in connection with the Transactions or the ability of
IMNET or any of its affiliates to own and operate the Company or otherwise
materially adversely affecting the business, assets, prospects, financial
condition or results of operations of the Company.
437366.8
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ARTICLE 10
PROVISIONS REGARDING THE IMNET SHARES
10.1. Representations by the Stockholder. Stockholder represents and
warrants to IMNET that Stockholder is a citizen and resident of France, is not
an affiliate of IMNET, and is acquiring the IMNET Shares for his own account,
for investment and not with a view to the distribution or resale thereof, and
will confirm such facts to IMNET by letter simultaneously with the Closing.
Stockholder further represents and warrants no offer of the IMNET Shares was
made to the Stockholder in the United States. Stockholder acknowledges that the
issuance of the IMNET Shares hereunder has not been registered under the
Securities Act, the Georgia Securities Act of 1973, as amended (the "Georgia
Act") in reliance upon Section 10-5-9(12) and (13) thereunder, any other U.S.
state securities or Blue Sky law, or any French securities law. Stockholder
represents and warrants that the transactions are not part of a scheme to evade
the registration requirements of the Securities Act.
10.2. Covenants of the Stockholder. Stockholder covenants not to offer,
sell, transfer, assign, mortgage, pledge, or otherwise dispose of or encumber
any of the IMNET Shares delivered to him pursuant to this Agreement unless in
the opinion of counsel acceptable to IMNET given prior to such transaction, (a)
such transaction may be effected in compliance with applicable U.S. and French
securities laws, and without registration thereunder, or (b) if such
registration is required, that such registration has become effective and
remains in effect. Stockholder acknowledges that IMNET is relying on Regulation
S, promulgated by the U.S. Securities and Exchange Commission, and will make no
offers or sales except in compliance with Regulation S (i.e., (i) the offer or
sale is not made to a person in the United States, the buyer and seller are
outside the United States, the buyer is not a U.S. person, nor is the
transaction for the account or benefit of a U.S. person, there are no directed
selling efforts in the United States, and the buyer agrees to observe all such
restrictions, or (ii) Regulation S is otherwise complied with) during the 40-day
"restricted period" specified in such Regulation. Stockholder represents that
Stockholder has not entered into any put options or short positions or other
similar instrument with respect to IMNET Common Stock.
10.3. Legend, etc. Stockholder agrees that IMNET will endorse on any
certificate for the IMNET Shares to be delivered to Stockholder pursuant to this
Agreement an appropriate legend referring to the provisions of Sections 10.1 and
10.2 hereof and the absence of registration thereof, and that IMNET may instruct
its transfer agents not to transfer any such shares unless advised by IMNET that
such provisions have been complied with.
10.4. Due Diligence. Stockholder acknowledges that Stockholder has had
full opportunity to investigate the business of IMNET, and that the investment
in the IMNET Shares is highly speculative. Stockholder represents that
Stockholder can bear the economic risks of such an investment. Stockholder also
represents that Stockholder has such familiarity with the business of IMNET that
Stockholder is able to evaluate the advisability of Stockholder's investment in
the IMNET Shares based upon the information made available to Stockholder.
Stockholder specifically acknowledges the "Risk Factors" set forth in the Form
10-K of IMNET for the fiscal year ended June 30, 1996, as amended, as well as
the other risk factors described in the Securities Filings. Notwithstanding the
foregoing, in respect of the U.S. Private Securities Litigation Reform Act of
1995, Stockholder acknowledges that statements made by IMNET herein or in the
Securities Filings which are not historical facts, including projections,
statements of plans, objectives, expectations, or future economic performance,
are forward
437366.8
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looking statements that involve risks and uncertainties and are subject to the
safe harbor created by the U.S. Private Securities Litigation Reform Act of
1995. IMNET 's future financial performance could differ significantly from that
set forth in the Securities Filings and from the expectation of management.
Important factors that could cause IMNET 's financial performance to differ
materially from past results and from those expressed in any forward looking
statements include, without limitation, IMNET 's limited operating history,
seasonality, fluctuations in quarterly operating results, customer
concentration,product acceptance, along sales and delivery cycle, dependence on
business partners, risks associated with acquisitions, and risks associated with
international operations.
ARTICLE 11
TERMINATION
11.1. Termination. This Agreement may be terminated at any time before
the Closing Date:
(a) by mutual written consent of IMNET and the Stockholder;
(b) by IMNET if (i) there occurs a substantial loss, damage or
diminution of assets or other material adverse change in the business of the
Company or in the Company arising from any cause including theft, fire, flood or
act of God prior to Closing; or (ii) the revenues and earnings progress of the
Company as shown on the books and records of the Company at the Closing has not
continued within such ranges as are consistent with prior performance of the
Company;
(c) by any nonbreaching party hereto if there has been a
material breach of any representation, warranty, covenant or agreement contained
in this Agreement on the part of any nonterminating party hereto;
(d) by either IMNET or Xx. XXXXX if the Closing is not
consummated on or before June 30, 1997, unless the failure to close by such date
is attributable to actions or omissions of the party seeking to terminate this
Agreement under this subsection;
(e) in accordance with IMNET 's election under Section 12.1;
or
(f) in accordance with the election of IMNET or Stockholder
pursuant to Section 3.3.
11.2. Effects of Termination. In the event this Agreement is terminated
pursuant to Section 11.1(a), 11.1(b)(i), 11.1(d), or 11.1(e) above, no party
shall have any obligations to the others hereunder. If this Agreement is
terminated pursuant to Section 11.1(b)(ii) or 11.1(c), each party hereto may
exercise all remedies available to it under this Agreement, at law or in equity.
If this Agreement is terminated, IMNET shall promptly return to the Company all
copies of the Company's due diligence materials previously provided to IMNET or
its representatives, and the obligations in respect of confidentiality set forth
herein shall remain in effect and each party hereto may exercise all remedies
available to it under this Agreement, at law or in equity.
437366.8
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ARTICLE 12
MISCELLANEOUS PROVISIONS
12.1. Risk of Loss. The risk of loss prior to the Closing Date shall be
with the Company and, indirectly, the Stockholder. In the event that any of the
Company's assets or the operations of the business of the Company shall have
been damaged or otherwise adversely affected as a result of any strike, accident
or other casualty or act of God or the public enemy, or any judicial,
administrative or governmental proceeding at such time as Company proposed to
close, then IMNET shall have the options of either (a) proceeding to close with
an assignment of any insurance proceeds which may be paid to reflect such loss
or damage (or assurance that such proceeds will be payable to the Company after
the Closing) or (b) terminating this Agreement without further liability to the
Company or the Stockholder.
12.2. Severability. If any provision of this Agreement is prohibited by
the laws of any jurisdiction as those laws apply to this Agreement, that
provision shall be ineffective to the extent of such prohibition and/or shall be
modified to conform with such laws, without invalidating the remaining
provisions hereto.
12.3. Modification. This Agreement may not be changed or modified
except in writing specifically referring to this Agreement and signed by each of
the parties hereto.
12.4. Assignment, Survival and Binding Agreement. This Agreement and
the Closing Documents may not be assigned by IMNET, except to an affiliate of
IMNET, and may not be assigned by the Company or any Stockholder, without the
prior written consent of IMNET. The terms and conditions hereof shall survive
the Closing as provided herein and shall inure to the benefit of and be binding
upon the parties hereto and their respective heirs, personal representatives,
successors and assigns.
12.5. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
12.6. Notices. Any notice or other communication under this Agreement
shall be in writing and must be delivered by personal delivery (including
personal delivery by courier, such as Federal Express, DHL or similar courier),
First Class Air Mail (registered or certified), or facsimile with confirmed
transmission (with a copy sent by personal delivery or First Class Air Mail).
All communications under this Agreement shall be addressed to the respective
parties hereto as follows:
If to the Stockholder: Xx. Xxxxxx Xxxxx
c/o Advisoft Consulting SA
0, Xxxxxxxxx Xxx
00000 Xxxxx, Xxxxxx
Attention: Xx. Xxxxx
Telefax: 0-00-00-00-00
437366.8
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with a copy to: FIDAL Societe d' Advocats
00 Xxxxxxxxx xx Xxxxxxxxx
00000 Xxxxx, Xxxxxx
Attention: Bruno Anger
Telefax: 0-00-00-00-00
If to IMNET : IMNET Systems, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxxxx Xxxxxxxx XX
Xxxxxxxxxx, XX, XXX 00000
Attention: President and Chief
Operating Officer
Telefax:(000) 000-0000
with a copy to: Arnall Golden & Xxxxxxx
2800 One Atlantic Center
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Attention: T. Xxxxx
Xxxxxxxxxx III, Esq.
Telefax: (000) 000-0000
and a further copy to: Moquet Borde Dieux Geens & Associes
00, Xxxxxx xx Xxxxxxx - 00000 Xxxxx
Attention: Xxxxx Xxxxxx
Telefax: 1-45-63-91-49
or at such other address as any party hereto notifies the other parties hereof
in writing. Notice in accordance with this notice provision shall be effective
upon receipt.
12.7. Entire Agreement; No Third Party Beneficiaries. This Agreement,
together with the Exhibits and Schedules attached hereto, constitutes the entire
agreement and supersedes any and all other prior agreements and undertakings,
both written and oral, among the parties, or any of them, with respect to the
subject matter hereof and, except as otherwise expressly provided herein, is not
intended to confer upon any Person other than IMNET, the Company and the
Stockholder, any rights or remedies hereunder.
12.8. Governing Law; Jurisdiction and Venue. This Agreement shall be
governed by, and construed and enforced in accordance with, the laws of the
State of Georgia, United States of America, excluding those relating to
conflicts of laws. The parties hereto expressly agree that the exclusive
jurisdiction and venue for legal proceedings under this Agreement shall be the
state or applicable federal court having jurisdiction over the defendant's
domicile (or in the case of IMNET and the Company, the location of its principal
corporate office). It is understood and agreed that employment agreements
between the Company and its employees shall be governed by the law of France,
and that, after the Closing, the Company may continue to enter into agreements
governed by the law of France.
12.9. Arbitration.
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(a) All disputes, controversies, claims or differences which
may arise between the parties hereto arising out of or in relation to or in
connection with this Agreement or any breach thereof (but excluding disputes
arising under the Employment Agreement at Exhibit 4.2(a) shall be settled by
arbitration conducted in accordance with the Rules for the International Chamber
of Commerce Court of Arbitration (the "Rules"). Whenever any dispute,
controversy, claim or difference which may be submitted to arbitration under
this Section arises between the parties hereto, either party hereby may give to
the other party hereto notice, in accordance with Section 12.6 hereof, of its
intention to submit such dispute, controversy, claim or difference to
arbitration. Such arbitration shall take place in Paris, France before three
arbitrators, who must be experienced in the computer industry, licensed to
practice law in the United States, and fluent in French. Each party shall choose
one arbitrator, and the two chosen arbitrators shall choose the third. In the
event the parties to the arbitration cannot agree upon an arbitrator within
twenty (20) days after the effective date, as provided in Section 12.6 hereof,
of either party's notice to arbitrate, such arbitration shall take place in
Paris, France, before three arbitrators appointed in accordance with the Rules.
If the dispute arises under the NonCompete Agreement, the arbitrators shall be
fluent in English, and licensed to practice law in France.
The parties hereto agree that each party to the arbitration is to pay
an equal part of the deposit fixed by the Rules or the arbitrators. So as to
provide a more thorough and expeditious presentation of the issues between the
parties to the arbitration, the parties hereto agree that, to the extent not
inconsistent with the Rules, the United States Federal Rules of Civil Procedure,
28 U.S.C.A., (or if the law of France applies, the equivalent under such law)
shall apply to and be utilized in connection with such proceedings. The
determinations of such arbitrator will be final and binding upon the parties to
the arbitration, and judgment upon the award rendered by the arbitrator may be
entered in any court having jurisdiction, or application may be made to such
court for a judicial acceptance of the award and an order of enforcement, as the
case may be. The arbitrator shall set forth the grounds for his decision in the
award.
The arbitrator shall apply the law of the State of Georgia, United
States of America, as to both substantive and procedural questions, but
excepting any State of Georgia rule which would result in judicial failure to
enforce this arbitration provision or any portion thereof.
All proceedings before the arbitrator shall be conducted in the English
language (unless the dispute relates to the NonCompete, in which case the
language shall be French). In the event the arbitrator is not fluent in French
(English, if the dispute relates to the NonCompete Agreement), all documents and
papers submitted to the arbitrator shall be in the English (French, if
NonCompete) language or accompanied by a competent English (French, if
NonCompete) language translation thereof.
(b) The parties hereto stipulate that submission of disputes to
arbitration as provided in Section 12.9(a) hereof and arbitration pursuant
thereto shall be a condition precedent to any suit, action or proceeding
instituted in any court or before any administrative agency with respect to this
Agreement or disputes arising out of or regarding this Agreement except as to
disputes arising out of the Employment Agreement at Exhibit 4.2(a).
(c) In the event the parties fail to arbitrate any dispute,
controversy, claim or difference, as provided in Section 12.9(a) above, then the
Stockholder irrevocably consents to the exclusive jurisdiction of, and the
laying of venue exclusively in, the United States District Court for the
Northern District of Georgia, Atlanta Division, in any dispute, action or suit
arising out of this Agreement, after arbitration, and hereby unconditionally
agrees that service
437366.8
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of process to the Stockholder in accordance with Section 12.6 shall be effective
and sufficient service of process upon the Stockholder to establish jurisdiction
and venue in such court in any such dispute, action or suit.
12.10. Attorney's Fees. In any action, including arbitration, between
the parties to enforce any of the terms of this Agreement, the prevailing party
shall be entitled to recover reasonable expenses, including reasonable
attorney's fees.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
COMPANY: IMNET :
ADVISOFT Consulting SA IMNET Systems, Inc.
By: By: Xxxxxxx X. Xxxxxx
Name: Name:Xxxxxxx X. Xxxxxx
Title: Title:Chairman and
Chief Executive Officer
STOCKHOLDER:
Xxxxxx Xxxxx
Xxxxxx Xxxxx
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LIST OF SCHEDULES AND EXHIBITS
Schedule 3.1 Consideration for Company Stock
Schedule 3.1.A NonCompete Agreement
Schedule 4.1 Company Consents
Schedule 4.9 Stock Rights
Schedule 5.2 Officers and Directors of the Company
Schedule 5.4 Exceptions to Required Consents
Schedule 5.7 Licenses and Permits
Schedule 5.8 Liabilities not disclosed on Historical Financials
Schedule 5.10(a) Software; Intellectual Property; Incorporated Property
Schedule 5.10(b) Intellectual Property Rights Agreements
Schedule 5.10(c) Infringement regarding Intellectual Property
Schedule 5.10(d) List of Intellectual Property License and Software Maintenance Agreements
Schedule 5.10(e) Restrictions on Intellectual Property
Schedule 5.10(f) Intellectual Property in Public Domain
Schedule 5.10(g) Third Party Software Products Required to Utilize Software
Schedule 5.10(h) Compliance of Software and Intellectual Property with Performance Standards
Schedule 5.11(a) Customer and Reseller Agreements
Schedule 5.11(b) Royalties, Commissions and other Obligations
Schedule 5.11(c) Defaults
Schedule 5.12(a) Exceptions to Execution of Assignment
Schedule 5.12(b) Non-disclosure Agreements
Schedule 5.12(c) Unauthorized use of Software and Intellectual Property
Schedule 5.13 Exceptions to Absence of Certain Changes
Schedule 5.14 Taxes
Schedule 5.15 Encumbrances
Schedule 5.16 Equipment
Schedule 5.17 Fixed Assets
Schedule 5.18 Leases
Schedule 5.19 Litigation
Schedule 5.20(a) Employee Benefit Plans
Schedule 5.20(c) Company Employees
Schedule 5.20(d) Certain Employment Contract Amendments
Schedule 5.20(e) Violations of Employee Benefit Plans
Schedule 5.20(f) Consultants and Accountants
Schedule 5.20(l) Changes in Employee Benefit Plans
Schedule 5.20(m) Sick leave and vacation time
Schedule 5.21(a) Unfulfilled Obligations of the Company
Schedule 5.22(a) Bids/Orders to Provide Software or Maintenance
Schedule 5.22(b) Return Policies and Practices
Schedule 5.22(c) Notifications regarding Cancellation of Orders
Schedule 5.24 Exceptions to Assets Necessary for Business
Schedule 5.26 Certain Other Contracts
Schedule 5.30 Advisors Fees
Schedule 5.31 Bank Accounts
Schedule 5.33 Insurance
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TABLE OF CONTENTS
Page
PARTIES......................................................................................................... 1
PREAMBLE........................................................................................................ 1
ARTICLE 1 DEFINITIONS........................................................................................... 1
1.1. Defined Terms................................................................................. 1
ARTICLE 2 THE ACQUISITION....................................................................................... 3
2.1. The Stock Purchase and Sale................................................................... 3
ARTICLE 3 PURCHASE PRICE FOR THE COMPANY STOCK.................................................................. 3
3.1. Aggregate Consideration....................................................................... 3
3.2. Distribution of Consideration................................................................. 4
3.3. IMNET Shares; Determination Price............................................................. 4
3.4. Escrow Funds.................................................................................. 4
3.5. Delivery of IMNET Shares...................................................................... 4
3.6. Closing....................................................................................... 4
ARTICLE 4 ADDITIONAL COVENANTS.................................................................................. 4
4.1. Consents...................................................................................... 4
4.2. Employment Agreements......................................................................... 5
4.3. Conduct of Business by Company Pending Closing................................................ 5
4.4. Expenses...................................................................................... 6
4.5. Notification of Certain Matters............................................................... 6
4.6. Public Announcements.......................................................................... 7
4.7. No Negotiations............................................................................... 8
4.8. Confidentiality............................................................................... 8
4.9. Termination of Stock Rights................................................................... 8
4.10. Disclosures Required by Law................................................................... 8
4.11. Registration of Agreement with Tax Authorities................................................ 8
ARTICLE 5 REPRESENTATIONS AND WARRANTIES AS
TO THE COMPANY AND THE STOCKHOLDER............................................................ 9
5.1. Organization and Authority of Company......................................................... 9
5.2. Corporate Power and Authority; Due Authorization.............................................. 9
5.3. Sufficiency of Assets......................................................................... 10
5.4. No Conflict; Required Consents................................................................ 10
5.5. Capitalization................................................................................ 10
5.6. Compliance with Laws.......................................................................... 10
5.7. Licenses and Permits.......................................................................... 11
5.8. Financial Information......................................................................... 11
5.9. Omitted....................................................................................... 12
5.10. Intellectual Property - Nature and Extent of Proprietary Interest............................. 12
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5.11. Prior Performance by the Company under Certain Agreements; No
Default....................................................................................... 14
5.12. Additional Documentation of Intellectual Property Rights...................................... 14
5.13. Absence of Certain Changes.................................................................... 15
5.14. Taxes......................................................................................... 16
5.15. Title to Properties; Encumbrances; Inventory.................................................. 17
5.16. Equipment..................................................................................... 17
5.17. Fixed Assets.................................................................................. 17
5.18. Leases........................................................................................ 17
5.19. Litigation.................................................................................... 17
5.20. Employee Benefit Plan......................................................................... 18
5.21. Contracts and Commitments..................................................................... 19
5.22. Work-in-Process, Orders, Commitments and Returns.............................................. 20
5.23. Tax Liens..................................................................................... 21
5.24. Assets Necessary to Business.................................................................. 21
5.25. Disclosure.................................................................................... 21
5.26. Certain Other Contracts....................................................................... 22
5.27. IMNET 's Access and Inspection................................................................ 22
5.28. Complete Documentation........................................................................ 22
5.29. Ongoing Business.............................................................................. 22
5.30. Advisors Fees................................................................................. 23
5.31. Bank Accounts................................................................................. 23
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF IMNET .............................................................. 23
6.1. Organization of IMNET ........................................................................ 23
6.2. Corporate Power and Authority; Due Authorization.............................................. 23
6.3. No Conflict; Consents......................................................................... 24
6.4. Brokers Fees and Expenses..................................................................... 24
6.5. Absence of Material Changes................................................................... 24
6.6. IMNET Shares to be Delivered.................................................................. 24
6.7. Accuracy of Securities Filings................................................................ 24
6.8. Approvals..................................................................................... 25
6.10. Accuracy of Representations................................................................... 25
ARTICLE 7 INDEMNIFICATION....................................................................................... 25
7.1. Indemnification by Stockholder................................................................ 25
7.2. Indemnification by IMNET ..................................................................... 25
7.3. Provisions Regarding Indemnification.......................................................... 26
7.4. Survival...................................................................................... 26
7.5. Right of Set-Off.............................................................................. 26
7.6. Indemnification Basket........................................................................ 27
7.7. Stockholder's Limit of Liability.............................................................. 27
ARTICLE 8 CONDITIONS TO BE FULFILLED BEFORE IMNET IS OBLIGATED
TO CLOSE......................................................................................... 27
8.1. Representations and Warranties True at Closing................................................ 27
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8.2. Obligations Performed......................................................................... 27
8.3. Consents...................................................................................... 27
8.4. Closing Deliveries............................................................................ 27
8.5. No Challenge.................................................................................. 28
8.6. No Investigations of Company or Business...................................................... 28
8.7. No Material Adverse Effect.................................................................... 28
8.8. Securities Laws............................................................................... 28
8.9. Omitted....................................................................................... 28
8.10. Revised Schedules............................................................................. 29
8.11. Legality...................................................................................... 29
8.12. Regulatory Matters............................................................................ 29
8.13. Repayment of Debts............................................................................ 29
8.14. Termination of Stock Rights................................................................... 29
8.15. Releases...................................................................................... 29
ARTICLE 9 CONDITIONS TO BE FULFILLED BEFORE THE STOCKHOLDER IS
OBLIGATED TO CLOSE............................................................................ 29
9.1. Representations and Warranties True at Closing................................................ 29
9.2. Obligations Performed......................................................................... 30
9.3. Closing Deliveries............................................................................ 30
9.4. No Challenge.................................................................................. 30
ARTICLE 10 PROVISIONS REGARDING THE IMNET SHARES......................................................... 31
10.1. Representations by the Stockholder............................................................ 31
10.2. Covenants of the Stockholder.................................................................. 31
10.3. Legend, etc................................................................................... 31
10.4. Due Diligence................................................................................. 31
ARTICLE 11 TERMINATION.......................................................................................... 32
11.1. Termination................................................................................... 32
11.2. Effects of Termination........................................................................ 32
ARTICLE 12 MISCELLANEOUS PROVISIONS...................................................................... 33
12.1. Risk of Loss.................................................................................. 33
12.2. Severability.................................................................................. 33
12.3. Modification.................................................................................. 33
12.4. Assignment, Survival and Binding Agreement.................................................... 33
12.5. Counterparts.................................................................................. 33
12.6. Notices....................................................................................... 33
12.7. Entire Agreement; No Third Party Beneficiaries................................................ 34
12.8. Governing Law; Jurisdiction and Venue......................................................... 34
12.10. Attorney's Fees................................................................................. 36
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