EXHIBIT 10.1
ASSET AND STOCK PURCHASE AGREEMENT
This Asset and Stock Purchase Agreement ("Agreement"), dated as of May
13, 2004 ("Effective Date") is entered into by and among PROPSTER, INC., a
Virginia corporation being formed ("Propster"), party of the first part; IceWEB,
INC. a Delaware corporation ("IceWEB"); party of the second part; DEVELEMENTS,
INC., a Virginia corporation ("DevElements"), party of the third part; and those
shareholders in DevElements who are to become shareholders in IceWEB and holders
of IceWEB stock options, referred to as DEVELEMENTS SHAREHOLDERS (collectively
or individually, as the content required, also sometimes known as the
"Shareholders"), parties of the fourth part.
RECITALS
A. The Shareholders are all of the owners of the percentage of the
issued and outstanding capital stock of DevElements necessary to
consent to this Agreement.
B. DevElements is the owner of certain assets which Propster wishes to
acquire.
X. Xxxxxxxx wishes to acquire 19% of the capital stock of DevElements
in exchange for authorized but unissued shares of common stock, par
value $.001 per share (the "Common Stock") of IceWEB as hereinafter
provided.
D. It is the intention of the parties hereto that: (i) Propster shall
acquire 19% of the capital stock of DevElements owned by the
Shareholders in exchange solely for the consideration set forth
below (the "Exchange"); (ii) the Exchange shall qualify as a
transaction in securities exempt from registration or qualification
under the Securities Act of 1933, as amended, and under the
applicable securities laws of each jurisdiction where the
Shareholders reside; and (iii) the Exchange is intended to qualify
as a "tax-free" transaction within the meaning of Section 368 of the
Internal Revenue Code of 1986.
E. It is the intention of the parties hereto that Propster will acquire
19% of the capital stock of DevElements and Propster will purchase
certain assets of DevElements. Propster and/or IceWEB, as
applicable, will assume those liabilities of DevElements as set
forth herein.
NOW THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained in this Agreement, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
ARTICLE I ACQUISITION OF SHARES AND ASSETS
SECTION 1.0- ACQUISITION OF SHARES
1.01 Acquisition of Shares. Propster, IceWEB and the Shareholders
hereby agree that the Shareholders shall, on the Closing Date (as hereinafter
defined), exchange 7,600 shares of the Common Stock of DevElements, which
constitute 19% of the 40,000 issued and outstanding shares of capital stock of
DevElements (hereafter referred to as the "DevElements Shares"), by transferring
the DevElements Shares to Propster, a wholly owned subsidiary of IceWEB, and, in
exchange therefor, IceWEB shall issue to the Shareholders 1,500,000 shares of
IceWEB's Common Stock (the "IceWEB Shares") and 1 ,500,000 options with an
exercise price of 85% of the closing price for IceWEB Common Stock on the date
of Closing to acquire IceWEB Common Stock (the "IceWEB Options"). The IceWEB
Shares and IceWEB Options are to be issued to the Shareholders (and any other
individuals, if applicable) in the amounts set forth in Schedule 1.01.
Furthermore, IceWEB shall also issue an additional 500,000 options with
an exercise I price of 85% of the closing price for IceWEB Common Stock on the
date of grant of said I additional options, enabling the grantees to acquire
IceWEB's Common Stock, with said I additional options being granted to the
individuals listed and in accordance with the conditions and in the manner set
forth in Schedule 1.01. These options shall be granted by IceWEB in the event
that IceWEB, Propster, and/or DevElements (individually, in combination, or
collectively) receive contracts, task orders, or any other work assignment,
perform work there under, and/or invoice or xxxx at least $840,000.00 in revenue
in the six (6) months following execution of this Agreement, that is derived
from, through, or as result of, in whole or in part, the DevElements assets
acquired through this Agreement or through the efforts of or work performed by
any individual who is currently a DevElements Shareholder or employee. These
option shares shall I be referred to as the "IceWEB Conditional Options" when
necessary to expressly distinguish the grant date of such option shares from the
1,500,000 options to acquire IceWEB Common Stock that will be granted on the
Closing Date. In all other occasions, the term "IceWEB Options" 1 shall refer to
all options discussed in this Agreement (e.g., when discussing the terms under:
which such options vest or can be executed in accordance with IceWEB's Incentive
Stock Option Agreement).
1.02 Delivery of DevElements Shares. IceWEB Shares. and IceWEB Options.
On the Closing Date, the Shareholders will deliver to Propster the certificates
representing the DevElements Shares, duly endorsed for transfer (or with
executed stock powers), so as to make Propster the sole owner thereof.
Simultaneously, IceWEB will instruct its transfer agent to deliver certificates
representing the IceWEB Shares and IceWEB will enter into agreements granting
IceWEB Options, excluding the IceWEB Conditional Options, to the Shareholders
(and any other individual, if applicable, listed in Schedule 1.01). Terms of the
IceWEB Options grants are set forth in Schedule 1.02.
1.03 Investment Intent. The IceWEB Shares and the Common Stock of
IceWEB which may be purchased upon exercise of the IceWEB Options ("Option
Shares") have not been registered under the Securities Act of 1933, as amended
(the "Act"), and may not be resold unless the IceWEB Shares and Option Shares
are registered under the Act or an exemption from such registration is
available. The Shareholders represent and warrant that they are acquiring the
IceWEB Shares for their respective accounts for investment, and not with a view
to the sale or distribution of the IceWEB Shares. Each certificate representing
the IceWEB Shares will have a legend thereon incorporating language as follows:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the " Act") or
any state securities laws. The shares have been acquired for investment
and may not be sold or transferred in the absence of an effective
Registration Statement for the shares under the Act unless in the
opinion of counsel satisfactory to the Company, registration is not
required under the Act or any applicable state securities laws."
1.04 Registration Rights.
a. Incidental Registration. In connection with any Public Offering of
IceWEB securities, Shareholders shall have the right to require IceWEB to
include all or (at Shareholder's election) any portion of the IceWEB Shares and
Option Shares (provided the IceWEB Options have been exercised prior to the
first filings with the Securities & Exchange Commission in connection with the
Public Offering). Notwithstanding the foregoing, if the underwriters shall
advise IceWEB in writing that, in their experience and professional opinion
arrived at in good t faith based upon existing market conditions, inclusion of
such number of IceWEB Shares and/or Option Shares (together with the shares of
Common Stock requested for registration by any other I selling equity holders)
will adversely affect the price or distribution of the securities to be offered
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in such Public Offering solely for the account of IceWEB, then Holder shall then
have the right j to include only such number of IceWEB Shares and/or Option
Shares that such advice by the underwriters indicates may be distributed without
adversely affecting the distribution of the securities solely for IceWEB's
account. As between Shareholders and any other holders of IceWEB Common Stock
requesting to be included in such Public Offering, such availability for
inclusion in the registration for such Public Offering shall be allocated pro
rata based upon the ; total number of shares of IceWEB Common Stock owned or
purchasable. In connection with any underwritten Public Offering, provided that
all other holders of equity interests of IceWEB are subject to identical (or
more restrictive) restrictions with respect to their equity interests, then
Shareholders shall agree to refrain from selling or otherwise transferring
(other than to affiliates) any IceWEB Shares not included in such Public
Offering for a period of time (not to exceed 14 calendar days prior to and 180
calendar days after the effective date of the registration statement for such
Public Offering) as may be appropriate under the circumstances and reasonably
requested by IceWEB and the underwriters for such offering.
b. Certain Additional Agreements in Connection with Registration. In
connection with any Public Offering, IceWEB (i) shall furnish Shareholders such
numbers of copies of registration statements and prospectuses (and amendments
and supplements thereto) as Shareholder may reasonably request, and (ii) shall
take all such other actions as are necessary or advisable to facilitate the
registration and sale of such IceWEB Shares. In connection with any Public
Offering as to which a Shareholder is requesting registration of IceWEB Shares,
Shareholder (A) shall provide IceWEB with such information regarding itself,
himself or herself as may be reasonably required by IceWEB, and (B) shall
reasonably cooperate with IceWEB in the preparation of the registration
statement. In connection with any offering of IceWEB Shares pursuant to the
provisions of this Section, IceWEB and Shareholders shall provide each other
with customary indemnifications that are no more favorable to IceWEB than those
applicable to any other Persons participating in such Public Offering.
c. Public Offering means any issuance or other sale of any Common Stock
(or securities convertible into, or exchangeable for, Common Stock or rights to
acquire common Stock or such securities) of IceWEB pursuant to a registration
statement filed with the Commission under the Securities Act, other than a
registration on Form S-8 (or any successor form) relating solely to employee
benefits or stock plans; provided, however, that if a registration statement is
filed at the request of holders of the Common Stock of IceWEB and no shares of
Common Stock will be sold under such registration statement on the account of
IceWEB, then such registration statement will only be considered a Public
Offering if such offering will result in gross proceeds of at least $5,000,000
to the selling security holders.
SECTION 1.1 -ACQUISITION OF ASSETS; ASSUMPTION OF LIABILITIES
1.11 Acquisition of Assets. Propster and DevElements hereby agree that
for and in consideration of Propster's assumption of the sum of US ONE HUNDRED
FIFTY THOUSAND AND NO/100 DOLLARS (US $150,000.00) in DevElements's liability to
Sun Trust Bank (as further described in Schedule 1.11) and a payment of US ONE
HUNDRED THOUSAND AND NO/100 DOLLARS (us $100,000.00) (as further described in
Schedule 1.11), DevElements shall sell to Propster, and Propster shall purchase
from DevElements, free of all liens and , encumbrances, the following
DevElements assets ("Assets"):
a. Software and Documentation. All software and documentation
developed, r under development, and used in what is referred to as the Propster
suite of software products and the DEX suite of software products, plus all
other software and documentation developed by or for DevElements at any time.
Every software program developed or used by DevElements shall be described in
Schedule 1.11.a. and, if the program is designated by name, the name for the
program shall be provided in Schedule 1.11.a.
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(the "Software Programs"). Without limiting the generality of the foregoing,
DevElements shall convey to Buyer the following:
(i) Code. All computer programming code. Code shall
include both Object Code and Source Code. "Object Code" is defined as the
machine-readable form of the Code. "Source Code" is defined as the
human-readable form of the Code, including all, comments and any procedural code
such as job control language. All Code is currently resident on computer servers
owned or controlled by DevElements. At Closing, DevElements will deliver CD-ROMs
to Propster containing all source code. At or immediately after Closing, a
mutually acceptable software expert must warrant that all computer programming
code as set forth in Schedule 1.11.a. remains on the computer servers owned or
controlled by DevElements.
(ii) Products and Derivative Products. All products
in Source Code and, if in existence, Object Code. Products may have taken the
form of either an original product, derivative work, or a copy of the product,
and may have been licensed to DevElements's customers as a basic Software
Program, or a modification, addition, or replacement of or to the Product,
whether in the form of a fix, new release, enhancement, upgrade, new product, or
otherwise. A "Derivative Work" means a work that is based upon one or more
preexisting works, such as a revision, modification, translation, abridgement,
condensation, expansion, or any other form in which such preexisting works may
be recast, transformed, or adapted, and which, if prepared without authorization
of the owner of the copyright in such preexisting work, would constitute a
copyright infringement. For purposes of this Agreement, a Derivative Work shall
also include any compilation that incorporates such a preexisting work. All
Products and Derivative Works developed and/or sold by DevElements, the rights
to all of which are being assigned hereunder, are described and listed in
Schedule 1.11.a(ii) attached.
(iii) Documentation. All Documentation, including
written materials (and machine-readable text subject to display and printout)
that directly relate to and/or describe particular Code. Documentation shall
include Development Documentation and User Documentation. Development
Documentation means Documentation used in conjunction with Source Code in the
development process. User Documentation means Documentation in the form of
instructions and manuals provided to end-user customers. All Documentation, the
rights to all of which are being assigned hereunder, is described and listed in
Schedule 1.11.a(iii) attached.
(iv) Existing Licenses. All license agreements
between DevElements and its customers, which relate to Products or Derivative
Products that have already been fully or partially delivered and installed
("Existing Licenses"). All Existing Licenses are described and listed m Schedule
1.11.a(iv) attached.
(v) Generic Code. All Generic Code. "Generic Code"
means the Code identified in Schedule 1.11.a(v) attached hereto, consisting of
subroutines that are currently part of a Product or Derivative Work and used by
DevElements or any of its Software developers in other products or for other
purposes.
(vi) Third Party Software Licenses. All software
developed or licensed by third parties to DevElements as licensee, and used by
DevElements in development of Software or otherwise used in DevElements's
business. All Third Party Software Licenses, the rights to all of which are
being assigned hereunder, are described and listed in Schedule 1.11.a(vi)
attached.
b. Other Content. All content not included in the Software
assets described in subparagraph a. above, whether said content is analog or
digital voice, video, or data content stored on
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tape, disk, or any form of analog, digital, electronic, or other media. All
Other Content, the rights to all of which are being assigned hereunder, are
described and listed in Schedule 1.11.b attached.
c. Customer Contracts. All contracts, agreements, licenses,
and other commitments and arrangements, oral or written, with any person or
entity (including for-profit businesses, non-profit organizations, and
government entities) respecting the provision of professional computer services;
ownership, license, acquisition, design, development, distribution, marketing,
use, hosting or maintenance of computer program code, analog ,recordings,
related technical or user documentation, and databases, arising out of the
businesses in which DevElements has been engaged Also included are sales leads,
teaming arrangements in process, hosting opportunities, and application service
provider software provision opportunities. All Customer Contracts, the rights to
all of which are being assigned hereunder, are described and listed in Schedule
1.11c. attached.
d. Other Assets. Cash, hardware, furniture, equipment,
supplies, contractual benefits (including memberships and certifications with
third party software licensors), contract rights with employees and other agents
(including non-competition and non-disclosure covenants) and all other assets
not specifically excluded also convey hereunder.
1.11.1 Assets Excluded from Sale. Expressly excluded from the assets
being sold by DevElements to Propster is a right reserved unto DevElements to
license Propster software to its current landlord at 00000 Xxxxxxx Xxxxxx Xxxxx,
Xxxxxx, Xxxxxxxx. Included among the prospective licensees of Propster in
connection with these reserved rights are the landlord, 11600 I Sunrise Limited
Partnership, and the Xxxxxxxxx management organization. DevElements will
negotiate any such license of Propster so reserved with the advice of those
employees and agents of lceWEB and/or its other subsidiaries and/or Propster.
These licensing rights reserved unto DevElements are expressly intended to
facilitate the negotiation by DevElements of any commercial lease amendment
which is determined to be in the best interests of DevElements.
1.12 Assumption of Liabilities. Propster and DevElements hereby agree
that, in connection with the Assets being acquired by Propster from DevElements,
DevElements shall t delegate to Propster those liabilities as set forth in
Schedule 1.12 only, and Propster agrees to accept and assume those liabilities.
Such delegated and assumed liabilities shall include any current or future
liabilities associated with the assets being acquired by or assigned to Propster
pursuant to this Agreement and any current liabilities DevElements has with any
supplier, provider of professional services, lessor (other than for DevElements
current office lease), or any other debt or obligation DevElements currently
owes to another party. Propster shall also assume any future liabilities
incurred by DevElements so long as such liabilities are incurred in the ordinary
course of business. The parties may enter into further agreements from time to
time with respect to assumption of liabilities
1.13 Profit Sharing on Propster Software Subsequent to the Closing
Date, the individuals identified in Schedule 1.13 will share in the profits
earned by IceWEB and/or Propster from the Propster software in the following
manner:
(a) The individuals identified in Schedule 1.13 shall be paid,
in the percentages set forth in the schedule, the total amount equal to fifty
percent (50%) of the gross profit earned by IceWEB and/or Propster during the
twelve (12) months after the Closing Date from the sale, licensing, and/or any
third party or customer use of the Propster software asset (as defined herein)
acquired from DevElements. The Propster software shall include any derivatives,
modifications, improvements, or subsequent versions created or developed after
Closing, any bundled products or software that includes, incorporates, or
utilizes the Propster software, or any service provided in connection with such
Propster software
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(b) The individuals identified in Schedule 1.13 shall be paid,
in the percentages set forth in the schedule, the total amount of fifty percent
(50%) of the gross proceeds paid to IceWEB and/or Propster by a third party as a
result of or from any asset sales of the Propster software set forth in Section
1.13(a) that occurs within eighteen (18) months after the Closing Date.
(c) Any amounts due under this Propster profit sharing plan
shall be paid to the individuals identified in Schedule 1.13 on a quarterly
basis commencing with the quarter ending on June 30, 2004, from fully funded and
closed sales in cash. Payment to these individuals shall be due within thirty
(30) calendar days of the end of the quarter.
(d) IceWEB and/or Propster shall provide an accounting of all
gross profits received by IceWEB and/or Propster from the sale, licensing,
and/or any other third party or customer use of the Propster software as set
forth in Section 1.13(a) on a quarterly basis. Such accounting report shall be
provided to the individuals identified in Schedule 1.13 at the same time as any
payments owed under Section 1.13.
(e) This Profit Sharing agreement may be succeeded by a
broader based program that includes other products and services sold by other
IceWEB subsidiaries.
ARTICLE II
CLOSING
2.01 Time and Place of Closing. The transactions contemplated by this
Agreement shall be consummated on or before May 13, 2004, at the law offices of
Xxx X. Xxxx, PLC, 0000 (Xxxxxxx Xxxxx, Xxxxxxx Xxxxxxxx 00000 (the "Closing
Date"), or at such other place as agreed to by the parties. The time and place
at which the transactions contemplated hereby are consummated is hereinafter
referred to as the "Closing".
2.02 Deliveries at Closing. At the Closing:
(a) The Shareholders shall cause the DevElements Shares to be
delivered to Propster, duly endorsed for transfer;
(b) IceWEB shall deliver to the Shareholders, or provide its
transfer agent instructions to issue and deliver, the IceWEB Shares, with a copy
of such instructions for each share recipient given to the DevElements
Shareholders, and IceWEB shall deliver agreements to purchase IceWEB Options to
the DevElements Shareholders and any other individuals receiving a grant of such
IceWEB Options at closing;
(c) DevElements shall deliver or make available at its
business offices the Assets to Propster as the parties may decide is
appropriate;
(d) Propster shall enter into Employment Agreements with those
persons listed in Schedule 2.02(e) in the form attached to Schedule 2.02(e);
(e) The parties to this Agreement anticipate that some of the
documents and information referenced in this Agreement will not be prepared
and/or provided to the other party as attachments, schedules, or exhibits to
this Agreement at the time the Agreement is executed. The parties agree to and
will work in good faith to prepare and provide the missing documents and
information referenced in this Agreement, to be completed not later than ten
(10) business days after Closing. Included among the deliveries after Closing
will be employment contracts between Propster as employer and the following
persons as employees: Xxxxxx Xxxx, Xxxxxx Xxxx, Xxxxx XxxXxxxxx, Xxxxxx
Xxxxxxxxx, and Xxxx Xxxxxxxxx.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF DEVELEMENTS AND THE SHAREHOLDERS
DevElements and the Shareholders, jointly and severally, hereby
represent and warrant to IceWEB and Propster as follows:
3.01 Legal Capacity of DevElements.
(a) DevElements has the legal capacity to execute and deliver
this Agreement and to consummate the transactions contemplated hereby.
(b) The execution and delivery of this Agreement by
DevElements, and the consummation by it of the transactions contemplated hereby,
does not violate or conflict with (i) any material terms of any organizational
document or any instrument, contractual restriction or commitment of any kind or
character to which DevElements is a party or by which it is bound, or (ii) any
requirement of law or any judgment, decree or order of any governmental or ,
regulatory authority to which DevElements is subject or by which DevElements or
any of its respective assets or properties is bound.
(c) This Agreement has been duly and validly executed by
DevElements, and constitutes a valid and binding obligation of DevElements
enforceable against DevElements in accordance with its terms except to the
extent that (i) such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and (ii) the availability of remedies, including
specific performance, is subject to the discretion of the court before which any
proceeding therefor may be brought.
3.02 Organization and Authority of DevElements. DevElements is a
corporation duly organized, validly existing and in good standing under the laws
of the commonwealth of Virginia, and has all requisite corporate power and
authority to carry on its business as presently conducted and to own or lease
and to operate its properties. DevElements is qualified to transact business as
a foreign corporation in each jurisdiction wherein the failure to so qualify
would have a material adverse effect on the business, financial condition,
results of operations, assets or properties of DevElements (a "DevElements
Material Adverse Effect"). DevElements has no subsidiaries.
3.03 Capitalization. The authorized capital stock of DevElements
consists of 100,000 shares of DevElements Common Stock, of which 40,000 shares
of Common Stock are issued and outstanding on the date hereof. A list of
DevElements Shareholders with the amount of DevElements Common Stock held by
each is attached as Schedule
3.03. DevElements is not a party to or bound by any options, calls,
voting agreements, contracts, or commitments of any character relating to any
issued or unissued capital stock or any other equity security issued or to be
issued by DevElements, except for an Amended and Restated Stock Restriction and
Retirement Agreement that limits the ability of DevElements Shareholders to sell
DevElements Common Stock to parties other than Shareholders or DevElements. The
issued and outstanding DevElements Common Stock has been duly authorized and is
validly issued, fully paid and non- assessable and not subject to the preemptive
or anti-dilution rights of any person.
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3.04 Consents and Approvals. This Agreement and the transactions
contemplated hereby have been duly authorized by the Board of Directors and by
the Shareholders. In the event the Board of Directors and Shareholders have not
authorized and approved this Agreement and the transactions contemplated herein
in written form by the Closing, such approvals will be forthcoming within two
(2) business days of Closing. In the interim, the execution of this Agreement by
DevElements and the Shareholders constitutes approval by each as to the
authorization and approval of this Agreement and the transactions contemplated
herein by DevElements' Board of Directors and Shareholders and to authorize and
approval such actions t without a formal meeting. No approval, order or consent
of, filing or registration with or notice or payment to, any foreign, federal,
state, county, local or other governmental or regulatory body, and no other
approval or consent of, or filing with or notice or payment to, any other person
is required by or with respect to DevElements in connection with the execution
and delivery by: DevElements of this Agreement and the consummation and
performance by it of the transactions contemplated hereby. The execution and
delivery of this Agreement, the consummation of the transactions contemplated
hereby, and the performance by DevElements of this Agreement in accordance with
its terms and conditions will not (a) conflict with or result in the breach or
violation of any of the terms or conditions of, or give rise to any acceleration
of Development's obligations or constitute (or with notice or lapse of time or
both would constitute) a default under (i) the Articles of Incorporation or
By-laws of DevElements, as the same have been amended and/or restated from time
to time (ii) any instrument, contract or other material agreement by or to which
DevElements is a party or by or to which DevElements's assets or properties are
bound or subject; (iii) any statute, law or regulation of any jurisdiction or
any order, writ, judgment, injunction, award or decree of any court, arbitrator
or governmental or regulatory body against, or binding upon, DevElements or the
assets or properties of DevElements; or (iv) any license, franchise, approval,
certificate, permit or authorization applicable to DevElements or any of
Development's assets; or (b) result m the creation of any hen, charge or
encumbrance of any nature, upon the DevElements Shares or assets or property of
DevElements.
3.05 Financial Statements. Books and Records. The following DevElements
financial statements are attached hereto as Schedule 3.05: the unaudited balance
sheet of DevElements as of May 13, 2004 (the "Balance Sheet"), and the related
unaudited statement of operations for the period then ended, including an income
statement (the "Financial Statements"). The Financial Statements are true and
accurate and fairly represent the financial position of DevElements, to the best
of DevElements' current good faith knowledge and belief, as of such date and the
results of its operations for the period then ended, and have been prepared in
accordance with generally accepted accounting principles consistently applied,
except for the omission of footnotes or otherwise as indicated therein. Since
the date of the Balance Sheet there has not been:
(a) any change which could reasonably be expected to have a
DevElements Material Adverse Effect;
(b) any damage, destruction or loss which could reasonably be
expected to have an DevElements Material Adverse Effect;
(c) any declaration, setting aside or payment of any
distribution or with respect to any redemption or repurchase of DevElements's
capital stock; or
(d) any sale of an asset (other than in the ordinary course of
business) or any mortgage or pledge by DevElements of any properties or assets.
3.06 Litigation. Except as disclosed in Schedule 3.06 hereto, there is
no action, suit or f proceeding pending or threatened, or any investigation, at
law or in equity, before any arbitrator, court or other governmental authority,
pending or threatened, nor any judgment, decree, injunction, award or order
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outstanding, against or in any manner involving DevElements or any of
DevElements's properties or rights which (a) could reasonably be expected to
have an f DevElements Material Adverse Effect, or (b) could reasonably be
expected to prevent the consummation of any of the transactions contemplated by
this Agreement.
3.07 Taxes. DevElements has filed all tax returns that it was required
to file, and has paid all taxes indicated on such returns for such periods which
are due and payable as of the date hereof. All such tax returns were in all
respects true, complete and correct and filed on a timely basis. None of the
income tax returns filed by, on behalf of or with respect to DevElements is
currently the Subject of an audit, and no notice of a planned audit has been
received by DevElements. Attached to Schedule 3.07 are federal and state income
tax returns for calendar years 2001, 2002, and 2003. DevElements is an
S-corporation.
3.08 Corporate Records. DevElements has granted IceWEB access to all
the tax, accounting, corporate and financial books and records relating to the
business of DevElements. Such books and records have been maintained on a
current basis, are true and complete in all material respects, and fairly
reflect the financial condition and results of operations of DevElements as of
the dates thereof and the periods ended. The minute books of DevElements contain
complete and accurate records of all meetings and other corporate actions of its
Board of Directors and stockholders and have been made available to IceWEB for
review.
3.09 DevElements' Properties. Develements has good and marketable title
to all its personal property, equipment, processes, patents copyrights,
trademarks, franchises, licenses and other properties and assets (except for
items leased or licensed to DevElements), including all property reflected in
DevElements's Financial Statements (except for assets reflected therein which
have been sold in the normal course of its business where the proceeds from such
sale or other disposition have been properly accounted for in the financial
statements of DevElements), in each case free and clear of all liens, claims and
encumbrances of every kind and character, except as set for the in Schedule
3.09. DevElements has no ownership interest in any real property. The assets and
properties owned, operated or leased by DevElements and used in its business are
in good operating condition, reasonable wear and tear excepted, and suitable for
the uses for which intended.
3.1 0 Insurance. Schedule 3.10 contains an accurate and complete list
and brief description of all performance bonds and policies of insurance,
including fire and extended coverage, general liability , workers compensation,
products liability, property , and other forms of insurance or indemnity the
bonds held by DevElements. DevElements is not in default with respect to any
provisions of any such policy or indemnity the Shareholders and has not failed
to give any notice or present any claim hereunder in due and timely fashion. All
policies of insurance and the bonds are: (1) in full force and effect; (2) are
sufficient for compliance by DevElements with all requirements of law and of all
agreements and instruments to which! DevElements is a party; (3) are valid,
outstanding and enforceable; (4) provide adequate insurance coverage for the
assets, business and operations of DevElements in amounts at least equal to
customary coverage in DevElements's industry; (5) will remain in full force and
effect through the Closing; and (6) will not be affected by, and will terminate
or lapse by reason of, the transactions contemplated by this Agreement.
3.11 Transactions with Certain Persons. Except as disclosed in Schedule
3.11, DevElements has no outstanding agreement, understanding, contract, lease,
commitment, loan or other arrangement with any officer, director or shareholder
of DevElements or any relative of any such person, or any corporation or other
entity in which such person owns beneficial interest.
9
3.12 Material Contracts. DevElements has no purchase, sale, commitment,
or other contract, the breach or termination of which would have a DevElements
Materially Adverse Effect on the financial condition of DevElements. A list of
Material Contracts is attached to Schedule 3.12, Material Contracts.
3 .13 Employment Matters. Schedule 3.13 contains a list of all
officers, their contracts, base salaries, accrued vacation pay, sick pay, and
severance pay. DevElements has not incurred any unfunded deficiency or liability
within the meaning of the Employee Retirement Income Security Act of 1974
("ERISA "), has not incurred any liability to the Pension Benefit Guaranty
Corporation established under ERISA in connection with any employee benefit plan
and has no outstanding obligations or liabilities under any employee benefit
plan. DevElements has not been a party to a "prohibited transaction," which
would subject DevElements to any tax or penalty. There is no collective
bargaining agreement or negotiations therefor, labor grievance or arbitration
proceeding against DevElements pending or threatened, and to the knowledge of
DevElements, there are no union organizing activities currently pending or
threatened against or involving DevElements.
3.14 Authorizations. DevE1ements has no licenses, permits, approvals
and other authorizations from any governmental agencies and any other entities
that are necessary for the conduct of its business except as set forth in
Schedule 3.14, which contains a list of all licenses, permits approvals, and
other authorizations, as well as a list of all copyrights, patents, trademarks,
trade names, service marks, franchises, licenses and other permits, each of
which is valid and in full force and effect.
3.15 Compliance with Laws. DevE1ements is not in violation of any
federal, state, local or other law, ordinance, rule or regulation applicable to
its business, and has not received any actual or threatened complaint, citation
or notice of violation or investigation from any governmental authority.
3.16 Compliance with Environmental Laws. DevElements is in compliance
with all applicable pollution control and environmental laws, rules and
regulations. DevElements has no environmental licenses, permits and other
authorizations relative to compliance with environmental laws, rules and
regulations.
3 .17 No Litigation. There are no actions, suits, claims, complaints or
proceedings pending or threatened against DevElements, at law or in equity, or
before or by any governmental department, commission, court, board, bureau,
agency or instrumentality; and there are no facts which would provide a valid
basis for any such action, suit or proceeding. There are no orders, judgments or
decrees or any governmental authority outstanding, which I specifically apply to
DevElements or any of its assets.
3.18 Validity. All contracts, agreements, leases and licenses to which
DevElements is a party or by which it or any of its properties or assets are
bound or affected, are valid and in full force and effect; and no breach or
default exists, or upon the giving of notice or lapse of time, or f both, would
exist, on the part of DevElements or by any other party thereto.
3.19 No Brokers. Neither DevElements nor the Shareholders is a party to
any agreement pursuant to which DevElements, Propster, or IceWEB will become
obligated to pay a commission to any person as a result of consummation of the
transactions contemplated hereby.
3.20 Information on the Shareholders. Except as set forth on Schedule
3.20, the Shareholders each represent that they are each an "accredited
investor," as such term is defined in Regulation D promulgated by the Act, are
experienced in investments and business matters, has made investments of a
speculative nature and, with his or her representatives, have such knowledge and
experience in financial, tax and other business matters as to enable them to
10
utilize o the information made available by IceWEB to evaluate the merits and
risks of and to make an informed investment decision with respect to this
Agreement, which represents a speculative investment. The Shareholders are able
to bear the risk of such investment for an indefinite period and to afford a
complete loss thereof.
3.21 Ownership of DevElements Shares and Authorization of Agreement.
Each of the Shareholders represents that he is the sole owner of record and
beneficially owns all of the shares of capital stock of DevElements attributed
to him in Schedule 3.03, all of which shares are owned free and clear of all
rights, claims, liens and encumbrances, and have not been sold, pledged,
assigned or otherwise transferred except pursuant to this Agreement. There are
no outstanding subscriptions, rights, options, warrants or other agreements
obligating either DevElements or the Shareholders to issue, sell or transfer any
stock or other securities of DevElements. The Shareholders have the power to
enter into this Agreement and to carry out the obligations hereunder. This
Agreement has been duly executed by the Shareholders and constitutes the valid
and binding obligation of the Shareholders and is enforceable against the
Shareholders in accordance with its terms.
3.22. No Untrue Statements. No representation or warranty made by
DevElements or the Shareholders in this Agreement, or in any Schedule or Exhibit
attached hereto, contains any untrue statement of a material fact or omits any
material fact necessary in order to make the statements contained herein or
therein not misleading. DevElements and the Shareholders have not knowingly
failed to disclose to IceWEB and Propster any facts material to the condition
(financial or otherwise), properties, business, operations or prospects of
DevElements and the Shareholders.
3.23. Current on Obligations. DevElements is current on all notes and
accounts payable, except as set forth in the financial statement provided with
this Agreement. The notes and accounts receivable reflected on the Financial
Statements, and all notes and accounts receivable which have arisen since
January 1, 2002, are valid receivables subject to no material setoffs or
counterclaims and are collectible within 120 days after the date of the Closing
at their recorded amounts, less any applicable recorded reserves
3.24 No Undisclosed Liabilities. DevElements has not incurred any
material liabilities or obligations of any nature (whether absolute, accrued,
contingent or otherwise and whether due or to become due), including without
limitation any tax liabilities, arising out of any transaction or state of facts
existing prior to the date of the Closing, except as and to the extent reflected
or reserved against in the Financial Statements.
3.25 Compliance with Immigration Laws. DevElements is in full
compliance with the Immigration Reform and Control Act of 1986, as amended, and
other applicable immigration laws, to the knowledge of DevElements and the
Shareholders, all employees who are not United States citizens (i) are set forth
in Schedule 3.24, (ii) are authorized under United States immigration laws to
hold United States employment, and (iii) are otherwise in compliance with United
States immigration laws.
3.26 Prior Registration Rights. DevElements is under no obligation,
contractual or otherwise, to register under the Act, any of its presently
outstanding securities or any securities that may subsequently be issued by
DevElements.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF IceWEB
IceWEB hereby represents and warrants to DevElements and the
Shareholders as follows:
11
4.01 Legal Capacity of IceWEB.
(a) IceWEB has the legal capacity to execute and deliver this
Agreement and to consummate the transactions contemplated hereby.
(b) The execution and delivery of this Agreement by IceWEB,
and the consummation of the transactions contemplated hereby, do not violate or
conflict with (i) any material terms of any organizational document or any
instrument, contractual restriction or commitment of any kind or character to
which IceWEB a party or by which it is bound, or (ii) any requirement of law or
any judgment, decree or order of any governmental or regulatory authority to
which IceWEB is subject or by which IceWEB or any of its respective assets or
properties is bound.
(c) This Agreement has been duly and validly executed by
IceWEB, and constitutes a valid and binding obligation of IceWEB enforceable
against IceWEB in accordance with its terms except to the extent that (i) such
enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting the enforcement of creditors' rights generally
and (ii) the availability of remedies, including specific performance, is
subject to the discretion of the court before which any proceeding therefor may
be brought.
4.02 Organization and Authority of IceWEB. IceWEB is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization, and has all requisite corporate power and
authority to carry on its business as presently conducted and to own or lease
and to operate its properties. IceWEB is qualified to transact business as a
foreign corporation in each jurisdiction wherein the failure to so qualify would
have a material adverse effect on the business, financial condition, results of
operations, assets or properties of IceWEB (a "IceWEB Material Adverse Effect").
4.03 Capitalization. The authorized capital stock of IceWEB consists of
100,000,000 shares of Common Stock, of which 38,190,000 shares are issued and
outstanding on the date hereof and 1,000,000 shares of Preferred Stock, no
shares of which are issued and outstanding. The IceWEB Shares have been duly
authorized and, upon issuance as contemplated hereby, will be validly issued,
fully paid and non-assessable and not Subject to the preemptive or anti-dilution
rights of any person.
4.04 Consents and Approvals. This Agreement and the transactions
contemplated hereby have been duly authorized by the Board of Directors. No
approval, order or consent of, filing or registration with or notice or payment
to, any foreign, federal, state, county, local or other governmental or
regulatory body, and no approval or consent of, or filing with or notice or
payment to, any other person is required by or with respect to IceWEB in
connection with the execution and delivery by IceWEB of this Agreement and its
consummation and performance of the transactions contemplated hereby. The
execution and delivery of this Agreement, the consummation of the transactions
contemplated hereby, and the performance by IceWEB of this Agreement in
accordance with its terms and conditions will not (a) conflict with or result in
the breach or violation of any of the terms or conditions of, or give rise to
any acceleration of IceWEB's obligations or constitute (or with notice or lapse
of time or both would constitute) a default under (i) the Certificate of
Incorporation or By-Laws of IceWEB (ii) any material instrument, contract or
other agreement by or to which IceWEB is a party or by or to which IceWEB's
assets or properties are bound or Subject; (iii) any statute, law or regulation
of any jurisdiction or any order, writ, judgment, injunction, award or decree of
any court, arbitrator or governmental or regulatory body against, or binding
upon, IceWEB or the assets or properties of IceWEB; or (iv) any license,
franchise, approval, certificate, permit or authorization applicable to IceWEB
or any of the its assets; or (b) result in the creation of any lien, charge or
encumbrance of any nature, upon the assets or property of IceWEB.
12
4.05 Filings. The Common Stock of IceWEB is registered under Section
12(g) of the Securities Exchange Act of 1934, as amended (the "Exchange Act").
IceWEB has filed with the United States Securities and Exchange Commission
("SEC") all reports required to be filed by it under the Exchange Act (the "SEC
Filings"), and IceWEB is current in its filing obligations under the Exchange
Act. The cumulative SEC Filings are true, complete and accurate in all material
respects.
4.06 Litigation. There is no action, suit or proceeding pending or
threatened, or any investigation, at law or in equity, before any arbitrator,
court or other governmental authority, pending or threatened, nor any judgment,
decree, injunction, award or order outstanding, against or in any manner
involving IceWEB or IceWEB or any of their respective properties or rights which
(i) could reasonably be expected to have an IceWEB Material Adverse Effect, or
(ii) could reasonably be expected to prevent the consummation of any of the
transactions contemplated by this Agreement.
4.07 Taxes. IceWEB has filed all tax returns that it was required to
file, and has paid all taxes indicated on such returns for such periods which
are due and payable as of the date hereof. All such tax returns were in all
respects true, complete and correct and filed on a timely basis. None of the
income tax returns filed by, on behalf of or with respect to IceWEB is currently
the Subject of an audit, and no notice of a planned audit has been received by
or on behalf of IceWEB.
4.08 Corporate Records. IceWEB has provided DevElements access to all
the tax, accounting, corporate and financial books and records relating to
IceWEB. Such books and records have been maintained on a current basis, are true
and complete and fairly reflect the financial condition and results of
operations of IceWEB as of the dates thereof and the periods ended.
4.09 No Brokers. IceWEB is not a party to any agreement pursuant to
which DevElements, the Shareholders, IceWEB, or Propster will become obligated
to pay a commission to any person as a result of consummation of the
transactions contemplated hereby and any action by IceWEB.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PROPSTER
Propster hereby represents and warrants to DevElements and the
Shareholders, as of the date of Propster's incorporation in the Commonwealth of
Virginia, as the context requires, as follows:
5.01 Legal Capacity of Propster.
(a) Propster is a Virginia corporation being formed.
Propster's promoter, Xxxx Xxxxxxxxxx, has the legal capacity to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
(b) The execution and delivery of this Agreement by Propster,
and the consummation of the transactions contemplated hereby, do not violate or
conflict with (i) any material terms of any organizational document or any
instrument, contractual restriction or commitment of any kind or character to
which Propster a party or by which it is bound, or (ii) any requirement of law
or any judgment, decree or order of any governmental or regulatory authority to
which Propster is subject or by which Propster or any of its respective assets
or properties is bound.
(c) This Agreement has been duly and validly executed by
Propster, and constitutes a valid and binding obligation of Propster enforceable
against Propster in accordance with its terms except to the extent that (i) such
enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting the enforcement of creditors' rights
13
generally and (ii) the availability of remedies, including specific performance,
is subject to the discretion of the court before which any proceeding therefor
may be brought.
5.02 Organization and Authority of Propster. Propster is a corporation
being formed.
5.03 Capitalization. The authorized capital stock of Propster consists
of 5,000 shares of Common Stock, of which 1,000 shares will be Issued and
outstanding following formation of Propster.
5.04 Consents and Approvals. This Agreement and the transactions
contemplated hereby have been duly authorized by the Board of Directors. No
approval, order or consent of, filing or registration with or notice or payment
to, any foreign, federal, state, county, local or other governmental or
regulatory body, and no approval or consent of, or filing with or notice or f
payment to, any other person is required by or with respect to Propster in
connection with the l execution and delivery by Propster of this Agreement and
its consummation and performance of the transactions contemplated hereby. The
execution and delivery of this Agreement, the f consummation of the transactions
contemplated hereby, and the performance by Propster of this Agreement in
accordance with its terms and conditions will not (a) conflict with or result in
the breach or violation of any of the terms or conditions of, or give rise to
any acceleration of Propster's obligations or constitute (or with notice or
lapse of time or both would constitute) a default under (i) the Articles of
Incorporation or By-Laws of Propster (ii) any material instrument, contract or
other agreement by or to which Propster is a party or by or to which Propster's
assets or properties are bound or Subject; (iii) any statute, law or regulation
of any jurisdiction or any order, writ, judgment, injunction, award or decree of
any court, arbitrator or governmental or regulatory body against, or binding
upon, Propster or the assets or properties of Propster; or (iv) any license,
franchise, approval, certificate, permit or authorization applicable to Propster
or any of the its assets; or (b) result in the creation of any lien, charge or
encumbrance of any nature, upon the assets or property of Propster.
5.05 Litigation. There is no action, suit or proceeding pending or
threatened, or any investigation, at law or in equity, before any arbitrator,
court or other governmental authority, pending or threatened, nor any judgment,
decree, injunction, award or order outstanding, against or in any manner
involving Propster or Propster or any of their respective properties or rights
which (i) could reasonably be expected to have an Propster Material Adverse
Effect, or (ii) could reasonably be expected to prevent the consummation of any
of the transactions contemplated by this Agreement.
5.06 Litigation. Propster has filed all tax returns that it was
required to file, and has paid all taxes indicated on such returns for such
periods which are due and payable as of the date hereof. All such tax returns
were in all respects true, complete and correct and filed on a timely basis.
None of the income tax returns filed by, on behalf of or with respect to
Propster is currently the Subject of an audit, and no notice of a planned audit
has been received by or on behalf of Propster.
5.07 No Brokers. Propster is not a party to any agreement pursuant to
which DevElements, the Shareholders or Propster will become obligated to pay a
commission to any t person as a result of consummation of the transactions
contemplated hereby and any action by Propster.
ARTICLE VI
COVENANTS OF THE DEVELEMENTS SHAREHOLDERS
6.0 1 DevElements and the Shareholders covenant and agree that from the
date hereof through and after Closing without the prior written consent of
Propster or IceWEB:
14
(a) Ordinary Course of Business. DevElements will operate the
business of DevElements only in the ordinary course and will use its best
efforts to preserve DevElements' business, origination, goodwill and
relationships with persons having business dealings with f them (subject to the
orderly assignment of Assets hereunder).
(b) Maintain Properties. DevElements will maintain all of
DevElements' properties in good working order, repair and condition (reasonable
wear and use excepted) and cause DevElements to take all steps reasonably
necessary to maintain in full force and effect its patents, trademarks, service
marks, trade names, brand names, copyrights and other intangible assets.
(c) Compensation. DevElements will not (i) enter into or alter
any employment agreements; (ii) grant any increase in compensation other than
normal merit increases consistent with DevElements's general prevailing
practices to any officer or employee; or (iii) enter into or alter any labor or
collective bargaining agreement or any bonus or other employee fringe benefit.
(d) No Indebtedness. DevElements will not create, incur,
assume guarantee or otherwise become liable with respect to any obligation for
borrowed money, indebtedness, capitalized lease or similar obligation, except in
the ordinary course of business consistent with past practices where the entire
net proceeds thereof are deposited with and used by and in connection with the
business of DevElements.
(e) No Disposition on Encumbrance. Except in the ordinary
course of business consistent with past practice, DevElements will not (i)
dispose of or encumber any of its properties and assets, (ii) discharge or
satisfy any lien or encumbrance or pay any obligation or liability (fixed or
contingent) except for previously scheduled repayment of debt, (iii) cancel or
compromise any debt or claim, (iv) transfer or grant any rights under any
concessions, leases, licenses, agreements, patents, inventions, proprietary
technology or process, trademarks, service marks or copyrights, or with respect
to any know-how, or (v) enter into or modify in any material respect or
terminate any existing license, lease, or contract, except as may be
contemplated in this Agreement.
(f) No Securities Issuances. Neither DevElements nor the
Shareholders will issue any shares of any class of capital stock, or enter into
any contract, option, warrant or right calling for the issuance of any such
shares of capital stock, or create or issue any securities convertible into any
securities of DevElements except for the transactions contemplated herein.
(g) Capital Commitments. DevElements will not make or commit
to make any capital expenditure, capital addition or capital improvement.
(h) Notice of Change. DevElements will promptly advise IceWEB
in writing of any DevElements Material Adverse Change, or the occurrence of any
event which involves any IceWEBstantial possibility of a material adverse
change, in the business, financial ~ condition, results of operations, assets,
liabilities or prospects of DevElements.
ARTICLE VII
CONDITIONS PRECEDENT TO THE
OBLIGATION OF IceWEB AND PROPSTER TO CLOSE
The obligation of IceWEB and Propster to close the transactions
contemplated hereby is subject to the fulfillment by DevElements and the
Shareholders prior to Closing of each of the following conditions, which may be
waived in whole or in part by IceWEB and Propster:
15
7.01 Compliance with Representations. Warranties and Covenants. The
representations and warranties and covenants of DevElements and the Shareholders
contained in this Agreement shall have been true and correct when made.
7.02 No Material Adverse Change. There shall have been no event which
has had or may have material adverse effect upon the business, financial
condition, results of operation, assets, liabilities or prospects of
DevElements.
7 .03 No Legal Proceedings. No suit, action or other legal or
administrative proceeding before any court or other governmental agency shall be
pending or threatened seeking to enjoin I the consummation of the transactions
contemplated hereby.
7 .04 Documents to be Delivered by DevElements. DevElements or the
Shareholders shall have delivered the following documents to Propster:
(a) Stock certificates representing the DevElements Shares
being transferred hereunder, duly endorsed or in blank or accompanied by duly
executed stock powers.
(b) All corporate and other records of applicable to
DevE1ements including, but not limited to, current and up to date minute books,
stock transfer books and registers, books or accounts, leases and material
contracts, as set forth in this Agreement.
7 .05 Assets to be Delivered by DevElements. DevElements or the
Shareholders shall have delivered the Assets to Propster (or such Assets will be
available to Propster at DevElements' business office) and the Assets shall be
as represented hereunder.
ARTICLE VIII
CONDITIONS PRECEDENT TO THE OBLIGATIONS
OF DEVELEMENTS AND THE SHAREHOLDERS TO CLOSE
The obligation of DevElements and the Shareholders to close the
transactions is subject to the fulfillment prior to Closing of each of the
following Conditions, any of Which may be waived, in whole or in part, by
DevElements:
8.01 Compliance with Representations. Warranties and Covenants. The
the representations and warranties made by IceWEB and Propster in this Agreement
shall have been true and correct when made and shall be true and correct in all
material respects at the Closing with the same force and effect as if made at
the Closing, and IceWEB shall have performed all agreements, covenants and
conditions required to be performed by IceWEB prior to the Closing.
8.02 No Legal Proceedings. No suit, action or other legal or
administrative proceedings before any court or other governmental agency shall
be pending or threatened seeking to enjoin the consummation of the Transactions
contemplated hereby.
8.03 Issuance of IceWEB Shares. IceWEB shall issue the IceWEB Shares
and deliver the certificates representing such shares to the Shareholders and
other individuals (if applicable) identified in Schedule 1.01
8.04 Deliveries. IceWEB shall grant the IceWEB Options and enter into
the agreements for the IceWEB Options as set forth in Sections 1.01 and 1.02 and
shall enter into the employment agreements as contemplated by section 2.02.
16
ARTICLE IX
MODIFICATION, WAIVERS, TERMINATION AND EXPENSES
9.01 Modifications. IceWEB, Propster, DevElements and the Shareholders
may amend, modify or supplement this Agreement in any manner as they may
mutually agree in writing.
9.02 Waivers. IceWEB and DevElements and the Shareholders may, in
writing, extend the time for or waive compliance by the other with any of the
covenants or conditions of I the other contained herein.
9.03 Termination before Closing. This Agreement may be terminated
before the Closing:
(a) By the mutual consent of IceWEB, Propster, DevElements and
the Shareholders;
(b) By IceWEB and Propster, if the representations and
warranties of DevElements and the Shareholders set forth herein shall not be
accurate, or conditions precedent I set forth herein shall not have been
satisfied in all material respects;
(c) By DevElements and the Shareholders, if the
representations and warranties of IceWEB set forth herein shall not be accurate,
or conditions precedent set forth herein shall not have been satisfied in all
material respects; and
(d) In the event of any such termination, each party shall
bear their own expenses.
9.04 Termination after Closing. This Agreement may be terminated after
the Closing:
(a) By the mutual consent of IceWEB, Propster, DevElements and
the Shareholders;
(b) In the event of any such termination, each party shall
bear their own expenses.
ARTICLE X
INDEMNIFICATION
10.01 Indemnification by Shareholders. The Shareholders hereby
indemnify and hold IceWEB harmless from and against any and all damages, losses,
liabilities, obligations, costs or expenses incurred by IceWEB and arising out
of the breach of any representation or warranty to the extent such breach
results in a material adverse effect to the business and operation of IceWEB
taken as a whole or covenant of DevElements or the Shareholders hereunder, or
failure to perform any covenant or obligation required to be performed by them
hereunder.
10.02 Indemnification by IceWEB. IceWEB hereby indemnifies and holds
DevElements and the Shareholders harmless from and against any and all damages,
losses, I liabilities, obligations, costs or expenses incurred by DevElements
and arising out of the breach I of any representation or warranty of IceWEB
hereunder, or IceWEB's failure to perform any f covenant or obligation required
to be performed by either of them hereunder.
10.03 Time for Assertion. No party to this Agreement shall have any
liability (for indemnification or otherwise) with respect to any representation,
warranty or covenant or I obligation to be performed and
17
complied hereunder, unless notice of any such liability is provided on or before
12 months from the date hereof.
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.01 Waiver. Any party hereto may with respect to any other party
hereto (a) extend the time for the performance of any of the obligations or
other acts, (b) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto and (c) waive
compliance with any of the agreements or conditions contained herein. Any such
extension or waiver shall be valid if set forth in an instrument in writing
signed by the party or parties to be bound thereby.
11.02 Notices. All communications provided for herein shall be in
writing and shall f be deemed to be given or made (a) when delivered personally,
including by courier service, (b) three business days following deposit in the
United Sates mail, certified mail, return receipt requested, or (c) when
transmitted by facsimile provided that electronic confirmation of receipt is
retained by the party transmitting such facsimile. The addresses to which
notices are to be provided are as follows:
If to IceWEB: IceWEB, INC.
000 Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxxxxxx, CEO
Facsimile: (000) 000-0000
If to DevElements: DevElements, Inc.
00000 Xxxxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxxxx, XX 00000
Attention: Xxxxxx Xxxx, President
Facsimile: (703) 860- 4007
If to the Shareholders: To the respective shareholder addresses
Any party may change the address to which notice is to be provided to it by
written notice to the other party hereto delivered pursuant to this Section.
11.03 Governing Law: Venue. This Agreement and the rights and duties of
the parties hereto shall be construed and determined in accordance with the laws
of the Commonwealth of Virginia, without regard to the choice of laws provisions
thereof. In the event of litigation related to this Agreement the parties
stipulate that the General District Court or Circuit Court of Fairfax County,
Virginia is good, proper and convenient venue.
11.04 Successors and Assigns. This Agreement shall be binding upon the
parties and their successors and assigns and shall inure to the benefit of the
other parties and successors and assigns.
11.05 Counterparts. This Agreement may be executed in any number of
counterparts and all such counterparts taken together shall be deemed to
constitute one instrument.
11.06 Entire Agreement: Modifications. This Agreement constitutes the
entire understanding of the parties with respect to transactions contemplated
hereby and all prior understandings with respect
18
thereto, whether written or oral, shall be of no force and effect. This
Agreement may only be modified by a writing executed with equal dignity as this
Agreement.
11.07 Partial Invalidity. If any term of this Agreement shall be held
to be invalid or unenforceable, such term shall be deemed to be severable and
the validity of the other terms of this Agreement shall in no way be affected
thereby.
11.08 Headings. The descriptive headings of the various Sections or
parts of this Agreement are for convenience only and shall not affect the
meaning or construction of any of the provisions hereof.
11.09. Promoter Liability .Propster is executing this Agreement by Xxxx
Xxxxxxxxxx, Xxxxxxxx'x promoter. Following the formation of Propster as a
Virginia corporation, all promoter liability of Xxxx Xxxxxxxxxx shall be
extinguished. Thereafter, Propster shall be considered the party to this
Agreement and Xxxx Xxxxxxxxxx shall be released of all promoter liability.
11.10. Counsel Fees. In the event litigation arises relating to this
Agreement the parties agree that the prevailing party(ies) may recover
reasonable counsel fees, expenses and costs from the non-prevailing party(ies).
11.11. Interpretation. This Agreement shall be construed as having been
drafted by all parties, and will not be construed in favor or against any party.
11.12 Survival. All indemnification provisions, representations and
warranties shall survive Closing.
11.13. Force Maieure. Performance under this Agreement shall be excused
in the event of war, act of God, strike, terrorism, or other force majeure.
IN WITNESS WHEREOF, the undersigned have executed this Asset and Stock
Purchase Agreement, effective as of the 13th day of May 2004.
PROPSTER:
PROPSTER, INC.,
a Virginia corporation being formed
By: ______________________________
Xxxx X. Xxxxxxxxxx, Promoter
ICEWEB:
ICEWEB, INC.,
a Delaware corporation
By: ______________________________
Xxxx X. Xxxxxxxxxx, Chairman and CEO
19
DEVELEMENTS:
DEVELEMENTS, INC.,
a Virginia corporation
By: ______________________________
Xxxxxx Xxxx, President
ATTEST:
By: ______________________________
, Corporate Secretary
(SEAL)
SHAREHOLDERS:
DEVELEMENTS SHAREHOLDERS:
__________________________________
Xxxxxx Xxxx
__________________________________
Xxxxxx Xxxx
__________________________________
Xxxxxxxxxxx XxxXxxxxx
__________________________________
Xxxxxx Xxxxxxxxx
__________________________________
Xxxx Xxxxxxxxx
__________________________________
Xxxxx XxXxxxxxx
__________________________________
Xxxxx Xxxx
__________________________________
Xxxxx XxXxxxxxx
20
LIST OF SCHEDULES
Schedule 1.01 - Distribution chart for "IceWEB Shares" and "IceWEB
Options" pursuant to Section 1.01
Schedule 1.02 - IceWEB, Inc.'s Incentive Stock Option Agreement
Schedule l.11 - Assumption of Liability to SunTrust Bank
Schedule 1.11.a - Propster Software & DEX Software
Exhibit 1 to Schedule 1.11.a - Xxxxxxx and Xxxxxxx Contract
Schedule 1.11.a(ii) - Products and Derivative Products
Schedule 1.11.a(iii) - Documentation
Schedule 1.11.a(vi) - Third Party Software Licenses
Exhibit 2 to Schedule 1.11.a(vi) - Xxxxxxx and Xxxxxxx Contract (see
Exhibit 1 to Schedule 1.II.a
Schedule 1.13 - Distribution Schedule for Propster Quarterly Gross
Profit Distributions
Schedule 2.02 - Schedule of Cash Distributions
Schedule 2.02e - Employment Agreement Between IceWEB, Inc. and
Xxxxxx Xxxx
Schedule 3.03 - DevElements's Outstanding Shares at Closing
Schedule 3.10 - DevElements's Insurance and Policy Information
Schedule 3.13 - List of DevElements's Officers and Relevant Salary and
Pay Information
Schedule 3.14 - Business Licenses
Schedule 3.20 - Stockholders Who Are Not "Accredited Investors"
21
SCHEDULE 1.01
Distribution chart for "IceWEB Shares" and "IceWEB Options" pursuant to Xxxxxxx 0.00
# xx # xx # xx XXXXXX
ICEWEB ICEWEB CONDITIONAL Social # of DevE
Stockholder Name SHARES OPTIONS OPTIONS Security # Address Shares Held
---------------- ------- ------- ----------- ----------- ---------------- -----------
Xxxxxx Xxxx 804,500 278,000 20,187 ###-##-#### 00000 Xxxx Xxxxx 00000
Xx, Xxxxxxxx, XX
00000
Xxxxxx Xxxx 150,000 200,000 69,982 ###-##-#### 21224 Crab 0000
Xxxxxxx Xx,
Xxxxxxx XX 00000
Xxxxx XxxXxxxxx 137,500 200,000 21,159 ###-##-#### 000 Xxxxxx Xxxxx 0000
Xxxxx, Xxxxxxxx,
Xx. 00000
Xxxxxx Xxxxxxxxx 112,500 162,500 55,465 ###-##-#### 0000 XX Xxxxxx 0000
Xxxxx, Xxxxxxxx,
XX 00000
Xxxx Xxxxxxxxx 112,500 152,500 69,982 ###-##-#### 00000 Xxxxxxxxxx 0000
Xxxxx, Xxxxxxx,
XX 00000
Xxxxx XxXxxxxxx 24,000 69,000 51,356 ###-##-#### 0000 Xxxxxxxxxx 000
Xxxx, Xxxxxx, XX
00000
Kit Wood 24,000 69,000 21,533 ###-##-#### 000 Xxxxx Xxxxxx 000
Xx. Xxx. 0X,
Xxxxxxxxx,
Xxxxxxxx 00000
22
Xxxx Xxxxxxxx 0 35,000 25,700 ###-##-#### 0000 Xxxxxxx Xxxx 0
Xxxx, Xxxxxxx, XX
00000
Xxxxxxx Xxxxxx 0 35,000 9,911 ###-##-#### 0000 XX Xxxxxx 0
Xxxx Xxx,
Xxxxxxxxx, XX
00000
Xxxxxx Xxxxxx 0 35,000 13,458 ###-##-#### 0000 Xxxx Xx., 0
Xxxxxx Xxxxxx, XX
00000
Xxxxxx Xxxxxxx 0 45,000 21,129 ###-##-#### 00000 Xxxxxx Xxxx 0
Xxxxx, Xxxxxxxx,
XX 00000
Xxxx Xxxxxxxx 0 35,000 25,945 ###-##-#### 0000 Xxxxx 0
Xxxxxxx Xxxx,
Xxxxxxxx, XX
00000
Xxxxx Xxxx 0 35,000 21,533 ###-##-#### 00000 Xxxxxxx Xxx 0
Xxxxxx Xxx 000,
Xxxxxxxxxxx, XX
00000
Xxxxx Xxxxx 0 40,000 13,445 ###-##-#### 0000 Xxxxxx 0
Xxxxxx Xxxxx,
Xxxxxxxxxxx, XX
00000
Xxxxx Xxxxxx 0 40,000 24,225 ###-##-#### 000 Xxxxxxxxxx 0
Xxxxx, Xxxxxxxx,
XX 00000
23
Xxxxx XxXxxxxxx 20,000 69,000 34,991 ###-##-#### 0000 Xxxxxxxxxx 000
Xxxx, Xxxxxx, XX
00000
Xxxxxxx 500 ###-##-#### 00000 Xxxxxx Xxxx 0
Xxxxxxxxx Xx, Xxxxxx, XX
00000
Shabnam 500 ###-##-#### 00000 Xxxxxx Xxxx 0
Xxxxxxxxx Xx, Xxxxxx, XX
00000
Xxxxxx Xxxxx 500 ###-##-#### 0000 Xxxxxxxx Xx, 0
Xxxxxxx, XX 00000
Xxxxxxx Xxxxxx 500 ###-##-#### 000 Xxxxxx Xxxxx, 0
Xxxxxxxxxxxxxxx,
XX 00000
Shayda Hope 2,000 ###-##-#### 0000 Xxxxxxxx Xx, 0
Xxxxx Xxxxxxx, XX 00000
Xxxxxx Xxxxxxxx 20,000 ###-##-#### 0000 Xxxxxxx 0
Xxxxx, Xxxxxxxxx
XX 00000
Xxxxx Xxxxxx 10,000 ###-##-#### 000 Xxxx Xxxxxxxx 0
Xxxxxx, Xxxxxxx,
XX 00000
W. Xxxxx Xxxx 41,000 ###-##-#### 000 Xxxxxxxxx 0
Xxx, Xxxxxx XX
00000
Xxxxx Xxxx 5,000 ###-##-#### 0000 Xxxxxx Xxxxx 0
Xxxx, Xxxxxxx XX
00000
Xxxxx Xxxx 10,000 ###-##-#### 000 Xxxxxxx Xxxx, 0
Xxxxxxxxxx, XX
00000
Xxxxx X. 20,000 ###-##-#### 2154 Greenskeeper 0
XxxXxxxxx Xxxxx, Xxxxxx XX
00000
Xxxxx Xxxxxx 5,000 ###-##-#### X.X. Xxx 0000 0
Xxxxxxxx XX 00000
24
SCHEDULE 1.02
IceWEB, Inc.'s Incentive Stock Option Agreement
25
SCHEDULE 1.11
Assumption of Liability to SunTrust Bank
Propster agrees to assume DevElements's liability to SunTrust Bank on a Line of
Credit by issuing a promissory note to DevElements in the principal amount of
$150,000.00. A copy of the note is attached as Exhibit 1 to Schedule 1.11. A
copy of the Personal Guarantee of the SunTrust note is attached as Exhibit 2 to
Schedule 1.11. DevElements represents that all interest payments due under this
promissory note are current, that SunTrust has not declared DevElements in
default, that no actions have been commenced or threatened to foreclose on any
collateral security held by SunTrust Bank. The security agreement between
SunTrust Bank as secured party and DevElements as debtor is attached as Exhibit
3 to Schedule 1.11. The UCC-1 financing statement(s) perfecting the security
interest of SunTrust Bank in the collateral is attached as Exhibit 4 to Schedule
1.11. DevElements represents and certifies that the UCC-1 lien in favor of
SunTrust Bank is the sole lien on the Assets. Propster may continue to make the
interest payments on this note and pay the note when due; Propster may cause
this note to be renewed from time to time as SunTrust permits; or Propster may
prepay the SunTrust note. If SunTrust requires it, IceWEB agrees to guarantee
the note either as an endorser or as an accommodation maker. If Propster does
not payoff DevElements's Line of Credit liability to SunTrust Bank in its
entirety within thirty (30) calendar days of the Closing Date, IceWEB and/or
Propster will take whatever action is necessary with SunTrust Bank to remove
Xxxxxx Xxxx as a personal guarantor of the Line of Credit with SunTrust Bank.
26
Schedule 1.11.a
Propster Software
Subject only to the license rights vested in Xxxxxxx and Xxxxxxx,
DevElements owns all right, title, and interest in Propster. Propster is
developed in the following programming languages, platforms, and utilizing the
following tools:
____________________________________________________________
____________________________________________________________
____________________________________________________________
Propster was developed by the following persons: (list names and
addresses and contributions of each person below including time frames within
which the development occurred)
____________________________________________________________
____________________________________________________________
____________________________________________________________
Executed employment agreements pursuant to which the developers of
Propster acknowledge all work is work for hire and agree to assign any right,
title, and interest they may have are attached as Exhibits 1 through ______ to
this Schedule 1.11 a.
____________________________________________________________
____________________________________________________________
____________________________________________________________
27
Schedule l.ll.a
DEX Software
Subject only to the license rights vested in Xxxxxxx and Xxxxxxx,
DevElements owns all right, title, and interest in DEX. DEX is developed in the
following programming languages, platforms, and utilizing the following tools:
____________________________________________________________
____________________________________________________________
____________________________________________________________
DEX was developed by the following persons: (list names and addresses
and contributions of each person below including time frames within which the
development occurred)
____________________________________________________________
____________________________________________________________
____________________________________________________________
Executed employment agreements pursuant to which the developers of DEX
acknowledge all work is work for hire and agree to assign any right, title, and
interest they may have are attached as Exhibits ____ through _________ to this
Schedule 1.11a
____________________________________________________________
____________________________________________________________
____________________________________________________________
28
EXHIBIT 1 to Schedule 1.11.a
(Xxxxxxx and Xxxxxxx Contract)
29
Schedule 1.11.a(ii)
Products and Derivative Products
List all products and derivative products and attach CD-ROMs containing all
source code, object code, and documentation relating to products and derivative
products. In the alternative, reference to filing and storage locations with
keys for access to these locations can be provided.
30
Schedule 1.11.a(iii)
Documentation
List all documentation and attach CD-ROMs containing all documentation
relating to products and derivative products. In the alternative, reference to
filing and storage locations with keys for access to these locations can be
provided.
31
Schedule 1.11.a(vi)
Third Party Software Licenses
Xxxxxxx and Xxxxxxx holds certain rights to Propster software as set
forth in the contract attached as Exhibit 1 to Schedule 1.11.a(vi).
DevElements is currently negotiating an amendment to this contract. The
proposed amendment is attached as Exhibit 2 to Schedule 1.11.a(vi). DevElements
represents and warrants that it believes that Xxxxxxx and Xxxxxxx will agree to
continuation of its status as licensee under a perpetual, nonexclusive license
to Propster and in exchange therefor, will agree to releasing DevElements from
the prior obligation to secure Xxxxxxx and Xxxxxxx'x prior approval before a
third party license of Propster would be permitted. In exchange for the prior
required permission for third party licenses DevElements agrees to an exclusion
from selling Propster licenses for a period of one year to the following four
Washington, DC area real estate brokers:
This prohibition against licensing Propster will be limited only to the
Washington, DC I Metropolitan area offices of said four brokers.
32
EXHIBIT 2 to Schedule l.ll.a(vi)
(Xxxxxxx and Xxxxxxx Contract -see above)
33
SCHEDULE 1.13
Distribution Schedule for Propster Quarterly Gross Profit Distributions
Employee Name % of Quarterly Gross Profit Amount for
------------------ --------------------------------------
Xxxxxx, Xxxxxxx 2%
Xxxxx, Xxxxx 3%
Xxxxxx, Xxxxxx 3%
Xxxx, Xxxxxx 4%
Xxxxxxx, Xxxxxxx 4%
XxxXxxxxx, Xxxxx 4%
Wood, Kit 4%
Xxxx, Xxxxx 4%
Xxxxxx, Xxxxx 5%
Xxxxxxxx, Xxxx 5%
Xxxxxxxx, Xxxx 5%
XxXxxxxxx, Xxxxx 7%
XxXxxxxxx, Xxxxx 10%
Xxxxxxxxx, Xxxxxx 11%
Xxxx, Xxx 14%
34
SCHEDULE 2.02
SCHEDULE OF CASH DISTRIBUTIONS
Total cash distributions at closing from IceWEB, Inc.
and/or Propster, Inc.: $250,000.00
To be distributed according to the following schedule:
SunTrust Bank Line of Credit Debt to DevElements
(either as Promissory Note to DevElements or payment
in full of Line of Credit debt to SunTrust Bank) $150,000.00
Payment of Internal Debt Owed to DevElements's
Shareholders ( e.g., back pay due to employees, loans
from DevElements's Shareholders) $ 42,767.09
Remaining Distribution to- Shareholders $57,232.91
The total distribution from IceWEB, Inc. and/or Propster, Inc. to DevElements's
I Shareholders and repayment of internal debt is as follows:
Xxxxxx Xxxx $42,875.91
Xxxxxx Xxxx $10,723.29
Xxxxx XxxXxxxxx $ 8,998.71
Xxxxxx Xxxxxxxxx $18,267.47
Xxxx Xxxxxxxxx $ 9,709.14
Xxxxxx XxXxxxxxx $ 4,833.49
Xxxxx Xxxx $ 858.49
Xxxxx XxXxxxxxx $ 3,733.49
The payment listed above to each DevElements' Shareholder constitutes full and
total repayment of all liabilities and monetary obligations owed by DevElements
to each listed Shareholder.
These amounts are to be paid by IceWEB, Inc. and/or Propster, Inc. to each
DevElements's Shareholder within six (6) months of the Closing Date.
35
SCHEDULE 2.02e
Employment agreement between IceWEB, Inc. and/or Propster, Inc. and the
following individuals: Xxxxxx Xxxx, Xxxxxx Xxxx, Xxxxx XxxXxxxxx, Xxxxxx
Xxxxxxxxx, and Xxxx Xxxxxxxxx.
These employment agreements will be prepared and executed by the
parties at a later date and added to this Agreement. The parties will negotiate
in good faith to execute such an employment agreement. At a minimum, the
Employment Agreement will include a term stating that in the event that the
individual employee in question is terminated from employment with IceWEB, Inc.,
or any of its subsidiary or affiliated companies, for a reason other than for
substantial cause any IceWEB Option Shares granted to the employee prior to the
termination date that have not yet vested, shall automatically vest as of the
termination date and will otherwise be available for exercise in accordance with
the applicable IceWEB Incentive Stock Option Agreement executed by the employee.
36
SCHEDULE 3.03
Total outstanding DevElements stock at Closing: 40,000 shares
DevElements Stock Ownership prior to 5/13/2004:
Stockholder Name # of Shares Held % of Ownership
Xxxxxx Xxxx 24,200 60.50%
Xxxxxx Xxxx 4,000 10.00%
Xxxxx XxxXxxxxx 4,000 10.00%
Xxxxxx Xxxxxxxxx 3,000 7.50%
Xxxx Xxxxxxxxx 3,000 7.50%
Xxxxxx XxXxxxxxx 600 1.50%
Kit Wood 600 1.50%
Xxxxx XxXxxxxxx 600 1.50%
37
SCHEDULE 3.10
DevElements's Insurance and Policy Information
Hartford Life, ADID, Short Term & Long Term Disability Insurance Policy #706087
CHUBB Insurance Property, Liability & Crime Policy #3577-99-04
CHUBB Insurance Worker's Compensation Policy #7170-65-95 CHUBB Insurance
Automobile Policy #7351-09-89
CHUBB Insurance Umbrella Policy #7981-88-38
38
SCHEDULE 3.13
List of DevElements's Officers and Relevant Salary and Pay Information
Chairman, Treasurer Xxxxxx Xxxx
Base Salary $120,000.00
Accrued Vacation Pay $2,500.00
Sick Pay n/a
Severance Pay n/a
Vice President Xxxxxx Xxxx
Base Salary $104,000
Accrued Vacation Pay $2,167.00
Sick Pay n/a
Severance Pay n/a
Secretary Xxxxx XxxXxxxxx
Base Salary $70,750.00
Accrued Vacation Pay $1,474.00
Sick Pay n/a
Severance Pay n/a
Under the terms of Section 7 .1.2, Annual Leave, of DevElements ' Employee
Handbook, dated January 2004, the maximum total accrued vacation liability for
DevElements is 40 hours.
Under the terms of Section 7.1.3, Annual Leave, of DevElements' Employee
Handbook, dated January 2004; DevElements' sick leave is included in annual
leave. Further, DevElements does not offer severance pay.
39
SCHEDULE 3.14
Business Licenses
2004 Fairfax County Business Professional License #000-27-8499
2004 City of Portland Business License #665286
40
SCHEDULE 3.20
Stockholders who are not "Accredited Investors" as defined in
Regulation D of the Securities Act of 1933
Xxxxxx Xxxx
Xxxxxx Xxxx
Xxxxx XxxXxxxxx
Xxxxxx Xxxxxxxxx
Xxxx Xxxxxxxxx
Xxxxxx XxXxxxxxx
Xxxxx Xxxx
Xxxxx XxXxxxxxx
41
This Letter of Understanding, dated as of May 13,2004 ("Effective
Date") is entered into by and among PROPSTER, INC., a Virginia corporation being
formed ("Propster"), party of the first part; IceWEB, INC. a Delaware
corporation ("IceWEB"); party of the second part; DEVELEMENTS, INC., a Virginia
corporation ("DevElements"), party of the third part.
With respect to DevElements' liability under its present lease for its office
space at 00000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxx, DevElements,
IceWEB, and Propster agree that the parties will jointly and/or collectively
work in good faith together in negotiations with DevElements' current landlord,
11600 Sunrise Limited Partnership, and/or the Xxxxxxxxx management organization
to terminate, modify, resolve liability there under, assign, or any other action
in connection with the lease for DevElements current office space.
IN WITNESS WHEREOF, the undersigned have executed this Letter of Understanding,
effective as of the 13th day of May, 2004.
PROPSTER:
PROPSTER, INC.,
a Virginia corporation being formed
By: ______________________________
Xxxx X. Xxxxxxxxxx, Promoter
ICEWEB:
ICEWEB, INC.,
a Delaware corporation
By: ______________________________
Xxxx X. Xxxxxxxxxx, Chairman and CEO
DEVELEMENTS:
DEVELEMENTS, INC.,
a Virginia corporation
By: ______________________________
Xxxxxx Xxxx, President
42
