Exhibit 10.2
AGREEMENT OF PURCHASE AND SALE OF ASSETS
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THIS AGREEMENT dated as of March 12, 1998 by and between Arbor
Intelligent Systems, Inc., a Michigan corporation having its principal office at
000 X. Xxxxxxxx, Xxx Xxxxx, Xxxxxxxx 00000 ("Seller"), AppNet Systems, Inc., a
Delaware corporation having its principal office at Suite 940, 0000 Xxxxxx
Xxxxxxxx Xxxxx, Xxxxxx, Xxxxxxxx 00000 and AppNet of Michigan, Inc., a Delaware
corporation having its principal office at 000 X. Xxxxxxxx, Xxx Xxxxx, XX 00000
("Purchaser"); Xxxxxx Xxxxxx ("Xxxxxx"); Xxxxxx Xxxxx ("Xxxxx"); and Xxxxxx
Xxxxx ("Royce").
W I T N E S S E T H:
WHEREAS, Seller is engaged in the business of developing, marketing,
distributing and servicing software applications (the "Business");
WHEREAS, Purchaser desires to purchase and acquire from Seller, and
Seller desires to sell, transfer and assign to Purchaser all of the assets and
properties used in the Business for the purchase price and upon and subject to
the terms and conditions hereinafter set forth.
NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, the parties hereby agree as follows:
1. PURCHASE AND SALE OF BUSINESS AND ASSETS.
1.1 ASSETS TRANSFERRED. Subject to and upon the terms and
conditions set forth in this Agreement, Seller will sell, transfer, convey,
assign and deliver to Purchaser and Purchaser will purchase and acquire from
Seller at the Closing (as hereafter defined) all right, title and interest of
Seller in and to the properties, assets and rights of every nature, kind and
description, tangible and intangible (including goodwill), whether real,
personal or mixed, whether accrued, contingent or otherwise and whether now
existing or hereinafter acquired relating to or used or held for use in
connection with the Business as the same may exist on the Closing Date
(collectively, the "Assets"), including without limitation all those items in
the following categories that conform to the definition of the term "Assets":
(i) all equipment, furniture, furnishings, and
similar property (including any of the foregoing purchased subject to any
conditional sales or title retention agreement in favor of any other individual,
sole proprietorship, corporation, partnership (general or limited), trust,
business trust, limited liability company, unincorporated organization or
association, joint venture, government or political subdivision including any
agency or instrumentality thereof or any other entity or any other nature
("Person"));
(ii) all rights to software sold or licensed and any
software under development prior to or on the Closing Date, including all of
Seller's rights pertaining to all documentation, source code, object code,
enhancements and other materials associated therewith;
(iii) all of the rights of the Seller under all
contracts, arrangements, license and technology agreements, leases (other than
leases to real property) and agreements, including, without limitation, all
value added reseller agreements, distribution agreements, software license
agreements and Seller's right to receive payment for services rendered and to
receive goods and services pursuant to such contracts and to assert claims and
take other rightful actions in respect of breaches, defaults and other
violations of such contracts and otherwise;
(iv) all prepaid expenses;
(v) all notes and accounts receivable held by Seller
and all notes, bonds and other evidences of indebtedness of and rights to
receive payments from any Person held by Seller;
(vi) (a) all trademarks, service marks and trade
names throughout the world, including registrations and applications for
registration thereof, if any, (b) all copyright registrations throughout the
world and applications therefor, and any other non-registered copyrights, (the
items described in clauses (a) and (b) being hereafter collectively referred to
as the "Intellectual Property");
(vii) all designs, plans, trade secrets, inventions,
processes, methods, procedures and research records (collectively, the
"Know-How");
(viii) all books, records, manuals and other
materials (except for any of Seller's corporate records to the extent not
necessary for the operation of the Business in the ordinary course), including,
without limitation, all records and materials maintained at the offices of
Seller, advertising matter, catalogues, price lists, correspondence, mailing
lists, lists of customers, distribution lists, sales and promotional materials
and records, purchasing materials and records, research and development files,
records, patent disclosures, communication, advertising or similar media
materials and plates, accounting records, sales order files and litigation
files;
(ix) all cash on hand and on deposit and all cash
equivalents including money market funds and certificates of deposit; and
(x) to the extent their transfer is permitted by law,
all governmental licenses, permits, approvals, license applications, license
amendment applications and product registrations.
The Assets shall be conveyed free and clear of all liabilities,
obligations, liens and encumbrances excepting only those liabilities and
obligations which are expressly agreed to be assumed by Purchaser hereunder and
those liens and encumbrances securing the same which are specifically disclosed
herein or expressly permitted by the terms hereof.
1.2 EXCLUDED ASSETS. Notwithstanding the definition of Assets
set forth in Section 1.1 of this Agreement or any other provision of this
Agreement, Seller will not sell,
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transfer, convey, assign or otherwise deliver to Purchaser any of the assets or
items listed on Schedule 1.2 hereof.
2. CLOSING; PURCHASE PRICE.
2.1 TIME AND PLACE OF CLOSING. The closing of the sale of the
Assets (the "Closing") shall take place at 10:00 a.m. local time, on the 12th
day of March, 1998, at the offices of Michaels, Xxxxxxx & Xxxxxx, P.C., or such
other time and place as the parties may agree upon. The day on which the Closing
actually takes place is herein sometimes referred to as the "Closing Date".
2.2 PURCHASE PRICE. Subject to Section 2.3 and Section 2.4
hereof, Purchaser shall pay or provide to Seller the following consideration in
connection with the purchase of the Assets (hereafter "Purchase Price"):
(i) $401,038 (as hereafter adjusted in this
Section 2.2) in current funds;
(ii) 266,796 shares of Series A-1 Convertible
Preferred Stock (sometimes hereafter referred to as the "Shares") having the
rights and preferences set forth in Exhibit A hereof each of which shall be
deemed to have a value of $4.00 per share;
(iii) $1,617,879, which amount shall be used to
satisfy all of the obligations set forth in Schedule 2.2 hereof ("Obligations");
and
(iv) the assumption of the payment of all expenses,
including accounts payable, salaries due through the Closing, accrued and unpaid
vacation and sick leave and deferred income liabilities, other than the
Obligations, which have been incurred to operate the Business through the
Closing, whether or not accrued, which Seller has not yet paid ("Expenses"),
which shall include, but not be limited to, those items listed in Schedule
2.2(iv) hereof;
provided, however, that the Purchase Price shall increase or decrease, dollar
for dollar, to the extent Seller's Current Net Worth as of the Closing exceeds
or is less than zero. For purposes hereof Seller's Current Net Worth shall equal
the difference between Seller's Current Assets less Seller's Current
Liabilities. Subject to Section 2.3 hereof, Seller's Current Assets shall mean
all of Seller's cash, cash equivalents, accounts receivable aged less than 90
days, the credit owed to Seller for the Michigan Single Business Tax, up to
$8,000 in amount, and work-in-process valued at the amount billable therefor, as
of the Closing. Seller's Current Liabilities shall mean all of the Expenses, all
of which to the extent known on the Closing will be set forth in a Schedule of
Expenses delivered at the Closing, and all other liabilities of a nature which
Seller would be required to set forth as part of Seller's current liabilities on
a balance sheet prepared in accordance with generally accepted accounting
principles.
2.3 PAYMENT OF THE PURCHASE PRICE. Purchaser shall pay and
deliver to Seller the consideration described in Section 2.2(i) and (ii) at the
Closing less the amount of funds and
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shares deliverable to the Escrow Agent under Section 2.5 and less the amount of
$100,000 which Purchaser shall retain from the amount otherwise payable under
Section 2.2(i) pending the determination of Seller's Current Net Worth. On the
120th day after the Closing, Purchaser will present Seller with a statement of
Seller's Current Net Worth at the Closing. In preparation of the statement of
Seller's Current Net Worth, as and for accounts receivable, Purchaser shall only
be obligated to include accounts receivable aged 90 days or less as of the
Closing which have been paid on or prior to the preparation of the statement of
Seller's Current Net Worth and as and for work-in-process, Purchaser shall only
be obligated to include work-in-process to the extent that it has matured into
an account receivable for which payment has been made on or prior to the
preparation of the statement of Seller's Current Net Worth. The final statement
shall be prepared having the level of detail which would generally exist on a
balance sheet prepared in accordance with generally accepted accounting
principals. If Seller accepts this statement, Purchaser shall pay to Seller the
remaining amount, if any, then due Seller under Section 2.2(i) as adjusted for
Seller's Current Net Worth exclusive of the amount of funds paid into escrow. If
Seller's Current Net Worth exceeds a negative $100,000, Seller shall pay
Purchaser an amount equivalent to such excess. If Seller disputes the statement,
the parties will negotiate in faith towards resolving the dispute. Failing such
resolution, either party shall have the right to submit the dispute to binding
arbitration in accordance with the Commercial Arbitration Rules of the American
Arbitration Association. Such arbitration will be conducted in Ann Arbor,
Michigan. Each party shall bear its own expenses of the arbitration. Following
the arbitration award, Purchaser shall pay to Seller the amount remaining due to
Seller under Section 2.2(i) as adjusted for Seller's Current Net Worth,
exclusive of the funds paid into escrow. In any event the Purchaser and Seller
shall only be entitled to the one purchase price adjustment referred to above
and such purchase price adjustment must be calculated within the 120 day period
referred to above. Notwithstanding the above, at any time after 60 days but
prior to 100 days following the Closing, Seller shall may by written notice to
Purchaser cause Purchaser to prepare the statement of Seller's Current Worth as
of a date Seller determines which falls prior to the date otherwise required
hereunder. Purchaser shall thereupon have up to 10 days from the date of receipt
of such notice to prepare the statement. All provisions set forth in this
Section 2.3 regarding the statement of Seller's Current Worth which Purchaser
was to otherwise prepare on the 120th day following the Closing shall apply to
the earlier statement herein required by Seller.
2.4 HOLDBACK. Purchaser shall have the right to holdback the
amount required for the payment of any of the Obligations until and unless
Purchaser shall have received: (i) a full and complete release, subject to the
payment of the Obligation, from the holder of such Obligation of any claim such
holder has or may have against Seller, Purchaser or the Business; or (ii) a
final court order requiring the payment of such Obligation or a final court
order providing that no such payment is required. If such releases are not
available at the Closing, the amount required for payment of the Obligations
will be placed in escrow under Section 2.5.
2.5 ESCROW. In addition to the amount referenced in Section
2.3, Purchaser shall withhold $80,207.60 from the amount payable to Seller under
Section 2.2(i) and 53,359 shares of Series A-1 Convertible Preferred Stock from
the shares deliverable to Seller under Section 2.2(ii). Such funds and shares,
along with the amounts required for payment of any of the Obligations
(collectively "Escrow Fund"), shall be placed in escrow with Commercial
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Settlements, Inc. ("Escrow Agent") subject to the provisions of the Escrow
Agreement attached hereto as Exhibit B. The Escrow Fund to the extent it
consists of cash or cash equivalents shall serve to (i) provide Seller with the
amounts required to satisfy any of the Obligations upon receipt of appropriate
releases from the holders thereof and (ii) secure and satisfy to the extent
hereinafter set forth, along with the Shares held in Escrow, all indemnities of
Seller pursuant to Section 8.4 of this Agreement. Purchaser shall have the right
to apply funds, shares of Series A Convertible Preferred Stock or any
combination thereof as Purchaser determines for such satisfaction of any
indemnity claim Purchaser possesses. Each share used to satisfy any such claim
shall be deemed equal to $4.00 per share.
2.6 ALLOCATION. The Purchase Price shall be allocated to the
Assets as described in Schedule 2.6 hereof.
2.7 EXCLUDED LIABILITIES. Purchaser shall not assume any
liabilities, obligations or commitments (the "Excluded Liabilities") of Seller
relating to or arising out of the operation of the Business prior to Closing
other than the Expenses, the obligation to perform subsequent to Closing under
any agreements assigned to Purchaser as part of the Assets or any liens or
encumbrances against any of the Assets which Purchaser expressly assumes in
writing. For purposes hereof, all such liabilities referred to above which
Purchaser has agreed to assume are referred to as the "Specified Liabilities".
3. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller, Xxxxxx, Xxxxx and
Xxxxx, jointly and severally, represent and warrant to Purchaser as follows:
3.1 ORGANIZATION, STANDING AND QUALIFICATION. Seller is a
corporation duly organized, validly existing and in good standing under the laws
of Michigan has ail requisite corporate power and authority and is entitled to
carry on the Business and to own or lease and operate the Assets as and in the
places where the Business is now conducted. Seller is duly qualified, licensed
or domesticated and in good standing in each of the jurisdictions, where the
nature of its activities conducted in connection with the Business or the
character of the properties owned, leased or operated by it in connection with
the Business require such qualification, licensing or domestication. Seller has
delivered to Purchaser true and complete copies of its Articles of Incorporation
and By-Laws, as amended and in effect.
3.2 OPERATIONS OF THE BUSINESS. Seller has conducted the
Business only through the Seller and not through any other Person.
3.3 TRANSACTIONS WITH CERTAIN PERSONS; THE ASSETS. Except as
set forth on Schedule 3.3, during the past three years Seller (i) has not, in
connection with its operation of the Business, directly or indirectly purchased,
leased or otherwise acquired any property or obtained any services from, or
sold, leased or otherwise disposed of any property or furnished any services to,
or otherwise dealt with (except with respect to remuneration for services
rendered as a director, officer or employee of Seller), in the ordinary course
of business or otherwise, (A) any Person beneficially owning 10% or more of the
common stock of Seller (a "Major Stockholder") or (B) any Person, firm or
corporation which, directly or indirectly, alone or together with others,
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controls, is controlled by or is under common control with Seller, and, (ii) in
connection with its operation of the Business, does not owe any amount to, or
has any contract with or commitment to, any Major Stockholders, directors,
officers, employees or consultants (other than compensation for current services
not yet due and payable and reimbursement of expenses arising in the ordinary
course of business), and none of such Persons owes any amount to Seller in
connection with its operation of the Business. The Assets constitute all of the
properties and assets relating to or used or held for use in connection with the
Business since December 31, 1997, (excluding inventories sold, cash disposed of,
accounts receivable collected, prepaid expenses realized, contracts fully
performed, and properties or assets replaced by equivalent or superior
properties or assets, in each case in the ordinary course of business). Except
for the assets and services set forth on Schedule 1.2 hereof, the Assets
comprise all assets and services used to conduct the Business as now being
conducted by Seller. There are no assets or properties used in the Business and
owned by any Person other than Seller which will not be leased or licensed to
Purchaser under valid, current lease or license arrangements.
3.4 EXECUTION, DELIVERY AND PERFORMANCE OF AGREEMENTS:
AUTHORITY. Other than as to the default that may occur under the Seller's
contract with IC&C Gmbh or as itemized on Schedule 3.12.3, the execution,
delivery and performance of this Agreement or any other agreements required
hereunder (the Agreement and such other agreements hereafter referred to as
"Basic Agreements") by Seller will not, with or without the giving of notice or
the passage of time, or both, conflict with, result in a default, right to
accelerate or loss of rights under, or result in the creation of any lien,
charge or encumbrance pursuant to, any provision of Seller's Articles of
Incorporation or By-laws or any franchise, mortgage, deed of trust, lease,
license, agreement, understanding, law, rule or regulation or any order,
judgment or decree to which Seller is a party or by which Seller may be bound or
affected. Seller has the full power and authority to enter into the Basic
Agreements and to carry out the transactions contemplated therein. This
Agreement has been duly executed and delivered by Seller and constitutes the
legal, valid and binding obligation of Seller enforceable against Seller in
accordance with its terms.
3.5 FINANCIAL STATEMENTS. Seller has delivered to Purchaser
copies (initialed by Seller's chief financial officer and identified with
reference to this Section 3.5 of this Agreement) of the following financial
statements prepared by Seller, all of which are complete and correct, and except
as otherwise set forth therein, have been prepared from the books and records of
the Seller in accordance with generally accepted accounting principles
consistently applied ("GAAP") and maintained throughout the periods indicated
and fairly present the financial condition of the Seller as at their respective
dates and the results of its operations for the periods covered thereby:
(i) Audited balance sheet at December 31, 1997,
and audited statements of operations and source and application of funds for the
fiscal year then ended;
(ii) Unaudited balance sheet at December 31, 1996,
and unaudited statement of operations and source and application of funds for
the fiscal year then ended; and
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(iii) Unaudited balance sheet ("the Unaudited Balance
Sheet") at January 31, 1998 ("the Balance Sheet Date") and the unaudited
statement of operations and source and application of funds for the one month
period then ended.
Such statements of operations do not contain any items of special or
nonrecurring income or any other income not earned in the ordinary course of
business except as expressly specified therein, and the interim financial
statements of January 31, 1998, include all adjustments, which consist only of
normal recurring accruals, necessary for such fair presentation.
3.6 ABSENCE OF UNDISCLOSED LIABILITIES. Except as and to the
extent reflected or reserved against on the face of the Unaudited Balance Sheet
(excluding any notes thereto), as of the Balance Sheet Date Seller did not have
(i) any debts, liabilities or obligations (whether absolute, accrued, contingent
or otherwise) of any nature whatsoever, including, without limitation, any
foreign or domestic tax liabilities or deferred tax liabilities incurred in
respect to or measured by the Seller's income for its period prior to the close
of business on the Balance Sheet Date or (ii) any other debt, liabilities or
obligations relating to or arising out of any act, omission, transaction,
circumstance, sale of goods or services, state of facts or other condition which
occurred or existed on or before such date, whether or not then known, due or
payable. Purchaser shall only have the liability and obligation to pay or honor
any employee benefits, including vacation, severance, sick leave and health care
benefits, which accrued prior to the Closing Date for any of Seller's employees
who Purchaser employs after the Closing Date to the extent such liability or
obligation was included as part of Expenses.
3.7 TAXES. Except as set forth in Schedule 3.7, all taxes,
including without limitation, income, property, sales, use, franchise, added
value, employees' income withholding and social security taxes, imposed by the
United States or by any foreign country or by a state, municipality, subdivision
or instrumentality of the United States or of any foreign country, or by any
other taxing authority, which are due or payable by Seller, and all interest and
penalties thereon, whether disputed or not (hereinafter, "Taxes"), have been
paid in full or adequate provisions have been made therefor, all tax returns
required to be filed in connection therewith have been accurately prepared and
duly and timely filed and all deposits required by law to be made by Seller with
respect to employees withholding taxes have been duly made. Seller has not been
delinquent in the payment of any foreign or domestic tax, assessment or
governmental charge or deposit and has no tax deficiency or claim outstanding,
proposed or assessed against it, and there is no basis for any such deficiency
or claim. There is not now in force any extension of time with respect to the
date on which any tax return was or is due to be filed or with respect to Seller
or any waiver or agreement by any Seller for the extension of time for the
assessment of any tax.
3.8 ABSENCE OF CHANGES OR EVENTS. Except as set forth in
Schedule 3.8, Seller has conducted the Business only in the ordinary course and
has not, on behalf of, in connection with or relating to the Business or the
Assets since the Balance Sheet Date:
(i) incurred any obligation or liability, absolute,
accrued, contingent or otherwise, whether due or to become due, except current
liabilities for trade or business
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obligations incurred in connection with the purchase or sale of goods or
services in the ordinary course of business and consistent with its prior
practice, none of which liabilities, in any case or in the aggregate, materially
and adversely affects the business, liabilities or financial condition of the
Business;
(ii) discharged or satisfied any lien, charge or
encumbrance relating to the Business other than those then required to be
discharged or satisfied, or paid any obligation or liability, absolute, accrued,
contingent or otherwise, whether due or to become due, other than current
liabilities shown on the Unaudited Balance Sheet and current liabilities
incurred since the date thereof in the ordinary course of business and
consistent with its prior practice;
(iii) except for Permitted Encumbrances (as defined
in Section 3.11.1), mortgaged, pledged or subjected to lien, charge, security
interest or any other encumbrance or restriction on any of the Seller's
property, business or assets, tangible or intangible;
(iv) sold, transferred, leased to others or otherwise
disposed of any of the Assets, or canceled or compromised any debt or claim, or
waived or released any right of substantial value;
(v) received any notice of termination of any
contract, lease or other agreement or suffered any damage, destruction or loss
(whether or not covered by insurance) which, in any case or in the aggregate,
has had a materially adverse effect on the assets, operations or prospects of
the Seller;
(vi) encountered any labor union organizing activity,
had any actual or threatened employee strikes, work stoppages, slowdowns or
lockouts, or had any material change in its relations with its employees,
agents, customers or suppliers;
(vii) transferred or granted any rights under, or
entered into any settlement regarding the breach or infringement of, any United
States or foreign license, patent, copyright, trademark, trade name, invention
or similar rights, or modified any existing rights with respect thereto:
(viii) made any material change in the rate of
compensation, commission, bonus or other direct or indirect remuneration
payable, or paid or agreed or orally promised to pay, conditionally or
otherwise, any bonus, extra compensation, pension or severance or vacation pay,
to any shareholder, director, officer, employee, salesman, distributor or agent
of Seller other than in the ordinary course of business and consistent with
prior practices;
(ix) made any capital expenditures or capital
additions or betterments in excess of an aggregate of $10,000;
(x) instituted, settled or agreed to settle any
litigation, action or proceeding before any court or governmental body relating
to Seller or the Assets;
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(xi) failed to replenish Seller's supplies in a
normal and customary manner consistent with its prior practice and prudent
business practices prevailing in the industry, or made any purchase commitment
in excess of the normal, ordinary and usual requirements of the business or at
any price in excess of the then current market price or upon terms and
conditions more onerous than those usual and customary in the industry, or made
any change in its selling, pricing, advertising or personnel practices
inconsistent with its prior practice and prudent business practices prevailing
in the industry;
(xii) suffered any change, event or condition which,
in any case or in the aggregate, has had or may have a materially adverse affect
on Seller's condition (financial or otherwise), properties, assets, liabilities,
operations or prospects, including, without limitation, any change in the
Seller's revenues, costs, backlog or relations with its employees, agents,
customers or suppliers; or
(xiii) entered into any agreement or made any
commitment to take any of the types of action described in subparagraphs (i)
through (xii) above.
3.9 LITIGATION. Except as disclosed in Schedule 3.9, there is
no claim, legal action, suit, arbitration, or other legal or administrative
proceeding or to the knowledge of Seller, Xxxxxx, Xxxxx or Xxxxx, any
governmental investigation, nor any order, decree or judgment in progress,
pending or in effect, or to the knowledge of Seller, Xxxxxx, Xxxxx or Xxxxx
threatened, against or relating to Seller in connection with the Business, or
against or relating to the transactions contemplated by this Agreement, and
Seller does not know or have reason to be aware of any basis for the same. For
the purposes of this Agreement, the term "knowledge" shall mean actual knowledge
without any investigation having been undertaken. Except as set forth in
Schedule 3.9, no citations, fines or penalties have been asserted against Seller
since January 1, 1995, under any foreign, federal, state or local law relating
to air or water pollution or other environmental protection matters,
occupational health or safety or medical devices.
3.10 COMPLIANCE WITH LAWS AND OTHER INSTRUMENTS. Seller has
complied with all existing laws, rules, regulations, ordinances, orders,
judgments and decrees applicable to the Business, properties or operations of
the Seller as presently conducted. Schedule 3.10 hereto contains a complete and
correct list of all permits, concessions, grants, franchises, licenses, filings
and other governmental authorizations and approvals which are necessary for the
conduct of the Business, all of which have been duly made or obtained and are in
full force and effect and there are no proceedings pending or, to knowledge of
Seller, Xxxxxx, Xxxxx or Xxxxx, threatened which may result in the revocation,
cancellation or suspension or any adverse modification, of any thereof. Seller
is not in violation of any term of its Articles of Incorporation or By-Laws.
Except as set forth on Schedule 3.10, neither the ownership nor use of the
Assets nor the conduct of the Business conflicts with the rights of any other
Person, firm or corporation or violates, or with or without the giving of notice
or the passage of time, or both, will violate, conflict with or result in a
default, right to accelerate or loss of rights under, any terms or provisions of
any lien, encumbrance, mortgage, deed of trust, lease, license, agreement,
understanding, law, ordinance, rule or regulation, or any order, judgment or
decree to which Seller is a party or by which it may be bound or affected.
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3.11 PROPERTIES.
3.11.1 Schedule 3.11 hereto includes a complete
and correct list of all tangible personal property included in the Assets with
an initial cost in excess of $2,000. Seller has good title to all the personal
property listed or required to be listed in Schedule 3.11, including, without
limitation, the properties reflected as being so owned on the Unaudited Balance
Sheet, in each case free and clear of any liens, security interests or
encumbrances except (i) liens for current Taxes not yet due and payable, (ii)
statutory liens of warehousemen, mechanics and materialmen and other like
statutory liens which arose in the ordinary course of business, and (iii) such
other encumbrances and easements which do not, individually or in the aggregate,
materially detract from the value or interfere with the use of the properties
affected thereby, for the purposes for which they are currently used or
otherwise (the exceptions described in the foregoing clauses (i), (ii), and
(iii) being referred to as "Permitted Encumbrances").
3.11.2 None of the tangible personal property
included in the Assets is leased by Seller.
3.12 CONTRACTS.
3.12.1 Schedule 3.12 hereto contains a complete
and correct list of all agreements, contracts and commitments (collectively, the
"Material Contracts") of the following types, whether written or oral by which
any of the Assets are bound or to which Seller is a party or by which it is
bound:
(i) mortgages, indentures, security
agreements and other agreements and instruments relating to the borrowing of
money by, or any extension of credit to, Seller;
(ii) employment, consulting and agency
agreements (other than employment arrangements terminable at will without
liability on the part of the employer or upon payment of no more than applicable
statutory or regulatory severance or termination benefits);
(iii) collective bargaining agreements;
(iv) sales agency, manufacturer's
representative, distributorship or marketing agreements;
(v) agreements, orders or commitments
for the purchase by Seller or any of Seller's Affiliates of supplies or
services, in each case involving payments or receipts in excess of $5,000 in the
aggregate;
(vi) licenses to or from others of
Intellectual Property and Know-How involving payments or receipts in excess of
$4,000;
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(vii) agreements or commitments for capital
expenditures in excess of $5,000 for any single project or related series of
projects;
(viii) brokerage or finder's agreements;
(ix) partnership, joint venture or other
arrangements or agreements involving a sharing of profits or expenses;
(x) contracts or commitments to sell, lease
or otherwise dispose of any Assets other than in the ordinary course of
business;
(xi) contracts or commitments, including
royalty agreements, .with any employee, director, officer, Major Stockholder or
affiliate of Seller;
(xii) contracts or commitments limiting the
freedom of Seller to compete in any line of business or in any geographic area
or with any Person;
(xiii) other agreements, contracts and
commitments which in any case involve payments or receipts of more than $5,000;
and
(xiv) any other agreements, contracts and
commitments material to the Business.
3.12.2 Seller has delivered to Purchaser complete and
correct copies of all written Material Contracts, together with all amendments
thereto, and accurate descriptions of all oral Material Contracts, listed on
such Schedule 3.12 or required to be listed thereon. Such Material Contracts are
in full force and effect and there does not exist thereunder any material
default or event or condition which, after notice or lapse of time or both,
would constitute a material default thereunder by Seller or, to the knowledge of
Seller, Xxxxxx, Xxxxx or Xxxxx, by any other party thereto.
3.12.3 Except as set forth in Schedule 3.12 hereto,
no consent by any third party is required under any of the Material Contracts as
a result of or in connection with the execution, delivery and performance of any
of the Basic Agreements or the consummation of the transactions contemplated
thereby. Seller has no outstanding powers of attorney, except powers of attorney
relating to representation before governmental agencies or given in connection
with qualification to conduct business in another jurisdiction.
3.13 BROKERS, FINDERS, ETC. Except as set forth in Schedule
3.13, all negotiations relating to this Agreement and the transactions
contemplated hereby have been carried on without the intervention of any Person
acting on behalf of Seller in such manner as to give rise to any claim against
Purchaser for any brokerage or finder's commission, fee or similar compensation.
11
3.14 CUSTOMERS AND SUPPLIERS. Attached as Schedule 3.14 hereto
is a complete and correct list of each customer of Seller who accounted for
purchases from Seller in excess of $5,000 during the twelve-month period ending
December 31, 1997, and, (ii) each vendor and supplier of Seller who accounted
for sales to Seller in connection with the Business in excess of $5,000 during
the twelve-month period ending December 31, 1997. To the knowledge of Seller,
Xxxxxx, Xxxxx or Xxxxx, no single source of supply of any product or service
required in connection with the operation of the Business has threatened to
cease supplying such product or service either before or after the Closing.
3.15 PATENTS, ETC.
3.15.1 Attached as Schedule 3.15 hereto is a complete
and correct list of all patents, trademarks, servicemarks, trade names,
registered user names and copyrights, and applications for registration of the
foregoing, included in the Intellectual Property. Except as set forth on such
Schedule 3.15, the Intellectual Property is owned by Seller and Seller has no
actual knowledge that any Intellectual Property is not valid or in full force
and effect and Seller has not received any notice or claim that any of the
Intellectual Property is invalid or unenforceable by it. The Intellectual
Property and Know How which are owned by Seller are owned free and clear of any
material license, sub-license, agreement, right, understanding, judgment, order,
decree, stipulation, lien, charge or encumbrance other than those disclosed on
Schedule 3.15 which individually or in the aggregate might have a materially
adverse effect on Purchaser's operation of the Business. To the knowledge of
Seller, Xxxxxx, Xxxxx or Xxxxx, the rights being transferred to Purchaser
pursuant to this Agreement constitute all such rights necessary to conduct the
Business as currently conducted. None of the Intellectual Property or any of the
technology covered thereby or any of the Know-How has been misappropriated from
any Person. To knowledge of Seller, Xxxxxx, Xxxxx or Xxxxx, Seller is not
infringing upon or otherwise acting adversely to the Intellectual Property owned
by any other Person, and there is no claim or action by any Person pending, or
to the knowledge of Seller, Xxxxxx, Xxxxx or Xxxxx, threatened, with respect
thereto.
3.15.2 Except as set forth on Schedule 3.15, Seller,
Xxxxxx, Xxxxx and Xxxxx have no knowledge of any infringement or improper use by
any third party of the Intellectual Property or the Know-How, and there is no
action or proceeding instituted by Seller pending in which an act constituting
an infringement of any of the rights to the Intellectual Property or Know-How
was alleged to have been committed by a third party. Seller has not waived, nor
has Seller, by the failure to either exercise reasonable and customary business
practices or take reasonable business efforts, caused any waiver to occur as to
any rights to the Intellectual Property and Know-How so as to have the effect of
making Purchaser unable to operate the Business as currently conducted by Seller
or of allowing any other Person to compete more effectively with Purchaser (or
its subsidiaries) than it now does with Seller.
3.15.3 Schedule 3.15 hereto accurately discloses all
licenses, sublicenses or agreements relating to (i) the use by third parties of
the Intellectual Property and the Know-How, or (ii) the use thereof by Seller
pursuant to a license or sublicense agreement with a third
12
party. Except as set forth in Schedule 3.15, Seller is not in default and Seller
has no knowledge that any third party is in material default under any such
license, sublicense or agreement.
3.16 NO GUARANTIES. Except as set forth in Schedule 3.16 none
of the obligations or liabilities of the Business or of Seller incurred in
connection with its operation of the Business is guaranteed by or subject to a
similar contingent obligation of any other Person, firm or corporation, nor has
Seller guaranteed or become subject to a similar contingent obligation in
respect of the obligations or liabilities of any other Person, firm or
corporation.
3.17 RECEIVABLES. All of the Seller's receivable and
work-in-process ("WIP") constituting Assets (including accounts receivable and
loans receivable) have arisen only from bona fide transactions in the ordinary
course of business. To the knowledge of Seller, Xxxxxx, Xxxxx or Xxxxx, all of
the receivable aged 90 days or less are collectible in full and none are subject
to any claims of set-off or reduction. Schedule 3.17 hereto accurately lists as
of the close of business on January 31, 1998, all receivable of Seller and WIP
(which schedule will be promptly updated after Closing to reflect receivable and
WIP as of Closing), the amount owing and the aging of such receivable, the
amount billable for WIP and the name and last known address of the party from
whom such receivable and eventual payment of such WIP is and will be owing. No
security exists for the payment of any receivable. To the knowledge of Seller,
Xxxxxx, Xxxxx or Xxxxx, all WIP will mature into collectible accounts receivable
for which full payment will be received after the Closing.
3.18 ABSENCE OF CERTAIN BUSINESS PRACTICES. Neither Seller nor
any officer, employee or agent of Seller, nor any other Person acting on their
behalf, has, directly or indirectly, within the past five years given or agreed
to give any gift or similar benefit to any customer, supplier, governmental
employee or other Person who is or may be in a position to help or hinder the
Business (or assist Seller in connection with any actual or proposed transaction
relating to the Business) which (i) might subject any Seller to any damage or
penalty in any civil, criminal or governmental litigation or proceeding, (ii) if
not given, might have had an adverse effect on the assets, business or
operations of the Business as reflected in the financial statements described in
Section 3.5, (iii) if not continued in the future, might adversely affect the
Business' assets, business, operations or prospects or which might subject
Seller to suit or penalty in any private or governmental litigation or
proceeding, (iv) was intended for any of the purposes described in Section
162(c) of the Code, or (v) was for the establishment or maintenance of any
concealed fund or concealed bank account.
3.19 DISCLOSURE. No representation or warranty by Seller,
Xxxxxx, Xxxxx or Xxxxx contained in this Agreement nor any statement or
certificate furnished or to be furnished by Seller, Xxxxxx, Xxxxx or Xxxxx to
Purchaser or its representatives in connection herewith or pursuant hereto
contains or will contain any untrue statement of a material fact, or knowingly
omits or will omit to state any material fact required to make the statements
herein or therein contained not misleading. Except as described in this
Agreement or in any schedules hereto, there is no fact (other than matters of a
general economic or political nature which do not uniquely affect the Business)
known to Seller, Xxxxxx, Xxxxx or Xxxxx which might reasonably be expected to
have a material adverse effect on the business, assets, properties, operations
13
(financial or other) or prospects of the Business. The representations and
warranties contained in this Section 3 or elsewhere in this Agreement or any
document delivered pursuant hereto shall not be affected or deemed waived by
reason of the fact that Purchaser and/or its representatives knew or should have
known that any such representation or warranty is or might be inaccurate in any
respect.
3.20 TERRITORIAL RESTRICTIONS. Other than as to the
"Smalltalk" line of products as restricted under Seller's agreement with IC&C
Gmbh, Seller is not restricted by any written agreement or understanding with
third parties from carrying on the Business anywhere in the world.
3.21 EMPLOYEES AND EMPLOYEE BENEFIT PLANS. Schedule 3.21 lists
each pension retirement, profit-sharing, deferred compensation, bonus or other
incentive plan, or program arrangement, agreement or other understanding, or
medical, vision, dental or other health plan, or life insurance or disability
plan, or any other employee benefit plan, including, without limitation, any
"employee benefit plan" as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), to which Seller contributes
or is a party or is bound or under which it may have liability and under which
employees or former employees (or their beneficiaries) are eligible to
participate or derive a benefit ("Employee Benefit Plans"). Seller has delivered
to Purchaser true, correct and complete copies of all Employee Benefit Plans. A
list of all of Seller's employees and their current levels of compensation are
set forth on Schedule 3.21.
3.22 INSURANCE. Schedule 3.22 sets forth a complete and
correct list and description of all of the policies of liability, property,
workers' compensation and other forms of insurance or bonds carried by Seller
for the benefit of or in connection with the Assets or the Business.
3.23 CONDUCT OF BUSINESS. Since December 31, 1997, Seller has
conducted the Business only in the ordinary course and consistent with its prior
practice and has maintained, kept and preserved the assets and properties of the
Business in good condition and repair in accordance with prior practices and has
used its best efforts (i) to preserve the business and organization of the
Business intact, (ii) to keep available to any prospective purchaser of the
Business the services of the Seller's employees and (iii) to preserve for any
prospective Purchaser the goodwill of the Seller's suppliers, customers, and
others having business dealing or relations with the Seller. Since January 1,
1998, Seller has not taken any action to modify or changes in any material
respect the pricing policies as to its services.
3.24 NO DISTRIBUTION. Seller agrees that it will be acquiring
the shares of Series A Convertible Preferred Stock for investment and other than
with respect to its stockholders incidental to Seller's redemption of its
stockholders' shares or Seller's liquidation, not with a view to resale,
fractionalization, disposition or distribution of all or any part thereof.
Seller is aware that neither the shares of Series A Convertible Preferred Stock
nor the shares of Common Stock issuable upon conversion thereof (the "Conversion
Shares") have been registered under the Securities Act of 1933, as amended (the
"Act") or the securities laws of any state and that the
14
same cannot be sold, transferred, pledged or conveyed unless registered under
the Act or the applicable laws of any state unless exempt from such registration
requirements. Seller has been provided such information it has requested
pertaining to Purchaser and has been given the opportunity to obtain additional
information necessary to verify the accuracy of the information received.
4. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser represents
and warrants to Seller as follows:
4.1 ORGANIZATION, STANDING AND QUALIFICATION. Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of Delaware, has all requisite corporate power and authority to enter into this
Agreement and the Basic Agreements to which it will be a party, and to carry out
the transactions contemplated by this Agreement, to carry on its business as now
being conducted and to own, lease or operate its properties. Purchaser is duly
qualified, licensed or domesticated and in good standing in each of the
jurisdictions where the nature of its activities conducted in connection with
its business or the character of the properties owned, leased or operated by it
in connection with its business requires such qualification, licensing or
domestication. Purchaser has delivered to Seller true and complete copies of its
Certificate of Incorporation and By-laws, as amended and in effect.
4.2 ORGANIZATION, STANDING AND QUALIFICATION OF SUBSIDIARY. In
the event that Purchaser assigns its rights, duties and obligations hereunder to
a wholly-owned subsidiary (the "Subsidiary"), Subsidiary will be duly organized,
validly existing and in good standing under the laws of Delaware, will have all
requisite corporate power and authority to enter into this Agreement and the
Basic Agreements to which it will be a party, and to carry out the transactions
contemplated by this Agreement, to carry on its business as now being conducted
and to own, lease or operate its properties. Subsidiary will be duly qualified,
licensed or domesticated and in good standing in each of the jurisdictions where
the nature of its activities conducted in connection with its business or the
character of the properties owned, leased or operated by it in connection with
its business will require such qualification, licensing or domestication.
Subsidiary will deliver to Seller true and complete copies of its Certificate of
Incorporation and By-laws, as amended and in effect.
4.3 AUTHORIZATION AND APPROVAL OF AGREEMENT. All proceedings
or corporate action required to be taken by Purchaser (and Subsidiary) relating
to the execution and delivery of this Agreement and the Basic Agreements and the
consummation of the transactions contemplated hereby and thereby shall have been
taken at or prior to the Closing.
4.4 EXECUTION, DELIVERY AND PERFORMANCE OF AGREEMENTS;
AUTHORITY. The execution, delivery and performance of this Agreement by
Purchaser (and Subsidiary) and the Basic Agreements by Purchaser (and
Subsidiary) will not, with or without the giving of notice or the passage of
time, or both, conflict with, result in a default, right to accelerate or loss
of rights under, result in the creation of any lien, charge or encumbrance
pursuant to, any provision of Purchaser's (and Subsidiary's) Certificate of
Incorporation or By-laws or any franchise, mortgage, deed of trust, lease,
license, agreement, understanding, law, rule or regulation or any
15
order, judgment or decree to which Purchaser (and Subsidiary) is a party or by
which Purchaser (and Subsidiary) may be bound or affected. Purchaser (and
Subsidiary) has the full power and authority to enter into the Basic Agreements
and to carry out the transactions contemplated therein. All proceedings required
to be taken by Purchaser (and Subsidiary) to authorize the execution, delivery
and performance of this Agreement, the Basic Agreements and the agreements
relating hereto will have been taken by the Closing. This Agreement and the
Basic Agreements constitute the legal valid and binding obligations of Purchaser
enforceable against Purchaser (and Subsidiary) in accordance with their terms.
4.5 BROKERS, FINDERS, ETC. All negotiations relating to this
Agreement and the transactions contemplated hereby have been carried on without
the intervention of any Person acting on behalf of Purchaser in such manner as
to give rise to any valid claim against Seller for any brokerage or finder's
commission, fee or similar compensation.
4.6 AUTHORIZATION. The execution of this Agreement and the
other Basic Agreements, the issuance of the shares of Series A Convertible
Preferred Stock to Seller and the issuance of shares of Common Stock upon
conversion of the shares of Series A Convertible Preferred Stock shall have been
duly authorized by Purchaser, and the Agreement and the other Basic Agreements
when executed and delivered to Seller pursuant hereto will constitute the valid
and binding obligations of Purchaser enforceable against Purchaser in accordance
with their terms.
4.7 LITIGATION. There is no legal action, suit, arbitration,
governmental investigation or other legal or administrative proceeding, nor any
order, decree or judgment in progress, pending or in effect, or to the knowledge
of Purchaser threatened against or relating to Purchaser in connection with or
relating to the transactions contemplated by this Agreement, and Purchaser does
not know, nor has any reason to be aware, of any basis for the same.
4.8 CAPITALIZATION. Immediately prior to the Closing, the
authorized capital stock of Purchaser shall consist of:
(a) PREFERRED STOCK. (i) A total of 6,000,000 shares
of Series A Convertible Preferred Stock, par value $.001 per share, of which
266,796 shares have been designated Series A-1 Convertible Preferred Stock none
of which are issued and outstanding.
(ii) A total of 5,000,000 shares of Series B
Convertible Preferred Stock, par value $.001 per share, of which 1,000,000
shares have been designated Series B-1 Convertible Preferred Stock, of which
none, are issued and outstanding.
(iii) A total of 5,000,000 shares of Series
Convertible Preferred Stock, par value $.001 per share, none of which are issued
and outstanding.
(b) COMMON STOCK. A total of 20,000,000 shares of
Common Stock, par value $.01 per share, of which 7,665,000 shares are issued and
outstanding.
16
(c) OPTIONS, WARRANTS, ETC. There are no outstanding
options, warrants or other rights or securities which constitute or which can be
exercised for or convertible into shares of Purchaser's stock, and Purchaser has
not entered into any agreement or made any commitment to complete any such
transaction other than those relating to warrants to be issued in connection
with any debt financing to be used to purchase the Assets hereunder. The
Purchaser's capitalization as of the Closing is as set forth on the
capitalization table attached hereto as Schedule 4.8.
(d) CAPITAL CONTRIBUTION. The amount of $1,067,183
has been paid as capital to Purchaser for the Series A-1 Convertible Preferred
Stock referred to in subsection (a)(i) of this Section 4.8.
4.9 VALID ISSUANCE. The Shares upon issuance will be duly and
validly issued, fully paid and non-assessable, free of any preemptive rights or
rights of first refusal. These shares of Common Stock issuable upon conversion
of the Shares will be duly and validly issued, fully paid and nonassessable and
free of preemptive rights or rights of first refusal.
4.10 CERTAIN SOFTWARE. Purchaser agrees and acknowledges that
the Assets do not include, and nothing in this Agreement or otherwise grants or
transfers any rights of any nature whatsoever to Purchaser in, any copyrightable
works or original authorship (including but not limited to computer programs,
technical specifications, documentation, manuals, business plans and product
literature), ideas, know-how, processes, compilations of information, or other
intellectual property relating to Advance for JAVA.
5. COVENANTS OF SELLER. In the event this Agreement is executed prior
to the Closing, the following covenants shall apply:
5.1 AFFIRMATIVE COVENANTS AS TO THE BUSINESS. On and after the
date of this Agreement and until the Closing Date or the date, if any, on which
this Agreement is earlier terminated and abandoned pursuant to Section 7 hereof
(the "Termination Date"), Seller shall:
(a) conduct its operations according to its ordinary
and usual course of business consistent with past practice; and
(b) use its best efforts to preserve intact its
business organization and goodwill, to keep available the services of its
officers and directors, and to maintain satisfactory relationships with
suppliers, distributors, licensors, licensees, customers, employees and others
having business relationships with it.
5.2 NEGATIVE COVENANTS AS TO THE BUSINESS. Without limiting the
generality of the foregoing, and except for actions to be taken in connection
with any of the transactions contemplated by this Agreement, and except for the
exercise of any outstanding stock options of Seller, without the prior written
consent of Purchaser, Seller shall not, on or after the date of this Agreement
and until the earlier of the Closing Date or the Termination Date:
17
(a) declare or pay any cash dividends on its
outstanding shares of capital stock;
(b) merge with, consolidate with, sell its assets to
or acquire substantially all the assets or capital stock of, any other
corporation or Person, or enter into any other transaction not in the ordinary
and usual course of its business;
(c) incur any indebtedness for borrowed money or
guarantee any such indebtedness or issue or sell any debt securities or
guarantee any debt securities of others, except that Seller may incur
indebtedness consistent with prior practice;
(d) make any direct or indirect redemption, purchase
or other acquisition of any of its capital stock;
(e) make any capital expenditures in excess of
$5,000;
(f) create or amend any pension or profit sharing
plan, bonus, deferred compensation, death benefit, or retirement plan, or any
other fringe benefit plan or program;
(g) amend its articles of incorporation or by-laws,
as amended to the date of this Agreement;
(h) issue any shares of its capital stock, effect any
stock split or otherwise change its capitalization as it exists on the date of
this Agreement;
(i) grant, confer or award any options, warrants,
conversion rights or other rights, not existing on the date of this Agreement,
to acquire any shares of its capital stock;
(j) enter into any agreement or make any undertaking
which could be violated, or create obligations which could be accelerated, as a
result of changes or developments or the absence of changes or developments in,
the business, assets, earnings, operations or condition, financial or otherwise,
of any other party hereto;
(k) make any material changes in any of its
respective management employment arrangements; or
(l) enter into any commitments involving payments by
or to Seller in excess of $5,000;
5.3 ACCESS TO INFORMATION AND CUSTOMERS. Seller shall (i)
afford to Purchaser and to its officers, employees, accountants, counsel and
other authorized representatives reasonable access, throughout the period prior
to the earlier of the Closing Date or the Termination Date, to its properties,
books and records; (ii) use its best efforts to cause its representatives to
furnish to Purchaser and to its authorized representatives such additional
financial and operating data and other information as to its business and
properties as Purchaser
18
or its duly authorized representatives may from time to time reasonably request;
and (iii) afford Purchaser and its representatives reasonable access, throughout
the period prior to the earlier of the Closing Date or the Termination Date, to
its present and potential customers, and Purchaser and its authorized
representatives shall have the right to contact such customers and conduct such
due diligence investigation relating to customer relations as Purchaser deems
reasonably necessary or appropriate.
5.4 ACQUISITION PROPOSALS. Seller shall not, directly or
indirectly, through any officer, director, agent, representative (including,
without limitation, investment bankers, attorneys and accountants) or otherwise,
(i) solicit, initiate or encourage submission of inquiries, proposals or offers
from any Person, corporation, partnership or other entity or group other than
Purchaser (a "Third Party"), relating to any acquisition or purchase of all or a
portion of the assets of, or any equity interest in, Seller; or (ii) participate
in any discussions or negotiations regarding, or furnish to any Third Party any
information with respect to, or otherwise cooperate in any way with, or assist
or participate in, facilitate or encourage, any effort or attempt by any Third
Party to do or seek any of the foregoing. Seller shall promptly notify Purchaser
if any such proposal or offer, or any inquiry or contact with any Third Party
with respect thereto, is made, and shall in any such notice set forth in
reasonable detail the identity of the Third Party and the terms and conditions
of such inquiry, proposal or offer.
5.5 PUBLIC ANNOUNCEMENTS. On or after the date of this
Agreement and until the earlier of the Closing Date or the Termination Date,
other than as required to obtain any document or agreement required under
Section 6.1.6 of this Agreement, Seller shall not furnish any written
communication to its customers, creditors or to the public generally if the
subject matter thereof relates to the transactions contemplated by this
Agreement without the prior approval of Purchaser as to the content thereof;
provided, however, that the foregoing shall not be deemed to prohibit any
disclosure required by any applicable law or by any governmental authority
having jurisdiction over such matters.
5.6 NOTIFICATION OF CERTAIN MATTERS. Seller shall give prompt
notice to Purchaser and Purchaser shall give prompt notice to Seller, of (i) the
occurrence, or failure to occur, of any event which occurrence of failure would
be likely to cause any representation or warranty of Seller contained in this
Agreement to be untrue or inaccurate in the Closing Date; and (ii) any material
failure of Seller, or of any officer, director, employee or agent of Seller, to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by it under this Agreement.
5.7 BEST EFFORTS. Seller agrees to use its best efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, all
things reasonably necessary, proper or advisable to consummate and make
effective the transactions contemplated by this Agreement, including, without
limitation, obtaining all authorizations, consents, waivers and approvals as may
be required.
5.8 EXECUTION OF ADDITIONAL DOCUMENTS. Seller will at any
time, and from time to time after the Closing Date, upon request of Purchaser,
execute, acknowledge and deliver
19
all such further deeds, assignments, transfers, conveyances, powers of attorney
and assurances, and take all such further action, as may be required to carry
out the intent of this Agreement, and to transfer and vest title to any Asset
being transferred hereunder, and to protect the right, title and interest in and
enjoyment of all of the Assets sold, granted, assigned, transferred, delivered
and conveyed pursuant to this Agreement; provided, however, that this Agreement
shall be effective regardless of whether any such additional documents are
executed.
6. CONDITIONS OF CLOSING.
6.1 PURCHASER'S CONDITIONS OF CLOSING. The obligation of
Purchaser to purchase and pay for the Assets and to assume the liabilities and
obligations set forth herein shall be subject to and conditioned upon the
satisfaction at the Closing of each of the following conditions:
6.1.1 All representations and warranties of Seller
contained in this Agreement and the Schedules hereto shall be true and correct
at and as of the Closing Date and Seller shall have performed all agreements and
covenants and satisfied all conditions on its part to be performed or satisfied
by the Closing Date pursuant to the terms of this Agreement, and Purchaser shall
have received a certificate of an authorized officer of Seller dated the Closing
Date to such effect;
6.1.2 There shall have been no material adverse
change since the date of the Unaudited Balance Sheet in the financial condition,
business or affairs of Seller, and Seller shall not have suffered any material
loss (whether or not insured) by reason of physical damage caused by fire,
earthquake, accident or other calamity which substantially affects the value of
its assets, properties or business, and Purchaser shall have received a
certificate of the principal financial officer of Seller dated the Closing Date
to such effect;
6.1.3 Seller shall have delivered to Purchaser a
Certificate of the Secretary of State (or other authorized public official) of
Seller's jurisdiction of incorporation certifying as of a date reasonably close
to the Closing Date that Seller has filed all required reports, paid all
required fees and taxes, and is, as of such date, in good standing and
authorized to transact business as a domestic corporation;
6.1.4 Seller shall have executed and delivered the
Escrow Agreement to Purchaser and the Escrow Agent;
6.1.5 Purchaser shall have received from Xxxxxx,
Xxxxxxx & Xxxxxxx, LLP, counsel for Seller, an opinion, dated the Closing Date,
in form and substance satisfactory to Purchaser and its counsel in the form
attached hereto as Exhibit C;
6.1.6 Seller shall have obtained all authorizations,
consents, waivers and approvals as may be required in connection with the
assignment of those contracts, agreements, licenses, leases, sales orders,
purchase orders and other commitments to be assigned to Purchaser pursuant to
this Agreement;
20
6.1.7 Seller shall have executed and delivered the
Xxxx of Sale, and Assignment Agreement to Purchaser in the form attached hereto
as Exhibit D;
6.1.8 Xxxxxx shall have executed for the benefit of
Purchaser a Non-Competition Agreement in the form attached hereto as Exhibit E;
6.1.9. Purchaser shall have determined to its
reasonable satisfaction that the amount required to satisfy the Obligations does
not exceed $1,800,000;
6.1.10 Xxxxxx and Purchaser shall have executed,
contingent on Closing, a lease for the premises at 000 X. Xxxxxxxx, Xxx Xxxxx,
Xxxxxxxx in the form attached hereto as Exhibit F;
6.1.11 Purchaser shall have obtained such employment
agreements which it deems appropriate for current key employees of Seller other
than Xxxxxx;
6.1.12 Seller shall have delivered to Purchaser a
certificate of its corporate secretary certifying:
(a) Resolution of its stockholders and Board
of Directors authorizing execution of this Agreement and the execution,
performance and delivery of all agreements, documents and transactions
contemplated hereby; and
(b) The incumbency of its officers executing
this Agreement and all agreements and documents contemplated hereby;
6.1.13 Neither any investigation of Seller by
Purchaser, nor the Schedules attached hereto or any supplement thereto nor any
other document delivered to Purchaser as contemplated by this Agreement, shall
have revealed any facts or circumstances which, in the sole and exclusive
judgment of Purchaser and regardless of the cause thereof, reflect in an adverse
way on Seller or its financial condition, assets, liabilities (absolute,
accrued, contingent or otherwise), reserves, business, operations or prospects.
6.1.14 The approval and all consents from third
parties and governmental agencies required to consummate the transactions
contemplated hereby shall have been obtained;
6.1.15 No suit, action, investigation, inquiry or
other proceeding by any governmental body or other Person or legal or
administrative proceeding shall have been instituted or threatened which
questions the validity or legality of the transactions contemplated hereby; and
6.1.16 As of the Closing, there shall be no effective
injunction, writ, preliminary restraining order or any order of any nature
issued by a court of competent jurisdiction directing that the transactions
provided for herein or any of them not be
21
consummated as so provided or imposing any conditions on the consummation of the
transactions contemplated hereby, which is unduly burdensome on Purchaser.
6.2 SELLER'S CONDITIONS OF CLOSING. The obligation of Seller
to sell, grant, convey, assign, transfer and deliver the assets shall be subject
to and conditioned upon the satisfaction at the Closing of each of the following
conditions:
6.2.1 All representations and warranties of Purchaser
contained in this Agreement shall be true and correct at and as of the Closing
Date and Purchaser shall have performed all agreements and covenants and
satisfied all conditions on its part to be performed or satisfied by the Closing
Date pursuant to the terms of this Agreement, and Seller shall have received a
certificate of Purchaser dated the Closing Date to such effect.
6.2.2 Purchaser shall have effected payment of the
Purchase Price (less the Escrow Fund) in accordance with the prior written
instructions of Seller, including the delivery of the certificates representing
the shares of Series A-1 Convertible Preferred Stock ;
6.2.3 Purchaser shall have executed the Escrow
Agreement and delivered to the Escrow Agent the funds and Shares subject
thereto;
6.2.4 Purchaser shall have executed and delivered the
Xxxx of Sale, Assignment and Assumption Agreement to Seller;
6.2.5 Purchaser shall have delivered to Seller a
certificate of its corporate Secretary certifying:
(a) Resolutions of its Board of Directors
authorizing execution of this Agreement and the execution, performance and
delivery of all agreements, documents and transactions contemplated hereby; and
(b) The incumbency of its officers executing
this Agreement and all agreements and documents contemplated hereby.
6.2.6 The approval and all consents from third
parties and governmental agencies required to consummate the transactions
contemplated hereby shall have been obtained;
6.2.7 No suit, action, investigation, inquiry or
other proceeding by any governmental body or other Person or legal or
administrative proceeding shall have been instituted or threatened which
questions the validity or legality of the transactions contemplated hereby; and
6.2.8 As of the Closing, there shall be no effective
injunction, writ, preliminary restraining order or any order of any nature
issued by a court of competent jurisdiction directing that the transactions
provided for herein or any of them not be
22
consummated as so provided or imposing any conditions on the consummation of the
transactions contemplated hereby, which is unduly burdensome on Seller.
6.2.9 Purchaser shall have executed and delivered to
Xxxxxx, a license in the form attached hereto as Exhibit G, whereby Purchaser
will grant to Xxxxxx, his affiliates and related corporations (collectively, the
"Licensee") a perpetual, worldwide license to use the pending patent commonly
referred to as "JADE" to incorporate such technology into Licensee's products,
to further develop such technology, to sublicense such technology to the extent
that it is incorporated into Licensee's products, and to assign and fully
transfer such license to any third party upon the sale of substantially all of
the assets of Licensee, or the stock sale or merger of Licensee.
7. TERMINATION AND ABANDONMENT.
7.1 REASONS FOR TERMINATION. Anything herein or elsewhere to
the contrary notwithstanding, this Agreement may be terminated and abandoned at
any time after the date of this Agreement but not later than the Closing:
7.1.1 by the mutual consent of Seller and Purchaser;
or
7.1.2 by Purchaser at any time after April 30, 1998
if, by that date, the conditions set forth in Section 6.1 of this Agreement
shall not have been fulfilled or waived; or
7.1.3 by Seller at any time after April 30, 1998 if,
by that date, the conditions set forth in Section 6.2 of this Agreement shall
not have been fulfilled or waived; or
7.1.4 by Purchaser at any time if any investigation
of Seller by Purchaser, or any Schedule hereto or any other document delivered
to Purchaser as contemplated by this Agreement, shall have revealed any facts or
circumstances which, in the sole and exclusive judgment of Purchaser and
regardless of the cause thereof, reflect in an adverse way on Seller or its
financial condition, assets, liabilities (absolute, contingent or otherwise),
reserves, business, operations or prospects; or
7.1.5 by Purchaser or by Seller at any time if there
has been a material breach of any representation or warranty made by the other
party herein or in any certificate or other document delivered pursuant hereto
or if there has been any failure by the other party to perform in all material
respects all obligations or to comply with all covenants on its part to be
performed hereunder; or
7.2 PROCEDURE UPON AND EFFECT OF TERMINATION. In the event of
any termination and abandonment pursuant to Section 7.1 of this Agreement,
written notice thereof shall forthwith be given to the other party and the
transactions contemplated by this Agreement shall thereupon be terminated and
abandoned, without further action by Purchaser or Seller , and there shall be no
liability on the part of Seller or Purchaser or their respective officers,
directors or shareholders, except for the
23
provisions of Section 3.9 of this Agreement or except for the material breach of
any representation, warranty or covenant contained herein that is within the
control of the party in breach.
8. INDEMNIFICATION.
8.1 INDEMNIFICATION BY SELLER, XXXXXX, XXXXX AND XXXXX. Upon
the terms and subject to the conditions set forth in Section 8.3 hereof and this
Section 8.1, Seller, Xxxxxx, Xxxxx and Xxxxx agree to indemnify and hold
Purchaser harmless against, and will reimburse Purchaser on demand for, any
payment, loss, cost, expense, or claim (including reasonable attorney's fees and
reasonable costs or expenses of investigation incurred in defending against such
payment, loss, costs or expense or claim therefor) made or incurred by or
asserted against Purchaser at any time after the Closing Date in respect of:
(a) any and all liabilities or obligations of Seller,
or claims against or imposed on Purchaser, of any nature (whether accrued,
absolute, contingent or otherwise and whether a contractual, tax or other type
of liability, obligation or claim) not assumed by Purchaser pursuant to this
Agreement; and
(b) any and all damage or deficiency resulting from
any omission, misrepresentation, breach of warranty , representation or
nonfulfillment of any term, provision, covenant or agreement on the part of
Seller, Xxxxxx, Xxxxx or Xxxxx, as the case may be, contained in this Agreement,
or from any misrepresentation in, or omission from, any certificate or other
instrument furnished or to be furnished to Purchaser pursuant to this Agreement.
8.2 INDEMNIFICATION BY PURCHASER. Upon the terms and subject
to the conditions set forth in Section 8.3 hereof and this Section 8.2,
Purchaser agrees to indemnify and hold Seller harmless against, and will
reimburse Seller on demand for, any payment, loss, cost or expense (including
reasonable attorney's fees and reasonable costs of investigation incurred in
defending against such payment, loss, cost or expense or claim therefor) made or
incurred by or asserted against Seller at any time after the Closing Date in
respect of any omission, misrepresentation, breach of representation or
warranty, or nonfulfillment of any term, provision, covenant or agreement on the
part of Purchaser contained in this Agreement, or from any misrepresentation in,
or omission from, any certificate or other instrument furnished or to be
furnished to Seller pursuant to this Agreement.
8.3 CONDITIONS OF INDEMNIFICATION. With respect to any actual
or potential claim, any written demand, the commencement of any action, or the
occurrence of any other event which involves any matter or related series of
matters (a "Claim") against which a party hereto is indemnified (the
"Indemnified Party") by the other party (the "Indemnifying Party") under Section
8.1 or 8.2 hereof:
8.3.1 Promptly after the Indemnified Party first
receives written documents pertaining to the Claim, or if such Claim does not
involve a third party Claim (a "Third Party Claim"), promptly after the
Indemnified Party first has actual knowledge of such Claim, the Indemnified
Party shall give notice to the Indemnifying Party of such Claim in
24
reasonable detail and stating the amount involved, if known, together with
copies of any such written documents.
8.3.2 The Indemnifying Party shall have no obligation
to indemnify the Indemnified Party with respect to any Claim if (i) the
Indemnified Party fails to give the notice with respect thereto in accordance
with Section 8.3.1 hereof, or (ii) the notice with respect thereto is not given
on or before the third anniversary of the Closing Date.
8.3.3 If the Claim involves a Third Party Claim, then
the Indemnifying Party shall have the right, at its sole cost, expense and
ultimate liability regardless of the outcome, and through counsel of its choice
(which counsel shall be reasonably satisfactory to the Indemnified Party), to
litigate, defend, settle or otherwise attempt to resolve such Third Party Claim;
provided, however, that if in the Indemnified Party's reasonable judgment a
conflict of interest may exist between the Indemnified Party and the
Indemnifying Party with respect to such Third Party Claim, the Indemnified Party
shall be entitled to select counsel of its own choosing, reasonably satisfactory
to the Indemnifying Party, in which event the Indemnifying Party may elect, at
any time and at the Indemnified Party's sole cost, expense and ultimate
liability, regardless of the outcome, and through counsel of its choice, to
litigate, defend, settle or otherwise attempt to resolve such Third Party Claim.
If the Indemnified Party so elects (for reasons other than the Indemnifying
Party's failure or refusal to provide a defense to such Third Party Claim), the
then Indemnifying Party shall have no obligation to indemnify the Indemnified
Party with respect to such Third Party Claim, but such disposition will be
without prejudice to any other right the Indemnified Party may have to
indemnification under Section 8.1 or 8.2 hereof, regardless of the outcome of
such Third Party Claim. If the Indemnifying Party fails or refuses to provide a
defense to any Third Party Claim, then the Indemnified Party shall have the
right to undertake the defense, compromise or settlement of such Third Party
Claim, through counsel of its choice, on behalf of and for the account and at
the risk of the Indemnifying Party, and the Indemnifying Party shall be
obligated to pay the costs, expenses and attorney's fees incurred by the
Indemnified Party in connection with such Third Party Claim. In any event,
Purchaser and Seller shall fully cooperate with any such litigation, defense,
settlement or other attempted resolution.
8.3.4 Notwithstanding anything to the contrary
herein, no payment with respect to any Claim or Claims shall be made to the
extent such Claim or Claims do not exceed, singularly or in the aggregate, Fifty
Thousand Dollars ($50,000); provided, however, such limitation with respect to
Section 8.1 shall not apply to any Third Party Claim which Xxxxxx & Xxxxx or any
successor thereof asserts. At such time that any Claim or Claims exceed,
singularly or in the aggregate, Fifty Thousand Dollars ($50,000), then the
obligation of an Indemnifying Party hereunder shall arise in connection with any
such excess.
8.3.5 In no event will the total of ail Claims for
which indemnification is sought under Section 8.1 or Section 8.2 exceed One
Million Four Hundred Thousand Dollars ($1,400,000) (the "Cap"); provided,
however, such limitation with respect to Section 8.1 shall not apply to any
Third Party Claim which Xxxxxx & Xxxxx or any successor thereof asserts. In no
event shall Purchaser's right to obtain indemnification, or any other direct or
indirect payment
25
from Xxxxxx, Xxxxx and Xxxxx under Section 8.1 for any Claim be in excess of the
percentages of such Claim set forth on Schedule 8.3.5 hereof. Notwithstanding
anything contained in the Agreement to the contrary, Purchaser's right to obtain
indemnification from Xxxxxx, Xxxxx and Xxxxx for Claims under Section 8.1 is
limited as follows: (a) as to Claims against Xxxxxx, 76.92% of any one Claim and
76.92% of the Cap for the aggregate of all Claims during the entire
indemnification period and (b) as to Claims against each of Xxxxx or Xxxxx
11.54% of any one Claim and 11.54% of the Cap for the aggregate of all Claims
during the entire indemnification.
8.4 REMEDY OF PURCHASER. Whenever Purchaser is the Indemnified
Party, Purchaser shall have the right to obtain satisfaction of its indemnified
claim from the Escrow Fund in accordance with and subject to the terms of the
Escrow Agreement.
9. MISCELLANEOUS.
9.1 NOTICES. Any notice, consent, approval, request, demand or
other communication required or permitted hereunder must be in writing to be
effective and shall be deemed delivered and received (i) if personally delivered
including by a nationally recognized overnight delivery service such as FedEx,
or if delivered by telex or telecopy with electronic confirmation when actually
received by the party to whom sent, or (ii) if delivered by mail (whether
actually received or not), at the close of business on the third business day
next following the day when placed in the federal mail, postage prepaid,
certified or registered mail, return receipt requested, addressed as follows:
If to Purchaser: AppNet of Michigan, Inc.
AppNet Systems, Inc.
Xxxxx 000
0000 Xxxxxx Xxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Attn.: President
Fax:
-------------------
Copy to Xxxx X. Xxxxxxx
Michaels, Xxxxxxx & Xxxxxx, PC
0000 Xxxxxxxxxxx Xxxxxx, XX
Xxxxxxxxxx, XX 00000
Fax: (000) 000-0000
E-Mail: xxxxxxxx@xxxxxxxx.xxx
If to Seller: Arbor Intelligent Systems, Inc.
c/o Xxxxxx Xxxxxx
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
E-Mail: xxx@xxxxxx-xxxxxxx.xxx
26
and
Arbor Intelligent Systems, Inc.
c/o Xxx Xxxxx
0000 Xxxxxxxx Xxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
E-Mail: xxxxxx@xxxxx.xxx
Copy to: Xxxxx X. Xxxxxxxxx
Xxxxxx, Xxxxxxx & Xxxxxxx, LLP
000 Xxxxxx
Xxxxx 000
Xxx Xxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
E-Mail: xxxxxxxxxx.xxx@xxxxxxx.xxx
(or to such other address as any party shall specify by written notice so
given).
9.2 INCIDENTAL ("PIGGYBACK") REGISTRATION RIGHTS. a) If the
Purchaser at any time (except with respect to the Purchaser's initial public
offering) proposes to register any of its Common Stock under the Act for sale to
the public (except with respect to registration statements on Forms X-0, X-0,
any forms replacing such forms, or any other form not available for registering
shares of Common Stock for sale to the public), each such time it will give
written notice to Seller or the holders of the Conversion Shares and Series A-1
Convertible Preferred Stock (the "Holders"), as the case may be, of its
intention so to do. Upon the written request of any Holder, given within 15 days
after receipt of any such notice, to register any of the Holder's Conversion
Shares (which request shall state the intended method of disposition thereof),
the Purchaser will use its best efforts to cause the Conversion Shares as to
which registration shall have been so requested to be included in the
registration statement proposed to be filed by the Purchaser, all to the extent
requisite to permit the sale or other disposition by the Holder (in accordance
with its written request) of such Conversion Shares. In the event that any
registration pursuant to this Section 9.2 shall be, in whole or in part, an
underwritten public offering of Common Stock, any request by a Holder pursuant
to this Section 9.2 to register Conversion Shares shall be subject to the
Holder's participation in such underwriting on the same terms and conditions as
the shares of Common Stock otherwise being sold through underwriters under such
registration. If, in connection with any registration under this Section 9.2 ,
the managing underwriters advise the Purchaser in writing that in their opinion
the number of shares requested to be included in such registration exceeds the
number which can be sold in an orderly manner in such offering within a price
range acceptable to the Purchaser, the Purchaser will include in such
registration (x) first, all shares the Purchaser proposes to register for which
consideration was paid in cash therefore, and (y) second, all other shares
requested to be included in such registration, pro rata among the holders of
such shares on the basis of the number of shares requested to be registered by
each such holder. Notwithstanding anything to the contrary contained in this
Section 9.2, in the event that there is a firm commitment underwritten offering
27
of shares of the Purchaser pursuant to a registration covering any shares of
Common Stock and a Holder does not elect to sell all of that Holder's Conversion
Shares to the underwriters of the Purchaser's shares in connection with such
offering, such Holder shall refrain from selling any Conversion Shares not so
sold during the period of distribution of the Purchaser's shares by such
underwriters and the period in which the underwriting syndicate participates in
the aftermarket; PROVIDED, HOWEVER that such Holder shall, in any event, be
entitled to sell Conversion Shares commencing on the 180th day after the
effective date of such registration statement.
(b) All expenses incurred in complying with this
Section 9.2, including, without limitation, all registration and filing fees,
printing expenses, fees and disbursements of counsel and independent public
accountants for the Purchaser, fees of the National Association of Securities
Dealers, Inc., transfer taxes, fees of transfer agents and registrars, costs of
insurance and the fees and expenses of counsel for the Purchaser, but excluding
any Selling Expenses, are herein called "Registration Expenses". All
underwriting discounts and selling commissions applicable to the sale of shares
are herein called "Selling Expenses". The Purchaser will pay all Registration
Expenses in connection with each registration statement filed pursuant to
Section 9.2 hereof. In connection with each registration statement filed
pursuant to Section 9.2 hereof, each Holder will pay all Selling Expenses
directly related to that Holder's shares.
9.3 BINDING EFFECT; BENEFITS. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assign. Notwithstanding anything contained in this Agreement to
the contrary, nothing in this Agreement, expressed or implied, is intended to
confer on any Person other than the parties hereto or their respective
successors and assigns any rights, remedies, obligations or liabilities under or
by reason of this Agreement.
9.4 ENTIRE AGREEMENT. This Agreement, together with the
Exhibits, Schedules and other documents contemplated hereby, constitute the
final written expression of all of the agreements between the parties, and is a
complete and exclusive statement of those terms. It supersedes all
understandings and negotiations concerning the matters specified herein. Any
representations, promises, warranties or statements made by any party that
differ in any way from the terms of this written Agreement, and the Exhibits,
Schedules and other documents contemplated hereby, shall be given no force or
effect. The parties specifically represent, each to the other, that there are no
additional or supplemental agreements between them related in any way to the
matters herein contained unless specifically included or referred to herein. No
addition to or modification of any provision of this Agreement shall be binding
upon any party unless made in writing and signed by all parties except that in
the event that Seller assigns the shares of Series A-1 Convertible Preferred
Stock to its stockholders any amendment of this Agreement shall be effective
when made in writing and signed by Purchaser and the holders of a majority of
the issued and outstanding Conversion Shares issued and issuable upon conversion
of the Series A-1 Convertible Preferred Stock issued to Purchaser hereunder.
9.5 GOVERNING LAW. THIS AGREEMENT, AND ALL QUESTIONS RELATING
TO ITS VALIDITY, INTERPRETATION, PERFORMANCE AND ENFORCEMENT (INCLUDING, WITHOUT
LIMITATION, PROVISIONS CONCERNING
28
LIMITATIONS OF ACTION), SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF MICHIGAN (EXCLUSIVE OF THE CONFLICT OF LAW PROVISIONS THEREOF)
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH SATE.
9.6 SURVIVAL. All of the terms, conditions, covenants,
agreements warranties, and representations contained in this Agreement shall
survive, in accordance with their terms, delivery by Purchaser of the
consideration to be given by it hereunder and delivery by Seller of the
consideration to be given by them hereunder, and shall survive the execution
hereof and the Closing hereunder.
9.7 COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original but all of which
shall constitute one and the same instrument; but in making proof of this
Agreement, it shall not be necessary to produce or account for more than one
such counterpart. It is not necessary that each party hereto execute the same
counterpart, so long as identical counterparts are executed by all parties.
9.8 HEADINGS. Headings of the Sections of this Agreement are
for the convenience of the parties only, and shall be given no substantive or
interpretive effect whatsoever.
9.9 WAIVERS. Any party hereto may, by written notice to the
other party hereto, (i) extend the time for the performance of any of the
obligations or other actions of the other party under this Agreement, (ii) waive
any inaccuracies in the representations or warranties of the other party
contained in this Agreement or in any document delivered pursuant to this
Agreement; (iii) waive compliance with any of the conditions or covenants of the
other party contained in this Agreement; or (iv) waive performance of any of the
obligations of the other party under this Agreement; provided, however, the
waiver of any condition to Closing by Purchaser or Seller shall not affect
Purchaser's or Seller's right to obtain indemnification hereunder. Except as
provided in the preceding sentence, no action taken pursuant to this Agreement,
including without limitation any investigation by or on behalf of any party,
shall be deemed to constitute a waiver by the party taking such action of
compliance with any presentations, warranties, covenants or agreements contained
in this Agreement. The waiver by any party hereto of a breach of any provisions
hereunder shall not operate or be construed as a waiver of any prior or
subsequent breach of the same or any other provision hereunder.
9.10 MERGER OF DOCUMENTS. This Agreement and all agreements
and documents contemplated hereby constitute one agreement and are
interdependent upon each other in all respects.
9.11 INCORPORATION OF EXHIBITS AND SCHEDULES. All Exhibits and
Schedules attached hereto are by this reference incorporated herein and made a
part hereof for all purposes as if fully set forth herein.
29
9.12 SEVERABILITY. If for any reason whatsoever, any one or
more of the provisions of this Agreement shall be held or deemed to be illegal,
inoperative, unenforceable or invalid as applied to any particular case or in
all cases, such circumstances shall not have the effect of rendering such
provision illegal, inoperative, unenforceable or invalid in any other case or of
rendering any of the other provisions of this Agreement illegal, inoperative,
unenforceable or invalid. Furthermore, in lieu of each illegal, invalid,
unenforceable or inoperative provision, there shall be added automatically, as
part of this Agreement, a provision similar in terms of such illegal, invalid,
unenforceable or inoperative provision as may be possible and as shall be legal,
valid, enforceable and operative.
9.13 ASSIGNABILITY. Except as to the Purchaser's right to
assign its rights hereunder to a wholly-owned subsidiary (other than its duties
and obligations as to the Series A Convertible Preferred Stock), neither this
Agreement nor any of the parties' rights hereunder shall be assignable by any
party hereto without the prior written consent of the other parties hereto;
provided, however, that Purchaser's, or its successors or assigns, rights
hereunder may be assigned or otherwise transferred, in whole or in part, without
Seller's consent (i) to any successor by merger or consolidation, (ii) to any
bank or other financial institution, or to any individual, partnership,
corporation or other entity, providing any financing to Purchaser, its
successors or assigns, or (iii) to any individual, partnership, corporation or
other entity deriving title from Purchaser or its successors or assigns to all
or substantially all of the Assets as constituted on the date of any such
transfer. Any assignment of any of the Shares issued to Purchaser shall be made
subject to all rights and obligations pertaining to such Shares in accordance
with the provisions of the Basic Agreements.
9.14 REFERENCES. The use of the words "hereof," "herein,"
"hereunder," and words of similar import shall refer to this entire Agreement,
and not to any particular article, section, subsection, clause, or paragraph of
this Agreement, unless the context clearly indicates otherwise.
IN WITNESS WHEREOF, the parties have executed this Agreement and
caused the same to be duly delivered on their behalf on the day and year
hereinabove first set forth.
SELLER:
ARBOR INTELLIGENT SYSTEMS, INC.
By: /s/ Xxxxxx Xxxxx
--------------------------------
Xxxxxx Xxxxx
30
PURCHASER:
APPNET SYSTEMS, INC.
By: /s/ Xxx X. Xxxxx
--------------------------------
Xxx X. Xxxxx
APPNET OF MICHIGAN, INC.
By: /s/ Xxx X. Xxxxx
--------------------------------
Xxx X. Xxxxx
/s/ Xxxxxx Xxxxxx
-----------------------------------
Xxxxxx Xxxxxx
/s/ Xxxxxx Xxxxx
-----------------------------------
Xxxxxx Xxxxx
/s/ Xxxxxx Xxxxx
-----------------------------------
Xxxxxx Xxxxx
31
