EXHIBIT 2.3
ASSET CONTRIBUTION AGREEMENT
September 3, 1999
By and Among
THE INTERCEPT GROUP, INC.
(A Georgia Corporation)
NETZEE, INC.
(A Georgia Corporation)
And
THE BANKERS BANK
(A Georgia Banking Corporation)
TABLE OF CONTENTS
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ARTICLE 1. THE CONTRIBUTION..................................................................... 2
Section 1.1. Contribution of Assets......................................................... 2
Section 1.2. Assumption of Liabilities...................................................... 2
Section 1.3. Time and Place of Closing...................................................... 2
ARTICLE 2. [Reserved]........................................................................... 2
ARTICLE 3. CONSIDERATION AND PAYMENT OF CONSIDERATION........................................... 2
Section 3.1. Consideration.................................................................. 2
Section 3.2. Payment of Consideration....................................................... 3
Section 3.3. Adjustment of Company Common Stock............................................. 3
Section 3.4. Legending of Securities........................................................ 3
ARTICLE 4. RULES OF CONSTRUCTION................................................................ 4
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF THE TRANSFEROR..................................... 7
Section 5.1. Organization................................................................... 7
Section 5.2. Authority; No Violation........................................................ 7
Section 5.3. Financial Statements........................................................... 8
Section 5.4. Broker's and Other Fees........................................................ 9
Section 5.5. Absence of Certain Changes or Events........................................... 9
Section 5.6. Legal Proceedings.............................................................. 9
Section 5.7. Taxes and Tax Returns.......................................................... 9
Section 5.8. Employee Benefit Plans and Relations........................................... 9
Section 5.9. Compliance with Applicable Laws................................................ 10
Section 5.10. Certain Contracts.............................................................. 10
Section 5.11. Properties and Insurance....................................................... 11
Section 5.12. Environmental Matters.......................................................... 12
Section 5.13. Intellectual Property.......................................................... 12
(a) Ownership................................................................ 12
(b) Procedures for Copyright Protection...................................... 12
(c) Procedures for Trade Secret Protection................................... 12
(d) Absence of Claims........................................................ 12
Section 5.14. Adequacy of Technical Documentation............................................ 13
Section 5.15. Third-Party Components in Software............................................. 13
Section 5.16. Third-Party Interests or Marketing Rights in Software.......................... 13
Section 5.17. Absence of Certain Agreements and Practices.................................... 13
Section 5.18. Major Vendors and Customers.................................................... 14
Section 5.19. Accounts Receivable............................................................ 14
Section 5.20. Bank Accounts.................................................................. 14
Section 5.21. Combinations Involving the Division............................................ 14
Asset Purchase Agreement - Page i
Section 5.22. Labor Relations................................................................ 14
Section 5.23. Year 2000 Matters.............................................................. 15
Section 5.24. Securities Act Compliance...................................................... 15
Section 5.25. Access to Information.......................................................... 15
Section 5.26. Experience; Investment......................................................... 15
Section 5.27. Tax Advice..................................................................... 16
Section 5.28. Disclosure..................................................................... 16
ARTICLE 6. REPRESENTATIONS AND WARRANTIES OF INTERCEPT........................................... 16
Section 6.1. Corporate Organization......................................................... 17
Section 6.2. Authority; No Violation........................................................ 17
Section 6.3. Broker's and Other Fees........................................................ 17
Section 6.4. Legal Proceedings.............................................................. 18
Section 6.5. Disclosure..................................................................... 18
ARTICLE 7. REPRESENTATIONS AND WARRANTIES OF THE COMPANY......................................... 18
Section 7.1. Corporate Organization......................................................... 18
Section 7.2. Capitalization................................................................. 18
Section 7.3. Authority; No Violation........................................................ 19
Section 7.4. Financial Statements........................................................... 20
Section 7.5. Broker's and Other Fees........................................................ 21
Section 7.6. Absence of Certain Changes or Events........................................... 21
Section 7.7. Legal Proceedings.............................................................. 21
Section 7.8. Properties and Insurance....................................................... 21
Section 7.9. Intellectual Property.......................................................... 22
(a) Ownership............................................................... 22
(b) Procedures for Copyright Protection..................................... 22
(c) Procedures for Trade Secret Protection.................................. 22
(d) Absence of Claims....................................................... 23
(e) Third Party Interests in Software....................................... 23
Section 7.10. Adequacy of Technical Documentation............................................ 23
Section 7.11. Third-Party Components in Company's Software................................... 23
Section 7.12. Third-Party Interests or Marketing Rights in Software.......................... 23
Section 7.13. Compliance with Laws........................................................... 24
Section 7.14. Taxes and Tax Returns.......................................................... 24
Section 7.15. Corporate Records.............................................................. 25
Section 7.16. Combinations Involving the Company............................................. 25
Section 7.17. No Prior Operations............................................................ 25
Section 7.18. Diligence...................................................................... 25
Section 7.19. SBS Corporation................................................................ 25
Section 7.20. Disclosure..................................................................... 25
ARTICLE 8. COVENANTS AND AGREEMENTS OF THE PARTIES............................................... 25
Section 8.1. Conduct of Business............................................................ 25
Section 8.2. Negative Covenants............................................................. 26
Section 8.3. No Solicitation................................................................ 27
Asset Purchase Agreement - Page ii
Section 8.4. Current Information............................................................ 28
Section 8.5. Access to Properties and Records; Confidentiality.............................. 28
Section 8.6. Regulatory Matters; Consents; Cooperation, etc................................. 29
Section 8.7. Parties' Efforts; Further Assurances; Cooperation.............................. 29
Section 8.8. Public Announcements........................................................... 29
Section 8.9. Noncompetition, Nonsolicitation and Confidentiality Agreement.................. 29
Section 8.10. Disclosure Supplements......................................................... 30
Section 8.11. Cooperation and Exchange of Information........................................ 30
Section 8.12. Customer Contacts.............................................................. 30
Section 8.13. Employees...................................................................... 30
Section 8.14. Non-Assignable Purchased Contracts............................................. 30
ARTICLE 9. CLOSING CONDITIONS.................................................................... 31
Section 9.1. Conditions of Each Party's Obligations Under this Agreement.................... 31
(a) Approvals and Regulatory Filings.......................................... 31
(b) Suits and Proceedings..................................................... 31
Section 9.2. Conditions to the Obligations of InterCept and the Company under this
Agreement...................................................................... 32
(a) Representations and Warranties; Covenants and Agreements;
Consents.................................................................. 32
(b) Certificates.............................................................. 32
(c) Noncompetition, Nonsolicitation and Confidentiality Agreement............. 32
(d) Work Product Agreements................................................... 32
(e) No Material Adverse Effect on the Division................................ 33
(f) Lease..................................................................... 33
Section 9.3. Conditions to the Obligations of the Transferor under this Agreement........... 33
(a) Representations and Warranties; Covenants and Agreements
Consents.................................................................. 33
(b) Certificates.............................................................. 33
(c) Noncompetition, Nonsolicitation and Confidentiality Agreement............. 33
(d) No Material Adverse Effect................................................ 33
(e) Approvals................................................................. 33
(f) Registration Rights Agreement............................................. 34
(g) Marketing Agreement....................................................... 34
(h) Company's Board........................................................... 34
(i) Completion of Due Diligence on Company.................................... 34
(j) Lease..................................................................... 34
ARTICLE 10. TERMINATION, AMENDMENT AND WAIVER..................................................... 34
Section 10.1. Termination.................................................................... 34
Section 10.2. Effect of Termination.......................................................... 35
Section 10.3. Specific Performance........................................................... 35
Section 10.4. Amendment...................................................................... 35
Section 10.5. Extension; Waiver.............................................................. 35
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ARTICLE 11. INDEMNIFICATION......................................................................... 36
Section 11.1. Indemnification by the Transferor................................................. 36
Section 11.2. Indemnification by InterCept...................................................... 36
Section 11.3. Indemnification by Company........................................................ 36
Section 11.4. Claims for Indemnification........................................................ 37
Section 11.5. Defense of Claim by Third Parties................................................. 37
Section 11.6. Third Party Claim Assistance...................................................... 37
Section 11.7. Settlement of Indemnification Claims.............................................. 38
Section 11.8. Certain Limitations............................................................... 38
ARTICLE 12. MISCELLANEOUS........................................................................... 39
Section 12.1. Expenses.......................................................................... 39
Section 12.2. Notices........................................................................... 39
Section 12.3. Parties in Interest............................................................... 40
Section 12.4. Entire Agreement.................................................................. 40
Section 12.5. Counterparts...................................................................... 40
Section 12.6. Governing Law..................................................................... 41
Section 12.7. Arbitration....................................................................... 41
Section 12.8. Invalidity of any Part............................................................ 41
Section 12.9. Time of the Essence; Computation of Time.......................................... 41
Asset Purchase Agreement - Page iv
ASSET CONTRIBUTION AGREEMENT
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THIS ASSET CONTRIBUTION AGREEMENT (this "Agreement") is dated and effective
as of September 3, 1999, by and among THE INTERCEPT GROUP, INC., a Georgia
corporation ("InterCept"), NETZEE, Inc., a Georgia corporation (the "Company"),
and THE BANKERS BANK, a Georgia banking corporation (the "Transferor").
InterCept, the Company, and the Transferor are hereinafter collectively called
the "Parties."
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Transferor or The Bankers Bank (as defined below) owns, leases
or licenses all of the assets used in the Internet banking business conducted by
the Transferor (the "Division");
WHEREAS, the Transferor wishes to contribute to the Company, and the
Company wishes to acquire from the Transferor, certain assets of the Transferor,
as specified in Article 1, in exchange for shares of common stock of the
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Company;
WHEREAS, the contribution of the Transferred Assets (as defined below) by
the Transferor to the Company in exchange for Company Common Stock (as defined
below) (the "Contribution") will be effected pursuant to an overall plan of the
Company, which involves the following transactions:
a. The contribution of the Transferred Assets (as defined below);
b. The transfer by The Bankers Bank, a Georgia banking corporation
("The Bankers Bank"), of certain of its assets to the Company in exchange
for shares of Company Common Stock;
c. Direct Access Interactive, Inc., a Georgia corporation ("Direct
Access"), will be merged into the Company in exchange for shares of Company
Common Stock;
d. Dyad Corporation, a Georgia corporation ("Dyad") will be merged
into the Company in exchange for shares of Company Common Stock; and
e. The transfer of all of the membership interests in Call Me ▇▇▇▇,
LLC, a Kentucky limited liability company ("CMB"), to the Company in
exchange for cash.
WHEREAS, it is intended that the Contribution and above series of related
and integrated transactions (overall, the "Exchange") qualify for treatment
under Section 351 of the Internal Revenue Code of 1986, as amended (the "Code").
WHEREAS, the Boards of Directors of InterCept and the Company have approved
the terms and conditions set forth herein.
Asset Purchase Agreement - Page 1
ARTICLE 1
THE CONTRIBUTION
1.1 Contribution of Assets. Upon the terms and subject to the conditions
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of this Agreement, the Transferor shall contribute, assign, deliver and transfer
to the Company and the Company shall receive from the Transferor, all of the
Transferor's right, title and interest in and to the Division, specified or
described on Schedule 1.1, wherever such assets are located and whether
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personal, tangible or intangible, in electronic form or otherwise, and whether
or not any of such assets have any value for accounting purposes or are carried
or reflected on or specifically referred to in the Transferor's books or
financial statements, free and clear of all encumbrances except those that
relate to the Assumed Liabilities (as defined below). The properties, business
and assets of the Division, or otherwise utilized by the Division, and to be
transferred hereunder shall be referred to as the "Transferred Assets."
1.2 Assumption of Liabilities. Upon the terms and subject to the
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conditions of this Agreement, the Company agrees to assume at the Closing and
become responsible for all of the liabilities and obligations of Transferor set
forth on Schedule 1.2 and all liabilities and obligations of the Division
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accruing under or pursuant to each Non-Assignable Purchased Contract from and
after the date on which all consents required for the transfer and assignment of
such Non-Assignable Purchased Contract have been obtained and delivered to the
Company as contemplated by Section 8.14 hereto (the "Assumed Liabilities"). The
Company will not assume or have any responsibility, however, with respect to any
other obligation or liability of Transferor of any kind or nature whatsoever not
specifically included within the definition of Assumed Liabilities.
1.3 Time and Place of Closing. The consummation of the transactions
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contemplated by this Agreement (the "Closing") shall take place at the offices
of ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ at 10:00 a.m. on the first business day after all
conditions set forth in Article 9 have been met or at such other place and time
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as the Company and Transferor may agree (the "Closing Date"). At the Closing,
the parties shall execute and deliver the certificates, opinions and other
instruments and documents referred to in Article 9.
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ARTICLE 2
[Reserved]
ARTICLE 3
CONSIDERATION AND PAYMENT OF CONSIDERATION
3.1 Consideration. Subject to the terms of this Agreement and the related
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agreements and documents, the consideration for all of the Transferred Assets
and Assumed Liabilities (the "Consideration") shall be 1,361,000 shares of
common stock, no par value, of the Company ("Company Common Stock").
Asset Purchase Agreement - Page 2
3.2 Payment of Consideration. At the Closing, the Company shall deliver
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(or cause to be delivered) and InterCept shall cause to be delivered the
Consideration to Transferor in the form of a certificate or certificates for
Company Common Stock in the name of the Transferor or its assigns.
3.3 Adjustment of Company Common Stock.
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In addition to any adjustments made pursuant to the Antidilution Agreement,
in the event that at any time after the date hereof and prior to the Closing
Date, the Company shall effect (i) a dividend or other distribution with respect
to Company Common Stock, payable in Company Common Stock or other property
(other than cash), (ii) a combination or conversion of outstanding Company
Common Stock into a smaller number of shares of such Company Common Stock, (iii)
a split or subdivision of outstanding Company Common Stock into a greater number
of shares of Company Common Stock, or (iv) any reorganization or
reclassification, or any consolidation or merger of the Company with another
corporation where the Company is not the surviving corporation, or the sale of
all or substantially all of its assets to another corporation, in such a way
that holders of outstanding Company Common Stock shall be entitled to receive
(either directly or upon subsequent liquidation) stock, securities or other
property with respect to or in exchange for Company Common Stock (any such event
described in clauses (i) through (iv) above referred to as a "Diluting Event"),
then, as a condition of such Diluting Event, lawful and adequate provision shall
be made whereby the Transferor shall thereafter be entitled to receive (under
the same terms otherwise applicable to its receipt of Company Common Stock
hereunder), in addition to or in lieu of (as the case may be) the number of
shares of Company Common Stock, to which the Transferor is entitled immediately
prior to such Diluting Event, such shares of stock, securities or other property
as may be issued or payable with respect to or in exchange for that number of
shares of Company Common Stock to which the Transferor was so entitled, and in
any case appropriate provision shall also be made with respect to the
Transferor's rights and interests to the end that the provisions of this Section
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3.3 shall thereafter be applicable in relation to any shares of stock,
---
securities or other property thereafter deliverable to the Transferor pursuant
to the provisions hereof.
3.4 Legending of Securities.
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(a) The shares of Company Common Stock to be delivered in connection
with this Agreement will be issued in a transaction exempt from registration
under the Securities Act of 1933, as amended (the "Securities Act") by reason of
Section 4(2) thereof, Regulation D promulgated thereunder, or other private
offering exemptions, and similar exemptions under applicable state securities
laws (the "State Acts"), and the Company is relying on the representations of
the Transferor with respect to such exemptions. The Transferor understands and
agrees that stop transfer instructions with respect to the shares of Company
Common Stock received by the Transferor pursuant to this Agreement will be given
to the Company's transfer agent and that there will be placed on the
certificates for such shares a legend stating in substance as follows:
The securities represented hereby have not been registered
under the Securities Act of 1933, as amended, or any state
securities laws and may not be offered, sold, transferred or
otherwise disposed of unless registered with the United
Asset Purchase Agreement - Page 3
States Securities and Exchange Commission and the securities
regulatory authorities of applicable states or unless an
exemption from such registration is available.
(b) The foregoing legend will also be placed on any certificate
representing securities issued subsequent to the original issuance of the
Company Common Stock pursuant to this Agreement as a result of any transfer of
such shares or any stock dividend, stock split or other recapitalization as long
as the Company Common Stock issued to the Transferor pursuant to this Agreement
has not been transferred in such manner to justify the removal of the legend
therefrom.
(c) Removal of Legends. Notwithstanding the foregoing provisions of
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this Section 3.4, the Company agrees to notify the Company's transfer agent to
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remove all stop transfer instructions with respect to the shares of Company
Common Stock received by the Transferor and to issue to the holder thereof a new
certificate or certificates for such shares not bearing the restrictive legend
set forth in Section 3.4(a) when (i) any such shares are sold or otherwise
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disposed of pursuant to an effective registration statement under the Securities
Act, (ii) the holder of such shares has met the requirements for transfer of
such shares pursuant to subparagraph (k) of Rule 144 under the Securities Act,
or (iii) in the opinion of counsel reasonably acceptable to the Company,
registration of any future transfer of such shares is not required by the
Securities Act or applicable State Acts.
ARTICLE 4
RULES OF CONSTRUCTION
In the interpretation of this Agreement, unless otherwise provided or
the context otherwise requires:
(a) The singular includes the plural and vice versa and, in
particular (but without limiting the generality of the foregoing), any word or
expression defined in the singular has the corresponding meaning used in the
plural and vice versa;
(b) Any reference to any gender includes the other gender;
(c) Any reference to an Article, Section, Exhibit, clause, subclause,
paragraph, subparagraph, Schedule or recital is a reference to an Article,
Section, Exhibit, clause, subclause, paragraph, subparagraph, Schedule or
recital of this Agreement;
(d) Any reference to any agreement, instrument or other document (i)
shall include all appendices, exhibits and schedules thereto and all agreements,
documents or other writings incorporated by reference therein, and (ii) shall be
a reference to such agreement, instrument or other document as amended,
supplemented, modified, suspended, restated or novated from time to time;
(e) Any reference to any statute shall be construed as including all
statutory provisions consolidating, amending or replacing such statute and all
governmental regulations and rules promulgated thereunder;
Asset Purchase Agreement - Page 4
(f) Any reference to "writing" includes printing, typing, lithography
and other means of reproducing words in a visible form;
(g) Any reference to a time or date or to a local time or date is a
reference to the time and date in Atlanta, Georgia;
(h) The headings and Article, Section and paragraph numbering
contained in this Agreement are used solely for convenience and do not
constitute a part of this Agreement, nor shall such headings and numbering be
used in any manner to aid in the construction of this Agreement;
(i) References herein to the "Transferor Disclosure Schedules" mean
the disclosure schedules, dated as of the date hereof, which have been delivered
by the Transferor to InterCept and the Company and all other documents,
agreements, and other items disclosed by Transferor in writing to InterCept and
the Company and attached to such schedules in connection with this Agreement,
and references to a numbered Transferor Disclosure Schedule shall mean that
portion of the Transferor Disclosure Schedules that refers to the specific
section or subsection of Article 5 of this Agreement;
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(j) The terms "disclosed by InterCept" and "disclosed by the Company"
mean and include, unless the context indicates otherwise, with respect to
information concerning any event, fact or circumstance, information contained in
the Company's Disclosure Schedules in this Agreement and the other Contribution
Agreements (defined in Section 12.4).
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(k) The term "including" means "including, without limitation";
(l) The term "Governmental Authority" means any United States
federal, state or local, or foreign, governmental, regulatory or administrative
authority, agency, department, board, investigative body or commission or any
court, tribunal, or judicial or arbitral body;
(m) The term "Knowledge" as used with respect to the Transferor
(including anyreferences to the Transferor being aware of a particular matter)
means the actual knowledge of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and
information which any of them reasonably should have known given the nature of
the disclosure, and the term "Knowledge" as used with respect to the Company
(including any references to the Company being aware of a particular matter)
means the actual knowledge of ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and
information which any of them reasonably should have known given the nature of
the disclosure;
(n) The term "Material Adverse Effect" with respect to a person means
any circumstance of, change in, or effect on the business and affairs of such
person or any of its Subsidiaries thereof that, individually or in the aggregate
with any other circumstance of change in, or effect on, the business and affairs
of such person and its Subsidiaries: (i) is, or would reasonably be expected to
be, materially adverse to the business, operations, assets, liabilities, results
of operations or financial condition of such person and its Subsidiaries, taken
as a whole, or (ii) would reasonably be expected to materially adversely affect
the ability of such person and its Subsidiaries to operate or conduct its or
their business and affairs in the manner in which it is currently operated or
conducted or contemplated by such person, to be operated or conducted;
Asset Purchase Agreement - Page 5
provided, however, that a Material Adverse Effect with respect to the Division
shall not include any change or developments attributable to (a) this Agreement
or the transactions contemplated hereby, (b) events which adversely affect the
general economy of the United States of America, or the region, state or county
in which the Division conducts its business operations, (c) events which
adversely affect the banking industry generally or (d) any change in Law
applicable to the Division's business as presently conducted;
(o) The term "person" means any individual, partnership, limited
liability company, firm, corporation, association, trust, joint venture,
unincorporated organization or other entity, as well as any syndicate or group
that would be deemed to be a person under Section 13(d)(3) of the Exchange Act
(as defined herein);
(p) References herein to the "Company Disclosure Schedules" mean the
disclosure schedules, dated as of the date hereof, which have been delivered by
the Company to the Transferor and all other documents, agreements and other
items disclosed by the Company in writing to the Transferor and attached to such
schedules in connection with this Agreement, and references to a numbered
Company Disclosure Schedule shall mean that portion of the Company Disclosure
Schedules that refers to the specific section or subsection of Article 7;
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(q) The term "Subsidiary" means any corporation, partnership, joint
venture or other legal entity in which a specified person, directly or
indirectly, owns or controls the voting of at least a 50% share or other equity
interest or for which such person, directly or indirectly, acts as a general
partner or managing member; and
(r) Each of the Parties acknowledges that it has had the opportunity
to negotiate the terms and provisions of this Agreement, with the assistance and
review of its counsel. This Agreement, therefore, shall be construed without
regard to any presumption or other rule requiring construction against the party
causing the Agreement to be drafted.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE TRANSFEROR
To induce InterCept and the Company to enter into this Agreement and the
other Contribution Agreements, the Transferor hereby represents and warrants to
InterCept and the Company as follows:
5.1 Organization.
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(a) The Transferor is a banking association duly organized, validly
existing and in good standing under the laws of the State of Texas. The
Transferor has the power and authority to own or lease all of its properties and
assets and to carry on its business as it is now being conducted.
(b) Transferor Disclosure Schedule 5.1(b) sets forth true and correct
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copies of the Articles of Association and Bylaws of the Transferor and all
amendments thereto.
Asset Purchase Agreement - Page 6
5.2 Authority; No Violation.
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(a) Except as disclosed on Transferor Disclosure Schedule 5.2(a)
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(collectively, the "Transferor Approvals"), no consents, approvals,
authorizations, clearances or orders of, filings or registrations with or
notices to any third party or any Governmental Authority (collectively
"Authorizations") are necessary on behalf of the Transferor in connection with
(i) the execution and delivery by the Transferor of this Agreement and the other
Contribution Agreements to which it is a party, (ii) the consummation by the
Transferor of the transactions contemplated hereby and thereby and (iii) the
performance of the Transferor's obligations under this Agreement and the other
Contribution Agreements. The Transferor has the full power and authority to
execute and deliver this Agreement and the other Contribution Agreements to
which it is a party and to consummate the transactions contemplated hereby and
thereby in accordance with the terms hereof and thereof. The execution and
delivery of this Agreement and the other Contribution Agreements to which the
Transferor is a party and the consummation of the transactions contemplated
hereby and thereby have been duly and validly approved by the Board of Directors
of the Transferor in accordance with the Articles of Association and Bylaws of
the Transferor and with applicable Laws (as defined below). Except for the
Transferor Approvals, no other corporate proceedings on the part of the
Transferor are necessary for the Transferor to execute and deliver this
Agreement and the other Contribution Agreements to which it is a party and for
the Transferor to be bound by the terms hereof and thereof. This Agreement and
the other Contribution Agreements to which the Transferor is a party have been
duly and validly executed and delivered by the Transferor and constitute the
valid and binding obligation of the Transferor enforceable against the
Transferor in accordance with its and their terms, subject to receipt of the
Transferor Approvals and except to the extent that enforceability may be limited
by (i) applicable bankruptcy, insolvency, reorganization, moratorium, or other
similar Laws affecting the rights of creditors, generally, and (ii) general
principles of equity (collectively, the "Enforceability Exceptions").
(b) Neither the execution and delivery by the Transferor of this
Agreement and the other Contribution Agreements to which it is a party, nor the
consummation by the Transferor of the transactions contemplated hereby and
thereby in accordance with the other terms hereof and thereof, nor compliance by
the Transferor with any of the terms or provisions hereof or thereof, will: (i)
violate any provision of the Transferor's Articles of Association or Bylaws;
(ii) assuming that the Transferor Approvals are duly obtained, violate any
United States federal, state or local or foreign statute, code, ordinance, rule,
regulation, judgment, order, writ, ruling, decree or injunction of any
Governmental Authority (collectively, "Laws") applicable to the Transferor or
any of its properties or assets; or (iii) violate, conflict with, result in a
breach of any provisions of, constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default) under, result in
the termination of, accelerate the performance required by, or result in the
creation of any lien, mortgage, security interest, pledge, charge, other right
of third parties or other encumbrance (collectively, "Liens") upon any of the
Transferred Assets under any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which the Transferor is a party, or by which it or
any of the Transferred Assets may be bound or affected except, with respect to
clauses (ii) and (iii) above, such as individually or in the aggregate will not
have a Material Adverse Effect on the Division or the Transferred Assets, and
which will not prevent or materially delay the consummation of the transactions
contemplated hereby.
Asset Purchase Agreement - Page 7
5.3 Financial Statements.
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(a) Transferor Disclosure Schedule 5.3(a) sets forth copies of: (i)
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the balance sheets of the Division as of December 31, 1998 and July 31, 1999,
and (ii) the statements of income for the periods from inception through
December 31, 1998 and for the seven months ended July 31, 1999 (collectively,
the "Division Financial Statements");
(b) The Division Financial Statements have been prepared on a
modified cash basis applied consistently during the periods involved (except as
may be indicated therein or in the notes thereto), and present fairly, the
financial position of the Division as of the respective dates set forth therein,
and the results of the Division's operations for the respective periods set
forth therein.
(c) The books and records of the Division have been maintained in
material compliance with applicable legal and accounting requirements.
(d) Since July 31, 1999 (the "Balance Sheet Date"), there has not
been any change, occurrence or circumstance affecting the business, results of
operations or financial condition of the Division that has had, individually or
in the aggregate, a Material Adverse Effect on the Division or which is
reasonably likely to have a Material Adverse Effect on the Division, other than
changes, occurrences and circumstances disclosed by the Transferor on the
Transferor Disclosure Schedules.
5.4 Broker's and Other Fees. Except as disclosed in Transferor Disclosure
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Schedule 5.4, Transferor has not employed any broker or finder or incurred any
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liability for any broker's or finder's fees or commissions in connection with
any of the transactions contemplated by this Agreement and the other
Contribution Agreements.
5.5 Absence of Certain Changes or Events. Except as set forth in
------------------------------------
Transferor Disclosure Schedule 5.5, the Transferor has not taken or permitted
----------------------------------
any of the actions set forth in Section 8.2 since the Balance Sheet Date and,
-----------
except for execution of this Agreement and the other Contribution Agreements,
the Transferor has conducted the business of the Division only in the ordinary
course, consistent with past practice. Prior to the Balance Sheet Date, the
Transferor did not take or permit any of the actions set forth in Section 8.2
-----------
that are not reflected in the Division Financial Statements.
5.6 Legal Proceedings. Except as disclosed in Transferor Disclosure
----------------- ---------------------
Schedule 5.6, the Transferor is not a party to any, and there are no pending or,
------------
to the Transferor's Knowledge, threatened legal, administrative, arbitral or
other proceedings, claims, actions or governmental investigations of any nature
against the Division. Except as disclosed in Transferor Disclosure Schedule 5.6,
----------------------------------
the Transferor is not a party to any order, judgment or decree entered in any
lawsuit or proceeding that relates to or would have an adverse effect on the
Transferred Assets or the Division. Without limiting the foregoing, except as
disclosed in Transferor Disclosure Schedule 5.6, no actions, suits, demands,
----------------------------------
notices, claims, investigations or proceedings are pending or, to the
Transferor's Knowledge, threatened against or otherwise involving, directly or
indirectly, any officer, director, employee or agent of the Transferor (in
connection with such officer's, director's, employee's or agent's activities on
behalf of the Transferor that relate,
Asset Purchase Agreement - Page 8
directly or indirectly to the Division or the Transferred Assets) including
without limitation any notices, demand letters or requests from any Governmental
Authority relating to such potential liabilities, nor, to the Transferor's
Knowledge, are there any circumstances which are reasonably likely to lead to
such actions, suits, demands, notices, claims, investigations or proceedings.
5.7 Taxes and Tax Returns. Transferor has no Liabilities related to any
---------------------
Taxes which affect the Transferred Assets or otherwise act as an encumbrance,
liability or Lien with respect to the Transferred Assets. As used herein,
"Taxes" means and includes any and all taxes, fees, levies, assessments, duties,
tariffs, imposts, and other charges of any kind (together with any and all
interest, penalties, additions to tax and additional amounts imposed with
respect thereto) imposed by any Governmental Authority, including, without
limitation: foreign, domestic, central, local, state or other jurisdictional
taxes or other charges on or with respect to income, estimated income,
franchises, business, occupation, windfall or other profits, gross receipts,
property, sales, use, capital stock, payroll, employment, social security,
workers' compensation, unemployment compensation, or net worth; taxes or other
charges in the nature of excise, withholding, ad valorem, stamp, transfer, value
added, or gains taxes; license, registration and documentation fees; and customs
duties, tariffs, and similar charges.
5.8 Employee Benefit Plans and Relations. Transferor has no liabilities
------------------------------------
regarding any form of employee benefit plan that will become the responsibility
or liability of the Company upon or after Closing.
5.9 Compliance with Applicable Laws. Except as set forth in Transferor
------------------------------- ----------
Disclosure Schedule 5.9 the Transferor holds all licenses, franchises, permits,
-----------------------
consents and authorizations ("Licenses") necessary for the lawful conduct of the
Division except to the extent a failure to hold such Licenses would not have a
Material Adverse Effect on the Division. No proceeding is pending or, to the
Knowledge of the Transferor, threatened seeking the revocation or suspension of
any License. Except as set forth on Transferor Disclosure Schedule 5.9, the
----------------------------------
Transferor is and has been in compliance in all material respects with all
applicable Laws related to the Division, and the Transferor has not received any
notices of any allegation of any violation by the Transferor of any Laws or
Licenses related to the Division.
5.10 Certain Contracts.
-----------------
(a) Transferor Disclosure Schedule 5.10(a) lists or describes the
--------------------------------------
material terms and conditions of the following agreements related to and in
respect of the Division (collectively, the "Material Contracts"), including,
without limitation, leases, purchase contracts and commitments, to which the
Transferor is a party or by which the Transferor or any of the Transferred
Assets is bound:
(i) all agreements involving an annual commitment or payment by
any party thereto of more than $10,000 individually or $25,000 in the aggregate
or which have a fixed term extending more than 12 months from the date hereof;
(ii) all joint venture, sales agency, sales representative,
distributorship, broker, franchise, license or similar agreements;
Asset Purchase Agreement - Page 9
(iii) all leases of real and personal property that are material
to the Transferor's business and operations;
(iv) all notes, bonds, mortgages, security agreements,
guarantees and other agreements and instruments for or relating to any lending
or borrowing by the Transferor in any amount (exclusive of advances to employees
for expenses or trade payables in the ordinary course of business);
(v) all powers of attorney, guarantees, suretyships or similar
agreements;
(vi) all employment agreements; and
(vii) all other agreements to which the Transferor is a party and
either (1) which is material to the Division or (2) the breach of or default
under which could have a Material Adverse Effect on the Division.
(b) Except as set forth on Transferor Disclosure Schedule 5.10(b),
--------------------------------------
each of the Material Contracts is valid, binding and enforceable on the
Transferor, and to the Knowledge of the Transferor, the other parties thereto,
in accordance with its terms, subject to the Enforceability Exceptions. The
Transferor has provided a true and complete copy of each Material Contract to
InterCept and Company.
(c) Except as disclosed in Transferor Disclosure Schedule 5.10(c), no
--------------------------------------
agreement or understanding to which the Transferor is a party or by which it is
bound limits the freedom of the Division to compete in any line of business or
with any person.
(d) Except as disclosed in Transferor Disclosure Schedule 5.10(d),
--------------------------------------
the Transferor, nor to the Knowledge of the Transferor, any other party thereto,
is in default under any of the Material Contracts; to the Transferor's
Knowledge, no event has occurred which (whether with or without notice, lapse of
time or the happening or occurrence of any other event) would constitute a
default thereunder entitling any party to terminate a Material Contract or other
such agreement or to otherwise claim or collect damages the impact of which
would have a Material Adverse Effect on the Division; and the continuation,
validity and effectiveness of all such Material Contracts and agreements under
the current terms thereof and the current rights and obligations of the
Transferor thereunder will in no way be materially affected, altered or impaired
by the consummation of the transactions contemplated hereby and by the other
Contribution Agreements. Except as disclosed in Transferor Disclosure Schedule
------------------------------
5.10(d), upon consummation of the transactions contemplated by this Agreement
-------
and the other Contribution Agreements, the Division will be entitled to continue
to enjoy the material advantages and benefits of the business arrangements,
agreements, opportunities and relationships of the Division as it enjoyed prior
to the date hereof without interference or interruption.
5.11 Properties and Insurance.
------------------------
(a) Except as disclosed in Transferor Disclosure Schedule 5.11(a),
--------------------------------------
the Transferred Assets are in good operating condition and repair, ordinary wear
and tear excepted, and are suitable for the purposes for which they are used in
the Division. The Transferor has
Asset Purchase Agreement - Page 10
good and marketable title to, or holds by valid and existing lease or license,
all of the Transferred Assets and all of the Transferred Assets are reflected on
the Division Financial Statements, or under GAAP are not required to be
reflected therein. None of the Transferred Assets is subject to any Lien, except
in any of the foregoing cases for such imperfections of title or Liens as (i)
are set forth in Transferor Disclosure Schedule 5.11, (ii) are reflected or
-----------------------------------
reserved against in the Division Financial Statements, (iii) arise out of Taxes
which are not yet due and payable or are not in default and payable without
penalty or interest, or (iv) arise out of the Assumed Liabilities.
(b) The business operations and insurable material properties
and assets of the Division are insured for their benefit against all risks
which, in the reasonable judgment of the Transferor, should be insured against,
in each case under policies or bonds issued by insurers of recognized
responsibility, in such amounts, with such deductibles and against such risks
and losses as are in the opinion of the Transferor adequate for the business
engaged in by the Division. Transferor has not received any written notice of
cancellation or written notice of a material amendment of any such insurance
policy or bond and the Transferor is not in default under any such policy or
bond, no coverage thereunder is being disputed and all material claims
thereunder have been filed in a timely fashion.
(c) No person other than the Transferor is currently entitled to
possession of any of the Transferred Assets or the loss of use of which would
have a Material Adverse Effect on the Division, whether owned or leased by the
Transferor. The Transferred Assets constitute all of the property and assets
that the Transferor uses or may reasonably need in connection with the operation
of the Division as conducted on the Closing Date.
5.12 Environmental Matters. Upon or after Closing, the Company shall
---------------------
have no liability from Transferor's failure to comply with environmental Laws
prior to Closing.
5.13 Intellectual Property. With respect to the Division, the Transferor
---------------------
develops, markets and licenses certain proprietary application software products
and systems to financial institutions and other customers (the "Software
Programs"), and in connection therewith the Transferor has developed certain
related technical documentation and user reference manuals (the
"Documentation"). The Software Programs and the Documentation are collectively
referred to as the "Software." The Software Programs are listed on Transferor
----------
Disclosure Schedule 5.13.
------------------------
(a) Ownership. Except as set forth in Transferor Disclosure
--------- ---------------------
Schedule 5.13(a), the Transferor owns or licenses all trademarks, service marks,
----------------
trade names and copyrights (including registrations, licenses and applications
pertaining thereto) and all other proprietary information used (with a
designation as to whether owned or used) by the Transferor in the conduct of the
Division. Transferor Disclosure Schedule 5.13(a) sets forth all domestic and
--------------------------------------
foreign patents, trademarks, service marks, trade names and copyrights owned or
used (with a designation as to whether owned or used) by the Transferor with
respect to the Division and all applications therefor and registrations thereof.
(b) Procedures for Copyright Protection. In no instance has the
-----------------------------------
eligibility of the Software for protection under copyright law been forfeited to
the public domain.
Asset Purchase Agreement - Page 11
(c) Procedures for Trade Secret Protection. The Transferor has
--------------------------------------
never disclosed source code for any of the Software to a third party other than
the persons identified in Transferor Disclosure Schedule 5.13(c). The Transferor
--------------------------------------
discloses its source code to employees only on a need-to-know basis in
connection with the performance of their duties to the Transferor. The source
code and system documentation comprising the Software have at all times been
maintained by the Transferor in confidence and the Transferor has not taken (nor
has it failed to take) any action which would be reasonably likely to result in
such source code and system documentation not being protectable as a trade
secret under applicable Laws.
(d) Absence of Claims. Except as set forth in Transferor
----------------- ----------
Disclosure Schedule 5.13(d), to the Knowledge of the Transferor, no claims have
---------------------------
been asserted by any person to rights in the Software, and no valid basis for
any such claim exists. The use of the Software by the Transferor and its
licensees does not infringe on the rights of any person (whether arising under
copyright, trade secret, patent, unfair competition or other Laws that protect
intellectual property rights). The use by the Transferor of the patents,
trademarks, service marks, trade names and copyrights identified in Transferor
----------
Disclosure Schedule 5.13(a) does not infringe the rights of any person, and no
---------------------------
written claim has been asserted that the use by the Transferor of any of the
foregoing infringes the rights of any person. The Transferor has not received
written notice of any claim asserted by any person to the effect that any
current or former employee of the Transferor has violated the provisions of any
noncompete or nondisclosure agreement with such person, or has disclosed any
proprietary information of such person to the Transferor or any third party.
5.14 Adequacy of Technical Documentation. Except as set forth on
-----------------------------------
Transferor Disclosure Schedule 5.14, the Software includes the source code,
-----------------------------------
system documentation and schematics for all Software Programs, as well as any
programmer comments for documentation and pertinent commentary or explanation
that may be reasonably necessary to render such materials understandable and
usable by a trained computer programmer. The Software also includes the
programs (including compilers), workbenches, tools and higher level language, if
any, used for the development, maintenance and implementation of the Software
Programs.
5.15 Third-Party Components in Software. The Transferor has validly
----------------------------------
obtained the right and license to use, copy, modify and distribute any third-
party programming and materials contained in the Software pursuant to the
contracts identified in Transferor Disclosure Schedule 5.15, subject to no
-----------------------------------
further license fee, royalty or other payment obligations not identified in
Transferor Disclosure Schedule 5.15, other than software maintenance payments
-----------------------------------
customarily associated therewith. The Software contains no other programming or
materials in which any third party may claim superior, joint or common
ownership, including any right or license. The Software does not contain
derivative works of any programming or materials not owned in their entirety by
the Transferor.
5.16 Third-Party Interests or Marketing Rights in Software. The
-----------------------------------------------------
Transferor has not granted, transferred or assigned any right or interest in the
Software to any person except pursuant to the contracts identified on Transferor
----------
Disclosure Schedule 5.16. There are no contracts, agreements, licenses,
-------------------------
commitments or arrangements in effect with respect to the marketing,
distribution, licensing or promotion of the Software by any independent
salesperson,
Asset Purchase Agreement - Page 12
distributor, sublicensor or other remarketer or sales organization except as set
forth on Transferor Disclosure Schedule 5.16.
-----------------------------------
5.17 Absence of Certain Agreements and Practices. Except as set forth in
-------------------------------------------
Transferor Disclosure Schedule 5.17, or in connection with customary
-----------------------------------
transactions in the ordinary course of business, no present or former officer,
director or shareholder of the Transferor:
(i) has made any claim (as defined in ▇▇▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ Bankruptcy Code) against the Division or, the Transferor's Knowledge, has
any basis for any such claim;
(ii) has any interest in any of the Transferred Assets; and
(iii) has any benefits that are contingent on the transactions
contemplated by this Agreement and the other Contribution Agreements, other than
as stated herein.
5.18 Major Vendors and Customers. Transferor Disclosure Schedule 5.18
--------------------------- -----------------------------------
sets forth a list of each licensor, developer, remarketer, distributor and
supplier of property or services to, and each licensee, end-user or customer of,
the Transferor with respect to the business of the Division, to whom the
Transferor paid or billed in the aggregate in excess of $25,000 during calendar
year 1998, or for the six months ended June 30, 1999.
5.19 Accounts Receivable. With respect to the business and operation of
-------------------
the Division, Transferor Disclosure Schedule 5.19 sets forth the accounts
-----------------------------------
receivable of the Transferor as of December 31, 1998, as reflected in the
Division Financial Statements as of that date, and the accounts receivable of
the Transferor as of the Balance Sheet Date, together with an aging of these
accounts. These accounts receivable, and all accounts receivable of the
Transferor created after the Balance Sheet Date with respect to the business and
operation of the Division, arose from valid transactions in the ordinary course
of business and are good and collectible at the recorded amounts thereof, except
for immaterial uncollectible amounts and except to the extent reserves therefor
have been made on the Division Financial Statements. To the Transferor's
Knowledge, no material portion of the accounts receivable is subject to
counterclaim or setoff.
5.20 Bank Accounts. Transferor Disclosure Schedule 5.20 lists all bank,
------------- -----------------------------------
money market, savings and similar accounts and safe deposit boxes of the
Transferor utilized with respect to the Division, specifying the account
numbers, the authorized signatories or persons having access to them.
5.21 Combinations Involving the Division. As it relates to the Division,
-----------------------------------
all mergers, consolidations or other business combinations involving the
Transferor and all liquidations, purchases or other transactions by which the
Transferor or any of its Subsidiaries acquired or disposed of any of the
business and property of the Division were conducted in compliance with
applicable charter documents, bylaws, any other applicable agreements,
instruments and documents and applicable Laws.
Asset Purchase Agreement - Page 13
5.22 Labor Relations. Except as disclosed on Transferor Disclosure
--------------- ---------------------
Schedule 5.22, with respect to the Division, the Transferor is in material
-------------
compliance with all federal and state Laws respecting employment and employment
practices, terms and conditions of employment, wages and hours. With respect to
the Division, there is no unlawful employment practice or discrimination charge
pending before the United States Equal Employment Opportunity Commission
("EEOC") or any EEOC recognized state "referral agency." There is no unfair
labor practice charge or complaint against the Division pending before the
National Labor Relations Board ("NLRB"). There is no labor strike, dispute,
slowdown or stoppage actually pending or, to the Transferor's Knowledge,
threatened against the Division and no NLRB representation question exists
respecting any of its employees with respect to the Division. No grievance or
arbitration proceeding is pending against the Division and no written claim
therefor exists with respect to the foregoing.
5.23 Year 2000 Matters. Except as provided on Transferor Disclosure
----------------- ---------------------
Schedule 5.23, the Software is "Millennium Compliant." For purposes of this
-------------
Agreement "Millennium Compliant" means: (a) the functions, calculations, and
other computing processes of the Software (collectively, "Processes") perform as
designed regardless of the date in time on which the Processes are actually
performed and regardless of the date input to the Software, whether or not the
dates include leap years; (b) the Software can accept, store, sort, extract,
sequence, and otherwise manipulate date inputs and date values, and return and
display date values, as designed and in a materially accurate manner, regardless
of the dates used or format of the date input; (c) the Software will function
without interruptions caused by the date in time on which the Processes are
actually performed or by the date input to the Software; (d) the Software
accepts and responds to four digit year date input in a manner that resolves any
material ambiguities as to the century in an accurate manner; and (e) the
Software displays, prints and provides electronic output of date information in
ways that are unambiguous as to the determination of the century.
5.24 Securities Act Compliance. The Transferor acknowledges that none of
-------------------------
the shares of Company Common Stock to be delivered to the Transferor pursuant to
this Agreement will, at the time of delivery, be registered under the Securities
Act or any State Acts (collectively the "Securities Laws"). The Transferor
represents and warrants that it is acquiring the Company Common Stock for
investment, and not with a view toward, or for resale in connection with, a
distribution of Company Common Stock except to its Affiliates or as required by
Governmental Authorities. The Transferor acknowledges that Company Common Stock
may be sold, pledged, hypothecated, disposed of, or otherwise transferred or
distributed only (i) pursuant to an effective registration statement covering
the Company Common Stock under the Securities Laws, or (ii) pursuant to an
exemption from the registration requirements of the Securities Laws.
5.25 Access to Information. The Transferor has had access to the books
---------------------
and records of the Company and has otherwise had access to sufficient
information about InterCept and the Company upon which to analyze the
transactions contemplated by this Agreement. The Transferor has been given the
opportunity to ask questions and receive answers from the officers of InterCept
and the Company concerning the terms and conditions of the transactions
contemplated by this Agreement and the business and financial condition of each
of InterCept and the Company. The Transferor has had the opportunity to obtain
any additional information it deems necessary to verify the accuracy and
completeness of information provided by InterCept and the Company in connection
with this Agreement and the transactions contemplated hereby.
Asset Purchase Agreement - Page 14
5.26 Experience; Investment. The Transferor has such knowledge and
----------------------
experience in financial and business matters as to enable it (a) to utilize the
information made available to it in connection with the transactions
contemplated by this Agreement and the other Contribution Agreements, (b) to
evaluate the merits and risks associated with the acquisition of Company Common
Stock pursuant hereto, and (c) to make an informed decision with respect
thereto. The Transferor's business and financial experience is such that
InterCept and the Company could reasonably assume the Transferor has the
capacity to protect its own interests in connection with the offer, sale and
issuance of the Company Common Stock. The Transferor is financially capable of
bearing the risk of loss of the Consideration surrendered in exchange for the
Company Common Stock, and acknowledges that an investment in the Company Common
Stock involves a high degree of risk, including a possible total loss of
investment, and the Consideration may not be indicative of the future value of
the securities. The Transferor represents that it is an "accredited investor"
within the meaning of Regulation D promulgated by the Commission under the
Securities Act, by reason of the fact the Transferor is a bank as defined in
Section 3(a)(2) of the Securities Act. The Transferor understands that the
officers, directors, attorneys and other advisors of InterCept and the Company
will rely upon the representations and warranties made by the Transferor in this
Agreement in order to establish any necessary exemption from the registration
provisions of the Securities Act and applicable state securities laws.
5.27 Tax Advice. The Transferor has reviewed with its tax advisor the
----------
United States federal, state, local and foreign tax consequences of an
investment in the Company Common Stock and the transactions contemplated by this
Agreement and the other Contribution Agreements. The Transferor understands that
it (and not InterCept or the Company or any other person or entity) shall be
responsible for its own tax liability that may arise as a result of this
investment or the transactions contemplated by this Agreement and the other
Contribution Agreements. Nothing in this Section 5.27 shall affect the
Transferor's rights to recover for breaches of the Company's or InterCept's
representations and warranties in this Agreement.
5.28 Disclosure. No representation, warranty or statement made by the
----------
Transferor in this Agreement, the other Contribution Agreements or in any
document or certificate furnished or to be furnished to InterCept or the Company
pursuant to this Agreement or the other Contribution Agreements contains or will
contain any untrue or incomplete statement of a material fact or omits or will
omit to state any material fact necessary to make the statements contained
herein or thereon not misleading. The Transferor has completely and accurately
responded in all material respects to all diligence inquiries made by InterCept,
the Company and their officers, directors, attorneys, accountants and other
representatives in connection with this Agreement and the other Contribution
Agreements.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF INTERCEPT
To induce the Transferor to enter into this Agreement and the other
Contribution Agreements, InterCept hereby represents and warrants to the
Transferor as follows:
6.1 Corporate Organization. InterCept is a corporation duly
----------------------
incorporated, validly existing and in good standing under the laws of the State
of Georgia. InterCept has the corporate power and authority to own or lease all
of its properties and assets and to carry on its business as
Asset Purchase Agreement - Page 15
it is now being conducted, and is duly licensed or qualified to do business and
is in good standing in each jurisdiction in which the nature of the business
conducted by it or the character or location of the properties and assets owned
or leased by it makes such licensing or qualification necessary, except where
the failure to be so licensed, qualified or in good standing would not have a
Material Adverse Effect on InterCept.
6.2 Authority; No Violation.
-----------------------
(a) No Authorizations (the "InterCept Approvals") are necessary on
behalf of InterCept in connection with (i) the execution and delivery by
InterCept of this Agreement, (ii) the consummation by InterCept of the
transactions contemplated hereby and thereby, (iii) the Exchange and the
documents, agreements and instruments executed or to be executed with respect to
the Exchange (the "Exchange Documents") to which InterCept is or will be a
party; (iv) the performance of InterCept's obligations under this Agreement, the
other Contribution Agreements and the Exchange Documents, other than such as
have been obtained or waived. InterCept has the full corporate power and
authority to execute and deliver this Agreement, the other Contribution
Agreements and the Exchange Documents to which it is a party, and to consummate
the transactions contemplated hereby and thereby in accordance with the terms
hereof and thereof. The execution and delivery of this Agreement, the
Contribution Agreements and the Exchange Documents and the consummation of the
transactions contemplated hereby and thereby have been duly and validly approved
by the Board of Directors of InterCept in accordance with the Articles of
Incorporation and Bylaws of InterCept and with applicable Laws. No corporate
proceedings on the part of InterCept are necessary for InterCept to execute and
deliver this Agreement, the other Contribution Agreements and the Exchange
Documents to which it is a party, and for InterCept to be bound by the terms
hereof and thereof. This Agreement, the other Contribution Agreements and the
Exchange Documents to which InterCept is a party have been duly and validly
executed and delivered by InterCept and constitute the valid and binding
obligation of InterCept enforceable against InterCept in accordance with its and
their terms, except to the extent that enforceability may be limited by the
Enforceability Exceptions.
(b) Neither the execution and delivery of this Agreement, the other
Contribution Agreements and the Exchange Documents by InterCept, nor the
consummation by InterCept of the transactions contemplated hereby or thereby in
accordance with the terms hereof or thereof, nor compliance by InterCept with
any of the terms or provisions hereof or thereof, will (i) violate any provision
of InterCept's Articles of Incorporation or Bylaws, or (ii) violate any Laws
applicable to InterCept or any of its properties or assets.
6.3 Broker's and Other Fees. Neither InterCept nor any of its directors
-----------------------
or officers has employed any broker or finder or incurred any liability for any
broker's or finder's fees or commissions in connection with any of the
transactions contemplated by this Agreement, the other Contribution Agreements
or the Exchange Documents.
6.4 Legal Proceedings. Except as disclosed by InterCept to the
-----------------
Transferor, there is no action, suit or proceeding before or by any court or
governmental agency or body, domestic or foreign, now pending or, to the
knowledge of InterCept's chief executive officer, chief operating officer and
chief financial officer, threatened against or affecting InterCept, or any of
its
Asset Purchase Agreement - Page 16
properties, which could reasonably be expected to materially and adversely
affect the ability of InterCept to perform its obligations pursuant to this
Agreement.
6.5 Disclosure. No representation or warranty of InterCept in this
----------
Agreement or the other Contribution Agreements, nor any financial statements or
other written statements or certificates furnished by InterCept to the
Transferor in connection with the transactions contemplated by this Agreement,
contains or as of the Closing Date will contain, any untrue statement of a
material fact, or omit or as of the Closing Date will omit to state a material
fact necessary to make the statements herein or therein not misleading.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
To induce the Transferor to enter into this Agreement and the other
Contribution Agreements, the Company hereby represents and warrants to the
Transferor as follows:
7.1 Corporate Organization.
----------------------
(a) Each of Direct Access and the Company is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Georgia. Each of Direct Access and the Company has the corporate power and
authority to own or lease all of its properties and assets and to carry on its
business as it is now being conducted, and is duly licensed or qualified to do
business and is in good standing in each jurisdiction in which the nature of the
business conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing or qualification necessary,
except where the failure to be so licensed, qualified or in good standing would
not have a Material Adverse Effect on Direct Access or the Company.
(b) Company Disclosure Schedule 7.1 sets forth true and complete
-------------------------------
copies of the Articles of Incorporation and Bylaws of each of Direct Access and
the Company and all amendments thereto.
7.2 Capitalization.
--------------
(a) The authorized capital stock of the Company consists of
70,000,000 shares of common stock, without par value (the "Company Common
Stock") none of which are issued and outstanding and 5,000,000 shares of
preferred stock, none of which are issued and outstanding. Company Disclosure
------------------
Schedule 7.2(a) sets forth the number of shares of Company Common Stock owned by
---------------
each shareholder and the number of shares of Company Common Stock which may be
acquired by each holder of warrants and options to purchase Company Common Stock
Company Disclosure Schedule 7.2(a) sets forth the name of each person and the
----------------------------------
number of shares of Company Common Stock or other capital stock of the Company
such person will acquire or has the right to acquire upon consummation of the
Exchange. Other than as disclosed on Company Disclosure Schedule 7.2(a), there
----------------------------------
are no options, warrants, or other rights to acquire Company Common Stock. All
issued and outstanding shares of Company Common
Asset Purchase Agreement - Page 17
Stock have been duly authorized and validly issued and are fully paid and
nonassessable, were not issued in violation of any preemptive rights and were
issued pursuant to effective registration statements or under available
exemptions from the registration requirements of the federal and state
securities laws. Except as set forth on Company Disclosure Schedule 7.2(a), the
----------------------------------
Company has not granted any outstanding subscriptions, options, warrants, calls,
commitments, registration rights or agreements of any character calling for the
transfer, purchase, subscription, issuance or registration under the Securities
Act of any shares of capital stock of the Company or any securities representing
the right to purchase, subscribe or otherwise receive any shares of such capital
stock or any securities convertible into any such shares, and, except as set
forth on Company Disclosure Schedule 7.2(a), there are no agreements or
----------------------------------
understanding with respect to voting any such shares.
(b) The authorized capital stock of Direct Access consists of
70,000,000 shares of common stock, without par value (the "Direct Access Common
Stock"), 12,185,000 of which are issued and outstanding and 5,000,000 shares of
preferred stock, none of which are issued and outstanding. Company Disclosure
------------------
Schedule 7.2(b) sets forth the number of shares of Direct Access Common Stock
---------------
owned by each shareholder and the number of shares of Direct Access Common Stock
which may be acquired by each holder of warrants and options to purchase Direct
Access Common Stock. Other than as disclosed on Company Disclosure Schedule
---------------------------
7.2(b), there are no options, warrants, or other rights to acquire Direct Access
------
Common Stock. All issued and outstanding shares of Direct Access Common Stock
have been duly authorized and validly issued and are fully paid and
nonassessable, were not issued in violation of any preemptive rights and were
issued pursuant to effective registration statements or under available
exemptions from the registration requirements of the federal and state
securities laws. Except as set forth on Company Disclosure Schedule 7.2(b),
----------------------------------
Direct Access has not granted any outstanding subscriptions, options, warrants,
calls, commitments, registration rights or agreements of any character calling
for the transfer, purchase, subscription, issuance or registration under the
Securities Act of any shares of capital stock of Direct Access or any securities
representing the right to purchase, subscribe or otherwise receive any shares of
such capital stock or any securities convertible into any such shares, and,
except as set forth on Company Disclosure Schedule 7.2(b), there are no
----------------------------------
agreements or understandings with respect to voting any such shares.
7.3 Authority; No Violation.
-----------------------
(a) Except as disclosed on Company Disclosure Schedule 7.3(a)
----------------------------------
(collectively, "Company Approvals"), no Authorizations are necessary on behalf
of the Company or Direct Access in connection with (i) the execution and
delivery by the Company of this Agreement, the other Contribution Agreements and
the Exchange Documents, (ii) the consummation by the Company of the transactions
contemplated hereby and thereby and (iii) the performance of the Company's
obligations under this Agreement, the other Contribution Agreements and the
Exchange Documents. The Company has the full corporate power and authority to
execute and deliver this Agreement, the other Contribution Agreements and the
Exchange Documents to which it is a party and the consummation by the Company of
the other transactions contemplated hereby and thereby in accordance with the
terms hereof and thereof. The execution and delivery of this Agreement, the
other Contribution Agreements and the Exchange Documents and the consummation of
the transactions contemplated hereby and thereby have been duly and validly
Asset Purchase Agreement - Page 18
approved by the Board of Directors of the Company in accordance with the
Articles of Incorporation and Bylaws of the Company and applicable Laws. No
other corporate proceedings on the part of the Company or Direct Access are
necessary to consummate the transactions so contemplated. This Agreement, the
other Contribution Agreements and the Exchange Documents have been duly and
validly executed and delivered by the Company and constitute the valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms, except to the extent that the availability of the remedy of
specific performance may be limited by the Enforceability Exceptions.
(b) Neither the execution and delivery of this Agreement and the
other Contribution Agreements and the Exchange Documents to which the Company is
a party, nor the consummation by the Company of the transactions contemplated
hereby and thereby in accordance with the terms hereof and thereof, nor
compliance by the Company with any of the terms or provisions hereof and
thereof, will (i) violate any provision of the Company's Articles of
Incorporation or Bylaws, (ii) violate any Laws applicable to the Company or any
of its properties or assets, or (iii) except where a waiver or consent had been
obtained or will be obtained prior to Closing, violate, conflict with, result in
a breach of any provisions of, constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under, result in
the termination of, accelerate the performance required by, or result in the
creation of any Lien upon any of the respective properties or assets of the
Company under any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which the Company is a party, or by which it or any
of its properties or assets may be bound or affected except, with respect to
clauses (ii) and (iii) above, such as individually or in the aggregate will not
have a Material Adverse Effect on the Company, and which will not prevent or
delay the consummation of the transactions contemplated hereby.
7.4 Financial Statements.
--------------------
(a) Attached hereto as Company Disclosure Schedule 7.4 is a true
-------------------------------
and complete copy of the financial statements of Direct Access at and for the
periods ending December 31, 1998 and 1997 and March 31, 1999 (collectively, the
"Direct Access Financial Statements"). The Direct Access Financial Statements
have been prepared from, and are in accordance with, the books and records of
Direct Access and fairly present the financial position and results of
operations of Direct Access as of and for the periods set forth therein.
(b) Other than as shown on Company Disclosure Schedule 7.4 or
-------------------------------
reserved against in the Direct Access Financial Statements, since March 31, 1999
Direct Access has not incurred material liabilities other than pursuant to this
Agreement and the other Contribution Agreements and except for liabilities
incurred in the ordinary course of business.
(c) Since March 31, 1999, there has not been any change, occurrence
or circumstance affecting the business, results of operations or financial
condition of Direct Access
Asset Purchase Agreement - Page 19
that has had, individually or in the aggregate, a Material Adverse Effect on the
Company, other than changes, occurrences and circumstances disclosed by the
Company to the Transferor on the Company Disclosure Schedules.
7.5 Broker's and Other Fees. Neither the Company, Direct Access nor
-----------------------
any of the directors or officers has employed any broker or finder or incurred
any liability for any broker's or finder's fees or commissions in connection
with any of the transactions contemplated by this Agreement, the other
Contribution Agreements or the Exchange Documents.
7.6 Absence of Certain Changes or Events. Except (i) as set forth in
------------------------------------
Company Disclosure Schedule 7.6, (ii) as pertaining to the former SBS
-------------------------------
corporation or its business, and (iii) in connection with or in contemplation of
the Exchange, Direct Access has not taken or permitted any of the actions of the
nature described in Section 8.2 since March 31, 1999 and, except for execution
of this Agreement, the other Contribution Agreements, the Exchange Documents and
the documents executed in connection with the SBS acquisition and all matters
related thereto or resulting therefrom, each of Direct Access and the Company
has conducted its respective businesses only in the ordinary course, consistent
with past practice.
7.7 Legal Proceedings. Except as disclosed in Company Disclosure
----------------- ------------------
Schedule 7.7, and except as relates to the former SBS Corporation and its
------------
operations and business, neither Direct Access or the Company is a party to any,
nor are there pending or to the Company's Knowledge threatened, legal,
administrative, arbitral or other proceedings, claims, actions or governmental
investigations of any nature against either Direct Access or the Company. Except
as disclosed in Company Disclosure Schedule 7.7 and as relates to the former
-------------------------------
SBS Corporation and its operations and business, neither Direct Access or the
Company is a party to any order, judgment or decree entered in a lawsuit or
proceeding that relates to or would have a material adverse effect on Direct
Access or the Company. Except as disclosed in Company Disclosure Schedule 7.7
--------------------------------
and as relates to the former SBS Corporation and its operations and business, to
the Company's Knowledge, no actions, suits, demands, notices, claims,
investigations or proceedings are pending or, to the Company's Knowledge,
threatened against or otherwise involving, directly or indirectly, any officer,
director, employee or agent of Direct Access or the Company, including without
limitation any notices, demand letters or requests from any Governmental
Authority relating to such potential liabilities, nor, to the Company's
Knowledge, are there any circumstances which are reasonably likely to lead to
such actions, suits, demands, notices, claims, investigations or proceedings.
7.8 Properties and Insurance.
------------------------
(a) Except as disclosed in Company Disclosure Schedule 7.8, and
-------------------------------
except for assets of the former SBS corporation, the Company's and Direct
Access' assets are in good operating condition and repair, ordinary wear and
tear excepted, and are suitable for the purposes for which they are used in the
Company or Direct Access, as the case may be. Each of the Company and Direct
Access has good and marketable title to, or holds by valid and existing lease or
license, free and clear of all Liens, each piece of real and personal property
used in their respective businesses as now conducted, except in any of the
foregoing cases for such imperfections of title or Liens as (i) are set forth in
Company Disclosure Schedule 7.8 hereof, (ii) are reflected or reserved against
-------------------------------
in the Direct Access Financial Statements, or (c) arise out of
Asset Purchase Agreement - Page 20
Taxes which are not yet due and payable or are not in default and payable
without penalty or interest.
(b) The business operations and insurable material properties and
assets of the Company are insured for their benefit against all risks which, in
the reasonable judgment of the Company, should be insured against, in each case
under policies or bonds issued by insurers of recognized responsibility, in such
amounts with such deductibles and against such risks and losses as are in the
opinion of the Company adequate for the business engaged in by the Company. The
Company has not received any notice of cancellation or notice of a material
amendment of any such insurance policy or bond and the Company is not in default
under any such policy or bond, no coverage thereunder is being disputed and all
material claims thereunder have been filed in a timely fashion.
7.9 Intellectual Property. All of the representations in Sections 7.9
---------------------
through 7.12 expressly exclude any representations with respect to the former
SBS Corporation, its operations or business. Direct Access conducts an active
business using proprietary application software products and systems and
provides internet banking and integrated voice response (telephone banking)
services utilizing such products and systems (the "Company's Software
Programs"), and in connection therewith the Company has developed certain
related technical documentation and user reference manuals (the "Company's
Documentation"). The Company's Software Programs and the Company's Documentation
are collectively referred to as the "Company's Software."
(a) Ownership. The Company owns all patents, trademarks, service
---------
marks, trade names and copyrights (including registrations, licenses and
applications pertaining thereto) and all other proprietary information used by
the Company and material to the conduct of its business, including, without
limitation, the Company's Software.
(b) Procedures for Copyright Protection. To the Knowledge of the
-----------------------------------
Company, in no instance has the eligibility of the Company's Software for
protection under copyright law been forfeited to the public domain.
(c) Procedures for Trade Secret Protection. To the Knowledge of the
--------------------------------------
Company, Direct Access has never disclosed source code for any of the Company's
Software to a third party other than the persons identified in Company
-------
Disclosure Schedule 7.9(c). Direct Access discloses its source code to
--------------------------
employees only on a need-to-know basis in connection with the performance of
their duties to Direct Access. The source code and system documentation
comprising the Company Software have at all times been maintained by Direct
Access in confidence and Direct Access has not taken (nor has it failed to take)
any action which would be reasonably likely to result in such source code and
system documentation not being protectable as a trade secret under applicable
Laws.
(d) Absence of Claims. To the Knowledge of the Company, no claims
-----------------
have been asserted by any person to rights in the Company's Software (other than
pursuant to licenses executed with customers in the ordinary course of
business), and no valid basis for any such claim exists. To the Company's
Knowledge, the use of the Company's Software by the Company or Direct Access and
its licensees does not infringe on the rights of any person
Asset Purchase Agreement - Page 21
(whether arising under copyright, trade secret, patent, unfair competition or
other state or federal laws which protect intellectual property rights). To the
Company's Knowledge, the use by the Company or Direct Access of its patents,
trademarks, service marks, trade names and copyrights does not infringe the
rights of any person, and no written claim has been asserted that the use by the
Company or Direct Access of any of the foregoing infringes the rights of any
person. No written claim has been asserted by any person to the effect that any
current or former employee of the Company or Direct Access has violated the
provisions of any noncompete or nondisclosure agreement with such person, or has
disclosed any proprietary information of such person to the Company or Direct
Access or any third party.
(e) Third Party Interests in Software. Neither the Company nor
---------------------------------
Direct Access has granted, transferred, or assigned any right or interest in the
Company's Software to any person, other than pursuant to licenses granted in the
ordinary course of business.
7.10 Adequacy of Technical Documentation. The Company's Software
-----------------------------------
includes the source code, system documentation and schematics for all Company's
Software Programs, as well as any programmer comments for documentation and
pertinent commentary or explanation that may be reasonably necessary to render
such materials understandable and usable by a trained computer programmer. The
Company's Software also includes the programs (including compilers),
workbenches, tools and higher level language, if any, used for the development,
maintenance and implementation for the Company's Software Programs.
7.11 Third-Party Components in Company's Software. Direct Access has
--------------------------------------------
validly obtained the right and license to use, copy , modify and distribute any
third-party programming and materials contained in the Company's Software
pursuant to the contracts identified in Company Disclosure Schedule 7.11,
--------------------------------
subject to no further license fee, royalty or other payment obligations not
identified in Company Disclosure Schedule 7.11, other than software maintenance
--------------------------------
payments customarily associated therewith. The Company's Software contains no
other programming or materials in which any third party may claim superior,
joint or common ownership, including any right or license. The Company's
Software does not contain derivative works of any programming or materials not
owned in their entirety by the Transferor.
7.12 Third-Party Interests or Marketing Rights in Software. Direct
-----------------------------------------------------
Access has not granted, transferred or assigned any right or interest in the
Company's Software to any person except pursuant to the contracts identified on
Company Disclosure Schedule 7.12. There are no contracts, agreements,
--------------------------------
licenses, commitments or arrangements in effect with respect to the marketing,
distribution, licensing or promotion of the Company's Software by any
independent salesperson, distributor, sublicensor or other remarketer or sales
organization except as set forth on Company Disclosure Schedule 7.12.
--------------------------------
7.13 Compliance with Applicable Laws. Each of Direct Access and the
-------------------------------
Company has all Licenses required for its business as currently conducted,
except to the extent a failure to hold such Licenses would not have a Material
Adverse Effect on the Company or Direct Access. No proceeding is pending or
threatened seeking the revocation or suspension of any material License. Except
as disclosed by the Company on Company Disclosure Schedule 7.13, Direct Access'
--------------------------------
business has been operated and maintained in all material respects in compliance
with
Asset Purchase Agreement - Page 22
applicable Laws. Neither Direct Access nor the Company has received any notices
of any allegation of any violation of any Laws or Licenses.
7.14 Taxes and Tax Returns. Except as disclosed in Company Disclosure
--------------------- ------------------
Schedule 7.14, since March 9, 1999:
-------------
(a) Direct Access has duly filed (and until the Closing Date will so
file) all Returns required to be filed by it in respect of any United States
federal, state or local, or foreign, Taxes and has duly paid (and until the
Closing Date will so pay) all such Taxes due and payable, other than Taxes which
are being contested in good faith (and disclosed by the Company to the
Transferor in writing). Each of the Company and Direct Access has established
(and until the Closing Date will establish) on its books and records reserves
that are adequate for the payment of all Taxes not yet due and payable, but are
incurred in respect of Direct Access or the Company through the date of this
Agreement.
(b) There are no audits or other Governmental Authority proceedings
presently pending, nor, to the Knowledge of the Company, any other disputes
pending with respect to, or claims asserted for, Taxes upon Direct Access or the
Company, nor has Direct Access or the Company given any currently outstanding
waivers or comparable consents regarding the application of any statute of
limitations with respect to any Taxes or Returns. There are no Liens filed of
record publicly for Taxes upon the assets of Direct Assets or the Company,
except Liens for Taxes not yet due. Each of Direct Access and the Company has
complied (and until the Closing Date will comply) in all respects with all
applicable Laws relating to the payment and withholding of Taxes.
(c) Neither Direct Access nor the Company (1) has requested any
extension of time within which to file any return which Return has not since
been filed (2) is a party to any agreement providing for the indemnification,
allocation or sharing of Taxes; (3) is required to include in income any
adjustment by reason of a voluntary change in accounting method initiated by
Direct Access or the Company (nor to the Company's Knowledge has any
Governmental Authority proposed any such adjustment or change of accounting
method): or (4) has filed a consent with any Governmental Authority pursuant to
which Direct Access or the Company has agreed to recognize gain (in any manner)
relating to or as a result of this Agreement or the transactions contemplated
hereby.
(d) Neither the Company nor Direct Access is liable for any Taxes of
any consolidated, combined, unitary or similar group of which the Company and/or
Direct Access has been a member. Except for that certain Tax Indemnity
Agreement between Intercept and Direct Access dated as of the date hereof (the
"Tax Indemnification Agreement"), neither the Company nor Direct Access is a
party to, or bound by, any tax indemnity, tax sharing or tax allocation
agreement.
7.15 Corporate Records. The corporate record books (including the share
-----------------
records) of Direct Access and the Company are materially complete, accurate and
up to date with all necessary signatures and set forth all meetings and actions
taken by the shareholders and directors of Direct Access and the Company and all
transactions involving the shares of Direct Access and the Company.
Asset Purchase Agreement - Page 23
7.16 Combinations Involving the Company. The mergers, consolidations or
----------------------------------
other business combinations involving Direct Access and/or the Company and all
liquidations, purchases or other transactions by which Direct Access or the
Company has acquired or disposed of any of its business and property since such
time were conducted in material compliance with applicable charter documents,
bylaws, any other applicable agreements, instruments and documents and
applicable Laws.
7.17 No Prior Operations. The Company was incorporated on August 25,
-------------------
1999. Other than actions taken to consummate the Exchange, the Company has not
conducted any operations or business and has not taken any other actions.
7.18 Diligence. The Company has conducted reasonable and customary legal,
---------
accounting, financial and other "due diligence" reviews of Dyad Corporation and
CMB. As of the date hereof, nothing has come to the attention of the Company,
and the Company is unaware of any information with respect to Dyad or CMB that
is likely to have a Material Adverse Effect on (i) the Company, (ii) the Company
Common Stock, or (iii) the ability to have the Exchange qualify for treatment
under Section 351 of the Code.
7.19 SBS Corporation. To the Knowledge of the Company, the
---------------
representations and warranties of SBS Corporation and its Shareholders contained
in that certain Agreement and Plan of Merger dated August 6, 1999 were true and
correct in all material respects.
7.20 Disclosure. No representation or warranty of the Company in this
----------
Agreement and the other Contribution Agreements, nor any financial statements or
other written statements or certificates furnished to the Transferor in
connection with the transactions contemplated by this Agreement, contains or as
of the Closing Date will contain, any untrue or incomplete statement of a
material fact, or omits or as of the Closing Date will omit to state a material
fact necessary to make the statements herein or therein not misleading. The
Company has completely and accurately responded in all material respects to the
diligence inquiries made by the Transferor in connection with this Agreement and
the other Contribution Agreements.
ARTICLE 8
COVENANTS AND AGREEMENTS OF THE PARTIES
8.1 Conduct of Business. The Transferor agrees that from the date hereof
-------------------
to the Closing Date, the Transferor shall conduct its business with respect to
the Division only in the ordinary course and consistent with prudent business
practice and past practice, except for transactions permitted hereunder or with
the prior written consent of InterCept and the Company. Without limiting the
generality of the foregoing, the Transferor agrees that, with respect to the
Division, the Transferor shall use all commercially reasonable efforts to:
(a) maintain its existence and status in good standing in all
jurisdictions in which the properties of the Division or the conduct of the
Division's business requires it to be qualified or registered to conduct its
business, except where the failure to do so would not have a Material Adverse
Effect on the Division;
Asset Purchase Agreement - Page 24
(b) maintain all of its tangible assets in good operating condition
and maintain the protection of all intellectual property in substantially the
same standing as exists on the date hereof;
(c) continue performance in the ordinary course of its obligations
under its contracts and agreements;
(d) preserve its business organization intact, use all commercially
reasonable efforts to keep available its present officers and employees and
preserve its present relationships with suppliers, customers and others having
business relationships with it; and
(e) maintain its existing insurance, subject to variations in amount
required by the ordinary operations of its business.
8.2 Negative Covenants. The Transferor agrees that from the date hereof
------------------
to the Closing Date, except as otherwise approved by InterCept and the Company
in writing, or as permitted or required by this Agreement, the Transferor will
not with respect to the Division or the Transferred Assets:
(i) sell or dispose of any assets other than in the ordinary
course of business consistent with past practices;
(ii) make any capital expenditures outside the ordinary course
of business;
(iii) make any change in its accounting methods or practices,
except as required by GAAP or applicable Governmental Authorities;
(iv) incur, create, assume or guarantee any liabilities except
in the ordinary course of business and as would not have a Material Adverse
Effect;
(v) increase, or make any change in any assumptions
underlying the method of calculating any bad debt, contingency or other reserves
from those reflected in the Division Financial Statements;
(vi) make any change in the method of valuing assets included
in the Division Financial Statements;
(vii) permit or allow any of the Transferred Assets (real,
personal or mixed, tangible or intangible) to be subjected to any Lien, except
for Liens which are in existence on the date hereof and which are disclosed on
the Transferor Disclosure Schedules or reflected in the Division Financial
Statements, and Liens for amounts not yet due and payable or which are contested
in good faith and for which adequate reserves have been or will be made;
(viii) write down the value of any inventory or write off as
uncollectible any notes or accounts receivable, except for write-downs and
write-offs in the ordinary course of business;
Asset Purchase Agreement - Page 25
(ix) cancel or waive any claims or rights, or sell, transfer,
distribute or otherwise dispose of any assets or properties, except in the
ordinary course of business;
(x) declare, file or permit to be filed any voluntary or
involuntary bankruptcy, receivership, insolvency or other similar proceeding or
petition with any Governmental Authority with respect to the Transferor;
(xi) fail to perform its obligations under any Material
Contract (except those being contested in good faith) or enter into, assume or
amend any agreement that would be a Material Contract other than agreements to
provide services entered into in the ordinary and usual course of business;
(xii) take any action that would or could reasonably be
expected to result in (A) a Material Adverse Effect on the Division or (B) any
of its representations and warranties contained in Article 5 not being true and
---------
correct in any material respect at the Closing Date, or that would cause any of
the conditions to Closing not to be satisfied; or
(xiii) directly or indirectly agree to do any of the foregoing.
8.3 No Solicitation. From the date hereof to the Closing Date or the
---------------
earlier termination of this Agreement in accordance with its terms, the
Transferor:
(a) agrees that neither the Transferor nor any of its present or
future subsidiaries or other affiliates, nor any of its or their directors,
officers, shareholders, employees, representatives or other agents
(collectively, the "Transferor Affiliates") shall, directly or indirectly, (i)
enter into any agreement (or agree to do so), or solicit, initiate or knowingly
encourage the invitation of inquiries or proposals or offers from any person
(other than InterCept, the Company or its or their directors, officers,
employees, representatives and agents) concerning: (A) any sale of the
Transferred Assets or the Division or transfer of Assumed Liabilities of the
Division (other than any such sale or transfer in the ordinary course of
business) or (B) any merger, consolidation, restructuring, recapitalization or
other significant transaction involving the Transferor or any of its present or
future subsidiaries, divisions or other affiliates (unless such transaction does
not adversely affect the transactions contemplated by this Agreement); or (ii)
provide any confidential information to, participate in discussions or
negotiations relating to any such transaction with, or otherwise cooperate with
or assist or participate in any effort to take such action by any person or
entity (other than InterCept, the Company or its or their directors, officers,
shareholders, employees, representatives and agents). The Transferor shall
immediately advise InterCept and the Company if any such inquiry, offer or
proposal is made or received by the Transferor or any of the Transferor
Affiliates;
(b) will immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any parties conducted heretofore
with respect to any of the foregoing, and the Transferor will take the necessary
steps to inform the individuals or entities referred to above of the obligations
undertaken in this Section 8.3; and
-----------
(c) will notify InterCept and the Company immediately of the
identity of any potential acquirer and the terms of any proposal or offer
(including, without limitation, any proposal or offer to any of the shareholders
of the Transferor) with respect to a proposed or
Asset Purchase Agreement - Page 26
potential merger, acquisition, consolidation, business combination, transfer or
similar transaction involving, or any purchase of all or any significant portion
of the assets, equity securities of or rights with respect to any assets or
securities of, the Transferor (which would adversely affect the transactions
contemplated hereby) not permitted by this Section 8.3.
-----------
8.4 Current Information. During the period from the date of this
-------------------
Agreement to the Closing Date or the earlier termination of this Agreement in
accordance with its terms, on a frequent basis:
(a) The Transferor will cause one or more of the Transferor's
representatives to confer with representatives of InterCept and the Company
regarding the Division's business, operations, properties, assets and financial
condition; each of the Parties will cause one or more of its representatives to
confer with representatives of the other Parties regarding matters relating to
the completion of the transactions contemplated herein; and
(b) Each of the Parties will notify the other Parties as soon as
practicable after any determination or discovery by it of any fact or
circumstance relating to any Party which it has discovered through the course of
investigation and which represents, or is reasonably likely to represent, a
material breach of any representation, warranty, covenant or agreement of any
Party or which has or is reasonably likely to have a Material Adverse Effect on
any Party. Notwithstanding the foregoing, for the purpose of determining
satisfaction of the condition set forth in Article 9, no such notification shall
---------
be deemed to amend such Disclosure Schedules or shall be deemed to be a part
thereof unless agreed to by the other Parties.
8.5 Access to Properties and Records; Confidentiality. The Transferor
-------------------------------------------------
shall permit InterCept, the Company and their representatives reasonable access
during normal business hours to its properties and shall disclose and make
available to InterCept, the Company and their representatives all books, papers
and records and information relating to the Division, the Transferred Assets and
the Assumed Liabilities, including, but not limited to, all books of account
(including the general ledger), tax records, minute books of directors' and
shareholders' meetings, organizational documents, agreements, filings with any
Governmental Authority, accountants' work papers, litigation files, plans
affecting employees, and any other records and information in which InterCept,
the Company and their representatives may have a reasonable interest; provided
that such investigation shall be reasonably related to the transactions
contemplated by this Agreement and shall not interfere unnecessarily with the
normal business operations of the Transferor.
8.6 Regulatory Matters; Consents; Cooperation, etc.
----------------------------------------------
(a) To the extent permitted by Law, each of the Parties will
promptly furnish each other with copies of written communications received by
them or any of their respective Subsidiaries or representatives from, or
delivered by any of the foregoing to, any Governmental Authorities in respect of
the transactions contemplated hereby.
(b) As soon as practicable following the date hereof, each of the
Parties will use its commercially reasonable efforts to obtain all consents,
waivers and other Approvals under
Asset Purchase Agreement - Page 27
any of its or its Subsidiaries' agreements, contracts, licenses or leases
required to be obtained by such Party in connection with the consummation of the
transactions contemplated hereby.
8.7 Parties' Efforts; Further Assurances; Cooperation. Subject to the
-------------------------------------------------
other provisions in this Agreement, the Parties shall in good faith perform
their obligations under this Agreement before, at and after the Closing Date,
and shall each use all commercially reasonable efforts to do, or cause to be
done, all things necessary, proper or advisable under applicable Laws to obtain
all Authorizations and satisfy all conditions to the obligations of the Parties
under this Agreement and to cause the transactions contemplated by this
Agreement to be carried out promptly in accordance with the terms hereof and
shall cooperate fully with each other and their respective officers, directors,
employees, agents, counsel, accountants and other designees in connection with
any steps required to be taken as part of their respective obligations under
this Agreement. Upon the execution of this Agreement and thereafter, each party
shall take such actions and execute and deliver such documents as may be
reasonably requested by the other Parties in order to consummate the
transactions contemplated by this Agreement.
8.8 Public Announcements. Prior to the Closing Date or the earlier
--------------------
termination of this Agreement in accordance with its terms, the Parties shall
consult and cooperate with each other as to the timing, content and form of any
press release or other public disclosure related to this Agreement or the
transactions contemplated herein, and will not issue a press release or make any
such public disclosure without the prior consent of the other party, which shall
not be unreasonably withheld, conditioned or delayed. After the Closing Date,
the Transferor shall not make any public announcement regarding any aspect of
this Agreement without InterCept's and the Company's prior written consent.
Nothing in this Section 8.8 shall be deemed to prohibit any Party from making
-----------
any disclosure which its counsel deems necessary in order to satisfy such
Party's disclosure obligations imposed by Law or Governmental Authority.
8.9 Noncompetition, Nonsolicitation and Confidentiality Agreement. The
-------------------------------------------------------------
Parties shall negotiate in good faith within seven (7) days of Closing the terms
and conditions of a Noncompetition, Nonsolicitation and Confidentiality
agreement among InterCept and the Company.
8.10 Disclosure Supplements. From time to time prior to the Closing Date,
----------------------
each Party hereto will promptly notify the other Party of any inaccuracy in its
respective Disclosure Schedules delivered pursuant hereto including, without
limitation, any matter which, if existing, occurring or known at the date of
this Agreement, would have been required to be set forth or described in such
Schedule or which is necessary to correct any information in such Schedule that
has been rendered inaccurate. Notwithstanding the foregoing, no such
notification shall be deemed to amend such Disclosure Schedules or shall be
deemed to be part hereof unless agreed to by the other Parties.
8.11 Cooperation and Exchange of Information. The Parties agree to
---------------------------------------
furnish, or to cause to be furnished in good faith to each other, such
cooperation and assistance as is reasonably necessary to file any future
Returns, to respond to audits, to negotiate settlements with Tax authorities and
to prosecute and defend against Tax claims.
Asset Purchase Agreement - Page 28
8.12 Customer Contacts. The Transferor shall permit the Company to
-----------------
conduct a survey or otherwise inquire of certain or all of the Division's key
customers, as selected by the Company, regarding the relationship between such
customer and the Transferor and the impact of a change in control on such
relationship. The Transferor shall assist the Company in making such survey or
inquiries and shall have the right to have a representative of its choice
participate therein.
8.13 Employees
---------
(a) All employees of the Division on the Closing Date shall be
employed by the Company and shall receive salaries no less favorable than the
salaries currently paid such employees as set forth on Schedule 8.13, provided,
-------------
however, that the provisions of this Section shall not change the employment
status of such employees.
(b) All employees of the Division who remain employed by the Company
after the Closing Date shall participate in all benefit plans generally
available to employees of the Company.
8.14 Non-Assignable Purchased Contracts.
----------------------------------
(a) In the case of any Transferred Assets which are contracts or
agreements which are not assignable or transferable, either by their terms or
otherwise without the prior consent of any third party thereto (such contracts
or agreements being the "Non-Assignable Purchased Contracts") the Transferor
shall use commercially reasonable efforts to obtain at its cost, or cause to be
obtained, prior to the Closing Date, any written consents or waivers necessary
for the assignment of such Transferred Assets to the Company as contemplated by
this Agreement, and InterCept and the Company shall cooperate with the
Transferor, at no additional cost to InterCept or the Company, in such manner as
may be reasonably requested in connection therewith. In the event the Transferor
shall be unable to obtain any such consent or waiver to the assignment or
transfer of a Transferred Asset to the Company prior to the Closing Date (i) the
Transferor shall continue to use such commercially reasonable efforts after the
Closing Date at its cost, (ii) the Transferor shall provide to the Company, from
and after the Closing Date, at a cost to the Company no greater than the cost of
the Company would have otherwise paid under the terms of such Non-Assignable
Purchased Contract (the "Contract Costs"), benefits substantially equivalent to
each such Non-Assignable Purchased Contract, as fully as if such consent had
been obtained, to the extent the Transferor is reasonably capable of providing
such benefits and (iii) at the Company's option, the Company may procure such
equivalent benefits from third parties during the final 90 days of the current
term of any such Non-Assignable Purchased Contract (or at any time within 90
days of the date on which the non-Assignable Purchased Contract which such
equivalent benefits replace would have by its terms terminated or entitled the
other party thereto to terminate or renegotiate the costs of such benefits)
without any further liability to the Transferor; provided however, that (A) the
Company shall provide the Transferor prior written notice of procuring any such
equivalent benefits 30 days (or, if 30 days' notice is not practicable,
Asset Purchase Agreement - Page 29
such notice, if any, which is practicable) prior to obtaining such equivalent
benefits pursuant to clause (iii), above, and (B) in the event the Company
procures equivalent benefits pursuant to clause (iii) the Transferor shall be
relieved of its obligations under this Section 8.14(a) with respect to the Non-
Assignable Purchased Contracts with respect to which such equivalent benefits
have been so procured by the Company and may take any and all action available
to the Transferor to terminate its obligation under such Non-Assignable
Purchased Contracts.
(b) The Company agrees to pay, or reimburse the Transferor for, the
Transferor's direct out-of-pocket costs, fees and expenses (excluding attorneys'
fees and fees and expenses of other professionals and employees of the
Transferor), actually incurred by the Transferor in fulfilling its obligations
to the Company under Section 8.14(a), provided, that the amount of such costs,
fees and expenses, shall not exceed $10,000. The Company shall make such
payments to the Transferor within 30 days after the Transferor's submission of
an itemized invoice therefor in detail reasonably sufficient to the Company.
ARTICLE 9
CLOSING CONDITIONS
9.1 Conditions of Each Party's Obligations Under this Agreement. The
-----------------------------------------------------------
respective obligations of each party under this Agreement shall be subject to
the satisfaction, or, where permissible under applicable Law, waiver at or prior
to the Closing Date of the following conditions:
(a) Approvals and Regulatory Filings. All necessary Authorizations
--------------------------------
of Governmental Authorities required to consummate the transactions contemplated
hereby shall have been obtained without any term or condition which would
materially impair the value of the Transferor, the Company or InterCept. All
conditions required to be satisfied prior to the Closing Date by the terms of
such approvals and consents shall have been satisfied, and all statutory waiting
periods in respect thereof shall have expired.
(b) Suits and Proceedings. The consummation of the transactions
---------------------
contemplated hereby will not violate the provisions of any injunction, order,
judgment, decree or Law applicable or effective with respect to InterCept, the
Company or the Transferor or their respective officers and directors. No suit or
proceeding shall have been instituted by any person, or, to the Knowledge of
InterCept, the Company or the Transferor, shall have been threatened by any
Governmental Authority, and not subsequently withdrawn, dismissed or otherwise
eliminated, which seeks (i) to prohibit, restrict or delay consummation of the
transactions contemplated hereby or to limit in any material respect the right
of InterCept or the Company to control any material aspect of the business of
InterCept, the Company or the Division after the Closing Date, or (ii) to
subject InterCept, the Company or the Transferor or their respective directors
or officers to material liability on the ground that it or they have breached
any Law or otherwise acted improperly in relation to the transactions
contemplated by this Agreement.
9.2 Conditions to the Obligations of InterCept and the Company under this
---------------------------------------------------------------------
Agreement. The obligations of InterCept and the Company under this Agreement
---------
shall be
Asset Purchase Agreement - Page 30
further subject to the satisfaction or waiver, at or prior to the Closing Date
(and continued until the Closing Date), of the following conditions:
(a) Representations and Warranties; Covenants and Agreements;
--------------------------------------------------------
Consents. The representations and warranties of the Transferor contained in this
--------
Agreement shall be true and correct in all material respects as of the date
hereof and shall also be true and correct in all material respects on the
Closing Date as though made on and as of the Closing Date, except that those
representations and warranties which are confined to a particular date shall
speak only as of such date, and the Transferor shall have performed in all
material respects the agreements, covenants and obligations to be performed by
it at or prior to the Closing Date. All Authorizations of or with any
Governmental Authority or other third party that are required for or in
connection with the execution and delivery of this Agreement or the consummation
of the transactions contemplated hereby by the Transferor shall have been
obtained or made.
(b) Certificates. The Transferor shall have furnished InterCept and
------------
the Company with such certificates of the Transferor and such other documents to
evidence fulfillment of the conditions set forth in this Article 9 and otherwise
---------
to consummate the transactions contemplated pursuant to this Agreement, in
substantially the form attached hereto as Exhibit 9.2(b).
--------------
(c) Noncompetition, Nonsolicitation and Confidentiality Agreement.
-------------------------------------------------------------
The Transferor, as reasonably requested by the Company, shall have executed and
delivered to the Company a Noncompetition, Nonsolicitation and Confidentiality
Agreement substantially in the form attached hereto as Exhibit 9.2(c).
--------------
(d) Work Product Agreements. The Transferor shall have delivered to
-----------------------
the Company an Assignment of Work Product Agreement in the form attached hereto
as Exhibit 9.2(d), signed by all persons who have developed, modified or
--------------
otherwise had access to the source code for the Software.
(e) No Material Adverse Effect on the Division. No event shall have
------------------------------------------
occurred and no fact or circumstance shall have arisen which, in the judgment of
InterCept and the Company, is reasonably likely to have a Material Adverse
Effect on the Division or materially and adversely affect the value of this
transaction to InterCept or the Company, since the Balance Sheet Date except (i)
the announcement of this Agreement or (ii) conditions affecting global economy
or regional economy in which InterCept and the Company operate any part of its
or their business.
(f) Lease. The Company and Transferor shall have entered into a lease
-----
for the office space presently used by Transferor for the Division on
substantially the same terms as Transferor presently makes the space available
to the Division.
9.3 Conditions to the Obligations of the Transferor under this Agreement.
--------------------------------------------------------------------
The obligations of the Transferor under this Agreement shall be further subject
to the satisfaction or waiver, at or prior to the Closing Date, of the following
conditions:
(a) Representations and Warranties; Covenants and Agreements;
--------------------------------------------------------
Consents. The representations and warranties of InterCept and the Company
--------
contained in this Agreement
Asset Purchase Agreement - Page 31
shall be true and correct in all material respects as of the date hereof and
shall also be true and correct in all material respects on the Closing Date as
though made on and as of the Closing Date, and InterCept and the Company shall
have performed in all material respects the agreements, covenants and
obligations to be performed by them at or prior to the Closing Date. All
Authorizations of or with any Governmental Authority or other third party that
are required for or in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby by
InterCept and the Company shall have been obtained or made, except where the
failure to obtain any such Authorizations would not have a Material Adverse
Effect on InterCept or the Company.
(b) Certificates. InterCept and the Company shall have furnished the
------------
Transferor with such certificates of InterCept and the Company and such other
documents to evidence fulfillment of the conditions set forth in this Article 9
---------
and otherwise to consummate the transactions contemplated pursuant to this
Agreement substantially in the form attached hereto as Exhibit 9.3(b).
--------------
(c) Noncompetition, Nonsolicitation and Confidentiality Agreement.
-------------------------------------------------------------
Intercept shall have executed and delivered to the Company a Noncompetition,
Nonsolicitation and Confidentiality Agreement substantially in the form attached
hereto as Exhibit 9.3(c).
--------------
(d) No Material Adverse Effect. No Material Adverse Effect on
--------------------------
InterCept or the Company since the date of this Agreement shall have occurred
except (i) the announcement of this Agreement, and (ii) conditions affecting the
global economy or regional economy in which InterCept and the Company operate
any part of its or their business.
(e) Approvals. This Agreement and the transactions contemplated
---------
hereby shall have received all required Government Authorizations and other
consents or approvals from third parties (including lenders, licensees and
lessors) required to consummate the transactions contemplated hereby which,
either individually or in the aggregate, if not obtained would have a Material
Adverse Effect.
(f) Registration Rights Agreement. The Company shall have executed
-----------------------------
and delivered a Registration Rights Agreement (herein so called) in the form of
Exhibit 9.3(f) attached hereto.
--------------
(g) Marketing Agreement. Each of the Company and Transferor shall
-------------------
have executed and delivered the Marketing Agreement.
(h) Company's Board. The Company and its Board of Directors shall
---------------
have taken all actions necessary so that upon the Closing of this Agreement
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, or such other individual as the Transferor may
designate prior to Closing and that is reasonably acceptable to the Company,
shall become a director of the Company with a term ending not earlier than three
years following the Closing and such person shall be a member of the Nominating
Committee of the Company's Board of Directors.
(i) Completion of Due Diligence on Company. The Transferor shall have
--------------------------------------
completed its review of the Company, the results of which shall be acceptable to
the Transferor in its reasonable discretion.
Asset Purchase Agreement - Page 32
(j) The Indemnity Agreement shall be in full force and effect.
(k) The Autidilution Agreement shall have been executed.
(l) Lease. The Company and Transferor shall have entered into a
-----
lease for the office space presently used by Transferor for the Division on
substantially the same terms as Transferor presently makes the space available
to the Division.
ARTICLE 10
TERMINATION, AMENDMENT AND WAIVER
10.1 Termination. This Agreement may be terminated prior to the Closing
-----------
Date, whether before or after approval of this Agreement by the Company,
InterCept and the Transferor:
(a) by mutual written consent of InterCept, the Company and the
Transferor;
(b) by InterCept, the Company or the Transferor if the Closing Date
shall not have occurred on or prior to the Deadline Date; provided, however,
that the right to terminate this Agreement under this Section 10.1(b) shall not
---------------
be available to any Party whose action or failure to act has been a principal
cause of or resulted in the failure of the transaction contemplated by this
Agreement to occur on or before such date and such action or failure to act
constitutes a willful and material breach of this Agreement;
(c) by InterCept or the Company, if there has been a material breach
of any representation, warranty, covenant, agreement or obligation of the
Transferor hereunder in each case which either is not capable of being remedied,
or, if capable of being remedied, shall not have been remedied within 10 days
after receipt by the Transferor of notice in writing from InterCept or the
Company specifying the nature of such breach and requesting that it be remedied;
(d) by the Transferor, if there has been a material breach in any
representation, warranty, covenant, agreement or obligation of InterCept or the
Company hereunder in each case which either is not capable of being remedied,
or, if capable of being remedied, shall not have been remedied within 10 days
after receipt by InterCept or the Company, as the case may be, of notice in
writing from the Transferor specifying the nature of such breach and requesting
that it be remedied;
(e) by InterCept or the Company if any of the conditions set forth
in Section 9.1 or 9.2 is not satisfied and is no longer capable of being
------------------
satisfied by the Closing Date; or
(f) by the Transferor if any of the conditions set forth in Section
-------
9.1 or 9.3 is not satisfied and is no longer capable of being satisfied by the
----------
Closing Date;
10.2 Effect of Termination. If any Party terminates and abandons this
---------------------
Agreement pursuant to Section 10.1, this Agreement, other than Section 8.5(b),
------------ --------------
this Section 10.2, Section
------------ -------
Asset Purchase Agreement - Page 33
10.3, Article 11 and Section 12.1 (each of which shall survive termination),
---- ---------- ------------
shall forthwith become void and have no effect, without any liability on the
part of any Party or its officers, directors or shareholders; provided, however,
that nothing contained in this Section 10.2 shall relieve any Party from any
------------
liability for any breach of this Agreement or the Confidentiality Agreement.
10.3 Specific Performance. The Parties acknowledge that the rights of each
--------------------
Party to consummate the transactions contemplated hereby are special, unique,
and of extraordinary character, and that, in the event any Party either violates
or fails or refuses to perform any covenant made by it herein, the other Party
or Parties will be without adequate remedy at law. Each Party agrees, therefore,
that in the event that it violates, fails or refuses to perform any covenant or
agreement made by it herein, the other Party or Parties, so long as it or they
are not in breach hereof, may, in addition to the remedies at law, institute and
prosecute an action in a court of competent jurisdiction to enforce specific
performance of such covenant or agreement or seek any other equitable relief.
10.4 Amendment. This Agreement may not be amended except by an instrument
---------
in writing signed on behalf of all the Parties hereto.
10.5 Extension; Waiver. The Parties may, at any time prior to the Closing
-----------------
Date, (a) extend the time for the performance of any of the obligations or other
acts of the other Parties; (b) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant thereto; or
(c) waive compliance with any of the agreements or conditions contained herein.
Any agreement on the part of any Party to any extension or waiver shall be valid
only if it is set forth in an instrument in writing signed on behalf of the
Party against which the waiver is sought to be enforced and shall apply only to
the specific condition, representation or warranty identified by the writing as
being waived, extended or modified.
ARTICLE 11
INDEMNIFICATION
11.1 Indemnification by the Transferor. Subject to the terms of this
---------------------------------
Article 11, the Transferor shall indemnify, defend, save and hold harmless
InterCept, the Company, and their respective Subsidiaries, predecessors,
successors, directors, officers, employees, agents, representatives and assigns
(collectively, the "InterCept Indemnified Parties"), from and against any Claims
(including, without limitation, reasonable attorneys' and accountants' fees and
expenses), together with interest and penalties, if any, awarded by court order
or otherwise agreed to (collectively, "Indemnifiable Damages"), suffered by
InterCept Indemnified Parties that arise out of or result from any of the
following (whether or not a third party initiates the proceeding or claim giving
rise to such Indemnifiable Damages):
(a) any breach of any of the representations, warranties, covenants
or agreements made by the Transferor in this Agreement or in the other
Contribution Agreements; or
(b) any breach of any representation, warranty, covenant or
agreement in a document, certificate or affidavit delivered by the Transferor at
the Closing.
Asset Purchase Agreement - Page 34
11.2 Indemnification by InterCept. Subject to the terms of this Article
---------------------------- -------
11, InterCept shall indemnify, defend, save and hold harmless the Transferor,
--
and its shareholders, officers, directors, employees, agents, representatives
and assigns (collectively, the "Transferor Indemnified Parties"), from and
against any Indemnifiable Damages suffered by the Transferor Indemnified Parties
that arise out of or result from any of the following (whether or not a third
party initiates the proceeding or claim giving rise to such Indemnifiable
Damages):
(a) any breach of any of the representations, warranties, covenants
and agreements made by InterCept in this Agreement or in the other Contribution
Agreements; or
(b) any breach of any representation, warranty, covenant or
agreement in a document, certificate or affidavit delivered by InterCept at the
Closing.
11.3 Indemnification by Company. Subject to the terms of this Article 11,
-------------------------- ----------
the Company shall indemnify, defend, save and hold harmless the Transferor
Indemnified Parties, from and against any Indemnifiable Damages suffered by the
Transferor Indemnified Parties that arise out of or result from any of the
following (whether or not a third party initiates the proceeding or claim giving
rise to such Indemnifiable Damages):
(a) any breach of any of the representations, warranties, covenants
and agreements made by the Company in this Agreement or in the other
Contribution Agreements;
(b) any breach of any representation, warranty, covenant or
agreement in a document, certificate or affidavit delivered by the Company at
the Closing; or
(c) those contracts set forth on Schedule 11.3(c).
----------------
11.4 Claims for Indemnification. The Party seeking indemnification (the
--------------------------
"Indemnified Party") shall give the Party from whom indemnification is sought
(the "Indemnifying Party") a written notice ("Notice of Claim") within sixty
(60) days of the discovery of any loss, liability, claim or expense in respect
of which the right to indemnification contained in this Article 11 may be
----------
claimed; provided, however, that the failure to give such notice within such
sixty (60) day period shall not result in the waiver or loss of any right to
bring such claim hereunder after such period unless, and only to the extent
that, the other Party is actually prejudiced by such failure. In the event a
claim is pending or threatened or the Indemnified Party has a reasonable belief
as to the validity of the basis for such claim, the Indemnified Party may give
written notice (a "Notice of Possible Claim") of such claim to the Indemnifying
Party, regardless of whether a loss has arisen from such claim. A Party shall
have no liability under this Article 11 for breach of a representation or
----------
warranty, unless a Notice of Claim or Notice of Possible Claim therefor is
delivered by the Indemnified Party prior to March 31, 2001; provided, however,
that the limitations set forth in this Section 11.4 shall not apply to liability
------------
under this Article 11 for any intentional breach of a representation or warranty
----------
in this Agreement. Any Notice of Claim or Notice of Possible Claim shall set
forth the representations, warranties, covenants and agreements with respect to
which the claim is made, the specific facts giving rise to an alleged basis for
the claim and the amount of liability asserted or anticipated to be asserted by
reason of the claim.
Asset Purchase Agreement - Page 35
11.5 Defense of Claim by Third Parties. If any claim is made by a third
---------------------------------
party against a Party to this Agreement that, if sustained, would give rise to a
liability of another Party under this Agreement, the Party against whom the
claim is made shall promptly cause Notice of Claim to be delivered to the other
Party and shall afford the other Party and its counsel, at the other Party's
sole expense, the opportunity to join in the defense and settlement of the
claim. The failure to provide such notice will not relieve the Indemnifying
Party of liability under this Agreement unless, and only to the extent that, the
Indemnifying Party is actually prejudiced by such failure.
11.6 Third Party Claim Assistance. From time to time after the Closing,
----------------------------
InterCept, Company and the Transferor shall provide or cause their appropriate
employees or representatives to provide the other Parties with information or
data in connection with the handling and defense of any third party claim or
litigation (including counterclaims filed by the parties) in respect to which a
Party may be required to indemnify another Party under this Agreement. The
Party receiving such information or data shall reimburse the other Parties for
all of their reasonable costs and expenses in providing these services,
including, without limitation, (i) all out of pocket, travel and similar
expenses incurred by their personnel in rendering these services; and (ii) all
fees and expenses for services performed by third parties engaged by or at the
request of such other Parties.
11.7 Settlement of Indemnification Claims. If a recipient of a Notice of
------------------------------------
Claim desires to dispute such claim, it shall, within thirty (30) days after
receipt of the Notice of Claim, give counter-notice, setting forth the basis for
disputing such claim, to InterCept, the Company or the Transferor, as the case
may be. If no such counter-notice is given within such thirty (30) day period,
or if InterCept, Company or the Transferor, as the case may be, acknowledges
liability for indemnification, then the amount claimed shall be promptly
satisfied as provided in Section 11.8. If, within thirty (30) days after the
receipt of counter-notice by InterCept, Company or the Transferor, as the case
may be, the Transferor, Company and InterCept shall not have reached agreement
as to the claim in question, then the Party disputing the claim shall satisfy
any undisputed amount as specified in Section 11.8 and the disputed amount of
the claim of indemnification shall be submitted to and settled by arbitration in
accordance with the then prevailing commercial arbitration rules of the American
Arbitration Association. Such arbitration shall be held in the Atlanta, Georgia
area before a panel of three (3) arbitrators, one selected by each of the
Parties and the third selected by mutual agreement of the first two, and all of
whom shall be independent and impartial under the rules of the American
Arbitration Association. The decision of the arbitrators shall be final and
binding as to any matter submitted under this Agreement. To the extent the
decision of the arbitrators is that a Party shall be indemnified hereunder, the
amount shall be satisfied as provided in Section 11.8. Judgment upon any award
rendered by the arbitrators may be entered in any court of competent
jurisdiction. The date of the arbitrator's decision or the date a claim
otherwise becomes payable pursuant to this Section 11.7 is referred to as the
"Determination Date."
11.8 Certain Limitations. Notwithstanding the foregoing in this Article
-------------------
11, the indemnification obligations of the parties shall not be affected by any
investigation made by the parties hereto prior to the date hereof or the Closing
Date and shall be subject to the following limitations.
Asset Purchase Agreement - Page 36
(a) No indemnification shall be made for breaches of representations
and warranties pursuant to this Article 11 until the total Indemnifiable Damages
for which the Indemnifying Party would be liable exceeds $50,000, in which event
the Indemnifying Party shall indemnify to the full amount of such Indemnifiable
Damages.
(b) No indemnification shall be made for breaches of representations
and warranties pursuant to this Article 11 to the extent Indemnifiable Damages
to be paid by the Transferor, on the one hand, or Company or Intercept,
collectively on the other hand, exceed $4,500,000.
(c) An Indemnifying Party shall be obligated to indemnify an
Indemnified Party pursuant to this Article 11 for breaches of representations
and warranties only for those Indemnifiable Damages as to which the Indemnified
Party has given the Indemnifying Party written notice thereof by March 31, 2001.
(d) The limitations set forth in Sections 11.8(a), (b) and (c) shall
not apply to Indemnifiable Damages arising out of (a) fraud, (b) intentional
breaches or (c) breaches of the representations and warranties in Sections 5.1,
5.2, 5.7, 6.1, 6.2, 7.1, 7.2, 7.3 and 7.14.
ARTICLE 12
MISCELLANEOUS
12.1 Expenses.
--------
(a) Except as otherwise expressly stated herein, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby (including legal and accounting fees and expenses) shall be
borne by the Party incurring such costs and expenses and shall be paid by such
Party prior to or on the Closing Date.
(b) Notwithstanding any provision in this Agreement to the contrary,
if any of the Parties shall willfully default in its obligations hereunder, the
non-defaulting Party may pursue any remedy available at law or in equity to
enforce its rights and shall be paid by the willfully defaulting Party for all
damages, costs and expenses, including without limitation reasonable legal and
accounting expenses incurred or suffered by the non-defaulting Party in
connection herewith or in the enforcement of its rights hereunder.
12.2 Notices. All notices or other communications which are required or
-------
permitted hereunder shall be in writing and sufficient if delivered personally
or by reputable overnight or express courier, sent by registered or certified
mail, postage prepaid, or by telefax (with subsequent delivery via one of the
two previous methods) as follows:
Asset Purchase Agreement - Page 37
(a) If to InterCept or Company, to:
The InterCept Group, Inc.
Netzee, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: President and Chief Financial Officer
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
Copy (which shall not constitute notice) to:
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to the Transferor (prior to Closing) or the Shareholders, to:
The Bankers Bank
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
600 Paces Summit
Atlanta, Georgia 30339-4098
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
Copy (which shall not constitute notice) to:
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP
1600 Atlanta Financial Center
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
or such other addresses and telefax numbers as shall be furnished in writing by
any Party, and any such notice or communications shall be deemed to have been
given as of three business days after the date actually sent via overnight or
express courier, eight days after mailed and upon telefax confirmation of
receipt to addressee by the sender.
12.3 Parties in Interest. This Agreement shall be binding on and shall
-------------------
inure to the benefit of the Parties hereto and their respective successors,
representatives and assigns. This Agreement (and the rights and interests
herein) may not be assigned by any Party without the written consent of the
other Parties; provided, however, InterCept and the Company each may assign its
interests herein to an entity controlling, controlled by or under common control
with InterCept or the Company, as the case may be; provided, that InterCept or
the Company, as the
Asset Purchase Agreement - Page 38
case may be, irrevocably and unconditionally guarantees the performance of all
the assignee's obligations under this Agreement, subject only to the terms and
conditions of this Agreement. Any attempted assignment in contravention of the
foregoing shall be null and void. Nothing in this Agreement is intended to
confer, expressly or by implication, upon any other Person any rights or
remedies under or by reason of this Agreement.
12.4 Entire Agreement. This Agreement and the Disclosure Schedules,
----------------
Exhibits and the other documents, agreements (including, without limitation, the
Registration Rights Agreement, Marketing Agreement, Antidilution Agreement and
the Agreement, certificates and instruments executed and delivered pursuant to
or in connection with this Agreement (collectively, the "Contribution
Agreements"), contains the entire agreement among the Parties with respect to
the transactions contemplated by this Agreement and supersedes all prior
negotiations, arrangements or understandings, written or oral, with respect
thereto.
12.5 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be an original, and each of which shall
constitute one and the same agreement. Any Party may deliver an executed copy of
this Agreement and any documents contemplated hereby by facsimile transmission
to another Party, and such delivery shall have the same force and effect as any
other delivery of a manually signed copy of this Agreement or of such other
documents.
12.6 Governing Law.
-------------
(a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE UNITED STATES OF AMERICA AND THE STATE OF GEORGIA,
EXCLUDING CHOICE OF LAW PRINCIPLES.
(b) InterCept, the Company and the Transferor consent to the
exclusive jurisdiction and venue of the courts of the United States Federal
District Courts of Georgia, in any judicial proceeding brought to enforce this
Agreement.
12.7 Arbitration.
-----------
(a) Any dispute, controversy or claim arising out of or relating to
this Agreement or any other related documents, agreements, certificates or other
writing, or the breach, termination, construction, validity or enforceability
hereof or thereof, shall be settled by binding arbitration in accordance with
the rules of the American Arbitration Association (except as otherwise provided
in this Section 12.7).
(b) Termination or limitation of InterCept's or Company's rights in
any of its software, products, or any associated intellectual property rights or
documents may not be awarded under any circumstances. The right to demand
arbitration and to receive damages and obtain other available remedies as
provided hereunder shall be the exclusive remedy in the event an arbitration
demand is made, except that InterCept and Company shall be entitled to obtain
equitable relief, such as injunctive relief, from any court of competent
jurisdiction to protect its rights in any of its software products or any
associated intellectual property rights or documents while such proceeding is
pending or in support of any award made pursuant to such arbitration.
Asset Purchase Agreement - Page 39
12.8 Invalidity of any Part. If any provision or part of this Agreement
----------------------
shall for any reason be held invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any other
provisions of this Agreement and shall be construed as if such invalid, illegal
or unenforceable provision or part thereof had never been contained herein, but
only to the extent of its invalidity, illegality, or unenforceability. Upon any
such determination that any term or other provision is invalid, illegal or
incapable of being enforced, the Parties hereto will negotiate in good faith to
modify this Agreement so as to effect the original intent of the Parties as
closely as possible in an acceptable manner to the end that the transactions
contemplated by this Agreement are consummated to the extent possible.
12.9 Time of the Essence; Computation of Time. Time is of the essence of
----------------------------------------
each and every provision of this Agreement. Whenever the last day for the
exercise of any right or the discharge of any duty under this Agreement shall
fall upon Saturday, Sunday or a federal, public or legal holiday, the Party
having such right or duty shall have until 5:00 p.m., Atlanta, Georgia time on
the next succeeding regular business day to exercise such right or to discharge
such duty.
[Remainder of Page Intentionally Left Blank.]
Asset Purchase Agreement - Page 40
IN WITNESS WHEREOF, InterCept, Company and the Transferor have caused this
Agreement to be executed by their duly authorized officers as of the day and
year first above written.
INTERCEPT:
The InterCept Group, Inc.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------
Title: CFO
--------------------------
COMPANY:
NETZEE, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------
Title Chief Executive Officer
--------------------------
THE TRANSFEROR
The Bankers Bank
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------
Title: SVP/CFO
--------------------------
Asset Purchase Agreement - Page 41