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EXHIBIT 2.1
ASSET PURCHASE AGREEMENT DATED FEBRUARY 2, 2001 BY
AND AMONG NETZEE, INC., NETCAL, INC., AND THE
INTERCEPT GROUP, INC.
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
NETZEE, INC.,
NETCAL, INC.
(GEORGIA CORPORATIONS)
AND
THE INTERCEPT GROUP, INC.
(A GEORGIA CORPORATION)
DATED
FEBRUARY 2, 2001
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TABLE OF CONTENTS
Page
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ARTICLE 1 - SALE AND PURCHASE.....................................................................................6
(a) Purchase and Sale; Included Assets..............................................................6
(b) Intent of the Parties...........................................................................8
(c) Title to and Transfer of Assets.................................................................8
(d) Excluded Assets.................................................................................8
ARTICLE 2 - ASSUMPTION OF LIABILITIES BY THE PURCHASER............................................................9
(a) Assumed Liabilities.............................................................................9
(i) Trade Payables.........................................................................9
(ii) Contracts..............................................................................9
(iii) Other Accrued Liabilities..............................................................9
(iv) Certain Employee Benefits..............................................................9
(b) Liabilities Not Assumed.........................................................................9
Article 3 - PURCHASE PRICE AND PAYMENT...........................................................................11
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES OF PARENT AND SELLER..................................................11
(a) Corporate Existence............................................................................11
(b) Corporate Power; Authorization; Enforceable Obligations........................................12
(c) No Conflict....................................................................................12
(d) Required Government Consents...................................................................12
(e) Required Contract Consents.....................................................................12
(f) Title to Tangible Property.....................................................................13
(g) Condition of Property..........................................................................13
(h) Inventory......................................................................................13
(i) Intellectual Property..........................................................................13
(i) Ownership.............................................................................13
(ii) Procedures for Copyright Protection...................................................13
(iii) Procedures for Trade Secret Protection................................................13
(iv) Ownership of Software.................................................................14
(v) Absence of Claims.....................................................................14
(vi) Adequacy of Technical Documentation...................................................14
(vii) Third-Party Components in Software....................................................14
(viii) Third-Party Interests or Marketing Rights in Software.................................14
(j) Contracts - General............................................................................15
(k) Leases.........................................................................................15
(l) Accounts Receivable............................................................................15
(m) Financial Statements...........................................................................15
(n) Undisclosed Liabilities........................................................................15
(o) Conduct of Business............................................................................16
(i) Ordinary Course of Business: No Removal or Disposal of Assets........................16
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(ii) No Material Adverse Change............................................................16
(iii) Absence of Particular Events..........................................................16
(p) Major Vendors and Customers....................................................................16
(q) Litigation.....................................................................................16
(r) Court Orders, Decrees, and Laws................................................................16
(i) Compliance With Laws..................................................................16
(ii) Adequacy of Authorizations............................................................17
(iii) Environmental Matters.................................................................17
(s) Taxes and Tax Returns..........................................................................17
(t) Personnel and Compensation.....................................................................18
(i) List of Personnel.....................................................................18
(ii) Compensation, etc.....................................................................18
(iii) Retirement Plans......................................................................19
(iv) Pension Benefit Guaranty Corporation..................................................19
(v) No Accumulated Deficiency.............................................................19
(vi) Submission to Purchaser for Review....................................................19
(vii) Multi-employer Plan...................................................................19
(viii) Adequate Reserves for Welfare Plans...................................................19
(ix) Compliance with Laws..................................................................19
(u) Insurance Policies.............................................................................20
(v) Sufficiency of Rights..........................................................................20
(w) Broker's or Finder's Fees......................................................................20
(x) Related-Party Transactions.....................................................................20
(y) Bank Accounts..................................................................................20
(z) No Fraudulent Transfer.........................................................................20
(aa) Disclosure.....................................................................................21
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES OF PURCHASER..........................................................21
(a) Corporate Existence............................................................................21
(b) Corporate Power and Authorization..............................................................21
(c) No Conflict....................................................................................21
(d) Broker's or Finder's Fees......................................................................22
(e) Required Governmental Consents.................................................................22
(f) Required Contract Consents.....................................................................22
(g) Disclosure.....................................................................................22
ARTICLE 6 - CONDITIONS TO CLOSING................................................................................22
(a) Conditions to Parent's and Seller's Obligations................................................22
(b) Conditions to Purchaser's Obligations..........................................................23
ARTICLE 7 - CLOSING..............................................................................................24
(a) Closing........................................................................................24
(b) Actions at Closing.............................................................................24
(i) Copies of Consents....................................................................24
(ii) Conveyance Instruments................................................................24
(iii) Assumption Agreements.................................................................24
(iv) Legal Opinions........................................................................24
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(v) Lease.................................................................................24
(c) Delivery of Purchase Price.....................................................................24
(d) Certain Consents...............................................................................24
(e) Further Assurances.............................................................................24
ARTICLE 8 - COVENANTS OF PARENT, SELLER AND PURCHASER FOLLOWING CLOSING..........................................25
(a) Purchaser's Cooperation........................................................................25
(b) Allocation of Purchase Price...................................................................25
(c) Maintenance of Books and Records...............................................................25
(d) UCC Matters....................................................................................25
(e) Covenant Not to Compete........................................................................26
(f) Nonsolicitation of Personnel...................................................................26
(g) Injunctive Relief..............................................................................26
(h) Maintain Corporate Status......................................................................26
(i) Hire of Employees..............................................................................26
ARTICLE 9 - INDEMNIFICATION......................................................................................26
(a) Indemnification by Parent and Seller...........................................................26
(i) Breach of Representation, Warranty or Obligation......................................27
(ii) Excluded Liabilities..................................................................27
(iii) Failure to Obtain Consents............................................................27
(iv) Violations of Fraudulent Conveyance Laws..............................................27
(v) Title to Assets.......................................................................27
(vi) Incidental Matters....................................................................27
(b) Indemnification by Purchaser...................................................................27
(i) Breach of Representation, Warranty or Obligation......................................27
(ii) Assumed Liabilities...................................................................27
(iii) Post-Closing Operations...............................................................27
(c) Notice of Claim................................................................................27
(d) Defense........................................................................................28
(e) Manner of Indemnification by Seller............................................................28
(f) Limitations....................................................................................28
(i) Threshold.............................................................................28
(ii) Time of Assertion.....................................................................28
(iii) Cap...................................................................................28
(iv) Exclusive Remedy......................................................................29
(g) Arbitration....................................................................................29
ARTICLE 10 - MISCELLANEOUS.......................................................................................29
(a) Sales, Transfer and Documentary Taxes, etc.....................................................29
(b) Expenses.......................................................................................29
(c) Contents of Agreement; Parties in Interest; etc................................................29
(d) Waiver.........................................................................................29
(e) Notices........................................................................................30
(f) Georgia Law to Govern..........................................................................31
(g) No Benefit to Others...........................................................................31
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(h) Headings, Gender and "Person"..................................................................31
(i) Schedules and Exhibits.........................................................................31
(j) Severability...................................................................................31
(k) Counterparts...................................................................................31
(l) Assistance of Counsel..........................................................................31
(m) Time of the Essence............................................................................31
(n) Actions and Proceedings........................................................................31
(o) Execution by Facsimile.........................................................................32
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Schedules
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1(a)(i) -- Accounts Receivable
1(a)(ii) -- License Agreements
1(a)(iii) -- Equipment
1(a)(iv) -- Inventory
1(a)(v) -- Intellectual Property
1(a)(vi) -- Office Furniture
1(a)(vii) -- Leases
1(a)(viii) -- General Contracts
1(a)(x) -- Authorizations
1(a)(xi) -- Prepaid Expenses
1(d) -- Excluded Assets
2(a) -- Assumed Liabilities
3 -- Allocation of Purchase Price
4(d) -- Required Government Consents
4(e) -- Required Contract Consents
4(i)(i) -- Intellectual Property - Ownership
4(i)(ii) -- Intellectual Property - Copyright Protection
4(i)(iii) -- Intellectual Property - Trade Secret Protection
4(i)(iv) -- Intellectual Property - Ownership of Software
4(i) (v) -- Intellectual Property - Absence of Claims
4(i)(vii) -- Intellectual Property - Third Party Components
4(i)(viii) -- Intellectual Property - Rights in Software
4(m) -- Financial Statements
4(o)(i) -- Conduct of Business
4(o)(ii) -- Material Adverse Change
4(o)(iii) -- Absence of Particular Events
4(p) -- Major Customers and Vendors
4(q) -- Litigation
4(s) -- Taxes and Tax Returns
4(s)(ii) -- Contested Taxes
4(t)(ii) -- Compensation
4(t)(iii) -- Retirement Plans
4(t)(v) -- Accumulated Deficiencies
4(t)(viii) -- Reserves for Welfare Plans
4(u) -- Insurance Policies
4(v) -- Sufficiency of Rights
4(x) -- Related Party Transactions
4(y) -- Bank Accounts
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "AGREEMENT") is made and entered
into as of the 2nd day of February, 2001, by and between Netzee, Inc., a
Georgia corporation (the "PARENT"), Netcal, Inc., a Georgia corporation (the
"SELLER"), and The InterCept Group, Inc., a Georgia corporation (the
"PURCHASER").
RECITALS
The Seller is engaged principally in the business of developing,
marketing and distributing regulatory reporting and financial performance
analysis software to financial institutions (collectively, the "BUSINESS").
The Purchaser desires to purchase, and the Seller desires to sell, all
of the assets of Seller associated with the Business, and Seller desires to
transfer, and Purchaser desires to assume, certain liabilities of Seller
arising in connection with the Business, all upon the terms and conditions and
subject to the limited exceptions set forth herein.
The boards of directors of Parent, Purchaser and Seller have approved
the transactions described in this Agreement.
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants, and agreements of the parties hereinafter set forth, the
parties hereto, intending to be legally bound, do hereby agree as follows:
Article 1
SALE AND PURCHASE
(a) Purchase and Sale; Included Assets. Upon the terms and
subject to the conditions of this Agreement, Purchaser agrees to purchase,
accept, and acquire from Seller, and Seller agrees to sell, transfer, assign,
convey, and deliver to Purchaser, at the Closing (as defined in Section 7(a)
hereof), all right, title, and interest in and to all of the rights and assets,
real, personal, and mixed, tangible or intangible, used directly or indirectly
in or otherwise relating primarily to the Business, whether now owned or
hereafter acquired, as owned or held by Seller, except as expressly excluded by
Section 1(d) below. Subject to such express exclusion and qualification, the
foregoing rights and assets shall hereinafter collectively be referred to as
the "ASSETS." As used herein, the "DETERMINATION DATE" means the date of this
Agreement, or if another date is specifically identified in a Schedule as the
Determination Date for purposes of the Assets described in such Schedule, such
other specified date. Without in any way limiting the generality of the
foregoing, the Assets shall include all of Seller's right, title and interest
in and to the following, wherever located:
(i) All accounts, accounts receivable, notes, notes
receivable, instruments, drafts, documents, chattel paper and other receivables
and rights to the payment of money or receipt of other benefit with respect to
the Business which remains uncollected or unreceived on the Closing Date (as
defined in Section 7(a) hereof), whether or not evidenced by a writing or
reflected in Seller's financial statements provided to Purchaser and disclosed
in Schedule 4(m) (the "ACCOUNTS RECEIVABLE"), including the Accounts Receivable
disclosed in Schedule 1(a)(i).
(ii) All of Seller's service, license, marketing and
other similar agreements and sales contracts used directly or indirectly in or
otherwise relating primarily to the Business (the "LICENSE AGREEMENTS"),
including, without limitation, the License Agreements disclosed in Schedule
1(a)(ii);
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(iii) All of Seller's fixed assets, goods, equipment and
other tangible personal property used directly or indirectly in or otherwise
relating primarily to the Business (the "EQUIPMENT"), including, without
limitation, the Equipment disclosed in Schedule 1(a)(iii);
(iv) All inventories of Seller and all unused or reusable
materials, work in process, damaged or unfinished goods and supplies, in each
case to the extent used directly or indirectly in or otherwise relating
primarily to the Business (the "INVENTORY"). As of the Determination Date, the
Inventory consists of the Inventory disclosed in Schedule 1(a)(iv);
(v) All patents, trademarks, service marks, trade names,
domain names, copyrights and general intangibles (including registrations,
licenses, and applications pertaining thereto); all technologies, methods,
formulations, data bases, trade secrets, know-how, inventions and other
intellectual property now existing or under development; all internet domain
names and registrations, including "▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇"; all software,
programs, databases and other intellectual property rights, whether owned or
leased, pursuant to which Seller operates the Business and its website at
▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇; and all computer software (including technical
documentation and user reference manuals and related object and source codes),
in each case as used directly or indirectly in or otherwise relating primarily
to the Business, including, but not limited to, the software and other
intellectual property disclosed in Schedule 1(a)(v) (collectively, the
"INTELLECTUAL PROPERTY");
(vi) All office furniture and fixtures used directly or
indirectly in or otherwise relating primarily to the Business (the "OFFICE
FURNITURE"). As of the Determination Date, the Office Furniture consists of all
items disclosed in Schedule 1(a)(vi);
(vii) The entire leasehold, rental or other interest
arising under or pursuant to leases of:
(A) real property, including buildings,
structures, and other improvements located thereon, fixtures contained
therein, and appurtenances thereto, and easements and other rights
relative thereto;
(B) equipment, including computer hardware and
associated telecommunications equipment, media, and tools;
(C) office furniture; and
(D) other personalty,
in each case as used directly or indirectly in or otherwise relating primarily
to the Business (the "LEASES"). As of the Determination Date, the Leases
consist of all leases disclosed in Schedule 1(a)(vii);
(viii) All contracts, agreements, licenses, commitments,
arrangements, and permissions entered into in connection with or otherwise
relating primarily to the Business (the "GENERAL CONTRACTS"), which items are
disclosed in Schedule 1(a)(viii), to the extent not otherwise classified as
License Agreements or Leases (as defined herein);
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(ix) All business and marketing records, including
accounting and operating records, asset ledgers, inventory records, reports,
budgets, personnel records, payroll records, customer lists, copies of
employment and consulting agreements, supplier lists, information and data
respecting leased or owned equipment, files, correspondence and mailing lists,
advertising materials and brochures, and other business records used directly
or indirectly in or otherwise relating primarily to the Business, in whatever
form they exist (the "BUSINESS RECORDS");
(x) All governmental approvals, authorizations,
certifications, consents, variances, permissions, licenses, and permits to or
from, or filings, notices, or recordings to or with, U.S. federal, state,
and/or local governmental authorities as well as states and jurisdictions
outside of the U.S. (the "AUTHORIZATIONS"), as used directly or indirectly in
or otherwise relating primarily to the Business, to the extent assignment is
permitted under applicable law or regulation. As of the Determination Date, the
Authorizations consist of the items disclosed in Schedule 1(a)(x);
(xi) All deposits and prepaid expense items and all other
products and proceeds of any Assets, arising from the Business and existing on
the Closing Date, all of which are disclosed in Schedule 1(a)(xi), plus all
other prepaid expense items and all other products and proceeds of any Assets,
arising from the Business on or after the Determination Date; and
(xii) All claims Seller may have against any person
relating to or arising from the Assets or the Business, including rights to
recoveries for damages or defective goods, to refunds, insurance claims, and
choses in action ("SELLER CLAIMS"), but not including any Seller Claims under
or in connection with the Excluded Assets, and not including any claims of
Parent and Seller arising out of the December 1999 purchase of the Assets and
the Business.
(b) Intent of the Parties. Although the Schedules to this
Agreement are intended to be complete, to the extent any rights or assets of
Seller primarily relate to the Business or are otherwise necessary for the
ownership and use of the Assets and the conduct of the Business, but are not
properly itemized or do not appear in the applicable Schedules where required,
then, unless this Agreement otherwise provides directly for Purchaser to
provide for or obtain such rights or assets in a different way or unless such
rights or assets are specifically included in Excluded Assets, the general
language of Section 1(a) shall govern and such rights and assets shall
nonetheless be deemed transferred to Purchaser at Closing.
(c) Title to and Transfer of Assets. The Seller agrees to convey
to the Purchaser fee simple, good, marketable and unencumbered lien free title
to all of the Assets by appropriate documents of transfer and sale, including
such bills of sale, endorsements and assignments, and other good and sufficient
instruments of bargain and sale, in such form as shall be approved and deemed
appropriate by legal counsel for the Purchaser, and which documents shall
contain covenants of warranty as to title, and which documents shall, in the
opinion of Purchaser's counsel, be sufficient to vest in Purchaser good and
marketable title to the Assets.
(d) Excluded Assets. Notwithstanding the foregoing, the Assets
shall not include any of the following (collectively, the "EXCLUDED ASSETS"):
(i) certificate of incorporation, minute books, stock books, tax returns, books
of account or other records having to do with corporate organization of Seller
or Parent; (ii) the rights which accrue or will accrue to Seller or Parent
under this Agreement; (iii) the rights to any of Seller's claims for any
federal, state, local, or foreign tax refunds; (iv) the assets, properties or
rights disclosed in Schedule 1(d); and (v) all insurance and reinsurance,
surety, bonding, or indemnity policies, binders, or contracts,
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and the benefits of any prior insurance coverage to the extent still available,
as established or obtained with respect to the Business or the Assets (the
"INSURANCE POLICIES").
Article 2
ASSUMPTION OF LIABILITIES BY THE PURCHASER
(a) Assumed Liabilities. At and after the Closing, the Purchaser
shall assume and pay in a timely fashion (except for valid disputes) and be
responsible for only the specific obligations and liabilities of the Seller
(the "LIABILITIES") that arise out of the Business or the Assets and that are
specifically identified on Schedule 2(a) (the "ASSUMED LIABILITIES"), provided
that subject to the express exclusions disclosed in Section 2(b), the Assumed
Liabilities shall include, and shall be subject to, the following:
(i) Trade Payables. All accrued trade payables of Seller
arising out of the Business, other than payables owed to any affiliates of
Seller, disclosed in Schedule 2(a);
(ii) Contracts. All payment and performance obligations
arising after the Closing Date and relating to the License Agreements, Leases
and the General Contracts, except to the extent attributable to (A) any breach
or default by Seller under any of the same on or before the Determination Date,
or (B) any material liability or obligation outside the ordinary course of
business not disclosed by Seller pursuant to this Agreement, insofar as
disclosure thereof is required hereunder and Purchaser does not receive
property or services of substantially equivalent value in respect of such
liability or obligation;
(iii) Other Accrued Liabilities. Any other liabilities
pertaining to the Assets recorded on the Seller's most recent balance sheet
delivered to Purchaser and which otherwise relate primarily to the Business,
including any refunds of prepaid amounts owed to customers of the Seller who
terminate their contracts for any reason other than the breach by the Seller of
any agreement with such customer; provided, however, that refunds of such
amounts in excess of $15,000 in the aggregate shall constitute Excluded
Liabilities (as defined below); and
(iv) Certain Employee Benefits. To the extent that an
employee of Seller is offered and accepts employment by Purchaser
contemporaneously with Closing, the accrued but unpaid payroll amounts due to
such employee and the accrued but unpaid amounts due to such employee or a plan
administrator for the account of such employee under disclosed employee benefit
plans generally offered to all of Seller's employees for the current payroll
period ending on or after the Closing Date, which Seller represents are not
more than $25,000.
(b) Liabilities Not Assumed. Purchaser shall not assume or be
responsible for any of the following liabilities or obligations (the "EXCLUDED
LIABILITIES"):
(i) any product liability or similar claim for injury to
person, business or property, regardless of when made or asserted, which arises
out of or is based upon any express or implied representation, warranty,
agreement or guarantee made by Seller, or alleged to have been made by Seller,
or which is imposed or asserted to be imposed by operation of law, in
connection with any service performed or product sold or leased by or on behalf
of Seller on or prior to the Closing, including, without limitation, any claim
relating to any product delivered in connection with the performance of such
service and any claim seeking recovery for consequential damages, lost revenue
or income;
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(ii) sales or use taxes, recapture taxes, other taxes,
assessments and penalties (A) payable with respect to the Business, Assets,
properties or operations of Seller or any member of any affiliated group of
which Seller is a member for any period prior to the Closing Date, or (B)
incident to or arising as a consequence of the negotiation or consummation by
Seller, or any member of any affiliated group of which Seller is a member, of
this Agreement and the transactions contemplated hereby;
(iii) any liability or obligation under or in connection
with the Excluded Assets;
(iv) any liability or obligation of Seller of any kind,
known or unknown, contingent or otherwise, not enumerated as an Assumed
Liability in Section 2(a);
(v) any liability or obligation resulting from
violations of any applicable laws or regulations by Seller prior to the
Determination Date or from infringement of third-party rights or interests;
(vi) except to the extent set forth above, any employee
liabilities relating to present and past employees of the Business with respect
to plans, programs, policies, commitments, and other benefit entitlement
established or existing on or prior to Closing (to the extent such liabilities
are accrued or payable before the Closing Date, and whether or not such
liabilities are contingent in nature), including
(A) any liability or obligation for workers'
compensation;
(B) any current or future liabilities to
employees retiring on, before, or after Closing, and their dependents
(excluding employees employed by Purchaser after the Closing and who
subsequently retire);
(C) any current or future liabilities for
benefits that may have been accrued or earned by any employees
associated with the Business on or before Closing under any pension
plans relating to service prior to the Closing Date;
(D) any current or future liabilities for
claims incurred prior to Closing and related expenses with respect to
any employees associated with the Business under any life, health,
welfare or disability plans established or existing at or prior to
Closing, regardless of when filed with Purchaser, Seller, or the
claims administrator for any such plan;
(E) any retrospective premium or pension,
savings, thrift, or profit-sharing plan contribution relating to any
employees associated with the Business incurred or accrued prior to
the Closing Date, regardless of when invoiced or recorded; and
(F) any monetary liability for severance
payments that may arise at any time in favor of any of Seller's
employees under any plan, program, policy, commitment, or any other
benefit entitlement, provided such monetary liability relates to
periods of employment prior to the Closing;
(vii) any Litigation (as defined herein) pending or
threatened against Seller or the Assets, if the cause of action or activities
giving rise to such litigation arose, accrued or occurred prior to the Closing
Date;
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(viii) any liability or obligation that under generally
accepted accounting principles ("GAAP") would be required to be accrued and
reflected in Seller's most recent balance sheet furnished to Purchaser before
Closing, but is not included therein, regardless of the materiality of such
items individually or in the aggregate;
(ix) any liability or obligation of Seller arising or
incurred in connection with the negotiation, preparation and execution of this
Agreement and the transactions contemplated hereby and fees and expenses of
counsel, accountants and other experts;
(x) any liability or obligation of Seller arising or
incurred in connection with any securities of Seller, including, but not
limited to, the offer or sale of any securities by Seller, the repurchase by
Seller of any its securities from its shareholders, and the issuance or payment
of any distributions and/or dividends by Seller to its shareholders; and
(xi) any liability or obligation of Seller arising or
incurred in connection with any letter of intent, agreement or plan of merger
or acquisition, non-disclosure, confidentiality, no-shop, standstill or similar
agreements which the Parent or Seller may have entered into prior to the date
hereof.
ARTICLE 3
PURCHASE PRICE AND PAYMENT
(a) The total consideration to be paid to Seller for the sale,
transfer and conveyance of the Assets and the covenant not to compete set forth
in Section 8(e) shall be $16,500,000 in cash, less an amount equal to the net
liabilities assumed by Purchaser as set forth on Schedule 2(a) (the net cash
payment (the "CASH PORTION") and the net liabilities assumed are, collectively,
the "PURCHASE PRICE"). The total Cash Portion shall be paid by Purchaser at the
Closing by wire transfer of same-day funds to an account designated by Seller.
(b) The parties agree that the Purchase Price represents the fair
market value of the Assets. The Purchase Price shall be allocated among the
Assets acquired hereunder as disclosed in Schedule 3. Seller, Parent and
Purchaser each hereby covenant and agree that it will not take a position on
any income tax return, before any governmental agency charged with the
collection of any income tax, or in any judicial proceeding that is in any way
inconsistent with the terms of this Article 3.
(c) Seller and Purchaser shall establish at Closing an escrow in
an aggregate amount of $250,000 pursuant to the terms of a six (6) month escrow
agreement (the "ESCROW AGREEMENT") to provide, as a nonexclusive remedy, a fund
for satisfaction of post-closing indemnification claims by Purchaser pursuant
to Section 9 hereof.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PARENT AND SELLER
Parent and Seller hereby represent and warrant, jointly and severally,
to Purchaser as follows:
(a) Corporate Existence. Each of Parent and Seller is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Georgia. Each of Parent and Seller has the corporate power
and
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authority to conduct its business and to own and lease all of its properties
and assets (including the Assets) and is duly qualified or licensed to do
business and is in good standing under the laws of each jurisdiction where such
qualification is required, except where the failure to be so qualified would
not have a material adverse effect on its business, operations, properties,
assets or condition (financial or otherwise) (a "MATERIAL ADVERSE EFFECT").
Seller does not own, directly or indirectly, any equity or other interest in
any corporation, company, association, partnership, joint venture, or other
entity.
(b) Corporate Power; Authorization; Enforceable Obligations. Each
of Parent and Seller has the corporate power and authority to execute and
deliver this Agreement and the other Purchase Agreements and instruments to be
executed and delivered by it in connection with the transactions contemplated
hereby and thereby and to perform its respective obligations hereunder and
thereunder. Each of Parent and Seller has taken all necessary corporate action
to authorize the execution and delivery of this Agreement and such other
agreements and instruments and the consummation of the transactions
contemplated hereby and thereby. This Agreement is, and the other agreements
and instruments to be executed and delivered by Parent and Seller in connection
with the transactions contemplated hereby shall be, the legal, valid, and
binding obligations of Parent and Seller, enforceable in accordance with their
terms, except as such enforcement may be subject to or limited by bankruptcy,
insolvency, reorganization, moratorium, or other similar laws now or hereafter
in effect and by general principles of equity.
(c) No Conflict. Neither the execution and delivery of this
Agreement and the other Purchase Agreements and instruments to be executed and
delivered in connection with the transactions contemplated hereby or thereby,
nor the consummation of the transactions contemplated hereby or thereby, will
(1) violate any foreign, federal, state, or local law, regulation, ordinance,
zoning requirement, governmental restriction, order, judgment, or decree
(collectively, "LAWS") applicable to Parent, Seller, the Business, or the
Assets, (2) violate or conflict with any provision of any articles of
incorporation, charter, bylaw or other governing or organizational instrument
of Parent or Seller, or (3) conflict with, result in the breach of, or
constitute a default under any mortgage, indenture, license, instrument, trust,
contract, agreement, or other commitment or arrangement to which Parent or
Seller is a party or by which Parent or Seller or any of the Assets are bound,
except where such violation, conflict, breach or default would not have a
Material Adverse Effect.
(d) Required Government Consents. Except for (1) the filing
and/or recording of deeds and other instruments of conveyance, transfer, or
assignment required by federal copyright, patent, or trademark laws or the laws
of the U.S. and non-U.S. jurisdictions and states in which the Assets are
located, to occur upon Closing; (2) any approvals necessary to assign to
Purchaser Contract No. TOT-97-0005/C770005, for the development and
distribution of an electronic software package between the Seller and the
Office of Thrift Supervision (the "OTS CONTRACT"), and (3) the further
exceptions disclosed in Schedule 4(d) (the foregoing items (1) through (3)
being referred to herein as the "REQUIRED GOVERNMENT CONSENTS"), no approval,
authorization, certification, consent, variance, permission, license, or permit
to or from, or notice, filing, or recording to or with, U.S. or non-U.S.,
federal, state, or local governmental authorities is necessary for the
execution and delivery of this Agreement and the other Purchase Agreements and
instruments to be executed and delivered in connection with the transactions
contemplated hereby or thereby by Parent or Seller or the consummation by
Parent or Seller of the transactions contemplated hereby or thereby, or the
ownership and use of the Assets and the conduct of the Business (including by
Purchaser, assuming such ownership and use is the same as the ownership and use
by Seller).
(e) Required Contract Consents. Except as disclosed in Schedule
4(e) (such scheduled items being referred to herein as the "REQUIRED CONTRACT
CONSENTS"), to the knowledge of Parent and Seller, no approval, authorization,
consent, permission, or waiver to or from, or notice, filing, or recording to
or with, any person (other
14
than the Required Government Consents) is necessary for (1) the execution and
delivery of this Agreement and the other Purchase Agreements and instruments to
be executed and delivered in connection with the transactions contemplated
hereby or thereby by Parent or Seller or the consummation by Parent or Seller
of the transactions contemplated hereby or thereby; (2) the transfer and
assignment to Purchaser at Closing of the Leases, License Agreements, or
General Contracts; or (3) the ownership and use of the Assets and the conduct
of the Business (including by Purchaser, assuming such ownership and use is
substantially the same as the ownership and use by Seller).
(f) Title to Tangible Property. Purchaser at Closing shall obtain
good and marketable title to all of the tangible Assets (i.e., the Equipment,
Inventory, Office Furniture, and Business Records), free and clear of all title
defects, liens, restrictions, claims, charges, security interests, or other
encumbrances of any nature whatsoever, including any mortgages, leases (except
for the Leases disclosed in Schedule 1(a)(vii)), chattel mortgages, conditional
sales contracts, collateral security arrangements, or other title or interest
retention arrangements.
(g) Condition of Property. All of the tangible Assets are in good
operating order, condition, and repair, ordinary wear and tear excepted, and
are suitable for use in the Business in the ordinary course, as presently
operated.
(h) Inventory. All Inventory is of usable quality and includes no
material amount of obsolete or discontinued items or items that cannot be used
by Purchaser in the Business in the ordinary course, consistent with past
practices and uses. All Inventory has been recorded using the "first-in,
first-out" accounting method. Seller maintains Inventory in an amount
reasonably necessary to satisfy delivery or fulfillment obligations under
existing customer orders and contracts.
(i) Intellectual Property. The Intellectual Property includes
certain proprietary application software products and systems which Seller
develops, markets and licenses to financial institutions and other customers
(the "SOFTWARE PROGRAMS"), and in connection therewith the Seller 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 disclosed in Schedule
1(a)(v).
(i) Ownership. Except as set forth in Schedule 4(i)(i),
Seller owns all of the Intellectual Property and all other proprietary
information used by the Seller in the conduct of the Business. Schedule 1(a)(v)
sets forth all domestic and foreign patents, trademarks, service marks, trade
names and copyrights owned or used by Seller in the conduct of the Business and
all applications therefor and registrations thereof.
(ii) Procedures for Copyright Protection. Schedule
4(i)(ii) sets forth the form and placement of the proprietary legends and
copyright notices displayed in or on the Software, including screen displays.
In no instance has the eligibility of the Software for protection under
copyright law been forfeited to the public domain.
(iii) Procedures for Trade Secret Protection. Neither
Parent nor Seller has ever disclosed source code for any of the Software to a
third party other than the persons disclosed in Schedule 4(i)(iii), each of
which has executed a nondisclosure agreement in favor of Seller. Seller
discloses its source code to employees only on a need-to-know basis in
connection with the performance of their duties to Seller. All personnel,
including employees, agents, consultants, and contractors, who have contributed
to or participated in the conception
15
and development of the Documentation or Software Programs on behalf of Seller
either (1) have been party to a "work-for-hire" arrangement or agreement with
Seller, in accordance with applicable federal and state law, that has accorded
Seller full, effective, exclusive, and original ownership of all tangible and
intangible property thereby arising, or (2) have executed appropriate
instruments of assignment in favor of Seller as assignee that have conveyed to
Seller full, effective, and exclusive ownership of all tangible and intangible
property thereby arising. The source code and system documentation comprising
the Software have at all times been maintained by Seller in confidence, and
Seller 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.
(iv) Ownership of Software. Except as disclosed in
Schedule 4(i)(iv) and except for independent contractors disclosed in Schedule
4(i)(iii), all persons who have contributed to or participated in the
conception and development of the Software on behalf of Seller have been
full-time employees of Seller hired to prepare such works within the scope of
employment. As a consequence, Seller has all ownership interests in the
Software.
(v) Absence of Claims. Except as disclosed in Schedule
4(i)(v), no claims have been asserted by any person to any rights in the
Software, and to the knowledge of Parent and Seller, no valid basis for any
such claim exists. To the knowledge of Parent and Seller, the use of the
Software by the Seller 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). To the
knowledge of Parent and Seller, the use by Seller of the Intellectual Property
does not infringe the rights of any person, and no claim has been asserted that
the use by Seller of any of the foregoing infringes the rights of any person.
Neither Parent nor Seller has received notice of any claim asserted by any
person to the effect that any current or former employee of Seller has violated
the provisions of any noncompete or nondisclosure agreement with such person,
or has disclosed any proprietary information of such person to the Seller or
any third party.
(vi) Adequacy of Technical Documentation. 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.
(vii) Third-Party Components in Software. Seller has
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 disclosed in Schedule 4(i)(vii), subject to no further license fee,
royalty or other payment obligations not disclosed in Schedule 4(i)(vii), other
than software maintenance payments customarily associated therewith. The
Software contains no other programming or materials in which any third party
could reasonably 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 Seller.
(viii) Third-Party Interests or Marketing Rights in
Software. Other than in the ordinary course of business pursuant to the terms
of the agreements listed in Schedule 4(i)(viii), Seller has not granted,
transferred or assigned any right or interest in the Software to any person.
There are no contracts, agreements, licenses, commitments or arrangements in
effect with respect to the marketing, distribution, licensing or
16
promotion of the Software by any independent salesperson, distributor,
sublicensor or other remarketer or sales organization except as set forth on
Schedule 4(i)(viii).
(j) Contracts - General. The License Agreements listed in
Schedule 1(a)(ii) and the General Contracts disclosed in Schedule 1(a)(viii),
constitute all contracts, agreements, licenses, and other commitments and
arrangements in effect as of the Determination Date and included in the Assets,
other than the Leases addressed by Section 4(k), that either (1) involve annual
expenditure of more than $10,000 or (2) require performance by any party
thereto more than six (6) months after the Closing Date. All such contracts are
valid, binding, and enforceable in accordance with their terms and are in full
force and effect. To the best knowledge of Parent and Seller, there are no
existing defaults by Seller under any such contracts and no act, event, or
omission has occurred that, whether with or without notice, lapse of time, or
both, would constitute a default thereunder.
(k) Leases. The Leases disclosed in Schedule 1(a)(vii) constitute
all leasing or rental contracts, agreements, and other commitments and
arrangements in effect as of the Determination Date and included in the Assets
that either (1) have an annual rental, in any individual instance, in excess of
$1,000, or (2) remain in effect for a period of twelve (12) months or longer
without allowing Seller (and, following the Closing, Purchaser) to terminate
without penalty for any reason upon the delivery of any required notice. All
Leases are valid, binding, and enforceable in accordance with their terms and
are in full force and effect. To the best knowledge of Parent and Seller, there
are no existing defaults by Seller under the Leases and no act, event, or
omission has occurred that, whether with or without notice, lapse of time, or
both, would constitute a default thereunder.
(l) Accounts Receivable. All Accounts Receivable shown on the
Financial Statements (as defined in Section (m) of this Article 4) represent,
and the Accounts Receivable outstanding on the Closing Date will represent,
sales actually made or services actually performed in the ordinary course of
business in bona fide transactions completed in accordance with the terms and
provisions contained in any documents relating thereto. The Accounts Receivable
outstanding on the Closing Date are subject to no defenses, counterclaims, or
rights of setoff other than those arising in the ordinary course of business
and for which adequate reserves have been established. At least 95% of the
value of the Accounts Receivable are collectible in the ordinary course of
Seller's business consistent with past custom and practice (including with
respect to quantity and frequency).
(m) Financial Statements. Schedule 4(m) sets forth unaudited
income statements for Seller for the eleven-month period ended November 30,
1999, and the twelve-month period ended December 31, 2000, and an unaudited
balance sheet as of December 31, 2000, each of which have been prepared with
consistent principles and procedures (collectively, the "FINANCIAL
STATEMENTS"). The Financial Statements properly reflect all Assets and Assumed
Liabilities as are (or were) then in existence, and the results of operations
of Seller or its predecessor for the periods presented, except for normal
year-end adjustments, which are not material, and the absence of footnotes. The
Financial Statements have been prepared in accordance with generally accepted
accounting principles ("GAAP") consistently applied, and present fairly in all
material respects the financial position of the Seller as of the dates and for
the periods indicated, except they do not contain footnotes and are subject to
normal year-end audit adjustments.
(n) Undisclosed Liabilities. There are no liabilities or
obligations, secured or unsecured (whether absolute, accrued, contingent, or
otherwise, and whether due or to become due), of a nature required by GAAP to
be reflected or reserved against in a balance sheet of the Business, except
such liabilities and obligations that either (1) are accrued and reserved
against in the December 31, 2000 balance sheet described in Section (m) of this
Article 4 or (2) have arisen or been incurred in the ordinary course of
business since December 31, 2000. Seller is
17
not directly or indirectly liable, by guarantee, indemnity or otherwise, or
obligated by discount or repurchase agreement or in any other way, to provide
funds with respect to, or obligated to guarantee or assume, any liability for
any person.
(o) Conduct of Business.
(i) Ordinary Course of Business: No Removal or Disposal
of Assets. Except as disclosed in Schedule 4(o)(i), since December 31, 2000,
Seller has operated the Business in the ordinary course consistent with past
practices, and has not removed or disposed of any assets that were assets of
the Business as of December 31, 2000 except in the ordinary course.
(ii) No Material Adverse Change. Except as disclosed in
Schedule 4(o)(ii), since December 31, 2000, there has been no material adverse
change in the Business or the Assets or in the financial condition, operations,
or prospects of the Business.
(iii) Absence of Particular Events. Except as disclosed in
Schedule 4(o)(iii), since December 31, 2000, Seller has not (1) suffered any
damage or destruction which could cause a Material Adverse Effect; (2)
increased the compensation payable or to become payable to employees of Seller
or declared any bonus; (3) incurred any liability or obligation relating to the
Business other than in the ordinary course consistent with past practice; (4)
made any change in any method, practice, or principle of accounting involving
the Business or the Assets; (5) paid, loaned, or advanced any monetary amount
or other asset to, or sold, transferred, or leased any asset to, any employee
involved in the Business except for normal compensation involving salary and
benefits; (6) made any commitment which is reasonably likely to cause economic
harm to Seller or Purchaser; (7) agreed to take any action described in this
Section 4(o)(iii); or (8) made any distribution to shareholders.
(p) Major Vendors and Customers. Schedule 4(p) lists each
supplier of property or services to, and each licensee or customer of, Seller
to whom Seller paid or billed in the aggregate $5,000 or more during the year
2000, together with, in each case, the amount paid or billed during such
period. To the best knowledge of Parent and Seller, there is no reason the
relationship with any such person or entity might not be continued by Purchaser
after its acquisition of the Business at substantially the same level of
business and on substantially the same terms as between Seller and such
supplier, licensee or customer during the twelve (12)-month period preceding
the Closing.
(q) Litigation. Except as disclosed in Schedule 4(q), no claim,
action, suit, proceeding, inquiry, hearing, arbitration, administrative
proceeding, patent infringement claim, or investigation (collectively,
"LITIGATION") is pending, or, to Parent's or Seller's best knowledge,
threatened against Seller or its present or former directors, officers, or
employees, affecting, involving, or relating to the Business or any of the
Assets. Neither Parent nor Seller knows of any facts or circumstances that
could reasonably be expected to serve as the basis for Litigation against
Seller (or the Purchaser upon acquisition of the Business) or its present or
former directors, officers, or employees, affecting, involving, or relating to
the Business or the Assets.
(r) Court Orders, Decrees, and Laws
(i) Compliance With Laws. There is no outstanding or, to
Parent's or Seller's best knowledge, threatened order, writ, injunction, or
decree of any court, governmental agency, or arbitration tribunal against
Seller affecting, involving, or relating to the Business or the Assets. Seller
is not in violation of any Laws affecting,
18
involving, or relating to the Business or the Assets, except where
noncompliance would not have a Material Adverse Effect, and Seller has received
no notices of any such alleged violation. The foregoing shall be deemed to
include Laws relating to the patent, copyright, and trademark laws, state trade
secret and unfair competition laws of the U.S. and foreign jurisdictions, and
to all other applicable laws, including equal opportunity, wage and hour, and
other employment matters, and antitrust and trade regulation laws.
(ii) Adequacy of Authorizations. The Authorizations
constitute all approvals, authorizations, certifications, consents, variances,
permissions, licenses, or permits to or from, or filings, notices, or
recordings to or with, U.S. or non-U.S., federal, state, or local governmental
authorities that are required for the ownership and use of the Assets and the
conduct of the Business under all applicable Laws. Seller is in compliance with
all material terms and conditions of such required Authorizations. All of the
Authorizations are in full force and effect, and to Parent's and Seller's best
knowledge, no suspension or cancellation of any Authorization is threatened,
nor will any of the Authorizations be affected by the consummation of the
transactions described in this Agreement, except to the extent any such
Authorizations are assignable or transferable only upon receipt of the Required
Government Consents. Seller is in compliance with all other applicable
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules, and timetables contained in any Laws relating to or
affecting the Business, except where non-compliance would not have a Material
Adverse Effect.
(iii) Environmental Matters.
(A) Seller has complied, in all material
respects with all applicable Laws relating to pollution or protection of the
environment ("ENVIRONMENTAL LAWS").
(B) Seller has obtained all environmental,
health and safety Licenses and other authorizations necessary for the operation
of the Business, all of which are valid and in good standing and are not
subject to any modification or revocation proceeding, and Seller is in
compliance in all material respects with all terms and conditions thereof.
(C) Neither Parent nor Seller has received any
notice of any pending or threatened investigation, proceeding or claim to the
effect that Seller is or may be liable to any person or entity, or responsible
or potentially responsible for the costs of any remedial or removal action or
other cleanup costs, as a result of noncompliance with any Environmental Laws
or arising out of the presence, generation, storage or disposal of hazardous
waste, including liability under the United States Comprehensive Environmental
Response, Compensation and Liability Act, as amended, any state superfund law
or any Environmental Law, and, to the best knowledge of Parent and Seller,
there is no past or present action, activity, condition or circumstance that
could be expected to give rise to any such liability on the part of Seller to
any person or entity or for any such cleanup costs.
(s) Taxes and Tax Returns. Except as disclosed in Schedule 4(s):
(i) Seller has duly filed all returns, declarations,
reports, information returns and statements ("RETURNS") required to be filed by
it in respect of any United States federal, state or local Taxes and has duly
paid all such Taxes due and payable as finally determined by the applicable
governmental authority, other than Taxes which are being contested in good
faith (and disclosed to Parent in writing). As used in this Agreement, "TAX" or
"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
19
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. Seller has established
on its books and records reserves that are reasonably adequate for the payment
of all Taxes not yet due and payable but that are incurred in respect of the
operation of the Business through such date.
(ii) Neither Parent nor Seller has received any notice
that any of the Returns of Seller has been examined by the United States
Internal Revenue Service (the "IRS"), or any other United States federal or
state governmental authority within the past six years. There are no audits or
other governmental authority proceedings currently pending, nor any other
disputes pending with respect to, nor, to the knowledge of Parent and Seller
claims asserted for, Taxes upon Seller greater than $250 individually or
$10,000 in the aggregate; nor has Seller 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 for Taxes
upon the Assets of Seller, except for Liens for Taxes not yet due and payable
or Taxes being properly contested. Any Taxes being properly contested are
disclosed in Schedule 4(s)(ii). Seller has complied in all material respects
with all applicable Laws relating to the payment and withholding of Taxes.
(iii) Seller (i) has not requested any extension of time
within which to file any Return which Return has not since been filed; (ii) is
not a party to any agreement providing for the indemnification, allocation or
sharing of Taxes; (iii) is not required to include in income any adjustment by
reason of a voluntary change in accounting method initiated by Seller (nor does
Seller have any knowledge that any governmental authority has proposed any such
adjustment or change of accounting method); and (iv) has not been a member of
an affiliated group other than one of which Parent was the common parent.
(t) Personnel and Compensation.
(i) List of Personnel. Seller has delivered to Purchaser
a true and complete list of the names and current compensation levels of (1)
all salaried or hourly employees and (2) all independent contractors and/or
consultants involved in the Business.
(ii) Compensation, etc. Except as disclosed in Schedule
4(t)(ii), Seller is not subject to, and has no obligation under, any
employment, consulting, or collective bargaining contracts, deferred
compensation, pension (as defined in Section 3(2) of the Employee Retirement
Income Security Act ("ERISA")), profit-sharing, bonus, stock option, stock
appreciation, stock purchase, or other nonqualified benefit or compensation
commitments, benefit plans, arrangements, or plans, including any welfare plans
(as defined in Section 3(1) of ERISA), fringe benefit arrangements, or
multi-employer plans (as defined in Section 3(37)(A) of ERISA) of or pertaining
to the present or former employees involved in the Business. To the extent
Seller has in effect any of the foregoing contracts, plans or arrangements,
Seller has complied with all of its obligations thereunder in all material
respects.
20
(iii) Retirement Plans. Schedule 4(t)(iii) identifies all
of the retirement plans, by plan name and plan year, that Seller has
established for the benefit of persons who are or were involved in the Business
as of or prior to the Closing (the "PLANS"). The Plans and their administration
are the sole responsibility of Seller.
(iv) Pension Benefit Guaranty Corporation. No liability
to the Pension Benefit Guaranty Corporation has been incurred with respect to
the Plans that has not been satisfied by Seller. All premiums due and payable
to the Pension Benefit Guaranty Corporation with respect to the Plans have been
paid. The Pension Benefit Guaranty Corporation has not instituted proceedings
to terminate any of the Plans. To the knowledge of Parent and Seller, no event
has occurred, and there exists no condition or set of circumstances, that
presents a risk that any past or future termination of any of the Plans could
result in liability on the part of Seller to the Pension Benefit Guaranty
Corporation. No notice of a reportable event (within the meaning of Section
4043(b) of ERISA) has been filed by the plan administrator of any of the Plans
with the Pension Benefit Guaranty Corporation, nor, to the knowledge of Parent
and Seller, has any such reportable event occurred.
(v) No Accumulated Deficiency. None of the Plans has an
accumulated funding deficiency, as defined in Section 302(a)(2) of ERISA. In
addition, each of the Plans is fully funded such that assets for each Plan
equal or exceed the present value of accrued benefits based on the actuarial
assumptions disclosed in Schedule 4(t)(v), which assumptions include interest
rates, incidence of turnover, and mortality and disability.
(vi) Submission to Purchaser for Review. All documents,
including plan and trust instruments, annual reports, and actuarial reports,
relating to the Plans for the Plans' most recently ended Plan years, have been
furnished to Purchaser for its review.
(vii) Multi-employer Plan. Neither Seller or any
predecessor in interest thereto, nor any trade or business under common control
with Seller or any predecessor in interest thereto (within the meaning of
Section 414(i) of the Internal Revenue Code), has ever contributed to, and has
no liability with respect to, any pension Plan that is a Multi-employer Plan
for the benefit of employees involved in the Business.
(viii) Adequate Reserves for Welfare Plans. Each welfare
plan (as defined in Section 3(2) of ERISA) of Seller is disclosed on Schedule
4(t)(viii). For welfare plans disclosed or required to be disclosed in Schedule
4(t)(viii), reserves have been established by Seller or its insurance companies
at least sufficient to pay all claims incurred under the provisions of such
Plans on or prior to the Closing Date. Seller has not received notice of, nor
does it know any basis for, any retrospective premium charge for claims
relating to any period prior to the Closing Date under such Plans.
(ix) Compliance with Laws. Seller is in compliance with
all applicable Laws respecting employment and employment practices, terms and
conditions of employment and wages and hours, and occupational safety and
health. Seller is not engaged in any unfair labor practice within the meaning
of Section 8 of the National Labor Relations Act. There is no unfair labor
practice, charge, or complaint or any other matter against or involving Seller
pending or, to the knowledge of Parent and Seller, threatened before the
National Labor Relations Board or any court of law pertaining to the Business
or the employees involved in the Business. There is no labor strike, dispute,
slowdown, or stoppage pending or, to the knowledge of Parent and Seller,
threatened against Seller pertaining to the Business or the employees involved
in the Business. No certification or decertification question or organizational
drive exists or has existed within the past twelve (12) months respecting the
Business or the employees involved in the Business. Seller has not experienced
any organized work stoppage or other labor difficulty involving the employees
of the Business since Seller's inception. There are no charges,
21
investigations, administrative proceedings, or formal complaints of
discrimination (including discrimination based upon sex, age, marital status,
race, national origin sexual preference, handicap, or veteran status) pending
or, to the knowledge of Parent and Seller, threatened before the Equal
Employment Opportunity Commission or any federal, state, or local agency or
court against Seller pertaining to the Business or the employees of the
Business, and, to the knowledge of Parent and Seller, no basis for any such
charge, investigation, administrative proceeding, or complaint exists. There
have been no audits of the equal employment opportunity practices of Seller
pertaining to the Business or the employees involved in the Business.
(u) Insurance Policies. Schedule 4(u) lists all Insurance
Policies relating to the Business or the Assets in force as of the
Determination Date, naming Seller as an insured or beneficiary or as a
loss-payable payee or for which Seller has paid or is obligated to pay all or
part of the premiums. Other than as disclosed in Schedule 4(u), Seller has not
received notice of any pending or threatened termination or retroactive premium
increase with respect thereto, and Seller is in compliance with all material
conditions contained therein, the noncompliance with which could reasonably be
expected to result in termination of insurance coverage or increased premiums
for prior or future periods. There are no pending material claims against such
insurance by Seller as to which insurers have denied liability or are defending
under any reservation of rights, and, to the knowledge of Parent and Seller,
there exists no material claim under such insurance that has not been properly
filed by Seller.
(v) Sufficiency of Rights. Except as disclosed in Schedule 4(v),
the Assets constitute all of the properties, rights, and privileges necessary
for the conduct of the Business by Purchaser as of the Closing Date, in
substantially the same manner as the Business has been operated by Seller
during the twelve (12)-month period preceding the Closing. Except as disclosed
in Schedule 4(v), neither Parent nor Seller has knowledge of any pending or
threatened early termination or cancellation of any General Contract.
(w) Broker's or Finder's Fees. Neither Parent nor Seller has
authorized any person to act as broker or finder or in any other similar
capacity in connection with the transactions contemplated by this Agreement,
and no broker or finder is entitled to any payment in respect thereof.
(x) Related-Party Transactions. Except as disclosed in Schedule
4(x), neither Parent nor Seller is a party to any contract, agreement, license,
lease, or arrangement with, and has no other commitment to, directly or
indirectly, (1) any officer or salaried employee of Seller in office within two
(2) years of the date of this Agreement; (2) any corporation, trust, or other
entity in which any such officer or salaried employee has a material equity or
participating interest; or (3) any partnership in which any such officer or
salaried employee has a partnership or participating interest, in each case,
relating to or involving the Business, the Assets, or the Assumed Liabilities,
except, in each instance, for existing compensation arrangements listed herein.
Each such contract, agreement, license, lease, arrangement, and commitment was
entered into by Parent or Seller in the ordinary course of business upon terms
that are fair and reasonable to Parent or Seller without regard to the status
and relationship of such other parties.
(y) Bank Accounts. Schedule 4(y) lists all bank, money market,
savings and similar accounts and safe deposit boxes of Seller, specifying the
account numbers, the authorized signatories or persons having access to them,
and the passwords used to access such accounts, including through voice
response and internet services.
(z) No Fraudulent Transfer. Parent and Seller have entered into
this Agreement and the Purchase Agreements without any intent to hinder, delay
or defraud any of their creditors. Parent and Seller have received a
22
reasonably equivalent value in exchange for the Assets transferred to the
Purchaser. Immediately prior to and after the Closing, the sum of the Seller's
assets is and will be greater than all of its debts, and Seller is and will be
generally able to pay its debts as they become due.
(aa) Disclosure. Parent and Seller have completely and accurately
responded to the inquiries and diligence requests of Purchaser and its agents,
representatives, attorneys and employees in connection with the transactions
contemplated by this Agreement. No representation, warranty, or statement made
by Parent or Seller in this Agreement, the Purchase Agreements or in any
document or certificate furnished or to be furnished to Purchaser pursuant to
this Agreement contains or will contain any untrue statement or omits or will
omit to state any fact necessary to make the statements contained herein or
therein, under the circumstances in which they were made, not materially
misleading. Parent and Seller have disclosed to Purchaser all facts known or
reasonably available to Parent and Seller that are material to the financial
condition, operation, or prospects of the Business, the Assets, and the Assumed
Liabilities.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Parent and Seller as
follows:
(a) Corporate Existence. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Georgia. Purchaser has the corporate power and authority to conduct its
business and to own and lease all of its properties and assets. Purchaser is
duly qualified or licensed to do business and is in good standing under the
laws of each jurisdiction where such qualification is required, except where
the failure to be so qualified would not have a Material Adverse Effect.
(b) Corporate Power and Authorization. Purchaser has the
corporate power, authority and legal right to execute, deliver and perform this
Agreement and the other Purchase Agreements and instruments to be executed and
delivered in connection with the transactions contemplated hereby and thereby.
The execution, delivery and performance of this Agreement by Purchaser has been
duly authorized by all necessary corporate action. This Agreement has been duly
executed and delivered by Purchaser and constitutes the legal, valid and
binding obligation of Purchaser enforceable against Purchaser in accordance
with its terms except as such enforcement may be subject to or limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance,
fraudulent transfer or other similar laws now or hereafter in effect affecting
creditors' rights generally, and by general principles of equity.
(c) No Conflict. The execution, delivery and performance of this
Agreement by Purchaser does not and will not violate any Laws to which
Purchaser is subject, and will not violate, conflict with or result in the
breach of any term, condition or provision of, or require the consent of any
other party to, (a) any judgment, order, writ, injunction, decree or award of
any court, arbitrator or governmental or regulatory official, body or authority
which is applicable to Purchaser, (b) the articles of incorporation or bylaws
of, or any securities issued by, Purchaser, or (c) any mortgage, indenture,
agreement, contract, commitment, lease, plan or other instrument, document or
understanding, oral or written, to which Purchaser is a party or by which
Purchaser is otherwise bound, except where the violation, conflict or breach
would not have a Material Adverse Effect.
23
(d) Broker's or Finder's Fees. Purchaser has not authorized any
person to act as broker, finder, or in any other similar capacity in connection
with the transactions contemplated by this Agreement, and no broker or finder
is entitled to any payment in respect thereof.
(e) Required Governmental Consents. Except for the Required
Governmental Consents, no approval, authorization, certification, consent,
variance, permission, license, or permit to or from, or notice, filing, or
recording to or with, U.S. or non-U.S., federal, state, or local governmental
authorities is necessary for (a) the execution and delivery of this Agreement
and the other Purchase Agreements and instruments to be executed and delivered
in connection with the transactions contemplated hereby or thereby by Purchaser
or (b) the consummation by Purchaser of the transactions contemplated hereby or
thereby.
(f) Required Contract Consents. To the knowledge of Purchaser,
except for (1) the Required Contract Consents, and (2) the consent of First
Union National Bank, N.A. in respect of that certain Loan and Security
Agreement dated April 28, 1998, as amended (the "FIRST UNION CONSENT"), no
approval, authorization, consent, permission, or waiver to or from, or notice,
filing, or recording to or with, any person (other than the Required
Governmental Consents) is necessary for (a) the execution and delivery of this
Agreement and the other Purchase Agreements and instruments to be executed and
delivered in connection with the transactions contemplated hereby or thereby by
Purchaser or (b) the consummation by Purchaser of the transactions contemplated
hereby or thereby.
(g) Disclosure. Purchaser has completely and accurately responded
to the inquiries and diligence requests of Parent and Seller and their agents,
representatives, attorneys and employees in connection with the transactions
contemplated by this Agreement. No representation, warranty, or statement made
by Purchaser in this Agreement, the Purchase Agreements or in any document or
certificate furnished or to be furnished to Parent or Seller pursuant to this
Agreement contains or will contain any untrue statement or omits or will omit
to state any fact necessary to make the statements contained herein or therein,
under the circumstances in which they were made, not materially misleading.
ARTICLE 6
CONDITIONS TO CLOSING
(a) Conditions to Parent's and Seller's Obligations. Each of the
obligations of Parent and Seller to be performed hereunder shall be subject to
the satisfaction (or waiver by Parent and/or Seller) at or prior to the Closing
Date of each of the following conditions:
(i) Purchaser's representations and warranties contained
in this Agreement shall be true on and as of the Closing Date.
(ii) Purchaser shall have performed and complied with all
agreements, obligations and conditions required by this Agreement to be
performed or complied with by it on or prior to the Closing.
(iii) Other than approvals required to assign to Purchaser
the OTS Contract and the matters described in Section 4(d)(1), all Required
Government Consents and Required Contract Consents and the agreement of
Purchaser and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Company to release their security interests in
the Assets shall have been obtained.
24
(iv) No Litigation shall be threatened or pending against
Purchaser before any court or governmental agency that, in the reasonable
opinion of counsel for Parent and Seller, could result in the restraint or
prohibition of Purchaser, or the obtaining of damages or other relief from
Purchaser, in connection with this Agreement or the consummation of the
transactions contemplated hereby.
(v) Purchaser shall have delivered to Parent and Seller
an opinion of counsel to Purchaser, dated as of the Closing Date, in form and
substance satisfactory to Parent and Seller.
(b) Conditions to Purchaser's Obligations. Each of the
obligations of Purchaser to be performed hereunder shall be subject to the
satisfaction (or the waiver by Purchaser) at or prior to the Closing Date of
each of the following conditions:
(i) Parent's and Seller's representations and warranties
contained in this Agreement shall be true on and as of the Closing Date.
(ii) Parent and Seller shall have performed and complied
with all agreements, obligations, and conditions required by this Agreement to
be performed or complied with by them on or prior to the Closing.
(iii) Other than approvals required to assign to Purchaser
the OTS Contract and the matters described in Section 4(d)(1), all Required
Government Consents and Required Contract Consents, as well as the First Union
Consent, shall have been obtained.
(iv) No Litigation shall be threatened or pending against
Parent or Seller before any court or governmental agency that, in the
reasonable opinion of counsel for Purchaser, could result in the restraint or
prohibition of any such party, or the obtaining of damages or other relief from
such party, in connection with this Agreement or the consummation of the
transactions contemplated hereby.
(v) Seller shall have provided to Purchaser payoff
letters for all liens, encumbrances and liabilities with respect to the Assets
and shall have paid all amounts required to be paid by Seller with respect
thereto or otherwise obtained the release of all such liens, encumbrances and
liabilities.
(vi) Parent and Seller shall have delivered to Purchaser
an opinion of counsel to Parent and Seller, dated as of the Closing Date, in
form and substance satisfactory to Purchaser.
(vii) Each of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ shall
have entered into a non-compete, non-solicitation and confidentiality agreement
with Purchaser.
(viii) Parent and Seller shall have executed the Escrow
Agreement.
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ARTICLE 7
CLOSING
(a) Closing. The closing of the purchase and sale of the Assets
and the transfer and assumption of the Assumed Liabilities (the "CLOSING")
shall take place at the offices of ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ commencing at 9:00 a.m. on February 2,
2001 (the "CLOSING DATE"). Subject to consummation of the Closing on the
Closing Date, the sale, assignment, transfer and conveyance to Purchaser of the
Assets will be effective as of 12:01 a.m. Eastern Standard Time on the Closing
Date.
(b) Actions at Closing. At Closing, Purchaser and Seller shall
take the following actions, in addition to such other actions as may otherwise
be required under this Agreement:
(i) Copies of Consents. Seller shall deliver to
Purchaser copies of all Required Contract Consents and all Required Government
Consents which have been obtained.
(ii) Conveyance Instruments. Seller shall deliver to
Purchaser or such bills of sale, assignments, and other instruments of
conveyance and transfer as Purchaser may reasonably request to effect the
transfer and assignment of the Assets to Purchaser.
(iii) Assumption Agreements. Purchaser shall deliver to
Seller one or more assumption agreements in form reasonably acceptable to
Seller, pursuant to which Purchaser assumes and agrees to pay and perform the
Assumed Liabilities, subject to valid disputes.
(iv) Legal Opinions. The parties shall cause their
respective counsel to deliver to the other parties the legal opinions required
under Article 6.
(v) Lease. Seller and Purchaser shall execute all
assignments and other documents required in order to assign the lease for
Seller's principal office to the Purchaser or its designated subsidiary.
(c) Delivery of Purchase Price. Purchaser shall deliver the Cash
Purchase Price to Seller, subject to deposit of the Escrow Amount with the
Escrow Agent pursuant to the Escrow Agreement.
(d) Certain Consents. To the extent that Seller's rights under
any agreement, General Contract, commitment, lease, permit, or other Asset to
be assigned to Purchaser hereunder may not be assigned without the consent of
another person which has not been obtained prior to the Closing Date, and which
is material to the ownership, use or disposition of an Asset, this Agreement
shall not constitute an agreement to assign the same if an attempted assignment
would constitute a breach thereof or be unlawful, and Seller shall use its
commercially reasonable good faith efforts to obtain any such required consents
as promptly as possible. If any necessary consent shall not be obtained or if
any attempted assignment thereof would be ineffective or would impair
Purchaser's rights under the Asset in question so that Purchaser would not in
effect acquire the benefit of all such rights, Seller, to the maximum extent
permitted by law and the specific Asset, shall act after the Closing as
Purchaser's agent in order to obtain for Purchaser the benefits thereunder, and
Seller shall be responsible for out-of-pocket costs with respect to such
action.
(e) Further Assurances. At and after the Closing, without further
consideration, each of the parties hereto shall take all such other action and
shall procure or execute, acknowledge, and deliver all such further
26
certificates, conveyance instruments, consents, and other documents as the
other parties or their counsel may reasonably request (1) to vest in Purchaser,
and perfect and protect Purchaser's right, title, and interest in, and
enjoyment of, the Assets and the Business, (2) to effect Purchaser's
assumption, payment (except for valid disputes) and discharge of all Assumed
Liabilities, and/or (3) to ensure more effectively the compliance of each party
with its agreements, covenants, warranties, and representations under this
Agreement.
ARTICLE 8
COVENANTS OF PARENT, SELLER AND PURCHASER FOLLOWING CLOSING
(a) Purchaser's Cooperation. Purchaser shall use its reasonable
efforts to provide Seller such assistance as it may reasonably request in
connection with matters relating to Taxes, including information with respect
to Seller's preparation of any Returns of Taxes, any audit or other examination
by any taxing authority, any judicial or administrative proceeding relating to
Seller's liability for Taxes, or any claims arising hereunder respecting the
Business. Purchaser shall retain and provide Seller with records or information
which may be relevant to any such Return, audit, examination, proceeding, or
determination, and Purchaser shall retain all such books and records for so
long as necessary in keeping with applicable statutes of limitations.
(b) Allocation of Purchase Price. The Purchase Price shall be
allocated as disclosed in Schedule 3, and all tax returns and reports filed by
Seller and Purchaser with respect to the transactions contemplated by this
Agreement shall be consistent with that allocation.
(c) Maintenance of Books and Records. Each of Seller and
Purchaser shall preserve until the fifth anniversary of the Closing Date all
records possessed or to be possessed by such party relating to any of the
Assets, Assumed Liabilities or Business of Seller prior to the Closing Date.
After the Closing Date, where there is a legitimate purpose, such party shall
provide the other parties with access, upon prior reasonable written request
specifying the need therefor, during regular business hours, to (i) the
officers and employees of such party, and (ii) the books of account and records
of such party, but, in each case, only to the extent relating to the Assets,
Assumed Liabilities or Business of Seller prior to the Closing Date, and the
other parties and their representatives shall have the right to make copies of
such books and records; provided, however, that the foregoing right of access
shall not be exercisable in such a manner as to interfere unreasonably with the
normal operations and business of such party; and further provided, that, as to
so much of such information as constitutes trade secrets or confidential
business information of such party, the requesting party and its officers,
directors and representatives will use due care to not disclose such
information except (i) as required by law, (ii) with the prior written consent
of the party who owns such information, which consent shall not be unreasonably
withheld, delayed or conditioned or (iii) where such information becomes
available to the public generally, or becomes generally known to competitors of
such party, through sources other than the requesting party, its affiliates or
its officers, directors or representatives. Such books and records may
nevertheless be destroyed by a party if such party sends to the other parties
written notice of its intent to destroy such books and records, specifying with
particularity the contents of the books and records to be destroyed. Such books
and records may then be destroyed after the 30th day after such notice is given
unless another party objects to the destruction, in which case the party
seeking to destroy the books and records shall deliver such books and records
to the objecting party.
(d) UCC Matters. From and after the Closing Date, Parent and
Seller will promptly refer all inquiries with respect to ownership of the
Assets or the Business to Purchaser. In addition, Parent and Seller
27
will execute such documents, assignments and financing statements as Purchaser
may request from time to time to evidence transfer of the Assets to Purchaser,
including any necessary assignments of financing statements, assignment of
rights or other similar documents.
(e) Covenant Not to Compete. Each of Parent and Seller agrees
that for a period of two (2) years after the Closing Date, neither it nor any
of its subsidiaries will, directly or indirectly, own, manage, operate, join,
control or participate in the ownership, management, operation or control of
any business, whether in corporate, proprietorship or partnership form or
otherwise as more than a five percent owner in such business, that competes
with the Business; provided, however, that Parent and its subsidiaries shall
not be restricted from developing, marketing and selling the DVI PortPro Asset
Liability Management System (PALMS), which competes with a product currently
licensed by Seller or Parent from a third party.
(f) Nonsolicitation of Personnel. For a period of two (2) years
after the Closing Date, neither Parent nor Seller shall solicit, divert, or
recruit, for its own benefit or for the benefit of any other person or entity,
any employee of Seller whom Purchaser hires or retains from and after the
Closing Date.
(g) Injunctive Relief. Parent and Seller jointly and severally
specifically acknowledge and agree that (1) the covenants and agreements
contains in Sections (e) and (f) of this Article 8 are made and given in
connection with the sale of substantially all of the Business and assets of
Seller, including Seller's goodwill as a going concern, and to protect and
preserve unto Purchaser the benefit of its purchase of such Business, assets
and goodwill, (2) that Parent is a beneficiary of the sale of Seller's assets,
(3) that the remedy at law for any breach of the covenants and agreements
contained in Sections (e) and (f) of this Article 8 will be inadequate, and
that Purchaser, in addition to any other relief available to it, shall be
entitled to temporary and permanent injunctive relief without the necessity of
proving actual damage. In the event that the provisions of this Section 8(g)
should ever be deemed to exceed the limitation provided by applicable law, then
the parties hereto agree that such provisions shall be reformed to set forth
the maximum limitations permitted.
(h) Maintain Corporate Status. Seller covenants that it will
continue to exist and shall keep and maintain its present corporate status in
good standing for a minimum of ten (10) months following the date of Closing.
Each of Parent and Seller covenants not to use in any manner the corporate
names Netcal, Inc., Distributed Planning Systems Corp., DPSC Software, Inc.,
DPSC Internet, Inc. or any confusingly similar name (including all related
trade names, logos, and marks) after the Closing Date.
(i) Hire of Employees. Contemporaneously with Closing, Purchaser
will offer employment to the employees of Seller for the same salary as each
such employee currently receives and with benefits consistent with other
similarly situated InterCept employees; provided, however, nothing in this
Section 8(i) will prevent Purchaser from terminating such employment
thereafter.
ARTICLE 9
INDEMNIFICATION
(a) Indemnification by Parent and Seller. Parent and Seller shall
jointly and severally indemnify, defend, and hold harmless Purchaser and its
subsidiaries, successors, permitted assigns, directors, officers, employees and
agents (collectively, the "PURCHASER GROUP") at, and at any time after, the
Closing, from and against any and all demands, claims, actions, or causes of
action, assessments, losses, damages, liabilities, costs,
28
and expenses, including reasonable fees and expenses of counsel, other expenses
of investigation, handling, and litigation, and settlement amounts, together
with interest and penalties (collectively, a "LOSS" or "LOSSES"), asserted
against, resulting to, imposed upon, or incurred by the Purchaser Group,
directly or indirectly, by reason of, resulting from, incident to or arising in
connection with any of the following:
(i) Breach of Representation, Warranty or Obligation.
Any breach of any representation, warranty, covenant or agreement of Parent or
Seller contained in or made pursuant to this Agreement and the other Purchase
Agreements, including the agreements and other instruments contemplated hereby
and thereby;
(ii) Excluded Liabilities. Any liabilities or obligations
of any kind or nature whatsoever, whether accrued, absolute, contingent, or
otherwise, known or unknown, arising out of or in connection with (1) any
Excluded Assets, or (2) the conduct of the Business or the ownership or use of
the Assets prior to the Closing Date, except for the Assumed Liabilities;
(iii) Failure to Obtain Consents. Any failure to obtain
the Required Government Consents or the Required Contract Consents prior to
Closing;
(iv) Violations of Fraudulent Conveyance Laws. Any
failure to comply with any fraudulent conveyance or similar laws relating to
notices to creditors;
(v) Title to Assets. Any failure to deliver good,
indefeasible or marketable title to any of the Assets, free and clear of all
liens and encumbrances; and
(vi) Incidental Matters. Any and all actions, suits,
claims, proceedings, investigations, demands, assessments, audits, fines,
judgments, costs and other expenses incident to any of the foregoing or to the
enforcement of this Section 9(a).
(b) Indemnification by Purchaser. Purchaser shall indemnify,
defend, and hold harmless Parent and Seller and their respective subsidiaries,
successors, permitted assigns, directors, officers, employees and agents
(collectively, the "SELLER GROUP") at, and at any time after, the Closing, from
and against any and all Losses asserted against, resulting to, imposed upon, or
incurred by the Seller Group, to the extent arising from any of the following:
(i) Breach of Representation, Warranty or Obligation.
Any breach of any representation, warranty, covenant or agreement of Purchaser
contained in or made pursuant to this Agreement or the Assumption Agreement,
including the agreements and other instruments contemplated hereby;
(ii) Assumed Liabilities. Any of the Assumed Liabilities;
and
(iii) Post-Closing Operations. The ownership and operation
of the Assets and Business from and after the Closing Date.
(c) Notice of Claim. The party entitled to indemnification
hereunder (the "CLAIMANT") shall promptly deliver to the party liable for such
indemnification hereunder (the "OBLIGOR") notice in writing (the "REQUIRED
NOTICE") of any claim for recovery under Section 9(a) or Section 9(b),
specifying in reasonable detail the nature of the Loss, and, if known, the
amount, or an estimate of the amount, of the liability arising therefrom (the
"CLAIM").
29
The Claimant shall provide to the Obligor as promptly as practicable thereafter
information and documentation reasonably requested by the Obligor to support
and verify the claim asserted, provided that, in so doing, it may restrict or
condition any disclosure in the interest of preserving privileges of importance
in any foreseeable litigation.
(d) Defense. If the facts pertaining to the Loss arise out of the
claim of any third party (other than a member of the Purchaser Group or Seller
Group, whichever is entitled to indemnification for such matter) and
indemnification is available by virtue of the circumstances of the Loss, the
Obligor must assume the defense or the prosecution thereof, including the
employment of counsel or accountants, at its cost and expense. If
representation of both the Obligor and the Claimant by such counsel would be
inappropriate due to actual or potential differing interests between the
Obligor and the Claimant in such proceeding (such as the availability of
defenses to the Claimant), the Claimant (together with all other indemnified
parties which may be represented without conflict by one counsel) shall have
the right to retain one separate counsel, with the reasonable fees and expenses
to be paid by the Obligor. The Claimant shall have the right to determine and
adopt (or, in the case of a proposal by Obligor, to approve) a settlement of
such matter in its reasonable discretion, except that Claimant need not consent
to any settlement that (1) imposes any nonmonetary obligation or (2) Obligor
does not agree to pay in full. The Obligor shall not be liable for any
settlement of any such claim effected without its prior written consent, which
shall not be unreasonably withheld, delayed or conditioned. Whether or not the
Obligor chooses to so defend or prosecute such claim, all the parties hereto
shall cooperate in the defense or prosecution thereof and shall furnish such
records, information, and testimony, and attend such conferences, discovery
proceedings, hearings, trials, and appeals, as may be reasonably requested in
connection therewith.
(e) Manner of Indemnification by Seller. Where Parent or Seller
is obligated to indemnify the Purchaser or any other member of the Purchaser
Group under Section 9(a), such Claim shall be satisfied pursuant to the Escrow
Agreement. Following termination of the Escrow Agreement, or after such time as
all funds available under the Escrow Agreement have been paid out to satisfy
Claims, such Claim shall be satisfied by Parent and/or Seller, at the option of
the relevant member of the Purchaser Group, by paying to that person in cash an
amount equal to the applicable Loss.
(f) Limitations. Notwithstanding anything in this Article 9 to
the contrary:
(i) Threshold. No indemnification or any other claim for
damages under this Agreement or any other instrument or agreement to be
executed and delivered by the parties hereto in connection with the
transactions contemplated hereby shall be payable by any party to any other
party until (and then only to the extent that) the total of all Losses from
such claim equals or exceeds $25,000.
(ii) Time of Assertion. No indemnification shall be
payable by any party with respect to matters as to which it has not received
notice from the Claimant within two (2) years after the Closing Date, except
that there shall be no limitation on the time during which indemnification may
be sought or obtained (1) under Sections 9(a)(ii), 9(a)(iv), or 9(a)(v) or
Sections 9(b)(ii) or (iii); or (2) with respect to any breach of any covenant
or agreement in this Agreement or any other instrument or agreement to be
executed and delivered by such party in connection with the transactions
contemplated hereby or any instance of fraud.
(iii) Cap. In no event shall the liability of Parent or
Seller in connection with the transactions contemplated hereby exceed the
Purchase Price.
30
(iv) Exclusive Remedy. Except as provided in Section
8(g), the parties hereto acknowledge and agree that this Article 9 is the
exclusive remedy of the parties hereto for damages for breach of or default or
misrepresentation under this Agreement, other than a claim or interpleader
based on Purchaser's failure to discharge the Assumed Liabilities or Seller's
failure to discharge the Excluded Liabilities.
(g) Arbitration. In the event of a dispute in which the parties
involved cannot reach agreement as to the claim in question or their liability
under this Article 9, then the disputed amount of the claim of indemnification
or their liability hereunder 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 a mutually
acceptable locale 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.
ARTICLE 10
MISCELLANEOUS
(a) Sales, Transfer and Documentary Taxes, etc. All sales and use
taxes relating to the sale and transfer of the Assets pursuant to this
Agreement shall be paid by Purchaser. Seller shall pay all other federal, state
and local documentary and other transfer taxes, if any, due as a result of the
purchase, sale or transfer of the Assets in accordance herewith whether imposed
by law on Seller or Purchaser, and Seller shall indemnify, reimburse and hold
harmless Purchaser in respect of the liability for payment of or failure to pay
any such taxes or the filing of or failure to file any reports required in
connection therewith.
(b) Expenses. Except as otherwise provided in this Agreement,
each party hereto shall pay its own expenses incidental to the preparation of
this Agreement, the carrying out of the provisions of this Agreement and the
consummation of the transactions contemplated hereby.
(c) Contents of Agreement; Parties in Interest; etc. This
Agreement, which includes the Schedules, Exhibits and the other documents,
agreements, certificates and instruments executed and delivered pursuant to or
in connection with this Agreement (collectively, the "PURCHASE AGREEMENTS"),
sets forth the entire understanding and agreement of the parties hereto with
respect to the transactions contemplated hereby. It shall not be assigned,
amended or modified except by written instrument duly executed by each of the
parties hereto; provided, however, that prior to the Closing, Purchaser may
assign its rights and obligations under this Agreement to a wholly owned
subsidiary, but Purchaser shall remain fully liable for performance of all of
its obligations under this Agreement as if no such assignment had occurred. Any
and all prior or contemporaneous negotiations, agreements, representations,
warranties and understandings between or among the parties regarding the
subject matter hereof, whether written or oral, are superseded in their
entirety by this Agreement and the other Purchase Agreements and shall not
create any liability on the part of any party hereto in favor of any other
party (or parties), except as otherwise expressly set forth herein and in the
other Purchase Agreements.
(d) Waiver. Any term or provision of this Agreement may be waived
at any time by the party entitled to the benefit thereof by a written
instrument duly executed by such party.
31
(e) Notices. Any notice, request, demand, waiver, consent,
approval or other communication which is required or permitted hereunder shall
be in writing and shall be deemed given only if delivered personally or sent by
facsimile, air courier, telegram or by registered or certified mail, postage
prepaid, as follows:
If to Parent or Seller:
Netzee, Inc.
Netcal, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ (facsimile)
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Executive Vice President
and Chief Financial Officer
With a copy, which shall not constitute notice, to:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ (facsimile)
If to Purchaser:
The InterCept Group, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Chief Financial Officer
(▇▇▇) ▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ (facsimile)
With a copy, which shall not constitute notice, to:
▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ & Bird LLP
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ (facsimile)
32
or to such other address as the addressee may have specified in a notice duly
given to the sender as provided herein. Such notice, request, demand, waiver,
consent, approval or other communication will be deemed to have been given as
of the date so delivered, transmitted by facsimile, telegraphed or mailed, as
the case may be.
(f) Georgia Law to Govern. This Agreement shall be governed by
and interpreted and enforced in accordance with the laws of the State of
Georgia, without regard to its conflict of law principles.
(g) No Benefit to Others. The representations, warranties,
covenants and agreements contained in this Agreement are for the sole benefit
of the parties hereto and their respective successors and assigns, and nothing
contained in this Agreement or the other Purchase Agreements shall be construed
as conferring any rights on any other persons.
(h) Headings, Gender and "Person". All section headings contained
in this Agreement are for convenience of reference only, do not form a part of
this Agreement and shall not affect in any way the meaning or interpretation of
this Agreement. Words used herein, regardless of the number and gender
specifically used, shall be deemed and construed to include any other number,
singular or plural, and any other gender, masculine, feminine, or neuter, as
the context requires. Any reference to a "PERSON" herein shall include an
individual, firm, corporation, partnership, trust, governmental authority or
body, association, unincorporated organization or any other entity. The
"KNOWLEDGE" of a person shall include the current actual awareness of such
person, such person's officers charged with the responsibility for the matters
qualified by the use of the term "KNOWLEDGE" and such matters as would be
revealed by a review of such person's records.
(i) Schedules and Exhibits. All Exhibits and Schedules referred
to herein are incorporated herein by reference and are intended to be and
hereby are specifically made a part of this Agreement.
(j) Severability. The invalidity or unenforceability of any
provision of this Agreement in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
(k) Counterparts. This Agreement may be executed in any number of
counterparts and any party hereto may execute any such counterpart, each of
which when executed and delivered shall be deemed to be an original and all of
which counterparts taken together shall constitute but one and the same
instrument. This Agreement shall become binding when one or more counterparts
taken together shall have been executed and delivered by the parties. It shall
not be necessary in making proof of this Agreement or any counterpart hereof to
produce or account for any of the other counterparts.
(l) Assistance of Counsel. Each party hereto acknowledges that it
has had the assistance of counsel in negotiating and preparing the terms of
this Agreement; therefore, this Agreement shall be construed without regard to
any presumption or other rule requiring construction against the party causing
the Agreement to be drafted.
(m) Time of the Essence. Time is of the essence of this
Agreement.
(n) Actions and Proceedings. Each party to this Agreement
consents to the exclusive jurisdiction and venue of the courts of any county in
the State of Georgia and the United States District Court for any District of
Georgia in any action or judicial proceeding seeking an injunction or other
equitable relief or to enforce an arbitration award. Each party consents and
submits to the non-exclusive personal jurisdiction of any
33
court in the State of Georgia in respect of any such proceeding. Each party
consents to service of process upon it with respect to any such proceeding by
registered mail, return receipt requested, and by any other means permitted by
applicable laws and rules. Each party waives any objection that it may now or
hereafter have to the laying of venue of any such proceeding in any court in
the State of Georgia and any claim that it may now or hereafter have that any
such proceeding in any court in the State of Georgia has been brought in an
inconvenient forum. Each party waives trial by jury in any such proceeding.
(o) Execution by Facsimile. 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.
[Signatures follow on next page]
34
IN WITNESS WHEREOF, the parties hereto have duly executed this Asset
Purchase Agreement on the date first written above:
PURCHASER:
THE INTERCEPT GROUP, INC.
By:
-----------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
SELLER:
NETCAL, INC.
By:
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President
PARENT:
NETZEE, INC.
By:
----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Executive Vice President and
Chief Financial Officer