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EXHIBIT 2.14
ASSET PURCHASE AGREEMENT
dated
as of May 1, 2001
By and Among
iPAY, LLC
(A Kentucky Limited Liability Company)
And
NETZEE, INC.
(A Georgia Corporation)
And
CALL ME ▇▇▇▇, LLC
(A Kentucky Limited Liability Company)
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TABLE OF CONTENTS
THE PURCHASE...................................................................................1
The Business..........................................................................1
Purchase and Sale of the Assets.......................................................1
Retained Assets.......................................................................2
Liabilities...........................................................................2
Hacker Liabilities....................................................................2
Time and Place of Closing.............................................................2
OFFICERS AND DIRECTORS OF THE COMPANIES........................................................3
Resignations..........................................................................3
PURCHASE PRICE AND PAYMENT OF PURCHASE PRICE...................................................3
Purchase Price........................................................................3
Payment of Purchase Price.............................................................3
Allocation of Purchase Price..........................................................3
RULES OF CONSTRUCTION..........................................................................3
REPRESENTATIONS AND WARRANTIES OF THE COMPANIES................................................4
Organization..........................................................................4
Authority; No Violation...............................................................5
Financial Information and Liabilities.................................................5
Broker's and Other Fees...............................................................5
Absence of Certain Changes or Events..................................................6
Legal Proceedings.....................................................................6
Taxes and Tax Returns.................................................................6
Employee Benefit Plans and Relations..................................................7
Compliance with Applicable Laws.......................................................7
Certain Contracts.....................................................................7
Properties and Insurance..............................................................8
Environmental Matters.................................................................8
Intellectual Property.................................................................8
Ownership....................................................................8
Procedures for Copyright Protection..........................................8
Procedure for Trade Secret Protection........................................9
Ownership of Software........................................................9
Absence of Claims............................................................9
Disclaimer of Certain Warranties.............................................9
Adequacy of Technical Documentation...................................................9
Third-Party Components in Software....................................................9
Third-Party Interests or Marketing Rights in Software.................................9
Absence of Certain Agreements and Practices..........................................10
Labor Relations......................................................................10
Disclosure...........................................................................10
Knowledge of Purchaser...............................................................10
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REPRESENTATIONS AND WARRANTIES OF THE PURCHASER...............................................11
Corporate Organization...............................................................11
Authority; No Violation..............................................................11
Broker's and Other Fees..............................................................11
Legal Proceedings....................................................................11
Disclosure...........................................................................12
COVENANTS AND AGREEMENTS OF THE PARTIES.......................................................12
Conduct of Business..................................................................12
Negative Covenants...................................................................12
No Solicitation......................................................................12
Current Information..................................................................13
Access to Properties and Records.....................................................13
Regulatory Matters; Consents; Cooperation, etc.......................................13
Parties' Efforts; Further Assurances; Cooperation....................................13
Public Announcements.................................................................13
Failure to Fulfill Conditions........................................................14
Disclosure Supplements...............................................................14
Release; Covenant Not to ▇▇▇.........................................................14
Cooperation and Exchange of Information..............................................15
Tax Returns..........................................................................15
New Accounts; Set Up Fees............................................................15
Software Bugs........................................................................15
Timely Payment of Certain Accounts Payable...........................................15
CLOSING CONDITIONS............................................................................15
Conditions of Each Party's Obligations Under this Agreement..........................15
Approvals and Regulatory Filings............................................15
Suits and Proceedings.......................................................15
Conditions to the Obligations of the Purchaser under this Agreement..................15
Representations and Warranties; Covenants and Agreements; Consents..........15
Certificates................................................................16
Noncompetition and Confidentiality Agreements...............................16
No Material Adverse Effect on the Companies.................................16
Release of Obligations......................................................16
Escrow Agreement............................................................16
Closing.....................................................................16
Assignment of Lease.........................................................16
▇▇▇▇ of Sale, Assignment and Assumption Agreement; Conveyance Documents.....16
Other Documents.............................................................16
Conditions to the Obligations of the Companies under this Agreement..................16
Representations and Warranties; Covenants and Agreements; Consents..........16
Certificates................................................................16
Escrow Agreement............................................................16
Purchase Price..............................................................16
Assignment of Lease.........................................................16
▇▇▇▇ of Sale, Assignment and Assumption Agreement...........................17
Other.......................................................................17
TERMINATION...................................................................................17
Termination..........................................................................17
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Effect of Termination................................................................17
Specific Performance.................................................................17
SURVIVAL......................................................................................17
Survival.............................................................................17
INDEMNIFICATION...............................................................................17
Indemnification by the Companies.....................................................17
Indemnification by Purchaser.........................................................18
Claims for Indemnification...........................................................18
Procedure...................................................................18
Excluded Costs..............................................................18
Insurance...................................................................18
Period to Settle............................................................18
Defense of Claim by Third Parties....................................................19
Third Party Claim Assistance.........................................................19
Settlement of Indemnification Claims.................................................19
Manner of Indemnification............................................................19
Certain Limitations..................................................................19
Indemnification is Exclusive Remedy..................................................20
MISCELLANEOUS.................................................................................20
Expenses.............................................................................20
Notices..............................................................................20
Parties in Interest..................................................................21
Entire Agreement.....................................................................21
Counterparts.........................................................................21
Governing Law........................................................................21
Invalidity of any Part...............................................................21
Time of the Essence; Computation of Time.............................................21
Amendment............................................................................21
Extension; Waiver....................................................................21
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "AGREEMENT") is dated and effective
as of May 1, 2001, by and among IPAY, LLC, a Kentucky limited liability company
(the "PURCHASER"), CALL ME ▇▇▇▇, LLC, A KENTUCKY LIMITED LIABILITY COMPANY
("CMB") and NETZEE, INC., a Georgia corporation ("NETZEE") (for purposes of this
Agreement, CMB and Netzee shall be collectively referred to as the "COMPANIES").
The Purchaser, Netzee and CMB are hereinafter collectively called the "PARTIES."
WITNESSETH:
WHEREAS, the Parties have agreed that it is in their best interests for
the Purchaser to purchase from the Companies and the Companies to sell to the
Purchaser certain of the assets of the Companies that are used in connection
with the Business (as defined herein); and
WHEREAS, the Parties acknowledge that, prior to and after Netzee's
acquisition of CMB on September 3, 1999, certain members, managers and officers
of the Purchaser (including ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, who is the President and Chief
Executive Officer of the Purchaser) have been actively involved in the
day-to-day operation of the Business and the Companies and are familiar with the
Business and the Companies;
WHEREAS, based in part upon such familiarity with the operations of the
Business and the Companies, the Purchaser desires to purchase from the
Companies, and the Companies desire to sell to the Purchaser, the Assets (as
defined herein), subject to all of the terms, covenants, conditions and
agreements contained in this Agreement; and
WHEREAS, the Boards of Directors of each of the Purchaser, CMB and
Netzee have approved, and the sole member of CMB has approved, the purchase and
sale of the Assets upon the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
Parties agree as follows:
ARTICLE 1
THE PURCHASE
1.1 THE BUSINESS. For purposes of this Agreement and any other
Purchase Agreements, the term "Business" shall mean Netzee's and CMB's business
of providing ▇▇▇▇ payment products and services to customers from the Company's
Elizabethtown, Kentucky office to the financial institutions and property
management companies listed in Schedule 1.1. The term "Acquired Contracts" shall
mean those financial institution and property management contracts set forth on
Schedule 1.1 to be sold to the Purchaser by the Companies.
1.2 PURCHASE AND SALE OF THE ASSETS. Subject to and upon the terms
and conditions set forth in this Agreement, as of the Closing Date, the
Companies will sell, transfer, convey, assign and deliver to Purchaser, and
Purchaser will purchase or acquire from the Companies, all right, title and
interest of the Companies in and to the following assets of the Companies
(collectively, the "Assets"):
(a) all of the rights of the Companies under the Acquired
Contracts, and all arrangements, licenses, leases and other agreements related
thereto, including, without limitation, all contracts and deposit agreements
with the financial institutions and property management groups listed on
Schedule 1.2(a), any right to receive payment for products sold or services
rendered on and after the Closing Date pursuant to the Acquired Contracts and
the other agreements described in this Section 1.2(a), and any right to assert
claims and take other rightful actions in respect of breaches, defaults and
other violations thereof;
(b) the specific items of hardware, software, furniture,
fixtures, workstations, phones, licenses and similar property of the Business
set forth on Schedule 1.2(b) exclusive of associated liabilities unless
expressly assumed;
(c) all rights in and to products sold or leased, and any
inventory of the Business in the Elizabethtown, Kentucky location;
(d) such rights (including but not limited to all related
intellectual property rights) in and to: (1) all proprietary or custom software
(including all object and source code) and related documentation used by the
Companies in the Business, including all upgrades and modifications thereto
developed prior to the Closing Date; and (2) any products under research or
development prior to the Closing Date (including all related intellectual
property rights); and certain software and documentation, each as provided in a
Software License Agreement to be entered into between Purchaser and the
Companies (the "Software License Agreement"), in the form attached hereto as
Exhibit 1.2(d);
(e) all intellectual property and all rights thereunder
set forth on Schedule 1.2(e) or in respect thereof primarily relating to or used
or held for use in connection with the Business, including, but not limited to,
the business name and trademark "Call Me ▇▇▇▇", all causes of action (whether
known or unknown), rights to bring suit for and to recover and
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enforce all remedies against any past, present and future infringements thereof
or other violation of rights therein, and all rights of priority and rights to
seek protection of all interests therein under the laws of any jurisdiction
worldwide and all tangible embodiments thereof (together with all intellectual
property rights included in the other clauses of this Section);
(f) at or promptly following the Closing, the Companies
shall provide to Purchaser, at Companies' expense, accurate, complete and
legible copies of all books, records, manuals and other materials (in any form
or medium) relating to the Assets, including, without limitation, all
advertising materials, catalogues, price lists, correspondence, mailing lists,
lists of customers, distribution lists, photographs, production data, sales and
promotional materials and records, purchasing materials and records, personnel
records, manufacturing and quality control records and procedures, blueprints,
research and development files, records, data and laboratory books, Intellectual
Property disclosures, media materials and plates, accounting and financial
records, sales order files and litigation files;
(g) all rights of the Companies to any causes of action,
lawsuits, judgments, claims and demands against any person (but not including
any claims against the Companies or the assets acquired hereunder) with respect
to the ownership, use, function or value of any Assets, whether arising by way
of counterclaim or otherwise;
(h) all guarantees, warranties, indemnities and similar
rights in favor of the Companies with respect to any Asset; and
(i) all leasehold interests used in the Business listed
on Schedule 1.2(i) and an assignment of the lease for the office space leased
for the Business by the Companies in Elizabethtown, Kentucky pursuant to the
terms of an assignment agreement attached hereto as Exhibit 1.2(i) (the
"Assignment of Lease").
1.3 RETAINED ASSETS. The Company shall retain, and the Purchased
Assets shall not include, the following assets (collectively, the "RETAINED
ASSETS"):
(a) the consideration to be delivered to the Companies
pursuant to this Agreement together with the Companies' rights under this
Agreement;
(b) any and all other assets of the Companies not set
forth above, including all revenue generated by the Business (including the
Acquired Contracts) prior to the Closing Date, except as provided in this
Agreement; and
(c) the Companies' minute book, stock book and seal.
1.4 LIABILITIES. Notwithstanding any other provision of this
Agreement or the other Purchase Agreements, Purchaser shall not assume or be
responsible for, and the Companies shall, in accordance with and pursuant to
Article 11 hereof, indemnify Purchaser and hold Purchaser harmless from, any
liabilities, obligations or commitments of the Companies relating to or arising
out of the operation of the Business or the ownership of the Assets prior to the
Closing (the "Excluded Liabilities"), other than the liabilities listed on
Schedule 1.4, which Purchaser agrees to assume at the Closing (the "Assumed
Liabilities").
1.5 HACKER LIABILITIES. Purchaser shall not assume or be
responsible for, and, in accordance with and pursuant to Article 11 hereof, the
Companies shall hold Purchaser harmless and indemnify Purchaser from any
liabilities, obligations or commitments and against any Indemnifiable Damages
(as defined Section 11.1) with respect to, or arising from the invasion and/or
disruption of the Companies' computer system, the corruption of the Companies'
software by an unauthorized person (or persons) or from fraudulent or otherwise
unauthorized access to customer or other accounts administered or maintained by
the Companies. Protection of Purchaser from such "hacker liabilities" shall
apply to events occurring prior to Closing regardless of when discovered,
provided that such discovery is not later than May 1, 2002. It is further
provided that the Companies' indemnification obligation for "Hacker Liabilities"
is conditioned upon Purchaser maintaining the security systems and procedures
currently in place to prevent such events from occurring. Purchaser, in its
reasonable discretion, may modify, expand, or replace such security systems and
procedures with security systems and procedures of an equal or greater
protective capacity. The Companies' indemnification obligation for "hacker
liabilities" shall not extend to consequential damages; provided that should
such an event result in Purchaser losing its contract with one of the financial
institutions or property management companies listed on Schedule 1.1, within 90
days of Closing, the Companies shall reimburse Purchaser for that portion of the
Purchase Price attributable to such contract, less any revenues received by
Purchaser pursuant to such contract.
1.6 TIME AND PLACE OF CLOSING. The consummation of the
transactions contemplated by this Agreement (the "CLOSING") shall take place by
facsimile signatures and overnight delivery. The Parties will use commercially
reasonable efforts to cause the Closing to occur on or before May 1, 2001, or at
such later time as Purchaser and the Companies may agree, provided the Closing
shall be effective as of May 1, 2001 (the "CLOSING DATE") subject to the
provisions of Article 9. The Closing shall be effective as of 12:01 a.m. on the
Closing Date. At the Closing, the parties shall execute and deliver the
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certificates, opinions and other instruments and documents referred to in
Article 8.
ARTICLE 2
OFFICERS AND DIRECTORS OF THE COMPANIES
2.1 RESIGNATIONS. Effective immediately upon the Closing, the
current managers, officers and employees of the Companies set forth on Schedule
2.1 shall resign their current positions as managers, officers and/or employees
of the Companies and the Companies shall pay such managers, officers and
employees their salaries, commissions, retention bonuses and sales and travel
expenses payable through the Closing Date; provided, however, that with respect
to ▇▇▇▇▇ ▇▇▇▇, she shall resign her employment with the Companies upon execution
of this Agreement and shall become an employee of Purchaser, which shall pay her
salary, commissions, retention bonus and sales and travel expenses from the date
of this Agreement.
ARTICLE 3
PURCHASE PRICE AND PAYMENT OF PURCHASE PRICE
3.1 PURCHASE PRICE. Subject to the terms of this Agreement and the
related agreements and documents, the purchase price ("PURCHASE PRICE") for the
Assets shall be $1,275,000.
3.2 PAYMENT OF PURCHASE PRICE. At the Closing, the Purchaser shall
pay the Purchase Price to the Company by delivering:
(a) to the escrow agent designated in the Escrow
Agreement in the form of Exhibit 3.2(a) hereto ("Escrow Agreement"), cash in the
amount of $50,000; and
(b) to The Intercept Group, Inc. ("Intercept") on behalf
of the Companies and as agent for Intercept and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Company pursuant
to a Consent Letter attached as Exhibit 3.2(b), by wire transfer of immediately
available funds, the total amount of $1,225,000.00.
3.3 ALLOCATION OF PURCHASE PRICE. The parties hereby agree to
allocate the Purchase Price among the Assets in accordance with Schedule 3.3.
ARTICLE 4
RULES OF CONSTRUCTION
In the interpretation of this Agreement, unless otherwise
provided or the context otherwise requires:
(a) The singular includes the plural and vice versa and,
in particular (but without limiting the generality of the foregoing), any word
or expression defined in the singular has the corresponding meaning used in the
plural and vice versa;
(b) Any reference to any gender includes the other
gender;
(c) Any reference to an Article, Section, Exhibit,
clause, subclause, paragraph, subparagraph, Schedule or recital is a reference
to an Article, Section, Exhibit, clause, subclause, paragraph, subparagraph,
Schedule or recital of this Agreement;
(d) Any reference to any agreement, instrument or other
document (i) shall include all appendices, exhibits and schedules thereto and
all agreements, documents or other writings incorporated by reference therein,
and (ii) shall be a reference to such agreement, instrument or other document as
amended, supplemented, modified, suspended, restated or novated from time to
time;
(e) Any reference to any statute shall be construed as
including all statutory provisions consolidating, amending or replacing such
statute and all governmental regulations and rules promulgated thereunder;
(f) Any reference to "WRITING" includes printing, typing,
lithography and other means of reproducing words in a visible form;
(g) Any reference to a time or date or to a local time or
date is a reference to the time and date in Louisville, Kentucky;
(h) The headings and Article, Section and paragraph
numbering contained in this Agreement are used solely for convenience and do not
constitute a part of this Agreement, nor shall such headings and numbering be
used in any manner to aid in the construction of this Agreement;
(i) References herein to the "COMPANY DISCLOSURE
SCHEDULES" mean the disclosure schedules, dated as of the date hereof, which
have been delivered by the Companies to the Purchaser and all other documents,
agreements, and other items disclosed by the Companies in writing to the
Purchaser and attached to such schedules in connection with this
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Agreement, and references to a numbered Company Disclosure Schedule shall mean
that portion of the Company Disclosure Schedules that refers to the specific
section or subsection of Article 5 of this Agreement;
(j) The term "DISCLOSED BY PURCHASER" means and includes,
with respect to information concerning any event, fact or circumstance,
information contained in the Purchaser's Disclosure Schedules, in this Agreement
and the other Purchase Agreements;
(k) The term "INCLUDING" means "including, without
limitation";
(l) The term "GOVERNMENTAL AUTHORITY" means any United
States federal, state or local, or foreign, governmental, regulatory or
administrative authority, agency, department, board, investigative body or
commission or any court, tribunal, or judicial or arbitral body;
(m) The term "KNOWLEDGE" as used with respect to Netzee,
CMB or the Companies (including any references to Netzee, CMB or the Companies
being aware of a particular matter) means the actual knowledge of any of the
following named or designated representatives of the Companies: ▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇▇▇▇, all other executive officers of the Companies, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇. The term "Knowledge" as used
with respect to the Purchaser means the actual knowledge of any of the following
named or designated representatives of the Purchaser: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇, or any of the current employees of Netzee based in Elizabethtown,
Kentucky.
(n) The term "MATERIAL ADVERSE EFFECT" with respect to a
person or entity means any circumstance of, change in, or effect on the business
and affairs of such person or entity or any of its Subsidiaries thereof that,
individually or in the aggregate with any other circumstance of, change in, or
effect on, the business and affairs of such person or entity and its
Subsidiaries: (i) is, or would reasonably be expected to be, materially adverse
to the business, operations, assets, liabilities, results of operations or
financial condition of such person or entity and its Subsidiaries, taken as a
whole, or (ii) would reasonably be expected to materially adversely affect the
ability of such person or entity and its Subsidiaries to operate or conduct its
or their business and affairs in the manner in which it is currently operated or
conducted or contemplated by such person or entity to be operated or conducted
provided, however, that a Material Adverse Effect shall not include any effect
to the extent resulting from (i) any change in generally applicable economic,
business or financial market conditions, (ii) any generally applicable change in
the Company's industry or (iii) any change in Laws (as defined in Section
5.2(b)) or in generally accepted accounting principles;
(o) The term "PERSON" means any individual, partnership,
limited liability company, firm, corporation, association, trust, joint venture,
unincorporated organization or other entity, as well as any syndicate or group
that would be deemed to be a person under Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended;
(p) References herein to the "PURCHASER DISCLOSURE
SCHEDULES" mean the disclosure schedules, dated as of the date hereof, which
have been delivered by the Purchaser to the Company and all other documents,
agreements and other items disclosed by the Purchaser in writing to the
Companies and attached to such schedules in connection with this Agreement, and
references to a numbered Purchaser Disclosure Schedule shall mean that portion
of the Purchaser Disclosure Schedules that refers to the specific section or
subsection of Article 6;
(q) The term "SUBSIDIARY" means any corporation,
partnership, limited liability company, joint venture or other legal entity in
which a specified person or entity, directly or indirectly, owns or controls the
voting of at least a 50% share or other equity interest or for which such person
or entity, directly or indirectly, acts as a general partner or managing member;
and
(r) Each of the Parties acknowledges that it has had the
opportunity to negotiate the terms and provisions of this Agreement, with the
assistance and review of its counsel. This Agreement, therefore, shall be
construed without regard to any presumption or other rule requiring construction
against the party causing the Agreement to be drafted.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE COMPANIES
To induce the Purchaser to enter into this Agreement and the other
Purchase Agreements, Netzee and CMB, jointly and severally, hereby represent and
warrant to the Purchaser as follows:
5.1 ORGANIZATION. Netzee is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Georgia.
CMB is a limited liability company duly organized, validly existing and in good
standing under the laws of the Commonwealth of Kentucky. Netzee and CMB have the
requisite power and authority to own or lease all of their properties and assets
and to carry on their business and the Business as it is now being conducted and
are duly licensed or qualified to do business and are in good standing in each
jurisdiction in which the nature of the Business or the character or location of
the Assets owned or leased by them makes such licensing or qualification
necessary, except where the failure of
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Netzee or CMB to be licensed, qualified or in good standing would not have and
is not reasonably likely to have a Material Adverse Effect on Netzee or CMB.
5.2 AUTHORITY; NO VIOLATION.
(a) Except as disclosed on Company Disclosure Schedule
5.2(a) (collectively, the "COMPANY APPROVALS"), no consents, approvals,
authorizations, clearances or orders of, filings or registrations with or
notices to (collectively "AUTHORIZATIONS") any third party or any Governmental
Authority are necessary on behalf of the Companies in connection with (i) the
execution and delivery by the Companies of this Agreement and the other Purchase
Agreements, (ii) the consummation by the Companies of the transactions
contemplated hereby and thereby and (iii) the performance of the Companies'
obligations under this Agreement and the other Purchase Agreements. The
Companies have the full requisite power and authority to execute and deliver
this Agreement and the other Purchase Agreements and to consummate the
transactions contemplated hereby and thereby in accordance with the terms hereof
and thereof. The execution and delivery of this Agreement and the other Purchase
Agreements and the consummation of the transactions contemplated hereby and
thereby have been duly and validly approved by the Board of Directors of Netzee
and CMB and the sole member of CMB in accordance with the governing instruments
of Netzee and CMB and with applicable Laws (as defined below). Except for the
Company Approvals, no other requisite proceedings on the part of Netzee or CMB
are necessary for Netzee and CMB to execute and deliver this Agreement and the
other Purchase Agreements to which each of them is a party and for Netzee and
CMB to be bound by the terms hereof and thereof. This Agreement and the other
Purchase Agreements to which each of them is a party have been duly and validly
executed and delivered by Netzee and CMB and constitutes the valid and binding
obligation of Netzee and CMB enforceable against Netzee and CMB in accordance
with its and their terms, subject to bankruptcy, insolvency and similar laws of
general application relating to or affecting creditors rights and to general
equitable principles.
(b) Except as set forth on Company Disclosure Schedule
5.2(a), neither the execution and delivery by Netzee and CMB of this Agreement
and the other Purchase Agreements to which each of them is a party, nor the
consummation by Netzee and CMB of the transactions contemplated hereby and
thereby in accordance with the other terms hereof and thereof, nor compliance by
Netzee and CMB with any of the terms or provisions hereof or thereof, will: (i)
violate any provision of Netzee's or CMB's governing instruments; (ii) assuming
that the Company Approvals are duly obtained, violate any United States federal,
state or local or foreign statute, code, ordinance, rule, regulation, judgment,
order, writ, ruling, decree or injunction of any Governmental Authority
(collectively, "LAWS") applicable to the Company or the Business or any of
Netzee's or CMB's respective properties or assets; or (iii) violate, conflict
with, result in a breach of any provisions of, constitute a default (or an event
which, with notice or lapse of time, or both, would constitute a default) under,
result in the termination of, accelerate the performance required by, or result
in the creation of any lien, mortgage, security interest, pledge, charge, other
right of third parties or other encumbrance (collectively, "LIENS") upon any of
the Assets under any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which Netzee or CMB is a party, or by which either
of them or any of the Assets may be bound or affected except, with respect to
(ii) or (iii) above, such as individually or in the aggregate will not have a
Material Adverse Effect on the Companies, and which will not prevent or delay
the consummation of the transactions contemplated hereby.
5.3 FINANCIAL INFORMATION AND LIABILITIES.
(a) Company Disclosure Schedule 5.3(a) sets forth copies
of: (i) an unaudited statement of revenue and expenses for all operations being
conducted by the Companies in Elizabethtown, Kentucky for the period ended March
31, 2001, and (ii) a list of gross revenue received by the Companies from each
financial institution that is a party to any of the Acquired Contracts
(collectively, the "BUSINESS FINANCIAL INFORMATION").
(b) Except as set forth on Company Disclosure Schedule
5.3(b), to the Companies' Knowledge, the Companies have no liabilities or
obligations of any nature whether known or unknown contingent, absolute, accrued
or otherwise ("LIABILITIES") relating to or affecting the Business or the
Assets, except for current liabilities incurred in the ordinary course of
business.
(c) Except as disclosed in Company Disclosure Schedule
5.3(c), since March 31, 2001, there has not been any change, occurrence or
circumstance affecting the results of operations or financial condition of the
Business that has had, individually or in the aggregate, a Material Adverse
Effect on the Business or which is reasonably likely to have a Material Adverse
Effect on the Business, other than changes, occurrences and circumstances
disclosed by the Companies on the Company Disclosure Schedules.
5.4 BROKER'S AND OTHER FEES. Except as disclosed in Company
Disclosure Schedule 5.4, the Companies have not employed any broker or finder or
incurred any liability for any broker's or finder's fees or commissions in
connection with
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any of the transactions contemplated by this Agreement and the other Purchase
Agreements.
5.5 ABSENCE OF CERTAIN CHANGES OR EVENTS.
(a) Except as disclosed in Company Disclosure Schedule
5.5(a) and except for changes in the economy and other factors generally
affecting the market for the Companies' services, the Companies do not have
Knowledge of any existing facts or conditions which it reasonably believes to be
likely to cause a Material Adverse Effect on the Business in the next twelve
months.
(b) Except as set forth in Company Disclosure Schedule
5.5(b), to the Knowledge of the Companies, the Companies have not taken or
permitted any of the actions set forth in Section 7.2 with respect to the
Business, since December 31, 2000 and, except for execution of this Agreement,
the Companies have conducted the Business only in the ordinary course,
consistent with past practice. Since September 3, 1999, the Companies have not
taken or permitted any of the actions set forth in Section 7.2 with respect to
the Business that are not reflected in the Business Financial Information.
5.6 LEGAL PROCEEDINGS. Except as disclosed in Company Disclosure
Schedule 5.6, the Companies are not a party to any, and there are no pending or,
to the Companies' Knowledge, threatened legal, administrative, arbitral or other
proceedings, claims or actions of any nature against the Companies that affect
or relate to the Business or the Assets. To the Knowledge of the Companies,
there are no pending or threatened governmental investigations of any nature
against the Companies that affect or relate to the Business or the Assets.
Except as disclosed in Company Disclosure Schedule 5.6, to the Knowledge of
Netzee since August 25, 1999 and to the Knowledge of CMB since September 3,
1999, the Companies are not a party to any order, judgment or decree entered in
any lawsuit or proceeding that could affect or relate to the Business or the
Assets. Without limiting the foregoing, except as disclosed in Company
Disclosure Schedule 5.6, no actions, suits, proceedings or claims made in a
suit, action or proceeding, or, to the Knowledge of the Companies, demands or
investigations, are pending or, to the Companies' Knowledge, threatened against,
or otherwise involving, directly or indirectly, any officer, director, employee
or agent of the Companies in connection with such officer's, director's,
employee's or agent's activities on behalf of the Companies or that otherwise
relate, directly or indirectly, to the Business or the Assets, including without
limitation any notices, demand letters or requests from any Governmental
Authority.
5.7 TAXES AND TAX RETURNS. Except as disclosed in Company
Disclosure Schedule 5.7 and solely with respect to those tax returns and reports
required to be filed by the Companies for the periods from September 3, 1999 to
the Closing Date:
(a) The Companies have duly and timely filed (and until
the Closing Date will so file) all returns, declarations, reports, information
returns and statements that relate to or affect the Business or Assets
("RETURNS") which are required to be filed by it in respect of any United States
federal, state or local, or foreign, Taxes and has duly and timely paid (and
until the Closing Date will so pay) all Taxes due and payable, other than Taxes
which are being contested in good faith (and disclosed by the Companies to
Purchaser in writing). As used herein, "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 imposed with respect thereto) that relate to or
affect the Business and which are 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. The Companies have
established (and until the Closing Date will establish) on its books and records
reserves that are adequate for the payment of all Taxes not yet due and payable,
but are incurred in respect of the Companies through such date.
(b) None of the Returns have been examined by the
Internal Revenue Service (the "IRS"), or any other United States federal, state
or local or any foreign Governmental Authority since September 3, 1999. There
are no audits or other Governmental Authority proceedings presently pending nor,
to the Knowledge of the Companies, any other disputes pending with respect to,
or claims asserted for, Taxes upon the Companies, nor have the Companies 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 the Companies, except Liens for
Taxes not yet due. The Companies have complied (and until the Closing Date will
comply) in all respects with all applicable Laws relating to the payment and
withholding of Taxes.
(c) The Companies (i) have not requested any extension of
time within which to file any Return which Return has not since been filed (ii)
are not a party to any agreement providing for the indemnification, allocation
or sharing of
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Taxes; (iii) are not required to include in income any adjustment by reason of a
voluntary change in accounting method initiated by the Company (nor to the
Company's Knowledge has any Governmental Authority proposed any such adjustment
or change of accounting method); (iv) have not filed a consent with any
Governmental Authority pursuant to which the Companies have agreed to recognize
gain (in any manner) relating to or as a result of this Agreement or the
transactions contemplated hereby; or (v) has not been a member of an affiliated
group of corporations within the meaning of Section 1504 of the Code.
5.8 EMPLOYEE BENEFIT PLANS AND RELATIONS. Except as disclosed in
Company Disclosure Schedule 5.8:
(a) The Companies do not maintain or contribute to any
"employee pension benefit plan" (the "COMPANY PENSION PLANS"), as such term is
defined in Section 3 of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), including any pension, profit-sharing, retirement, thrift or
stock bonus plan, or "employee welfare benefit plan" (the "COMPANY WELFARE
PLANS"), as such term is defined in Section 3 of ERISA, or any other material
stock option plan, stock purchase plan, restricted stock plan, deferred
compensation plan, severance plan, phantom stock plan, bonus plan or other
similar plan, program or arrangement that relates to or affects the Business
(collectively the "EMPLOYEE PLANS"). The Companies have not contributed to, or
been required to contribute to, any "MULTIEMPLOYER PLAN," as such term is
defined in Section 3(37) of ERISA.
(b) None of the Employee Plans is a Pension Plan subject
to Title IV of ERISA (including those for retired, terminated or other former
employees of the Companies).
(c) The Business will not have any liability after the
Closing arising from the operation of Employee Plans prior to the Closing that
will cause a Material Adverse Effect on the Business, and the Assets will not be
subject to any liability or obligations relating to such Employee Plan.
5.9 COMPLIANCE WITH APPLICABLE LAWS. Except as set forth in
Company Disclosure Schedule 5.9, to the Knowledge of the Companies, the
Companies hold all licenses, franchises, permits, consents and authorizations
("LICENSES") necessary for the lawful conduct of the Business, except to the
extent a failure to hold such Licenses would not have a Material Adverse Effect.
No proceeding is pending or, to the Knowledge of Companies, threatened seeking
the revocation or suspension of any License. Except as set forth on Company
Disclosure Schedule 5.9, to the Knowledge of the Companies, since September 3,
1999, the Companies are and have been in compliance in all material respects
with all applicable Laws, and have not received any notices of any allegation of
any violation by the Companies of any Laws or Licenses.
5.10 CERTAIN CONTRACTS.
(a) Schedule 1.2 lists the Acquired Contracts and other
leases and contracts being acquired by Purchaser (the "Contracts").
(b) Except as set forth on Company Disclosure Schedule
5.10(b), each of the Contracts is valid, binding and enforceable against CMB or
Netzee, as the case may be, and to the Knowledge of the Companies, the other
parties thereto, in accordance with its terms. To the Knowledge of the
Companies, the Companies have provided a copy of each Contract to Purchaser, and
to the Companies' Knowledge, each such contract is complete and accurate.
(c) Except as disclosed in Company Disclosure Schedule
5.10(c), since August 25, 1999 with respect to Netzee and since September 3,
1999 with respect to CMB, no agreement or understanding to which either of the
Companies is a party or by which it is bound limits the freedom of either
Company to compete in the Business or with any person with respect to the
Business.
(d) Except as disclosed in Company Disclosure Schedule
5.10(d), neither Netzee, CMB nor, to the Knowledge of the Companies, any other
party thereto, is in default under any of the Contracts; to the Companies'
Knowledge, no event has occurred which (whether with or without notice, lapse of
time or the happening or occurrence of any other event) would constitute a
default thereunder entitling any party to terminate a Contract or to otherwise
claim or collect damages; and the continuation, validity and effectiveness of
all such Contracts under the current terms thereof will in no way be affected,
altered or impaired by the consummation of the transactions contemplated hereby
and by the other Purchase Agreements.
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5.11 PROPERTIES AND INSURANCE.
(a) Except as disclosed in Company Disclosure Schedule
5.11(a), the Company has good and marketable title to all of the Assets, whether
real or personal, tangible or intangible, subject to no Liens except (i)
statutory liens for amounts not yet delinquent or which are being contested in
good faith (and for which adequate reserves have been made). The Company as
lessee has the right to occupy, use, possess and control all real property
leased by the Company as presently occupied, used, possessed and controlled by
the Company or necessary in the operation of the Business as currently
conducted.
(b) The Assets are insured for the Companies' benefit
against all risks which, in the reasonable judgment of the Companies, should be
insured against, in each case under policies or bonds issued by insurers of
recognized responsibility, in such amounts with such deductibles and against
such risks and losses as are in the opinion of the Companies adequate for the
Assets. Copies of all such policies as in effect on the date hereof are attached
hereto as Company Disclosure Schedule 5.11(b). Neither of the Companies has
received any notice of cancellation or notice of a material amendment of any
such insurance policy or bond and neither of the Companies is in default under
any such policy or bond, no coverage thereunder is being disputed and all
material claims thereunder have been filed in a timely fashion.
(c) Assuming no employees of the Companies based in the
Elizabethtown, Kentucky office of Netzee have taken any action to adversely
affect possession of the Assets, no person other than the Companies is currently
entitled to possession of the Assets, whether owned or leased by the Companies.
The Companies have not received notice of, and to the Companies' Knowledge,
there does not exist (i) any pending or contemplated condemnation or eminent
domain proceeding affecting such properties, (ii) any proposal for increasing
the assessed value of any such properties for state, county, local or other ad
valorem Taxes or (iii) any pending or contemplated proceedings or public
improvements that would result in the levy of any special Tax or assessment
against any such properties; and there are no outstanding requirements or
recommendations by the Companies' insurance providers requiring or recommending
any repairs or work to be done with reference to any such properties or any
basis for such. To the Knowledge of the Companies, all such property and Assets
are in good repair and operating condition, normal wear and tear excepted. The
consummation of the transactions contemplated by this Agreement and the other
Purchase Agreements will not impair the ability of the Purchaser to use such
Assets.
5.12 ENVIRONMENTAL MATTERS.
(a) To the Companies' Knowledge, the operations of the
Business comply, and have complied, in all material respects with all applicable
Laws relating to pollution or protection of the environment ("ENVIRONMENTAL
LAWS").
(b) To the Companies' Knowledge, except as set forth on
Company Disclosure Schedule 5.12, no environmental, health or safety Licenses or
other such authorizations are necessary for the operation of the Business.
(c) Since September 3, 1999, the Companies have not
received any notice of any pending or threatened investigation, proceeding or
claim to the effect that the Companies are or may be liable to any person or
responsible or potentially responsible for the costs of any remedial or removal
action or other cleanup costs, which affects the Business or the Assets, 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 Companies' Knowledge, 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 the Companies to any person or entity or
for any such cleanup costs which affects the Business or the Assets.
5.13 INTELLECTUAL PROPERTY. The Companies develop, market and
license certain proprietary application software products and systems to
financial institutions and other customers with respect to the Business (the
"SOFTWARE PROGRAMS"), and in connection therewith the Companies have obtained
from third party contractors certain related technical documentation and user
reference manuals (the "DOCUMENTATION"). The Software Programs and the
Documentation are collectively referred to as the "SOFTWARE." The Software
Programs are listed on Company Disclosure Schedule 5.13.
(a) OWNERSHIP. The Companies have the right to use all
patents, trademarks, service marks, trade names, copyrighted works which are the
subject of a copyright registration and all other proprietary information used
by the Companies in the conduct of the Business. Company Disclosure Schedule
5.13(a) sets forth all United States and foreign patents, trademarks, service
marks and trade names owned or used by the Companies in the conduct of the
Business and all applications therefor and registrations thereof, and copyright
registrations or pending applications for copyright, trademark, or service ▇▇▇▇
registrations owned by the Companies with respect to the Business.
(b) PROCEDURES FOR COPYRIGHT PROTECTION. In no instance
has the eligibility of the Software for protection
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under copyright law been forfeited to the public domain.
(c) PROCEDURES FOR TRADE SECRET PROTECTION. To the
Knowledge of the Companies, since September 3, 1999, the Companies have never
disclosed source code for any of the Software to a third party other than the
persons identified in Company Disclosure Schedule 5.13(c), each of which has
executed an appropriate nondisclosure agreement in favor of either Netzee or
CMB. To the Knowledge of the Companies, since September 3, 1999, the Companies
have disclosed their source code for the Software to each of their employees
only on a need-to-know basis in connection with the performance of their duties
to the Companies and except as described in Company Disclosure Schedule 5.13(c),
each such current employee of the Companies has executed and delivered to the
Companies an employment or other agreement containing provisions for the
protection of trade secrets and confidential information of the Companies which
would include the Software from the date of delivery to the Companies. To the
Knowledge of the Companies, the source code and system documentation (from the
date of delivery to the Companies) comprising the Software have at all times
been maintained by the Companies in confidence and the Companies have not taken
(nor have they failed to take) any action which would be reasonably likely to
result in such source code and system documentation not being protectable as a
trade secret under applicable Laws.
(d) OWNERSHIP OF SOFTWARE. Except for certain contractors
("Contractors") disclosed on Company Disclosure Schedule 5.13(d), all persons
who have contributed to or participated in the conception and development of the
Software on behalf of the Companies since September 3, 1999 have been full-time
employees of either Netzee or CMB hired to prepare such works within the scope
of their employment. All Contractors have executed an assignment agreement
substantially in the form attached to Company Disclosure Schedule 5.13(c). As a
consequence, the Companies possess all copyright or other authorship interests
in the Software and no third party possesses any rights of authorship or
copyright (whether joint, in whole, or in part) in the Software.
(e) ABSENCE OF CLAIMS. Except as set forth in Company
Disclosure Schedule 5.13(e), no claims have been asserted by any person to
rights in the Software, and to the Knowledge of the Companies, no valid basis
for any such claim exists. The use of the Software by the Companies does not
infringe on the rights of any person (whether arising under copyright, trade
secret, patent, unfair competition or other Laws that protect intellectual
property rights). The use by the Companies of the patents, trademarks, service
marks, trade names and works which are the subject of copyright registration
identified in Company Disclosure Schedule 5.13(a) does not infringe the rights
of any person, and no claim has been asserted that the use by the Companies of
any of the foregoing infringes the rights of any person. The Companies have not
received notice of any claim asserted by any person to the effect that any
current or former employee of the Companies has violated the provisions of any
noncompete or nondisclosure agreement with such person, or has disclosed any
proprietary information of such person to the Companies or any third party.
(f) DISCLAIMER OF CERTAIN WARRANTIES. EXCEPTING THE
EXPRESS WARRANTIES CONTAINED IN THIS SECTION 5.13 OR SECTIONS 5.14, 5.15 AND
5.16 OF THIS AGREEMENT, NEITHER NETZEE NOR CMB MAKES ANY REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO THE SOFTWARE, INCLUDING (BUT NOT
BY WAY OF LIMITATION) ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE.
5.14 ADEQUACY OF TECHNICAL DOCUMENTATION. The Software includes the
source code, available system documentation, and schematics for all Software
Programs, as well as any programmer comments or explanations relating to the
Software Programs.
5.15 THIRD-PARTY COMPONENTS IN SOFTWARE. Except as set forth in
Company Disclosure Schedule 5.15, the Software contains no programming or
materials in which any third party may claim superior, joint or common
ownership, including any rights therein or license thereto. The Software does
not comprise any derivative works of any programming or materials not owned in
their entirety by the Companies, and to the extent the Software constitutes any
derivative works of programming or materials owned by the Companies
(collectively, "Pre-existing Materials"), the Companies hereby grant Purchaser
an irrevocable license, for the duration of the copyright in such Pre-existing
Materials, to prepare additional derivative works incorporating such
Pre-existing Materials.
5.16 THIRD-PARTY INTERESTS OR MARKETING RIGHTS IN SOFTWARE. The
Companies have not granted, transferred or assigned any right or interest in the
Software to any person except pursuant to the contracts identified on Company
Disclosure Schedule 5.16(a). To the Knowledge of the Companies, there are no
contracts, agreements, licenses, commitments or arrangements in effect with
respect to the marketing, distribution, licensing or promotion of the Software
by any independent salesperson, distributor, sublicensor or other remarketer or
sales organization except as set forth on Company Disclosure Schedule 5.16(b).
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5.17 ABSENCE OF CERTAIN AGREEMENTS AND PRACTICES.
(a) Except as set forth in Company Disclosure Schedule
5.17(a) or in connection with customary transactions in the ordinary course of
business, the Companies represent and warrant that no present or former officer,
director or 5% or greater shareholder of either Netzee or CMB (but only to
Companies' Knowledge with respect to former officers, members or managers of
CMB):
(i) owes money to either Netzee or CMB with
respect to the Business;
(ii) has made any claim (as defined in ▇▇▇▇▇▇▇
▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Bankruptcy Code) against the Companies relating to or
affecting the Assets, or the Business or, to the Companies' Knowledge, has any
basis for any such claim;
(iii) has any interest in any material property or
assets used by the Companies in the Business;
(iv) except as contemplated by this Agreement and
the other Purchase Agreements, has any benefits that are contingent on the
transactions contemplated by this Agreement and the other Purchase Agreements,
other than as stated herein;
(v) has any agreement with the Companies
relating to the Assets or the Business that is not terminable by the Purchaser
without penalty or notice;
(vi) has any agreement relating to the Business
providing severance benefits or other benefits after the termination of
employment of such employee (before or after a change in control) regardless of
the reason for such termination of employment; or
(vii) has any agreement or plan, any of the
benefits of which will be increased, vested or accelerated by the occurrence of
any of the transactions contemplated by this Agreement and the other Purchase
Agreements.
(b) With respect to the Business, to the Knowledge of the
Companies, neither CMB nor Netzee, nor any of their directors, officers, agents,
affiliates or employees, nor any other person acting on behalf of CMB or Netzee
has (i) given or agreed to give any gift or similar benefit having a value of
$1,000 or more to any customer, supplier or governmental employee or official or
any other person, for the purpose of directly or indirectly furthering the
Business, (ii) used any corporate funds for contributions, payments, gifts or
entertainment, to government officials or others in violation of any applicable
Laws or (iii) received any unlawful contributions, payments, gifts or
expenditures in connection with the Business or the Assets.
(c) Notwithstanding anything in this Section 5.17 to the
contrary, neither Netzee nor CMB makes any representation in Section 5.17 with
respect to any acts or transactions that occurred prior to September 3, 1999.
5.18 LABOR RELATIONS. Except as disclosed on Company Disclosure
Schedule 5.18, the Companies are in material compliance with all federal and
state Laws respecting employment and employment practices, terms and conditions
of employment and wages and hours that relate to the Business, and is not
engaged in any unfair labor or unlawful employment practice. To the Knowledge of
the Companies, there is no unlawful employment practice or discrimination charge
pending before the United States Equal Employment Opportunity Commission
("EEOC") or any EEOC recognized state "referral agency." To the Knowledge of the
Companies, there is no unfair labor practice charge or complaint against the
Company pending before the National Labor Relations Board ("NLRB") that relates
to the Assets or the Business. To the Knowledge of the Companies, there is no
labor strike, dispute, slowdown or stoppage actually pending or, to the
Companies' Knowledge, threatened against or involving or affecting the Business
and no NLRB representation question exists respecting any of its employees. No
grievance or arbitration proceeding is pending and no written claim therefor
exists. To the Knowledge of the Companies, there is no collective bargaining
agreement that is binding on the Companies that relates to the Business or the
Assets.
5.19 DISCLOSURE. No representation or warranty of the Companies in
this Agreement, the other Purchase Agreements or in any document or certificate
furnished or to be furnished to the Purchaser pursuant to this Agreement or the
other Purchase Agreements contains any untrue or incomplete statement or omits
to state any material fact necessary to make the statements contained herein or
therein not misleading.
5.20 KNOWLEDGE OF PURCHASER. In no event shall the Companies be
deemed to have breached any representation or warranty to the Purchaser in this
Article 5 if the Purchaser had Knowledge on or prior to the Closing Date of the
facts constituting such purported breach.
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ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
To induce the Companies to enter into this Agreement and the other
Purchase Agreements, the Purchaser hereby represents and warrants to the
Companies as follows:
6.1 CORPORATE ORGANIZATION.
(a) Purchaser is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
Kentucky. Purchaser has the corporate power and authority to own or lease all of
its properties and assets and to carry on its business as it is now being
conducted, and is duly licensed or qualified to do business and is in good
standing in each jurisdiction in which the nature of the business conducted by
it or the character or location of the properties and assets owned or leased by
it makes such licensing or qualification necessary, except where the failure to
be so licensed, qualified or in good standing would not have a Material Adverse
Effect on Purchaser.
(b) Purchaser Disclosure Schedule 6.1 sets forth true and
complete copies of the Articles of Organization of Purchaser and all amendments
thereto, as well as the name and title of each manager, officer and member of
the Purchaser (and, with respect to any such person that may be an entity, the
names and titles of all of the controlling persons of each such entity), and
shall designate which members own greater than 10% of the membership interests
in the Purchaser as of the date of this Agreement.
6.2 AUTHORITY; NO VIOLATION.
(a) Except as disclosed on Purchaser Disclosure Schedule
6.2(a) (collectively, "PURCHASER APPROVALS"), no Authorizations to any third
party or Governmental Authority are necessary on behalf of the Purchaser in
connection with (i) the execution and delivery by the Purchaser of this
Agreement and the other Purchase Agreements, (ii) the consummation by the
Purchaser of the transactions contemplated hereby and thereby and (iii) the
performance of the Purchaser's obligations under this Agreement and the other
Purchase Agreements. The Purchaser has the requisite power and authority to
execute and deliver this Agreement and the other Purchase Agreements to which it
is a party and the consummation by the Purchaser of the other transactions
contemplated hereby and thereby in accordance with the terms hereof and thereof.
The execution and delivery of this Agreement and the other Purchase Agreements
and the consummation of the transactions contemplated hereby and thereby have
been duly and validly approved by the members and managers of the Purchaser in
accordance with the Articles of Organization and the Operating Agreement of the
Purchaser and applicable Laws. No other corporate proceedings on the part of the
Purchaser are necessary to consummate the transactions so contemplated. This
Agreement and the other Purchase Agreements have been duly and validly executed
and delivered by the Purchaser and constitute the valid and binding obligation
of the Purchaser enforceable against the Purchaser in accordance with its terms,
subject to bankruptcy, insolvency and similar laws of general application
relating to or affecting creditors rights and to general equitable principles.
(b) Neither the execution and delivery of this Agreement
and the other Purchase Agreements to which it is a Party by the Purchaser, nor
the consummation by the Purchaser of the transactions contemplated hereby and
thereby in accordance with the terms hereof and thereof, nor compliance by the
Purchaser with any of the terms or provisions hereof and thereof, will (i)
violate any provision of the Purchaser's Articles of Organization or Operating
Agreement, (ii) violate any Laws applicable to the Purchaser or any of its
properties or assets, or (iii) except where a waiver or consent had been
obtained or will be obtained prior to Closing, violate, conflict with, result in
a breach of any provisions of, constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under, result in
the termination of, accelerate the performance required by, or result in the
creation of any Lien upon any of the respective properties or assets of the
Purchaser under any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which the Purchaser is a party, or by which it or
any of its properties or assets may be bound or affected except, with respect to
(ii) and (iii) above, such as individually or in the aggregate will not have a
Material Adverse Effect on the Purchaser, and which will not prevent or delay
the consummation of the transactions contemplated hereby.
6.3 BROKER'S AND OTHER FEES. Neither the Purchaser nor any of its
members, managers or officers has employed any broker or finder or incurred any
liability for any broker's or finder's fees or commissions in connection with
any of the transactions contemplated by this Agreement.
6.4 LEGAL PROCEEDINGS. Except as set forth on Purchaser Disclosure
Schedule 6.4, there is no action, suit or proceeding before or by any court or
governmental agency or body, domestic or foreign, now pending or, to the
Knowledge of the Purchaser, threatened, against or affecting the Purchaser, or
any of its properties, which could reasonably be expected to materially and
adversely affect the ability of the Purchaser to perform its obligations
pursuant to this Agreement and the
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other Purchase Agreements.
6.5 DISCLOSURE. No representation or warranty of the Purchaser in
this Agreement and the other Purchase Agreements, nor any other written
statements or certificates furnished to the Companies in connection with the
transactions contemplated by this Agreement, contains any untrue or incomplete
statement or omits to state a material fact necessary to make the statements
herein or therein not misleading.
ARTICLE 7
COVENANTS AND AGREEMENTS OF THE PARTIES
7.1 CONDUCT OF BUSINESS. The Companies agree that from the date
hereof to the Closing Date, the Companies shall operate and conduct the Business
and manage the Assets only in the ordinary course and consistent with prudent
business practice and past practice, except for transactions permitted hereunder
or with the prior written consent of the Purchaser. Without limiting the
generality of the foregoing, the Companies agree that the Companies shall use
all commercially reasonable efforts to:
(a) maintain the value of the Assets (less depreciation,
if any), and the Business as a going concern;
(b) maintain their existence and status in good standing
in all jurisdictions in which CMB and Netzee are required to be qualified or
registered to conduct the Business, except where the failure to do so would not
have a Material Adverse Effect on the Companies;
(c) maintain all of the tangible assets of the Business
in good operating condition and maintain the protection of all intellectual
property used in the Business in substantially the same standing as exists on
the date hereof;
(d) continue performance in the ordinary course of its
obligations under its contracts and agreements relating to the Business;
(e) use all commercially reasonable efforts to keep
available the officers and employees of the Business set forth on Schedule 2.1,
and preserve its present relationships with suppliers, customers and others
having relationships with the Business; and
(f) maintain its existing insurance for the Business,
subject to variations in amount required by the ordinary operations of the
Business.
7.2 NEGATIVE COVENANTS. The Companies agree that from the date
hereof to the Closing Date, except as otherwise approved by Purchaser in
writing, or as permitted or required by this Agreement, the Companies will not:
(a) change any provision of the Articles of Organization
or the Operating Agreement of CMB or the Articles of Incorporation or Bylaws of
Netzee that could affect the Business;
(b) sell, transfer or distribute or dispose of any of the
Assets;
(c) enter into, terminate, modify or amend any agreement
or arrangement with any officer, manager or director of CMB or Netzee relating
to the Business;
(d) incur, create, assume or guarantee any Liabilities
relating to the Business except in the ordinary course of business and as would
not have a Material Adverse Effect on the Business;
(e) permit or allow any of the Assets to be subject to
any Lien, except for Liens which are in existence on the date hereof and which
are disclosed on the Company Disclosure Schedules and Liens for amounts not yet
due and payable which Liens are contested in good faith and for which adequate
reserves have been made;
(f) declare, file or permit to be filed any voluntary or
involuntary bankruptcy, receivership, insolvency or other similar proceeding or
petition with any Governmental Authority with respect to the Companies;
(g) fail to perform its obligations under any Contract;
(h) take any action that would or could reasonably be
expected to result in (A) a Material Adverse Effect on the Assets or the
Business or (B) any of the Companies' representations and warranties contained
in Article 5 not being true and correct in any material respect at the Closing
Date, or that would cause any of the conditions to Closing not to be satisfied;
or
(i) directly or indirectly agree to do any of the
foregoing.
7.3 NO SOLICITATION. From the date hereof to the Closing Date or
the earlier termination of this Agreement in accordance with its terms, Netzee
and CMB:
(a) agrees that neither of them, nor any of its present
or future subsidiaries or other affiliates, nor any of its directors, officers,
shareholders, employees, representatives or other agents (collectively, the
"COMPANY AFFILIATES") shall, directly or indirectly, (i) enter into any
agreement (or agree to do so), or solicit, initiate or knowingly encourage the
invitation
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of inquiries or proposals or offers from any person (other than the Purchaser or
its or their members, managers, officers, employees, representatives and agents)
concerning: (A) any sale of the Business or any of the Assets; or (B) any
merger, consolidation, restructuring, recapitalization or other significant
transaction affecting the Assets; or (ii) provide any confidential information
to, participate in discussions or negotiations relating to any such transaction
with, or otherwise cooperate with or assist or participate in any effort to take
such action by any person or entity (other than Purchaser or its directors,
managers, members, employees, representatives and agents). The Companies shall
immediately advise Purchaser if any such inquiry, offer or proposal is made or
received by any of the Company Affiliates;
(b) will immediately cease and cause to be terminated any
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any of the foregoing, and the Companies will take the
necessary steps to inform the individuals or entities referred to above of the
obligations undertaken in this Section 7.3; and
(c) will notify Purchaser immediately of the identity of
any potential acquiror and the terms of any proposal or offer with respect to a
proposed or potential merger, acquisition, consolidation, business combination,
transfer or similar transaction involving, or any purchase of all or any
significant portion of the Business or the Assets, whether or not permitted by
this Section 7.3.
7.4 CURRENT INFORMATION. Each of the Parties will notify the other
Parties as soon as practicable after any determination or discovery by it of any
fact or circumstance relating to any Party which it has discovered through the
course of investigation and which represents, or is reasonably likely to
represent, a material breach of any representation, warranty, covenant or
agreement of any Party or which has or is reasonably likely to have a Material
Adverse Effect on any Party. Notwithstanding the foregoing, for the purpose of
determining satisfaction of the condition set forth in Article 8, no such
notification shall be deemed to amend such Disclosure Schedules or shall be
deemed to be a part thereof unless agreed to by the other Parties.
7.5 ACCESS TO PROPERTIES AND RECORDS. The Companies shall permit
the Purchaser and its representatives reasonable access to the Assets and shall
disclose and make available to the Purchaser and its representatives all books,
papers and records and information relating to the Business and the Assets,
including all books of account (including the general ledger), tax records,
organizational documents, agreements, filings with any Governmental Authority,
accountants' work papers, litigation files, plans affecting employees, and any
other records and information in which Purchaser and its representatives may
have a reasonable interest relating to the Business; provided that such
investigation shall be reasonably related to the transactions contemplated by
this Agreement and shall not materially interfere with the normal business
operations of the Companies.
7.6 REGULATORY MATTERS; CONSENTS; COOPERATION, ETC.
(a) Each of the Parties will promptly furnish each other
with copies of written communications received by them or any of their
respective Subsidiaries from, or delivered by any of the foregoing to, any
Governmental Authorities in respect of the transactions contemplated hereby.
(b) As soon as practicable following the date hereof,
each of the Parties will use its commercially reasonable efforts to obtain all
consents, waivers and other Approvals under any of its or its Subsidiaries'
agreements, contracts, licenses or leases required to be obtained by such Party
in connection with the consummation of the transactions contemplated hereby.
7.7 PARTIES' EFFORTS; FURTHER ASSURANCES; COOPERATION. Subject to
the other provisions in this Agreement, the Parties shall in good faith perform
their obligations under this Agreement before, at and after the Closing Date,
and shall each use all commercially reasonable efforts to do, or cause to be
done, all things necessary, proper or advisable under applicable Laws to obtain
all Authorizations and satisfy all conditions to the obligations of the Parties
under this Agreement and to cause the transactions contemplated by this
Agreement to be carried out promptly in accordance with the terms hereof and
shall cooperate fully with each other and their respective officers, directors,
employees, agents, counsel, accountants and other designees in connection with
any steps required to be taken as part of their respective obligations under
this Agreement. Upon the execution of this Agreement and thereafter, each party
shall take such actions and execute and deliver such documents as may be
reasonably requested by the other Parties in order to consummate the
transactions contemplated by this Agreement.
7.8 PUBLIC ANNOUNCEMENTS. Prior to the Closing Date or the earlier
termination of this Agreement in accordance with its terms, the Parties shall
consult and cooperate with each other as to the timing, content and form of any
press release or other public disclosure related to this Agreement or the
transactions contemplated herein, and will not issue a press release or make any
such public disclosure without the prior consent of the other party, which shall
not be unreasonably withheld, conditioned or delayed. After the Closing Date,
the Companies shall not make any public announcement regarding any aspect
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of this Agreement without Purchaser's prior written consent. Nothing in this
Section 7.8 shall be deemed to prohibit any Party from making any disclosure
which its counsel deems necessary in order to satisfy such Party's disclosure
obligations imposed by Law or Governmental Authority, including the rules of any
national securities association, as well as any exchange or market upon which
Netzee's shares are traded.
7.9 FAILURE TO FULFILL CONDITIONS. In the event that any Party
determines that a material condition to its or the other's obligation to
consummate the transactions contemplated hereby cannot be fulfilled on or prior
to May 1, 2001, it will promptly notify the other Party. Each Party will
promptly inform the other Party of any facts applicable to it that would be
likely to prevent or materially delay consummation of the transactions
contemplated by this Agreement.
7.10 DISCLOSURE SUPPLEMENTS. From time to time prior to the Closing
Date, each Party hereto will promptly notify the other Party of any inaccuracy
in its respective Disclosure Schedules delivered pursuant hereto including,
without limitation, any matter which, if existing, occurring or known at the
date of this Agreement, would have been required to be set forth or described in
such Schedule or which is necessary to correct any information in such Schedule
that has been rendered inaccurate. Notwithstanding the foregoing, no such
notification shall be deemed to amend such Disclosure Schedules or shall be
deemed to be part hereof unless agreed to by the other Parties.
7.11 RELEASE; COVENANT NOT TO ▇▇▇.
(a) If the Closing occurs, the Companies hereby
permanently release the Purchaser and its officers, employees, members,
managers, shareholders, directors, agents, representatives, assigns and
affiliates (collectively, the "PURCHASER RELEASED PARTIES") from any and all
Claims (as defined herein), rights and causes of action the Companies may have,
may have had or may, at any time, claim to have had against any Purchaser
Released Party, arising out of or in connection with any transactions between
the Companies and any or all of the Purchaser Released Parties occurring prior
to the Closing Date, or arising with respect to any fact, circumstance, act or
omission occurring prior to the Closing Date; provided, however, that such
release shall not apply to any breach by any Purchaser Released Party of its
representations, warranties and agreements set forth in this Agreement and the
other Purchase Agreements to which it is a party.
(b) If the Closing occurs, the Companies covenant not to
▇▇▇ or otherwise institute, cause to be instituted or in any way participate in,
any legal or administrative proceeding against any of the Purchaser Released
Parties with respect to any claims (as defined by ▇▇▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ Bankruptcy Code, as amended), debts, demands, actions, causes of action,
suits, accounts, damages and liabilities of every name and nature, both at law
and in equity, whether known or unknown (collectively, the "CLAIMS"), that the
Companies now have, ever had or may, at any time, claim to have had against any
of the Purchaser Released Parties arising out of or in connection with any
transactions between the Companies and any or all of the Purchaser Released
Parties occurring prior to the Closing Date, or arising with respect to any
fact, circumstance, act or omission occurring prior to the Closing Date;
provided, however, that such covenant not to ▇▇▇ shall not apply to a suit or
action based solely upon any breach by the Purchaser of its representations,
warranties and agreements set forth in this Agreement and the other Purchase
Agreements to which it is a party. The Companies represent and warrant that
neither Netzee nor CMB has voluntarily or involuntarily assigned or suffered any
transfer of any of such Claims to any other person or entity, and the Companies
agree to indemnify and hold harmless each Purchaser Released Party from and
against any loss, damage, liability, cost and expense (including, but not
limited to, attorneys' fees incurred in connection therewith or in connection
with enforcing this indemnity) asserted against, imposed on or incurred by any
of the Purchaser Released Parties by reason of any such Claims which were
effectively or purportedly assigned or transferred by the Companies and arise
out of or in connection with any transactions between the Companies and any or
all of the Purchaser Released Parties occurring prior to the Closing Date, or
arise with respect to any fact, circumstance, act or omission occurring prior to
the Closing Date.
(c) If the Closing occurs, then the Purchaser hereby
permanently releases the Companies and their officers, employees, shareholders,
directors, agents, representatives, assigns and affiliates (collectively, the
"COMPANY RELEASED PARTIES") from any and all Claims, rights and causes of action
that the Purchaser may have, may have had or may, at any time, claim to have had
against the Company Released Parties, arising out of or in connection with any
transactions between the Purchaser and any or all of the Company Released
Parties occurring prior to the Closing Date, or arising with respect to any
fact, circumstance, act or omission occurring prior to the Closing Date;
provided, however, that such release shall not apply to any breach by any
Company Released Party of its representations, warranties and agreements set
forth in this Agreement and the other Purchase Agreements to which it is a
party.
(d) If the Closing occurs, the Purchaser covenants not to
▇▇▇ or otherwise institute, cause to be instituted or in any way participate in,
any legal or administrative proceeding against any of the Company Released
Parties with respect to any Claims that the Purchaser now has, ever had or may,
at any time, claim to have had against any of the Company Released Parties
arising out of or in connection with any transactions between the Purchaser and
any or all of the Company Released
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Parties occurring prior to the Closing Date, or arising with respect to any
fact, circumstance, act or omission occurring prior to the Closing Date;
provided, however, that such covenant not to ▇▇▇ shall not apply to a suit or
action based solely upon any breach by Companies of their representations,
warranties and agreements set forth in this Agreement and the other Purchase
Agreements to which Netzee and/or CMB is a party. Purchaser represents and
warrants that it has not voluntarily or involuntarily assigned or suffered any
transfer of any of such Claims to any other person or entity, and it agrees to
indemnify and hold harmless each Company Released Party from and against any
loss, damage, liability, cost and expense (including, but not limited to,
attorneys' fees incurred in connection therewith or in connection with enforcing
this indemnity) asserted against, imposed on or incurred by any of the Company
Released Parties by reason of any such Claims which were effectively or
purportedly assigned or transferred by the Purchaser and arise out of or in
connection with any transactions between the Companies and any or all of the
Purchaser Released Parties occurring prior to the Closing Date, or arise with
respect to any fact, circumstance, act or omission occurring prior to the
Closing Date.
7.12 COOPERATION AND EXCHANGE OF INFORMATION. The Parties agree to
furnish, or to cause to be furnished in good faith to each other, such
cooperation and assistance as is reasonably necessary to file any future
returns, to respond to audits, to negotiate settlements with Tax authorities and
to prosecute and defend against Tax claims.
7.13 TAX RETURNS. The Companies shall be responsible for preparing
and filing the federal and state income tax returns relating to the Business for
the period ending on the Closing Date; provided, however, Purchaser shall pay
any sales or use tax arising out of the transaction contemplated by this
Agreement, if any, and shall file all sales or use tax returns related thereto,
if required.
7.14 NEW ACCOUNTS; SET UP FEES. The Companies will set up new
accounts in the ordinary course of business through Closing. Set up fees for new
accounts sold after the date of this Agreement which are installed prior to the
Closing shall be the property of Purchaser, and Purchaser shall be responsible
for paying all commissions related thereto.
7.15 SOFTWARE BUGS. Promptly upon discovering a bug or flaw in the
Software or upon effecting a patch or modification to repair a bug, the party
discovering the bug or effecting the patch or modification shall notify the
other party of such bug, patch or modification, and shall provide all
information on such bug, patch, or modification in the notifying party's
possession. The obligation to provide such notification shall expire 12 months
after the Closing.
7.16 TIMELY PAYMENT OF CERTAIN ACCOUNTS PAYABLE. The Companies
shall pay on or before the Closing any and all invoices relating to the Business
or the Assets received by Netzee at its principal place of business on or prior
to May 1, 2001.
ARTICLE 8
CLOSING CONDITIONS
8.1 CONDITIONS OF EACH PARTY'S OBLIGATIONS UNDER THIS AGREEMENT.
The respective obligations of each party under this Agreement shall be subject
to the satisfaction, or, where permissible under applicable Law, waiver at or
prior to the Closing of the following conditions:
(a) APPROVALS AND REGULATORY FILINGS. All necessary
Authorizations of Governmental Authorities required to consummate the
transactions contemplated hereby shall have been obtained without any term or
condition which would materially impair the value of the Assets. All conditions
required to be satisfied prior to the Closing Date by the terms of such
approvals and consents shall have been satisfied; and all statutory waiting
periods in respect thereof shall have expired.
(b) SUITS AND PROCEEDINGS. The consummation of the
transactions contemplated hereby will not violate the provisions of any
injunction, order, judgment, decree or Law applicable or effective with respect
to Purchaser or the Companies or their officers and directors. No suit or
proceeding shall have been instituted by any person, or, to the knowledge of
Purchaser or the Companies, shall have been threatened by any Governmental
Authority, and not subsequently withdrawn, dismissed or otherwise eliminated,
which seeks (i) to prohibit, restrict or delay consummation of the transactions
contemplated hereby, or (ii) to subject Purchaser or the Companies or their
respective directors, officers, members or managers, as the case may be, to
material liability on the ground that it or they have breached any Law or
otherwise acted improperly in relation to the transactions contemplated by this
Agreement.
8.2 CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER UNDER THIS
AGREEMENT. The obligations of the Purchaser under this Agreement shall be
further subject to the satisfaction or waiver, at or prior to the Closing (and
continued until the Closing), of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES; COVENANTS AND
AGREEMENTS; CONSENTS. The representations and warranties of the Companies
contained in this Agreement shall be true and correct in all material respects
as of the date hereof and shall also be true and correct in all material
respects on the Closing as though made on and as of the Closing, except that
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those representations and warranties which are confined to a particular date
shall speak only as of such date, and the Companies shall have performed in all
material respects the agreements, covenants and obligations to be performed by
them at or prior to the Closing. All Authorizations of or with any Governmental
Authority or other third party that are required for or in connection with the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby by the Companies have been obtained or made.
(b) CERTIFICATES. The Companies shall have furnished
Purchaser with such certificates of the Companies and their authorized officers,
and such other documents, to evidence fulfillment of the conditions set forth in
this Article 8 and otherwise to consummate the transactions contemplated
pursuant to this Agreement as Purchaser may reasonably request.
(c) NONCOMPETITION AND CONFIDENTIALITY AGREEMENT. The
Companies shall have executed and delivered to Purchaser a Noncompetition and
Confidentiality Agreement substantially in the form attached hereto as Exhibit
8.2(c).
(d) NO MATERIAL ADVERSE EFFECT ON THE COMPANIES. No event
shall have occurred and no fact or circumstance shall have arisen which, in the
judgment of Purchaser, is reasonably likely to have a Material Adverse Effect on
the Business or materially and adversely affect the value of this transaction to
Purchaser, since the date of the most recent Company Financial Statements.
(e) RELEASE OF OBLIGATIONS. If required by Purchaser on
or prior to Closing, all obligations of the Companies pursuant to any loan,
lease, guaranty, commitment or other undertaking of the Companies affecting the
Business or Assets, except service agreements and other similar agreements with
customers and vendors entered into in the ordinary course of business, whether
entered into as maker, guarantor or otherwise, shall have been fully and
permanently released or satisfied pursuant to documents and agreements
satisfactory in all respects to Purchaser and its counsel.
(f) ESCROW AGREEMENT. The Companies shall have executed
and delivered to Purchaser the Escrow Agreement.
(g) CLOSING. If the Companies are unable to close by June
30, 2001, Purchaser shall have the option, in its sole discretion, of
terminating this Agreement.
(h) ASSIGNMENT OF LEASE. The Companies shall have
executed and delivered to Purchaser the Assignment of Lease.
(i) ▇▇▇▇ OF SALE, ASSIGNMENT AND ASSUMPTION OF AGREEMENT;
CONVEYANCE DOCUMENTS. The Companies shall have executed and delivered to the
Purchaser bills of sale and such other instruments of sale, conveyance,
transfer, assignment, endorsement, direction or authorization to vest in
Purchaser all of the Companies' right, title and interest in and to the Assets
and an assignment and assumption agreement whereby the Purchaser shall assume
the liabilities set forth on Schedule 1.4 and the obligations under the Acquired
Contracts.
(j) OTHER DOCUMENTS. The Companies shall have executed
and delivered to the Purchaser or obtained and delivered to the Purchaser such
other documents as may be reasonably requested by the Purchaser to effect the
transactions contemplated by this Agreement.
8.3 CONDITIONS TO THE OBLIGATIONS OF THE COMPANIES UNDER THIS
AGREEMENT. The obligations of the Companies under this Agreement shall be
further subject to the satisfaction or waiver, at or prior to the Closing, of
the following conditions:
(a) REPRESENTATIONS AND WARRANTIES; COVENANTS AND
AGREEMENTS; CONSENTS. The representations and warranties of the Purchaser
contained in this Agreement shall be true and correct in all material respects
as of the date hereof and shall also be true and correct in all material
respects on the Closing as though made on and as of the Closing, and Purchaser
shall have performed in all material respects the agreements, covenants and
obligations to be performed by it at or prior to the Closing. All Authorizations
of or with any Governmental Authority or other third party that are required for
or in connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby by the Purchaser shall have
been obtained or made.
(b) CERTIFICATES. Purchaser shall have furnished the
Companies with such certificates of its officers or others and such other
documents to evidence fulfillment of the conditions set forth in this Article 8
and otherwise to consummate the transactions contemplated pursuant to this
Agreement as the Companies may reasonably request.
(c) ESCROW AGREEMENT. Purchaser shall have executed and
delivered the Escrow Agreement.
(d) PURCHASE PRICE. The Purchaser shall have delivered to
the Companies the Purchase Price at the Closing.
(e) ASSIGNMENT OF LEASE. The Purchaser shall have
executed and delivered the Assignment of Lease to the Companies.
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(f) ▇▇▇▇ OF SALE, ASSIGNMENT AND ASSUMPTION AGREEMENT.
The Purchaser shall have executed and delivered to the Companies a ▇▇▇▇ of sale,
assignment and assumption agreement vesting title in Purchaser all of the
Companies' right, title and interest in and to the Assets and whereby the
Purchaser shall assume the liabilities set forth on Schedule 1.4 and the
obligations under the Acquired Contracts.
(g) OTHER. The Purchaser shall have executed and
delivered to the Companies or obtained or delivered to the Companies such other
documents as may be reasonably requested by the Companies to effect the
transactions contemplated by this Agreement.
ARTICLE 9
TERMINATION
9.1 TERMINATION. This Agreement may be terminated prior to the
Closing Date, whether before or after approval of this Agreement by the
Purchaser and the Companies as follows:
(a) by mutual written consent of Purchaser and the
Companies;
(b) by the Purchaser after June 30, 2001, if the Closing
Date shall not have occurred on or prior to June 30, 2001;
(c) by the Purchaser, if there has been a material breach
of any representation, warranty, covenant, agreement or obligation of Netzee or
CMB hereunder in each case which either is not capable of being remedied, or, if
capable of being remedied, shall not have been remedied within 10 days after
receipt by Netzee and CMB of notice in writing from the Purchaser specifying the
nature of such breach and requesting that it be remedied;
(d) by the Companies, if there has been a material breach
in any representation, warranty, covenant, agreement or obligation of the
Purchaser hereunder in each case which either is not capable of being remedied,
or, if capable of being remedied, shall not have been remedied within 10 days
after receipt by Purchaser of notice in writing from Netzee or CMB specifying
the nature of such breach and requesting that it be remedied;
(e) by the Purchaser if any of the conditions set forth
in Sections 8.1 or 8.2 are not satisfied and are no longer capable of being
satisfied; or
(f) by the Companies if any of the conditions set forth
in Sections 8.1 or 8.3 are not satisfied and are no longer capable of being
satisfied.
9.2 EFFECT OF TERMINATION. If any Party terminates and abandons
this Agreement pursuant to Section 9.1, this Agreement, (excluding this Section
9.2, Section 9.3, Article 11 and Section 12.1 each of which shall survive
termination), shall forthwith become void and have no effect, without any
liability on the part of any Party or its officers, managers, directors, members
or shareholders; provided, however, that nothing contained in this Section 9.2
shall relieve any Party from any liability for any breach of this Agreement that
arises prior to the effectiveness of such termination.
9.3 SPECIFIC PERFORMANCE. The Parties acknowledge that the rights
of each Party to consummate the transactions contemplated hereby are special,
unique, and of extraordinary character, and that, in the event any Party either
violates or fails or refuses to perform any covenant made by it herein, the
other Party will be without adequate remedy at law. Each Party agrees,
therefore, that in the event that it violates, fails or refuses to perform any
covenant or agreement made by it herein, the other Party, so long as it is not
in breach hereof, may, in addition to the remedies at law, institute and
prosecute an action in a court of competent jurisdiction to enforce specific
performance of such covenant or agreement or seek any other equitable relief.
ARTICLE 10
SURVIVAL
10.1 SURVIVAL. The representations and warranties of the Companies
and the Purchaser set forth herein shall survive the Closing for a period of one
(1) year.
ARTICLE 11
INDEMNIFICATION
11.1 INDEMNIFICATION BY THE COMPANIES. Subject to the terms of this
Article 11, the Companies, jointly and severally, shall indemnify, defend, save
and hold harmless the Purchaser and its subsidiaries, predecessors, successors,
members, managers, directors, officers, employees, agents, representatives and
assigns (collectively, the "PURCHASER
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INDEMNIFIED PARTIES"), from and against any Claims (including, without
limitation, reasonable attorneys' and accountants' fees and expenses), together
with interest and penalties, if any, awarded by court order or otherwise agreed
to (collectively, "INDEMNIFIABLE DAMAGES"), suffered by Purchaser Indemnified
Parties that arise out of or result from any of the following (whether or not a
third party initiates the proceeding or claim giving rise to such Indemnifiable
Damages):
(a) any breach of any of the representations, warranties,
covenants or agreements made by the Companies in this Agreement or in the other
Purchase Agreements;
(b) any breach of any representation, warranty, covenant
or agreement in a document, certificate or affidavit delivered by the Companies
at the Closing;
(c) any Excluded Liabilities; or
(d) any "Hacker Liabilities" as defined in Section 1.5.
11.2 INDEMNIFICATION BY PURCHASER. Subject to the terms of this
Article 11, Purchaser shall indemnify, defend, save and hold harmless the
Companies and each of their officers, managers, members, directors, employees,
agents, representatives and assigns (collectively, the "Company Indemnified
Parties"), from and against any Indemnifiable Damages suffered by the Company
Indemnified Parties that arise out of or result from any of the following
(whether or not a third party initiates the proceeding or claim giving rise to
such Indemnifiable Damages):
(a) any breach of any of the representations, warranties,
covenants and agreements made by the Purchaser in this Agreement or in the other
Purchase Agreements;
(b) any breach of any representation, warranty, covenant
or agreement in a document, certificate or affidavit delivered by the Purchaser
at the Closing; or
(c) any Assumed Liabilities.
11.3 CLAIMS FOR INDEMNIFICATION.
(a) PROCEDURE. The Party seeking indemnification (the
"INDEMNIFIED PARTY") shall give the Party from whom indemnification is sought
(the "INDEMNIFYING PARTY") a written notice ("NOTICE OF CLAIM") within sixty
(60) days of the discovery of any loss, liability, claim or expense in respect
of which the right to indemnification contained in this Article 11 may be
claimed; provided, however, that the failure to give such notice within such
sixty (60) day period shall not result in the waiver or loss of any right to
bring such claim hereunder after such period unless, and only to the extent
that, the other Party is actually prejudiced by such failure. In the event a
claim is pending or threatened or the Indemnified Party has a reasonable belief
as to the validity of the basis for such claim, the Indemnified Party may give
written notice (a "NOTICE OF POSSIBLE CLAIM") of such claim to the Indemnifying
Party, regardless of whether a loss has arisen from such claim. A Party shall
have no liability under this Article 11 for a breach of a representation and
warranty, unless a Notice of Claim or Notice of Possible Claim therefor is
delivered by the Indemnified Party prior to May 1, 2002; provided, however, that
any Notice of Claim or Notice of Possible Claim for the consequential damage of
loss of contract on account of "hacker liabilities" as set forth in Section 1.5
hereof, shall be provided within 5 days following the 90 day period referenced
in Section 1.5 hereof; provided further, that the limitations set forth in this
Article 11 shall not apply to liability under this Article 11 for any fraudulent
breach of a representation or warranty in this Agreement. Any Notice of Claim or
Notice of Possible Claim shall set forth the representations, warranties,
covenants and agreements with respect to which the claim is made, the specific
facts giving rise to an alleged basis for the claim and the amount of liability
asserted or anticipated to be asserted by reason of the claim.
(b) EXCLUDED COSTS. Indemnifiable Damages shall not
include expenses and costs, including without limitation the cost of unrelated
third party retained services, incurred by the Indemnified Party for purposes of
determining whether a Claim exists, to the extent that no Claim is made as a
result of such investigation; provided, however, that such costs and expenses
shall be Indemnifiable Damages to the extent any Indemnified Party successfully
makes a Claim based on information resulting from such investigation. In no
event shall staff time and associated overhead and expenses be considered
Indemnifiable Damages.
(c) INSURANCE. In the event insurance coverage maintained
and paid for by the Indemnifying Party prior to Closing is available with
respect to any Claim for which the Indemnified Party recovers Indemnifiable
Damages, the Indemnified Party shall assign any claims under such policy to the
Indemnifying Parties for recovery of such insurance proceeds. To the extent any
Indemnified Party obtains proceeds from an insurer, no duplicate recovery by
such Indemnified Party shall be permitted.
(d) PERIOD TO SETTLE. The Indemnifying Party shall be
afforded a reasonable opportunity to collect, settle or mitigate any Claim
following receipt of the Notice of Claim, provided that the Indemnifying Party
acknowledges in writing
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that the Claim is indemnifiable, in full, hereunder.
11.4 DEFENSE OF CLAIM BY THIRD PARTIES. If any claim is made by a
third party against a Party to this Agreement that, if sustained, would give
rise to a liability of another Party under this Agreement, the Party against
whom the claim is made shall promptly cause notice of the claim to be delivered
to the other Party and shall afford the other Party and its counsel, at the
other Party's sole expense, the opportunity to join in the defense and
settlement of the claim. The failure to provide such notice will not relieve the
Indemnifying Party of liability under this Agreement unless, and only to the
extent that, the Indemnifying Party is actually prejudiced by such failure.
11.5 THIRD PARTY CLAIM ASSISTANCE. From time to time after the
Closing, the Purchaser and the Companies shall provide or cause their
appropriate employees or representatives to provide the other Parties with
information or data and otherwise assist as reasonably requested in connection
with the handling and defense of any third party claim or litigation (including
counterclaims filed by the parties) in respect to which a Party may be required
to indemnify another Party under this Agreement. The Party receiving such
information or data shall reimburse the other Parties for all of their
reasonable costs and expenses in providing these services, including, without
limitation, (i) all out of pocket, travel and similar expenses incurred by their
personnel in rendering these services; and (ii) all fees and expenses for
services performed by third parties engaged by or at the request of such other
Parties.
11.6 SETTLEMENT OF INDEMNIFICATION CLAIMS. If a recipient of a
Notice of Claim desires to dispute such claim, it shall, within thirty (30) days
after receipt of the Notice of Claim, give counter-notice, setting forth the
basis for disputing such claim, to Purchaser or the Companies, as the case may
be. If no such counter-notice is given within such thirty (30) day period, or if
Purchaser or the Companies, as the case may be, acknowledge liability for
indemnification, then the amount claimed shall be promptly satisfied as provided
in Section 11.7. If, within thirty (30) days after the receipt of counter-notice
by Purchaser or the Companies, as the case may be, the Companies and Purchaser
shall not have reached agreement as to the claim in question, then the Party
disputing the claim shall satisfy any undisputed amount as specified in Section
11.7 and the disputed amount of the claim of indemnification shall be submitted
to and settled by arbitration in accordance with the then prevailing commercial
arbitration rules of the American Arbitration Association. Such arbitration
shall be held in the Louisville, Kentucky area before a panel of three (3)
arbitrators, one selected by each of the Parties and the third selected by
mutual agreement of the first two, and all of whom shall be independent and
impartial under the rules of the American Arbitration Association. The decision
of the arbitrators shall be final and binding as to any matter submitted under
this Agreement. To the extent the decision of the arbitrators is that a Party
shall be indemnified hereunder, the amount shall be satisfied as provided in
Section 11.7. Judgment upon any award rendered by the arbitrators may be entered
in any court of competent jurisdiction. The date of the arbitrator's decision or
the date a claim otherwise becomes payable pursuant to this Section 11.6 is
referred to as the "DETERMINATION DATE."
11.7 MANNER OF INDEMNIFICATION. Where the Companies are obligated
to indemnify the Purchaser Indemnified Parties under this Section 11.7 after the
Closing Date, such indemnity obligation must be satisfied first pursuant to the
Escrow Agreement. Thereafter, or if the Closing Date fails to occur for any
reason, such indemnity obligation must be satisfied by the Companies by paying
to that Purchaser Indemnified Party cash in an amount equal to the applicable
Indemnified Damages, subject to the limitations set forth in this Article 11.
Where the Purchaser is obligated to indemnify the Company Indemnified Parties
under this Section 11.7, such indemnity obligation shall be satisfied by the
Purchaser by paying to that Company Indemnified Party cash in an amount equal to
the applicable Indemnified Damages, subject to the limitations set forth in this
Article 11.
11.8 CERTAIN LIMITATIONS. Notwithstanding the foregoing in this
Article 11, the indemnification obligations of the parties shall not be affected
by any investigation made by the parties hereto prior to the date hereof or the
Closing Date and shall be subject to the following limitations.
(a) No indemnification shall be made for breaches of
representations and warranties pursuant to this Article 11 until the total
Indemnifiable Damages for which the Indemnifying Party would be liable exceeds
$30,000, in which event the Indemnifying Party shall indemnify to the full
amount of any excess.
(b) No indemnification shall be made for breaches of
representation and warranties or for "hacker liabilities" as set forth in
Section 1.5 pursuant to this Article 11 to the extent Indemnifiable Damages to
be paid by the Companies, on the one hand, or Purchaser, on the other hand,
exceed $1,275,000.
(c) An Indemnifying Party shall be obligated to indemnify
an Indemnified Party pursuant to this Article 11 for breaches of representations
and warranties only for those Damages as to which the Indemnified Party has
given the Indemnifying Party a Notice of Claim or Notice of Possible Claim
thereof within one (1) year after the Closing Date.
(d) The limitations set forth in Sections 11.8(a), (b)
and (c) shall not apply to Damages arising out of fraud.
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11.9 INDEMNIFICATION IS EXCLUSIVE REMEDY. In the absence of fraud
or intentional torts and except for non-monetary equitable relief, if the
Closing occurs, indemnification pursuant to the provisions of this Article 11
shall be the sole and exclusive remedy of the Parties for any breach of any
Indemnifiable Damages suffered by any Party.
ARTICLE 12
MISCELLANEOUS
12.1 EXPENSES.
(a) Except as otherwise expressly stated herein, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby (including legal and accounting fees and
expenses) shall be borne by the Party incurring such costs and expenses and
shall be paid by such Party prior to or on the Closing Date.
(b) Notwithstanding any provision in this Agreement to
the contrary, if any of the Parties shall willfully default in its obligations
hereunder, the non-defaulting Party may pursue any remedy available at law or in
equity to enforce its rights and shall be paid by the willfully defaulting Party
for all damages, costs and expenses, including without limitation reasonable
legal and accounting expenses incurred or suffered by the non-defaulting Party
in connection herewith or in the enforcement of its rights hereunder.
12.2 NOTICES. All notices or other communications which are
required or permitted hereunder shall be in writing and sufficient if delivered
personally or by reputable overnight or express courier, sent by registered or
certified mail, postage prepaid, or by telefax (with subsequent delivery via one
of the two previous methods) as follows:
(a) If to Purchaser, to:
iPay, LLC
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: President
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
Copy (which shall not constitute notice) to:
Middleton & ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to the Companies, to:
Netzee, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Senior Executive Vice
President, Chief Financial Officer and
Secretary
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
Copy (which shall not constitute notice) to:
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
or such other addresses and telefax numbers as shall be furnished in writing by
any Party, and any such notice or communications shall be deemed to have been
given (i) when personally delivered, (ii) as of three business days after the
date
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actually sent by mail, (iii) the next business day after the date actually sent
via overnight mail or express courier and (iv) upon telefax confirmation of
receipt to addressee by the sender.
12.3 PARTIES IN INTEREST. This Agreement shall be binding on and
shall inure to the benefit of the Parties hereto and their respective
successors, representatives and assigns. This Agreement (and the rights and
interests herein) may not be assigned by any Party without the written consent
of the other Parties; provided, however, Purchaser may assign its interests
herein to (a) an entity controlling, controlled by or under common control with
Purchaser or (b) a purchaser or transferee of all or substantially all of the
business or assets of Purchaser, whether by sale of stock or assets, merger or
otherwise. ANY ATTEMPTED ASSIGNMENT IN CONTRAVENTION OF THE FOREGOING SHALL BE
NULL AND VOID. Nothing in this Agreement is intended to confer, expressly or by
implication, upon any other person or entity any rights or remedies under or by
reason of this Agreement.
12.4 ENTIRE AGREEMENT. This Agreement, which includes the
Disclosure 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"), contains the entire
agreement among the Parties with respect to the transactions contemplated by
this Agreement and supersedes all prior negotiations, arrangements or
understandings, written or oral, with respect thereto.
12.5 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be an original, and each of which shall
constitute one and the same agreement. Any Party may deliver an executed copy of
this Agreement and any documents contemplated hereby by facsimile transmission
to another Party, and such delivery shall have the same force and effect as any
other delivery of a manually signed copy of this Agreement or of such other
documents.
12.6 GOVERNING LAW.
(a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE UNITED STATES OF AMERICA AND THE STATE OF
KENTUCKY, EXCLUDING CHOICE OF LAW PRINCIPLES.
(b) Purchaser and the Companies consent to the exclusive
jurisdiction and venue of the courts of any county in the State of Kentucky and
the United States Federal District Courts of Kentucky, in any judicial
proceeding brought to enforce this Agreement. The Parties agree that any forum
other than the State of Kentucky is an inconvenient forum and that a lawsuit (or
non-compulsory counterclaim) brought by one Party against another Party, in a
court of any jurisdiction other than the State of Kentucky should be forthwith
dismissed or transferred to a court located in the State of Kentucky.
12.7 INVALIDITY OF ANY PART. If any provision or part of this
Agreement shall for any reason be held invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provisions of this Agreement and shall be construed as if such invalid,
illegal or unenforceable provision or part thereof had never been contained
herein, but only to the extent of its invalidity, illegality, or
unenforceability. Upon any such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the Parties hereto will
negotiate in good faith to modify this Agreement so as to effect the original
intent of the Parties as closely as possible in an acceptable manner to the end
that the transactions contemplated by this Agreement are consummated to the
extent possible.
12.8 TIME OF THE ESSENCE; COMPUTATION OF TIME. Time is of the
essence of each and every provision of this Agreement. Whenever the last day for
the exercise of any right or the discharge of any duty under this Agreement
shall fall upon Saturday, Sunday or a federal, public or legal holiday, the
Party having such right or duty shall have until 5:00 p.m., Louisville, Kentucky
time on the next succeeding regular business day to exercise such right or to
discharge such duty.
12.9 AMENDMENT. This Agreement may not be amended except by an
instrument in writing signed on behalf of the Parties hereto.
12.10 EXTENSION; WAIVER. Any agreement on the part of any Party to
any extension or waiver shall be valid only if it is set forth in an instrument
in writing signed on behalf of the Party against whom the waiver is sought to be
enforced and shall apply only to the specific condition, representation or
warranty identified by the writing as being waived, extended or modified.
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IN WITNESS WHEREOF, Purchaser and the Companies have caused
this Agreement to be executed by their duly authorized officers as of the day
and year first above written.
PURCHASER:
iPAY, LLC
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------
Its: President
-------------------------------
THE COMPANIES:
Netzee, Inc.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
Its: President and CEO
-------------------------------
Call Me ▇▇▇▇, LLC
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
Its: President and CEO
-------------------------------
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