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EXHIBIT 2.10
ASSET PURCHASE AGREEMENT
AMONG
NETZEE, INC.,
NETZEEPLUS, INC.,
CARD PLUS, INC.
AND THE
SHAREHOLDERS
OF CARD PLUS, INC.
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TABLE OF CONTENTS
ARTICLE 1 THE TRANSACTION................................................................................1
Section 1.1 Sale and Purchase of Assets...........................................................1
Section 1.2 Retained Assets.......................................................................1
Section 1.3 Assumed Liabilities...................................................................2
Section 1.4 Retained Liabilities..................................................................2
Section 1.5 Consideration.........................................................................2
(a) Purchase Price......................................................2
(b) Earnout Payments....................................................2
(c) Possible Adjustment.................................................5
(d) Changes to the Company..............................................5
(e) Calculation of Earnout Payments.....................................6
(f) Allocation of Purchase Price and Earnout Payments...................6
(g) Exceptions..........................................................7
Section 1.6 Closing...............................................................................7
Section 1.7 Payment of Consideration..............................................................8
(a) Purchase Price......................................................8
(b) Earnout Payments....................................................8
(c) Conformity of Payment...............................................8
Section 1.8 Fractional Shares.....................................................................8
Section 1.9 Certain Consents......................................................................8
Section 1.10 Restrictions on Securities; Registration Rights.......................................9
Section 1.11 Effective Date.......................................................................10
Section 1.12 Tax Free Transaction.................................................................10
Section 1.13 Use of Corporate Name................................................................10
Section 1.14 Netzee Guaranty......................................................................10
ARTICLE 2 RULES OF CONSTRUCTION.........................................................................10
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SHAREHOLDERS............................13
Section 3.1 Organization.........................................................................13
Section 3.2 Capitalization.......................................................................13
Section 3.3 Authority; No Violation..............................................................14
Section 3.4 Financial Statements.................................................................15
Section 3.5 Broker's and Other Fees..............................................................16
Section 3.6 Absence of Certain Changes or Events.................................................16
Section 3.7 Legal Proceedings....................................................................16
Section 3.8 Taxes and Tax Returns................................................................16
Section 3.9 Employee and Fringe Benefit Plans....................................................18
(a) Schedule of Plans..................................................18
(b) Qualification......................................................18
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(c) Accruals; Funding..................................................19
(d) Reporting and Disclosure...........................................19
(e) Prohibited Transactions; Terminations; Other Reportable Events.....19
(f) Claims for Benefits................................................20
(g) Other..............................................................20
(h) Creation of Obligations By Reason of Sale of the Purchased Assets..20
(i) No Multi-Employer Plans............................................20
Section 3.10 Compliance with Applicable Laws......................................................20
Section 3.11 Certain Contracts....................................................................20
Section 3.12 Properties and Insurance.............................................................22
Section 3.13 Environmental Matters................................................................22
Section 3.14 Intellectual Property................................................................23
(a) Background.........................................................23
(b) Ownership..........................................................23
(c) Procedures for Copyright Protection................................23
(d) Procedures for Trade Secret Protection.............................23
(e) Ownership of Software..............................................24
(f) Absence of Claims..................................................24
Section 3.15 Adequacy of Technical Documentation..................................................24
Section 3.16 Third-Party Components in Software...................................................24
Section 3.17 Third-Party Interests or Marketing Rights in Software................................24
Section 3.18 Absence of Certain Agreements and Practices..........................................25
Section 3.19 Major Vendors and Customers..........................................................25
Section 3.20 Accounts Receivable..................................................................25
Section 3.21 Bulk Sales Laws......................................................................25
Section 3.22 Combinations Involving the Company...................................................25
Section 3.23 Labor Relations......................................................................25
Section 3.24 Year 2000 Matters....................................................................26
Section 3.25 Assignment Provisions................................................................26
Section 3.26 Necessary Properties.................................................................26
Section 3.27 Securities Act Compliance............................................................26
Section 3.28 Access to Information................................................................27
Section 3.29 Experience; Investment...............................................................27
Section 3.30 Tax Advice...........................................................................27
Section 3.31 Disclosure...........................................................................28
Section 3.32 Approval of Shareholders.............................................................28
ARTICLE 4 REPRESENTATION AND WARRANTIES OF THE PURCHASER AND NETZEE.....................................28
Section 4.1 Corporate Organization...............................................................28
Section 4.2 Capitalization.......................................................................28
Section 4.3 Authority; No Violation..............................................................29
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Section 4.4 Broker's and Other Fees..............................................................29
Section 4.5 Legal Proceedings....................................................................29
Section 4.6 SEC Reports..........................................................................30
Section 4.7 No Material Adverse Change...........................................................30
Section 4.8 Disclosure...........................................................................30
ARTICLE 5 COVENANTS AND AGREEMENTS OF THE PARTIES.......................................................30
Section 5.1 Conduct of Business..................................................................30
Section 5.2 Negative Covenants...................................................................31
Section 5.3 No Solicitation......................................................................32
Section 5.4 Current Information..................................................................33
Section 5.5 Access to Properties and Records; Confidentiality....................................33
Section 5.6 Regulatory Matters; Consents; Cooperation, etc.......................................33
Section 5.7 Parties' Efforts; Further Assurances.................................................34
Section 5.8 Public Announcements.................................................................35
Section 5.9 Sales Tax............................................................................35
Section 5.10 Disclosure Supplements...............................................................35
Section 5.11 No Transfers.........................................................................35
Section 5.12 Customer Contacts....................................................................35
Section 5.13 Additional Financial Statements......................................................35
Section 5.14 WARN.................................................................................36
Section 5.15 Broker Fees..........................................................................36
Section 5.16 Dissolution and Liquidation of the Company...........................................36
Section 5.17 Non-Accredited Investors.............................................................36
Section 5.18 Compliance...........................................................................36
Section 5.19 Medinterface Services................................................................36
Section 5.20 Company Phantom Stock Units..........................................................36
Section 5.21 Reservation of Employee Stock Options................................................37
Section 5.22 Provisions Regarding Company Employees...............................................37
Section 5.23 Provisions Regarding Company Claims..................................................37
(a) Response to Company Claims.........................................37
(b) Documentation......................................................37
(c) Claim Status Reports...............................................37
ARTICLE 6 CLOSING CONDITIONS............................................................................38
Section 6.1 Conditions to the Obligations of Purchaser under this Agreement......................38
(a) Authorizations and Regulatory Filings..............................38
(b) Suits and Proceedings..............................................38
(c) Representations and Warranties; Covenants and Agreements...........38
(d) Shareholder Approval...............................................38
(e) Opinion of Counsel.................................................39
(f) Certificates.......................................................39
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(g) Noncompetition, Nonsolicitation, Confidentiality and
Employment Agreements..............................................39
(h) Assignment of Work Product Agreements..............................39
(i) No Material Adverse Effect on the Company..........................39
(j) No Interest in Software............................................39
(k) Escrow Agreement...................................................39
(l) Cancellation of Debt...............................................39
(m) ▇▇▇▇ of Sale; Conveyance Documents.................................39
(n) Assignment and Assumption Agreement................................40
(o) Due Diligence......................................................40
(p) Accredited Investors...............................................40
(q) Retention of Employees.............................................40
(r) Software Ownership Agreement.......................................40
(s) Other..............................................................40
Section 6.2 Conditions to the Obligations of the Company and the Shareholders
under this Agreement..............................................................40
(a) Authorizations and Regulatory Filings..............................40
(b) Suits and Proceedings..............................................40
(c) Representations and Warranties; Covenants and Agreements...........41
(d) Shareholder Approval...............................................41
(e) Certificates.......................................................41
(f) Escrow Agreement...................................................41
(g) Assignment and Assumption Agreement................................41
(h) Purchase Price.....................................................41
(i) Registration Rights Agreement......................................41
(j) Opinion of Counsel.................................................41
(k) Other..............................................................41
ARTICLE 7 TERMINATION, AMENDMENT AND WAIVER.............................................................42
Section 7.1 Termination..........................................................................42
Section 7.2 Effect of Termination................................................................42
Section 7.3 Specific Performance.................................................................42
Section 7.4 Amendment............................................................................43
Section 7.5 Extension; Waiver....................................................................43
ARTICLE 8 INDEMNIFICATION...............................................................................43
Section 8.1 Indemnification by the Company and the Shareholders..................................43
Section 8.2 Indemnification by Purchaser.........................................................44
Section 8.3 Claims for Indemnification...........................................................44
Section 8.4 Defense of Claim by Third Parties....................................................44
Section 8.5 Third Party Claim Assistance.........................................................45
Section 8.6 Settlement of Indemnification Claims.................................................46
Section 8.7 Manner of Indemnification by the Company and the Shareholders........................46
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Section 8.8 Indemnification is Exclusive Remedy..................................................47
Section 8.9 Certain Limitations..................................................................47
Section 8.10 Subrogation..........................................................................48
Section 8.11 Escrow...............................................................................48
ARTICLE 9 COMPANY REPRESENTATIVE........................................................................48
Section 9.1 Appointment of Company Representative; Acceptance....................................48
Section 9.2 Authority............................................................................49
Section 9.3 Actions..............................................................................49
Section 9.4 Successors...........................................................................49
Section 9.5 Effectiveness........................................................................50
ARTICLE 10 MISCELLANEOUS.................................................................................50
Section 10.1 Expenses.............................................................................50
Section 10.2 Notices..............................................................................50
Section 10.3 Parties in Interest..................................................................51
Section 10.4 Entire Agreement.....................................................................52
Section 10.5 Counterparts.........................................................................52
Section 10.6 Governing Law........................................................................52
Section 10.7 Invalidity of any Part...............................................................52
Section 10.8 Time of the Essence; Computation of Time.............................................52
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("AGREEMENT") is dated and effective as
of July 28, 2000, among Netzee, Inc., a Georgia corporation ("NETZEE"),
NetzeePlus, Inc., a Georgia corporation and a wholly-owned subsidiary of Netzee
("PURCHASER"), Card Plus, Inc., a Georgia corporation (the "COMPANY"), and the
Shareholders (as defined below). Netzee, Purchaser, the Company and the
Shareholders are hereinafter collectively called the "PARTIES."
WITNESSETH:
WHEREAS, the Company primarily is engaged in software and systems
development and the outsourcing of consultants to major corporations for
systems development, primarily in the card processing industry (the
"BUSINESS"); and
WHEREAS, Purchaser desires to buy and the Company desires to sell
substantially all of the assets utilized by the Business, all upon the terms
and conditions hereinafter set forth.
NOW, THEREFORE, for and in consideration of the premises and of the
mutual covenants and agreements hereinafter set forth, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Parties hereto mutually covenant and agree, with the intent
to be legally bound, as follows:
ARTICLE 1
THE TRANSACTION
1.1 SALE AND PURCHASE OF ASSETS. At the Closing, the Company
shall sell and transfer to Purchaser, and Purchaser shall purchase from the
Company, all of the Company's right, title and interest in and to the
properties and assets of the Business, including those assets specified or
described on Schedule 1.1, wherever such assets are located and whether
personal, tangible or intangible, in electronic form or otherwise, and whether
or not any such assets have any value for accounting purposes or are carried or
reflected on or specifically referred to in the Company's books or Company
Financial Statements, except those assets specifically excluded pursuant to
Section 1.2, free and clear of all Encumbrances, other than Permitted
Encumbrances. The properties and assets of the Business to be transferred
hereunder are collectively referred to as the "PURCHASED ASSETS." Purchaser
assumes no risk of loss to the Purchased Assets prior to the Closing.
1.2 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 Company
pursuant to this Agreement, together with the Company's rights under this
Agreement;
(b) the Company's rights to acquire shares of the common
stock of ▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc. ("MEDINTERFACE"), a Georgia corporation;
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(c) the Company's accounts receivable created on or
prior to June 30, 2000, as set forth on Schedule 1.2(c);
(d) the Company's minute book, stock book and seal; and
(e) the assets listed on Schedule 1.2(e).
1.3 ASSUMED LIABILITIES. At the Closing, pursuant to an
Assignment and Assumption Agreement (the "ASSIGNMENT AND ASSUMPTION AGREEMENT")
Purchaser shall assume and agree to perform and discharge only the following
specifically enumerated obligations and liabilities of the Company
(collectively, the "ASSUMED LIABILITIES"): (i) the liabilities and obligations
of the Company arising on or after the Closing Date under the agreements listed
on Schedule 1.3 (the "ASSUMED CONTRACTS"), and (ii) those liabilities of the
Company set forth on Schedule 1.3; provided, however, Purchaser shall not
assume any obligation under any Assumed Liability to the extent that payments
were made to or any other benefit was received by the Company prior to the
Closing Date unless the Company has remitted the amount of such payment or
otherwise transferred such benefit under such Assumed Liability to Purchaser,
or that results from any default under or breach of such Assumed Contract
occurring prior to the Closing Date.
1.4 RETAINED LIABILITIES. Except for the Assumed Liabilities,
Purchaser does not hereby assume and shall not assume or in any way undertake
to pay, perform, satisfy or discharge any liability of the Company, whether
existing on, before or after the Closing Date or arising out of any
transactions entered into, or any state of facts existing on, prior to or after
the Closing Date (the "RETAINED LIABILITIES"). Without limiting the foregoing,
the Retained Liabilities shall include any automobile leases of the Company.
1.5 CONSIDERATION.
(a) Purchase Price. The consideration paid at the
Closing for the Purchased Assets shall consist of the following: (i) 320,000
shares of Netzee Common Stock; (ii) Netzee Stock Options to purchase 35,556
shares of Netzee Common Stock issued to the former holders of Phantom Stock
Units who are becoming employees of Netzee or Purchaser, subject to the
provisions of Section 5.20 and in the amounts specified on Schedule 5.20 and
(iii) assumption of the Assumed Liabilities shown on Schedule 1.3. No cash
consideration will be paid for the Purchased Assets. The total consideration
paid at the Closing is collectively referred to as the "PURCHASE PRICE."
(b) Earnout Payments. In each case subject to Section
1.5(g):
(i) Revenue Earnout Payment. In addition to the
Purchase Price described in Section 1.5(a), the Shareholders will be entitled
to receive additional Netzee Common Stock in accordance with the table set
forth below if, based solely upon the performance of the Purchased Assets,
Purchaser:
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(1) reports EBITDA (as herein defined)
of at least $650,000 for the
twelve months ended June 30, 2001
(the "EARNOUT PERIOD"), as
reported on a GAAP basis applied
consistently by Purchaser; and
(2) reports total revenue in
accordance with the table set
forth below, as reported on a GAAP
basis applied consistently by
Purchaser for the twelve months
ended June 30, 2001 (the "REVENUE
EARNOUT PAYMENT"):
Amount of Revenue
Total Revenue Earnout Payment
------------- -----------------
Equal to or greater than $2.6 million and less than $2.9 million 38,095 shares
Equal to or greater than $2.9 million and less than $3.2 million 76,190 shares
Equal to or greater than $3.2 million and less than $3.5 million 114,285 shares
Equal to or greater than $3.5 million and less than $3.8 million 152,380 shares
Equal to or greater than $3.8 million 190,475 shares
Netzee and Purchaser shall use reasonable commercial efforts to develop, design
and implement strategies to assist Purchaser in achieving the foregoing revenue
goals. Without limiting the foregoing, revenues from licenses of the Software
by Purchaser shall be included for purposes of determining revenues pursuant to
Section 1.5(b)(i). For purposes of this Section 1.5(b)(i), "EBITDA" shall mean
Purchaser's operating income (loss) before income taxes, plus the sum of
depreciation and amortization expense, all determined in accordance with GAAP
consistently applied, subject to the following:
(A) extraordinary items, as determined
under GAAP, and any adjustments with respect to periods prior
to the Earnout Period, other than adjustments to estimates in
the normal course of business, shall be excluded;
(B) any income associated with early
termination of customer or vendor contracts shall be
excluded;
(C) all increased amortization of
goodwill and depreciation and any federal, state or local
taxes resulting from the acquisition of the Purchased Assets
shall be excluded;
(D) any aggregate net gain (or loss)
during the Earnout Period arising from the sale, exchange or
other disposition of capital assets (such term to include all
fixed assets, whether tangible or intangible, all inventory
sold in conjunction with the disposition of fixed assets, all
real estate and all securities), shall be excluded;
(E) any net gain from the collection
of the proceeds of life insurance policies shall be excluded;
and
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(F) any income, gain, loss, charge or
expense not related to the ordinary business operations of
Purchaser shall be excluded, provided, that the foregoing
shall not restrict Netzee from charging Purchaser for costs
related to Purchaser's business that are borne by Netzee
(including the cost of employee benefit programs provided by
Netzee to employees of Purchaser); provided, however, that
the rates or unit prices charged to Purchaser (except for the
cost of any employee benefit programs described above) shall
not exceed the rates or unit prices paid for similar items by
the Company.
(ii) Employee Retention Payment. The
Shareholders will also be entitled to receive 38,095 additional shares of
Netzee Common Stock (the "EMPLOYEE RETENTION PAYMENT") if, as of the end of
business on June 30, 2001, Netzee or Purchaser has retained not less than 17 of
the persons who were employed by the Company as of July 17, 2000, other than
the current office manager, marketing manager and bookkeeper of the Company.
For purposes of this Section 1.5(b)(ii):
(A) any person referred to in this
Section 1.5(b)(ii) who is terminated by Netzee or Purchaser
without Cause (as defined in the Employment Agreement) on or
after June 1, 2001 but before the end of business on June 30,
2001 shall be included as an employee for purposes of the
Employee Retention Payment; and
(B) any person hired by Netzee or
Purchaser to replace an employee who has left the employ of
Netzee or Purchaser after July 17, 2000 (exclusive of any
person otherwise covered by Section 1.5(b)(ii)(A)) and who in
the reasonable judgment of Netzee or Purchaser is not a
satisfactory replacement for such former employee shall not
be included as an employee for purposes of the Employee
Retention Payment.
Netzee and Purchaser shall use reasonable commercial efforts to develop, design
and implement an incentive program to assist Purchaser in retaining such former
Company employees, but Netzee and Purchaser shall be free to terminate the
employment of any such former Company employee for any reason.
The Revenue Earnout Payment and the Employee Retention Payment are collectively
referred to as the "EARNOUT PAYMENTS."
(iii) The Earnout Payments shall be paid by
Netzee delivering to the Shareholders, among such persons pro rata (subject to
Section 1.5(g)(iv)) on the basis of their ownership of the stock of the Company
immediately prior to the Closing, that number of shares of Netzee Common Stock
equal to the amount of such Earnout Payments as set forth above. If at any time
or times prior to the payment of the Earnout Payments, Netzee shall (a) declare
a dividend or make a distribution with respect to Netzee Common Stock in shares
of Netzee Common Stock, (b) subdivide or reclassify the outstanding Netzee
Common Stock into a greater
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number of shares, or (c) combine or reclassify the outstanding Netzee Common
Stock into a smaller number of shares, then the number of shares set forth in
Section 1.5(b)(i) and (ii) and the $4.50 figure in Section 1.5(g)(i) shall be
proportionately adjusted. Notwithstanding the foregoing, all Earnout Payments
shall be made to the Escrow Agent and not to any of the Shareholders, and such
Earnout Payments shall become a part of the Escrow.
(c) Possible Adjustment. Notwithstanding the provisions
of Section 1.5(a), the aggregate amount of any cash payments deemed to be made
and the principal amount of the Assumed Liabilities described in Section 1.5(a)
may not exceed in the aggregate twenty percent (20%) of the Purchase Price paid
at the Closing. In the event the aggregate amount of any deemed cash payments
and principal amount of the Assumed Liabilities described in Section 1.5(a)
would exceed in the aggregate twenty percent (20%) of the Purchase Price, then
the Shareholders shall, jointly and severally, assume or provide for the
assumption by Accredited Investors of Assumed Liabilities in exchange for
additional shares of Company Common Stock, in such a manner and amount prior to
the Closing Date to prevent the aggregate amount of the deemed cash payments
and principal amount of the Assumed Liabilities from exceeding in the aggregate
twenty percent (20%) of the Purchase Price.
(d) Changes to the Company.
(i) Subject to the other provisions of Section
1.5(d), Purchaser shall not be under any obligation to retain the Purchased
Assets, or, in the exercise of reasonable business judgment, continue to
conduct the Business for any particular length of time whatsoever.
(ii) If prior to the payment of the Earnout
Payments Purchaser sells or transfers substantially all of the Purchased Assets
in a transaction not covered by Section 1.5(d)(iii) to a person that is not
affiliated with either Purchaser or Netzee, and such disposition occurs on or
prior to June 30, 2001, the Shareholders shall be entitled to receive, as of
June 30, 2001, the maximum amount of all Earnout Payments specified in Section
1.5(b)(i) and (ii), notwithstanding the fact that any or all of the conditions
for payment of the Earnout Payments set forth in Section 1.5(b)(i) or (ii) may
not have been met.
(iii) If Netzee is acquired (whether by sale of
stock, sale of assets, merger or otherwise) prior to the payment of the Earnout
Payments, then Netzee shall cause the acquiring person (A) to agree to be
subject to the provisions of Section 1.5(d), and (B) to assume the obligation
to pay the Earnout Payments if, as and when otherwise due, with the Earnout
Payments converted into the right to receive the consideration paid for each
share of Netzee Common Stock in such acquisition, multiplied by the appropriate
number of shares set forth in Section 1.5(b)(i) and (ii), as applicable. If
such conversion is impracticable in the reasonable judgment of the acquiring
person, the acquiring person will provide a reasonably equivalent substitute
conversion mechanism. If there is a reorganization or reclassification of
Netzee's securities prior to the payment of the Earnout Payments, then a
similar adjustment in the number and class of shares subject to the Earnout
Payments shall be made by Netzee to prevent a dilution or enlargement of
rights.
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(iv) If Purchaser develops or acquires any other
business or businesses, the Earnout Payments will be calculated without taking
into account the revenue from such business or businesses.
(v) Modifications to the terms of the Earnout
Payments may be made if approved by Purchaser and former shareholders of the
Company who at the Closing Date held a majority interest of the stock of the
Company.
(e) Calculation of Earnout Payments. As soon as
practicable after June 30, 2001, and in any event no later than August 15,
2001, Purchaser shall deliver to the Company Representative (defined below) its
calculation of the Earnout Payments. Purchaser shall make the books and records
of Purchaser available to the Company Representative and its representatives at
all reasonable times with respect to the matters affecting these calculations.
If within thirty days following delivery of the calculations, the Company
Representative has not given Purchaser notice of its objection to any such
calculations (such notice must contain a statement of items described with
reasonable specificity to which the Company Representative objects and specific
facts as to the reason for the Company Representative's objection, and identify
the amounts in dispute), then Purchaser's calculations will be a final
determination, binding and conclusive on the Parties. If the Company
Representative gives such notice of objection, then Purchaser and the Company
Representative will attempt to resolve any disagreements. If any such
disagreements are not resolved by the Purchaser and the Company Representative
within thirty days following the receipt by Purchaser of the Company
Representative's objections, (i) the issues in dispute will be submitted to a
"Big Five" auditing firm reasonably acceptable to Netzee and the Company
Representative (the "DISPUTES AUDITOR") for resolution; (ii) each will furnish
to the Disputes Auditor such work papers and other documents and information
relating to the disputed issues as the Disputes Auditor may request and are
available to it (or its independent public accountants), and Purchaser and the
Company Representative will be afforded the opportunity to present to the
Disputes Auditor any material relating to the determination and to discuss the
determination with the Disputes Auditor; (iii) the determination by the
Disputes Auditor, as set forth in a notice delivered to both parties by the
Disputes Auditor, will be a final determination, binding and conclusive on the
Purchaser and the Company Representative; and (iv) Purchaser will bear a
percentage of the fees of the Disputes Auditor which equals the percentage of
the total amount disputed by the Company Representative which is awarded to the
Company Representative by the Disputes Auditor, and the Company Representative
will bear the balance of such fees. The "COMPANY REPRESENTATIVE" shall be
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇., or any successor appointed by him, by the Company or
by the former shareholders of the Company who at the Closing Date held a
majority of the stock of the Company.
(f) Allocation of Purchase Price and Earnout Payments..
The Purchase Price and the Earnout Payments shall be allocated as set forth on
Schedule 1.5(f). Each of the Parties agrees (i) that any such allocation shall
be consistent with the requirements of Section 1060 of the Code and the
regulations promulgated thereunder; (ii) to complete jointly and file
separately Form 8594 with its federal income tax return consistent with such
allocation for the tax year in which the Closing occurs; and (iii) that it
shall not take a position on any income,
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transfer or gains tax return that is in any manner inconsistent with the terms
of any such allocation without the prior written consent of each other Party,
which consent shall not be unreasonably withheld or delayed.
(g) Exceptions. Notwithstanding any other provision in
this Section 1.5 to the contrary:
(i) Antidilution Protection. If the closing
price of a share of the Netzee Common Stock as of June 29, 2001 is less than
$4.50, the Shareholders shall be entitled to receive the maximum amount of all
Earnout Payments specified in Sections 1.5(b)(i) and (ii), notwithstanding the
fact that any or all of the conditions for payment of the Earnout Payments set
forth in Sections 1.5(b)(i) or (ii) may not have been satisfied.
(ii) Termination of Employment by Employer
Without Cause. If Netzee or Purchaser, as the case may be, terminates the
employment of either ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. without
Cause (as such term is defined in the particular Employment Agreement) during
the initial term of the particular Employment Agreement, the Shareholders shall
be entitled to receive, as of June 30, 2001, the maximum amount of all Earnout
Payments specified in Sections 1.5(b)(i) and (ii), notwithstanding the fact
that any or all of the conditions for payment of the Earnout Payments set forth
in Sections 1.5(b)(i) or (ii) may not have been satisfied.
(iii) Termination of Employment by Employer for
Cause or by Employee Without Good Reason. If Netzee or Purchaser, as the case
may be, terminates the employment of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
▇▇. with Cause (as such term is defined in the particular Employment
Agreement), or either of Messrs. Ambellan or Boylston terminates his employment
without Good Reason (as such term is defined in the particular Employment
Agreement) during the initial term of the Employment Agreement, then such
Shareholder who was terminated with Cause or so terminated the Employment
Agreement shall immediately forfeit any and all rights to receive his share of
the Earnout Payments, notwithstanding the fact that all of the conditions for
payment of the Earnout Payments set forth in Sections 1.5(b)(i) or (ii) may
have been satisfied. However, nothing contained in this Section 1.5(g)(iii)
shall affect the rights of any other Shareholder to receive payment of the
Earnout Payments in accordance with Section 1.5(b).
(iv) Treatment of Forfeited Earnout Payments. If
any of the Shareholders are required to forfeit their portion of the Earnout
Payments pursuant to Section 1.5(g)(iii), then the remaining Shareholders who
remain eligible to receive the Earnout Payments shall be entitled to receive,
if and to the extent earned, their pro rata portion of the Earnout Payments
specified in Sections 1.5(b)(i) and (ii), except that any such pro rata
distribution pursuant to Section 1.5(b)(iii) shall be made as if the forfeiting
Shareholder did not own any shares of the Company immediately prior to the
Closing.
1.6 CLOSING. The consummation of the purchase and sale of the
Purchased Assets and the consummation of the other transactions contemplated
hereby (the "CLOSING") shall take place, at 10:00 a.m., local time, three (3)
business days after satisfaction of the latest to occur,
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or, if permissible, waiver of the conditions set forth in Article 6, at the
offices of ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ or at such other time, date or place as the Parties
agree (the "CLOSING DATE"). The Parties shall use their best efforts to
consummate the Closing on or before July 25, 2000.
1.7 PAYMENT OF CONSIDERATION.
(a) Purchase Price. The Purchase Price shall be paid to
the Company by Netzee delivering (i) to the holders of the Netzee Stock Options
described in Section 1.5(a)(ii) executed stock option agreements representing
such Netzee Stock Options; (ii) to the Company the executed Assignment and
Assumption Agreement providing for the assumption by Purchaser of the Assumed
Liabilities, and (iii) to the Escrow Agent a certificate for one hundred
percent (100%) of the shares of Netzee Common Stock described in Section
1.5(a)(i) (the "ESCROW SHARES").
(b) Earnout Payments. Any Earnout Payment to be made to
a former shareholder of the Company is personal in nature and may not be
encumbered in any manner or transferred in whole or in part except by will or
the laws of descent and distribution and pursuant to the Escrow Agreement.
Subject to Section 8.7, the Earnout Payments shall be paid within ten (10)
business days after their final determination pursuant to Section 1.5(e).
(c) Conformity of Payment. Notwithstanding any other
provision of this Agreement and the other Purchase Agreements to the contrary,
the Purchase Price and the Earnout Payments shall be paid only in conformity
with the Securities Laws and other applicable Laws. Without limiting the
foregoing and notwithstanding any other provision of this Agreement, Netzee
shall distribute Netzee Common Stock only to Accredited Investors.
1.8 FRACTIONAL SHARES. No fractional shares of Netzee Common
Stock will be issued, and fractional shares to which the Company or the former
shareholders of the Company would otherwise be entitled to will be disregarded.
1.9 CERTAIN CONSENTS. Nothing in this Agreement shall be
construed as an attempt to assign any contract, agreement, permit, franchise or
claim of the Company that is by its terms or in law nonassignable without the
consent of the other party or parties thereto, unless such consent shall have
been given, or as to which all the remedies for the enforcement thereof enjoyed
by the Company would not, as a matter of law, pass to Purchaser as an incident
of the assignments provided for by this Agreement. In order to provide
Purchaser with the full realization and value of every contract, agreement,
permit, franchise and claim of the character described in the immediately
preceding sentence and which are part of the Purchased Assets, the Company on
and after the Closing Date will, at the request and under the direction of
Purchaser, in the name of the Company or otherwise as Purchaser shall specify,
take all reasonable action (i) to assure that the rights of the Company under
such contracts, agreements, permits, franchises and claims shall be preserved
for the benefit of Purchaser and (ii) to facilitate receipt of the
consideration to be received by the Company under every such contract,
agreement, permit, franchise and claim, which consideration shall be held for
the benefit of, and shall be delivered to Purchaser. Nothing in this Section
1.9 shall in any way
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diminish the obligation of the Company hereunder to obtain all consents and
approvals and to take all such other actions prior to or at Closing as are
necessary to enable the Company to convey or assign valid title to all the
Purchased Assets to Purchaser.
1.10 RESTRICTIONS ON SECURITIES; REGISTRATION RIGHTS.
(a) The shares of Netzee Common Stock to be delivered in
connection with this Agreement will be issued to the Company in a transaction
exempt from registration under the Securities Act of 1933, as amended (the
"SECURITIES ACT") by reason of Section 4(2) thereof, Regulation D promulgated
thereunder, or other private offering exemptions, and similar or other
exemptions under applicable state securities laws (the "STATE ACTS"), and
Purchaser is relying on the representations of the Company and the Shareholders
with respect to such exemptions.
(b) The shares of Netzee Common Stock, if any, to be
delivered by Netzee in connection with this Agreement will be subject to the
terms, conditions and limitations of a Registration Rights Agreement.
(c) The Company and the Shareholders understand and
agree that stop transfer instructions with respect to any shares of Netzee
Common Stock issued by Netzee pursuant to this Agreement will be given to
Netzee's transfer agent and that there will be placed on the certificates for
such shares legends stating in substance as follows:
The securities represented hereby have not been registered under the
Securities Act of 1933, as amended, or any state securities laws and
may not be offered, sold, transferred or otherwise disposed of unless
registered with the United States Securities and Exchange Commission
and the securities regulatory authorities of applicable states or
unless (1) an exemption from such registration is available and (2)
the issuer of such securities has received an opinion of counsel
satisfactory to it (both as to the opinion and such counsel) stating
that such registration is not required under the Securities Act of
1933 and the applicable laws of such other states.
Certain rights, obligations and restrictions are imposed on the shares
represented by this certificate by an Asset Purchase Agreement and a
Registration Rights Agreement, each among Netzee, Card Plus, Inc. and
the shareholders of Card Plus, Inc., and any amendments thereto,
copies of which are available at Netzee's offices. The transfer,
encumbrance or other disposition of such shares in contravention of
such agreements is null and void. Any transferee of such shares (but
only as to such transfers that are permitted by such agreements) shall
be bound by such agreements.
(d) Each of the legends set forth in Section 1.10(c)
will also be placed on any certificate representing securities issued
subsequent to the original issuance of Netzee Common Stock pursuant to this
Agreement as a result of any transfer of such shares or any stock dividend,
stock split or other recapitalization as long as Netzee Common Stock issued to
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the Company and the former shareholders of the Company pursuant to this
Agreement has not been registered or transferred in such manner to justify the
removal of the legend therefrom.
1.11 EFFECTIVE DATE. For accounting purposes only, the Parties
shall treat the purchase and sale of the Purchased Assets contemplated hereby
as effective as of the close of business on June 30, 2000. For all other
purposes, the Parties shall treat such purchase and sale as effective as of the
Closing Date.
1.12 TAX FREE TRANSACTION. The Parties intend that the sale of
assets contemplated by this Agreement shall be treated as a tax-free
reorganization under the Code to the extent the consideration is Netzee Common
Stock, shall report the sale of assets contemplated by this Agreement as such
for federal and state income tax purposes, and shall take no action after the
Closing Date to adversely effect the status of the sale of assets contemplated
by this Agreement as a tax-free reorganization under the Code to the extent the
consideration is Netzee Common Stock.
1.13 USE OF CORPORATE NAME. Effective as of the Closing Date, the
Company shall:
(a) relinquish and assign all rights to the name "Card
Plus" and any logos, artwork or other graphic material used by the Company in
connection with such name, to Purchaser; and
(b) cease to use the name "Card Plus" or any similar
derivation thereof, and any logos, artwork or other graphic material used by
the Company in connection with such name.
1.14 NETZEE GUARANTY. Netzee hereby unconditionally and
irrevocably guarantees the performance and payment of all obligations of
Purchaser under this Agreement and the other Purchase Agreements including
indemnity obligations; provided, however, that Netzee shall not assume any
liabilities of the Company of any kind whatsoever, including any Assumed
Liabilities, but shall only guarantee the performance and payment of the
obligations of Purchaser as described in this Section 1.14.
ARTICLE 2
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 either gender includes the other
gender;
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(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 Atlanta, Georgia and any
reference to a monetary value is in reference to United States currency (the
U.S. Dollar);
(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) The term "AVERAGE PRICE" means the average of the
per share closing prices for the Netzee Common Stock on the Nasdaq National
Market for the five (5) trading days immediately prior to the relevant date of
payment or offset.
(j) The term "CODE" means the Internal Revenue Code of
1986, as amended, and the applicable rulings and regulations thereunder;
(k) References herein to the "COMPANY DISCLOSURE
SCHEDULES" mean the disclosure schedules, dated as of the date hereof, which
have been delivered by the Company to Purchaser and all other documents,
agreements, and other items disclosed by the Company in writing to Purchaser
and attached to such schedules in connection with this Agreement, and
references to a numbered Company Disclosure Schedule shall mean that portion of
the Company Disclosure Schedules that refers to the specific section or
subsection of Article 3 of this Agreement;
(l) The term "DISCLOSED BY PURCHASER" means and
includes, with respect to information concerning any event, fact or
circumstance, information contained in this Agreement and the other Purchase
Agreements;
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(m) The term "ENCUMBRANCE" means any liability, debt,
mortgage, deed of trust, pledge, security interest, encumbrance, option,
right-of first refusal, agreement of sale, adverse claim, easement, lien,
assessment, restrictive covenant, encroachment, burden or charge of any kind or
nature whatsoever or any item similar or related to the foregoing;
(n) The term "INCLUDING" means "including, without
limitation";
(o) 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;
(p) The term "KNOWLEDGE" as used with respect to the
Company (including any references to the Company being aware of a particular
matter) means the actual knowledge of any of the officers or Shareholders of
the Company, and any information that any of them reasonably should have known,
given the nature of the disclosure;
(q) The term "MATERIAL ADVERSE EFFECT" with respect to a
person means any circumstance of, change in, or effect on the business and
affairs of such person or any of its Subsidiaries thereof that, individually or
in the aggregate with any other circumstance of change in, or effect on, the
business and affairs of such person and its Subsidiaries: (i) is materially
adverse to the business, operations, assets, liabilities, prospects, results of
operations or financial condition of such person and its Subsidiaries, taken as
a whole, or (ii) would reasonably be expected to materially adversely affect
the ability of such person and its Subsidiaries to operate or conduct its or
their business and affairs in the manner in which it is currently operated or
conducted or contemplated by such person to be operated or conducted;
(r) The term "PERSON" means any individual, partnership,
limited liability company, firm, corporation, association, trust, joint
venture, unincorporated organization or other entity, as well as any syndicate
or group that would be deemed to be a person under Section 13(d)(3) of the
Exchange Act;
(s) The term "SHAREHOLDERS" means ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. and ▇▇▇▇▇ ▇. Boylston;
(t) The term "SUBSIDIARY" means any corporation,
partnership, 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;
(u) The term "THREATENED" means any act that would cause
a person reasonably to believe that the act, omission, fact or circumstance
with respect to which such word is used is likely to occur; and
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(v) Each of the Parties acknowledges that he or it has
had the opportunity to negotiate the terms and provisions of this Agreement,
with the assistance and review of his or 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 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND THE SHAREHOLDERS
To induce the Purchaser to enter into this Agreement and the other
Purchase Agreements, the Company, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
▇▇. hereby jointly and severally represent and warrant to the Purchaser as
follows:
3.1 ORGANIZATION.
(a) The Company is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Georgia.
The Company has the corporate power and authority to own or lease all of its
properties and assets and to carry on its business as it is now being
conducted, and, except as disclosed on Company Disclosure Schedule 3.1(a), is
duly licensed or qualified to do business and is in good standing in each
jurisdiction in which failure to qualify would have a Material Adverse Effect.
(b) Company Disclosure Schedule 3.1(b) sets forth true
and correct copies of the Articles of Incorporation and Bylaws of the Company
and all amendments thereto.
(c) The Company has no Subsidiaries, and does not own or
control, directly or indirectly, any equity interest in any corporation,
company, association, partnership, joint venture or other entity.
3.2 CAPITALIZATION. The authorized capital stock of the Company
consists of 10,000 shares of Company Common Stock, without par value, and no
other form of capital stock. As of the Closing Date, there were 500 shares of
Company Common Stock issued and outstanding. Company Disclosure Schedule 3.2
sets forth the number of shares of Company Common Stock owned by each
Shareholder. Other than as disclosed on Company Disclosure Schedule 3.2, there
are no options, warrants, other debt, equity or derivative securities
convertible into or exchangeable for Company Common Stock, or any other rights
to acquire Company Common Stock. All issued and outstanding shares of Company
Common Stock have been duly authorized and validly issued and are fully paid and
nonassessable, were not issued in violation of any preemptive rights and were
issued pursuant to effective registration statements or under available
exemptions from the registration requirements of the Securities Laws. Except as
set forth on Company Disclosure Schedule 3.2, (a) neither the Company nor any
shareholder of the Company has granted or is bound by any outstanding
subscriptions, options, warrants, calls, commitments or agreements of any
character calling for the transfer, purchase, registration, subscription or
issuance of any shares of capital stock of the Company or any securities
representing the right to purchase, subscribe or otherwise receive any shares
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20
of such capital stock or any securities convertible into any such shares, and
(b) there are no agreements or understandings with respect to voting any such
shares. All outstanding shares of Company Common Stock are owned free and clear
of all Encumbrances, liens, claims, options, proxies, charges, pledges,
security interests, pre-emptive rights and adverse claims. Except as set forth
on Company Disclosure Schedule 3.2, there are no agreements in place by and
among any of the shareholders of the Company and the Company with respect to
Company Common Stock or other securities of the Company.
3.3 AUTHORITY; NO VIOLATION.
(a) Except as disclosed on Company Disclosure Schedule
3.3(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 Company or any Shareholder in
connection with (i) the execution and delivery by the Company or any
Shareholder of this Agreement and the other Purchase Agreements, (ii) the
consummation by the Company or any Shareholder of the transactions contemplated
hereby and thereby and (iii) the performance of the Company's or any
Shareholder's obligations under this Agreement and the other Purchase
Agreements. Each Shareholder and the Company has the full power (corporate or
otherwise) 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 and shareholders of the Company
in accordance with the Articles of Incorporation and Bylaws of the Company and
with applicable Laws. Except for the Company Approvals, no other corporate
proceedings on the part of the Company or the Shareholders are necessary for
the Company to execute and deliver this Agreement and the other Purchase
Agreements to which it or he is a party and for the Company and the
Shareholders to be bound by the terms hereof and thereof. This Agreement and
the other Purchase Agreements to which the Shareholders are a party have been
entered into voluntarily without promise or benefit other than as set forth
herein and therein. This Agreement and the other Purchase Agreements to which
each Shareholder or the Company is a party have been duly and validly executed
and delivered by each Shareholder and the Company and constitute the valid and
binding obligations of the Company and each Shareholder enforceable against the
Company and each Shareholder in accordance with its and their terms, except to
the extent that the enforceability thereof may be limited by applicable
bankruptcy, insolvency, moratorium, reorganization, fraudulent conveyance or
similar laws in effect that effect the enforcement of creditor's rights
generally or general principles of equity, whether considered in a proceeding
at law or in equity.
(b) Neither the execution and delivery by the Company
and each of the Shareholders of this Agreement and the other Purchase
Agreements to which it or he is a party, nor the consummation by the Company
and each of the Shareholders of the transactions contemplated hereby and
thereby in accordance with the other terms hereof and thereof, nor compliance
by the Company and each of the Shareholders with any of the terms or provisions
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hereof or thereof, will: (i) violate any provision of the Company's Articles of
Incorporation or Bylaws; (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, the Shareholders, or any of the properties or assets of the
Company or any Shareholder; or (iii) assuming that the Company Approvals are
obtained, 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 Encumbrance upon any
of the Purchased Assets under any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, deed of trust, license, lease, agreement or
other instrument or obligation to which the Company or any Shareholder is a
party, or by which it, he or any of the Purchased Assets may be bound or
affected, except, as to clause (iii), for defaults which have been waived or
which will be cured or rendered moot by payment or other discharge of the
obligation at the Closing.
3.4 FINANCIAL STATEMENTS.
(a) Company Disclosure Schedule 3.4(a) sets forth copies
of: (i) the unaudited balance sheets of the Company as of December 31, 1999,
1998 and 1997, (ii) the related statements of income and cash flows for the
periods then ended (together with any other financial statements of the Company
delivered pursuant to Section 5.13, the "COMPANY FINANCIAL STATEMENTS") and
(iii) statements of shareholders' equity as of each such date.
(b) The Company Financial Statements present fairly, in
all material respects, the financial position of the Company as of the
respective dates set forth therein, and the results of the Company's operations
and its cash flows for the respective periods set forth therein.
(c) The books and records of the Company have been
maintained in material compliance with applicable legal and accounting
requirements (excluding GAAP).
(d) Except as and to the extent reflected, disclosed or
reserved against in the Company Financial Statements, or as disclosed in
Company Disclosure Schedule 3.4(d), the Company has not incurred any
liabilities or obligations of any kind, whether absolute, accrued, contingent
or otherwise ("LIABILITIES").
(e) Except as and to the extent reflected, disclosed or
reserved against in the Company Financial Statements, or as disclosed in
Company Disclosure Schedule 3.4(e), since December 31, 1999, there has not been
any change, occurrence or circumstance affecting the business, results of
operations or financial condition of the Company or the Purchased Assets that
has had, individually or in the aggregate, a Material Adverse Effect on the
Company or the Purchased Assets or which is reasonably likely to have a
Material Adverse Effect on the Company or the Purchased Assets.
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3.5 BROKER'S AND OTHER FEES. Except for ▇▇▇▇▇▇ Businesses,
neither the Company nor any Shareholder 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 and the
other Purchase Agreements.
3.6 ABSENCE OF CERTAIN CHANGES OR EVENTS.
(a) Except as disclosed in Company Disclosure Schedule
3.6(a), or as reflected in the Company Financial Statements as of and for the
year ended December 31, 1999, the Company does not have Knowledge of any facts
or conditions which it reasonably believes would be likely to cause a Material
Adverse Effect on the Company or the Purchased Assets in the next twelve (12)
months.
(b) Except as set forth in Company Disclosure Schedule
3.6(b), neither the Company nor any of the Shareholders have taken or permitted
any of the actions set forth in Section 5.2 since December 31, 1999, and,
except for execution of this Agreement, the Company has conducted its business
only in the ordinary course, consistent with past practice. Prior to December
31, 1999, neither the Company nor any of the Shareholders have taken or
permitted any of the actions set forth in Section 5.2 that are not reflected in
the Company Financial Statements.
3.7 LEGAL PROCEEDINGS. Except as disclosed in Company Disclosure
Schedule 3.7, (a) neither the Company nor any of the Shareholders is a party to
any, and there are no pending or, to the Company's or any Shareholder's
Knowledge, threatened legal, administrative, arbitral or other proceedings,
claims, actions or governmental investigations of any nature against the
Company, any of the Shareholders or the Purchased Assets, (b) neither the
Company nor any Shareholder is a party to any order, judgment or decree entered
in any lawsuit or proceeding, and (c) no actions, suits, demands, notices,
claims, investigations or proceedings are pending or, to the Company's or a
Shareholder's Knowledge, threatened against or otherwise involving, directly or
indirectly, any officer, director, employee or agent of the Company (in
connection with such officer's, director's, employee's or agent's activities on
behalf of the Company or that otherwise relate, directly or indirectly to the
Company or its properties or securities) including without limitation any
notices, demand letters or requests from any Governmental Authority relating to
such potential Liabilities. Except in the case of fraud or intentional
breaches, neither the Company nor any Shareholder shall have any liability for
breach of any representation or warranty in this Section 3.7 arising solely
from any of the information included in, or omitted from the attachments to
Company Disclosure Schedule 3.7.
3.8 TAXES AND TAX RETURNS. Except as disclosed in Company
Disclosure Schedule 3.8:
(a) The Company has duly and timely filed (and until and
after the Closing Date will so file) all returns, declarations, reports,
information returns and statements required to be filed by it in respect of any
United States federal, state, local, or foreign Taxes ("RETURNS") and has duly
and timely paid (and until and after the Closing Date will so pay) all such
Taxes due and payable, other than Taxes which are being contested in good faith
(and
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disclosed by the Company 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) 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 Company has established (and
until the Closing Date will establish) on its books and records reserves that
are adequate for the payment of all Taxes not yet due and payable, but are
incurred in respect of the Company through such date and shall pay all Taxes
when due.
(b) None of the Returns of the Company 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 the
Company's inception. There are no audits or other Governmental Authority
proceedings presently pending nor, to the Knowledge of the Company, any other
disputes pending with respect to, or claims asserted for, Taxes upon the
Company, nor has the Company given any currently outstanding waivers or
comparable consents regarding the application of any statute of limitations
with respect to any Taxes or Returns. There are no liens for Taxes upon the
assets of the Company, except liens for Taxes not yet due. The Company has
complied (and until and after the Closing Date will comply) in all respects
with all applicable Laws relating to the payment and withholding of Taxes.
(c) Except as set forth on Company Disclosure Schedule
3.8, the Company (i) has not requested any extension of time within which to
file any Return which Return has not since been filed; (ii) is not a party to
any agreement providing for the indemnification, allocation or sharing of
Taxes; (iii) is not required to include in income any adjustment by reason of a
voluntary change in accounting method initiated by the Company (nor to the
Company's Knowledge has any Governmental Authority proposed any such adjustment
or change of accounting method); (iv) has not filed a consent with any
Governmental Authority pursuant to which the Company has agreed to recognize
gain (in any manner) relating to or as a result of this Agreement or the
transactions contemplated hereby; and (v) has not been a member of an
affiliated group of corporations within the meaning of Section 1504 of the
Code.
(d) The Company has had a valid election made under
Section 1362 of the Code and comparable provisions of state law to be taxed as
a "Subchapter S" corporation and has qualified and will qualify as of the
Closing to be taxed as a "Subchapter S" corporation for all of its taxable
years ending prior to the Closing Date.
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3.9 EMPLOYEE AND FRINGE BENEFIT PLANS.
(a) Schedule of Plans. Company Disclosure Schedule 3.9
lists each of the following that the Company or any ERISA Affiliate (as defined
below) either maintains, is required to contribute to or otherwise participates
in (or at any time maintained, contributed to or otherwise participated in) or
as to which the Company or any ERISA Affiliate has any unsatisfied liability or
obligations whether accrued, contingent or otherwise:
(i) any employee pension benefit plan
("PENSION/PROFIT-SHARING PLAN") (as such term is defined in the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")), including any
pension, profit-sharing, retirement, thrift or stock bonus plan;
(ii) any "multi-employer plan" ("MULTI-EMPLOYER
PLAN") (as such term is defined in ERISA);
(iii) any employee welfare benefit plan ("WELFARE
PLAN") (as such term is defined in ERISA); or
(iv) any other compensation, stock option,
restricted stock, fringe benefit or retirement plan, program, policy,
understanding or arrangement of any kind whatsoever, whether formal or
informal, not included in the foregoing and providing for benefits for, or the
welfare of, any or all of the current or former employees or agents of the
Company or any ERISA Affiliate or their beneficiaries or dependents, including
any group health, life insurance, retiree medical, bonus, incentive or
severance arrangement, and all outstanding stock options, restricted shares,
phantom stock awards, stock appreciation rights, performance share unit awards
or cash or other similar incentive awards thereunder; (all of the foregoing in
items (i), (ii), (iii) and (iv) being referred to as "EMPLOYEE PLANS""). "ERISA
AFFILIATE" means each trade or business (whether or not incorporated) which
together with the Company is treated as a single employer pursuant to Code
Section 414(b), (c), (m) or (o). The Company has delivered to Purchaser (and
Company Disclosure Schedule 3.9 lists each item delivered) copies of the
following: (1) each written Employee Plan, as amended (including either the
original plan or the most recent restatement and all subsequent amendments);
(2) the most recent IRS determination letter issued with respect to each
Pension/Profit-Sharing Plan; (3) the latest actuarial valuation (if any) for
each Pension/Profit-Sharing Plan; (4) all annual reports on the Form 5500
series; (5) each trust agreement, insurance contract or document setting forth
any other funding arrangement, if any, with respect to each Employee Plan; (6)
the most recent ERISA summary plan description or other summary of plan
provisions distributed to participants or beneficiaries for each Employee Plan;
(7) each opinion or ruling from the IRS, the Department of Labor or the Pension
Benefit Guaranty Corporation ("PBGC") concerning any Employee Plan; and (8)
each Registration Statement, amendment thereto and prospectus relating thereto
filed with the Securities and Exchange Commission (the "SEC") or furnished to
participants in connection with any Employee Plan.
(b) Qualification. Except as set forth on Company
Disclosure Schedule 3.9 each Pension/Profit-Sharing Plan: (i) has received a
favorable determination letter from the
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IRS to the effect that it is qualified under Code Sections 401(a) and 501, both
as to the original plan and all restatements or material amendments; (ii) has
never been subject to any assertion by any Governmental Authority that it is
not so qualified; and (iii) has been operated so that it has always been so
qualified.
(c) Accruals; Funding.
(i) Pension/Profit-Sharing Plans. None of the
Employee Plans is a Pension/Profit-Sharing Plan subject to ERISA Title IV
(including those for retired, terminated or other former employees and agents).
(ii) Other Plans. Company Disclosure Schedule
3.9 fully and accurately sets forth any funding liability under each Employee
Plan not subject to ERISA Title IV, whether insured or otherwise, specifically
setting forth any liabilities under any retiree medical arrangement and
specifically designating any insured plan which provides for retroactive
premium or other adjustments. The levels of insurance reserves and accrued
liabilities with regard to each such Employee Plan are reasonable and are
sufficient to provide for all incurred but unreported claims and any
retroactive premium adjustments.
(iii) Contributions. Except as set forth on
Company Disclosure Schedule 3.9, (A) the Company and each ERISA Affiliate have
made full and timely payment of all amounts required to be contributed under
the terms of each Employee Plan and applicable Law, or required to be paid as
expenses under such Employee Plan, including PBGC premiums and amounts required
to be contributed under Code Section 412; (B) all contributions have been made
in accordance with the actuarial recommendations; and (C) no excise taxes are
assessable as a result of any nondeductible or other contributions made or not
made to an Employee Plan.
(d) Reporting and Disclosure. Summary plan descriptions
and all other returns, reports, registration statements, prospectuses,
documents, statements and communications which are required to have been filed,
published or disseminated under ERISA or other Law and the rules and
regulations promulgated by the Department of Labor under ERISA and the Treasury
Department or by the SEC with respect to the Employee Plans have been so filed,
published or disseminated.
(e) Prohibited Transactions; Terminations; Other
Reportable Events. Except as set forth on Company Disclosure Schedule 3.9:
(i) neither the Company, any ERISA Affiliate,
any Employee Plan, any trust or arrangement created under any of them, nor any
trustee, fiduciary, custodian, administrator or any person or entity holding or
controlling assets of any of the Employee Plans has engaged in any "prohibited
transaction" (as such term is defined in ERISA or the Code) which could subject
any of the foregoing persons or entities, or any person or entity dealing with
them, to any tax, penalty or other cost or liability of any kind; and
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(ii) no termination, whether partial or
complete, has occurred with respect to any Employee Plan.
(f) Claims for Benefits. Other than claims for benefits
arising in the ordinary course of the administration and operation of the
Employee Plans, no claims, investigations or arbitrations are pending or
threatened against any Employee Plan or against the Company, any ERISA
Affiliate, any trust or arrangement created under or as part of any Employee
Plan, any trustee, fiduciary, custodian, administrator or other person or
entity holding or controlling assets of any Employee Plan, and no basis to
anticipate any such claim or claims exists.
(g) Other. The Company and all ERISA Affiliates have
fully complied with all of their obligations under each of the Employee Plans
and with all provisions of ERISA and any and all other Laws applicable to the
Employee Plans. No written notice has been received by the Company of any claim
by any participant in the Employee Plans of any violations of such Laws, and to
the Knowledge of the Company, no such claims are pending or threatened.
(h) Creation of Obligations By Reason of Sale of the
Purchased Assets. Except as set forth on Company Disclosure Schedule 3.9, the
execution and delivery of this Agreement and the other Purchase Agreements and
the consummation of the transactions contemplated by this Agreement and the
other Purchase Agreements will not constitute an event under any Employee Plan
that will or may result in any payment (whether of severance pay or otherwise),
acceleration, forgiveness of indebtedness, vesting, distribution, increase in
benefits or obligation to fund benefits with respect to any employee, including
any obligation to make a payment that would be nondeductible under Code Section
280G or any other Code provision.
(i) No Multi-Employer Plans. Except as set forth on
Company Disclosure Schedule 3.9, none of the Employee Plans is a Multi-Employer
Plan, and neither the Company nor any ERISA Affiliate has any liability, joint
or otherwise, for any withdrawal liability (potential, contingent or otherwise)
under ERISA Title IV for a complete or partial withdrawal from any
Multi-Employer Plan.
3.10 COMPLIANCE WITH APPLICABLE LAWS. Except as set forth in
Company Disclosure Schedule 3.10, the Company holds all licenses, franchises,
permits, consents and authorizations necessary for the lawful conduct of its
business ("LICENSES"). No proceeding is pending or to the Knowledge of the
Company threatened seeking the revocation or suspension of any License. Except
as set forth on Company Disclosure Schedule 3.10, the Company is and has been
in compliance in all material respects with all applicable Laws, and the
Company has not received any notices of any allegation of any violation by the
Company of any Law or License.
3.11 CERTAIN CONTRACTS.
(a) Company Disclosure Schedule 3.11(a) lists the
following agreements (collectively, the "MATERIAL CONTRACTS"), including,
without limitation, leases, purchase
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contracts and commitments, to which the Company is a party or by which the
Company or any of its material properties or assets is bound:
(i) all agreements involving an annual
commitment or payment by any party thereto of more than $10,000 individually or
$25,000 in the aggregate or which have a fixed term extending more than 12
months from the date hereof;
(ii) all joint venture, sales agency, sales
representative or distributorship, broker, franchise, license or similar
agreements;
(iii) all leases of real and personal property
that are material to the Company's business and operations;
(iv) all notes, bonds, mortgages, security
agreements, guarantees and other agreements and instruments for or relating to
any lending or borrowing by the Company in any amount (exclusive of advances to
employees for expenses in the ordinary course of business);
(v) all powers of attorney, guarantees,
suretyships or similar agreements;
(vi) all employment agreements; and
(vii) all other agreements to which the Company
is a party and (1) which are material to the Business or the Purchased Assets,
(2) another party to such agreement is or was an officer, director or 5% or
greater shareholder of the Company or any of its affiliates, or (3) the breach
of or default under which could have a Material Adverse Effect on the Business
or the Purchased Assets.
(b) Except as set forth on Company Disclosure Schedule
3.11(b), each of the Material Contracts is valid, binding and enforceable on
the Company, and to the Knowledge of the Company, the other parties thereto, in
accordance with its terms, and the Company has provided a true and complete
copy of each Material Contract to Purchaser.
(c) Except as disclosed in Company Disclosure Schedule
3.11(c), (i) neither the Company, nor to the Knowledge of the Company, any
other party thereto, is in default under any of the Material Contracts or any
other agreement to which the Company is a party or to which its properties are
bound; (ii) to the Company's Knowledge, no event has occurred which (whether
with or without notice, lapse of time or the happening or occurrence of any
other event) would constitute a default thereunder entitling any party to
terminate a Material Contract or other such agreement or to otherwise claim or
collect damages the impact of which would have a Material Adverse Effect on the
Company; and (iii) the continuation, validity and effectiveness of all such
Material Contracts and agreements under the current terms thereof and the
current rights and obligations of the Company thereunder will in no way be
affected, altered or impaired by the consummation of the transactions
contemplated by this Agreement or the other Purchase Agreements.
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3.12 PROPERTIES AND INSURANCE.
(a) Except as disclosed in Company Disclosure Schedule
3.12(a), the Company has good and marketable title to all of the Purchased
Assets, whether tangible or intangible, subject to no Encumbrances except
statutory liens for amounts not yet due or which are being contested in good
faith (and which have been disclosed on Company Disclosure Schedule 3.12(a)
(the "PERMITTED ENCUMBRANCES").
(b) Company Disclosure Schedule 3.12(b) contains a list
of all of the items of personal property included among the Purchased Assets.
No item of real property is included among the Purchased Assets. Complete and
correct copies of each lease listed on Company Disclosure Schedule 3.12(b) and
any amendments, extensions, and renewals thereof have been furnished to
Purchaser. Each of the leases described on Company Disclosure Schedule 3.12(b)
is in full force and effect and there are no existing defaults or events of
default, real or claimed, or events which with notice or lapse of time or both
would constitute defaults. Except as described on Company Disclosure Schedules
3.3(a), 3.12(a) or 3.12(b), all such leases are fully assignable to Purchaser
without the consent of any third party. No rights of the Company under such
leases have been assigned or otherwise transferred as security for any
obligation of the Company.
(c) The Purchased Assets and the Business are currently
insured under various policies of general liability and other forms of
insurance, which are set forth on Company Disclosure Schedule 3.12(c), and
which policies are in amounts adequate in the reasonable judgment of the
Company to protect the Business from significant loss. All such policies are in
force and effect with premiums thereon timely paid and no act or failure to act
has accrued which caused or may cause any such policy to be canceled or
terminated. Since December 5, 1996, all insurance policies covering liability
maintained by or for the benefit of the Company have been "occurrence" policies
and not "claims made" policies. The Company has not been refused any insurance
with respect to the Purchased Assets or the Business by any insurance carrier
to which it has applied for insurance.
(d) No person other than the Company is currently
entitled to possession of any of the Purchased Assets, whether owned or leased
by the Company.
3.13 ENVIRONMENTAL MATTERS.
(a) The operations of the Company comply, and have
complied, in all material respects with all applicable Laws relating to
pollution or protection of the environment ("ENVIRONMENTAL LAWS").
(b) The Company has obtained all environmental, health
and safety licenses and other authorizations necessary for the operation of the
Business, all of which are valid and in good standing and are not subject to
any modification or revocation proceeding, and the Company is in compliance in
all material respects with all terms and conditions thereof.
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(c) The Company has not received any written notice of
any pending or threatened investigation, proceeding or claim to the effect that
the Company is 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, 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 Company's Knowledge there is no past or present
action, condition or circumstance that could be expected to give rise to any
such liability on the part of the Company to any person or entity or for any
such cleanup costs.
3.14 INTELLECTUAL PROPERTY.
(a) Background. The Company develops, markets and
licenses certain proprietary application software products and systems to its
customers (the "SOFTWARE PROGRAMS"), and in connection therewith the Company
has developed certain related technical documentation and user reference
manuals (the "DOCUMENTATION"). The Software Programs and the Documentation are
collectively referred to as the "SOFTWARE." The Software Programs are listed on
Company Disclosure Schedule 3.14(a).
(b) Ownership. Except as set forth in Company Disclosure
Schedule 3.14(b), the Company owns all patents, trademarks, service marks,
trade names and copyrights (including registrations, licenses and applications
pertaining thereto) and all other proprietary information used by the Company
in the conduct of the Business. Company Disclosure Schedule 3.14(b) sets forth
all domestic and foreign patents, trademarks, service marks, trade names and
copyrights owned or used by the Company and all applications therefor and
registrations thereof.
(c) Procedures for Copyright Protection. Company
Disclosure Schedule 3.14(c) sets forth the form and placement of the
proprietary legends and copyright notices displayed in or on the Software
including screen displays. In no instance has the eligibility of the Software
for protection under copyright law been forfeited to the public domain.
(d) Procedures for Trade Secret Protection. The Company
has never disclosed source code for any of the Software to a third party other
than the persons identified in Company Disclosure Schedule 3.14(d), each of
which has executed an appropriate nondisclosure agreement in favor of the
Company. The Company discloses its source code to employees only on a
need-to-know basis in connection with the performance of their duties to the
Company. Except as described in Company Disclosure Schedule 3.14(d), each
current employee of the Company and each former employee of the Company has
executed and delivered to the Company an employment or other agreement
containing provisions for the protection of trade secrets and confidential
information of the Company and the absolute ownership by the Company of all
work resulting from the performance of services by such employee. The source
code and system documentation comprising the Software have at all times been
maintained by the Company in confidence and the Company has not taken (nor has
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it failed to take) any action which would be reasonably likely to result in
such source code and system documentation not being protectable as a trade
secret under applicable Laws.
(e) Ownership of Software. Except as set forth in
Company Disclosure Schedule 3.14(e), all persons who have contributed to or
participated in the conception and development of the Software on behalf of the
Company have been full-time employees of the Company or of Card Plus
Consultants, Inc. ("CPC"), hired to prepare such works within the scope of
employment. Together with CPC, as more specifically set forth in the Software
Ownership Agreement by and among Purchaser, the Company and CPC, the Company
has all ownership interests in the Software.
(f) Absence of Claims. Except as set forth in Company
Disclosure Schedule 3.14(f), no claims have been asserted by any person to
rights in the Software, and to the Knowledge of the Company, no valid basis for
any such claim exists. The use of the Software by the Company and its licensees
does not infringe on the rights of any person (whether arising under copyright,
trade secret, patent, unfair competition or other Laws that protect
intellectual property rights). The use by the Company of the patents,
trademarks, service marks, trade names and copyrights identified in Company
Disclosure Schedule 3.14(a) does not infringe the rights of any person, and the
Company has not received a claim asserting that the use by the Company of any
of the foregoing infringes the rights of any person. The Company has not
received notice of any claim asserted by any person to the effect that any
current or former employee of the Company has violated the provisions of any
noncompete or nondisclosure agreement with such person or has disclosed any
proprietary information of such person to the Company or any third party.
3.15 ADEQUACY OF TECHNICAL DOCUMENTATION. The Software includes
the source code, system documentation and schematics for all Software Programs,
as well as all programmer comments for documentation and pertinent commentary
or explanation that may be reasonably necessary to render such materials
understandable and usable by a trained computer programmer. The Software also
includes the programs (including compilers), workbenches, tools and higher
level language, if any, used for the development, maintenance and
implementation of the Software Programs.
3.16 THIRD-PARTY COMPONENTS IN SOFTWARE. The Company has validly
obtained the right and license to use, copy, modify and distribute any
third-party programming and materials contained in the Software pursuant to the
contracts identified in Company Disclosure Schedule 3.16, subject to no further
license fee, royalty or other payment obligations not identified in Company
Disclosure Schedule 3.16, other than software maintenance payments customarily
associated therewith. The Software contains no other programming or materials
in which any third party may claim superior, joint or common ownership,
including any right or license. The Software does not contain derivative works
of any programming or materials not owned in their entirety by the Company.
3.17 THIRD-PARTY INTERESTS OR MARKETING RIGHTS IN SOFTWARE. The
Company has not granted, transferred or assigned any right or interest in the
Software to any person except
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pursuant to the contracts identified on Company Disclosure Schedule 3.17. 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 3.17.
3.18 ABSENCE OF CERTAIN AGREEMENTS AND PRACTICES. Neither the
Shareholders, the Company, its directors, officers or employees, nor to the
Company's Knowledge, its agents, affiliates, nor any other person acting on
behalf of the Company, has (a) 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, (b) used any corporate funds
for contributions, payments, gifts or entertainment, or made any expenditures
relating to political activities to government officials or others in violation
of any applicable Laws in connection with the Business or (c) received any
unlawful contributions, payments, gifts or expenditures in connection with the
Business.
3.19 MAJOR VENDORS AND CUSTOMERS. Company Disclosure Schedule 3.19
sets forth a list of each licensor, developer, remarketer, distributor and
supplier of property or services to, and each licensee, end-user or customer
of, the Company, to whom the Company paid or billed in the aggregate in excess
of $25,000 during calendar year 1999.
3.20 ACCOUNTS RECEIVABLE. Company Disclosure Schedule 3.20 sets
forth the accounts receivable of the Company as of December 31, 1999, as
reflected in the Company Financial Statements as of that date, and the accounts
receivable of the Company as of June 30, 2000, together with an aging of these
accounts. These accounts receivable, and all accounts receivable of the Company
created after June 30, 2000 represent receivables due for goods sold and
services rendered in the ordinary course of business and are collectible at the
recorded amounts thereof, except to the extent reserves therefor have been made
on the Company Financial Statements.
3.21 BULK SALES LAWS. No bulk sales law is applicable to the
transactions contemplated by this Agreement.
3.22 COMBINATIONS INVOLVING THE COMPANY. All mergers,
consolidations or other business combinations involving the Company and all
liquidations, purchases of stock or assets or other transactions by which the
Company acquired or disposed of any of its business, property or securities
were conducted in compliance with applicable charter documents, Bylaws, any
other applicable agreements, instruments and documents and applicable Laws.
3.23 LABOR RELATIONS. Except as disclosed on Company Disclosure
Schedule 3.23, the Company is in material compliance with all federal and state
Laws respecting employment and employment practices, terms and conditions of
employment, wages and hours, and is not engaged in any unfair labor or unlawful
employment practice. There is no unlawful employment practice or discrimination
charge against the Company
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pending before the United States Equal Employment Opportunity Commission
("EEOC") or any EEOC recognized state "referral agency." There is no unfair
labor practice charge or complaint against the Company pending before the
National Labor Relations Board ("NLRB"). There is no labor strike, dispute,
slowdown or stoppage actually pending or, to the Company's Knowledge,
threatened against or involving or affecting the Company, and no NLRB
representation question exists respecting any of its employees. No grievance or
arbitration proceeding is pending and no written claim therefor exists. There
is no collective bargaining agreement that is binding on the Company. Except
for any Material Contract disclosed pursuant to Section 3.11, the Company is
not a party to or bound by any agreement, arrangement or understanding with any
employee or consultant that cannot be terminated on notice of ninety (90) or
fewer days without liability to the Company or that entitles such employee or
consultant to receive any salary continuation or severance payment or retain
any specified position with the Company.
3.24 YEAR 2000 MATTERS. Except as provided on Company Disclosure
Schedule 3.24, the Software and the Company's internal systems and software and
the network connections it maintains are each "MILLENNIUM COMPLIANT." For
purposes of this Agreement, "Millennium Compliant" means: (a) the functions,
calculations, and other computing processes of the Software (collectively,
"PROCESSES") perform as designed regardless of the date in time on which the
Processes are actually performed and regardless of the date input to the
Software, whether or not the dates include leap years; (b) the Software can
accept, store, sort, extract, sequence, and otherwise manipulate date inputs
and date values, and return and display date values, as designed and in a
materially accurate manner, regardless of the dates used or format of the date
input; (c) the Software will function without interruptions caused by the date
in time on which the Processes are actually performed or by the date input to
the Software; (d) the Software accepts and responds to four digit year date
input in a manner that resolves any material ambiguities as to the century in
an accurate manner; and (e) the Software displays, prints and provides
electronic output of date information in ways that are unambiguous as to the
determination of the century.
3.25 ASSIGNMENT PROVISIONS. Company Disclosure Schedule 3.25
contains a true and complete list of all agreements in effect to which the
Company is a party and which contain any provisions which become effective or
are accelerated or contingent upon a sale of assets by the Company or otherwise
require any payment or performance by the Company or any officer, director or
shareholder thereof, now or in the future, in connection with or as a result of
any of the transactions contemplated by this Agreement or any of the other
Purchase Agreements. Copies of such agreements have been previously provided to
Purchaser or Netzee.
3.26 NECESSARY PROPERTIES. All properties and assets occupied by,
used in or necessary to the conduct of the Business, other than the Retained
Assets, are included in the Purchased Assets and are being sold, transferred,
assigned and conveyed by the Company to Purchaser pursuant to this Agreement.
The Purchaser's ability to use the Purchased Assets in the conduct of the
Business will not be prohibited or otherwise impaired by the consummation of
the transactions contemplated in this Agreement or the other Purchase
Agreements.
3.27 SECURITIES ACT COMPLIANCE. The Company and each Shareholder
acknowledge that none of the shares of Netzee Common Stock to be delivered to
the Company (or to any
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Shareholder as a result of the Liquidation) pursuant to this Agreement will, at
the time of delivery, be registered under the Securities Act or any State Acts
(collectively the "SECURITIES LAWS"). The Company and each Shareholder
represent and warrant that it or he is acquiring shares of Netzee Common Stock
for investment, and not with a view toward, or for resale in connection with, a
distribution of Netzee Common Stock. The Company and each Shareholder
acknowledge that Netzee Common Stock may not be sold, pledged, hypothecated,
disposed of, or otherwise transferred or distributed except (i) pursuant to an
effective registration statement covering Netzee Common Stock under the
Securities Laws, or (ii) pursuant to an exemption from the registration
requirements of the Securities Laws.
3.28 ACCESS TO INFORMATION. The Company and each Shareholder have
had access to Netzee's SEC Filings and have otherwise had access to sufficient
information about Netzee upon which to analyze the transactions contemplated by
this Agreement. The Company and each Shareholder have been given the
opportunity to ask questions and receive answers from the officers of Netzee
concerning the terms and conditions of the transactions contemplated by this
Agreement and the business and financial condition of Netzee. The Company and
each Shareholder have had the opportunity to obtain any additional information
it deems necessary to verify the accuracy and completeness of information
provided by Netzee in connection with this Agreement and the transactions
contemplated hereby.
3.29 EXPERIENCE; INVESTMENT. The Company and each Shareholder have
such knowledge and experience in financial and business matters as to enable
the Company and each Shareholder (a) to utilize the information made available
to the Company and each Shareholder in connection with the transactions
contemplated by this Agreement and the other Purchase Agreements, (b) to
evaluate the merits and risks associated with the acquisition of Netzee Common
Stock pursuant hereto, and (c) to make an informed decision with respect
thereto. The Company and each Shareholder have such business and financial
experience such that Purchaser and Netzee could reasonably assume the Company
and each Shareholder have the capacity to protect its or his own interests in
connection with the offer, sale and issuance of Netzee Common Stock. The
Company and each Shareholder are financially capable of bearing the risk of
loss of any and all consideration surrendered in exchange for the Netzee Common
Stock, and acknowledge that an investment in Netzee Common Stock involves a
high degree of risk, including a possible total loss of investment, and that
the market price of Netzee Common Stock on the Closing Date may not be
indicative of its future value. The Company and each Shareholder represent that
it or he or she is an "ACCREDITED INVESTOR" within the meaning of Regulation D
("REGULATION D") promulgated by the Commission under the Securities Act. The
Company and each Shareholder understand that the officers, directors, attorneys
and other advisors of Purchaser and Netzee will rely upon the representations
and warranties made by the Company and each Shareholder in this Agreement in
order to establish any necessary exemption from the registration provisions of
the Securities Laws.
3.30 TAX ADVICE. The Company and each Shareholder have reviewed
with its tax advisors the United States federal, state, local and foreign tax
consequences of the transactions contemplated by this Agreement and the other
Purchase Agreements. The Company and each Shareholder are relying solely on
such advisors and not on any statements or representations of
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Purchaser or any of its agents, and understands that it (and not Purchaser or
any other person or entity) shall be responsible for its own tax liability that
may arise as a result of the transactions contemplated by this Agreement and
the other Purchase Agreements.
3.31 DISCLOSURE. No representation, warranty or statement made by
the Company or any Shareholder 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 or will
contain any untrue or incomplete statement or omits or will omit to state any
material fact necessary to make the statements contained herein or therein not
misleading. The Company and each Shareholder have completely and accurately
responded in all material respects to all diligence inquiries made by Purchaser
and its officers, directors, attorneys, accountants and other representatives
in connection with this Agreement and the other Purchase Agreements and have
disclosed all material facts (and have not omitted any material facts) known or
reasonably available that are reasonably necessary in order to make the
Company's and each Shareholder's responses to such inquiries, in light of the
circumstances in which such responses were made, not misleading.
3.32 APPROVAL OF SHAREHOLDERS. The Board of Directors of the
Company has caused copies of this Agreement an d whatever supplemental
information Purchaser reasonably requested to be distributed to the
shareholders of the Company. All of the shareholders of the Company have
executed and delivered a unanimous written consent in lieu of a shareholders'
meeting in accordance with the Company's Articles of Incorporation, its Bylaws
and all applicable Laws, which unanimous written consent includes resolutions
of all of the shareholders of the Company approving (i) this Agreement, (ii)
the other Purchase Agreements, (iii) all of the transactions contemplated
hereby and thereby and (iv) the liquidation of the Company in accordance with
this Agreement (the "LIQUIDATION").
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF
THE PURCHASER AND NETZEE
To induce the Company to enter into this Agreement and the other
Purchase Agreements, the Purchaser and Netzee hereby jointly and severally
represent and warrant to the Company as follows:
4.1 CORPORATE ORGANIZATION. Each of Purchaser and Netzee is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Georgia. Each of Purchaser and Netzee 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.
4.2 CAPITALIZATION. The authorized capital stock of Netzee
consists of 70,000,000 shares of common stock, without par value (the "NETZEE
COMMON STOCK"), 21,708,083 shares of which were issued and outstanding as of
July 17, 2000 and 5,000,000 shares of preferred stock, 500,000 shares of which
were issued and outstanding and designated "Series A 8% Convertible Preferred
Stock" as of July 17, 2000. The Netzee Common Stock to be issued
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pursuant to this Agreement will be duly authorized, validly issued, fully paid
and non-assessable.
4.3 AUTHORITY; NO VIOLATION.
(a) Except for filings of Form D and other notices
related to the issuance of securities by Netzee, and the Nasdaq notification of
listing of additional shares of Netzee Common Stock, and except as identified
on Purchaser Disclosure Schedule 4.3(a), no Authorizations are necessary on
behalf of Purchaser or Netzee in connection with (i) the execution and delivery
by Purchaser or Netzee of this Agreement and the other Purchase Agreements,
(ii) the consummation by Purchaser or Netzee of the transactions contemplated
hereby and thereby and (iii) the performance of Purchaser's and Netzee's
obligations under this Agreement and the other Purchase Agreements. Each of
Purchaser and Netzee has the full corporate power and authority to execute and
deliver this Agreement and the other Purchase Agreements to which it is a party
and the consummation by Purchaser and Netzee 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 Board of Directors of
Purchaser and Netzee in accordance with the Articles of Incorporation and
Bylaws of the Purchaser and Netzee and applicable Laws. No other corporate
proceedings on the part of Purchaser or Netzee are necessary to consummate the
transactions so contemplated. This Agreement and the other Purchase Agreements
have been duly and validly executed and delivered by Purchaser and Netzee and
constitute the valid and binding obligation of Purchaser and Netzee enforceable
against Purchaser and Netzee in accordance with its terms, except to the extent
that the availability of the remedy of specific performance may be limited by
equitable principles.
(b) Neither the execution and delivery of this Agreement
and the other Purchase Agreement to which it is a party by each of Purchaser or
Netzee, nor the consummation by Purchaser or Netzee of the transactions
contemplated hereby and thereby in accordance with the terms hereof and
thereof, nor compliance by Purchaser or Netzee with any of the terms or
provisions hereof and thereof, will (i) violate any provision of Purchaser's or
Netzee's Articles of Incorporation or Bylaws, or (ii) violate any Laws
applicable to Purchaser or Netzee any of its properties or assets.
4.4 BROKER'S AND OTHER FEES. Neither Purchaser nor Netzee 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.
4.5 LEGAL PROCEEDINGS. No litigation is pending or, to the
Knowledge of Purchaser or Netzee, threatened against or affecting Purchaser or
Netzee in connection with any of the transactions contemplated by this
Agreement or the other Purchase Agreements to which Purchaser or Netzee is a
party which may affect Purchaser's or Netzee's ability to perform its
obligations hereunder or thereunder. There is presently no outstanding
judgment, decree or order of any Governmental Authority against or affecting
Purchaser or Netzee in connection
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with the transactions contemplated by this Agreement or the other Purchase
Agreements to which Purchaser or Netzee is a party.
4.6 SEC REPORTS. Netzee is a "reporting issuer" and has a class
of securities registered under Section 12(g) of the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT"). Netzee has made all filings with the SEC
that it has been required to make under the Securities Act and the Exchange Act
(the "SEC FILINGS"). None of the reports contained in such SEC Filings, as of
their respective dates (or if amended or superseded by subsequent filing, on
the dates of such filings), contained any untrue statement of a material fact
or omitted to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
materially misleading. The financial statements of Netzee contained in such SEC
Filings and reports were prepared in accordance with GAAP consistently applied
through the periods covered thereby (except as may be indicated in the notes to
such financial statements or, in the case of unaudited statements, as permitted
by Form 10-Q promulgated by the SEC) and present fairly, in all material
respects, the financial condition of Netzee as of the indicated dates and the
results of operations of Netzee for the indicated periods.
4.7 NO MATERIAL ADVERSE CHANGE. Since the date of Netzee's most
recent SEC Filings, other than as disclosed by Netzee in such SEC Filings, in
press releases of Netzee disseminated to major new wire services or the Nasdaq,
or in this Agreement, there has been no material adverse change in the
business, financial condition or results of operations of Netzee.
4.8 DISCLOSURE. No representation, warranty or statement made by
Purchaser or Netzee in this Agreement, the other Purchase Agreements or in any
document or certificate furnished to the Company pursuant to this Agreement or
the other Purchase Agreements contains or will contain any untrue or incomplete
statement or omits or will omit to state any material fact necessary to make
the statements herein or therein not misleading.
ARTICLE 5
COVENANTS AND AGREEMENTS OF THE PARTIES
5.1 CONDUCT OF BUSINESS. From the date hereof to the Closing
Date, the Company and the Shareholders shall conduct the Business only in the
ordinary course and consistent with past practice, except for transactions
permitted hereunder or with the prior written consent of Purchaser. Without
limiting the generality of the foregoing, the Company and the Shareholders
shall use all commercially reasonable efforts to:
(a) maintain its existence and status in good standing
in all jurisdictions in which it is required to be qualified or registered to
conduct its business;
(b) maintain all of the tangible Purchased Assets in
good operating condition, ordinary wear and tear excepted, and maintain the
protection of all intellectual property in substantially the same standing as
exists on the date hereof;
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(c) continue performance in the ordinary course of its
obligations under its contracts and agreements;
(d) preserve its business organization intact, use all
commercially reasonable efforts to keep available its present officers and
employees and preserve its present relationships with suppliers, customers and
others having business relationships with it; and
(e) maintain its existing insurance, subject to
variations in amount required by the ordinary operations of its business.
5.2 NEGATIVE COVENANTS. 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 Company and the Shareholders will not:
(a) change any provision of its Articles of
Incorporation or Bylaws;
(b) grant any severance or termination pay to, or enter
into or amend any employment or severance agreement with, any of its directors,
officers or employees; adopt any new employee benefit plan or arrangement of
any type; or award any increase in compensation or benefits to its directors,
officers or employees except for (A) employee increases in the ordinary course
of business and consistent with past practices and policies and (B) bonuses in
amounts that do not result in a material variance from the amounts reserved for
such payments through the date of the most recent balance sheet included in the
Company Financial Statements.
(c) sell or dispose of any Purchased Assets other than
in the ordinary course of business consistent with past practices;
(d) make any capital expenditures outside the ordinary
course of business;
(e) acquire in any manner whatsoever any business or
entity;
(f) make any change in its accounting methods or
practices;
(g) incur, create, assume or guarantee any Liabilities
except in the ordinary course of business and as would not be material.
(h) pay, discharge or satisfy any Liabilities, other
than by payment, discharge or satisfaction in the ordinary course of business;
(i) permit or allow any of the Purchased Assets (real,
personal or mixed, tangible or intangible) to be subjected to any Encumbrance,
except for Permitted Encumbrances;
(j) declare, file or permit to be filed any voluntary
bankruptcy, receivership, insolvency or other similar proceeding or petition
with any Governmental Authority with respect to the Company;
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(k) fail to perform its obligations under any Material
Contract (except those being contested in good faith) or enter into, assume or
amend any agreement that would be a Material Contract other than agreements to
provide services entered into in the ordinary course of business;
(l) take any action that results in (A) a Material
Adverse Effect on the Company or (B) any of its representations and warranties
contained in Article 3 not being true and correct in any material respect at the
Closing Date, or that would cause any of the conditions to the Closing not to be
satisfied; or
(m) directly or indirectly agree to do any of the
foregoing.
5.3 NO SOLICITATION. From the date hereof to the Closing Date or
the earlier termination of this Agreement in accordance with its terms:
(a) neither any of the Shareholders, the Company nor any
of its present or future Subsidiaries or other affiliates, nor any of its or
their directors, officers, shareholders, employees, representatives or other
agents (together with the Company, 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 of inquiries or
proposals or offers from any person (other than Purchaser or its directors,
officers, employees, representatives and agents) concerning: (A) any sale of
assets or transfer of liabilities of any of the Company Affiliates (other than
any such sale or transfer in the ordinary course of business); (B) any issuance,
purchase or sale of capital stock or debt or other securities of any of the
Company Affiliates; or (C) any merger, consolidation, restructuring,
recapitalization or other significant transaction involving any of the Company
Affiliates; 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, officers, shareholders,
employees, representatives and agents). The Company 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 Company will take the
necessary steps to inform the individuals or entities referred to above of the
obligations undertaken in this Section 5.3; and
(c) will notify Purchaser immediately of the identity of
any potential acquiror and the terms of any proposal or offer (including,
without limitation, any proposal or offer to any of the shareholders of the
Company) 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 assets, equity
securities of or rights with respect to any assets or securities of, the Company
whether or not permitted by this Section 5.3.
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5.4 CURRENT INFORMATION. During the period from the date of this
Agreement to the Closing Date or the earlier termination of this Agreement in
accordance with its terms:
(a) Upon the reasonable request of Purchaser, the Company
will cause one or more of the Company's representatives to confer with
representatives of Purchaser regarding its business, operations, properties,
assets and financial condition; each of the Parties will cause one or more of
its representatives to confer with representatives of the other Party regarding
matters relating to the completion of the transactions contemplated herein; and
(b) Each of the Parties will notify the other Party as
soon as practicable after any determination or discovery by it of any fact or
circumstance relating to the other 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 the other Party or which has or is reasonably likely to have a
Material Adverse Effect on either Purchaser, the Business or the Purchased
Assets.
5.5 ACCESS TO PROPERTIES AND RECORDS; CONFIDENTIALITY.
(a) The Company shall permit Purchaser and its
representatives reasonable access to its properties and shall disclose and make
available to Purchaser and its representatives all books, papers and records and
information relating to it, its assets, stock ownership, properties, operations,
obligations and liabilities, including, but not limited to, all books of account
(including the general ledger), tax records, minute books of directors' and
shareholders' meetings, organizational documents, agreements, filings with any
Governmental Authority, accountants' work papers, litigation files, plans
affecting employees, and any other records and information in which Purchaser
and its representatives may have a reasonable interest; provided that such
investigation shall be reasonably related to the transactions contemplated by
this Agreement and shall not interfere unnecessarily with the normal business
operations of the Company.
(b) For a period of four years from the date hereof, all
information (whether written or oral and whether received before or after the
date this Agreement is signed) provided by any Party to any other Party in
connection with the transactions contemplated by this Agreement (the
"Confidential Information") will be treated as confidential and will not be
disclosed by the recipient to any third party unless the disclosing Party
reasonably believes that such disclosure is required by applicable law, rule,
regulation or court process or as may be necessary or appropriate in connection
with the enforcement of this Agreement. However, the term "Confidential
Information" shall not include any information (i) that was already in the
recipient's possession prior to the date hereof, (ii) that was then generally
known to the public or (iii) that has been made generally available to the
public after the date hereof other than through a breach of this provision by
the recipient.
5.6 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
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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, but
in any event prior to the completion of the Liquidation, each of the Parties
will use its commercially reasonable efforts to obtain all consents, waivers and
other Authorizations 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,
including without limitation the agreements, contracts and leases set forth on
Company Disclosure Schedule 3.3(a).
(c) Effective as of the Closing Date, the Company shall
cause all mail and other communications, moneys, checks and other instruments of
payment relating to the Purchased Assets, the Assumed Liabilities or the
Business, to be delivered by it or forwarded to such mailing address as
Purchaser shall provide to the Company, or, if no such address has been
provided, to Purchaser in accordance with the provisions of Section 10.2(a). The
Company hereby authorizes Purchaser from and after the Closing Date to receive
and open all mail and other communications relating to the Business received by
Purchaser, and to act with respect to such communications in such manner as
Purchaser may elect if such communications related to the Purchased Assets, the
Assumed Liabilities or the Business, or, if such communications do not so
relate, to forward the same promptly to the Company in accordance with the
provisions of Section 10.2(b).
(d) Effective immediately after the Closing Date,
Purchaser and Netzee, and their designees, shall have the right to use the
invoices, logos, artwork and other similar printed materials bearing or
including the name "Card Plus" in connection with the operation of the Purchased
Assets and the Business, in such manner as to be determined in Purchaser's and
Netzee's sole discretion.
5.7 PARTIES' EFFORTS; FURTHER ASSURANCES. Subject to the other
provisions in this Agreement, the Parties shall in good faith perform their
obligations under this Agreement and the other Purchase Agreements 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 to
obtain all Authorizations and satisfy all conditions to the obligations of the
Parties under this Agreement and the other Purchase Agreements and to cause the
transactions contemplated by this Agreement and the other Purchase Agreement to
be carried out promptly in accordance with the terms hereof and thereof 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 and the other Purchase Agreements. 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 Party in
order to consummate the transactions contemplated by this Agreement and the
other Purchase Agreements. Further, Netzee and Purchaser agree to pay the
Company the expenses of the Company incurred from July 1, 2000
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up to and including the Closing Date set forth on Schedule 5.7 in a commercially
reasonable manner.
5.8 PUBLIC ANNOUNCEMENTS. Neither the Company nor any Shareholder
shall make any public announcement regarding any aspect of this Agreement
without Netzee's prior written consent. Nothing in this Section 5.8 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.
5.9 SALES TAX. The Company shall be responsible for paying any
sales, use, transfer or other Tax arising out of the transactions contemplated
by this Agreement.
5.10 DISCLOSURE SUPPLEMENTS. From time to time prior to the Closing
Date, the Company and the Shareholders will promptly notify Purchaser of any
inaccuracy in the Company 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 the Company Disclosure Schedules
or shall be deemed to be part hereof unless agreed to by the Purchaser.
5.11 NO TRANSFERS. Except pursuant to the Registration Rights
Agreement, with the prior written consent of Purchaser or for transfers by the
Company to the Shareholders who are Accredited Investors within the meaning of
Regulation D upon the Liquidation (if the transfer to such shareholders is
effected in conformity with the Securities Laws and applicable Laws, including
the Code), neither the Company nor any Shareholder shall transfer, assign,
convey or otherwise dispose of any of the Netzee Common Stock or any rights with
respect to such stock received pursuant to this Agreement for a period of 12
months commencing upon the date of receipt of such Netzee Common Stock.
5.12 CUSTOMER CONTACTS. The Company shall permit Purchaser to
conduct a survey or otherwise inquire of certain or all of the Company's key
customers, as selected by Purchaser, regarding the relationship between such
customer and the Company and the impact of a change in control on such
relationship. The Company shall assist Purchaser in making such survey or
inquiries and shall have the right to have a representative of its choice
participate therein.
5.13 ADDITIONAL FINANCIAL STATEMENTS. As soon as practicable after
the end of every month (but in no event later than the twentieth day of the
following month) beginning with the month in which this Agreement is signed, the
Company will deliver to Purchaser an unaudited balance sheet of the Company as
of the end of such month, and related statements of income, stockholders' equity
and cash flows for such month, each certified by an officer of the Company as
meeting the standards for financial statements set forth in Section 3.4. Before
and after the Closing Date, the Company will cooperate with Netzee in the timely
preparation of financial statements of the Company and pro forma financial
statements that meet the requirements of the SEC for filing under Form 8-K.
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5.14 WARN. The Company shall be responsible for giving any notice
that may be required by the Worker Adjustment and Retraining Notification Act
("WARN") as a result of the transactions contemplated by this Agreement, both as
to layoffs or facility closings ordered prior to or after the Closing Date.
5.15 BROKER FEES. Each Party shall be responsible for the payment
of any fees, commissions, or other expenses incurred by or owed to any broker or
representative hired or retained by such Party.
5.16 DISSOLUTION AND LIQUIDATION OF THE COMPANY. Upon receipt of
approval from the Board of Directors and shareholders of the Company for the
Liquidation, the Company shall liquidate and distribute the Purchase Price and
Retained Assets no later than 60 days after the Closing Date.
5.17 NON-ACCREDITED INVESTORS. Prior to the Closing Date, the
Company or the Shareholders will purchase or will cause to be purchased by other
Accredited Investors, the Company Common Stock owned by any non-Accredited
Investors after providing such non-Accredited Investors with appropriate
information reasonably satisfactory in form and substance to Purchaser.
5.18 COMPLIANCE. The Company covenants and agrees that all
transactions with respect to the Company's securities have been and shall be,
through the date of Liquidation, conducted in all respects in accordance with
the Securities Laws and applicable Law.
5.19 MEDINTERFACE SERVICES.
(a) Purchaser shall provide a reasonable number of
software development and consulting personnel that were employed by the Company
immediately prior to the Closing Date to complete up to $10,000 of work for
Medinterface based upon Purchaser's standard hourly rates for such personnel.
Purchaser shall provide such personnel at mutually convenient times and without
charge, except that Purchaser shall be reimbursed by Medinterface for reasonable
out-of-pocket expenses incurred in connection with such services.
(b) Purchaser shall make available for use for such work
by such personnel, without charge, one of the servers that Purchaser is
acquiring from the Company, at times mutually agreed upon and consistent with
Purchaser's use thereof; provided, however, that nothing in this Agreement will
require Netzee or Purchaser to cause any such employee's employment to be
continued for any specific period.
5.20 COMPANY PHANTOM STOCK UNITS. As of the Closing, Netzee shall
issue non-qualified stock options (the "NETZEE STOCK OPTIONS") under the Netzee,
Inc. 1999 Stock Option and Incentive Plan (the "PLAN") in the amounts and to
each of the persons set forth on Schedule 5.20, as holders of certain phantom
stock units of the Company (the "PHANTOM STOCK UNITS"), if they have agreed
pursuant to an agreement substantially in the form of Exhibit J to surrender
their Phantom Stock Units in exchange for the Netzee Stock Options as set forth
on Schedule 5.20 and if they have agreed to be employees of Netzee or Purchaser
on
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the Closing Date. To receive such Netzee Stock Options, each holder of
Phantom Stock Units must also execute and deliver a stock option agreement
substantially in the form of Exhibit K.
5.21 RESERVATION OF EMPLOYEE STOCK OPTIONS. As of the Closing Date,
Netzee shall issue options to purchase in the aggregate up to 150,000 shares of
Netzee Common Stock to each of the persons and in the amounts set forth on
Schedule 5.21; provided, however, that no option shall be granted to any person
who is not an employee or consultant of Netzee or Purchaser on the Closing Date.
Each recipient listed on Schedule 5.21 shall execute an option agreement in such
form as is customarily used by Netzee for the grant of options under the Plan,
which shall reflect all of the terms and conditions for such options as
specified on Schedule 5.21.
5.22 PROVISIONS REGARDING COMPANY EMPLOYEES. With respect to the
employees of the Company who shall continue to be employed by Netzee or
Purchaser after the Closing Date, Netzee or Purchaser, as the case may be,
shall:
(a) pay each such employee the hourly rate set forth on
Schedule 5.22(a);
(b) permit each employee to participate in Netzee's or
Purchaser's employee benefit plans and programs from time to time in effect and
on such terms and conditions as provided by such plans and programs, and Netzee
shall give each such employee full credit for service with the Company for
purposes of their eligibility to participate in and the payment of benefits
under such benefit plans, subject in each case to the terms of the plans; and
(c) continue to provide three weeks' of paid vacation per
year to each former employee of the Company who, as of the Closing Date, was
entitled to receive three weeks' of paid vacation per year.
5.23 PROVISIONS REGARDING COMPANY CLAIMS.
(a) Response to Company Claims. The Company and each of
the Shareholders agree to use all commercially reasonable efforts to respond
promptly to any and all demands, claims, letters, correspondence and other
communications received regarding or in connection with the matters set forth on
Company Disclosure Schedule 3.7.
(b) Documentation. The Company and each of the
Shareholders agree to forward or cause to be forwarded promptly to Netzee and
Purchaser (with a copy to Netzee's legal counsel) copies of all such demands,
claims, letters, correspondence and other communications received by the Company
or any of the Shareholders (or their legal counsel) or delivered by the Company
or any of the Shareholders (or their legal counsel) to any third party.
(c) Claim Status Reports. Beginning in August 2000 and
ending on the first to occur of (i) the expiration of the Claims Period or (ii)
the execution and delivery of a settlement agreement with respect to all of the
matters set forth on Company Disclosure Schedule 3.7, the Company and each of
the Shareholders agree to provide to Netzee and
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Purchaser, on or before the tenth (10th) day of each month, a detailed written
summary of all matters pertaining to the resolution of the matters referenced on
Company Disclosure Schedule 3.7.
ARTICLE 6
CLOSING CONDITIONS
6.1 CONDITIONS TO THE OBLIGATIONS OF PURCHASER UNDER THIS
AGREEMENT. The obligations of Purchaser under this Agreement shall be further
subject to the satisfaction or waiver, at or prior to the Closing Date, of the
following conditions:
(a) Authorizations and Regulatory Filings. All necessary
Authorizations of Governmental Authorities and third parties required to be
obtained by the Company to consummate the transactions contemplated by this
Agreement and the other Purchase Agreements shall have been obtained. All
conditions required to be satisfied by the Company prior to the Closing Date by
the terms of such Authorizations 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 by this Agreement and other Purchase Agreements will
not violate the provisions of any injunction, order, judgment, decree or Law
applicable or effective with respect to the Company or its officers and
directors. No suit or proceeding shall have been instituted by any person, or,
to the Knowledge of Purchaser, shall have been threatened by any Governmental
Authority, and not subsequently withdrawn, dismissed or otherwise eliminated,
which seeks (i) to prohibit, restrict or delay consummation of the transactions
contemplated hereby or to limit in any material respect the right of Purchaser
to acquire any of the Purchased Assets, or (ii) to subject the Company or its
directors or officers to material liability on the ground that it or they have
breached any Law or otherwise acted improperly in relation to the transactions
contemplated by this Agreement.
(c) Representations and Warranties; Covenants and
Agreements. The representations and warranties of the Company and the
Shareholders contained in this Agreement shall be true and correct as of the
date hereof and shall also be true and correct in all material respects on the
Closing Date as though made on and as of the Closing Date, except that those
representations and warranties which are confined to a particular date shall
speak only as of such date, and the Company and the Shareholders shall have
performed the agreements, covenants and obligations to be performed by it at or
prior to the Closing Date.
(d) Shareholder Approval. The shareholders of the Company
shall have unanimously approved the transactions contemplated by this Agreement
and each of the other Purchase Agreements in accordance with applicable Law.
None of the outstanding shares of Company Common Stock immediately prior to the
Closing shall be owned by shareholders of the Company who have exercised
dissenters' rights of appraisal pursuant to applicable Law.
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(e) Opinion of Counsel. Purchaser and Netzee shall have
received an opinion of counsel to the Company and the Shareholders, dated the
Closing Date, in form and substance reasonably satisfactory to Purchaser and
Netzee, covering the matters set forth on Exhibit A.
(f) Certificates. The Company shall have furnished
Purchaser with such certificates of the Company and its authorized officers or
others and such other documents to evidence fulfillment of the conditions set
forth in this Article 6 and otherwise to consummate the transactions
contemplated pursuant to this Agreement and the other Purchase Agreements as
Purchaser may reasonably request, including certificates in substantially the
form attached hereto as Exhibit B-1 and Exhibit B-2.
(g) Noncompetition, Nonsolicitation, Confidentiality and
Employment Agreements. The Company and the Shareholders shall each have executed
and delivered to Purchaser a Noncompetition, Nonsolicitation and Confidentiality
Agreement substantially in the form attached hereto as Exhibit C, and each of
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. shall have executed and
delivered an employment agreement (the "EMPLOYMENT AGREEMENT") with Purchaser or
Netzee in form and substance satisfactory to Purchaser or Netzee, as the case
may be, and each such individual.
(h) Assignment of Work Product Agreements. The Company
shall have delivered to Purchaser an Assignment of Work Product Agreement in
substantially the form attached hereto as Exhibit D or standard form previously
used by the Company and reasonably acceptable to Purchaser, signed by all
persons who have developed, modified or otherwise had access to the source code
for the Software.
(i) No Material Adverse Effect on the Company. No event
shall have occurred and no fact or circumstance shall have arisen which has had
a Material Adverse Effect on the Business or the Purchased Assets.
(j) No Interest in Software. The Company shall have
eliminated or provided for the elimination of any and all claims to ownership,
access, copies, source code and license and royalty interests in all Software
and systems associated with the Company's Software, each of which shall be
satisfactory to Purchaser and its counsel in all respects
(k) Escrow Agreement. The Company shall have executed and
delivered to Purchaser the Escrow Agreement in substantially the form attached
hereto as Exhibit E and with such modifications reasonably requested by the
Escrow Agent.
(l) Cancellation of Debt. Except for the debt obligations
of the Company assumed by Purchaser pursuant to Schedule 1.3, the Company shall
have eliminated the remaining debt of the Company to the reasonable satisfaction
of Purchaser.
(m) ▇▇▇▇ of Sale; Conveyance Documents. The Company shall
have executed and delivered to Purchaser bills of sale and such other
instruments of sale, conveyance, transfer, assignment, endorsement, direction or
authorization as will, in the opinion of
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Purchaser, vest in Purchaser all right, title and interest (which title and
interest shall be good and marketable) in and to the Purchased Assets free and
clear of all Encumbrances other than Permitted Encumbrances.
(n) Assignment and Assumption Agreement. The Company
shall have executed and delivered to Purchaser assignment and assumption
agreements in substantially form attached hereto as Exhibit F whereby Purchaser
shall assume certain liabilities and obligations related to the Business.
(o) Due Diligence. Purchaser shall have completed its due
diligence review of the Company to its sole and absolute discretion and
satisfaction.
(p) Accredited Investors. Immediately prior to the
Closing Date, all the outstanding shares of Company Common Stock shall be owned
by Accredited Investors.
(q) Retention of Employees. Immediately prior to the
Closing Date, the Company shall have retained all of the employees who performed
programming or software consulting services for the Company and who were
employed by the Company as of July 17, 2000.
(r) Software Ownership Agreement. Each of the Company and
CPC shall have executed and delivered to Purchaser the Software Ownership
Agreement described in Section 3.14(e).
(s) Other. The Company shall have executed and delivered
to Purchaser or obtained and delivered to Purchaser such other documents as may
be reasonably requested by Purchaser to effect the transactions contemplated by
this Agreement.
6.2 CONDITIONS TO THE OBLIGATIONS OF THE COMPANY AND THE
SHAREHOLDERS UNDER THIS AGREEMENT. The obligations of the Company and the
Shareholders under this Agreement shall be further subject to the satisfaction
or waiver, at or prior to the Closing Date, of the following conditions:
(a) Authorizations and Regulatory Filings. All necessary
Authorizations of Governmental Authorities required to be obtained by Purchaser
and Netzee to consummate the transactions contemplated by this Agreement and the
other Purchase Agreements shall have been obtained. All conditions required to
be satisfied by Purchaser and Netzee prior to the Closing Date by the terms of
such Authorizations 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 by this Agreement and other Purchase Agreements will
not violate the provisions of any injunction, order, judgment, decree or Law
applicable or effective with respect to Purchaser or Netzee, or the officers and
directors of Purchaser or Netzee. No suit or proceeding shall have been
instituted by any person, or, to the Knowledge of the Company, shall have been
threatened by any Governmental Authority, and not subsequently withdrawn,
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dismissed or otherwise eliminated, which seeks (i) to prohibit, restrict or
delay consummation of the transactions contemplated hereby or to limit in any
material respect the right of the Company to sell the Purchased Assets, or (ii)
to subject the Company or its directors or officers to material liability on the
ground that it or they have breached any Law or otherwise acted improperly in
relation to the transactions contemplated by this Agreement.
(c) Representations and Warranties; Covenants and
Agreements. The representations and warranties of Purchaser and Netzee contained
in this Agreement shall be true and correct as of the date hereof and shall also
be true and correct in all material respects on the Closing Date as though made
on and as of the Closing Date, except that those representations and warranties
which are confined to a particular date shall speak only as of such date, and
Purchaser and Netzee shall have performed the agreements, covenants and
obligations to be performed by it at or prior to the Closing Date.
(d) Shareholder Approval. The shareholders of the Company
shall have approved the transactions contemplated by this Agreement in
accordance with applicable Law.
(e) Certificates. Purchaser and Netzee shall have
furnished the Company with such certificates of Purchaser and Netzee, and the
authorized officers of Purchaser and Netzee, and such other documents to
evidence fulfillment of the conditions set forth in this Article 6 and otherwise
to consummate the transactions contemplated pursuant to this Agreement as the
Company may reasonably request including certificates in substantially the form
attached hereto as Exhibit G-1 and Exhibit G-2.
(f) Escrow Agreement. Purchaser and Netzee shall have
executed and delivered the Escrow Agreement in substantially the form attached
hereto as Exhibit E and with such modifications reasonably requested by the
Escrow Agent.
(g) Assignment and Assumption Agreement. Purchaser shall
have executed and delivered to the Company the Assignment and Assumption
Agreement.
(h) Purchase Price. Netzee shall have delivered to the
Company that portion of the Purchase Price payable at the Closing.
(i) Registration Rights Agreement. Netzee shall have
executed and delivered to each of the Shareholders a Registration Rights
Agreement in the form attached hereto as Exhibit H.
(j) Opinion of Counsel. The Company shall have received
an opinion of counsel to Netzee and Purchaser, dated the Closing Date, in form
and substance reasonably satisfactory to the Company, covering the matters set
for on Exhibit I.
(k) Other. Purchaser and Netzee shall have executed and
delivered to the Company and the Shareholders or obtained and delivered to the
Company and the Shareholders such other documents as may be reasonably requested
by the Company to effect the transactions contemplated by this Agreement.
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ARTICLE 7
TERMINATION, AMENDMENT AND WAIVER
7.1 TERMINATION. This Agreement may be terminated prior to the
Closing Date, whether before or after approval of this Agreement by the
Purchaser and the Company as follows:
(a) by mutual written consent of Purchaser and the
Company;
(b) by Purchaser or the Company if the Closing Date shall
not have occurred on or prior to August 15, 2000; provided, however, that the
right to terminate this Agreement under this Section 7.1(b) shall not be
available to any Party whose action or failure to act has been a principal cause
of or resulted in the failure of the transactions contemplated by this Agreement
to occur on or before such date and such action or failure to act constitutes a
willful and material breach of this Agreement;
(c) by Purchaser, if there has been a material breach of
any representation, warranty, covenant, agreement or obligation of the Company
or the Shareholders hereunder in each case which either is not capable of being
remedied, or, if capable of being remedied, shall not have been remedied within
10 days after receipt by the Company or the Shareholders of notice in writing
from Purchaser specifying the nature of such breach and requesting that it be
remedied;
(d) by the Company, if there has been a material breach
in any representation, warranty, covenant, agreement or obligation of 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 the Company specifying the
nature of such breach and requesting that it be remedied;
(e) by Purchaser if any of the conditions set forth in
Section 6.1 are not satisfied and is no longer capable of being satisfied; or
(f) by the Company if any of the conditions set forth in
Section 6.2 are not satisfied and is no longer capable of being satisfied.
7.2 EFFECT OF TERMINATION . If any Party terminates and abandons
this Agreement pursuant to Section 7.1, this Agreement, other than Section
5.5(b), this Section 7.2, Section 7.3, Article 8, Article 9, and Section 10.1
(each of which shall survive termination), shall forthwith become void and have
no effect, without any liability on the part of any Party or its officers,
directors or shareholders; provided, however, that nothing contained in this
Section 7.2 shall relieve any Party from any liability for any breach of this
Agreement.
7.3 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
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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.
7.4 AMENDMENT. This Agreement may not be amended except by an
instrument in writing signed on behalf of the Parties hereto; provided, however,
that no approval of the Shareholders is necessary except for an amendment which
directly affects their obligations under this Agreement as Shareholders and that
after the Liquidation, the Company Representative named in Section 1.5(e) shall
be substituted for the Company as a Party. The terms of the Earnout Payments may
be amended after the Closing Date as set forth in Section 1.5(d)(v).
7.5 EXTENSION; WAIVER. The Parties may, at any time prior to the
Closing Date, (a) extend the time for the performance of any of the obligations
or other requirements herein; (b) waive any inaccuracies in the representations
and warranties contained herein or in any document delivered pursuant thereto;
or (c) waive compliance with any of the agreements or conditions contained
herein. Any agreement on the part of any Party to any extension or waiver shall
be valid only if it is set forth in an instrument in writing signed on behalf of
the Party against 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.
ARTICLE 8
INDEMNIFICATION
8.1 INDEMNIFICATION BY THE COMPANY AND THE SHAREHOLDERS. Subject
to the terms of this Article 8, the Company and the Shareholders shall jointly
and severally indemnify, defend, save and hold harmless each of Purchaser and
Netzee and each of their respective Subsidiaries, predecessors, successors,
directors, officers, employees, agents, representatives and assigns
(collectively, the "PURCHASER INDEMNIFIED PARTIES"), from and against any
claims, losses, damages, liabilities, demands, assessments, judgments, costs and
expenses (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 the 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 Company or the Shareholders in this
Agreement or in the other Purchase Agreements;
(b) any breach of any representation, warranty, covenant
or agreement in a document or certificate delivered by the Company or the
Shareholders at the Closing; or
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(c) in connection with any matter referenced on Company
Disclosure Schedule 3.7, including a breach of any of the covenants contained in
Section 5.23.
8.2 INDEMNIFICATION BY PURCHASER. Subject to the terms of this
Article 8, Purchaser and Netzee shall jointly and severally indemnify, defend,
save and hold harmless the Company and the Shareholders from and against any
Indemnifiable Damages suffered by the Company or the Shareholders 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 Purchaser or Netzee in this Agreement or in the
other Purchase Agreements; or
(b) any breach of any representation, warranty, covenant
or agreement in a document or certificate delivered by Purchaser or Netzee at
the Closing.
8.3 CLAIMS FOR INDEMNIFICATION. The representations, warranties,
covenants and agreements of the Parties in this Agreement shall survive the
Closing, and the representations and warranties of the Parties shall remain in
full force and effect until the close of business on August 20, 2001 (the
"CLAIMS PERIOD"); provided, however, that the representations and warranties set
forth in Sections 3.1, 3.2, 3.3, 3.8, 3.9, 3.10, 3.12(a), 3.13, 3.14, 3.16, 3.17
and 3.32 shall survive until expiration of any applicable statute of limitations
(including any extensions thereof) which would preclude assertion of claims for
matters existing on or prior to the date of this Agreement. 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 Indemnifiable Damage
in respect of which the right to indemnification contained in this Article 8 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 Indemnifying Party is actually prejudiced by such failure. Any Notice
of Claim delivered to the Company shall also be delivered to the Escrow Agent.
Any Notice of Claim shall set forth the representations, warranties, covenants
and agreements with respect to which the claim is made, the 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.
8.4 DEFENSE OF CLAIM BY THIRD PARTIES.
(a) 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 any
other Party (the "LIABLE PARTY") under this Agreement, the Party against whom
the claim is made shall promptly cause notice of the claim to be delivered to
the Liable Party and shall afford the Liable Party and its counsel, at the
Liable Party's sole expense, the opportunity (which must be accepted within
twenty (20) days of notice) to join in the defense and settlement of the claim.
The failure to provide such notice will not relieve an Indemnifying Party of
liability under this Agreement unless, and only to the extent that, the
Indemnifying Party is actually prejudiced by such failure.
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(b) Neither the Company nor any Shareholder shall effect
any compromise or settlement of any third party claim without (1) providing
notice of such compromise or settlement and a copy of the compromise or
settlement agreement to Netzee and Purchaser (and their legal counsel) and (2)
obtaining the prior written consent of Netzee and Purchaser to enter into such
compromise or settlement agreement, which consent shall not be withheld if (x)
there is no finding or admission of any violation of law or rights of another
person by Netzee or Purchaser, or any of their Affiliates or Subsidiaries, (y)
the sole relief provided is for costs, damages or expenses that are paid in full
by the Company or the Shareholders and neither Netzee nor Purchaser (nor any of
their Affiliates or Subsidiaries) shall be obligated to any third party for any
costs, damages, judgments, fees, expenses or other liability in any form
whatsoever (whether such liability is expressed in the form of monetary,
injunctive, equitable, declaratory or other relief) and (z) the compromise or
settlement includes, as an unconditional term thereof, the giving by all parties
thereto of a general release, in form and substance satisfactory to Netzee in
its sole and absolute discretion, of the Purchaser Indemnified Parties from all
liability in respect of all such third party claims. Neither Netzee nor
Purchaser shall have any liability with respect to any compromise or settlement
thereof effected without its consent.
(c) Neither Netzee nor Purchaser shall effect any
compromise or settlement of any third party claim without (1) providing notice
of such compromise or settlement and a copy of the compromise or settlement
agreement to the Company and the Shareholders (and their legal counsel) and (2)
obtaining the prior written consent of the Company or the Shareholders, which
consent shall not be unreasonably withheld. Neither the Company nor any of the
Shareholders shall have any liability with respect to any compromise or
settlement thereof effected without its consent.
(d) Notwithstanding anything to the contrary in this
Article 8, Netzee or Purchaser agrees to pay up to $50,000 of the Company's or
the Shareholders' (as the case may be) legal fees and expenses reasonably
incurred to defend any of the claims set forth on Company Disclosure Schedule
3.7. Any payments made by Netzee or Purchaser pursuant to this Section 8.4(d)
shall be deemed to be Indemnifiable Damages of Netzee or Purchaser under this
Agreement and Netzee and Purchaser shall be indemnified by the Company and the
Shareholders pursuant to this Article 8 for all such payments made. The Company
and the Shareholders shall forward to Netzee copies of all bills from their
legal counsel that reflect expenses covered by this Section 8.4(d). All such
payments shall be made by Netzee or Purchaser directly to the Company's or the
Shareholders' legal counsel.
8.5 THIRD PARTY CLAIM ASSISTANCE. From time to time after the
Closing, Netzee, Purchaser, the Shareholders and the Company shall provide or
cause their appropriate employees or representatives to provide each other with
information or data in connection with the handling and defense of any third
party claim or litigation (including counterclaims filed by the parties) in
respect to which a Party may be required to indemnify other Parties under this
Agreement. The Party or Parties receiving such information or data shall
reimburse the other Parties for all of its reasonable costs and expenses in
providing these services, including, without limitation, (i) all out of pocket,
travel and similar expenses incurred by their personnel
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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.
8.6 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 and Netzee, on the one hand, or to
the Company and the Shareholders, on the other hand, as the case may be. In the
case of the Company or the Shareholders giving counter-notice, such notice must
also be given to the Escrow Agent. If such counter-notice is not given to all
Parties to which such counter-notice is required to be given within such thirty
(30) day period, or if Purchaser or Netzee, on the one hand, or the Company or
the Shareholders, on the other hand, as the case may be, acknowledges liability
for indemnification, then the amount claimed shall be promptly satisfied as
provided in Section 8.7. If, within thirty (30) days after the receipt of
counter-notice by Purchaser or Netzee, on the one hand, or the Company or the
Shareholders, on the other hand,, as the case may be, the Company and Purchaser
shall not have reached agreement as to the claim in question, then the Party or
Parties disputing the claim shall satisfy any undisputed amount as specified in
Section 8.7 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 Atlanta, Georgia area before a panel of three
(3) arbitrators, one selected by each of Purchaser and Netzee, on the one hand,
and the Company and the Shareholders, on the other hand, and the third selected
by mutual agreement of all the Parties, 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 8.7. Judgment upon any award rendered by the arbitrators may be entered
in any court of competent jurisdiction.
8.7 MANNER OF INDEMNIFICATION.
(a) Where the Company and the Shareholders are obligated
to indemnify the Purchaser Indemnified Parties under either Section 8.1(a) or
Section 8.1(b) after the Closing Date, such indemnity obligation shall be
satisfied first out of (i) up to ten percent (10%) of the shares of Netzee
Common Stock delivered by Netzee pursuant to Section 1.5(a)(i) or the proceeds
thereof (any shares of Netzee Common Stock shall be valued for this purpose at
the Average Price) and (ii) thereafter, by either (A) an offset against the
Earnout Payments, if the Earnout Payments have not been made into the Escrow
pursuant to Section 1.5(b)(iii) at or prior to the time such indemnity
obligation is paid or (B) payment of the Earnout Payments from the Escrow, if
the Earnout Payments have been made into the Escrow pursuant to Section
1.5(b)(iii) at or prior to the time such indemnity obligation is paid (the
Netzee Common Stock shall be valued for this purpose at the Average Price), and,
in the case of fraud or intentional breaches, at the option of Netzee, out of
the other assets of the Company or the Shareholders or both, and such amounts
shall, to the extent satisfied and deducted from payments to be made from (i)
the ten percent (10%) of the shares of Netzee Common Stock delivered by Netzee
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pursuant to Section 1.5(a)(i) and (ii) the Earnout Payments, be deemed to be a
reduction in the amount of Netzee Common Stock otherwise payable under this
Agreement pursuant to the Escrow.
(b) Where the Company and the Shareholders are obligated
to indemnify the Purchaser Indemnified Parties under Section 8.1(c) after the
Closing Date, such indemnity obligation shall be satisfied first out of (i) up
to one hundred percent (100%) of the shares of Netzee Common Stock delivered by
Netzee pursuant to Section 1.5(a)(i) or the proceeds thereof (any shares of
Netzee Common Stock shall be valued for this purpose at the Average Price) and
(ii) thereafter, by either (A) an offset against the Earnout Payments, if the
Earnout Payments have not been made into the Escrow pursuant to Section
1.5(b)(iii) at or prior to the time such indemnity obligation is paid or (B)
payment of the Earnout Payments from the Escrow, if the Earnout Payments have
been made into the Escrow pursuant to Section 1.5(b)(iii) at or prior to the
time such indemnity obligation is paid (the Netzee Common Stock shall be valued
for this purpose at the Average Price), and, in the case of fraud or intentional
breaches, at the option of Netzee, out of the other assets of the Company or the
Shareholders or both, and such amounts shall, to the extent satisfied and
deducted from payments to be made from (i) the one hundred percent (100%) of the
shares of Netzee Common Stock delivered by Netzee pursuant to Section 1.5(a)(i)
and (ii) the Earnout Payments, be deemed to be a reduction in the amount of
Netzee Common Stock otherwise payable under this Agreement pursuant to the
Escrow.
(c) Where the Purchaser and Netzee are obligated to
indemnify the Company and the Shareholders under Section 8.2 after the Closing
Date, such indemnity obligation shall be satisfied by payment of cash or
delivery of a certified check in the amount of the indemnity obligation.
8.8 INDEMNIFICATION IS EXCLUSIVE REMEDY. In the absence of fraud,
and except for non-monetary equitable relief, if the Closing occurs,
indemnification pursuant to this Article 8 shall be the sole and exclusive
remedy of the parties for any breach of any representation or warranty contained
in this Agreement.
8.9 CERTAIN LIMITATIONS. Notwithstanding the foregoing in this
Article 8, 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) Except as provided in Sections 8.9(c) and (d), no
indemnification shall be made for breaches of representations and warranties
pursuant to this Article 8 until the total Indemnifiable Damages for which the
Company and the Shareholders, on the one hand, and Purchaser and Netzee, on the
other hand, would be liable exceeds $25,000, in which event the Indemnifying
Party shall be obligated to indemnify to the extent the amount such
Indemnifiable Damages exceed $25,000.
(b) Except as provided in Sections 8.9(c) and (d), no
indemnification shall be made for breaches of representation and warranties
pursuant to this Article 8 to the extent
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Indemnifiable Damages to be paid by the Company and the Shareholders, on the one
hand, exceed the aggregate of the Earnout Payments and 10% of the shares of
Netzee Common Stock described in Section 1.5(a)(i) (or any proceeds therefrom),
or by Purchaser and Netzee, on the other hand, exceed the value of the Earnout
Payments and 10% of the shares of Netzee Common Stock described in Section
1.5(a)(i) as of the Closing Date.
(c) The limitations set forth in Sections 8.9(a) and (b)
shall not apply to Indemnifiable Damages arising out of fraud or intentional
breaches, and the limitations set forth in Section 8.9(a) shall not apply to (a)
breaches of the representations and warranties in Sections 3.1, 3.2, 3.3, 3.8,
3.9, 3.10, 3.12(a), 3.13, 3.14, 3.16, 3.17 and 3.32, or (b) any indemnification
of the Purchaser Indemnified Parties by the Company or the Shareholders pursuant
to Section 8.1(c).
(d) Notwithstanding Section 8.9(b) to the contrary, no
indemnification of the Purchaser Indemnified Parties by the Company or the
Shareholders pursuant to Section 8.1(c) shall exceed the aggregate of the
Earnout Payments and 100% of the shares of Netzee Common Stock described in
Section 1.5(a)(i) (or any proceeds therefrom).
8.10 SUBROGATION. Upon payment in full of any Indemnifiable
Damages, whether such payment is effected by set-off or otherwise, or the
payment of any judgment or settlement with respect to a third party claim, the
Indemnifying Party shall be subrogated to the extent of such payment to the
rights of the Indemnified Party against any person or entity with respect to the
subject matter of such Indemnifiable Damages or third party claim.
8.11 ESCROW. The Escrow Shares shall be delivered by Netzee to U.S.
Bank Trust, National Association, or such other financial institution as may be
agreed upon by the Company and Purchaser (the "ESCROW AGENT"). Purchaser and
Netzee, on the one hand, and the Company and the Shareholders, on the other
hand, shall each pay one-half of the fees payable to the Escrow Agent for
maintaining the escrow (the "ESCROW") established under the Escrow Agreement.
The Escrow Shares (or other property into which the Escrow Shares are converted)
shall be maintained by the Escrow Agent for a period beginning on the Closing
Date and ending at the termination of the Claims Period or such longer period as
provided in the Escrow Agreement. The Escrow shall be available to satisfy the
indemnification rights of Purchaser Indemnified Parties set forth in Section 8.1
as well as any other obligations of the Company under this Agreement.
ARTICLE 9
COMPANY REPRESENTATIVE.
9.1 APPOINTMENT OF COMPANY REPRESENTATIVE; ACCEPTANCE. All actions
required to be taken by or with respect to the Company in this Agreement shall
be taken by or with respect to the Company Representative. By executing this
Agreement, each Shareholder (notwithstanding any Shareholder's current or future
mental or physical disability or incompetency) hereby irrevocable constitutes
and appoints the Company Representative and his successors, acting as
hereinafter provided, as his attorney-in-fact and agent in his name, place and
▇▇▇▇▇, in connection with the transactions and agreements contemplated by the
Agreement
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and the other Purchase Agreements, and acknowledges that such appointment is
coupled with an interest. The Company Representative hereby (i) accepts his
appointment and authorization to act as the Company Representative on behalf of
the Shareholders as attorney-in-fact and agent on behalf of the Shareholders in
accordance with the terms of this Agreement and (ii) agrees to perform his
obligations under, and otherwise comply with this Section 9.1.
9.2 AUTHORITY. Without limiting the generality of Section 9.1,
each Shareholder by this Agreement fully and completely, hereby:
(a) authorizes the Company Representative to:
(i) dispute or refrain from disputing any claim
made by Purchaser under this Agreement and any of the other Purchase Agreements;
(ii) negotiate and compromise any dispute that
may arise, and to exercise or refrain from exercising remedies available, under
this Agreement and any of the other Purchase Agreements, and to sign any release
or other document with respect to such dispute or remedy;
(iii) give such instructions and do such other
things and refrain from doing such other things as the Company Representative
shall deem necessary or appropriate to carry out the provisions of this
Agreement and any of the other Purchase Agreements; and
(iv) agree in his discretion with Purchaser to
amend this Agreement and any of the other Purchase Agreements to which a
Shareholder may be bound at any time and from time to time; and
(b) agrees to be bound by all agreements and
determinations made by and documents executed and delivered by the Company
Representative under this Agreement and any of the other Purchase Agreements.
9.3 ACTIONS. Each of the Shareholders hereby expressly
acknowledges and agrees that the Company Representative is authorized to act on
his behalf, notwithstanding any dispute or disagreement between the
Shareholders, and that Purchaser, Netzee and any other person or entity shall be
entitled to rely on any and all actions taken by the Company Representative
under this Agreement or any of the other Purchase Agreements without any
liability to, or obligation to inquire of, any of the Shareholders. Purchaser,
Netzee and any other person or entity is expressly authorized to rely on the
genuineness of the signatures of the Company Representative, and upon receipt of
any writing that reasonably appears to have been signed by the Company
Representative, Purchaser, Netzee and any other person or entity may act upon
the same without any further duty of inquiry as to the genuineness of the
writing.
9.4 SUCCESSORS. If ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. ceases to function in
his capacity as the Company Representative for any reason whatsoever, then
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ shall be appointed as his successor, and if ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇ ceases to function in such capacity for any reason whatsoever, then the
Shareholders, by action of the persons who formerly held a
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majority of the shares of Company Common Stock immediately prior to the
Liquidation, shall have the right to appoint his successor; provided, however,
that if for any reason no successor has been appointed pursuant to the foregoing
within thirty (30) days, then Purchaser shall have the right to appoint a
successor.
9.5 EFFECTIVENESS. The authorizations of the Company
Representative shall be effective until his rights and obligations under this
Agreement terminate by virtue of the termination of any and all obligations of
the Shareholders to Purchaser and Netzee and of Purchaser and Netzee to the
Shareholders under this Agreement.
ARTICLE 10
MISCELLANEOUS
10.1 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.
10.2 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 or Netzee, to:
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: President and Chief Financial Officer
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
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Copy (which shall not constitute notice) to:
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to the Company or the Shareholders, to:
Card Plus, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
Copy (which shall not constitute notice) to:
Holland & Knight LLP
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
(c) If to the Company Representative, to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
c/o ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
or such other addresses and telefax numbers as shall be furnished in writing by
any Party, and any such notice or communications shall be deemed to have been
given as of the next succeeding business day after the date actually sent via
overnight or express courier, five days after mailed and upon telefax
confirmation of receipt to addressee by the sender.
10.3 PARTIES IN INTEREST. This Agreement shall be binding on and
shall inure to the benefit of the Parties hereto, the former shareholders of the
Company following Liquidation, 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, which
consent shall not be unreasonably withheld; 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
Page 51
58
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.
10.4 ENTIRE AGREEMENT. This Agreement, which includes the
disclosure schedules and 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.
10.5 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.
10.6 GOVERNING LAW.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the United States of America and the State of
Georgia, excluding choice of law principles.
(b) Netzee, Purchaser, the Company and the Shareholders
consent to the exclusive jurisdiction and venue of the courts of any county in
the State of Georgia and the United States Federal District Courts of Georgia,
in any judicial proceeding brought to enforce this Agreement and agree that any
forum other than the State of Georgia is an inconvenient forum and that a
lawsuit (or non-compulsory counterclaim) brought in a court of any jurisdiction
other than the State of Georgia should be forthwith dismissed or transferred to
a court located in the State of Georgia.
10.7 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.
10.8 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,
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public or legal holiday, the Party having such right or duty shall have until
5:00 p.m. on the next succeeding regular business day to exercise such right or
to discharge such duty.
[Remainder of Page Intentionally Left Blank.]
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IN WITNESS WHEREOF, Purchaser, the Company and the Shareholders have
caused this Agreement to be executed by their duly authorized officers as of
the day and year first above written.
PURCHASER:
NETZEEPLUS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Vice President and Treasurer
NETZEE:
NETZEE, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Senior Executive Vice President and
Chief Financial Officer
THE COMPANY
CARD PLUS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
---------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
--------------------------------
Title: President
-------------------------------
SHAREHOLDERS:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
--------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
/s/ ▇▇▇▇▇ ▇. BOYLSTON
--------------------------------------
▇▇▇▇▇ ▇. BOYLSTON
61
SCHEDULES
Schedule 1.1 - Purchased Assets
Schedule 1.2(c) - Accounts Receivable
Schedule 1.2(e) - Certain Retained Assets
Schedule 1.3 - Assumed Liabilities/Contracts
Schedule 1.5(a) - Purchase Price
Schedule 1.5(f) Allocation of Purchase Price and Earnout Payments
Schedule 3.1(a) - Organization
Schedule 3.1(b) - Articles of Incorporation and Bylaws
Schedule 3.2 - Capitalization
Schedule 3.3(a) - Company Approvals
Schedule 3.4(a) - Annual Financial Statements
Schedule 3.4(d) - Interim Financial Statements
Schedule 3.4(e) - Changes since December 31, 1999
Schedule 3.6(a) - Absence of Certain Changes or Events
Schedule 3.6(b) - Permitted Actions
Schedule 3.7 - Legal Proceedings
Schedule 3.8 - Taxes and Tax Returns
Schedule 3.8(c) - Extensions of Time
Schedule 3.9 - Employee and Fringe Benefits Plan
Schedule 3.10 - Compliance with Applicable Laws
Schedule 3.11(a) - Material Contracts
Schedule 3.11(b) - Non-Binding Material Contracts
Schedule 3.11(c) - Material Contracts in Default
Schedule 3.12(a) - Permitted Encumbrances
Schedule 3.12(b) - Personal Property
Schedule 3.12(c) - Insurance
Schedule 3.14(a) - Software Programs
Schedule 3.14(b) - Ownership
Schedule 3.14(c) - Procedures for Copyright Protection
Schedule 3.14(d) - Procedures for Trade Secret Protection
Schedule 3.14(e) - Ownership of Software
Schedule 3.14(f) - Absence of Claims
Schedule 3.16 - Third Party Components in Software
Schedule 3.17 - Third Party Interests or Marketing Rights in Software
Schedule 3.19 - Major Vendors and Customers
Schedule 3.20 - Accounts Receivable
Schedule 3.23 - Labor Relations
Schedule 3.24 - Year 2000 Matters
Schedule 3.25 - Assignment Provisions
Schedule 4.3(a) - Necessary Purchaser Authorizations
Schedule 5.7 - Transitional Expenses
Schedule 5.20 - Recipients and Terms of Netzee Stock Options Exchanged for Phantom Stock Units
Schedule 5.21 - Recipients and Terms of Options Granted to Employees of the Company
Schedule 5.22(a) - Company Employee Hourly Rates
62
EXHIBITS
Exhibit A - Form of Opinion of Company's Counsel
Exhibit B-1 - Form of Certificate Required by Purchaser
Exhibit B-2 - Form of Certificate Required by Purchaser
Exhibit C - Form of Non-Competition, Non-Solicitation and Confidentiality
Agreement
Exhibit D - Form of Assignment of Work Product Agreement
Exhibit E - Form of Escrow Agreement
Exhibit F - Form of Assignment and Assumption Agreement
Exhibit G-1 - Form of Certificate Required by the Company
Exhibit G-2 - Form of Certificate Required by the Company
Exhibit H - Form of Registration Rights Agreement
Exhibit I - Form of Opinion of Purchaser's and Netzee's Counsel
Exhibit J - Form of Phantom Stock Unit Exchange Agreement
Exhibit K - Form of Netzee Stock Option Agreement
63
DEFINED TERMS
ACCREDITED INVESTOR......................................................27
AGREEMENT.................................................................1
ASSIGNMENT AND ASSUMPTION AGREEMENT.......................................2
ASSUMED CONTRACTS.........................................................2
ASSUMED LIABILITIES.......................................................2
AUTHORIZATIONS...........................................................14
AVERAGE PRICE............................................................11
BUSINESS..................................................................1
CLAIMS PERIOD............................................................44
CLOSING...................................................................7
CLOSING DATE..............................................................7
CODE.....................................................................11
COMPANY...................................................................1
COMPANY AFFILIATES.......................................................32
COMPANY APPROVALS........................................................14
COMPANY DISCLOSURE SCHEDULES.............................................11
COMPANY FINANCIAL STATEMENTS.............................................15
COMPANY REPRESENTATIVE....................................................6
CPC......................................................................23
DISCLOSED BY PURCHASER...................................................11
DISPUTES AUDITOR..........................................................6
DOCUMENTATION............................................................23
EARNOUT PAYMENTS..........................................................4
EARNOUT PERIOD............................................................3
EBITDA....................................................................3
EEOC.....................................................................25
64
EMPLOYEE PLANS...........................................................18
EMPLOYEE RETENTION PAYMENT................................................4
EMPLOYMENT AGREEMENT.....................................................39
ENCUMBRANCE..............................................................11
ENVIRONMENTAL LAWS.......................................................22
ERISA AFFILIATE..........................................................18
ESCROW...................................................................48
ESCROW AGENT.............................................................48
ESCROW SHARES.............................................................8
EXCHANGE ACT.............................................................29
GOVERNMENTAL AUTHORITY...................................................12
INCLUDING................................................................11
INDEMNIFIABLE DAMAGES....................................................43
INDEMNIFIED PARTY........................................................44
INDEMNIFYING PARTY.......................................................44
IRS......................................................................17
KNOWLEDGE................................................................12
LAWS.....................................................................14
LIABILITIES..............................................................15
LIABLE PARTY.............................................................44
LICENSES.................................................................20
LIQUIDATION..............................................................28
MATERIAL ADVERSE EFFECT..................................................12
MATERIAL CONTRACTS.......................................................20
MEDINTERFACE..............................................................1
MILLENNIUM COMPLIANT.....................................................26
MULTI-EMPLOYER PLAN......................................................18
NETZEE STOCK OPTIONS.....................................................36
65
NLRB.....................................................................25
NOTICE OF CLAIM..........................................................44
PARTIES...................................................................1
PBGC.....................................................................18
PENSION/PROFIT-SHARING PLAN..............................................18
PERMITTED ENCUMBRANCES...................................................21
PERSON...................................................................12
PHANTOM STOCK UNITS......................................................36
PLAN.....................................................................36
PROCESSES................................................................26
PURCHASE AGREEMENTS......................................................51
PURCHASE PRICE............................................................2
PURCHASED ASSETS..........................................................1
PURCHASER.................................................................1
PURCHASER COMMON STOCK...................................................28
PURCHASER INDEMNIFIED PARTIES............................................43
REGULATION D.............................................................27
RETAINED ASSETS...........................................................1
RETAINED LIABILITIES......................................................2
RETURNS..................................................................16
REVENUE EARNOUT PAYMENT...................................................3
SEC......................................................................18
SEC FILINGS..............................................................29
SECURITIES ACT............................................................9
SECURITIES LAWS..........................................................26
SHAREHOLDERS.............................................................12
SOFTWARE.................................................................23
SOFTWARE PROGRAMS........................................................23
66
STATE ACTS................................................................9
SUBSIDIARY...............................................................12
TAX......................................................................16
TAXES....................................................................16
THREATENED...............................................................12
WARN.....................................................................35
WELFARE PLAN.............................................................18