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EXHIBIT 2.8
ASSET PURCHASE AGREEMENT
DECEMBER 15, 1999
BY AND BETWEEN
NETZEE, INC.,
NETCAL, INC.
(GEORGIA CORPORATIONS)
AND
DPSC SOFTWARE, INC.
(A CALIFORNIA CORPORATION)
AND
SHAREHOLDERS OF SELLER
(____________ RESIDENTS)
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TABLE OF CONTENTS
Page
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ARTICLE 1 - SALE AND PURCHASE.....................................................................................1
(a) Purchase and Sale; Included Assets..............................................................1
(b) Intent of the Parties...........................................................................4
(c) Title to and Transfer of Assets.................................................................4
(d) Excluded Assets.................................................................................4
ARTICLE 2 - ASSUMPTION OF LIABILITIES BY THE PURCHASER............................................................4
(a) Assumed Liabilities.............................................................................4
(i) Trade Payables..............................................................................5
(ii) Contracts..................................................................................5
(iii) Other Accrued Liabilities.................................................................5
(iv) Certain Employee Benefits..................................................................5
(b) Liabilities Not Assumed.........................................................................5
ARTICLE 3 - PURCHASE PRICE AND PAYMENT............................................................................7
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES OF THE SELLER AND THE SHAREHOLDERS.....................................9
(a) Corporate Existence.............................................................................9
(b) Corporate Power; Authorization; Enforceable Obligations.........................................9
(c) No Conflict.....................................................................................9
(d) Required Government Consents...................................................................10
(e) Required Contract Consents.....................................................................10
(f) Title to Tangible Property.....................................................................10
(g) Condition of Property..........................................................................10
(h) Inventory......................................................................................11
(i) Intellectual Property..........................................................................11
(i) Ownership..................................................................................11
(ii) Procedures for Copyright Protection.......................................................11
(iii) Procedures for Trade Secret Protection...................................................11
(iv) Ownership of Software.....................................................................12
(v) Absence of Claims..........................................................................12
(vi) Adequacy of Technical Documentation.......................................................12
(vii) Third-Party Components in Software.......................................................12
(viii) Third-Party Interests or Marketing Rights in Software...................................12
(j) Contracts - General............................................................................13
(k) Leases.........................................................................................13
(l) Accounts Receivable............................................................................13
(m) Financial Statements...........................................................................13
(n) Undisclosed Liabilities........................................................................13
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(o) Conduct of Business............................................................................14
(i) Ordinary Course of Business: No Removal or Disposal of Assets.............................14
(ii) No Material Adverse Change................................................................14
(iii) Absence of Particular Events.............................................................14
(p) Major Vendors and Customers....................................................................14
(q) Litigation.....................................................................................14
(r) Court Orders, Decrees, and Laws................................................................15
(i) Compliance With Laws.......................................................................15
(ii) Adequacy of Authorizations................................................................15
(iii) Environmental Matters....................................................................15
(s) Taxes and Tax Returns..........................................................................16
(t) Personnel and Compensation.....................................................................17
(i) List of Personnel..........................................................................17
(ii) Compensation, etc.........................................................................17
(iii) Retirement Plans.........................................................................17
(iv) Pension Benefit Guaranty Corporation......................................................17
(v) No Accumulated Deficiency..................................................................17
(vi) Submission to Purchaser for Review........................................................18
(vii) Multi-employer Plan......................................................................18
(viii) Adequate Reserves for Welfare Plans.....................................................18
(ix) Compliance with Laws......................................................................18
(u) Insurance Policies.............................................................................18
(v) Sufficiency of Rights..........................................................................19
(w) Broker's or Finder's Fees......................................................................19
(x) Related-Party Transactions.....................................................................19
(y) Bank Accounts..................................................................................19
(z) Year 2000 Matters..............................................................................19
(aa) No Fraudulent Transfer.........................................................................20
(bb) Disclosure.....................................................................................20
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS.......................................................20
(a) Securities Act Compliance......................................................................20
(b) Access to Information..........................................................................21
(c) Experience; Investment.........................................................................21
(d) No Prior Convictions...........................................................................22
(e) Tax Advice.....................................................................................22
(f) Shareholders' Authority........................................................................22
(g) Ownership......................................................................................22
(h) No Options, Etc................................................................................22
(i) Waiver of Dissenter's Rights...................................................................23
ARTICLE 6 - REPRESENTATIONS AND WARRANTIES OF PARENT.............................................................23
(a) Corporate Existence............................................................................23
(b) Corporate Power and Authorization..............................................................23
(c) Validity of Contemplated Transactions, etc.....................................................23
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(d) Broker's or Finder's Fees......................................................................24
(e) Capitalization.................................................................................24
(f) SEC Reports....................................................................................24
(g) Compliance with Applicable Laws................................................................24
(h) Litigation.....................................................................................24
(i) Required Government Consents...................................................................25
(j) Required Contract Consents.....................................................................25
(k) Obligations of Purchaser.......................................................................25
(l) No Material Adverse Change.....................................................................25
(m) Disclosure.....................................................................................25
ARTICLE 7 - CONDITIONS TO CLOSING................................................................................26
(a) Conditions to Seller's Obligations.............................................................26
(b) Conditions to Parent's and Purchaser's Obligations.............................................26
ARTICLE 8 - CLOSING 30...........................................................................................29
(a) Closing........................................................................................29
(b) Actions at Closing.............................................................................29
(i) Copies of Consents.........................................................................29
(ii) Conveyance Instruments....................................................................29
(iii) Assumption Agreement(s) .................................................................29
(iv) Legal Opinions............................................................................29
(v) Lease......................................................................................29
(vi) Post-Closing Agreement....................................................................29
(c) Delivery of Purchase Price.....................................................................29
(d) Further Assurances.............................................................................29
ARTICLE 9 - COVENANTS OF PARENT, PURCHASER AND SELLER FOLLOWING CLOSING..........................................30
(a) Purchaser's Cooperation........................................................................30
(b) Allocation of Purchase Price...................................................................30
(c) Maintenance of Books and Records...............................................................30
(d) UCC Matters....................................................................................30
(e) Covenant Not to Compete........................................................................31
(f) Nonsolicitation of Personnel...................................................................31
(g) Maintain Corporate Status......................................................................31
(h) Reservation of Shares..........................................................................31
ARTICLE 10 - INDEMNIFICATION.....................................................................................31
(a) Indemnification by Seller and Shareholders.....................................................31
(i) Breach of Obligation.......................................................................32
(ii) Excluded Liabilities......................................................................32
(iii) Failure to Obtain Consents...............................................................32
(iv) Violations of Fraudulent Conveyance Laws..................................................32
(v) Incidental Matters.........................................................................32
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(b) Indemnification by Purchaser...................................................................32
(i) Breach of Obligation.......................................................................32
(ii) Assumed Liabilities.......................................................................32
(iii) Post-Closing Operations..................................................................32
(c) Notice of Claim................................................................................32
(d) Defense........................................................................................33
(e) Manner of Indemnification by Seller............................................................33
(f) Limitations....................................................................................33
(i) Threshold..................................................................................33
(ii) Time of Assertion.........................................................................33
(iii) Exclusive Remedy.........................................................................34
(g) Recovery of Attorney Fees For Frivolous Actions................................................34
(h) Arbitration....................................................................................34
ARTICLE 11 - CONFIDENTIALITY.....................................................................................34
ARTICLE 12 - GENERAL RELEASE AND COVENANT NOT TO XXX.............................................................34
ARTICLE 13 - MISCELLANEOUS.......................................................................................35
(a) Sales, Transfer and Documentary Taxes, etc.....................................................35
(b) Expenses.......................................................................................35
(c) Contents of Agreement; Parties in Interest; etc................................................35
(d) Waiver.........................................................................................36
(e) Notices........................................................................................36
(f) Georgia Law to Govern..........................................................................37
(g) No Benefit to Others...........................................................................37
(h) Headings, Gender and "Person"..................................................................37
(i) Schedules and Exhibits.........................................................................38
(j) Severability...................................................................................38
(k) Counterparts...................................................................................38
(m) Assistance of Counsel..........................................................................38
(n) Time of the Essence............................................................................38
(o) Execution by Facsimile.........................................................................38
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "AGREEMENT"), is made and entered
into as of the 15th day of December, 1999, by and between Netzee, Inc., a
Georgia corporation (the "PARENT"), Netcal, Inc., a Georgia corporation (the
"PURCHASER"), DPSC Software, Inc., a California corporation (the "SELLER") and
the shareholders of the Seller named on the signatures pages hereto
(collectively, the "SHAREHOLDERS").
RECITALS
The Seller is engaged principally in the business of developing,
marketing and distributing software and providing related products and services
to financial institutions, including marketing and distributing internet banking
software and other products of third parties (collectively, the "BUSINESS").
The Purchaser desires to purchase, and the Seller desires to sell, all
of the assets of Seller associated with the Business, and Seller desires to
transfer, and Purchaser desires to assume, certain liabilities of Seller arising
in connection with the Business, all upon the terms and conditions and subject
to the limited exceptions set forth herein.
The boards of directors of Parent, Purchaser and Seller, as well as the
Shareholders and the sole shareholder of Purchaser, have approved the
transactions described in this Agreement.
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants, and agreements of the parties hereinafter set forth, the
parties hereto, intending to be legally bound, do hereby agree as follows:
ARTICLE 1
SALE AND PURCHASE
(a) Purchase and Sale; Included Assets. Upon the terms and subject
to the conditions of this Agreement, Purchaser agrees to purchase, accept, and
acquire from Seller, and Seller agrees to sell, transfer, assign, convey, and
deliver to Purchaser, at the Closing (as defined in Section 8(a) hereof), all
right, title, and interest in and to all of the rights and assets, real,
personal, and mixed, tangible or intangible, used directly or indirectly in or
otherwise relating primarily to the Business, whether now owned or hereafter
acquired, as owned or held by Seller, except as expressly excluded by Section
1(d) below. Subject to such express exclusion and qualification, the foregoing
rights and assets shall hereinafter collectively be referred to as the "ASSETS."
As used herein, the "DETERMINATION DATE" means the date of this Agreement, or if
another date is specifically identified in a Schedule as the Determination Date
for purposes of the Assets described in such Schedule, such other specified
date. Without in any way limiting the
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generality of the foregoing, the Assets shall include all of Seller's right,
title and interest in and to the following, wherever located:
(i) All accounts, accounts receivable, notes, notes
receivable, instruments, drafts, documents, chattel paper and other receivables
and rights to the payment of money or receipt of other benefit with respect to
the Business which remains uncollected or unreceived on the Closing Date (as
defined in Section 8(a) hereof), whether or not evidenced by a writing or
reflected in Seller's financial statements provided to Purchaser and disclosed
in Schedule 4(m) (the "ACCOUNTS RECEIVABLE") including the Accounts Receivable
disclosed in Schedule 1(a)(i).
(ii) All of the Seller's service, license, marketing and
other similar agreements and sales contracts used directly or indirectly in or
otherwise relating primarily to the Business (the "LICENSE AGREEMENTS"),
including, without limitation, the License Agreements disclosed in Schedule
1(a)(ii);
(iii) All of Seller's fixed assets, goods, equipment and
other property used directly or indirectly in or otherwise relating primarily to
the Business (the "EQUIPMENT"), including, without limitation, the Equipment
disclosed in Schedule 1(a)(iii);
(iv) All inventories of Seller and all unused or reusable
materials, work in process, damaged or unfinished goods and supplies, in each
case to the extent used directly or indirectly in or otherwise relating
primarily to the Business (the "INVENTORY"). As of the Determination Date, the
Inventory consists of the Inventory disclosed in Schedule 1(a)(iv);
(v) All patents, trademarks, service marks, trade names,
domain names, copyrights and general intangibles (including registrations,
licenses, and applications pertaining thereto); all technologies, methods,
formulations, data bases, trade secrets, know-how, inventions and other
intellectual property now existing or under development; all internet domain
names and registrations, including "xxx.xxxxxxxxxxxx.xxx"; all software,
programs, databases and other intellectual property rights, whether owned or
leased, pursuant to which Seller operates the Business and its website at
xxx.xxxxxxxxxxxx.xxx; and all computer software (including technical
documentation and user reference manuals and related object and source codes),
in each case as used directly or indirectly in or otherwise relating primarily
to the Business, including, but not limited to, the software and other
intellectual property disclosed in Schedule 1(a)(v) (collectively, the
"INTELLECTUAL PROPERTY");
(vi) All office furniture and fixtures used directly or
indirectly in or otherwise relating primarily to the Business (the "OFFICE
FURNITURE"). As of the Determination Date, the Office Furniture consists of all
items disclosed in Schedule 1(a)(vi);
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(vii) The entire leasehold, rental or other interest
arising under or pursuant to leases of:
(A) real property, including buildings, structures,
and other improvements located thereon, fixtures contained therein, and
appurtenances thereto, and easements and other rights relative thereto;
(B) equipment, including computer hardware and
associated telecommunications equipment, media, and tools;
(C) office furniture; and
(D) other personalty,
in each case as used directly or indirectly in or otherwise relating
primarily to the Business (the "LEASES"). As of the Determination Date,
the Leases consist of all leases disclosed in Schedule 1(a)(vii);
(viii) All contracts, agreements, licenses, commitments,
arrangements, and permissions entered into in connection with or otherwise
relating primarily to the Business (the "GENERAL CONTRACTS"), which items are
disclosed in Schedule 1(a)(viii), to the extent not otherwise classified as
License Agreements, Leases or Insurance Policies (as defined herein);
(ix) All business and marketing records, including
accounting and operating records, asset ledgers, inventory records, reports,
budgets, personnel records, payroll records, customer lists, copies of
employment and consulting agreements, supplier lists, information and data
respecting leased or owned equipment, files, correspondence and mailing lists,
advertising materials and brochures, and other business records used directly or
indirectly in or otherwise relating primarily to the Business, in whatever form
they exist (the "BUSINESS RECORDS");
(x) All governmental approvals, authorizations,
certifications, consents, variances, permissions, licenses, and permits to or
from, or filings, notices, or recordings to or with, U.S. federal, state, and/or
local governmental authorities as well as states and jurisdictions outside of
the U.S. (the "AUTHORIZATIONS"), as used directly or indirectly in or otherwise
relating primarily to the Business ,but subject, as to the reassignability to
Purchaser, to the procurement of the Required Government Consents (as defined
herein). As of the Determination Date, the Authorizations consist of the items
disclosed in Schedule 1(a)(x);
(xi) The deposits, deposit accounts, prepaid expense
items, and investments that are disclosed in Schedule 1(a)(xi) plus all other
cash, cash equivalents, deposits, deposit accounts, and investments, and all
other products and proceeds of any Assets, arising from the Business on or after
the Determination Date;
(xii) All insurance and reinsurance, surety, bonding, or
indemnity policies, binders, or contracts, and the benefits of any prior
insurance coverage to the extent still available,
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as established or obtained with respect to the Business or the Assets (the
"INSURANCE POLICIES"). As of the Determination Date, the Insurance Policies
consist of the items disclosed in Schedule 1(a)(xii); and
(xiii) All claims Seller may have against any person
relating to or arising from the Assets or the Business, including rights to
recoveries for damages or defective goods, to refunds, insurance claims, and
choses in action ("SELLER CLAIMS"), but not including any Seller Claims under or
in connection with the Excluded Assets.
(b) Intent of the Parties. Although the Schedules to this
Agreement are intended to be complete, to the extent any rights or assets of
Seller primarily relate to the Business or are otherwise necessary for the
ownership and use of the Assets and the conduct of the Business, but are not
properly itemized or do not appear in the applicable Schedules where required,
then, unless this Agreement otherwise provides directly for Purchaser to provide
for or obtain such rights or assets in a different way or unless such rights or
assets are specifically included in Excluded Assets, the general language of
Section 1(a) shall govern and such rights and assets shall nonetheless be deemed
transferred to Purchaser at Closing.
(c) Title to and Transfer of Assets. The Seller agrees to convey
to the Purchaser fee simple, good, marketable and unencumbered lien free title
to all of the Assets by appropriate documents of transfer and sale, including
such bills of sale, endorsements and assignments, and other good and sufficient
instruments of bargain and sale, in such form as shall be approved and deemed
appropriate by legal counsel for the Purchaser, and which documents shall
contain covenants of warranty as to title, and which documents shall, in the
opinion of Purchaser's counsel, be sufficient to vest in Purchaser good and
marketable title to the Assets.
(d) Excluded Assets. Notwithstanding the foregoing, the Assets
shall not include any of the following: certificate of incorporation, minute
books, stock books, tax returns, books of account or other records having to do
with corporate organization of Seller; the rights which accrue or will accrue to
Seller under this Agreement; the rights to any of Seller's claims for any
federal, state, local, or foreign tax refunds; or the assets, properties or
rights disclosed in Schedule 1(d) (the "EXCLUDED ASSETS").
ARTICLE 2
ASSUMPTION OF LIABILITIES BY THE PURCHASER
(a) Assumed Liabilities. At and after the Closing, the Purchaser
shall assume and pay in a timely fashion and be responsible for only the
specific obligations and liabilities of the Seller (the "LIABILITIES") that
arise out of the Business or the Assets and that are specifically identified on
Schedule 2(a) (the "ASSUMED LIABILITIES") or are specifically assumed by any
other covenant, agreement or indemnity of Purchaser in this Agreement or the
other Purchase Agreements (as defined in Section 13(c) below) and instruments to
be executed and delivered by Purchaser in connection with this Agreement.
Subject to the express exclusions disclosed in Section 2(b), the Assumed
Liabilities shall include the following:
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(i) Trade Payables. All accrued trade payables of Seller
arising out of the Business, other than payables owed to the affiliates of
Seller, disclosed in Schedule 2(a)(i);
(ii) Contracts. All payment and performance obligations
arising after the Closing Date and relating to the License Agreements, Leases
and the General Contracts, except to the extent attributable to (A) any breach
or default by Seller under any of the same on or before the Determination Date,
or (B) any material liability or obligation outside the ordinary course of
business not disclosed by Seller pursuant to this Agreement, insofar as
disclosure thereof is required hereunder and Purchaser does not receive property
or services of substantially equivalent value in respect of such liability or
obligation;
(iii) Other Accrued Liabilities. Any other liabilities
pertaining to the Assets recorded on the Seller's most recent balance sheet
delivered to Purchaser and which otherwise relate primarily to the Business,
including any refunds of prepaid amounts owed to customers of the Seller who
terminate their contracts for any reason other than the breach by the Seller of
any agreement with such customer; provided, however, that refunds of such
amounts in excess of $15,000 in the aggregate shall constitute Excluded
Liabilities (as defined below); and
(iv) Certain Employee Benefits. To the extent that an
employee of Seller is offered and accepts employment by Purchaser
contemporaneously with Closing, the accrued but unpaid payroll amounts due to
such employee or a plan administrator for the account of such employee under
disclosed employee benefit plans generally offered to all of Seller's employees
for the current payroll period ending on or after the Closing Date, which Seller
represents are not more than $75,000 in the aggregate. In addition, the
Purchaser agrees to assume a maximum total of $ 60,000 of accrued but unpaid
bonus amounts due to employees of the Seller for service during 1999 but not yet
paid.
(b) Liabilities Not Assumed. Purchaser shall not assume or be
responsible for any of the following liabilities or obligations (the "EXCLUDED
LIABILITIES"):
(i) any product liability or similar claim for injury to
person, business or property, regardless of when made or asserted, which arises
out of or is based upon any express or implied representation, warranty,
agreement or guarantee made by Seller, or alleged to have been made by Seller,
or which is imposed or asserted to be imposed by operation of law, in connection
with any service performed or product sold or leased by or on behalf of Seller
on or prior to the Closing, including without limitation any claim relating to
any product delivered in connection with the performance of such service and any
claim seeking recovery for consequential damages, lost revenue or income;
(ii) sales or use taxes, recapture taxes, other taxes,
assessments and penalties (A) payable with respect to the Business, Assets,
properties or operations of Seller or any member of any affiliated group of
which Seller is a member for any period prior to the date hereof, or (B)
incident to or arising as a consequence of the negotiation or consummation by
Seller, or any member of any affiliated group of which Seller is a member, of
this Agreement
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and the transactions contemplated hereby. All sales taxes, transfer taxes,
documentary stamp taxes and other similar assessments relating to the sale and
transfer of the Assets pursuant to this Agreement shall be paid by the
Purchaser;
(iii) any liability or obligation under or in connection
with the Excluded Assets;
(iv) any liability or obligation of Seller of any kind,
known or unknown, contingent or otherwise, not either enumerated as an Assumed
Liability in Section 2(a) or resulting from any other covenant, agreement, or
indemnity of Seller in this Agreement or the other Purchase Agreements and
instruments to be executed and delivered by Seller;
(v) any liability or obligation resulting from violations
of any applicable laws or regulations by Seller prior to the Determination Date
or from infringement of third-party rights or interests;
(vi) except to the extent set forth above, any employee
liabilities relating to present and past employees of the Business with respect
to plans, programs, policies, commitments, and other benefit entitlement
established or existing on or prior to Closing (whether or not such liabilities
are accrued or payable at Closing, and whether or not such liabilities are
contingent in nature), including
(A) any liability or obligation for workers'
compensation;
(B) any current or future liabilities to employees
retiring on, before, or after Closing, and their dependents (excluding
employees employed by Purchaser after the Closing and who subsequently
retire);
(C) any current or future liabilities for benefits
that may have been accrued or earned by any employees associated with
the Business on or before Closing under any pension plans relating to
service prior to the Closing Date;
(D) any current or future liabilities for claims
incurred prior to Closing and related expenses with respect to any
employees associated with the Business under any welfare or disability
plans established or existing at or prior to Closing, regardless of
when filed with Purchaser, Seller, or the claims administrator for any
such plan;
(E) any retrospective premium on pension, savings,
thrift, or profit-sharing plan contribution relating to any employees
associated with the Business incurred or accrued prior to the Closing
Date, regardless of when invoiced or recorded; and
(F) any monetary liability for severance payments
that may arise at any time in favor of any of Seller's employees under
any plan, program, policy, commitment, or any other benefit
entitlement, provided such monetary liability relates to periods of
employment prior to the Closing;
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(vii) any Litigation (as defined herein) pending or
threatened against Seller or the Assets, if the cause of action or activities
giving rise to such litigation arise or accrue prior to the Closing Date;
(viii) any liability or obligation that under generally
accepted accounting principles ("GAAP") would be required to be accrued and
reflected in Seller's most recent balance sheet furnished to Purchaser before
Closing, but is not included therein, regardless of the materiality of such
items individually or in the aggregate;
(ix) any liability or obligation of Seller arising or
incurred in connection with the negotiation, preparation and execution of this
Agreement and the transactions contemplated hereby and fees and expenses of
counsel, accountants and other experts;
(x) any liability or obligation of Seller arising or
incurred in connection with any securities of the Seller, including, but not
limited to, the offer or sale of any securities by Seller, the repurchase by the
Seller of any its securities from its shareholders, and the issuance or payment
of any distributions and/or dividends by Seller to its shareholders;
(xi) any liability or obligation of Seller arising or
incurred in connection with the letter of intent dated February 19, 1999 by and
among Xxxx Xxxxx & Associates, Inc. and Seller or the Agreement and Plan of
Merger dated on or about April 1, 1999 by and among Xxxx Xxxxx & Associates,
Inc., XXX Acquisition Corp. and Seller and any other agreements or documents
executed by Seller in connection therewith; and
(xii) any liability or obligation of Seller arising or
incurred in connection with any non-disclosure, confidentiality, no-shop,
standstill or similar agreements which the Seller or any of the Shareholders may
have entered into prior to the date hereof.
ARTICLE 3
PURCHASE PRICE AND PAYMENT
(a) The total purchase price for all of the Assets shall be (1)
$18,500,000 in cash (the "CASH PORTION"), plus (2) 525,000 shares of common
stock, without par value ("COMMON STOCK"), of the Parent (the "COMMON STOCK
PORTION"), plus (3) 500,000 shares of Series A 8% Convertible Preferred Stock,
without par value ("PREFERRED STOCK") of Parent (the "PREFERRED STOCK PORTION")
plus (4) Purchaser's assumption of the Assumed Liabilities (together with the
Cash Portion, the Common Stock Portion and the Preferred Stock Portion, the
"PURCHASE PRICE"). The total Cash Portion shall be paid at the Closing by wire
transfer of same-day funds to an account designated by Seller.
(b) The parties agree that the Purchase Price represents the fair
market value of the Assets. The Purchase Price shall be allocated among the
Assets acquired hereunder as disclosed in Schedule 3. Seller, Shareholders,
Parent and Purchaser each hereby covenant and
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agree that it will not take a position on any income tax return, before any
governmental agency charged with the collection of any income tax, or in any
judicial proceeding that is in any way inconsistent with the terms of this
Article 3.
(c) On the Closing Date, Purchaser shall deliver to the escrow
agent set forth in the Escrow Agreement in the form of Exhibit 3(c) hereto
("ESCROW AGREEMENT") (1) share certificates representing 295,000 shares of
Common Stock and 150,000 shares of Preferred Stock (together, the "ESCROW
AMOUNT") for the escrow established pursuant to the Escrow Agreement. The
amounts placed in escrow include 175,000 shares of Common Stock (the "OTS
PORTION") to be released to Seller upon assignment (including obtaining all
Required Government Consents) to Purchaser of the OTS Contract (as defined
herein), in accordance with the terms of the Escrow Agreement and, if such
assignment of the OTS Contract to Purchaser does not occur during 2000, the OTS
Portion (or proceeds thereof) shall be released from the escrow to the
Purchaser.
(d) The shares of Common Stock and Preferred Stock to be delivered
in connection with this Agreement will be issued in a transaction exempt from
registration under the Securities Act of 1933, as amended (the "SECURITIES
ACT"), by reason of Section 4(2) thereof, Regulation D promulgated thereunder,
or other private offering exemptions, and Purchaser and Parent are relying on
the representations of the Seller and the Shareholders with respect to such
exemptions. Seller and each Shareholder understand and agree that stop transfer
instructions with respect to the shares of Common Stock and Preferred Stock
received by Seller pursuant to this Agreement will be given to Parent's transfer
agent and that there will be placed on the certificates for such shares a legend
stating in substance as follows:
The securities represented hereby have not been registered
under the Securities Act of 1933, as amended, 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 an exemption from such
registration is available.
The foregoing legends will also be placed on any certificate representing
securities issued subsequent to the original issuance of the Common Stock or
Preferred Stock pursuant to this Agreement as a result of any transfer of such
shares or any stock dividend, stock split or other recapitalization as long as
the Common Stock or Preferred Stock issued to the Seller pursuant to this
Agreement has not been transferred in such manner to justify the removal of the
legend therefrom.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE SELLER AND THE
SHAREHOLDERS
The Seller and the Shareholders hereby represent and warrant, jointly
and severally, to Parent and Purchaser that, except as set forth on the
disclosure schedules attached hereto, each of which exceptions shall
specifically identify the relevant subsection hereof to which it relates, as
follows:
(a) Corporate Existence. Seller is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of California. Seller has the corporate power and authority to conduct the
Business and to own and lease all of its properties and assets (including the
Assets) and is duly qualified or licensed to do business and is in good standing
under the laws of each jurisdiction where such qualification is required, except
where the failure to be so qualified would not have a material adverse effect on
its business, operations, properties, assets or condition (financial or
otherwise) (a "MATERIAL ADVERSE EFFECT"). The Seller does not own, directly or
indirectly, any equity or other interest in any corporation, company,
association, partnership, joint venture, or other entity. DPSC Internet, Inc.
has been dissolved and is no longer a validly existing corporation. The Seller
has done business only under its corporate name and DPSC Internet, Inc. for the
five (5) years prior to the Closing Date. Seller has filed all documents
necessary for the dissolution of DPSC Internet, Inc. DPSC Internet, Inc. does
not now own, nor has it ever owned, any of the Assets or conducted any
operations related to the Business.
(b) Corporate Power; Authorization; Enforceable Obligations.
Seller has the corporate power and authority, and the Shareholders have the
power and authority, to execute and deliver this Agreement and the other
Purchase Agreements and instruments to be executed and delivered by them in
connection with the transactions contemplated hereby and thereby and to perform
their obligations hereunder and thereunder. Seller and Shareholders have taken
all necessary action (corporate action in the case of Seller) to authorize the
execution and delivery of this Agreement and such other agreements and
instruments and the consummation of the transactions contemplated hereby and
thereby. This Agreement is, and the other agreements and instruments to be
executed and delivered by the Seller and the Shareholders in connection with the
transactions contemplated hereby shall be, the legal, valid, and binding
obligations of the Seller and the Shareholders, enforceable in accordance with
their terms, except as such enforcement may be subject to or limited by
bankruptcy, insolvency, reorganization, moratorium, or other similar laws now or
hereafter in effect and by general principles of equity.
(c) No Conflict. Neither the execution and delivery of this
Agreement and the other Purchase Agreements and instruments to be executed and
delivered in connection with the transactions contemplated hereby or thereby,
nor the consummation of the transactions contemplated hereby or thereby, will
(1) violate any foreign, federal, state, or local law, regulation, ordinance,
zoning requirement, governmental restriction, order, judgment, or decree
(collectively, "LAWS") applicable to the Seller, the Shareholders, the Business,
or the Assets, (2) violate or conflict with any provision of any articles of
incorporation, charter, bylaw or other
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governing or organizational instrument of Seller, or (3) conflict with, result
in the breach of, or constitute a default under any mortgage, indenture,
license, instrument, trust, contract, agreement, or other commitment or
arrangement to which the Seller is a party or by which Seller or any of the
Assets are bound, except where such violation, conflict, breach or default would
not have a Material Adverse Effect on the Business or the Assets.
(d) Required Government Consents. Except for (1) the filing and/or
recording of deeds and other instruments of conveyance, transfer, or assignment
required by federal copyright, patent, or trademark laws or the laws of the U.S.
and non-U.S. jurisdictions and states in which the Assets are located, to occur
upon Closing; (2) any approvals necessary to assign to Purchaser Contract No.
TOT-97-0005/C770005, for the development and distribution of an electronic
software package between the Seller and the Office of Thrift Supervision (the
"OTS CONTRACT"), and (3) the further exceptions disclosed in Schedule 4(d) (the
foregoing items (1) through (3) being referred to herein as the "REQUIRED
GOVERNMENT CONSENTS"), no approval, authorization, certification, consent,
variance, permission, license, or permit to or from, or notice, filing, or
recording to or with, U.S. or non-U.S., federal, state, or local governmental
authorities is necessary for the execution and delivery of this Agreement and
the other Purchase Agreements and instruments to be executed and delivered in
connection with the transactions contemplated hereby or thereby by the Seller or
the Shareholders or the consummation by the Seller or the Shareholders of the
transactions contemplated hereby or thereby, or the ownership and use of the
Assets and the conduct of the Business (including by Purchaser, assuming such
ownership and use is the same as the ownership and use by the Seller).
(e) Required Contract Consents. Except as disclosed in Schedule
4(e) (such scheduled items being referred to herein as the "REQUIRED CONTRACT
CONSENTS"), no approval, authorization, consent, permission, or waiver to or
from, or notice, filing, or recording to or with, any person (other than the
Required Government Consents) is necessary for (1) the execution and delivery of
this Agreement and the other Purchase Agreements and instruments to be executed
and delivered in connection with the transactions contemplated hereby or thereby
by Seller or Shareholders or the consummation by Seller or Shareholders of the
transactions contemplated hereby or thereby; (2) the transfer and assignment to
Purchaser at Closing of the Leases, License Agreements, General Contracts or
Insurance Policies; or (3) the ownership and use of the Assets and the conduct
of the Business (including by Purchaser, assuming such ownership and use is
substantially the same as the ownership and use by the Seller).
(f) Title to Tangible Property. Purchaser at Closing shall obtain
good and marketable title to all of the tangible Assets (i.e., the Equipment,
Inventory, Office Furniture, and Business Records), free and clear of all title
defects, liens, restrictions, claims, charges, security interests, or other
encumbrances of any nature whatsoever, including any mortgages, leases (except
for the Leases disclosed in Schedule 1(a)(vii)), chattel mortgages, conditional
sales contracts, collateral security arrangements, or other title or interest
retention arrangements.
(g) Condition of Property. All of the tangible Assets are in good
operating order, condition, and repair, ordinary wear and tear excepted, and are
suitable for use in the Business in the ordinary course, as presently operated.
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(h) Inventory. All Inventory is of usable quality and includes no
material amount of obsolete or discontinued items or items that cannot be used
by Purchaser in the Business in the ordinary course, consistent with past
practices and uses. All Inventory has been recorded using the "first-in,
first-out" accounting method. Seller maintains Inventory in an amount reasonably
necessary to satisfy delivery or fulfillment obligations under existing customer
orders and contracts.
(i) Intellectual Property. The Intellectual Property includes
certain proprietary application software products and systems which Seller
develops, markets and licenses to financial institutions and other customers
(the "SOFTWARE PROGRAMS"), and in connection therewith the Seller has developed
certain related technical documentation and user reference manuals (the
"DOCUMENTATION"). The Software Programs and the Documentation are collectively
referred to as the "SOFTWARE." The Software Programs are disclosed in Schedule
1(a)(v).
(i) Ownership. Except as set forth in Schedule 4(i)(i),
the Seller owns all of the Intellectual Property and all other proprietary
information used by the Seller in the conduct of the Business. Schedule 1(a)(v)
sets forth all domestic and foreign patents, trademarks, service marks, trade
names and copyrights owned or used by the Seller and all applications therefor
and registrations thereof.
(ii) Procedures for Copyright Protection. Schedule
4(i)(ii) sets forth the form and placement of the proprietary legends and
copyright notices displayed in or on the Software including screen displays. In
no instance has the eligibility of the Software for protection under copyright
law been forfeited to the public domain.
(iii) Procedures for Trade Secret Protection. Neither the
Seller nor any Shareholder has ever disclosed source code for any of the
Software to a third party other than the persons disclosed in Schedule
4(i)(iii), each of which has executed a nondisclosure agreement in favor of the
Seller. The Seller discloses its source code to employees only on a need-to-know
basis in connection with the performance of their duties to the Seller. All
personnel, including employees, agents, consultants, and contractors, who have
contributed to or participated in the conception and development of the
Documentation or Software Programs on behalf of Seller either (1) have been
party to a "work-for-hire" arrangement or agreement with Seller, in accordance
with applicable federal and state law, that has accorded Seller full, effective,
exclusive, and original ownership of all tangible and intangible property
thereby arising, or (2) have executed appropriate instruments of assignment in
favor of Seller as assignee that have conveyed to Seller full, effective, and
exclusive ownership of all tangible and intangible property thereby arising. The
source code and system documentation comprising the Software have at all times
been maintained by the Seller in confidence, and the Seller has not taken (nor
has it failed to take) any action which would be reasonably likely to result in
such source code and system documentation not being protectable as a trade
secret under applicable Laws.
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(iv) Ownership of Software. Except as disclosed in
Schedule 4(i)(iv) and except for independent contractors disclosed in Schedule
4(i)(iii), all persons who have contributed to or participated in the conception
and development of the Software on behalf of the Seller have been full-time
employees of the Seller hired to prepare such works within the scope of
employment. As a consequence, the Seller has all ownership interests in the
Software.
(v) Absence of Claims. Except as disclosed in Schedule
4(i)(v), no claims have been asserted by any person to any rights in the
Software, and to the knowledge of the Seller and the Shareholders, no valid
basis for any such claim exists. To the knowledge of the Seller and the
Shareholders, the use of the Software by the Seller and its licensees does not
infringe on the rights of any person (whether arising under copyright, trade
secret, patent, unfair competition or other Laws that protect intellectual
property rights). To the knowledge of the Seller and the Shareholders, the use
by the Seller of the Intellectual Property does not infringe the rights of any
person, and no claim has been asserted that the use by the Seller of any of the
foregoing infringes the rights of any person. Neither the Seller nor the
Shareholders has received notice of any claim asserted by any person to the
effect that any current or former employee of the Seller has violated the
provisions of any noncompete or nondisclosure agreement with such person, or has
disclosed any proprietary information of such person to the Seller or any third
party.
(vi) Adequacy of Technical Documentation. The Software
includes the source code, system documentation and schematics for all Software
Programs, as well as any programmer comments for documentation and pertinent
commentary or explanation that may be reasonably necessary to render such
materials understandable and usable by a trained computer programmer. The
Software also includes the programs (including compilers), workbenches, tools
and higher level language, if any, used for the development, maintenance and
implementation of the Software Programs.
(vii) Third-Party Components in Software. The Seller has
obtained the right and license to use, copy, modify and distribute any
third-party programming and materials contained in the Software pursuant to the
contracts disclosed in Schedule 4(i)(vii), subject to no further license fee,
royalty or other payment obligations not disclosed in Schedule 4(i)(vii), other
than software maintenance payments customarily associated therewith. The
Software contains no other programming or materials in which any third party
could reasonably claim superior, joint or common ownership, including any right
or license. The Software does not contain derivative works of any programming or
materials not owned in their entirety by the Seller.
(viii) Third-Party Interests or Marketing Rights in
Software. Other than in the ordinary course of business pursuant to the terms of
the agreements listed in Schedule 4(i)(viii), the Seller has not granted,
transferred or assigned any right or interest in the Software to any person.
There are no contracts, agreements, licenses, commitments or arrangements in
effect with respect to the marketing, distribution, licensing or promotion of
the
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Software by any independent salesperson, distributor, sublicensor or other
remarketer or sales organization except as set forth on Schedule 4(i)(viii).
(j) Contracts - General. The License Agreements listed in Schedule
1(a)(ii), the General Contracts disclosed in Schedule 1(a)(viii), and the
Insurance Policies disclosed in Schedule 1(a)(xii) constitute all contracts,
agreements, licenses, and other commitments and arrangements in effect as of the
Determination Date and included in the Assets, other than the Leases addressed
by Section 4(k), that either (1) involve annual expenditure of more than $10,000
or (2) require performance by any party thereto more than six (6) months after
the Closing Date. All such contracts are valid, binding, and enforceable in
accordance with their terms and are in full force and effect. To the best
knowledge of the Seller and the Shareholders, there are no existing defaults by
Seller under any such contracts and no act, event, or omission has occurred
that, whether with or without notice, lapse of time, or both, would constitute a
default thereunder.
(k) Leases. The Leases disclosed in Schedule 1(a)(vii) constitute
all leasing or rental contracts, agreements, and other commitments and
arrangements in effect as of the Determination Date and included in the Assets
that either (1) have an annual rental, in any individual instance, in excess of
$1,000, or (2) remain in effect for a period of twelve (12) months or longer
without allowing Seller (and, following the Closing, Purchaser) to terminate
without penalty for any reason upon the delivery of any required notice. All
Leases are valid, binding, and enforceable in accordance with their terms and
are in full force and effect. To the best knowledge of the Seller and the
Shareholders, there are no existing defaults by Seller thereunder and no act,
event, or omission has occurred that, whether with or without notice, lapse of
time, or both, would constitute a default thereunder.
(l) Accounts Receivable. The Accounts Receivable arose from valid
transactions in the ordinary course of business and no portion of the Accounts
Receivable is subject to counterclaim or setoff. At least 95% of the value of
the Accounts Receivable are collectible in the ordinary course of Seller's
business consistent with past custom and practice (including with respect to
quantity and frequency).
(m) Financial Statements. Schedule 4(m) sets forth unaudited
income statements for Seller for its fiscal years ended June 30, 1997, June 30,
1998 and June 30, 1999 and the five-month period ended November 30, 1999, and an
unaudited balance sheet as of November 30, 1999, each of which have been
prepared in a manner consistent with the principles and procedures employed in
prior periods by Seller (collectively, the "FINANCIAL STATEMENTS"). The
Financial Statements properly reflect all Assets and Assumed Liabilities as are
(or were) then in existence, and the results of operations of Seller for the
periods presented, except for normal year-end adjustments, which are not
material, and the absence of footnotes.
(n) Undisclosed Liabilities. There are no liabilities or
obligations, secured or unsecured (whether absolute, accrued, contingent, or
otherwise, and whether due or to become due), of a nature required by GAAP to be
reflected or reserved against in a balance sheet of the Business, except such
liabilities and obligations that either (1) are accrued and reserved against in
the Financial Statements or (2) have arisen or been incurred in the ordinary
course of business
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since the date of such balance sheet and are reflected and/or accrued and
reserved against in the most recent balance sheet of Seller delivered to
Purchaser at or prior to Closing.
(o) Conduct of Business.
(i) Ordinary Course of Business: No Removal or Disposal
of Assets. Except as disclosed in Schedule 4(o)(i), since November 30, 1999,
Seller has operated the Business in the ordinary course consistent with past
practices, and has not removed or disposed of any assets that were assets of the
Business as of November 30, 1999 except in the ordinary course.
(ii) No Material Adverse Change. Except as disclosed in
Schedule 4(o)(ii), since November 30, 1999, there has been no material adverse
change in the Business or the Assets or in the financial condition, operations,
or prospects of the Business.
(iii) Absence of Particular Events. Except as disclosed in
Schedule 4(o)(iii), since November 30, 1999, Seller has not (1) suffered any
damage or destruction which could cause a Material Adverse Effect on the
Business or the Assets; (2) increased the compensation payable or to become
payable to employees of Seller or declared any bonus; (3) incurred any liability
or obligation relating to the Business other than in the ordinary course
consistent with past practice; (4) made any change in any method, practice, or
principle of accounting involving the Business or the Assets; (5) paid, loaned,
or advanced any monetary amount or other asset to, or sold, transferred, or
leased any asset to, any employee involved in the Business except for normal
compensation involving salary and benefits; (6) made any commitment which is
reasonably likely to cause economic harm to Seller or Purchaser; or (7) agreed
to take any action described in this Section 4(o)(iii); or (8) made any
distribution (including, but not limited to, S-corporation distributions).
(p) Major Vendors and Customers. Schedule 4(p) lists each supplier
of property or services to, and each licensee or customer of, Seller, to whom
Seller paid or billed in the aggregate $5,000 or more during the most recent
fiscal year, together with, in each case, the amount paid or billed during such
period. To the best knowledge of Seller, there is no reason the relationship
with any such person or entity might not be continued by Purchaser, after its
acquisition of the Business, at substantially the same level of business and on
substantially the same terms as Seller experienced during the twelve (12)-month
period preceding the Closing.
(q) Litigation. Except as disclosed in Schedule 4(q), no claim,
action, suit, proceeding, inquiry, hearing, arbitration, administrative
proceeding, patent infringement claim, or investigation (collectively,
"LITIGATION") is pending, or, to Seller's and each of the Shareholder's best
knowledge, threatened against Seller, its present or former directors, officers,
or employees, affecting, involving, or relating to the Business or any of the
Assets. Neither Seller nor any Shareholder knows of any facts or circumstances
that could reasonably be expected to serve as the basis for Litigation against
Seller (or the Purchaser upon acquisition of the Business), its present or
former directors, officers, or employees, affecting, involving, or relating to
the Business or the Assets.
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(r) Court Orders, Decrees, and Laws
(i) Compliance With Laws. There is no outstanding or, to
Seller's and each of the Shareholder's best knowledge, threatened order, writ,
injunction, or decree of any court, governmental agency, or arbitration tribunal
against Seller affecting, involving, or relating to the Business or the Assets.
Seller is not in violation of any Laws affecting, involving, or relating to the
Business or the Assets, except where noncompliance has no Material Adverse
Effect on the Business or the Assets, and Seller has received no notices of any
such alleged violation. The foregoing shall be deemed to include Laws relating
to the patent, copyright, and trademark laws, state trade secret and unfair
competition laws of the U.S. and foreign jurisdictions, and to all other
applicable laws, including equal opportunity, wage and hour, and other
employment matters, and antitrust and trade regulation laws.
(ii) Adequacy of Authorizations. The Authorizations
constitute all approvals, authorizations, certifications, consents, variances,
permissions, licenses, or permits to or from, or filings, notices, or recordings
to or with, U.S. or non-U.S., federal, state, or local governmental authorities
that are required for the ownership and use of the Assets and the conduct of the
Business under all applicable Laws. Seller is in compliance with all material
terms and conditions of such required Authorizations. All of the Authorizations
are in full force and effect, and, to the best of Seller's and each of the
Shareholder's knowledge, no suspension or cancellation of any of them is being
threatened, nor will any of the Authorizations be affected by the consummation
of the transactions described in this Agreement, except to the extent any such
Authorizations are assignable or transferable only upon receipt of the Required
Government Consents. Seller is in compliance with all other applicable
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules, and timetables contained in any Laws relating to or
affecting the Business, except where non-compliance would have no Material
Adverse Effect on the Business or Assets.
(iii) Environmental Matters.
(A) The operations of the Seller forming a part of
the Business comply, and have complied, in all material respects with all
applicable Laws relating to pollution or protection of the environment
("ENVIRONMENTAL LAWS").
(B) The Seller has obtained all environmental, health
and safety Licenses and other authorizations necessary for the operation of the
Business, all of which are valid and in good standing and are not subject to any
modification or revocation proceeding, and the Seller is in compliance in all
material respects with all terms and conditions thereof.
(C) Neither the Seller nor any of the Shareholders
has received any notice of any pending or threatened investigation, proceeding
or claim to the effect that the Seller is or may be liable to any person or
entity, or responsible or potentially responsible for the costs of any remedial
or removal action or other cleanup costs, as a result of noncompliance with any
Environmental Laws or arising out of the presence, generation, storage or
disposal of hazardous waste, including liability under the United States
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Comprehensive Environmental Response, Compensation and Liability Act, as
amended, any state superfund law or any Environmental Law, and, to the best
knowledge of the Seller or any of the Shareholders, there is no past or present
action, activity, condition or circumstance that could be expected to give rise
to any such liability on the part of the Seller to any person or entity or for
any such cleanup costs.
(s) Taxes and Tax Returns. Except as disclosed in Schedule 4(s):
(i) Seller has duly filed all returns, declarations,
reports, information returns and statements ("RETURNS") required to be filed by
it in respect of any United States federal, state or local Taxes and has duly
paid all such Taxes due and payable as finally determined by the applicable
governmental authority, other than Taxes which are being contested in good faith
(and disclosed to Parent in writing). As used in this Agreement, "TAX" or
"TAXES" means and includes any and all taxes, fees, levies, assessments, duties,
tariffs, imposts, and other charges of any kind (together with any and all
interest, penalties, additions to tax and additional amounts imposed with
respect thereto) imposed by any governmental authority, including, without
limitation, foreign, domestic, central, local, state or other jurisdictional
taxes or other charges on or with respect to income, estimated income,
franchises, business, occupation, windfall or other profits, gross receipts,
property, sales, use, capital stock, payroll, employment, social security,
workers' compensation, unemployment compensation, or net worth; taxes or other
charges in the nature of excise, withholding, ad valorem, stamp, transfer, value
added, or gains taxes; license, registration and documentation fees; and customs
duties, tariffs, and similar charges. Seller has established on its books and
records reserves that are reasonably adequate for the payment of all Taxes not
yet due and payable, but that are incurred in respect of the operation of the
Business through such date.
(ii) Neither Seller nor the Shareholders have received any
notice that any of the Returns of the Seller has been examined by the United
States Internal Revenue Service (the "IRS"), or any other United States federal
or state governmental authority within the past six years. There are no audits
or other governmental authority proceedings currently pending, nor any other
disputes pending with respect to, nor, to the knowledge of Seller and the
Shareholders claims asserted for, Taxes upon Seller greater than $250
individually or $10,000 in the aggregate; nor has Seller given any currently
outstanding waivers or comparable consents regarding the application of any
statute of limitations with respect to any Taxes or Returns. There are no Liens
for Taxes upon the Assets of Seller, except for Liens for Taxes not yet due and
payable or Taxes being properly contested. Any Taxes being properly contested
are disclosed in Schedule 4(s)(ii). Seller has complied in all material respects
with all applicable Laws relating to the payment and withholding of Taxes.
(iii) Seller (i) has not requested any extension of time
within which to file any Return which Return has not since been filed; (ii) is
not a party to any agreement providing for the indemnification, allocation or
sharing of Taxes; (iii) is not required to include in income any adjustment by
reason of a voluntary change in accounting method initiated by Seller (nor does
Seller have any knowledge that any governmental authority has proposed any such
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adjustment or change of accounting method); and (iv) has not been a member of an
affiliated group other than one of which Seller was the common parent.
(t) Personnel and Compensation.
(i) List of Personnel. Seller has delivered to Purchaser
a true and complete list of the names and current compensation levels of (1) all
salaried or annual employees and (2) all independent contractors and/or
consultants involved in the Business.
(ii) Compensation, etc. Except as disclosed in Schedule
4(t)(ii), Seller is not subject to, and has no obligation under, any employment,
consulting, or collective bargaining contracts, deferred compensation, pension
(as defined in Section 3(2) of the Employee Retirement Income Security Act
("ERISA")), profit-sharing, bonus, stock option, stock appreciation, stock
purchase, or other nonqualified benefit or compensation commitments, benefit
plans, arrangements, or plans, including any welfare plans (as defined in
Section 3(1) of ERISA), fringe benefit arrangements, or multi-employer plans (as
defined in Section 3(37)(A) of ERISA) of or pertaining to the present or former
employees involved in the Business. To the extent Seller has in effect any of
the foregoing contracts, plans or arrangements, Seller has complied with all of
its obligations thereunder in all material respects.
(iii) Retirement Plans. Schedule 4(t)(iii) identifies all
of the retirement plans, by plan name and plan year, that Seller has established
for the benefit of persons who are or were involved in the Business as of or
prior to the Closing (the "PLANS"). The Plans and their administration are the
sole responsibility of Seller.
(iv) Pension Benefit Guaranty Corporation. No liability to
the Pension Benefit Guaranty Corporation has been incurred with respect to the
Plans that has not been satisfied by the Seller. All premiums due and payable to
the Pension Benefit Guaranty Corporation with respect to the Plans have been
paid. The Pension Benefit Guaranty Corporation has not instituted proceedings to
terminate any of the Plans. To the knowledge of Seller and the Shareholders, no
event has occurred, and there exists no condition or set of circumstances, that
presents a risk that any past or future termination of any of the Plans could
result in liability on the part of the Seller to the Pension Benefit Guaranty
Corporation. No notice of a reportable event (within the meaning of Section
4043(b) of ERISA) has been filed by the plan administrator of any of the Plans
with the Pension Benefit Guaranty Corporation, nor, to the knowledge of the
Seller and the Shareholders, has any such reportable event occurred.
(v) No Accumulated Deficiency. None of the Plans has an
accumulated funding deficiency, as defined in Section 302(a)(2) of ERISA. In
addition, each of the Plans is fully funded such that assets for each Plan equal
or exceed the present value of accrued benefits based on the actuarial
assumptions disclosed in Schedule 4(t)(v), which assumptions include interest
rates, incidence of turnover, and mortality and disability.
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(vi) Submission to Purchaser for Review. All documents,
including plan and trust instruments, annual reports, and actuarial reports,
relating to the Plans for the Plans' most recently ended Plan years, have been
furnished to Purchaser for its review.
(vii) Multi-employer Plan. Neither Seller or any
predecessor in interest thereto, nor any trade or business under common control
with Seller or any predecessor in interest thereto (within the meaning of
Section 414(i) of the Internal Revenue Code), has ever contributed to, and has
no liability with respect to, any pension Plan that is a Multi-employer Plan for
the benefit of employees involved in the Business.
(viii) Adequate Reserves for Welfare Plans. For welfare
Plans (as defined in Section 3(2) of ERISA) disclosed (or required to be
disclosed) in Schedule 4(t)(viii), reserves have been established by Seller or
its insurance companies at least sufficient to pay all claims incurred under the
provisions of such Plans on or prior to the Closing Date. Seller has not
received notice of, nor does it know any basis for, any retrospective premium
charge for claims relating to any period prior to the Closing Date under such
Plans.
(ix) Compliance with Laws. Seller is in compliance with
all applicable Laws respecting employment and employment practices, terms and
conditions of employment and wages and hours, and occupational safety and health
pertaining to the Business and the employees involved in the Business, and is
not engaged in any unfair labor practice within the meaning of Section 8 of the
National Labor Relations Act. There is no unfair labor practice, charge, or
complaint or any other matter against or involving Seller pending or, to the
knowledge of Seller and the Shareholders, threatened before the National Labor
Relations Board or any court of law pertaining to the Business or the employees
involved in the Business. There is no labor strike, dispute, slowdown, or
stoppage pending or, to the knowledge of Seller and the Shareholders, threatened
against Seller pertaining to the Business or the employees involved in the
Business. No certification or decertification question or organizational drive
exists or has existed within the past twelve (12) months respecting the Business
or the employees involved in the Business. Seller has not experienced any
organized work stoppage or other labor difficulty involving the employees of the
Business since Seller's inception. There are no charges, investigations,
administrative proceedings, or formal complaints of discrimination (including
discrimination based upon sex, age, marital status, race, national origin sexual
preference, handicap, or veteran status) pending or, to the knowledge of Seller
and the Shareholders, threatened before the Equal Employment Opportunity
Commission or any federal, state, or local agency or court against Seller
pertaining to the Business or the employees of the Business, and, to the
knowledge of the Seller and the Shareholders, no basis for any such charge,
investigation, administrative proceeding, or complaint exists. There have been
no audits of the equal employment opportunity practices of Seller pertaining to
the Business or the employees involved in the Business.
(u) Insurance Policies. Schedule 1(a)(xii) lists all Insurance
Policies relating to the Business or the Assets in force as of the Determination
Date, naming Seller as an insured or beneficiary or as a loss-payable payee or
for which Seller has paid or is obligated to pay all or part of the premiums.
Other than as disclosed in Schedule 4(u), Seller has not received notice of any
pending or threatened termination or retroactive premium increase with respect
thereto; and
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Seller is in compliance with all material conditions contained therein, the
noncompliance with which could reasonably be expected to result in termination
of insurance coverage or increased premiums for prior or future periods. There
are no pending material claims against such insurance by Seller as to which
insurers have denied liability or are defending under any reservation of rights,
and, to the knowledge of Seller or any Shareholder, there exists no material
claim under such insurance that has not been properly filed by Seller.
(v) Sufficiency of Rights. Except as disclosed in Schedule 4(v),
and assuming (i) the renewal or continuation of all business arrangements
affecting the Business currently in place and (ii) advancements in technology do
not supersede, render materially obsolete or materially affect the marketability
of any of the Software Programs (and, to the best of Seller's and each
Shareholder's knowledge, (x) no reason exists why such renewal or continuation
in favor of Purchaser could be obstructed and (y) no such advancements are
pending or threatened), the Assets constitute all of the properties, rights, and
privileges necessary for the indefinite continuation of the conduct of the
Business by Purchaser in substantially the same manner as it has been operated
by Seller during the twelve (12)-month period preceding the Closing.
(w) Broker's or Finder's Fees. Except for a fee of $200,000
payable by Seller to Mr. J. Xxxxx Xxxxxxx, a director of the Seller, neither
Seller nor any Shareholder has authorized any person to act as broker or finder
or in any other similar capacity in connection with the transactions
contemplated by this Agreement in any manner that may reasonably be expected to
impose liability on Purchaser.
(x) Related-Party Transactions. Except as disclosed in Schedule
4(x), Seller is not a party to any contract, agreement, license, lease, or
arrangement with, and has no other commitment to, directly or indirectly, (1)
any officer or salaried employee of Seller in office within two (2) years of the
date of this Agreement; (2) any corporation, trust, or other entity in which any
such officer or salaried employee has a material equity or participating
interest; or (3) any partnership in which any such officer or salaried employee
has a partnership or participating interest, in each case, relating to or
involving the Business, the Assets, or the Assumed Liabilities, except, in each
instance, for existing compensation arrangements listed herein. Each such
contract, agreement, license, lease, arrangement, and commitment was entered
into by Seller in the ordinary course of business upon terms that are fair and
reasonable to the Seller without regard to the status and relationship of such
other parties.
(y) Bank Accounts. Schedule 4(y) lists all bank, money market,
savings and similar accounts and safe deposit boxes of the Seller, specifying
the account numbers, the authorized signatories or persons having access to
them, and the passwords used to access such accounts, including through voice
response and internet services.
(z) Year 2000 Matters. The Seller has conducted reasonable testing
in conformity with industry standards, including but not limited to the FFIEC
Year 2000 Management Awareness publication issued on May 5, 1997, as amended or
supplemented, to test the Software, the Seller's internal systems and software,
and the network connections it maintains as part of its business to determine
whether they are "Millennium Compliant" and, based upon
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these tests, the Seller and the Shareholders have no knowledge that any of such
Software systems or connections is not "Millennium Compliant." For the 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.
The Seller has provided the Purchaser with access to the results of such tests.
(aa) No Fraudulent Transfer. Seller and Shareholders have entered
into this Agreement and the Purchase Agreements without any intent to hinder,
delay or defraud any of their creditors. Seller and Shareholders have received a
reasonably equivalent value in exchange for the Assets transferred to the
Purchaser. Immediately prior to and after the Closing, the sum of the Seller's
assets is and will be greater than all of its debts, and Seller is and will be
generally able to pay its debts as they become due.
(bb) Disclosure. Seller and each Shareholder has completely and
accurately responded to the inquiries and diligence requests of Parent and
Purchaser and their agents, representatives, attorneys and employees in
connection with the transactions contemplated by this Agreement. No
representation, warranty, or statement made by Seller or the Shareholders in
this Agreement, the Purchase Agreements or in any document or certificate
furnished or to be furnished to Purchaser pursuant to this Agreement contains or
will contain any untrue statement or omits or will omit to state any fact
necessary to make the statements contained herein or therein, under the
circumstances in which they were made, not materially misleading. Seller and
each Shareholder has disclosed to Purchaser all facts known or reasonably
available to Seller and the Shareholders that are material to the financial
condition, operation, or prospects of the Business, the Assets, and the Assumed
Liabilities.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS
(a) Securities Act Compliance. Each Shareholder acknowledges that
none of the shares of Common Stock or Preferred Stock to be delivered to the
Seller will, at the time of delivery, be registered under the securities laws of
any state or federal authority (the "SECURITIES LAWS"). Each Shareholder
represents and warrants that Seller (and such Shareholder, in the event Seller
transfers such shares to the Shareholders) is acquiring the Common Stock and
Preferred Stock for investment, and not with a view toward, or for resale
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in connection with, a distribution in violation of federal or state securities
laws. Each Shareholder acknowledges that the Common Stock and Preferred Stock
may be sold, pledged, hypothecated, disposed of, or otherwise transferred or
distributed only (i) pursuant to an effective registration statement covering
the security under the Securities Laws, or (ii) pursuant to an exemption from
the registration requirements of the Securities Laws.
(b) Access to Information. Each Shareholder has had access to the
books and records of Parent and has otherwise had access to sufficient
information about Parent upon which to analyze the transactions contemplated by
this Agreement. Each Shareholder has been given the opportunity to ask questions
and receive answers from the officers of Parent concerning the terms and
conditions of the transactions contemplated by this Agreement and the business
and financial condition of Parent. Each Shareholder has had the opportunity to
obtain any additional information he or she deems necessary to verify the
accuracy and completeness of information provided by Parent in connection with
this Agreement and the transactions contemplated hereby.
(c) Experience; Investment. Each Shareholder has such knowledge
and experience in financial and business matters as to enable such Shareholder
(a) to utilize the information made available to him 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 Common
Stock and Preferred Stock, and (c) to make an informed decision with respect
thereto. Each Shareholder's business and financial experience is such that
Parent and Purchaser could reasonably assume such Shareholder has the capacity
to protect his own interests in connection with the offer, sale and issuance of
the Common Stock. Each Shareholder is financially capable of bearing the risk of
loss of any and all consideration surrendered in exchange for the Common Stock
and Preferred Stock and acknowledges that an investment in the Common Stock and
Preferred Stock involves a high degree of risk, including a possible total loss
of investment, and the purchase price of the Common Stock and Preferred Stock
may not be indicative of the future value of the securities. Each Shareholder
represents that because of one or more of the following criteria, such
Shareholder is an "accredited investor" within the meaning of Regulation D
promulgated by the Securities and Exchange Commission ("SEC") under the
Securities Act, by reason of: (a) the Shareholder is a natural person who has a
net worth or joint net worth with the Shareholder's spouse exceeding $1,000,000
at the time of purchase; (b) the Shareholder is a natural person who had an
individual income in excess of $200,000 in each of the two most recent years or
joint income with that person's spouse in excess of $300,000 in each of those
years and who reasonably expects to reach the same income level in the current
year; (c) the Shareholder is a corporation, partnership or trust with total
assets in excess of $5,000,000; or (d) all of the Shareholder's shareholders,
partners or members, as the case may be, participating in the investment in the
Parent, are "accredited investors." Each Shareholder understands that the
officers, directors, attorneys and other advisors of Parent and Purchaser will
rely upon the representations and warranties made by such Shareholders in this
Agreement in order to establish any necessary exemption from the registration
provisions of the Securities Act and applicable state securities laws.
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(d) No Prior Convictions. No Shareholder has been convicted of,
arrested for, or has any action pending for, a crime involving fraud,
embezzlement or theft or any similar crime.
(e) Tax Advice. Each Shareholder has reviewed with his tax advisor
the United States federal, state, local and foreign tax consequences of an
investment in the Common Stock and Preferred Stock and the transactions
contemplated by this Agreement and the other Purchase Agreements. Such
Shareholder is relying solely on such advisor and not on any statements or
representations of the Parent or Purchaser or any of their agents, and
understands that he or she (and not the Parent, Purchaser or any other person or
entity) shall be responsible for his or her own tax liability that may arise as
a result of this investment or the transactions contemplated by this Agreement
and the other Purchase Agreements.
(f) Shareholders' Authority. Each Shareholder has the right,
power, capacity and authority to execute, deliver and perform this Agreement and
to consummate the transactions contemplated hereby; this Agreement has been duly
and validly executed and delivered by the Shareholder and is entered into
voluntarily without promise or benefit other than as set forth herein; and this
Agreement constitutes the Shareholder's legal, valid and binding obligation,
enforceable in accordance with its terms.
(g) Ownership. Each Shareholder owns, of record and beneficially,
valid title to his/her shares of common stock of Seller, and such shares are
free and clear of all Liens, Claims (as defined below) and encumbrances. Other
than the common stock owned by the Shareholder, the Shareholder does not own,
beneficially or of record, or have any right to acquire, now or in the future,
any shares of stock or other securities of any kind of the Seller. The
Shareholder has not granted nor is he or she bound by any outstanding
subscriptions, options, warrants, calls, commitments or agreement of any
character calling for the transfer, purchase, subscription or issuance of any
shares of capital stock of the Seller or any securities representing the right
to purchase, subscribe or otherwise receive any shares of such capital stock or
any securities convertible into any such shares, and there are no agreements or
understandings with respect to voting any such shares.
(h) No Options, Etc. The Shareholder has not granted nor is he/she
bound by any outstanding subscriptions, options, warrants, calls, commitments or
agreements of any character calling for the transfer, purchase, subscription or
issuance of any shares of capital stock of the Seller or any securities
representing the right to purchase, subscribe or otherwise receive any shares of
such capital stock or any securities convertible into any such shares, and there
are no agreements or understandings with respect to voting any such shares. The
execution, delivery and performance of this Agreement by the Shareholder will
not conflict with or result in a breach of any agreement, instrument, order,
injunction, decree, statute, rule or regulation applicable to the Shareholder or
any of his or her assets. The execution, delivery and performance of this
Agreement by the Shareholder does not require the consent or approval of any
third party or governmental agency or authority which has not been obtained (and
a copy of which is attached hereto).
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(i) Waiver of Dissenter's Rights. Each Shareholder acknowledges
that he/she understands that if such Shareholder were to vote against, or had
voted against, the transactions contemplated by this Agreement, such Shareholder
would be entitled to receive in cash, the "fair market value" of the shares of
common stock of Seller owned by such person, as provided in Section 1300 et seq.
of the California Corporations Code. By such Shareholder's execution and
delivery of this Agreement, such person is knowingly and voluntarily waiving his
or her right to assert such statutory dissenters' rights in connection with this
Agreement.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
The Parent and Purchaser, as applicable, hereby represent and warrant
to the Seller and the Shareholders as follows:
(a) Corporate Existence. Each of Parent and Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Georgia. Each of Parent and Purchaser has the corporate power
and authority to conduct its business and to own and lease all of its properties
and assets. Each of Parent and Purchaser is duly qualified or licensed to do
business and is in good standing under the laws of each jurisdiction where such
qualification is required, except where the failure to be so qualified would not
have a Material Adverse Effect on the Parent or the Purchaser, as the case may
be.
(b) Corporate Power and Authorization. Each of Parent and
Purchaser has the corporate power, authority and legal right to execute, deliver
and perform this Agreement and the other Purchase Agreements and instruments to
be executed and delivered in connection with the transactions contemplated
hereby and thereby. The execution, delivery and performance of this Agreement by
Parent and Purchaser have been duly authorized by all necessary corporate
action. This Agreement has been duly executed and delivered by Parent and
Purchaser and constitutes the legal, valid and binding obligation of Parent and
Purchaser enforceable against Parent and Purchaser in accordance with its terms
except as such enforcement may be subject to or limited by bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance, fraudulent
transfer or other similar laws now or hereafter in effect affecting creditors'
rights generally, and by general principles of equity.
(c) No Conflict. The execution, delivery and performance of this
Agreement by Parent and Purchaser does not and will not violate any Laws to
which Parent or Purchaser is subject, and will not violate, conflict with or
result in the breach of any term, condition or provision of, or require the
consent of any other party to, (a) any judgment, order, writ, injunction, decree
or award of any court, arbitrator or governmental or regulatory official, body
or authority which is applicable to Parent or Purchaser, (b) the articles of
incorporation or bylaws of, or any securities issued by, Parent or Purchaser, or
(c) any mortgage, indenture, agreement, contract, commitment, lease, plan or
other instrument, document or understanding, oral or written, to which Parent or
Purchaser is a party or by which Parent or Purchaser is
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otherwise bound, except where the violation, conflict or breach would not have a
Material Adverse Effect on Parent or Purchaser.
(d) Broker's or Finder's Fees. Other than BancBoston Xxxxxxxxx
Xxxxxxxx Inc., Parent has not authorized any person to act as broker, finder, or
in any other similar capacity in connection with the transactions contemplated
by this Agreement.
(e) Capitalization. The authorized capital stock of the Parent
consists of 70,000,000 shares of Common Stock, 19,795,855 of which are issued
and outstanding as of December 14, 1999, and 5,000,000 shares of preferred
stock, none of which are issued and outstanding. All of the shares of Common
Stock and Preferred Stock to be issued pursuant to this Agreement have been duly
authorized and, upon issuance at Closing, will be validly issued, fully paid and
nonassessable. The Common Stock and Preferred Stock to be issued to the Seller
and the Shareholders will be duly authorized and validly issued, fully paid and
nonassessable, free of preemptive rights and free and clear of all Liens created
by or through Parent (except as set forth in this Agreement).
(f) SEC Reports. Parent represents and warrants to the Seller and
the Shareholders that it 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"). Parent 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 Parent 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 the financial condition of
Parent as of the indicated dates and the results of operations of Parent for the
indicated periods and are correct and complete in all material respects. To
Parent's knowledge, since June 30, 1999, no event has occurred for which Parent
is required to file a Form 8-K but has not so filed.
(g) Compliance with Applicable Laws. Parent has all Licenses
required for its business as currently conducted, except to the extent a failure
to hold such Licenses would not have a Material Adverse Effect on Parent,
Purchaser and their subsidiaries, taken as a whole. No proceeding is pending or
threatened seeking the revocation or suspension of any material License. Except
as disclosed by the Parent in Schedule 6(g), the Parent's business has been
operated and maintained in all material respects in compliance with applicable
Laws. The Parent has not received any notices of any allegation of any violation
of any Laws or Licenses.
(h) Litigation. Except as disclosed in Schedule 6(h), as of the
date hereof, there are no administrative or judicial suits, claims, actions or
proceedings pending or, to the knowledge of Parent, threatened, against Parent
which, (a) if determined adversely to Parent's interests,
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Parent believes would have a Material Adverse Effect on Parent, Purchaser and
their subsidiaries, taken as a whole and/or (b) seeking to prevent, hinder,
modify or challenge the transactions contemplated by this Agreement. Parent is
not subject to any outstanding order, writ, judgment, injunction, decree or
arbitration award or order which has a Material Adverse Effect on Parent.
(i) Required Government Consents. Except for (1) the Required
Government Consents, (2) filings of Form D or other notices relating to the
issuance of securities by Parent, and (3) the Nasdaq notification of listing of
additional shares with respect to the Common Stock and Preferred Stock issued
pursuant to this Agreement, no approval, authorization, certification, consent,
variance, permission, license, or permit to or from, or notice, filing, or
recording to or with, U.S. or non-U.S., federal, state, or local governmental
authorities is necessary for (a) the execution and delivery of this Agreement
and the other Purchase Agreements and instruments to be executed and delivered
in connection with the transactions contemplated hereby or thereby by the Parent
or the Purchaser or (b) the consummation by the Parent or the Purchaser of the
transactions contemplated hereby or thereby.
(j) Required Contract Consents. Except for (1) the Required
Contract Consents and (2) the consent of The Xxxxxxxx-Xxxxxxxx Company pursuant
to the underwriting agreement dated November 8, 1999 with respect to Parent's
initial public offering, no approval, authorization, consent, permission, or
waiver to or from, or notice, filing, or recording to or with, any person (other
than the Required Government Consents) is necessary for (a) the execution and
delivery of this Agreement and the other Purchase Agreements and instruments to
be executed and delivered in connection with the transactions contemplated
hereby or thereby by Parent or Purchaser or (b) the consummation by Parent or
Purchaser of the transactions contemplated hereby or thereby.
(k) Obligations of Purchaser. Parent shall take all action
reasonably necessary to cause Purchaser to perform its agreements, covenants,
and obligations under this Agreement in a prompt and timely manner.
(l) No Material Adverse Change. Since the date of the Parent's
most recent SEC Filings, other than as disclosed by Parent in such SEC filings,
in press releases of Parent 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 Parent, Purchaser and
their subsidiaries, taken as a whole.
(l) Disclosure. Parent and Purchaser have completely and
accurately responded to the inquiries and diligence requests of Seller and the
Shareholders and their agents, representatives, attorneys and employees in
connection with the transactions contemplated by this Agreement. No
representation, warranty, or statement made by Parent or Purchaser in this
Agreement, the Purchase Agreements or in any document or certificate furnished
or to be furnished to Seller and the Shareholders pursuant to this Agreement
contains or will contain any untrue statement or omits or will omit to state any
fact necessary to make the statements contained herein or therein, under the
circumstances in which they were made, not materially misleading. Parent and
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Purchaser have disclosed to Seller and the Shareholders all facts known or
reasonably available to Parent and Purchaser that are material to their
financial condition, operation, or prospects.
ARTICLE 7
CONDITIONS TO CLOSING
(a) Conditions to Seller's Obligations. Each of the obligations of
Seller to be performed hereunder shall be subject to the satisfaction (or waiver
by Seller) at or prior to the Closing Date of each of the following conditions:
(i) Parent's and Purchaser's representations and
warranties contained in this Agreement shall be true on and as of the Closing
Date.
(ii) Parent and Purchaser shall have complied with all
agreements, obligations and conditions required by this Agreement to be
performed or complied with by them on or prior to the Closing.
(iii) Other than approvals required to assign to Purchaser
the OTS Contract, all Required Government Consents and Required Contract
Consents shall have been obtained.
(iv) No Litigation shall be threatened or pending against
Parent or Purchaser before any court or governmental agency that, in the
reasonable opinion of counsel for Seller, could result in the restraint or
prohibition of any such party, or the obtaining of damages or other relief from
such party, in connection with this Agreement or the consummation of the
transactions contemplated hereby.
(v) Purchaser and Parent shall have delivered to Seller
an opinion of counsel to Purchaser and Parent, dated as of the Closing Date, in
form and substance satisfactory to Seller.
(vi) Parent shall have filed with the Georgia Secretary of
State Articles of Amendment to its Articles of Incorporation in the form
attached hereto as Schedule 7(a)(vi) designating the Series A Preferred Stock.
(vii) Purchaser shall have entered into a contract
providing for the employment of Xxxxx X. Xxxx by Purchaser in the form attached
hereto as Schedule 7(a)(vii).
(viii) Parent, Seller and the Shareholders shall have
entered into a registration rights agreement in the form attached hereto as
Schedule 7(a)(viii).
(b) Conditions to Parent's and Purchaser's Obligations. Each of
the obligations of Parent and Purchaser to be performed hereunder shall be
subject to the satisfaction (or the waiver by Purchaser or Parent, as
applicable) at or prior to the Closing Date of each of the following conditions:
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(i) Seller's and Shareholders' representations and
warranties contained in this Agreement shall be true on and as of the Closing
Date.
(ii) Seller and Shareholders shall have performed and
complied with all agreements, obligations, and conditions required by this
Agreement to be performed or complied with by them on or prior to the Closing.
(iii) Other than approvals required to assign to Purchaser
the OTS Contract, all Required Government Consents and Required Contract
Consents shall have been obtained.
(iv) No Litigation shall be threatened or pending against
Seller or any Shareholder before any court or governmental agency that, in the
reasonable opinion of counsel for Purchaser, could result in the restraint or
prohibition of any such party, or the obtaining of damages or other relief from
such party, in connection with this Agreement or the consummation of the
transactions contemplated hereby.
(v) Seller shall have provided to Purchaser payoff letters
for all liens, encumbrances and liabilities with respect to the Assets and shall
have paid all amounts required to be paid by Seller with respect thereto.
(vi) [Intentionally omitted].
(vii) Seller shall have delivered to Parent and Purchaser an
opinion of counsel to Seller and the Shareholders, dated as of the Closing Date,
in form and substance satisfactory to Parent and Purchaser.
(viii) Xxxxx Xxxx shall have entered into an employment
agreement with Purchaser in the form attached hereto as Schedule 7(a)(viii), the
effectiveness of which shall be expressly contingent upon the occurrence of
Closing.
(ix) Xxxxx Xxxx, Xxxxxxx Xxxxxxx, Xxxxxxx Xxxxxxx, and Xxxxx
Xxxx shall have entered into the non-compete, non-solicitation and
confidentiality agreement attached hereto as Schedule 7(b)(ix).
(x) The employees of Seller identified by the Parent shall
have entered into the work product and confidentiality agreements in the forms
attached hereto as Schedule 7(b)(x).
(xi) Each Shareholder shall have had their spouse execute a
spousal consent in the form attached hereto as Schedule 7(b)(xi).
(xii) The Seller and the Shareholders shall have executed the
Escrow Agreement.
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(xiii) Seller shall have executed and delivered for filing
with the Secretary of State of California Articles of Amendment to effect a
change in the Seller's name from DPSC Software, Inc. to Xxxxx X. Xxxx &
Associates, Inc.
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ARTICLE 8
CLOSING
(a) Closing. The closing of the purchase and sale of the Assets
and the transfer and assumption of the Assumed Liabilities (the "CLOSING") shall
take place at the offices of Xxxxxx Xxxxxxx Xxxxx & Xxxxxxxxxxx, L.L.P.,
Atlanta, Georgia at 10:00 a.m. on December 10, 1999 (the "CLOSING DATE").
(b) Actions at Closing. At Closing, Purchaser and Seller shall
take the following actions, in addition to such other actions as may otherwise
be required under this Agreement:
(i) Copies of Consents. Seller shall deliver to Purchaser
copies of all Required Contract Consents and all Required Government Consents.
(ii) Conveyance Instruments. Seller shall deliver to
Purchaser such warranty deeds, bills of sale, assignments, and other instruments
of conveyance and transfer as Purchaser may reasonably request to effect the
transfer and assignment to Purchaser of the Assets.
(iii) Assumption Agreement(s). Purchaser shall deliver to
Seller one or more assumption agreement(s) in form reasonably acceptable to
Seller, pursuant to which Purchaser assumes and agrees to pay and perform the
Assumed Liabilities.
(iv) Legal Opinions. The parties shall cause their
respective counsel to deliver to the other parties the legal opinions required
under Article 7.
(v) Lease. Seller and Purchaser shall execute all
assignments and other documents required in order to assign the lease for
Seller's principal office to the Purchaser.
(vi) Post-Closing Agreement. The parties shall enter into a
post-closing agreement in the form attached hereto as Schedule 8(a)(xii).
(c) Delivery of Purchase Price. Purchaser shall deliver the Purchase
Price to Seller, subject to deposit of the Escrow Amount with the Escrow Agent
pursuant to the Escrow Agreement.
(d) Further Assurances. At and after the Closing, without further
consideration, each of the parties hereto shall take all such other action and
shall procure or execute, acknowledge, and deliver all such further
certificates, conveyance instruments, consents, and other documents as the other
parties or their counsel may reasonably request (1) to vest in Purchaser, and
perfect and protect Purchaser's right, title, and interest in, and enjoyment of,
the Assets and the Business, (2) to effect Purchaser's assumption, payment of
discharge of all Assumed Liabilities, and/or (3) to ensure more effectively the
compliance of each party with its agreements, covenants, warranties, and
representations under this Agreement.
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ARTICLE 9
COVENANTS OF PARENT, PURCHASER AND SELLER FOLLOWING CLOSING
(a) Purchaser's Cooperation. Purchaser shall use its reasonable
efforts to provide Seller such assistance as it may reasonably request in
connection with matters relating to Taxes, including information with respect to
Seller's preparation of any Returns of Taxes, any audit or other examination by
any taxing authority, any judicial or administrative proceeding relating to
Seller's liability for Taxes, or any claims arising hereunder respecting the
Business. Purchaser shall retain and provide Seller with records or information
which may be relevant to any such Return, audit, examination, proceeding, or
determination, and Purchaser shall retain all such books and records for so long
as necessary in keeping with applicable statutes of limitations.
(b) Allocation of Purchase Price. The Purchase Price shall be
allocated as disclosed in Schedule 3, and all tax returns and reports filed by
Seller and Purchaser with respect to the transactions contemplated by this
Agreement shall be consistent with that allocation.
(c) Maintenance of Books and Records. Each of Seller and Purchaser
shall preserve until the fifth anniversary of the Closing Date all records
possessed or to be possessed by such party relating to any of the Assets,
Assumed Liabilities or Business of Seller prior to the Closing Date. After the
Closing Date, where there is a legitimate purpose, such party shall provide the
other parties with access, upon prior reasonable written request specifying the
need therefor, during regular business hours, to (i) the officers and employees
of such party, and (ii) the books of account and records of such party, but, in
each case, only to the extent relating to the Assets, Assumed Liabilities or
Business of the Seller prior to the Closing Date, and the other parties and
their representatives shall have the right to make copies of such books and
records; provided, however, that the foregoing right of access shall not be
exercisable in such a manner as to interfere unreasonably with the normal
operations and business of such party; and further, provided, that, as to so
much of such information as constitutes trade secrets or confidential business
information of such party, the requesting party and its officers, directors and
representatives will use due care to not disclose such information except (i) as
required by law, (ii) with the prior written consent of such party, which
consent shall not be unreasonably withheld, delayed or conditioned or (iii)
where such information becomes available to the public generally, or becomes
generally known to competitors of such party, through sources other than the
requesting party, its affiliates or its officers, directors or representatives.
Such records may nevertheless be destroyed by a party if such party sends to the
other parties written notice of its intent to destroy records, specifying with
particularity the contents of the records to be destroyed. Such records may then
be destroyed after the 30th day after such notice is given unless another party
objects to the destruction, in which case the party seeking to destroy the
records shall deliver such records to the objecting party.
(d) UCC Matters. From and after the Closing Date, Seller will
promptly refer all inquiries with respect to ownership of the Assets or the
Business to Purchaser. In addition, Seller will execute such documents,
assignments and financing statements as Purchaser may request from time to time
to evidence transfer of the Assets to Purchaser, including any
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necessary assignments of financing statements, assignment of rights or other
similar documents.
(e) Covenant Not to Compete. Seller agrees that for a period of
two (2) years after the Closing Date, neither it nor any of its affiliates will,
directly or indirectly, own, manage, operate, join, control or participate in
the ownership, management, operation or control of, any business whether in
corporate, proprietorship or partnership form or otherwise as more than a five
percent owner in such business where such business is competitive with the
Business. Seller further specifically acknowledges and agrees that the remedy at
law for any breach of the foregoing will be inadequate and that the Purchaser,
in addition to any other relief available to it, shall be entitled to temporary
and permanent injunctive relief without the necessity of proving actual damage.
In the event that the provisions of this Section 9(e) should ever be deemed to
exceed the limitation provided by applicable law, then the parties hereto agree
that such provisions shall be reformed to set forth the maximum limitations
permitted.
(f) Nonsolicitation of Personnel. For a period of two (2) years
after the Closing Date, Seller shall not solicit, divert, or recruit, for its
own benefit or for the benefit of any other person or entity, any employee of
Seller whom Purchaser hires or retains from and after the Closing Date.
(g) Maintain Corporate Status. Seller covenants that it will
continue to exist and shall keep and maintain its present corporate status in
good standing for a minimum of thirteen (13) months following the date of
Closing. Seller covenants not to use in any manner the corporate names
Distributed Planning Systems Corp., DPSC Software, Inc., DPSC Internet, Inc. or
any confusingly similar name (including all related trade names, logos, and
marks) after the Closing Date. Seller and Shareholders covenant to use all
commercially reasonable efforts to dissolve DPSC Internet, Inc.
(h) Reservation of Shares. Parent covenants that it will reserve
and keep available out of its authorized but unissued shares of Common Stock
solely for the purpose of effecting the conversion of the shares of the Series A
Preferred Stock such number of shares of Common Stock as shall from time to time
be sufficient to effect the conversion of all outstanding shares of the Series A
Preferred Stock. If at any time the number of authorized but unissued shares of
Common Stock shall be insufficient to effect the conversion of all then
outstanding shares of the Series A Preferred Stock, Parent agrees to take such
corporate action as may be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be sufficient for such
purpose.
ARTICLE 10
INDEMNIFICATION
(a) Indemnification by Seller and Shareholders. Seller and
Shareholders shall jointly and severally indemnify, defend, and hold harmless
Parent and Purchaser and their respective subsidiaries, successors and permitted
assigns, and the directors, officers, employees and agents
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of each (collectively, the "PURCHASER GROUP"), at, and at any time after, the
Closing, from and against any and all demands, claims, actions, or causes of
action, assessments, losses, damages, liabilities, costs, and expenses,
including reasonable fees and expenses of counsel, other expenses of
investigation, handling, and litigation, and settlement amounts, together with
interest and penalties (collectively, a "LOSS" or "LOSSES"), asserted against,
resulting to, imposed upon, or incurred by the Purchaser Group, directly or
indirectly, by reason of, resulting from, incident to or arising in connection
with any of the following:
(i) Breach of Obligation. Any breach of any representation,
warranty, or agreement of Seller or Shareholders contained in or made pursuant
to this Agreement and the other Purchase Agreements, including the agreements
and other instruments contemplated hereby and thereby;
(ii) Excluded Liabilities. Any liabilities or obligations of
any kind or nature whatsoever, whether accrued, absolute, contingent, or
otherwise, known or unknown, arising out of or in connection with any Excluded
Assets, or the conduct of the Business or the ownership or use of the Assets
prior to the Closing Date, except for the Assumed Liabilities;
(iii) Failure to Obtain Consents. Any failure to obtain the
Required Government Consents or the Required Contract Consents prior to Closing
or within the time allowed by the Post-Closing Agreement, as the case may be;
(iv) Violations of Fraudulent Conveyance Laws. Any failure
to comply with any fraudulent conveyance or similar laws relating to notices to
creditors; and
(v) Incidental Matters. [Intentionally omitted].
(b) Indemnification by Purchaser. Purchaser shall indemnify,
defend, and hold harmless Seller, each Shareholder, each director, officer,
employee and agent of Seller, and their respective heirs, successors, and
permitted assigns (collectively, the "SELLER GROUP"), at, and at any time after,
the Closing, from and against any and all Losses asserted against, resulting to,
imposed upon, or incurred by the Seller Group, to the extent arising from any of
the following:
(i) Breach of Obligation. Any breach of any representation,
warranty, or agreement of Parent or Purchaser contained in or made pursuant to
this Agreement or the Assumption Agreement, including the agreements and other
instruments contemplated hereby;
(ii) Assumed Liabilities. Any of the Assumed Liabilities;
and
(iii) Post-Closing Operations. The ownership and operation
of the Assets and Business from and after the Closing Date.
(c) Notice of Claim. The party entitled to indemnification
hereunder (the "CLAIMANT") shall promptly deliver to the party liable for such
indemnification hereunder (the "OBLIGOR") notice in writing (the "REQUIRED
NOTICE") of any claim for recovery under Section
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10(a) or Section 10(b), specifying in reasonable detail the nature of the Loss,
and, if known, the amount, or an estimate of the amount, of the liability
arising therefrom (the "CLAIM"). The Claimant shall provide to the Obligor as
promptly as practicable thereafter information and documentation reasonably
requested by the Obligor to support and verify the claim asserted, provided
that, in so doing, it may restrict or condition any disclosure in the interest
of preserving privileges of importance in any foreseeable litigation.
(d) Defense. If the facts pertaining to the Loss arise out of the
claim of any third party (other than a member of the Purchaser Group or Seller
Group, whichever is entitled to indemnification for such matter) and
indemnification is available by virtue of the circumstances of the Loss, the
Obligor must assume the defense or the prosecution thereof, including the
employment of counsel or accountants, at its cost and expense. If representation
of both the Obligor and the Claimant by such counsel would be inappropriate due
to actual or potential differing interests between the Obligor and the Claimant
in such proceeding (such as the availability of defenses to the Claimant), the
Claimant (together with all other indemnified parties which may be represented
without conflict by one counsel) shall have the right to retain one separate
counsel, with the reasonable fees and expenses to be paid by the Obligor. The
Claimant shall have the right to determine and adopt (or, in the case of a
proposal by Obligor, to approve) a settlement of such matter in its reasonable
discretion, except that Claimant need not consent to any settlement that (1)
imposes any nonmonetary obligation or (2) Obligor does not agree to pay in full.
The Obligor shall not be liable for any settlement of any such claim effected
without its prior written consent, which shall not be unreasonably withheld,
delayed or conditioned. Whether or not the Obligor chooses to so defend or
prosecute such claim, all the parties hereto shall cooperate in the defense or
prosecution thereof and shall furnish such records, information, and testimony,
and attend such conferences, discovery proceedings, hearings, trials, and
appeals, as may be reasonably requested in connection therewith.
(e) Manner of Indemnification by Seller. Where Seller and/or the
Shareholders are obligated to indemnify the Purchaser, Parent or any other
member of the Purchaser Group under Section 10(a), such Claim shall be satisfied
pursuant to the Escrow Agreement. Following termination of the Escrow Agreement,
such Claim shall be satisfied by Seller and the Shareholders, at the option of
the relevant member of the Purchaser Group, by paying to that person in cash an
amount equal to the applicable Loss.
(f) Limitations. Notwithstanding anything in this Article 10 to
the contrary:
(i) Threshold. No indemnification or any other claim for
damages under this Agreement or any other instrument or agreement to be executed
and delivered by the parties hereto in connection with the transactions
contemplated hereby shall be payable by any party to any other party until (and
then only to the extent that) the total of all Losses from such claim equals or
exceeds $50,000.
(ii) Time of Assertion. No indemnification shall be payable
by any party with respect to matters as to which it has not received notice from
the Claimant within two (2) years after the Closing Date, except that there
shall be no limitation on the time during which
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indemnification may be sought or obtained for (1) Losses based on Excluded
Liabilities; or (2) any instance of fraud or any knowing and willful breach by
any party of any provision of this Agreement or any other instrument or
agreement to be executed and delivered by such party in connection with the
transactions contemplated hereby.
(iii) Exclusive Remedy. The parties hereto acknowledge and
agree that this Article 10 is the exclusive remedy of the parties hereto for
damages for breach or misrepresentation of or under this Agreement, other than a
claim or interpleader based on Purchaser's failure to discharge the Assumed
Liabilities or Seller's failure to discharge the Excluded Liabilities.
(g) Recovery of Attorney Fees For Frivolous Actions. Claimant
shall be entitled to recover its reasonable out-of-pocket costs (including court
costs and actual attorney fees) incurred in pursuing any Claim defended by the
Obligor on frivolous grounds or opposed for the purpose of delay or harassment.
(h) Arbitration. In the event of a dispute in which the parties
involved cannot reach agreement as to the claim in question or their liability
under this Article 10, then the disputed amount of the claim of indemnification
or their liability hereunder shall be submitted to and settled by arbitration in
accordance with the then prevailing commercial arbitration rules of the American
Arbitration Association. Such arbitration shall be held in a mutually acceptable
locale (other than Los Angeles, California or Atlanta, Georgia) before a panel
of three (3) arbitrators, one selected by each of the parties and the third
selected by mutual agreement of the first two, and all of whom shall be
independent and impartial under the rules of the American Arbitration
Association. The decision of the arbitrators shall be final and binding as to
any matter submitted under this Agreement.
ARTICLE 11
CONFIDENTIALITY
Following the Closing, the terms of that certain Confidentiality
Agreement dated as of November 22, 1999 (the "CONFIDENTIALITY AGREEMENT"), a
copy of which is attached hereto as Exhibit 11 and is incorporated herein by
reference, shall continue to be applicable to the Seller and the Parent.
ARTICLE 12
GENERAL RELEASE AND COVENANT NOT TO XXX
The Seller and the Shareholders hereby acknowledge and agree that the
transactions contemplated by this Agreement are in the best interest of the
Seller and each of the Shareholders. As part of the agreements set forth herein
and in consideration of Parent's and Purchaser's agreements hereunder, to the
fullest extent permitted by law, the Seller and Shareholders hereby fully and
forever release, remise, acquit and discharge the Purchaser,
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Parent and their past, present and future subsidiaries, officers, directors,
employees, shareholders, attorneys, agents, successors, assigns, representatives
and other affiliates (collectively, the "PURCHASER RELEASEES") of and from all
claims (as defined by Xxxxxxx 000 xx xxx Xxxxxx Xxxxxx Bankruptcy Code, as
amended), debts, demands, actions, causes of action, suits, accounts, damages
and liabilities of every name and nature, both at law and in equity, whether
known or unknown, that the Seller and the Shareholders now have, ever had or
may, at any time, claim to have had against any of the Purchaser Releasees;
provided, however, that such release shall not apply (1) to any breach by any
party of its representations, warranties and agreements set forth in this
Agreement or the Purchase Agreements to which it is a party or (2) to any claims
based upon or arising out of facts, conduct, acts or omissions by the Parent or
Purchaser first occurring or accruing from and after Closing. Furthermore,
Seller and each Shareholder hereby covenants not to xxx, institute, cause to be
instituted or in any way participate in, any legal or administrative proceeding
against any Purchaser Releasee with respect to any of the foregoing; provided,
however, that such covenant shall not apply to any breach by any party of its
representations, warranties and agreements set forth in this Agreement or the
Purchase Agreements to which it is a party. Each of the Seller and the
Shareholders represent and warrant to the Purchaser Releasees that they have not
voluntarily or involuntarily assigned or suffered any transfer of any of the
claims, debts, demands, actions, causes of action, suits, accounts, damages and
liabilities to any other person or entity, and agree to indemnify and hold
harmless the Purchaser Releasees from and against any loss, damage, liability,
cost and expense (including, but not limited to, attorneys' fees incurred in
connection therewith or in connection with enforcing this indemnity) asserted
against, imposed on or incurred by the Purchaser Releasees by reason of any of
the foregoing which were effectively or purportedly assigned or transferred by
the Seller or the Shareholder. To the fullest extent permitted by law,
Shareholders hereby waive the benefits of California Civil Code ss. 1542 and any
other applicable statute or regulation governing general releases or creditors'
rights.
ARTICLE 13
MISCELLANEOUS
(a) Sales, Transfer and Documentary Taxes, etc. Seller shall pay all
federal, state and local sales, documentary and other transfer taxes, if any,
due as a result of the purchase, sale or transfer of the Assets in accordance
herewith whether imposed by law on Seller or Purchaser, and Seller shall
indemnify, reimburse and hold harmless Purchaser in respect of the liability for
payment of or failure to pay any such taxes or the filing of or failure to file
any reports required in connection therewith.
(b) Expenses. Except as otherwise provided in this Agreement, each
party hereto shall pay its own expenses incidental to the preparation of this
Agreement, the carrying out of the provisions of this Agreement and the
consummation of the transactions contemplated hereby.
(c) Contents of Agreement; Parties in Interest; etc. This Agreement,
which includes the Schedules, Exhibits and the other documents, agreements,
certificates and
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instruments executed and delivered pursuant to or in connection with this
Agreement (collectively, the "PURCHASE AGREEMENTS") sets forth the entire
understanding and agreement of the parties hereto with respect to the
transactions contemplated hereby. It shall not be assigned, amended or modified
except by written instrument duly executed by each of the parties hereto. Any
and all prior or contemporaneous negotiations, agreements, representations,
warranties and understandings between or among the parties regarding the subject
matter hereof, whether written or oral, are superseded in their entirety by this
Agreement and the other Purchase Agreements and shall not create any liability
on the part of any party hereto in favor of any other party (or parties), except
as otherwise expressly set forth herein and in the other Purchase Agreements.
(d) Waiver. Any term or provision of this Agreement may be waived at
any time by the party entitled to the benefit thereof by a written instrument
duly executed by such party.
(e) Notices. Any notice, request, demand, waiver, consent, approval or
other communication which is required or permitted hereunder shall be in writing
and shall be deemed given only if delivered personally or sent by telecopier,
air courier, telegram or by registered or certified mail, postage prepaid, as
follows:
if to Parent or the Purchaser before December 20, 1999:
Netzee, Inc.
Netcal, Inc.
0000 Xxxxx Xxxxx Xxxx
150 paces Summit
Xxxxxxx, XX 00000
(000) 000-0000
Attention: Chief Executive Officer, President and
Chief Financial Officer
if to Parent or the Purchaser beginning December 20, 1999:
Netzee, Inc.
Netcal, Inc.
0000 Xxxxxx Xxxxx Xxxx
Xxxxx 000
Xxxxxxx, XX 00000
(000) 000-0000
Attention: Chief Executive Officer, President and
Chief Financial Officer
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With a copy to:
Xxxxx X. Xxxxxxx, Esq.
Xxxxxx Xxxxxxx Xxxxx & Scarborough, L.L.P.
First Union Plaza, Suite 1400
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, XX 00000
(000) 000-0000
(000) 000-0000 (facsimile)
If to Seller or Shareholders, to:
Xxxxx X. Xxxx
00000 Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxxx Xxxxx, XX 00000
(000) 000-0000
With a copy to:
Xxxxxx X. Xxxxxxxx, Esq.
Xxxxxxxx, Xxxxxx, Xxxxxxxx & Xxxxx, XXX
0000 Avenue of the Stars, Xxxxxxx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
(000) 000-0000
(000) 000-0000 (facsimile)
or to such other address as the addressee may have specified in a notice duly
given to the sender as provided herein. Such notice, request, demand, waiver,
consent, approval or other communication will be deemed to have been given as of
the date so delivered, transmitted by facsimile, telegraphed or mailed, as the
case may be.
(f) Georgia Law to Govern. This Agreement shall be governed by and
interpreted and enforced in accordance with the laws of the State of Georgia,
without regard to its conflict of law principles.
(g) No Benefit to Others. The representations, warranties, covenants
and agreements contained in this Agreement are for the sole benefit of the
parties hereto and their respective heirs, executors, administrators, legal
representatives, successors and assigns, and nothing contained in this Agreement
or the other Purchase Agreements shall be construed as conferring any rights on
any other persons.
(h) Headings, Gender and "Person". All section headings contained in
this Agreement are for convenience of reference only, do not form a part of this
Agreement and shall not affect in any way the meaning or interpretation of this
Agreement. Words used herein, regardless of the number and gender specifically
used, shall be deemed and construed
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to include any other number, singular or plural, and any other gender,
masculine, feminine, or neuter, as the context requires. Any reference to a
"PERSON" herein shall include an individual, firm, corporation, partnership,
trust, governmental authority or body, association, unincorporated organization
or any other entity. The "KNOWLEDGE" of a person shall include the current
actual awareness of such person, such person's officers charged with the
responsibility for the matters qualified by the use of the term "KNOWLEDGE" and
such matters as would be revealed by a review of such person's records.
(i) Schedules and Exhibits. All Exhibits and Schedules referred to
herein are incorporated herein by reference and are intended to be and hereby
are specifically made a part of this Agreement.
(j) Severability. The invalidity or unenforceability of any provision
of this Agreement in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
(k) Counterparts. This Agreement may be executed in any number of
counterparts and any party hereto may execute any such counterpart, each of
which when executed and delivered shall be deemed to be an original and all of
which counterparts taken together shall constitute but one and the same
instrument. This Agreement shall become binding when one or more counterparts
taken together shall have been executed and delivered by the parties. It shall
not be necessary in making proof of this Agreement or any counterpart hereof to
produce or account for any of the other counterparts.
(m) Assistance of Counsel. Each party hereto acknowledges that they
have had the assistance of counsel in negotiating and preparing the terms of
this Agreement; therefore, this Agreement shall be construed without regard to
any presumption or other rule requiring construction against the party causing
the Agreement to be drafted.
(n) Time of the Essence. Time is of the essence of this Agreement.
(o) Actions and Proceedings. The Seller and Shareholders consent to the
exclusive jurisdiction and venue of the courts of any county in the State of
Georgia and the United States District Court for any District of Georgia in any
action or judicial proceeding seeking an injunction or other equitable relief or
to enforce an arbitration award in favor of Parent or Purchaser. The Seller and
each Shareholder agree that any forum other than the State of Georgia is an
inconvenient forum and that a suit (or non-compulsory counterclaim) seeking an
injunction or other equitable relief or to enforce an arbitration award in favor
of Parent or Purchaser brought by the Seller and/or any Shareholder against
Purchaser, or any member of the Purchaser Group in a court of any state other
than the State of Georgia should be forthwith dismissed or transferred to a
court located in the State of Georgia.
(p) Execution by Facsimile. Any party may deliver an executed copy of
this Agreement and any documents contemplated hereby by facsimile transmission
to another party,
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and such delivery shall have the same force and effect as any other delivery of
a manually signed copy of this Agreement or of such other documents.
[Signatures follow on next page]
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IN WITNESS WHEREOF, the parties hereto have duly executed this Asset
Purchase Agreement on the date first written above:
"Purchaser"
Netcal, Inc.
/s/ Xxxxxxx X. Xxxxxxxx
------------------------------------------
By: Xxxxxxx X. Xxxxxxxx
--------------------------------------
Title: CFO and V.P.
-----------------------------------
"Seller"
DPSC Software, Inc.
/s/ Xxxxx Xxxx
------------------------------------------
By: Xxxxx Xxxx
--------------------------------------
Title: President
-----------------------------------
"Shareholders"
Gall Family Trust
By: /s/ Xxxxx Xxxx, Trustee
--------------------------------------
Xxxxx Xxxx, Trustee
By: /s/ Xxxxx Xxxx, Trustee
--------------------------------------
Xxxxx Xxxx, Trustee
/s/ Xxxxx Xxxx
------------------------------------------
Xxxxx Xxxx
/s/ Xxxxxxx X. Xxxx
------------------------------------------
Xxxxxxx X. Xxxx
/s/ Xxxxx X. Xxxxx
------------------------------------------
Xxxxx X. Xxxxx
/s/ Xxxxxxx Xxxxxxx
------------------------------------------
Xxxxxxx Xxxxxxx
/s/ Xxxxx X. Xxxxxx
------------------------------------------
Xxxxx X. Xxxxxx
/s/ Xxxxxxx Xxxxxxxx
------------------------------------------
Xxxxxxx Xxxxxxxx
/s/ Xxxxxxx Xxxxxxx
------------------------------------------
Xxxxxxx Xxxxxxx
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"Parent"
Netzee, Inc.
/s/ Xxxxx X. Xxxxx
------------------------------------------
By: Xxxxx X. Xxxxx
--------------------------------------
Title: Chief Executive Officer
-----------------------------------
41
