ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") is made as of June 21,
2004, by and between Global Axcess Corp, a Nevada corporation ("Buyer"), Family
Heritage Estate Portfolio, Inc., a Pennsylvania corporation ("FHEP" or
"Seller"), Xxxxxxx X. Xxxxxxxx ("Xxxxxxxx"), Xxxxx X. Xxxxxx ("Xxxxxx"). Buyer
and FHEP are sometimes referred to individually as a "Party" and together as
"Parties."
PRELIMINARY STATEMENTS:
FHEP is a party to various agreements with Buyer's affiliate Nationwide
Money Services, Inc. ("NMS"), pursuant to which FHEP was given the right to
place ATMs and receive revenues therefrom at approximately 106 locations located
at various retail establishments operating under the names Cumberland Farms,
Kash n' Xxxxx, and Food Lion (the "Placement Agreements").
FHEP is a party to agreements with various other merchants for the
placement and processing of transactions for 6 ATM locations, and FHEP is the
responsible organization for the phone lines used in connection with the
operation of the ATM at two of such locations (collectively, the "Processing
Merchant Agreements," and together with the Placement Agreements, the "Merchant
Agreements"). Exhibit 4.1(d) sets forth details regarding the Merchant
Agreements including the dates of each such contract.
Pursuant to a general assignment for the benefit of creditors and the
appointment of a liquidating receiver under Section 1985 of the Pennsylvania
Business Corporation Law of 1988, as amended ("PaBCL"), the Allegheny County
Court of Common Pleas (the "Court") by order dated October 14, 2003, approved
the appointment of Inglewood Associates, Inc., a Pennsylvania corporation as
receiver for FHEP ("Receiver").
Seller desires to assign and sell, and Buyer has agreed to assume and
purchase, (i) all of Seller's rights and obligations in and to the Processing
Merchant Agreements, (ii) the ATMs installed in merchant locations covered under
the Merchant Agreements, (iii) all of Seller's rights and obligations in and to
the phone lines in which Seller is the responsible organization and used in
connection with the Merchant Agreements, and (iv) certain ancillary agreements,
in each case, subject to the terms and conditions contained in this Agreement.
Following an introduction by Seller, Buyer, through its affiliate NMS,
commenced discussions with Xxxxxxxxx Corporation ("Xxxxxxxxx") regarding the
placement and operation of Seller's ATMs at up to 60 separate restaurants
operated by Xxxxxxxxx under the Eat `n' Park brand name. Such discussions are
presently expected to result in a definitive agreement by and between Buyer
and/or NMS and Xxxxxxxxx containing substantially the terms set forth on
Addendum A attached hereto (the "Eat `n' Park Agreement").
NOW, THEREFORE, in consideration of these preliminary statements and
the mutual covenants, representations, warranties and agreements hereinafter set
forth, and for other good and valuable consideration, the receipt and
sufficiency of which the Parties hereby acknowledge, the Parties hereby agree as
follows:
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1. PURCHASED ASSETS; EXCLUDED ASSETS; ASSUMPTION OF LIABILITIES.
1.1 Purchased Contract and ATM Rights. Subject to the terms and conditions of
this Agreement, on the Closing Date (as defined in Section 3.1), Seller will
sell to Buyer, and Buyer will purchase from Seller, (i) all of Seller's right,
title and interest in and to the Processing Merchant Agreements, (ii) all right,
title and interest in and to the ATMs located in active merchant locations
covered under the Merchant Agreements, (iii) all rights in the use of the phone
lines for which Seller is responsible and which are used in connection with the
Merchant Agreements, (iv) Seller's rights to all telephone numbers used by
Seller for ATM host communications and transaction processing in connection with
the Merchant Agreements, all as more fully detailed on Exhibit 4.1(d) and (v)
prepayments of expenses covering periods beyond the Closing Date associated with
operating the ATMs (collectively, the "Purchased Assets"). Seller shall transfer
the Purchased Assets free and clear of all security interests, liens,
restrictions, claims, encumbrances or charges of any kind. In addition,
effective on the Closing Date, the Placement Agreements shall terminate and be
of no further force or effect; provided that each of NMS and Seller shall remain
liable for any breaches thereunder arising on or occurring prior to the Closing
Date.
1.2 Limited Liabilities Assumed. Buyer, effective as of the Close Date, will
assume Seller's rights and obligations arising on or after the Closing Date
under the Processing Merchant Agreements identified on Exhibit 4.1(d) attached
hereto and in and to the agreements for phone lines used in connection with the
Merchant Agreements. Subject to the preceding sentence or except as otherwise
expressly set out in this Agreement, the parties acknowledge that the Buyer
assumes no other obligations or liabilities of the Seller.
2. PURCHASE PRICE
2.1 Purchase Price; Payment. Subject to Section 2.2, the consideration to be
paid by Buyer to Seller for the Purchased Assets will be Nine Hundred Fourteen
Thousand Dollars ($914,000) (the "Purchase Price"). Eight Hundred Twenty-Two
Thousand Six Hundred Dollars ($822,600) of the Purchase Price shall be paid to
Receiver in cash or other immediately available funds at Closing. The remaining
Ninety-One Thousand Four Hundred Dollars ($91,400) of the Purchase Price (the
"Holdback") will be held by Xxxxx, Xxxxxxxx & Xxxxxxx, LLP, as escrow agent ,
for a period of six months following the Closing to secure Seller's obligations
hereunder. The Holdback shall be maintained by the Escrow Agent pursuant to the
terms of an Escrow Agreement substantially in the form of Exhibit 2.1 hereto
(the "Escrow Agreement"). Buyer will advise Seller in advance of its causing any
of the escrowed funds to be disbursed other than in payment of the deferred
Purchase Price to Seller, allowing Seller no less than twenty days to attempt to
eliminate, in whole or in part, the reason for the intended disbursement from
the escrow fund. Promptly (not more than ten (10) business days) after the six
month anniversary of the Closing Date, Buyer will instruct Escrow Agent to remit
to Seller any portion of the Holdback that remains in Escrow Agent's possession,
in excess of the amount of any claims made by Buyer pursuant to the Escrow
Agreement. In case of a dispute regarding the Holdback amount, the portion of
the Holdback not in dispute will be remitted to Seller within ten (10) business
days after expiration of such six-month period. In the event the dispute
regarding the Holdback amount is not resolved in ten (10) business days then the
issue of the disputed portion of the Holdback will be referred to an arbitrator
mutually agreed upon by both parties. The Holdback shall not be construed as a
limitation of Seller's liability hereunder, and Seller shall remain liable for
any obligations hereunder in excess of the Holdback.
2.2 Additional Consideration. If the Eat `n' Park Agreement is executed
substantially upon the terms set forth on Addendum A by Buyer and/or any of its
affiliates on or before the first anniversary of the Closing(i) Buyer shall pay
Seller Eighty Thousand Dollars ($80,000) in cash or other immediately available
funds (the "Additional Consideration") and (ii) Seller will transfer the assets
described in Addendum A pursuant to transfer document(s) satisfactory to Buyer,
in each case, immediately upon the execution of such Agreement. Such Additional
Consideration shall be in addition to the Purchase Price referred to in the
immediately foregoing section.
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2.3 Merchant Obligations. Seller will be responsible for any and all expenses
that accrue or arise under the Merchant Agreements on or prior to the Closing
Date. Seller is to provide Buyer with a copy of all vendor invoices relating to
the time period up to the Closing Date that are unpaid as of the Closing Date,
and a copy of all vendor invoices received by it thereafter that relate to the
Purchased Assets. Seller will be liable and ultimately pay for all such expenses
on their due date if such due date is prior to the Closing, or, if such due date
has occurred after the Closing and such expenses have not been paid timely by
Seller, Buyer will be entitled to pay such claims out of the Purchase Price
and/or Holdback.
2.3 Taxes. All transfer, sales or similar tax due as a result of this
transaction will be paid by Seller at the Closing and, if not so paid, shall
remain Seller's obligation.
3. CLOSING.
3.1 Closing Date. Subject to the terms and conditions of this Agreement, the
closing of the transactions (the "Closing") contemplated by this Agreement and
the Non-Competition Agreement(s), Escrow Agreement, Assignment and Assumption
Agreement and Xxxx of Sale (collectively, the "Related Agreements") shall occur
at a mutually acceptable place and time within five days after the last of the
conditions to Closing set forth in Sections 7.1 and 7.2 have been satisfied or
waived by the Party or Parties entitled to waive the same, or such other date
and time as to which Buyer and Seller may agree in writing; provided that, at
Buyer's option, the Closing may take place on the last day of the month in which
the conditions set forth in Sections 7.1 and 7.2 have been satisfied (the
"Closing Date"); provided, further, however, that if the Closing has not
occurred by August 31, 2004, then either party may terminate this Agreement upon
prompt notification to the other party.
3.2 Actions to be Taken at the Closing. At the Closing, the Parties will take
the following actions and deliver the following documents:
(a) Seller will deliver to Buyer:
(i) a duly executed Assignment and Assumption Agreement, in
substantially the form attached hereto as Exhibit 3.2(a)(i).
(ii) A duly executed Escrow Agreement, in substantially the form
attached hereto as Exhibit 2.1.
(iii) a duly executed xxxx of sale, in substantially the form attached
hereto as Exhibit 3.2(a)(ii)
(iv) all required consents of third parties to the sale, conveyance,
transfer, assignment and delivery of the Purchased Assets, including,
without limitation, the consent of the merchants party to the Processing
Merchant Agreements.
(v) a non-compete agreement in favor of Buyer duly executed by Seller
in substantially the form attached hereto as Exhibit 3.2(a)(iv).
(vi) a good standing certificate of FHEP (dated within 10 business
days prior to the Closing Date), certified by the Secretary of the State of
Pennsylvania.
(vii) a certificate of the Seller certifying as to the truth and
correctness of Seller's representations and warranties to the best of
Seller's knowledge as of the Closing Date and that all of Seller's
obligations that are to be performed prior to Closing have been performed.
(viii) an opinion of legal counsel for Seller, substantially in the
form attached hereto as Exhibit 3.2(a)(viii).
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(ix) all original Processing Merchant Agreements and satisfactory
evidence of the termination of all Placement Agreements.
(x) official notification to investors and/or owners of FHEP, the
Michigan Attorney General, and any other interested party ("Interested
Parties") approved by the Court regarding this Agreement and the
transactions contemplated hereby.`
(xi) An order of court issued by the Court of Common Pleas, Allegheny
County, approving this Agreement and authorizing Seller to consummate the
transactions contemplated herein (the "Court Order"). The Court Order shall
state that upon consummation of the transactions contemplated herein, all
parties, other than Buyer, shall be divested of any claim, lien,
encumbrance or other interest any such party may have in and to the
Purchased Assets and shall also provide that all liens of such parties, if
any, shall attach to the proceeds of the sale contemplated herein.
(xii) notification in form and substance satisfactory to Buyer
directed to the phone companies instructing them to transfer the rights and
use of the phone lines described in Section 1.1(iii) to Buyer or its
designee.
(xiii) written notice satisfactory to Buyer, directed to the other
contracting parties to the Processing Merchant Agreements and the other
parties to vendor agreements relating to the Merchant Agreements notifying
them of the assignment and assumption of the Processing Merchant Agreements
and the termination of the Placement Agreements.
(xiv) a certificate executed by the Receiver substantially in the form
attached hereto as Exhibit 3.2(a)(xiv).
(b) Buyer will deliver to Receiver:
(i) a duly executed Assignment and Assumption Agreement in
substantially the form attached as Exhibit 3.2(a),
(ii) a duly executed Escrow Agreement in substantially the form
attached hereto as Exhibit 2.1,
(iii) the Purchase Price (as adjusted, if applicable, pursuant to
Section 2.2 hereof) excluding the Holdback,
(iv) a Xxxx of Sale in substantially the form attached hereto as
Exhibit 3.2(a)(ii),
(v) a secretary's certificate, certifying resolutions of the board of
directors of Buyer approving the purchase of the Purchased Assets,
(vi) an officer's certificate certifying as to the truth and
correctness of Buyer's representations and warranties to the best of
Buyer's knowledge as of the Closing Date and that all of Buyer's
obligations that are to be performed prior to Closing have been performed.
(c) Buyer will deliver the Holdback to the Escrow Agent.
(d) Xxxxxxxx, Xxxxxx will deliver to Buyer (i) non-compete agreements in
favor of Buyer executed by them and (ii) the officers' certificates in
substantially the form attached hereto as Exhibit 3.2(a)(iv).
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(e) The Parties will take such other actions and will execute and deliver
such other instruments, documents and certificates as are required by
the terms of this Agreement and the Related Agreements or as may be
reasonably requested by any Party in connection with the consummation
of the transactions contemplated herein.
4. REPRESENTATIONS; WARRANTIES.
4.1 Seller Representations. Seller or Receiver, as the case may be, severally
and not jointly, represent and warrant to Buyer as of the Closing Date as
follows:
(a) Each of FHEP and Receiver are corporations duly organized, validly
existing and in good standing under the laws of the Commonwealth of
Pennsylvania. Receiver has full power and lawful authority, subject only to the
approval of the Court, to enter into this Agreement and all Related Agreements,
and consummate the transactions contemplated hereby and thereby.
(b) The execution, delivery and performance of this Agreement and the
Related Agreements by Seller have each been duly authorized and approved by the
Court. This Agreement constitutes, and when executed by Receiver, on behalf of
Seller, the Related Agreements each will constitute, the legal, valid and
binding obligation of Seller, enforceable in accordance with their respective
terms. Seller's execution, delivery and performance of this Agreement and the
Related Agreements will not (i) constitute a violation of any order, judgment or
decree by which Seller is bound or affected, or a breach or violation of any
law, rule or regulation, or (ii) result in a breach or default under any of the
Purchased Assets or the creation of any lien or charge thereon. Receiver is the
duly authorized, court-appointed receiver for Seller. Xxxx XxXxxx is a duly
authorized officer of Receiver.
(c) No consent, license, approval or authorization of, or filing,
registration or waiver or other action by, any governmental authority or any
third party is or will be required in connection with the execution, delivery or
performance by Seller of this Agreement or the Related Agreements except those
consents which Seller shall deliver to Buyer before Closing.
(d) Exhibit 4.1(d) sets forth a complete list of all of the Processing
Merchant Agreements to which Seller is a party and details regarding all of the
ATMs owned by Seller and in use at locations covered under the Merchant
Agreements, all of which are being sold to Buyer hereunder. Seller has delivered
to Buyer a true and correct copy of each contract included in the Purchased
Assets. Each contract included in the Purchased Assets is valid and enforceable
in accordance with its terms against Seller and, to the best of Seller's
knowledge, against the other party or parties thereto. Except as set forth on
Schedule 4.1(d), there is no suit or proceeding pending or, to the best of
Seller's knowledge, threatened, relating in any way to, any contract included in
the Purchased Assets, or that could otherwise impair Seller's ability to perform
its obligations hereunder. Neither Seller nor, to the best of Seller's
knowledge, any other party thereto is in breach of or in default under any
contract included in the Purchased Assets nor has any notice or claim with
respect to any breach or default thereunder been given, except for the breach by
FHEP of its obligations to pay investors in FHEP's contracts described as
franchises and partnerships their monthly investment income. Receiver has not
made any oral representations or warranties to any person with respect to the
Purchased Assets, nor has it offered to provide any services other than what has
already been stated in the Merchant Agreements and other than pursuant to
previously disclosed discussions with Xxxxxxxxx regarding the Eat `n' Park
Agreement.
(e) Set forth on Exhibit 4.1(e) is a calculation of an estimate of the
average monthly income generated by transactions for ATMs processed under the
Merchants Agreements. The estimate is based upon the (i) average surcharge
transactions per location, (ii) average total transactions per location, and
(iii) the average interchange revenue for total number of transactions for each
reporting period. Seller represents that, to the best of its knowledge, the
average monthly transactions, surcharge revenues, and interchange revenues
reflected on Exhibit 4.1(e) are true and accurate averages for each such item,
all as calculated from April 1, 2003 through March 31, 2004.
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(f) To the best of Seller's knowledge, all financial information relating
to the Purchased Assets that has been provided by Seller in accordance with the
historical methods of accounting consistently applied by Family Heritage.
Neither Seller nor Receiver makes any representation that Seller's historical
accounting practices comply with GAAP or any other applicable accounting
standard.
(g) To the best of Seller's knowledge, neither this Agreement nor any
schedules, certificates or other document or information provided by Seller to
Buyer in connection with this Agreement or the Related Agreements or the
transactions contemplated hereby contains or will contain any untrue statement
of a material fact or omits to state a material fact necessary to make the
statements so made not misleading, at the time such statements were made and
through the time of the Closing Date.
(h) Neither the Seller, nor any of its shareholders, officers, employers or
agents, has employed any financial advisor, broker or finder or incurred any
liability for any financial advisory, brokerage or finder's fee or commission in
connection with this Agreement, the Related Agreements or the transactions
contemplated by such agreements for which Buyer could become liable or
obligated.
(i) Seller has not received any proceeds from the ATM processors with
respect to the Purchased Assets that relate in whole or part to any period after
the Closing Date.
(j) To the best of Seller's knowledge, the persons listed on Exhibit
4.1(j) are the only persons with any potential interest in the Purchased Assets,
including all investors in the Seller or any of Seller's assets, and Seller has
provided notification to all such persons, and to any others required by law to
be notified, in each case in accordance with Pennsylvania law of the Seller's
assignment for the benefit of creditors and all other notices required to be
delivered in connection with the Seller entering into this Agreement and
performing its obligations hereunder. Upon consummation of the transactions
contemplated hereby, Buyer will own all right, title and interest in the
Purchased Assets, free and clear of all security interests, liens, restrictions,
claims, encumbrances or charges of any kind. Any security interests existing in
the Purchased Assets prior to the consummation of the sale of the Purchased
Assets to Buyer shall attach to the proceeds of the sale.
4.2 Buyer Representations. Buyer represents and warrants to Seller as follows:
(a) Buyer is a corporation duly organized, validly existing and in good
standing under the laws of the State of Nevada and has the corporate power and
authority to enter into this Agreement and the Related Agreements and to
consummate the transactions contemplated by this Agreement and the Related
Agreements.,
(b) Prior to the Closing, this Agreement and each Related Agreement will
have been duly authorized by all necessary corporate action on the part of
Buyer. This Agreement constitutes and, when executed, the Related Agreements
will constitute, the legal, valid and binding obligations of Buyer, enforceable
in accordance with their respective terms.
(c) Neither Buyer, nor any of its Shareholders, officers, employees or
agents have employed any financial advisor, broker or finder or incurred any
liability for any financial advisory, brokerage or finder's fee or commission in
connection with this Agreement, the Related Agreements or the transactions
contemplated by such agreements for which Seller could become liable or
obligated.
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5. CERTAIN COVENANTS.
5.1 Approvals and Consents. Prior to Closing, Seller will obtain, in writing and
without penalty to Buyer, all necessary approvals and consents required in order
to authorize and approve this Agreement and the Related Agreements, and to
consummate the assignment to, and assumption by, Buyer of the Purchased Assets,
including without limitation (i) the consent of the merchants for the assignment
of the Processing Merchant Agreements, and (ii) the Court Order approving and
authorizing the sale of the Purchased Assets free and clear of all security
interests, liens, restrictions, claims, encumbrances or charges of any kind and
ordering that any such security interests, liens, restrictions, claims,
encumbrances or charges shall attach to the proceeds of the sale contemplated
herein. Prior to closing Buyer will obtain from its affiliate NMS, in writing
and without penalty to Seller, satisfactory evidence of termination of all
Placement Agreements between NMS and FHEP. On or prior to the Closing, Seller
will use commercially reasonable efforts to obtain a letter from the Securities
and Exchange Commission ("SEC") satisfactory to Buyer stating in form and
substance that the SEC will not hold Buyer responsible for, or take any action
against Buyer or the Purchased Assets, for any actions of FHEP or FHEP
representatives.
5.2 Cooperation. Each of the Parties hereto will use its best efforts in good
faith to perform and fulfill all conditions and obligations to be fulfilled or
performed by it hereunder.
5.3 Access to Properties and Records; Inspection. Seller shall give Buyer and
its counsel, accountants and other representatives full access during normal
business hours to all of the properties, personnel, financial and operating
data, books, tax returns, contracts, commitments and records of Seller to the
extent that they relate to the Purchased Assets. In addition, Seller hereby
consents to Buyer contacting merchants that are parties to the Merchant
Agreements to confirm that there have been no oral agreements or representations
made with respect to the Merchant Agreements and to discuss the assignment of
the Merchant Agreements. Such investigation shall not limit Seller's liability
for the breach of Seller's representations and warranties herein even if Buyer's
review did or should have revealed any such breach.
5.4 Operation of Business. From the date hereof until the Closing Date or the
earlier termination of this Agreement pursuant to Section 8 hereof, Seller will:
(a) operate its business in the ordinary course; (b) other than as expressly
contemplated to the contrary in this Agreement, use its best efforts to preserve
its operations so that Buyer will obtain the benefits intended to be afforded by
this Agreement; (c) not take any action which would result in any representation
or warranty of Seller becoming incorrect or untrue in any respect; (d) obtain
the prior written approval of Buyer in connection with all material decisions
(equal to, or greater than, $5,000 revenue per month) affecting the Purchased
Assets, or operations thereunder, other than material decisions undertaken in
the ordinary course of business consistent with (a) above, (e) maintain all
equipment that is the subject of a Merchant Agreement in good working order
ordinary wear and tear excepted, and otherwise comply with all of its
obligations under the Merchant Agreements; and (f) notify Buyer in writing
promptly after Seller becomes aware of the occurrence of any event that might
result in any of Seller's statements, representations and warranties under this
Agreement or any Related Agreement being or becoming untrue.
5.5 Notices. Each of Buyer and Seller will promptly notify the other in writing
if it receives any notice, or otherwise becomes aware, of any action or
proceeding instituted or threatened before any court or governmental agency by
any third party to restrain or prohibit, or obtain damages in respect of this
Agreement or any Related Agreement or the consummation of the transactions
contemplated hereby or thereby.
5.6 Further Assurances. Each Party will execute and deliver any further
instruments or documents, and take all further action, reasonably requested by
the other Party to carry out the transactions contemplated by this Agreement and
the Related Agreements.
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5.7 Merchant Expenses/ATM Processor Proceeds.
(a) Seller shall be entitled to all proceeds from the ATM processors and be
liable for all merchant expenses under the Merchant Agreements, in each case,
that relate to the Purchased Assets for periods prior to Closing Date. Buyer
shall reimburse Seller for all prepaid expenses relating to the Purchased Assets
as of the Closing Date that represent expenses paid by the Seller that relate to
the period beyond the Closing Date. Buyer shall reimburse Seller for that
portion of prepaid expenses that relate to the post-closing period within ten
days after the Closing.
(b) Buyer shall be entitled to all proceeds from the ATM processors and be
liable for all merchant expenses under the Merchant Agreements, in each case,
that relate to the Purchased Assets for periods on or after the Closing Date.
(c) FHEP agrees to pay, on or before the Closing Date, all amounts owed to
any merchant or association and to any vendor or contractor listed on Exhibit B
relating to the Purchased Assets that relate to periods prior to Closing Date.
Any amounts owed by FHEP in which the specific amount owed is known and not paid
by FHEP on or before the Closing Date will be deducted from the Purchase Price
and paid by Buyer on FHEP's behalf. Any amounts owed by FHEP which remain unpaid
by FHEP for more than 60 days after the Closing Date will be deducted from the
Holdback and paid by Buyer on FHEP's behalf.
(d) Buyer agrees that, after the Closing, it shall promptly remit to
Seller any proceeds it receives from ATM processors that relate to the Purchased
Assets for periods prior to the Closing Date. Seller agrees to promptly remit to
Buyer any ATM processor proceeds it receives that relate to periods on or after
the Closing Date. If Buyer or Seller receives processor proceeds relating to the
pre-closing period or the post-closing period, as the case may be, then Buyer
will remit to Seller, or Seller will remit to Buyer, as applicable, a pro rata
portion of the net processor proceeds received from the ATM processors, after
paying all expenses related strictly to merchant contracts. Such allocation
shall be based on the number of days to which such payment relates that are
prior to the Closing Date versus the number of such days that fall on or after
the Closing Date. Any such payment shall be made by Seller or Buyer, as
applicable, to the other within ten days after such Party's receipt of such
funds from the processor.
5.8 Indemnification. FHEP will indemnify, defend and hold Buyer, its Affiliates
(as defined below) and their respective stockholders, directors, officers,
employees, legal representatives, agents, successors and assigns (the
"Indemnified Parties") harmless from and against any and all claims, judgments,
damages, penalties, fines, costs, liabilities, losses and expenses (including,
without limitation, reasonable attorneys' fees and expenses) incurred by the
Indemnified Parties (collectively, "Losses") arising from or directly or
indirectly relating to:
(a) any breach by Seller of any term or provision of this Agreement or any
Related Agreement, including without limitation, Seller's representations and
warranties contained herein; or
(b) Seller's performance or breach under any of the Merchant Agreements
prior to the Closing Date; or
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(c) any termination fee owed to ATM processors or any other third parties
providing services that related to the Purchased Assets prior to the Closing
Date, the contracts for which are not assumed by Buyer; or
(d) any other expense or liability relating to the Purchased Assets arising
or occurring prior to the Closing Date.
"Affiliate" means, with respect to any Person (as hereinafter
defined), any Person that controls, is controlled by or is under common control
with such Person, together with its and their respective members, partners,
venturers, directors, officers, stockholders, agents, employees and spouses. A
Person shall be presumed to have control when it possesses the power, directly
or indirectly, to direct, or cause the direction of, the management or policies
of another Person, whether through ownership of voting securities, by contract,
or otherwise. "Person" means an individual, partnership, limited liability
company, association, corporation, or other entity.
5.9 Indemnification by Buyer. Buyer shall indemnify, defend and hold Seller, its
Affiliates and their respective Indemnified Parties harmless from and against
any and all Losses arising from or directly or indirectly relating to:
(a) any breach by Buyer of any term or provision of this Agreement or any
Related Agreement, including without limitation, Buyer's representations,
warranties and covenants contained herein; or
(b) Buyer's performance or breach of the Merchant Agreements after the
Closing Date or
(c) any other expense or liability relative to the Purchased Assets or
Assumed Liabilities arising or occurring after the Closing Date.
5.10 ACH Releases. Seller shall deliver to Buyer, within ten business days prior
to the Close Date, authorization release forms duly executed by each of the
merchant's party to the Processing Merchant Agreements, authorizing EFT
Integration to debit and credit the merchant bank accounts, in form and
substance substantially in the form attached hereto as Exhibit 5.10.
5.11 Survival of Representations and Warranties. The parties' representations
and warranties contained herein shall survive the Closing for a period of two
(2) years, or until FHEP has been liquidated with the approval of the Court,
whichever occurs first.
5.12 Exclusivity. From the date hereof through the Closing Date or the
termination of this Agreement, whichever first occurs, Seller shall not, nor
shall Seller authorize or permit any of its directors, officers, employees,
representatives, agents or Affiliates to, directly or indirectly, solicit,
initiate, encourage, respond favorably to, permit or condone inquiries or
proposals from, or provide any confidential information to, or participate in
any discussions or negotiations with, any Person (other than Buyer and its
directors, officers, employees, representatives and agents) concerning a sale,
assignment or other transfer of the Purchased Assets, either directly or through
a stock purchase or merger or other acquisition structure.
5.13 Transfer of Vendor Services. Seller shall fully cooperate in Buyer's
efforts to enter into agreements, in form and substance satisfactory to Buyer,
with each of Chartbank, Coredata Resources, EPA/MAC, Premiere Armored, Xxxxxx
Fargo, Amsa and Efmark, for the provision of services related to the Purchased
Assets during a transition period following Closing.
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6. LOST VALUE.
Seller shall pay to Buyer the Estimated Lost Profit Amount, as defined
below, with respect to any Processing Merchant Agreement that was in effect
prior to the Closing Date and is terminated on or prior to the six month
anniversary of the Closing Date (the "Measurement Period"), and where such
termination is a result of gross negligence of the Seller prior to the Closing
Date (Qualified Terminations). Buyer shall notify Seller of Qualified
Terminations on a monthly basis starting in the month immediately following the
Closing. Buyer will provide to Seller the location information and the applied
formula for calculating loss as specified in this Agreement with respect to any
Qualified Termination. Seller shall have thirty days from its receipt of Buyer's
calculation of the loss (the "Objection Period") to notify Buyer of an error in
the average net revenue for any Processing Merchant Agreement used for such
calculation or any error in correctly applying the formula set forth below for
any terminated contract included in such calculation.
If no objection is made within the Objection Period, Seller shall be deemed
to have accepted the calculation of the Estimated Lost Profit Amount. To the
extent the Holdback remaining at such time is less than the amount owed by
Seller under this Section 6, Seller shall pay to Buyer within seven (7) business
days after the expiration of the Objection Period, the Estimated Lost Profit
Amount set forth in the Buyer's notice less the amount paid from the escrow
fund.
If Seller does timely object to the calculation of the Estimated Lost
Profit amount, as permitted above, Seller shall, within seven (7) business days
after expiration of the Objection Period, pay to Buyer the amount not in dispute
and the Parties shall use their good faith efforts to resolve their dispute. If
after fifteen (15) business days the Parties are unable to resolve their
dispute, Seller may institute suit for the collection of the remaining unpaid
amount of the total Estimated Lost Profit Amount. Any amount not paid by Buyer
or Seller under this Section 6 when due shall bear interest at the highest rate
permitted by law from the due date until paid in full.
For purposes of this Agreement, the Estimated Lost Profit Amount for each
Qualified Termination shall be an amount equal to the average monthly revenue
for each location terminated as set forth on Exhibit 4.1(e), less a variable
expense factor of 65%, multiplied by the remaining number of months on the
original term without regard for any potential renewal.
7. CONDITIONS PRECEDENT.
7.1 Conditions to Buyer's Obligations. Buyer's obligations under this Agreement
are subject to the satisfaction, on or prior to the Closing Date, of each of the
following conditions, any of which may be waived in writing by Buyer:
(a) Seller will have complied with and performed in all material respects
its obligations under this Agreement and the Related Agreements required to be
complied with or performed prior to Closing.
(b) All representations and warranties of Seller in this Agreement and the
Related Agreements will be true and correct in all material respects as of the
date when given and on the Closing Date.
(c) All consents, approvals and waivers required to consummate the
transactions contemplated by this Agreement and the Related Agreements will have
been obtained in writing by Seller and provided to Buyer without any penalty or
condition which is adverse to Buyer. Buyer will have received evidence of the
due authorization and execution of this Agreement by Seller in form and
substance satisfactory to Buyer.
(d) There will not have been any material adverse change in the business,
prospects or future business relating to the Purchased Assets, or any event
which may, in the future, cause such a change or any pending or threatened
material litigation or other proceeding relating to the Purchased Assets.
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(e) Seller shall have delivered to Buyer ACH authorization release forms in
form and substance satisfactory to Buyer, duly executed by each of the merchants
party to the Processing Merchant Agreements as required pursuant to Section 5.9
hereof.
(f) Buyer shall have received all of the items set forth in Sections 3.2(a)
and 3.2(d).
7.2 Condition to Seller's Obligations. Seller's obligations under this Agreement
are subject to the satisfaction, on the Closing Date, of the following
conditions, which may be waived by Seller:
(a) Buyer will have complied with and performed, in all material respects,
its obligations under this Agreement and the Related Agreements.
(b) All representations of Buyer in this Agreement or the Related
Agreements will be true and correct as of the date when given and on the Closing
Date.
(c) Seller and/or Escrow Agent shall have received all of the items set
forth in Section 3.2(b) and 3.2(c).
8. TERMINATION OF AGREEMENT; EFFECT OF TERMINATION.
8.1 Termination. This Agreement may be terminated at any time before the Closing
as follows:
(a) By Buyer, by notice to Seller, if any of Buyer's conditions precedent
to Closing have not been satisfied as of August 31, 2004 or have become
incapable of being satisfied by such date.
(b) By Seller, by notice to Buyer, if any of Seller's conditions precedent
to Closing have not been satisfied as of August 31, 2004 or have become
incapable of being satisfied by such date.
8.2 Effect of Termination. Upon a termination in accordance with Section 8.1,
this Agreement will have no further force or effect. Buyer will immediately
return the ACH Releases delivered pursuant to Section 5.9. Notwithstanding the
foregoing, each Party will be liable to the other for any breaches by such Party
prior to termination of this Agreement.
9. Specific Representation & Warranty. Xxxxxxx X. Xxxxxxxx and Xxxxx Xxxxxx
Xxxxxx represent and warrant to Buyer all items listed in section 4.1 and such
stated representation and warranty shall survive the Closing for a period of two
(2) years.
10 MISCELLANEOUS.
10.1 No Waiver. No waiver of any breach of any provision of this Agreement will
be deemed a waiver of any other breach of this Agreement. No extension of time
for performance of any act will be deemed an extension of the time for
performance of any other act.
10.2 Severability. The provisions of this Agreement will be deemed severable,
and if any provision of this Agreement is held illegal, void or invalid under
applicable law, such provision may be changed to the extent reasonably necessary
to make the provision legal, valid and binding. If any provision of this
Agreement is held illegal, void or invalid in its entirety, the remaining
provisions of this Agreement will not be affected but will remain binding in
accordance with their terms.
10.3 Entire Agreement; Amendment. This Agreement, the Related Agreements and the
schedules, exhibits and attachments to such agreements contain the entire
agreement of the Parties with respect to the subject matter hereof. This
Agreement may be amended only by an instrument in writing signed by all of the
Parties hereto. The headings in this Agreement are solely for convenience of
reference and will not affect the interpretation of any provision of this
Agreement.
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10.4 Applicable Law. This Agreement will be construed in accordance with and
governed by the laws of the State of Florida. Jurisdiction and venue for all
disputes relating to this Agreement shall lie with the state and federal courts
located in St. Xxxxx County, Florida.
10.5 Time is of the Essence. The Parties to this Agreement acknowledge and agree
that time is of the essence with respect to the consummation of the transactions
contemplated by this Agreement and each Related Agreement.
10.6 Binding Agreement, Assignment. The terms and provisions of this Agreement
will bind the Parties and their respective permitted successors and assigns.
Neither this Agreement nor any Related Agreement may be assigned by Seller or
Buyer, without the prior written consent of the other.
10.7 Expenses. Each Party will pay all of its expenses, including attorneys' and
accountants' fees in connection with the negotiation of this Agreement or any
Related Agreement, the performance of its obligations hereunder or thereunder,
and the consummation of the transactions contemplated by this Agreement or any
Related Agreement; provided that in any proceeding or other attempt to enforce,
construe or to determine the validity of this Agreement or any Related
Agreement, the nonprevailing Party will pay the reasonable expenses of the
prevailing Party, including reasonable attorneys' fees and costs.
10.8 Notices. All notices, demands or other communications required or permitted
to be given hereunder will be in writing, and any and all such items will be
deemed to have been duly delivered upon personal delivery; or as of the third
business day after mailing by United States mail, certified, return receipt
requested, postage prepaid, addressed as follows; or as of the immediately
following business day after deposit with Federal Express or a similar overnight
courier service, addressed as follows; or as of the business day if by facsimile
to the facsimile number set forth below:
Notices to Seller:
Family Heritage Estate Portfolio, Inc.
000 Xxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxx
Phone: 000-000-0000
Fax: 000-000-0000
With a Copy to:
Inglewood Associates, Inc.
Attn: Xxxx XxXxxx
000 Xxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
Notices to Buyer:
Global Axcess Corp
000 Xxxxx Xxxxx Xxxx Xxxxx
Xxxxx Xxxxx Xxxxx, Xxxxxxx 00000
Attn: Xxxxx X. Xxxxxxx
Phone: 000-000-0000
Fax: 000-000-0000
10.9 Counterparts. This Agreement may be executed in one or more counterparts,
any one of which need not contain the signatures of more than one party, but all
such counterparts taken together will constitute one and the same instrument.
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10.10 No Third Party Beneficiaries. Nothing in this Agreement is intended or
shall be construed to give any person, other than the parties hereto, any legal
or equitable right, remedy or claim under or in respect of this Agreement or any
provision contained herein.
10.11 Publicity. Each party agrees to notify the other prior to issuing any
press release or making any public statement regarding the transactions
contemplated hereby, and will attempt to obtain the reasonable approval of the
other party prior to making such release or statement, except where such release
or statement is required by applicable law or pursuant to any listing agreement
with, or the rules or regulations of, any securities exchange or any other
regulatory requirement, in which case the disclosing party shall endeavor to
provide the other party with as much prior notice of the content of such release
or statement as is reasonably practicable under the circumstances.
10.12 Confidentiality. Other than as contemplated by this Agreement, Seller will
maintain in confidence, and will cause its directors, officers, employees,
agents, and advisors to maintain in confidence, any written, oral, or other
information in its possession relating directly or indirectly to the Purchased
Assets, unless such information becomes publicly available through no fault of
Seller, or its directors, officers, employees, agents or advisors, the use of
such information is necessary or appropriate in making any filing or obtaining
any consent or approval required for the consummation of the transactions
contemplated herein, or the furnishing or use of such information is required by
legal proceedings or otherwise required by law. If this Agreement is terminated
pursuant to Section 8.1, this Section 10.12 shall be of no further force or
effect.
The Parties have executed and delivered this Agreement on the date set
forth in the introductory paragraph of this Agreement.
Seller: Buyer:
FAMILY HERITAGE ESTATE PORTFOLIO, INC., GLOBAL AXCESS CORP,
a Pennsylvania corporation a Nevada corporation
By: INGLEWOOD ASSOCIATES, INC.,
a Pennsylvania corporation, as Receiver
By: By:
---------------------------------------- -----------------------
Name: Xxxx X. XxXxxx Name: Xxxxxxx X. Xxxxx
Title: President Title: Chief Executive
Officer
XXXXXXX X. XXXXXXXX
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Xxxxx X. Xxxxxx
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Xxxxx Xxxxxxx
