PURCHASE AGREEMENT
Exhibit
10.1
This
Purchase Agreement (“Agreement”), dated as of September 17, 2008, is by and
between Netcom Data Corp.,
a Georgia corporation (“Buyer”), and Net Com Data Corp of N.Y.,
a New York corporation (“NCNY”) and American Timeshare Associates,
Inc., a New York corporation (“ATA;” ATA and NCNY to be collectively
referred to as “Sellers”).
RECITALS:
WHEREAS,
NCNY is a party to an Independent Sales Organization Agreement dated on or about
May 2, 1997, with Michigan National Bank (“MNB”), which agreement has been
amended from time to time and provides for customers of Seller to utilize the
merchant processing services offered by MNB and marketing of MNB’s merchant
processing services by Seller to prospective customers (the “Seller Bank
Agreement”); and
WHEREAS,
NCNY previously assigned a portion of its rights in and to the Seller Bank
Agreement to ATA; and
WHEREAS,
Buyer entered into an Independent Sales Organization Agreement with MNB on or
about February 2, 1995, which agreement has been amended from time to time
and provides for customers of Buyer to utilize the merchant processing services
offered by MNB and marketing of MNB’s merchant banking services by Buyer to
prospective customers (“Buyer Bank Agreement”); and
WHEREAS,
LaSalle Bank, N.A. (“Bank”) is the successor to MNB and was subsequently
acquired by Bank of America Corporation. Bank now offers merchant
processing services through LaSalle Merchant Services, LLC, a Bank of America
affiliate, and has requested the termination of many services currently provided
by Buyer and NCNY under the Seller Bank Agreement and the Buyer Bank Agreement;
and
WHEREAS,
pursuant to this Agreement, at the Closing (as defined below), Sellers will
assign all of their rights and obligations under the Seller Bank Agreement to
Buyer and Buyer will purchase such rights and assume such obligations pursuant
to the provisions of this Agreement and, contemporaneously therewith, the Buyer
Bank Agreement and the Seller Bank Agreement will be consolidated and modified
by a Service Agreement to be executed by Buyer and Bank on or before the Closing
(“New Service Agreement”), pursuant to which Buyer will perform certain services
currently provided by NCNY under the Seller Bank Agreement and will receive all
payments due from LaSalle Bank, N.A., its successors and assigns, under the
Seller Bank Agreement as modified by the New Service Agreement.
NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
1. Purchase and
Sale. On the date of the Closing (“Closing Date”), the Sellers
shall sell and the Buyer shall buy all of Sellers’ rights and obligations under
the Seller Bank Agreement, as modified by the New Service Agreement (“Assigned
Rights”), and Buyer shall accept such assignment and by its execution of the New
Service Agreement will assume all obligations of
Sellers
under the Seller Bank Agreement, as modified by the New Service Agreement
(“Assumed Obligations”). The Assigned Rights will be transferred by
Sellers to Buyer free of all liens, claims, interests, or
encumbrances.
2. Purchase
Price. The purchase price (“Purchase Price”) will equal
$2,275,000.00, in cash, plus 3,200,000 shares of United eSystems, Inc.
(“United”) Common Stock (“United Stock”), subject to adjustment and payable as
follows: (a) $2,000,000.00 in cash (“Closing Payment”), payable
by wire transfer within five (5) business days following the Closing; and
(b) 2,850,000 shares of United Stock (“Closing Stock”) to be issued to
Sellers within five (5) business days following the Closing. Within
five (5) business days after the Closing, Buyer will wire transfer an additional
$250,000.00 (“Escrow Payment”) to Berenbaum, Weinshienk & Xxxxx, P.C.
(“Escrow Agent”), to be held in escrow pursuant to the provisions of this
Agreement and will deliver to the Escrow Agent two certificates for 175,000
shares of United Stock each (“Escrow Stock”), issued in the name of
Sellers. The money and stock held in escrow by the Escrow Agent will
be held pursuant to the terms of an escrow agreement (“Earn Out Escrow
Agreement”) executed contemporaneously herewith. Buyer will be
entitled to receive the entire payment from the Bank under the Seller Bank
Agreement that is payable on or about September 20, 2008 and the entire amount
of all subsequent payments even though all or a portion of such payment(s) is or
may be attributable to a time prior to Closing. Within five (5)
business days after Buyer receives the September 20, 2008 payment, Buyer will
pay Seller $25,000 (“$25,000 Payment”) of the cash Purchase
Price. The Closing Payment, Closing Stock, $25,000 Payment, Escrow
Payment and Escrow Stock will be allocated 10% to NCNY and 90% to
ATA.
3. Earn Out and Escrow
Release. For purposes of this Section 3, the term “Base”
will mean $109,613.00 (derived from Sellers’ Compensation Report for April 2008
from Bank of America); the term “Excluded Amount” will equal $5,480.00; and the
term “Net Revenue” will mean the revenue Buyer receives under the Service
Agreement that was attributable to the accounts under the Seller Bank
Agreement. For the six (6) month period commencing on the Closing
Date, Buyer will compute the average monthly Net Revenue and add to that amount
any cancellation fees that are collected in connection with contracts that are
cancelled during such 6-month period and were subject to the Bank Service
Agreement, in each case divided by the remaining number of months for each such
cancelled contract. This result, the Adjusted Net Monthly Revenue
will be compared with the Base. If the difference (“Difference”)
exceeds the Excluded Amount, the six (6) month adjustment to the cash portion
(“Cash Adjustment”) of the purchase price will be computed by multiplying the
Difference by six (6) (annualizing by multiplying by 12 and dividing by 2 to
adjust for the cash portion only). The Cash Adjustment will be
deduced from $125,000.00 (one-half of the cash held in escrow), and any
resulting positive balance will be paid to Sellers by the Escrow Agent, with the
Cash Adjustment to be paid by the Escrow Agent to Buyer. In addition,
the number of shares which will be returned to United at the end of such six (6)
months (“Stock Adjustment”) will be determined by multiplying 175,000 shares by
the Cash Adjustment for such six (6) months and dividing the result by
$125,000.00. If there is a Stock Adjustment, a certificate for
175,000 shares will be returned to United by the Escrow Agent and United will
issue Sellers for such six (6) months a number of shares equal to 175,000 shares
less the Stock Adjustment, with United retaining the Stock Adjustment portion of
such shares.
For
the six (6) month period commencing six months after the Closing Date, the Cash
Adjustment and the Stock Adjustment will be similarly be computed and the amount
of cash and stock held in escrow will be divided between Buyer (or United with
respect to the Escrow Stock) and Sellers
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in
accordance with the same formula provided for above. The Escrow Agent
will deposit the cash held in escrow in a bank account mutually agreed to by
Buyer and Sellers, and any interest earned on the funds held in deposit will be
divided in the same proportion as the cash is paid out of
escrow. After the end of the second twelve (12) month period, the
Purchase Price will be adjusted to reflect the total amounts of cash and United
Stock paid to Sellers at the Closing and released to Sellers from escrow
(excluding any portion of cash that was for interest earned).
4. Assumption of
Liabilities. The Buyer (by its execution of the New Service
Agreement) will fully and unconditionally assume the liabilities of NCNY under
the Service Agreement and will not assume or be responsible for any other
liabilities of either or both Sellers.
5. Representations, Warranties,
and Covenants of Sellers. The Sellers represent, warrant, and
covenant to Buyer that:
(a) Organization and
Standing. Each Seller is a corporation duly organized, validly
existing, and in good standing under the laws of the State of New York, and is
duly qualified to conduct business as a foreign corporation in each state where
the failure to qualify would have a material adverse effect on such
Seller. Each Seller has full power and authority to own and hold its
assets and to conduct its business as now conducted.
(b) Authorization; Binding
Agreement. All necessary corporate actions to approve the
execution, delivery, and performance of this Agreement and the consummation of
the transactions contemplated hereby have been taken by Sellers. This
Agreement and the other agreements and documents executed and delivered by
Sellers pursuant to the terms thereof constitute the valid and binding
obligations of Sellers, enforceable against Sellers in accordance with their
terms.
(c) License, Permits, and
Approvals. No licenses, permits, or approvals are required
from any federal, state, or local governmental or administrative authority or
other agency or a party to any contract with a Seller for either or both Sellers
to enter into and perform their obligations under this Agreement or for Buyer to
become a party to and perform its obligations under the Service
Agreement. Sellers currently are and in the past have been in
compliance with the rules, regulations, and requirements of all applicable
governmental and private regulatory agencies.
(d) Financial
Information. The Sellers have delivered to Buyer Compensation
Detail Reports (“Compensation Reports”) for the months from March 2007 through
July 2008, reflecting revenues received and costs incurred by Sellers in
connection with performance under the Seller Bank Agreement for the periods
represented thereby. Such Compensation Reports are true, correct, and
complete in all material respects, fairly present the net revenues and costs for
the periods covered thereby, and are in accordance with the books and records of
Sellers.
(e) Service
Agreement. Sellers hold all rights in and to the Seller Bank
Agreement free and clear of all liens, encumbrances, security interests, and
other interests of any kind whatsoever. Upon Sellers’ execution and
delivery of an Assignment assigning all of their rights under the Seller Bank
Agreement and the Service Agreement to Buyer, the Buyer will have all right,
title, and interest in and to the Sellers’ rights under the Seller Bank
Agreement and the Service Agreement, free and clear of all liens, security
interests, encumbrances, and other interests of any kind
whatsoever. Sellers have full power and authority to transfer the
Assigned Rights to Buyer without obtaining any
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consents
or approvals from any other entity or person other than Bank. Sellers
do not have any liabilities, fixed or contingent, known or unknown, liquidated
or accrued, primary or secondary, by agreement or operation of law, including,
without limitation, liabilities for federal, state, and local taxes or
liabilities to customers or suppliers that could adversely affect or result in a
lien, encumbrance, or claim against the Assigned Rights.
(f) Litigation. No
judgment, order, writ, injunction, decree, or arbitration award is issued or
outstanding against or affecting a Seller and no litigation, action,
arbitration, special assessment, charge, lien, suit, judgment, proceeding,
inquiry, or investigation is pending or outstanding before any forum, court, or
governmental body, department, or agency of any kind or, to the best of Sellers’
knowledge, is threatened to which a Seller is a party or which effects the
Assigned Rights and Sellers do not know of any reason for any such claim,
litigation, action, special assessment, charge, lien, suit, judgment,
proceeding, or investigation.
(g) Insolvency. No
insolvency proceeding of any character, including, without limitation,
bankruptcy, receivership, reorganization, composition, or arrangement with
creditors, voluntary or involuntary, affecting a Seller or any of the Assigned
Rights is pending or threatened. No Seller has taken any action in
contemplation of, or which constitutes the basis for institution of, any
insolvency proceedings.
(h) Absence of
Restrictions. No Seller is a party to any contact, agreement,
or other instrument which restricts, limits, or in any way adversely affects any
aspect of Sellers’ performance of this Agreement and any other agreements
executed and delivered by a Seller hereunder or the transactions contemplated
hereby. The execution, delivery, and performance of this Agreement
and the other agreements executed and delivered by Sellers hereunder and the
transactions contemplated hereby by Sellers will not conflict with, or result in
the termination or breach of any term, provision, or condition of, or constitute
a default under the Articles of Incorporation or Bylaws of a Seller or any
contract, lease, agreement, or other instrument or condition to which a Seller
is bound. Sellers’ performance of this Agreement and the other
agreements executed and delivered by Sellers hereunder will not violate any law,
regulation, or judgment to which a Seller is subject.
(i) Investment Intent;
Restricted Securities. Each Seller is acquiring the United
Stock for its own account for investment and not with a view to, or for sale in
connection with, any distribution of any thereof and with no present intention
of disposing of any thereof. Each Seller acknowledges that such
securities have not been registered under the Securities Act of 1933, as amended
(“Securities Act”) or qualified under applicable state securities laws and
confirms to the Buyer and United that it understands the restrictions on resale
of such securities imposed by such laws including Rule 144 promulgated under the
Securities Act and that such securities may only be sold in limited
circumstances. Each Seller acknowledges and agrees that the
representations, warranties and agreements contained herein relating to the
United Stock are for the benefit of United and United is entitled to enforce
such provisions.
(j) Transfer Without
Registration. Notwithstanding the provisions of subsection
(i), a Seller may transfer such securities in compliance with the provisions of
the Securities Act (including Rule 144 promulgated thereunder) and any
applicable provision of state law. Prior to any transfer of such
securities otherwise than in an offering registered under the Securities Act, a
Seller will notify United of its intention to effect such transfer, indicating
the circumstances of the proposed
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transfer
and furnish United with an opinion of its counsel, in form and substance
reasonably satisfactory to counsel for United, to the effect that the proposed
transfer may be made without registration under the Securities Act or
qualification under any applicable state securities laws. United will
promptly notify a Seller if the opinion of counsel furnished to United is
satisfactory to counsel for United.
(k) Legend. Each
Seller understands that United will place the following legend and any other
legend required by law on the certificates representing the United
Stock:
THE
SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR ANY APPLICABLE STATE LAW, AND NO INTEREST THEREIN MAY
BE SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF SUCH
REGISTRATION AND QUALIFICATION WITHOUT AN OPINION OF LEGAL COUNSEL THAT SUCH
REGISTRATION AND QUALIFICATION ARE NOT REQUIRED.
United
shall, upon the request of any holder of a stock certificate bearing the
foregoing legend and the surrender of such certificate, issue a new stock
certificate without the foregoing legend if (i) the stock evidenced by such
certificate has been effectively registered under the Securities Act and sold by
the holder thereof in accordance with such registration, or (ii) such holder
shall have delivered to the Company a written legal opinion acceptable to the
Company to the effect that the restrictions set forth herein are no longer
required or necessary under any federal or state law or regulation.
(l) Experience. Each
Seller is an accredited investor under the Securities Act. Each
Seller has such knowledge and experience in financial and business matters that
it is capable of evaluating the risks of its investment in securities of United
and is able to bear the economic risks of such investment. Each
Seller is aware that United has filed current reports and other filings with the
Securities and Exchange Commission and acknowledges that it has access to and
has had the opportunity to review such reports and filings. Each
Seller believes it has received all information it considers necessary or
appropriate for deciding whether to accept the United Stock. Each
Seller has had an opportunity to ask questions and receive answers from officers
of United regarding this investment and believes it has made an informed
judgment with respect to its investment in securities of United.
(m) Disclosure. The
Sellers have made full written disclosure of all material facts pertaining to
the Assigned Rights, including, without limitation, the Seller Bank Agreement
and Service Agreement. There are no facts known to Sellers which
(individually or in the aggregate) could have or would have a material adverse
effect upon Buyer’s performance and receipt of benefits under the Service
Agreement which have not otherwise been disclosed in writing to
Buyer.
6. Buyer’s Representations,
Warranties, and Agreements. The Buyer represents and warrants
to Sellers that:
(a) Organization and
Standing. The Buyer is a corporation duly organized, validly
existing, and in good standing under the laws of the State of
Georgia. The Buyer has full
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power
and authority to purchase the Assigned Rights and to be a party to and perform
under this Agreement and the Service Agreement, except where the failure to have
such power and authority would not have a material adverse effect on the
financial condition, liabilities, or assets of the Buyer.
(b) Authorization. All
necessary corporate action to duly approve the execution, delivery, and
performance of this Agreement and the consummation of the transactions
contemplated hereby have been taken by Buyer. This Agreement and the
other agreements executed and delivered by Buyer hereunder constitute the valid
and binding obligations of Buyer, enforceable against Buyer in accordance with
their terms.
(c) United
Stock. The Closing Stock when delivered at the Closing will be
validly issued, fully paid and non-assessable and the Escrow Stock to which
Sellers become entitled under the provisions of this Agreement and the Earn Out
Escrow Agreement will upon issuance to Sellers be validly issued, fully paid and
non-assessable. As of May 14, 2008, 18,291,667 shares of United’s
common stock, $0.001 par value, were issued and outstanding. In
addition, United has shares reserved for issuance as described in its reports
and filings with the Securities and Exchange Commission, and United will issue
7,800,000 shares of its common stock to the stockholders of Buyer prior to or
contemporaneously with the Closing.
(d) Absence of
Restrictions. The Buyer is not a party to any contact,
agreement, or other instrument which restricts, limits, or in any adversely
affects any aspect of the Buyer’s performance of this Agreement and any other
agreements executed and delivered by Buyer hereunder or the transactions
contemplated hereby. The execution, delivery, and performance of this
Agreement and the other agreements executed and delivered by Buyer hereunder and
the transactions contemplated hereby by Buyer do not conflict with, or result in
the termination or breach of any term, provision, or condition of, or constitute
a default under the Articles of Incorporation or Bylaws of Buyer or any
contract, lease, agreement, or other instrument or condition to which Buyer is
bound. Buyer’s performance of this Agreement and the other agreements
executed and delivered by Buyer hereunder will not violate any law, regulation,
or judgment to which Buyer is subject.
7. Conditions Precedent to
Buyer’s Obligations at Closing. The obligations of Buyer to
consummate the transactions contemplated herby in connection with the Closing is
subject to the fulfillment of each of the conditions set forth
below. The Buyer may, in its sole discretion, waive the performance
of such conditions. Any such waiver shall only be valid if it is in
writing. The giving of such waiver shall not preclude a claim for the
breach of any applicable representation or warranty.
(a) Representation and
Warranties. The representations and warranties of the Sellers
shall be true and correct on the date of this Agreement and on the Closing Date,
and the Sellers shall have furnished Buyer with a certificate to that
effect.
(b) Performance of
Covenants. The Sellers shall have performed and complied with
all covenants, agreements, and conditions of this Agreement to be performed
prior to or on the Closing Date, and Sellers shall have furnished Buyer a
certificate to that effect.
(c) Certified
Resolution. Each Seller shall have delivered to the Buyer
certified copies of the resolutions of its directors and shareholders in form
and substance satisfactory to Buyer with respect to the authorization of this
Agreement and the transactions referred to herein.
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(d) Service
Agreement. The Bank shall have executed the New Service
agreement upon terms acceptable to Buyer.
(e) United Purchase of
Buyer. Prior to or contemporaneously with the Closing, United
shall have consummated its purchase of all of the outstanding stock of
Buyer.
(f) Due
Diligence. The Buyer shall have completed its due diligence
investigation of Sellers, the Seller Bank Agreement, and the Service Agreement
to its satisfaction.
(g) Approval of
Documents. The form and substance of all certificates,
instruments, and other documents delivered to the Buyer under this Agreement
shall be reasonably satisfactory in all respects to Buyer and its
counsel.
(h) Approvals and
Consents. All necessary consents to the assignment, transfer,
and assumption of the Service Agreement shall have been obtained upon terms
satisfactory to Buyer.
(i) Satisfactory
Proceedings. All proceedings to be taken in connection with
the consummation of the transactions contemplated hereby shall be reasonably
satisfactory to Buyer and its counsel.
8. Conditions Precedent to
Seller’s Obligations at Closing. The obligations of the
Sellers to consummate the transactions contemplated hereby in connection with
the Closing shall be subject to the fulfillment of each of the conditions set
forth below prior to the Closing Date. The Sellers may, in their sole
discretion, waive the performance of such conditions. Any such waiver
shall only be valid if it is in writing. The giving of such waiver
shall not preclude a claim for breach of any applicable representation and
warranty:
(a) Representation and
Warranties. The representations and warranties of the Buyer
shall be true and correct on and as of the Closing Date with the same effect as
though such representations and warranties had been made on and as of the
Closing Date, and Buyer shall have furnished Sellers a certificate to that
effect.
(b) Performance of
Covenants. The Buyer shall have, in all material respects,
performed and complied with all covenants, agreements, and conditions required
by this Agreement to be performed or complied with by it prior to or on the
Closing Date, and Buyer shall have furnished Sellers a certificate to that
effect.
(c) Certified
Resolution. The Buyer shall have delivered to the Sellers
certified copies of the resolutions of its directors and resolutions of the
directors of United, which shall be in form and substance reasonably
satisfactory to the Sellers with respect to the authorization of this Agreement,
the issuance of the United Stock contemplated hereby, and the transactions
referred to herein.
(d) United Purchase of
Buyer. Prior to or contemporaneously with the Closing, United
shall have consummated its purchase of all of the outstanding stock of
Buyer.
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(e) Approval of
Documents. The form and substance of all certificates,
instruments, and other documents delivered to the Sellers under this Agreement
shall be reasonably satisfactory in all respects to the Sellers and their
counsel.
(f) Satisfactory
Proceedings. All proceedings to be taken in connection with
the consummation of the transactions contemplated hereby shall be reasonably
satisfactory to Sellers and their counsel.
9. Closing. The
Closing of the transactions contemplated by this Agreement (“Closing”) will
occur upon satisfaction or waiver of the conditions to Buyer’s and Sellers’
obligations to be performed at Closing; provided that if such conditions have
not been satisfied or waived by 5:00 P.M. Eastern Time on September 26, 2008,
and the parties have not mutually agreed to extend such date (provided that if
one party is in default under this Agreement and the other party is not, the
non-defaulting party shall have the right to extend such date), this Agreement
will terminate, and the parties will have no further obligations
hereunder. It is contemplated that the Buyer and Sellers will enter
into an Escrow Agreement (“Closing Escrow Agreement”) prior to Closing and will
deposit all documents and deposit the Closing Payment and Closing Stock in
escrow, in which event the Closing will occur when Buyer and Seller (or their
respective counsel) have each acknowledged in writing that the conditions to
their respective obligations have been satisfied or waived.
10. Buyer’s
Deliveries. At the Closing, Buyer will execute, acknowledge,
and deliver the following:
(a) A
certificate as to its representations and warranties and as to its performance
as provided in Sections 8(a) and (b).
(b) Certified
resolutions as provided in Section 8(c).
(c) The
Service Agreement executed by Buyer.
(d) The
Earn Out Escrow Agreement executed by Buyer.
(e) The
Closing Payment.
(f) The
Closing Stock.
(g) At
the Closing, or within five (5) days thereafter, Buyer will wire transfer the
Escrow Payment to the Escrow Agent and deliver to the Escrow Agent certificates
representing the Escrow Stock.
11. Sellers’
Deliveries. At the Closing, the Sellers shall execute,
acknowledge, and deliver (as appropriate), the following:
(a) An
Assignment assigning all of their rights under the Seller Bank Agreement and the
Service Agreement to Buyer.
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(b) A
certificate as to their representations and warranties and their performance as
provided in Section 7(a) and (b).
(c) Certified
resolutions of each Seller as provided in Section 7(c).
(d) The
Earn Out Escrow Agreement executed by Seller.
(e) All
consents required in connection with the transfer of the Assigned Rights to
Buyer or Buyer’s assumption of the Assumed Obligations.
12. Covenants and Further
Agreements.
(a) Access to
Records. Seller will provide the records for the largest 100
active accounts within 30 days after the Closing, and will provide the remaining
record as soon as reasonably practical, but not to exceed 90 days after the
Closing. If Buyer requests information for a specific merchant for
which records have not yet been delivered, Seller agrees to provide that
information within 1 business day after Buyer’s request.
(b) Cooperation. Buyer
and Sellers shall cooperate in consummating, as soon as reasonably possible, the
transactions contemplated by this Agreement and each will, at the request of the
other, join in taking any action that may be reasonably required in order to
consummate the transactions contemplated by this Agreement, including the
delivery of all documents and certificates contemplated by this Agreement or
reasonably requested by any party to this Agreement or counsel for such
party.
(c) Representations and
Warranties. Prior to Closing, neither Buyer nor Sellers will
take any action that would in any way cause the representations and warranties
made by it under this Agreement to become untrue in any material
respect.
(d) Fulfillment of
Conditions. Buyer and Sellers agree to proceed in good faith
to obtain performance of all conditions to Closing over which they exercise
discretion or control.
(e) Global
Payments. Sellers hereby release Buyer from all obligations
related to Global Payments residual commissions, effective as of the Closing of
this Agreement.
13. Termination Prior to Closing
Without Liability. This Agreement may be terminated prior to
the Closing without liability of any party (except to the extent a party
previously breached any representation, covenant, or condition) upon the
following circumstances:
(a) Mutual
Consent. Termination by mutual consent evidenced by a written
document executed by the Buyer and the Sellers.
(b) Failure of Conditions
Precedent – Buyer’s Obligations. Termination by the Buyer evidenced by
written notice to the Sellers, on or before the Closing Date, if any of the
conditions
precedent to the Buyer’s obligations as set forth in Section 7 have not
been satisfied or waived by the Closing.
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(c) Failure of Conditions
Precedent – Seller’s Obligations. Termination by Sellers,
evidenced by written notice to the Buyer on or before the Closing Date, if any
conditions precedent to the Sellers’ obligations as set forth in Section 8
have not been satisfied or waived by the Closing.
14. Default.
(a) Remedies. If
any obligation under this Agreement is not performed as provided under the terms
of this Agreement, the parties shall have the remedies set forth below, in
addition to any other remedies available at law or in equity or specifically
provided for under any other provision of this Agreement.
(b) Buyer’s
Default. In the event this Agreement is not terminated in
accordance with Section 15 and either (i) all of the conditions precedent
to the obligation of the Buyer set forth in Section 7 are satisfied and the
Buyer fails to consummate the Closing, or (ii) the Buyer defaults in the
performance of any material obligation to be performed by the Buyer hereunder
and if such default can be cured, does not cure such default within five (5)
days after notice from Sellers, the Sellers may elect to treat this Agreement as
terminated and may recover such damages as may be proper.
(c) Sellers’
Default. If this Agreement is not terminated in accordance
with Section 15 and either (i) all of the conditions precedent to the
obligations of the Sellers set forth in Section 8 are satisfied and Sellers
fail to consummate the Closing or (ii) Sellers default in the performance of any
material obligation to be performed by Sellers hereunder and if such default can
be cured, fail to cure such default within five (5) days after notice from
Buyer, the Buyer may elect to treat this Agreement:
(i) as
terminated and the Buyer may recover such damages as may be proper,
or
(ii) as
being in full force and effect and the Buyer shall have a right to an action for
specific performance or damages, or both.
15. Indemnification by
Sellers.
(a) The
Sellers, jointly and severally agree to indemnify, defend, and hold the Buyer
harmless from and against: (i) any loss or liability (including
attorneys’ fees) occasioned by, arising out of, or resulting from, operation of
either or both of the Sellers prior to the Closing including, but not limited
to, all obligations and liabilities of a Seller; and (ii) any and all loss,
liability, or deficiency (including attorneys’ fees) arising out of or resulting
from any misrepresentation, breach of warranty or covenant, or default or
non-fulfillment of any covenant or agreement on the part of the Sellers under
this Agreement, or any certificate, agreement, exhibit, schedule, or instrument
furnished to the Buyer pursuant to this Agreement or in connection with any of
the transactions contemplated hereby.
(b) The
Buyer shall notify the Sellers in writing promptly after the occurrence of any
event, or the discovery of any facts which in its opinion entitles or may
entitle it to
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indemnification
under this Section, provided that the failure to give such notice shall not
affect the liability of the Sellers under this Section except to the extent the
failure to give such notice adversely affected to a material degree its or their
ability to defend against a claim or to cure a default giving rise to a
claim. With respect to a threatened or asserted claim by third
parties, the Buyer shall be entitled to undertake the defense, compromise, or
settlement of such claim at the expense of and for the account and risk of the
Sellers. In no event may the Sellers, without the Buyer’s written
consent, settle or compromise any claim or consent (which consent will not
unreasonably be withheld) to the entry of any judgment which does not include as
an unconditional term thereof, the giving by the claimant or plaintiff to the
Buyer of a release of all liability in respect of such claim.
(c) In
addition to Buyer’s rights to indemnification, the Buyer shall have the right to
receive from any amounts that may still be held by the Escrow Agent and to
setoff against the $25,000 Payment the amount of any indemnification claim under
this Section.
16. Indemnification by
Buyer.
(a) The
Buyer hereby agrees to indemnify, defend and hold Sellers harmless from and
against: any and all loss, liability, or deficiency (including
attorneys’ fees) arising out of or resulting from any misrepresentation, breach
of warranty or covenant, or default or non-fulfillment of any covenant or
agreement on the part of the Buyer under this Agreement, or any certificate,
agreement, exhibit, schedule, or instrument furnished to the Sellers pursuant to
this Agreement or in connection with any of the transactions contemplated
hereby.
(b) The
Sellers shall notify the Buyer in writing promptly after the occurrence of any
event, or the discovery of any facts which in its opinion entitles or may
entitle them to indemnification under this Section, provided that the failure to
give such notice shall not affect the liability of the Buyer under this
Section except to the extent the failure to give such notice adversely
affected to a material degree its ability to defend itself against a claim or to
cure a default giving rise to a claim. In the case of a claim against
Sellers subject to Buyer’s indemnification obligations under this Section, in no
event may the Buyer, without the Sellers’ written consent (which consent will
not unreasonably be withheld), settle, compromise any claim, or consent to the
entry of any judgment which does not include as an unconditional term thereof,
the giving by the claimant or plaintiff to Sellers of a release of all liability
in respect to such claim.
17. Exclusive
Dealings. The Sellers agree that, from the date hereof until
the Closing or earlier termination of this Agreement, neither of them will
directly or indirectly engage in discussions with, solicit interest from, or
negotiate with any other person or entity (or its intermediaries or
representatives) concerning a Transaction. For purposes of the
foregoing, “Transaction” shall mean any form of acquisition of an interest in
the Seller Bank Agreement. Sellers further agree that they
will: (a) notify Buyer immediately of any inquiry or contact
regarding a Transaction initiated by any other entity or person;
(b) disclose to Buyer the substance of any such inquiry; and
(c) notify such entity or person that Sellers have entered into an
exclusive Purchase Agreement with Buyer.
18. Due
Diligence. The Sellers will cooperate with Buyer in its due
diligence and furnish Buyer with copies of such records, contracts, and other
information as Buyer may reasonably request. Each Seller will permit
Buyer to communicate with, and have access to, such Seller’s employees, vendors,
and other persons who have a business relationship with such
Seller.
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19. Finders, Consultants, and
Brokers. The parties hereto hereby represent and warrant to
each other that there has been no finder, broker, or consultant involved in
negotiations leading up to the execution of this Agreement and no finder’s,
broker’s, or consultant’s fees or commissions are payable in connection with the
transactions contemplated hereby.
20. Other
Documents. The parties shall execute such other documents as
may be necessary and desirable to the implementation and consummation of this
Agreement.
21. Survival of Covenants,
Representations, and Warranties. All representations,
warranties, covenants, and agreements contained in this Agreement shall survive
the Closing Date notwithstanding any investigation made by or on behalf of the
parties hereto.
22. Notices. Any
notice or other communication any party desires or is required to give to the
other under the terms of this Agreement shall be deemed to have been given or
delivered, when delivered in person or by facsimile transmission to the party
being notified or to an executive officer of a corporate party being notified or
shall be deemed to have been given or delivered: (i) three (3)
business days after the same is deposited in the United States mail, registered
or certified, with proper postage prepaid, return receipt requested; or
(ii) one (1) business day after delivery to an overnight courier service
addressed to the party for whom intended at its address given below or to such
other address as a party may designate to the others by written notice given in
accordance with this Section.
(a) If
to the Sellers:
American Timeshare Associates,
Inc.
Net Com Data Corp of N.Y.
00 Xxxxxx Xxxxxx
Xxx Xxxxx, XX 00000
With
a copy
to: Xxxxxx
Xxxxxxxxx, Esq.
Phoenix Financial Center
000 Xxxxx Xxxx
Xxxxxxxxxxx, XX 00000
(b) If
to the Buyer:
United E-Systems, Inc.
15431 O’Xxxx Xxxx
Xxxxxxxx,
Xxxxxxxxxxx 00000
Attn: Xxxx
Xxxxx
With
a copy
to: Xxxx
X. Xxxxxxxx, Esq.
Nowalsky, Bronston, and Xxxxxxx,
APLLC
0000 Xxxxx Xxxxxxxx Xxxx., Xxx.
0000
Xxxxxxxx, Xxxxxxxxx 00000
23. Legal
Fees. Each party shall bear its own legal fees and expenses in
connection with the preparation of this Agreement and the consummation of the
Closing under this Agreement. If any action at law or in equity is
brought to enforce or interpret the terms of this Agreement, the
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prevailing
party shall be entitled to reasonable attorneys’ fees, costs, and disbursements
in addition to any other relief to which it may be entitled.
24. Assignability. This
Agreement may not be assigned by any party without the prior written consent of
the other party, provided that the Buyer may assign this Agreement and all of
its rights hereunder without consent and, upon any such assignment, this
Agreement shall inure to the benefit of, and be binding upon, such assignee or
successor, but Buyer will not be released from its obligations hereunder to the
extent they are not performed by the assignee.
25. Entire Agreement; Binding
Effect. Except as otherwise specifically provided herein, all
understandings and agreements between the parties are merged into this Agreement
which fully and completely expresses its agreement and supersedes any prior
agreement or understanding relating to the subject matter
hereof. This Agreement shall be binding upon and shall inure to the
benefit of the parties and their respective personal representatives, executors,
administrators, heirs, successors, and permitted assigns.
26. Governing Law; Forum, and
Venue. This Agreement and the agreements contemplated hereby
shall be construed in accordance with and governed by the laws of the State of
Mississippi without giving effect to the principles of conflict of
law.
27. Descriptive
Headings. The descriptive headings of the separate sections of
this Agreement are inserted for convenience only and shall not be deemed to
affect the meaning or construction of any of the provisions hereof.
28. Severability. If
any provision of this Agreement is held contrary to any federal, state, or local
law, the invalidity of such provision shall not affect any other provision of
this Agreement, and the remaining provisions hereof shall continue in full force
and effect and unmodified hereby. Any restriction or obligation
contained herein which cannot be enforced to its full extent shall be enforced
to the maximum extent permitted by law.
[Reminder
of page intentionally left blank; signature page follows]
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IN
WITNESS WHEREOF, the foregoing Agreement has been executed as of the date first
set forth above.
SELLERS:
Net Com Data
Corp of N.Y., a New York corporation
/s/ XXX XXXX
By:
Xxx Xxxx
Its: President
American Timeshare
Associates, Inc., a New York corporation
/s/ XXX XXXX
By:
Xxx Xxxx
Its: President
BUYER:
Netcom Data Corp.,
a Georgia corporation
/s/ XXXXXX X.
XXXXX
By:
Xxxxxx X. Xxxxx
Its: Treasurer
and Secretary
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