MEMBER INTEREST PURCHASE AGREEMENT
BY AND AMONG
MEDIA BILLING, L.L.C.,
INTERNET BILLING COMPANY, LLC
AND
INTERCEPT, INC.,
THE SOLE MEMBER OF INTERNET BILLING COMPANY, LLC
DATED AS OF MARCH 16, 2004
MEMBER INTEREST PURCHASE AGREEMENT
THIS MEMBER INTEREST PURCHASE AGREEMENT (this "AGREEMENT") is made and
entered into as of March 16, 2004, by and among Media Billing, L.L.C., a New
York limited liability company ("PURCHASER"); Internet Billing Company, LLC, a
Georgia limited liability company (the "COMPANY," formerly known as Internet
Merger Company, LLC, a Georgia limited liability company, and successor in
interest by merger to a Georgia limited liability company also known as Internet
Billing Company, LLC); and InterCept, Inc., a Georgia corporation ("SELLER").
Seller is the sole member of the Company, and Seller and the Company are
sometimes together referred to as the "INTERCEPT PARTIES."
R E C I T A L S
A. The Company is primarily engaged in the business of providing
various services that enable, among other things, merchants (providing services
to both adult-related and non-adult-related customers) to accept and process
real-time payments for goods and services over the Internet, as well as services
related to outsourced payment processing, transaction processing, risk
management, transaction security, fraud control, reporting tools, subscription,
accounting/bookkeeping services, shopping cart functionality, marketing, payment
options, interface, and back office management (the "SUBJECT BUSINESS," which
shall specifically exclude any assets to be transferred in the transaction to
Seller or one of its Affiliates as contemplated in Section C below and otherwise
described herein).
B. As of the date hereof, Seller owns 100% of the member interests of
the Company, constituting a 100% ownership interest in the Company under the
terms of the Company's Operating Agreement, and is entitled to that percentage
of the profits of the Company and must bear that percentage of the Company's
losses.
C. Seller wishes to sell to Purchaser and Purchaser wishes to purchase
from Seller 100% of the member interests of the Company. Prior to the closing,
the Company will transfer certain of its assets, including its non-adult-related
customers and certain claims of the Company, to an affiliate of Seller. By
virtue of this acquisition, Purchaser will acquire, through the Company,
substantially all of the Company's customer relationships (other than those
specifically transferred to an affiliate of Seller as otherwise described
herein) and the "iBill" trademark, and such other trademarks and other assets
currently owned by the Company as identified herein. In addition, Purchaser will
acquire (1) a perpetual royalty-free license to the Company of Seller's NexGen
and iBill transaction processing and support software, and (2) an assignment of
rights in any other components of the Company's existing infrastructure not
owned by the Company but necessary to continue services to the Company's
customers consistent with the services provided to them on the date hereof, all
as specifically subject to the terms and conditions set forth in this Agreement.
D. The Company has significant financial obligations, including
customer obligations, that Purchaser and the Company after Closing will be
required to satisfy pursuant to this Agreement. Additionally, Purchaser is
releasing Seller from liability to certain parties to which it has provided
security or guarantees on behalf of or for the benefit of the Company. Purchaser
has agreed to indemnify Seller for any claims or losses related to these matters
pursuant to the terms of this Agreement. To secure Purchaser's performance of
these obligations, Purchaser is providing to Seller an insurance policy with a
policy limit of at least $20,000,000 that Seller may make claims against to
satisfy indemnification claims up to that amount.
E. The above sale and purchase, including the asset transfers, licenses
and insurance policy referenced in Paragraphs C and D and all of the
transactions contemplated herein, are hereinafter collectively referred to as
the "CONTEMPLATED TRANSACTIONS."
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants, representations, warranties, conditions and agreements herein
contained, the parties hereto, intending to be legally bound, hereby agree as
follows:
ARTICLE 1
DEFINITIONS
The following terms used in this Member Interest Purchase Agreement
shall have the following respective meanings:
"2002 FINANCIAL STATEMENTS" has the meaning set forth in
Section 3.7(a).
"ACCOUNTS RECEIVABLE" has the meaning set forth in Section
3.19.
"AFFILIATE" means, with respect to any Person, (i) a director,
officer, manager, member or stockholder of such Person, (ii) a spouse, parent,
sibling or descendant of such Person (or spouse, parent, sibling or descendant
of any director or executive officer of such Person), and (iii) any other Person
that, directly or indirectly through one or more intermediaries, Controls, or is
Controlled by, or is under common Control with, such Person.
"AGE-RESTRICTED SERVICES" means goods and services related to
the adult entertainment industry.
"AGREEMENT" has the meaning set forth in the preamble.
"ASSET TRANSFERS" has the meaning set forth in Section 2.1(a).
"ASSET TRANSFER AGREEMENTS" has the meaning set forth in
Section 2.1(a).
"BALANCE SHEET" means the balance sheet set forth in the Most
Recent Financial Statements. "BALANCE SHEET DATE" means December 31, 2003.
"BOARD OF DIRECTORS" means, with respect to any Person, the
board of directors of such Person.
"BREAK-UP FEE" has the meaning set forth in Section 13.2.
"BUSINESS DAY" means any day that is not a Saturday, Sunday or
a day on which banking institutions in Atlanta, Georgia are not required to be
open.
"BYLAWS" means, with respect to any Person, the bylaws of such
Person.
"CASH PAYMENT" has the meaning set forth in Section 2.1(c).
"CLAIM" has the meaning set forth in Section 11.3.
2
"CLAIMANT" has the meaning set forth in Section 11.3.
"CLOSING" has the meaning set forth in Section 10.1.
"CLOSING DATE" has the meaning set forth in Section 10.1.
"CLOSING DATE BALANCE SHEET" has the meaning set forth in
Section 2.2(a).
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPANY" has the meaning set forth in the preamble.
"CONFIDENTIAL INFORMATION" means Intellectual Property Rights
of Seller, the Company and Purchaser and all information of a proprietary or
confidential nature relating to Seller, the Company, Purchaser, the Subject
Business or the Contemplated Transactions (other than information that is in the
public domain at the time of its use or disclosure other than as a result of the
breach by such party of its agreement hereunder).
"CONTEMPLATED TRANSACTIONS" has the meaning set forth in the
preamble.
"CONTRACT" means any loan or credit agreement, note, bond,
mortgage, indenture, lease, sublease, purchase order or other agreement,
instrument, permit, concession, franchise, license contract, obligation,
promise, or undertaking (whether written or oral and whether express or
implied).
"CONTROL" means, with respect to any Person, the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of such Person.
"CREDIT AGREEMENT" has the meaning set forth in Section 9.12.
"DEERFIELD BEACH LEASE" means the lease for the Company's main
office location in Deerfield Beach, Florida.
"EMPLOYEE PLAN" means any "employee benefit plan" (as defined
in Section 3(3) of ERISA) as well as any other plan, program or arrangement
involving direct and indirect compensation, under which the Company or any ERISA
Affiliate of the Company has any present or future obligations or Liability on
behalf of its employees or former employees, contractual employees or their
dependents or beneficiaries.
"ENCUMBRANCES" means and includes Taxes, security interests,
mortgages, liens, pledges, charges, claims, conditions, easements, reservations,
restrictions, clouds, equities, rights of way, options, community property
rights, rights of first refusal and all other encumbrances, whether or not
relating to the extension of credit or the borrowing of money, or any other
restriction of any kind, including any restriction on use, voting, transfer,
receipt of income, or exercise of any other attribute of ownership.
"ENVIRONMENTAL LAWS" has the meaning set forth in Section 3.8.
"ERISA" means the Employment Retirement Income Security Act of
1974, as amended.
3
"ESTIMATED WORKING CAPITAL DEFICIT" means the estimate of the
Company as of the Closing Date of the amount calculated by subtracting the total
liabilities of the Company transferred in the Subject Business from the current
assets of the Company transferred in the Subject Business, specifically to
include any cash held as security for the letter of credit securing the
Deerfield Beach Lease, both as reflected on the Pre-Closing Balance Sheet.
"EVENT OF DEFAULT" has the meaning set forth in Section 11.8.
"FINANCIAL STATEMENTS" has the meaning set forth in Section
3.7(a).
"FINAL WORKING CAPITAL DEFICIT" has the meaning set forth in
Section 2.2(a).
"FINE" has the meaning set forth in Section 9.10.
"FIRST DATA" has the meaning set forth in Section 8.5.
"FIRST DATA LETTER OF CREDIT" has the meaning set forth in
Section 9.13.
"GAAP" means generally accepted accounting principles, as
commonly practiced in the United States, and as applied on a basis consistent
with the basis on which the Balance Sheet and the other financial statements
referred to in Section 3.7 were prepared.
"GOVERNMENTAL ENTITY" means any court, administrative agency
or commission or other governmental authority or instrumentality, domestic or
foreign, Federal, state or local.
"GUARANTOR" has the meaning set forth in Section 9.14.
"GUARANTY AGREEMENT" has the meaning set forth in Section
9.14.
"INITIAL DEPOSIT" has the meaning set forth in Section 2.1(d).
"INSURANCE POLICY" has the meaning set forth in Section 9.6.
"INTELLECTUAL PROPERTY RIGHTS" means, whether patentable or
unpatentable and whether or not reduced to practice, all industrial and
intellectual property rights, including, without limitation, patents, patent
applications, patent rights, trademarks (registered and unregistered), trademark
applications, trade names, service marks, service xxxx applications, copyrights
(in both published and unpublished works), copyright applications, know-how,
trade secrets, proprietary processes and formulae, software, confidential
information, technical information, data, process technology, franchises,
licenses, inventions, discoveries, instructions, marketing materials, trade
dress, logos, slogans, corporate names, fictitious business names, internet
domain names, customer and supplier lists, rights in telephone numbers, pricing
and costing information, business and marketing plans, advertising and
promotional materials, and designs and all documentation and media constituting,
describing or relating to the foregoing, including, without limitation, manuals,
memoranda and records together with all translations, adaptations, derivations,
including all goodwill associated therewith.
"INTERCEPT PARTIES" has the meaning set forth in the preamble.
"IPS" has the meaning set forth in Section 2.1(a).
4
"KNOWLEDGE" of a party to this Agreement shall mean the
current awareness of management of that party, which with respect to (i) Seller
(on or before Closing) and the Company shall only include Xxxx Xxxxxxx, Xxxx
Xxxxx, Xxxx Xxxxx, Xxxxx Xxxxxxxxx and Xxxxx Xxxxx, and (ii) Purchaser and
Seller (following Closing) shall only include Xxxxx Xxxxxxx and Xxxxxxx Xxxxx.
"LAW" means any law, statute, treaty, rule, directive,
regulation or Order of any Governmental Entity.
"LEASED REAL PROPERTY" means the Company's leased premises in
Xxxxxxxxx Xxxxx, Xxxxxxx xxx Xxxxxxxx Xxxxx, Xxxxxxxxxx.
"LEASES" has the meaning set forth in Section 3.10.
"LENDER CONSENT" has the meaning set forth in Section 9.12.
"LIABILITY" of a Person means any liability or obligation,
whether known or unknown, asserted or unasserted, absolute or contingent,
accrued or unaccrued, liquidated or unliquidated and whether due or to become
due, joint or several, regardless of when asserted, including all liability for
Taxes, and whether or not the same is required to be accrued on the financial
statements of such Person.
"LOSS" or "LOSSES" means any and all losses, Liabilities,
demands, claims, actions, causes of action, assessments, shortages, damages
(including incidental and consequential), costs, expenses (including court
costs, the cost of any investigation, expert witnesses and preparation, and
attorneys', accountants' and other professionals' fees including the value of
services of in-house accountants and attorneys), assessments, Tax deficiencies
and Taxes incurred, whether directly or indirectly, net of any accruals
reflected on the Closing Date Balance Sheet, in connection with the receipt of
indemnification payments (including interest or penalties thereon) arising from
or in connection with any such matter that is the subject of indemnification
under Article 11 whether or not involving Third Party Claims.
"MATERIAL ADVERSE CHANGE" or "MATERIAL ADVERSE EFFECT" means,
whether in the whole or in the aggregate, with respect to any Person, any
material adverse change in the business, operations, assets (including levels of
working capital and components thereof), condition (financial or otherwise),
operating results, Liabilities, employee relations or business prospects of such
Person or any material casualty loss or damage to the assets of such Person,
whether or not covered by insurance.
"MEMBER INTEREST" the meaning set forth in Section 2.1(b).
"MOST RECENT FINANCIAL STATEMENTS" has the meaning set forth
in Section 3.7(a).
"XXXXXX XXXXXXX" has the meaning set forth in Section 7.5.
"NON-COMPETITION PERIOD" has the meaning set forth in Section
12.1.
"NOTE" has the meaning set forth in Section 2.1(c).
"OBLIGOR" has the meaning set forth in Section in Section
11.3.
"ORDERS" means judgments, writs, decrees, compliance
agreements, injunctions or orders of any Governmental Entity or arbitrator.
5
"ORDINARY COURSE" means, with respect to the Company, the
ordinary course of commercial operations engaged in by the Company, consistent
with past practice.
"ORGANIZATIONAL DOCUMENTS" means (i) the articles or
certificate of incorporation and the bylaws of a corporation; (ii) the
partnership agreement and any statement of partnership of a general partnership;
(iii) the limited partnership agreement and the certificate of limited
partnership of a limited partnership; (iv) the articles of organization or
certificate of formation and operating agreement or limited liability company
agreement of any limited liability company, (v) any charter or similar document
adopted or filed in connection with the creation, formation, or organization of
a Person; and (vi) any amendment to any of the foregoing.
"PART" means a part or section of a Disclosure Letter.
"PERMITS" means all permits, licenses, authorizations,
registrations, franchises, approvals, certificates, variances and similar rights
obtained, or required to be obtained, from Governmental Entities.
"PERMITTED ENCUMBRANCE" means (i) any Encumbrance for Taxes
not yet due or delinquent or being contested in good faith by appropriate
Proceedings for which adequate reserves have been established in accordance with
GAAP, (ii) any statutory Encumbrance arising in the ordinary course of business
by operation of Law with respect to a liability that is not yet due or
delinquent, (iii) any minor imperfection of title or similar Encumbrance which
individually does not materially impair the value of the property subject to
such Encumbrance or the use of such property in the conduct of the Subject
Business, and (iv) Encumbrances associated with the Leases.
"PERSON" shall be construed broadly and shall include an
individual, a partnership, a corporation, a limited liability company, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization or a Governmental Entity (or any department, agency or political
subdivision thereof) and any and all officers, directors and any other managers
of the preceding.
"PRE-CLOSING BALANCE SHEET" has the meaning set forth in
Section 7.3.
"PROCEEDING" means actions, audits, suits, claims, hearings,
investigations or legal or administrative or arbitration proceedings.
"PROCESSING AGREEMENTS" has the meaning set forth in Section
8.5.
"PURCHASER" has the meaning set forth in the preamble.
"PURCHASER DISCLOSURE LETTER" means the disclosure letter
delivered by Purchaser to Seller concurrently with the execution and delivery of
this Agreement.
"PURCHASE PRICE" has the meaning set forth in Section 2.1(c).
"PURCHASE PRICE ADJUSTMENT" has the meaning set forth in
Section 2.2(b).
"PURCHASER ADJUSTMENT PAYMENT" has the meaning set forth in
Section 2.2(b).
"PURCHASER REVIEW PERIOD" has the meaning set forth in Section
2.2(a).
"RESOLUTION PERIOD" has the meaning set forth in Section
2.2(d).
6
"SEC" shall mean the Securities and Exchange Commission.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended from time to time.
"SELECTED AUDITOR" shall mean Ernst & Young.
"SELLER" has the meaning set forth in the preamble.
"SELLER ADJUSTMENT PAYMENT" has the meaning set forth in
Section 2.2(b).
"SELLER DISCLOSURE LETTER" means the disclosure letter
delivered by Seller to Purchaser concurrently with the execution and delivery of
this Agreement.
"SELLER REVIEW PERIOD" has the meaning set forth in Section
2.2(d).
"SGS" has the meaning set forth in Section 8.5.
"SOFTWARE LICENSE AGREEMENT" has the meaning set forth in
Section 9.2.
"SUBJECT BUSINESS" has the meaning set forth in the recitals.
"TAX RETURNS" means returns, reports, statements,
declarations, forms and information statements with respect to Taxes, including
any schedule or attachment thereto, required to be submitted to or be filed with
the IRS or any other federal, foreign, state, local or provincial taxing
authority, domestic or foreign.
"TAXES" or "TAX," as applicable, means taxes, fees,
assessments, levies, duties, tariffs, imports, and governmental impositions or
charges of any kind in the nature of (or similar to) taxes, payable to any
federal, state, local or foreign taxing authority whether or not disputed,
including without limitation (a) income (including whether or not based upon net
income, gross income, income as specially defined, earnings, profits or selected
items of income, earnings or profits), franchise, profits, gains, gross
receipts, excise, sales, use, ad valorem, transfer, net worth, value added,
license, withholding, payroll, employment, social security (or similar),
workers' compensation, unemployment compensation, environmental, utility,
excise, severance, production, stamp, occupation, premium, customs duties,
property or windfall profits, alternative or add-on minimum taxes, or any other
tax of any kind whatsoever, together with all interest and penalties, additions
to tax and other additional amounts imposed by any taxing authority (domestic or
foreign), and (b) any liability for the payment of any amount of the type
described in the immediately preceding clause (a) as a result of (1) being a
"transferee" within the meaning of Section 6901 of the Code or any other
applicable Law, (2) being a member of an affiliated or combined group within the
meaning of the Code or any other applicable Law or (3) any contractual
obligation.
"THIRD PARTY CLAIM" means any claim brought by a Person who is
not a party to this Agreement.
"THIRD PARTY INTELLECTUAL PROPERTY RIGHTS" has the meaning set
forth in Section 3.12(a).
7
"TRANSACTION SERVICES" shall mean the business of providing
transaction processing solutions for consumer-to-business, business-to-business,
and person-to-person electronic commerce for third parties.
"TRANSFERRED CUSTOMERS" has the meaning set forth in Section
9.4.
"TRANSFERRED CLAIMS" has the meaning set forth in Section 9.5.
"TRANSITION PERIOD" has the meaning set forth in the
introductory paragraph of Article 5.
"TRANSITION SUPPORT AGREEMENT" has the meaning set forth in
Section 9.3.
ARTICLE 2
PURCHASE AND SALE OF MEMBER INTERESTS
2.1. PURCHASE AND SALE OBLIGATION.
(a) THE IBC ASSET TRANSFER. Immediately before the Closing, Seller
shall cause the Company to transfer to both Seller and Seller's and the
Company's Affiliate, InterCept Payment Solutions, LLC ("IPS"), the Transferred
Customers (and related contracts and relationships), the Transferred Claims,
certain software, and other assets and liabilities (collectively, the "ASSET
TRANSFERS") all as more fully described in, and in accordance with the terms and
conditions set forth in, the Asset Transfer Agreements attached hereto as
EXHIBIT 2.1(A) (the "ASSET TRANSFER AGREEMENTS"), and IPS shall license certain
software to the Company pursuant to the Software License Agreement.
(b) SALE OF MEMBER INTEREST. Upon the terms and subject to the
conditions set forth in this Agreement, at the Closing, and immediately after
the Asset Transfers from the Company to Seller or its Affiliates as contemplated
herein, Seller shall transfer, assign and sell to Purchaser, and Purchaser shall
purchase, acquire and accept from Seller, all of Seller's right, title and
interest in and to Seller's interest as a member of the Company (the "MEMBER
INTEREST"). The Member Interest will constitute all of the Company's member
interests upon the Closing. The Member Interest shall be delivered by Seller to
Purchaser free and clear of all Encumbrances.
(c) PURCHASE OF MEMBER INTEREST. In exchange for the Member Interest,
on the Closing Date, Purchaser shall:
(1) pay to Seller in immediately available funds the amount of (x)
$750,000 MINUS (y) the amount, if any, by which the Estimated
Working Capital Deficit of the Company exceeds $22,000,000 (the
"CASH PAYMENT");
(2) deliver to Seller a promissory note in the amount of (x)
$750,000 PLUS (y) the amount, if any, by which the Estimated
Working Capital Deficit of the Company is less than $22,000,000
(the "NOTE") (collectively, the amounts payable in the Cash
Payment and the Note shall be the "PURCHASE PRICE");
(3) cause the Insurance Policy to be delivered to Seller; and
(4) enter into the agreements as set forth in Article 9 hereof.
(d) INITIAL DEPOSIT. Upon the signing of this Agreement and subject to
the terms of Sections 13.1 and 13.2, Purchaser shall make a nonrefundable
deposit of $750,000 (the "INITIAL DEPOSIT") into the
8
following depository account of Seller with Bank of America, N.A. as designated
in writing by Seller on the date hereof. The Initial Deposit shall be credited
at Closing toward the cash portion of the Purchase Price set forth in Section
2.1(c) above.
2.2. PURCHASE PRICE ADJUSTMENT.
(a) Within 45 days following the Closing (the "PURCHASER REVIEW
PERIOD"), Purchaser shall deliver to Seller (i) a final closing balance sheet of
the Company as of the Closing Date (reflecting the Subject Business transferred
at Closing and excluding the Asset Transfers) prepared in accordance with GAAP
(other than exceptions to GAAP specified in the notes to the Pre-Closing Balance
Sheet) using the same accounting principles, policies and practices used to
prepare the Pre-Closing Balance Sheet (the "CLOSING DATE BALANCE SHEET"); and
(ii) Purchaser's calculation of the final working capital deficit of the Company
determined by the sum of the value of the current assets of the Company and the
total liabilities of the Company as determined in the Closing Date Balance Sheet
(the "FINAL WORKING CAPITAL DEFICIT") using the same methodology used to
calculate the Estimated Working Capital Deficit.
(b) If
(i) the Final Working Capital Deficit is less than (i.e., a lesser
negative number) the Estimated Working Capital Deficit, then Purchaser
shall pay Seller such difference (the "PURCHASER ADJUSTMENT PAYMENT")
as provided in Section 2.2(e) below, or
(ii) the Final Working Capital Deficit is greater than (i.e., a
greater negative number) the Estimated Working Capital Deficit, then
Seller shall pay Purchaser such difference (the "SELLER ADJUSTMENT
PAYMENT") as provided in Section 2.2(e) below,
and in either event the Purchase Price shall be adjusted accordingly (in either
case, the "PURCHASE PRICE ADJUSTMENT").
(c) If Purchaser fails to deliver the Closing Date Balance Sheet to
Seller during the Purchaser Review Period, then Purchaser shall have the right
to extend the Purchaser Review Period for up to an additional 15 days by
providing written notice to Seller before the end of the Purchaser Review
Period. If Purchaser fails to deliver the Closing Date Balance Sheet to Seller
during the extended Purchaser Review Period, as extended, then Purchaser shall
be deemed to have waived its rights to the Purchase Price Adjustment, and Seller
may submit a Closing Date Balance Sheet to Purchaser if it would be entitled to
the Purchaser Adjustment Payment thereunder.
(d) Provided Purchaser delivers the Closing Date Balance Sheet to
Seller before the end of the Purchaser Review Period, Seller shall have 20
business days after its receipt of the Closing Date Balance Sheet to review and
dispute the Closing Date Balance Sheet, including the computation of the Final
Working Capital Deficit (the "SELLER REVIEW PERIOD"). If Seller fails to dispute
the Closing Date Balance Sheet, including the computation of the Final Working
Capital Deficit, during the Seller Review Period, Seller shall be deemed to have
accepted the terms of the Closing Date Balance Sheet, including the Seller
Adjustment Payment or the Purchaser Adjustment Payment thereunder, as determined
by Purchaser. If Seller disputes the computation of the Final Working Capital
Deficit during the Seller Review Period, then Seller and Purchaser shall have 20
business days from the delivery of notice of its dispute to Purchaser to reach
an agreement with regard to the disputed computation (the "RESOLUTION PERIOD").
If the parties fail to reach an agreement during the Resolution Period, then the
dispute shall be submitted to the Selected Auditor for full and final resolution
applying the principles, policies and practices referenced in Section 2.2(a).
The Selected Auditor shall make a determination of the Final Working Capital
Deficit and the Seller Adjustment Payment or the Purchaser Adjustment Payment
9
thereunder, as applicable, within 60 days following the end of the Resolution
Period. For purposes of this Agreement, the determination of the Selected
Auditor with respect to the Purchase Price Adjustment shall be final and
conclusive as to all parties, absent clear error. If Purchaser fails to deliver
the Closing Date Balance Sheet to Seller as described in Section 2.2(c), and
Seller submits to Purchaser a Closing Date Balance Sheet, then the review
provisions described in this Section 2.2(d) for the benefit of Seller shall
apply for the benefit of Purchaser, and the same dispute resolution procedures
shall be applicable in the event of an unresolved dispute.
(e) Following final determination of the amount of the Purchase Price
Adjustment, if any, in accordance with the above paragraphs, (i) Seller shall
remit the Seller Adjustment Payment, if any, to Purchaser or the Company in
immediately available funds within five business days after the final
determination of the Purchase Price Adjustment, or (ii) either Purchaser or the
Company (being jointly and severally obligated to do so) shall remit to Seller
the Purchaser Adjustment Payment, if any, in immediately available funds within
five business days after the final determination of the Purchase Price
Adjustment, provided that if Purchaser and the Company fail to make the
Purchaser Adjustment Payment in such period, Seller, at its sole option, may
immediately draw against the Letter to Credit for the amount of the Purchaser
Adjustment Payment.
(f) The fees and expenses of the Selected Auditor shall be split
equally between Purchaser, on the one hand, and Seller, on the other hand.
(g) During all periods contemplated in this Section 2.2, the parties
shall reasonably cooperate with each other (and the Selected Auditor if
applicable), including providing reasonable access to each party's books and
records, to facilitate the determination of the Final Working Capital Deficit
and any Purchase Price Adjustment.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY AND SELLER
To the Knowledge of Seller with respect to all representations and
warranties set forth in this Article 3 other than Section 3.1, Seller represents
and warrants to Purchaser as follows:
3.1. CAPITALIZATION AND ORGANIZATION. Seller is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Georgia. The Company is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Georgia and is
foreign qualified to transact business and is in good standing in the States of
Florida and California. Except as set forth in PART 3.1 of the Seller Disclosure
Letter, the Company is not foreign qualified or required to be foreign qualified
in any other state. Seller owns the Member Interest, which constitutes 100% of
the outstanding member interests of the Company and there are no rights,
options, warrants or other agreements to acquire any additional membership
interests of the Company. The Company has delivered to Purchaser complete and
correct copies of its Articles of Organization and Operating Agreement, each as
amended to date, and the records of any and all proceedings and actions at all
meetings of, or taken by written consent by, the manager and member of the
Company. The Company owns equity positions in the entities listed in PART 3.1 of
the Seller Disclosure Letter in the percentages stated therein.
10
3.2. AUTHORITY. Seller and the Company have the power and authority to
execute and deliver this Agreement. Seller and the Company have taken all
necessary corporate action, including all action required by their respective
board of directors or board of managers, to authorize the execution and delivery
of this Agreement. Upon execution, this Agreement shall constitute the legal,
valid, and binding obligation of Seller and the Company, enforceable against
Seller and the Company in accordance with its terms and conditions, except as
such enforcement may be subject to or limited by bankruptcy, insolvency,
reorganization, moratorium or other similar Laws now or hereafter in effect
affecting creditors' rights generally, and by general principles of equity.
3.3. NO GOVERNMENT CONSENTS. Except as disclosed in PART 3.3 of the
Seller Disclosure Letter, no approval, authorization, consent, permission, or
waiver to or from, or notice, filing, or recording to or with, any Government
Entity is necessary for the valid execution and delivery of this Agreement by
Seller and the Company.
3.4. NO THIRD PARTY CONSENTS. Except as disclosed in PART 3.4 of the
Seller Disclosure Letter, no approval, authorization, consent, permission, or
waiver to or from, or notice, filing, or recording to or with, any Person that
is a party to a material contract or agreement with Seller or the Company is
necessary for (a) the execution and delivery of this Agreement by Seller and the
Company; or (b) the transfer and assignment to Purchaser at Closing of the
Leases and the material Contracts of the Company.
3.5. NO CONFLICTS. Except as disclosed in PART 3.5 of the Seller
Disclosure Letter, the execution and delivery by the Company and Seller of this
Agreement and the consummation of the Contemplated Transactions do not and will
not (i) conflict with, or result in any violation of, or cause a default (with
or without notice or lapse of time, or both) under, or give rise to a right of
termination, amendment, the loss of any material benefit under, any term,
condition or provision of the Organizational Documents of the InterCept Parties,
any material Contract to which the any of the InterCept Parties is a party, or
by which the InterCept Parties or their respective properties may be bound, or
(ii) violate any Law applicable to the InterCept Parties or any of their
respective properties. Except as set forth on PART 3.5 of the Seller Disclosure
Letter, there are no agreements between Seller and any other Person with respect
to its Member Interest that would prevent or encumber Seller's right to transfer
its Member Interest in the Company as contemplated herein.
3.6. NO ADDITIONAL BROKERS. Except as set forth in PART 3.6 of the
Seller Disclosure Letter, no investment banker, broker or finder is entitled to
receive a commission or fee in respect of this Agreement or the transactions
contemplated hereby, based upon any arrangement or agreement made by or on
behalf of either of Seller or the Company.
3.7. FINANCIAL STATEMENTS.
(a) The (i) unaudited consolidated balance sheets and statements of
operations for the Company as of and for the period from April 9, 2002 to
December 31, 2002 (the "2002 FINANCIAL STATEMENTS"); and (ii) the unaudited
consolidated balance sheets and statements of operations for the Company as of
and for the one year period ended December 31, 2003 (the "MOST RECENT FINANCIAL
STATEMENTS") (collectively, the 2002 Financial Statements and the Most Recent
Financial Statements are referred to as the "FINANCIAL STATEMENTS") fairly
present the combined financial position of the Company with regard to the
Financial Statements as of the respective dates thereof and the results of their
operations for the respective periods thereof. The Financial Statements were
prepared in accordance with GAAP (except as disclosed on PART 3.7 of the Seller
Disclosure Letter and for the absence of normal footnote disclosures and the
absence of immaterial normal year-end adjustments in the Most Recent Financial
Statements).
11
(b) Except as set forth on PART 3.7 of the Seller Disclosure Letter,
the Company has no material obligations or liabilities of any nature (matured or
unmatured, fixed or contingent) other than (i) those set forth or adequately
provided for (including any reserves) in the Most Recent Financial Statements,
(ii) those incurred in the ordinary course of business and not required to be
set forth in the Most Recent Financial Statements under GAAP, (iii) those
incurred in the ordinary course of business since the date of the Most Recent
Financial Statements and consistent with past practice and (iv) those incurred
in connection with the execution of this Agreement.
3.8. ENVIRONMENTAL MATTERS. Neither Seller nor the Company has received
any notice of any pending or threatened investigation, Proceeding or claim with
respect to the Company to the effect that the Company 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 applicable Laws relating to pollution or protection of the environment
("ENVIRONMENTAL LAWS"). 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 Company to any person or entity or for any such cleanup costs.
3.9. LITIGATION. Except as set forth on PART 3.9 of the Seller
Disclosure Letter, neither the Company nor Seller, nor any officer, director,
employee, agent or Affiliate of the Company is a party to any material pending
or threatened Proceeding, whether at law or in equity, or before or by any
Governmental Entity or arbitrator, nor does any basis exist for any such
Proceeding.
3.10. LEASES. The leases disclosed in PART 3.10 of the Seller
Disclosure Letter (the "LEASES") constitute all material leasing or rental
contracts, agreements, and other commitments and arrangements in effect as of
the execution of this Agreement and to which the Company is a party.
3.11. PERSONNEL, BENEFIT ARRANGEMENTS AND EMPLOYEE PLANS.
(a) LIST OF PERSONNEL. PART 3.11(a)(1) of the Seller Disclosure Letter
contains a true and complete list of the names, positions and current
compensation levels of all salaried or annual employees and of the Company. PART
3.11(a)(2) of the Seller Disclosure Letter contains a true and complete list of
the names, positions and current compensation levels of all other employees of
the Company, including without limitation, temporary employees and employees
compensated on an hourly or commission basis, who are not included on PART
3.11(a)(1) of the Seller Disclosure Letter.
(b) EMPLOYEE RELATIONS. There is no labor strike, dispute, slowdown,
stoppage, or similar activity pending or threatened against the Company. Except
as described in PART 3.11(b) of the Seller Disclosure Letter, there are no
Proceedings pending before the Equal Employment Opportunity Commission or any
federal, state, or local agency or court against Seller pertaining to the
Company or the employees of the Company.
(c) LIST OF EMPLOYEE PLANS. The Employee Plans set forth in PART
3.11(c) of the Seller Disclosure Letter is accurate list of the Employee Plans
of the Company.
(d) NO LIABILITIES OR OBLIGATIONS. Except as reflected on the Financial
Statements, the Company has no liabilities or obligations to any beneficiaries,
governmental authorities, or any other parties arising out of or relating to the
Employee Plans.
(e) NO MULTI-EMPLOYER OR CERTAIN OTHER PLANS. None of the Employee
Plans is a multi-employer plan, as defined in Section 3(37) of ERISA, or is
subject to Title IV of ERISA or Code section 412; and neither the Company nor
any of its Affiliates has or has had any liability or other obligation in
12
connection with any such multi-employer plan, or plan which is or was subject to
Title IV of ERISA or Code section 412.
(f) WARN ACT COMPLIANCE. The Company has complied in all respects with
the Worker Adjustment and Retraining Notification Act.
3.12. INTELLECTUAL PROPERTY.
(a) PART 3.12 of the Seller Disclosure Letter lists (1) material
patents, patent applications, registered and unregistered trademarks and service
marks, trade names, domain names, registered and unregistered copyrights,
including software, and maskworks owned by the Company, (2) material licenses,
sublicenses and other agreements as to which Company is a party and under which
a third party is authorized or permitted to use such Intellectual Property
Rights listed pursuant to Section 3.12(a)(1), and (3) material licenses,
sublicenses and other agreements as to which Company is a party and pursuant to
which Company is authorized to use third party (including Seller or any of its
Affiliates other than the Company) patents, trademarks or copyrights, including
software ("THIRD PARTY INTELLECTUAL PROPERTY RIGHTS"), which are incorporated
solely in, are, or form a primary part of material product or service offerings
of Company to conduct its business. PART 3.12 of the Seller Disclosure Letter
does not, and need not, include or describe Intellectual Property Rights of a
generalized nature such as know how and goodwill. The Company is not in
violation of any license, sublicense, or agreement described in PART 3.12 of the
Seller Disclosure Letter. The Intellectual Property Rights and Third Party
Intellectual Property Rights set forth on PART 3.12 of the Seller Disclosure
Letter are all those in existence that are necessary for the operation of the
Company's businesses as they are currently conducted, including the Subject
Business. The Company, or its wholly-owned subsidiary, is the owner of all
right, title, and interest in and to each of such Intellectual Property Rights
or licensee of such Third Party Intellectual Property Rights, free and clear of
all Encumbrances, other than Permitted Encumbrances.
(b) Except as disclosed in PART 3.12 of the Seller Disclosure Letter,
there is no unauthorized use, disclosure, infringement or misappropriation of
any Intellectual Property Rights of the Company, or misappropriation of any
trade secret material owned by the Company, by any third party, including any
former employee of the Company.
(c) All material patents and registered and unregistered trademarks,
service marks and copyrights held by the Company are valid and existing. The
Company has not received any written notice of any assertion or claim
challenging the validity of any Intellectual Property Rights of the Company.
Except as described in PART 3.12 of the Seller Disclosure Letter, the Company
has not been sued, or threatened to be sued, in any suit or other Proceeding
which involves a claim of infringement of any patents, trademarks, service
marks, copyrights or misappropriation of any trade secret or violation of other
proprietary right of any third party. Except as described in PART 3.12 of the
Seller Disclosure Letter, there is no claim, nor has the Company recognized any
facts or circumstances which could lead to a claim, of infringement of any
patents, trademarks, service marks, copyrights or misappropriation of any trade
secret or violation of other proprietary right of any third party. Except as
described in PART 3.12 of the Seller Disclosure Letter, the Company has not
received written notice that any third party is challenging the ownership of any
of the Company's Intellectual Property Rights. Except as described in PART 3.12
of the Seller Disclosure Letter, the Company has not brought or threatened to
bring any action, suit, or Proceeding for infringement of Intellectual Property
Rights or breach of any license or agreement involving its Intellectual Property
Rights against any third party. There are no pending or threatened interference
Proceedings or re-examinations involving any patents or patent applications of
the Company.
13
3.13. ABSENCE OF CHANGES. Except as set forth on PART 3.13 of the
Seller Disclosure Letter, since the Balance Sheet Date and other than the Asset
Transfers, with respect to the Company there has not occurred any of the
following:
(a) change in the Company's authorized or issued membership interests;
grant of any option or right to purchase any membership interests or similar
rights with respect to the Company or any of its subsidiaries; issuance of any
security convertible into membership interest or similar rights; grant of any
registration rights; purchase, redemption, retirement, or other acquisition by
the Company of any membership interests or similar rights; or declaration or
payment of any dividend or other distribution or payment in respect of
membership interests;
(b) amendment to the Organizational Documents of the Company or any of
its subsidiaries;
(c) payment or increase by the Company or any of its subsidiaries of
any bonuses, salaries, or other compensation to any stockholder, member,
director, officer, or employee (except for year-end bonuses and salary increases
in the Ordinary Course of Business) or entry into any employment, severance, or
similar contract with any director, officer, or employee;
(d) adoption of, or increase in the payments to or benefits under, any
profit sharing, bonus, deferred compensation, savings, insurance, pension,
retirement, or other employee benefit plan for or with any employees of the
Company or any of its subsidiaries, other than an adoption or increase of Seller
affecting all of its subsidiaries;
(e) damage to or destruction or loss of any asset or property of the
Company or any of its subsidiaries, whether or not covered by insurance, that
has or could have a Material Adverse Effect on the properties, assets, business,
or financial condition of the Company or any of its subsidiaries, taken as a
whole;
(f) entry into, termination of, or receipt of notice of termination of
(i) any license, distributorship, dealer, sales representative, joint venture,
credit, or similar agreement, or (ii) any contract or transaction involving a
total remaining commitment by or to the Company or any of its subsidiaries of at
least $100,000;
(g) sale (other than sales of inventory in the Ordinary Course of
Business), lease, or other disposition of any asset or property of the Company
or any of its subsidiaries or mortgage, pledge, or imposition of any new
Encumbrance on any material asset or property of the Company or any of its
subsidiaries, including the sale, lease, or other disposition of any of the
Intellectual Property Rights;
(h) cancellation or waiver of any claims or rights with a value to the
Company or any of its subsidiaries in excess of $100,000;
(i) material change in the accounting methods used by the Company or
any of its subsidiaries; or
(j) agreement, whether oral or written, by the Company or any of its
subsidiaries to do any of the foregoing.
3.14. TAX RETURNS. The Company has filed all Tax returns and reports
that it is required to file with the appropriate Governmental Entities. Such
returns and reports are accurate and complete, and the Company has paid in full
all Taxes, interest, penalties, assessments, or deficiencies shown to be due on
14
such reports, claimed to be due by any taxing authority, or otherwise due and
owing. The Company has made all withholdings of Tax required to be made under
all applicable federal state and local tax regulations.
3.15. TITLE TO ASSETS, PROPERTIES AND RIGHTS AND RELATED MATTERS.
(a) Except as set forth on PART 3.15(a) of the Seller Disclosure
Letter, the Company has good title to the Intellectual Property Rights as
provided in Section 3.12 and to all other assets, properties and interests in
properties, real, personal or mixed, reflected on the Balance Sheet or acquired
after the Balance Sheet Date (except inventory or other property sold or
otherwise disposed of since the Balance Sheet Date in the Ordinary Course and
accounts receivable and notes receivable paid in full subsequent to the Balance
Sheet Date), free and clear of all Encumbrances, except for Permitted
Encumbrances. Except as set forth on PART 3.15 of the Seller Disclosure Letter,
and except for inventory and supplies in transit in the Ordinary Course, all
material tangible personal property is located on one or more of the Leased Real
Properties.
(b) Except as set forth on PART 3.15(b) of the Seller Disclosure
Letter, neither the Company, nor any of its subsidiaries, has transferred to
Seller or any of its Affiliates any material assets other than in the Ordinary
Course.
3.16. AGREEMENTS, NO DEFAULTS. Except as set forth on PART 3.16 of the
Seller Disclosure Letter, the Company is not a party to any:
(a) Contract for the employment of any officer, individual employee or
other Person on a full-time, part-time, consulting or other basis or agreement
with any Affiliates;
(b) Contract relating to the borrowing of money or to the mortgaging,
pledging or otherwise placing an Encumbrance, other than Permitted Encumbrances,
on any asset owned by the Company and/or used in the Subject Business;
(c) Contract relating to any guarantee of any obligation for borrowed
money or otherwise;
(d) Contract with respect to the lending or investing of funds;
(e) Contract relating to the licensing of any rights of any third
party;
(f) Contract or group of related Contracts with the same party
(excluding purchase orders entered into in the Ordinary Course which are to be
completed within three months of entering into such purchase orders) for the
purchase or sale of products or services under which the undelivered balance of
such products and services has a purchase price in excess of $100,000; or
(g) Contract that prohibits it from freely engaging in business
anywhere in the world.
3.17. COMPLIANCE. Except as set forth in PART 3.17, the Company has not
received any notice of violation from any government or regulatory agency
related to an alleged violation of any statute, ordinance, regulation, order or
requirement relating to its operations, and the Company and Seller have no
Knowledge of any such violation.
3.18. BANK ACCOUNTS; POWERS OF ATTORNEY. PART 3.18 of the Seller
Disclosure Letter sets forth a complete and correct list of (a) the names of
each bank account in which the Company has an account or
15
safe deposit box, and the names of all persons authorized to draw thereon, or
have access thereto and (b) the names of all Persons holding general or special
powers of attorney from the Company and a summary of the terms thereof.
3.19. ACCOUNTS RECEIVABLE. Except as set forth in PART 3.19 of the
Seller Disclosure Letter, the accounts receivable of the Company that are
reflected on the Most Recent Financial Statements or on the accounting records
of the Company as of the Closing Date (the "ACCOUNTS RECEIVABLE") have arisen in
the Ordinary Course in the aggregate recorded amounts thereof, net of any
applicable reserve reflected in the Most Recent Financial Statements. Except as
set forth in PART 3.19 of the Seller Disclosure Letter, the Accounts Receivable
(a) arose from bona fide sales or services transactions in the ordinary course
of business and are payable on ordinary trade terms, (b) are not the subject of
any actions or Proceedings brought by or on behalf of the Company, (c) have not
been challenged or disavowed by the obligor of such Accounts Receivable, and (d)
are, to the Knowledge of the Company, fully collectible subject to any aggregate
reserve reflected in the Most Recent Financial Statements.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to the Company and Seller as
follows:
4.1. CORPORATE EXISTENCE. Purchaser is a New York limited liability
company duly organized, validly existing and in good standing under the laws of
its jurisdiction of organization. Penthouse International, Inc. owns 99% of the
member interests of Purchaser, and Xx. Xxxxxxx X. Xxxxx ("Xxxxx") and Xx. Xxxx
Xxxxxxx Xxxxxx G. respectively own .5% of the member interests of Purchaser and
are the sole managers of Purchaser.
4.2. CORPORATE POWER AND AUTHORIZATION. Purchaser has the power,
authority, and legal right to execute this Agreement, to consummate the
Contemplated Transactions, to execute any instrument necessary to fully complete
the terms of this Agreement, and to otherwise perform all of its obligations
hereunder. The execution, delivery, and performance of this Agreement and all
other agreements required hereunder have been duly authorized by all necessary
corporate or other similar action. This Agreement and all other agreements
required hereunder have been duly executed and delivered by Purchaser and,
assuming due and valid execution and delivery by all other parties hereto,
constitute the legal, valid, and binding obligations of Purchaser, enforceable
against Purchaser in accordance with their terms and conditions except as such
enforcement may be subject to or limited by bankruptcy, insolvency,
reorganization, moratorium or other similar Laws now or hereafter in effect
affecting creditors' rights generally, and by general principles of equity.
4.3. NO ADDITIONAL BROKERS. Except as set forth on PART 4.3 of the
Purchaser Disclosure Letter, no investment banker, broker or finder is entitled
to receive a commission or fee from the execution of this Agreement or from the
consummation of the Contemplated Transactions, based upon any arrangement or
agreement made by or on behalf of Purchaser.
4.4. NO CONSENTS REQUIRED. Except as otherwise provided in this
Agreement, no Permit, consent, approval or authorization of, or any notification
of or filing with, any Person or Governmental Entity is required in connection
with the execution and delivery by Purchaser of this Agreement, any other
agreement required hereunder, or the consummation of any of the Contemplated
Transactions to be performed by Purchaser.
4.5. FINANCIAL RESOURCES. On the Closing Date, Purchaser:
16
(a) owns property having a value, at fair valuations, greater than the
amount required to pay its debts;
(b) has capital sufficient to carry on its business and transactions
and all business and transactions in which it is about to engage following
acquisition of the Subject Business; and
(c) does not intend or believe it will incur following consummation of
the Contemplated Transactions debts beyond its ability to repay them as they
mature.
4.6. NO RESTRICTIONS. The execution and delivery of this Agreement, the
execution and delivery of the other agreements contemplated by this Agreement,
and the consummation of the Contemplated Transactions do not and will not result
in:
(a) the breach of any contract to which Purchaser is a party or by
which Purchaser is bound,
(b) the violation of the Organizational Documents of Purchaser,
including but not limited to the organizational agreement of Purchaser, or
(c) the violation of any statute, regulation, or governmental order by
which Purchaser is bound.
4.7. PURCHASE FOR OWN ACCOUNT. Purchaser is purchasing the Member
Interest of the Company for its own account for investment, not as a nominee or
agent for any other Person, and not with a view to, or for sale in connection
with, the distribution of any part thereof, and Purchaser has no present
intention of distributing the same.
4.8. RELIANCE UPON PURCHASER'S REPRESENTATIONS. Purchaser understands
that the Member Interest is not registered under the Securities Act nor
qualified under applicable state securities law on the ground that the sale
provided for in this Agreement is exempt from registration under the Securities
Act and qualification under applicable state securities law, and that Seller's
reliance on such exemptions is predicated on Purchaser's representations set
forth in this Agreement.
4.9. PURCHASER IS ON AN "AS IS" BASIS; RECEIPT OF ALL MATERIAL
INFORMATION. Purchaser represents that it is purchasing the Company on an "as
is" basis. Purchaser believes that, as of Closing, Purchaser will have received
all the information Purchaser considers necessary or appropriate for deciding
whether to purchase the Member Interest of the Company. By Closing, Purchaser
will have had a satisfactory opportunity to ask questions and receive answers
from Seller and the Company regarding the terms and conditions of the purchase
of the Member Interest and the business, properties, prospects, and financial
condition of the Company. Also by Closing, Purchaser will have had a
satisfactory opportunity to obtain additional information sufficient to satisfy
itself with respect to the foregoing. Purchaser hereby acknowledges that by
participating in the Closing, it will be affirming:
(a) that it has taken advantage of its opportunity to ask questions and
receive answers from Seller and the Company, and
(b) that every material fact necessary to induce Purchaser into its
purchase of the Member Interest of the Company is addressed in this Agreement or
in the accompanying Seller Disclosure Letter.
4.10. INVESTMENT EXPERIENCE. Purchaser's officers are experienced in
evaluating and investing in securities, and Purchaser acknowledges that through
their expertise, it is able to make investment decisions for itself, can bear
the economic risk of its investment and has such knowledge and
17
experience in financial and business matters that it is capable of evaluating
the merits and risks of the investment in the Member Interest.
4.11. RESTRICTED SECURITIES. Purchaser understands that the Member
Interest may not be sold, transferred or otherwise disposed of without
registration under the Securities Act and/or qualification under applicable
state securities law, or an exemption therefrom, and that in the absence of an
effective registration statement and/or applicable state qualification covering
the Member Interest or an available exemption from registration under the
Securities Act and/or qualification under applicable state securities law, the
Member Interest must be held indefinitely.
4.12. NO KNOWLEDGE OF BREACH OF THE COMPANY'S OR SELLER'S
REPRESENTATIONS OR WARRANTIES. To the Knowledge of Purchaser, there are no
facts, events or occurrences which would cause the Company or Seller to be in
breach of any of their respective representations or warranties contained in
this Agreement.
4.13. COMPANY INSURANCE. Purchaser acknowledges that the Company's
insurance policies are held by Seller and that at Closing, Purchaser shall be
required to obtain new insurance policies for the Company.
4.14. CERTAIN RELATED DOCUMENTS. The ancillary documents to be executed
by Purchaser in connection with this Agreement have been duly executed and
delivered by the parties thereto other than Seller and the Company and
constitute the legal, valid, and binding obligations of such parties,
enforceable against such parties in accordance with their terms and conditions.
ARTICLE 5
COVENANTS DURING THE TRANSITION PERIOD
The Company, Seller and Purchaser agree to abide by the following
covenants from and after the date of this Agreement until the Closing or the
earlier termination of this Agreement pursuant to Section 13.1 (the "TRANSITION
PERIOD").
5.1. CONSENTS, APPROVALS, ETC. The Company, Seller and Purchaser shall
each use commercially reasonable efforts:
(a) to cooperate with one another in determining whether any filings
are required to be made with, or consents, permits, authorizations or approvals
are required to be obtained from, any other Person or Governmental Entity in
connection with the execution and delivery of this Agreement and the
consummation of the Contemplated Transactions, and timely making all such
filings and timely seeking all such consents, permits, authorizations or
approvals (provided that Seller shall only be required to obtain the consent of
applicable parties under its Senior credit facility); and
(b) to take, or cause to be taken, all other actions and do, or cause
to be done, all other things necessary, proper or advisable to consummate and
make effective the Contemplated Transactions as soon as reasonably practicable.
5.2. AFFIRMATIVE COVENANTS OF THE COMPANY AND SELLER. Except as
otherwise consented to in writing by Purchaser, the Company shall, and Seller
shall cause the Company:
(a) to conduct its operations in the Ordinary Course (including the
collection of receivables and the payment of payables) and use reasonable
efforts to preserve intact its business organization, keep
18
available the services of officers and employees, and maintain satisfactory
relationships with suppliers, customers and others having business relationships
with them;
(b) to maintain its assets in customary repair, order and condition,
maintain insurance reasonably comparable to that in effect on the Balance Sheet
Date, replace in accordance with past practice inoperable, worn out or obsolete
assets with modern assets of comparable quality and, in the event of a casualty,
loss or damage to any of such assets or properties before the Closing Date for
which the Company is insured or the condemnation of any assets or properties,
either repair or replace such assets or property or, if Purchaser agrees, retain
such insurance or condemnation proceeds;
(c) to use its reasonable efforts to obtain all consents known by the
Company or Seller to be needed, or specified by Purchaser, on or before the
Closing Date, to the Contemplated Transactions (provided that Seller shall only
be required to obtain the consent of applicable parties under its Senior credit
facility); and
(d) to maintain its insurance policies in full force and effect, or
shall renew or replace the same before the expiration or termination of the
expiring policies with policies from a reputable insurance carrier with a
"Best's Rating" equal to or better than that of the existing carrier, containing
insurance coverage in the same or greater amount than the existing policies in
substantially the same form and substance as the existing policies.
5.3. NEGATIVE COVENANTS OF THE COMPANY AND SELLER. Without the prior
written consent of Purchaser, except as expressly contemplated by this
Agreement, the Company shall not, and Seller shall cause the Company not:
(a) to sell, lease, transfer or assign any of its material assets,
tangible or intangible, other than inventory sold in the Ordinary Course and the
Asset Transfers;
(b) except as set forth on PART 5.3(b) of the Seller Disclosure Letter,
to acquire or agree to acquire by merging or consolidating with, or by
purchasing any material portion of the capital stock or assets of, or by any
other manner, any business or any corporation, partnership, association or other
business organization or division thereof;
(c) to amend the Organizational Documents of the Company;
(d) to split, combine, reclassify, encumber or make any change in the
Company's membership interests, or issue any new member interests or issue or
become a party to any subscriptions, warrants, rights, options, convertible
securities or other agreements or commitments of any character relating to the
interests of the Company;
(e) to incur or commit to incur any capital expenditures in excess of
$250,000 in the aggregate;
(f) to incur, assume or guarantee any long-term or short-term
indebtedness except under existing credit facilities or replacements for the
same;
(g) to distribute any cash or assets to its members, or make any
payments to Seller or any of its affiliates, to the extent necessary to ensure
that on the Closing Date, the Company shall have at least the amount of cash
(restricted and unrestricted) on its balance sheet at Closing as reflected on
the Balance Sheet; or
19
(h) to authorize any of the foregoing, or enter into any agreement to
do any of the foregoing.
5.4. TAX MATTERS. Except as set forth on PART 5.4 of the Seller
Disclosure Letter, without the prior written consent of Purchaser, the Company
shall not make or change any election, change an annual accounting period, adopt
or change any accounting method, file any amended Tax Return, enter into any
closing agreement, settle any Tax claim or assessment, surrender any right to
claim a refund of Taxes, consent to any extension or waiver of the limitation
period applicable to any Tax claim or assessment relating to Company, or take
any other similar action relating to the filing of any Tax Return or the payment
of any tax, if such election, adoption, change, amendment, agreement,
settlement, surrender, consent or other action would have the effect of
increasing the Tax liability of the Company for any period ending after the
Closing Date or decreasing any Tax attribute existing on the Closing Date.
5.5. REAL PROPERTY AND LEASES.
(a) MAINTENANCE OF REAL PROPERTY. Seller will cause the Company to
maintain the Leased Real Property, including any and all improvements situated
thereon, in substantially the same condition as of the date of this Agreement,
ordinary wear and tear and acts of God excepted, and shall not demolish or
remove any of the existing improvements situated thereon, or erect new
improvements on the Leased Real Property or any portion thereof, without the
prior written consent of Purchaser.
(b) LEASES. Except with regard to assisting Purchaser with its efforts
to obtain any necessary consents related to the Company's leases, Seller will
not cause or permit the Company's leases to be amended, modified, extended
renewed or terminated, nor shall the Company enter into any new lease, sublease,
license or other agreement for the use or occupancy of any real property,
without the prior written consent of Purchaser.
5.6. ADDITIONAL COVENANTS OF SELLER AND THE COMPANY.
(a) Seller and the Company shall cooperate with Purchaser in preparing
and making all filings or submissions to Governmental Entities required, if any,
in connection with the Contemplated Transactions. Seller and the Company, at any
time before or after the Closing, shall execute, acknowledge and deliver any
further assignments, assurances, documents and instruments of transfer
reasonably requested by Purchaser, and shall take any other action consistent
with the terms of this Agreement that may reasonably be requested by Purchaser,
for the purpose of delivering the Member Interest to Purchaser, and obtaining
the consents necessary to complete the Contemplated Transactions.
(b) Seller shall use its, and shall cause the Company to use its,
commercially reasonable efforts to fulfill the conditions set forth in Article 7
of this Agreement over which they have control or influence and to complete the
Contemplated Transactions.
5.7. COVENANTS OF PURCHASER.
(a) Purchaser shall cooperate with Seller and the Company in preparing
and making all filings or submissions to Governmental Entities required in
connection with the Contemplated Transactions, if any.
(b) Purchaser shall use its reasonable efforts to obtain all consents
and releases related to the Processing Agreements and the contracts related to
the Leased Real Property (provided that Purchaser shall only be required to
obtain the consents of First Data and SGS under the Processing Agreements).
20
(c) Purchaser shall use its commercially reasonable efforts to fulfill
all of the conditions set forth in Article 8 of this Agreement over which it has
control or influence, and to complete the Contemplated Transactions.
5.8. EXPENSES. Except as otherwise provided in this Agreement, each of
Seller on one hand, and Purchaser on the other hand, 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 Contemplated
Transactions, including without limitation its own respective legal, accounting,
brokerage and other costs, if any, incurred in connection with the Contemplated
Transactions.
ARTICLE 6
CONDITIONS TO EACH PARTY'S OBLIGATIONS
The respective obligations of each party hereto to effect the
Contemplated Transactions are subject to the satisfaction at or before the
Closing of all the following conditions, unless waived (to the extent such
conditions can be waived) in writing by Purchaser or Seller, as applicable:
6.1. NO INJUNCTIONS OR RESTRAINTS. No temporary restraining order,
preliminary or permanent injunction or other Order issued by any Governmental
Entity nor other legal restraint or prohibition preventing the Contemplated
Transactions shall be in effect.
6.2. STATUTES. No action shall have been taken or threatened, and no
Law or Order shall have been enacted, promulgated or issued or deemed applicable
to the transactions contemplated hereby by any Governmental Entity that would:
(a) make the Contemplated Transactions illegal or substantially delay
the consummation of any material aspect of the transactions contemplated hereby;
(b) compel the Company or Purchaser to dispose or hold separate all or
a material portion of the Subject Business or assets of the Company, Purchaser
or any Affiliate thereof as a result of the consummation of the Contemplated
Transactions; or
(c) render any party unable to consummate the Contemplated
Transactions.
ARTICLE 7
CONDITIONS TO THE OBLIGATIONS OF PURCHASER
The obligations of Purchaser to effect the Contemplated Transactions
are subject to the satisfaction at or before the Closing of all the following
conditions, unless waived (to the extent such conditions can be waived) in
writing by Purchaser:
7.1. REPRESENTATIONS AND WARRANTIES TRUE AND COMPLETE AT CLOSING.
Seller shall deliver a certificate to the Purchaser confirming that the
representations and warranties of Seller and the Company contained in this
Agreement shall be true and complete in all material respects at and as of the
Closing Date with the same effect as if such representations and warranties had
been made at and as of the Closing Date.
21
7.2. PERFORMANCE OF COVENANTS AND AGREEMENTS. Seller shall deliver a
certificate to the Purchaser confirming that the all of the covenants and
agreements required to be performed by the Company and Seller at or before the
Closing pursuant to the terms of this Agreement shall have been duly performed
in all material respects.
7.3. PRE-CLOSING BALANCE SHEET. Purchaser shall have received from
Seller an estimated balance sheet of the Company reflecting the Subject Business
transferred at Closing, and excluding the Asset Transfers, (the "PRE-CLOSING
BALANCE SHEET") and which is set forth on EXHIBIT 7.3 attached hereto.
7.4. CLOSING DELIVERIES. Purchaser shall have received duly executed
copies of the closing documents set forth in Section 10.1(a) and such documents
shall be in full force and effect.
7.5. OPINION OF COUNSEL. Purchaser shall have received the opinion of
Xxxxxx Xxxxxxx Xxxxx & Xxxxxxxxxxx, L.L.P. ("XXXXXX XXXXXXX"), counsel to the
Company and Seller, in the form and substance attached hereto as EXHIBIT 7.5
dated as of the Closing Date.
7.6. RESIGNATIONS OF MANAGER AND OFFICERS. The sole manager and any
officers of the Company shall have submitted written resignations to the Company
with respect to such party's position with the Company.
7.7. CONSENTS. Purchaser shall have received, in writing and in form
and substance reasonably acceptable to Purchaser, all consents, approvals,
Orders and waivers of, and all filings and registrations with, all Governmental
Entities, and applicable parties under Seller's senior credit facility, that are
required for the consummation of the Contemplated Transactions.
Notwithstanding anything in this Agreement to the contrary, Purchaser's
conditions to closing this Agreement pursuant to Sections 7.1, 7.2 and 7.7, as
such sections may in any manner relate to contract consents required in order to
close the Contemplated Transactions shall be limited to the consent of
applicable parties under Seller's senior credit facility.
ARTICLE 8
CONDITIONS TO THE OBLIGATIONS OF
SELLER
The obligations of Seller to effect the Contemplated Transactions are
subject to the satisfaction at or before the Closing of all the following
conditions, unless waived (to the extent such conditions can be waived) in
writing by Seller:
8.1. REPRESENTATIONS AND WARRANTIES TRUE AND COMPLETE AT CLOSING.
Purchaser shall deliver a certificate to Seller confirming that all of the
representations and warranties of Purchaser contained in this Agreement shall be
true and complete in all material respects at and as of the Closing Date with
the same effect as if such representations and warranties had been made at and
as of the Closing Date.
8.2. PERFORMANCE OF COVENANTS AND AGREEMENTS. Purchaser shall deliver a
certificate to Seller confirming that all of the covenants and agreements
required to be performed by Purchaser at or before the Closing pursuant to the
terms of this Agreement shall have been duly performed in all material respects.
22
8.3. CLOSING DELIVERIES. Seller shall have received duly executed
copies of the closing documents set forth in Section 10.1(b) and such documents
shall be in full force and effect.
8.4. OPINIONS OF COUNSEL. Seller shall have received the opinion of
Xxxxxxx, Savage, Kaplowitz, Wolf & Marcus, LLP, counsel to Purchaser, in form
and substance attached hereto as EXHIBIT 8.4 dated as of the Closing Date.
8.5. CONSENTS. Seller shall have received, in writing and in form and
substance reasonably acceptable to Seller, all consents, approvals, Orders and
waivers of, and all filings and registrations with, all Governmental Entities,
and the release from any and all remaining liability or obligations under the
Company's processing agreement (the "PROCESSING AGREEMENTS") with First Data
Merchant Services, Inc. (together with its Affiliates, "FIRST DATA") and Shared
Global Systems, Inc. (together with its Affiliates, "SGS"), including any Seller
guaranty thereof.
Notwithstanding anything in this Agreement to the contrary, Seller's conditions
to closing this Agreement pursuant to Sections 8.1, 8.2 and 8.5, as such
sections may in any manner relate to contract consents required in order to
close the Contemplated Transactions, shall be limited to Seller's release from
any and all remaining liability or obligations under the Processing Agreements,
including any Seller guaranty thereof, and provided that the letter of credit
currently securing the Company's obligations under the Processing Agreement with
First Data shall be released, or otherwise addressed, in accordance with Section
9.13.
ARTICLE 9
ADDITIONAL AGREEMENTS
9.1. COOPERATION. The InterCept Parties on the one hand, and Purchaser
on the other hand, shall cooperate fully with each other and their respective
employees, legal counsel, accountants and other representatives and advisers in
connection with the steps required to be taken as part of their respective
obligations under this Agreement both before and after the Closing; and shall,
at any time and from time to time after the Closing, upon the request of the
other, do, execute, acknowledge and deliver, or will cause to be done, executed,
acknowledged and delivered, all such further acts, deeds, assignments,
transfers, conveyances, powers of attorney, receipts, acknowledgments,
acceptances and assurances as may be reasonably required to satisfy and perform
the obligations of such party hereunder.
9.2. SOFTWARE LICENSE AGREEMENT. At Closing, the Company and Seller or
its Affiliates shall enter into a software license agreement in the form
attached hereto as EXHIBIT 9.2 (the "SOFTWARE LICENSE AGREEMENT") providing for
the royalty-free, non-exclusive, non-transferable, perpetual license of the
NexGen and iBill transaction processing and support software from Seller or its
Affiliates to the Company.
9.3. TRANSITION SUPPORT SERVICES AGREEMENT. At Closing, the Company or
its Affiliates and Seller shall enter into a transition support services
agreement in the form attached hereto as EXHIBIT 9.3 (the "TRANSITION SUPPORT
AGREEMENT") providing that Seller shall provide to the Company or its Affiliates
post-Closing certain services currently performed by Seller for the Company or
its Affiliates, as well as for other services Seller or its Affiliates may
desire from the Company, for a period not to exceed six months.
9.4. TRANSFER OF CUSTOMERS. Purchaser and Seller agree that Seller
shall retain some of the Company's non-adult content customer relationships
acquired since April 8, 2002. As such, immediately before Closing, Seller shall
cause the Company to transfer the customers listed on PART 9.4 of the Seller
23
Disclosure Letter (the "TRANSFERRED CUSTOMERS") to Seller or an Affiliate of
Seller in one of the Asset Transfer Agreements.
9.5. TRANSFER OF CLAIMS. Seller and Purchaser acknowledge and agree
that immediately before Closing, the Company will assign to Seller or an
Affiliate of Seller all of its rights to the claims as set forth on PART 9.5 of
the Seller Disclosure Letter (the "TRANSFERRED CLAIMS") in the Asset Transfer
Agreements. The Parties acknowledge that the value of such Claims shall be
removed from the Closing Balance Sheet for purposes of all calculations of the
Purchase Price Adjustment.
9.6. INSURANCE POLICY. At Closing, to secure Purchaser's
indemnification obligations pursuant to Sections 11.2(d) and 11.2 (e), Purchaser
shall deliver or cause to be delivered to Seller a validly issued insurance
policy (the "INSURANCE POLICY") in the face amount of $20,000,000, in
substantially the form attached hereto as EXHIBIT 9.6, which shall be issued by
insurance companies satisfactory to Seller in its sole discretion. The Insurance
Policy shall have a term of two years and shall provide that Seller as
beneficiary thereof which may, from time to time, make a claim against the
Insurance Policy by following the procedures set forth therein. Purchaser shall
have paid all premiums for the term of the Insurance Policy before Closing and
the Insurance Policy shall have no deductible. The face amount of the Insurance
Policy will be reduced from $20,000,000 to $5,000,000 on the 375th day following
the Closing.
9.7. CONFIDENTIALITY. The InterCept Parties on the one hand and
Purchaser on the other hand shall hold in trust and confidence all Confidential
Information about the other and shall not make any copies of, distribute, or use
any such Confidential Information except as necessary to prepare for the
completion of the Contemplated Transactions. After the Closing, neither Seller
on the one hand nor Purchaser and the Company on the other hand shall make any
unauthorized disclosure of Confidential Information about the other for a period
of five years. If the Contemplated Transactions do not occur, then each such
party, upon the first request in writing from the other, shall return to the
other all Confidential Information in its possession, without retaining any
copies thereof, and neither the InterCept Parties on the one hand nor Purchaser
on the other hand shall make any unauthorized disclosure of Confidential
Information about the other for a period of five years from the date of this
Agreement. Notwithstanding the foregoing, any party may disclose Confidential
Information to the extent disclosure is mandated by the legal requirements of
such party, the Nasdaq Stock Market, or the SEC, as well as to professional
advisors, directors and senior executives as reasonably necessary. This
Agreement may also be disclosed to third parties if reasonably necessary to
secure consents or approvals to consummate the Contemplated Transactions, or, to
the extent necessary, to comply with diligence requirements in connection with
financing or other transactions that may be proposed by the Company in the
future. The parties will cooperate to draft a press release for the announcement
of this Agreement as soon as possible after the execution of this Agreement by
all parties. The provisions of this Section 9.7 are cumulative with the
provisions of the Non-Disclosure Agreement previously signed by Seller and
Purchaser, provided that in the event of a conflict between the confidentiality
provisions of that agreement and this Agreement, the confidentiality provisions
of this Agreement shall govern. Notwithstanding anything in this Agreement or
the referenced Non-Disclosure Agreement to the contrary, any party to this
Agreement (and any employee, representative, or other agent of any party to this
Agreement) may disclose to any and all persons, without limitation of any kind,
the tax treatment and tax structure of the transactions contemplated by this
Agreement and all materials of any kind (including opinions or other tax
analyses) that are provided to it relating to such tax treatment and tax
structure. However, any such information relating to the tax treatment or tax
structure is required to be kept confidential to the extent necessary to comply
with any applicable federal or state securities laws.
24
9.8. ABILITY OF XXXXXX XXXXXXX TO REPRESENT SELLER POST-CLOSING IN
MATTERS RELATED TO THE COMPANY. The parties to this Agreement agree and
acknowledge that Xxxxxx Xxxxxxx has represented Seller and the Company
pre-Closing and will continue to represent Seller post-Closing. Purchaser
agrees, for itself and the Company post-Closing, and after consultation with its
own counsel, that the client/attorney relationship that currently exists between
Xxxxxx Xxxxxxx and the Company shall cease upon Closing, and that the Company
hereby waives any conflict that might be deemed to be present between Xxxxxx
Xxxxxxx and the Company post-Closing arising out of Xxxxxx Xxxxxxx' prior
representation of the Company. Accordingly, Purchaser agrees, for itself and for
the Company post-Closing, that Xxxxxx Xxxxxxx may represent Seller in any
dispute between Seller on one hand and Purchaser or the Company on the other
hand, notwithstanding the client/attorney relationship that currently exists
between Xxxxxx Xxxxxxx and the Company.
9.9. PAYMENT OF TAXES.
(a) Seller shall pay all Taxes relating to or arising from operations
of the Company on or before the Closing Date.
(b) Seller, the Company and Purchaser agree to furnish, or to cause to
be furnished in good faith to each other, such cooperation and assistance as is
reasonably necessary to file any future returns, to respond to audits, to
negotiate settlements with Governmental Entities and to prosecute and defend
against Tax claims.
(c) The Purchase Price shall be allocated as set forth on SCHEDULE
9.9(c). Such allocation shall also conform to the requirements of Section 1060
of the Code and the regulations thereunder and any comparable provisions of
state or local law. Seller and Purchaser shall jointly complete and separately
file Form 8594 with their respective tax returns for the tax year in which the
Closing Date occurs in accordance with such allocation. Each of Seller and
Purchaser hereby covenants and agrees that it will not take a position on any
income, property or other Tax Return, before any Governmental Entity charged
with the collection of any income, property or other Tax, or in any judicial
proceeding that is in any way inconsistent with the terms of this Agreement.
9.10. PAYMENT OF FINES. Notwithstanding any other provision of this
Agreement, if (a) at any time within 180 days following the Closing Date the
Company is assessed any fine, assessment, levy or other charge by First Data or
any credit card association (any such event, a "FINE") including without
limitation in relation to chargebacks or the manner in which the Company's
business is conducted, (b) such Fine relates to any period on or before the
Closing Date and was not fully reserved against in the Closing Balance Sheet or
previously paid in full, and (c) Purchaser notifies Seller in writing of such
Fine before the close of business on the 180th day following the Closing Date,
then Seller shall remit to the Company the amount of such Fine, net of aggregate
reserves or holdbacks reflected in the Closing Date Balance Sheet, in
immediately available funds within five business days after Purchaser notifies
Seller in writing of such Fine. Purchaser and the Company agree that, contingent
upon Seller's payment or reimbursement of such Fine, the Company and Seller
hereby assign to Seller the following:
(1) all refunds of Fines actually paid by Seller to First Data or
card associations before or in respect of periods before Closing;
(2) any actual or potential causes of action against any of the
Company's processing providers or other vendors by reason of any act or omission
that may have resulted in the Company suffering a Fine for activities occurring
before Closing, and for which Seller has paid the Fine; and
25
(3) any right to recover from (or pass through to) merchants,
consumers, or other Persons any Fines suffered by the Company for activities
occurring before Closing; and for which Seller has paid the Fine.
If Seller reimburses Purchaser for any Fines in accordance with this Agreement,
Purchaser covenants and agrees that it shall use reasonable best efforts to
recover the amount of any such Fines from the merchant, consumers, or other
Persons whose activities led to the incurrence of the Fines and shall pay any
amount so recovered to Seller as reimbursement for amounts previously paid by
Seller to Purchaser (or the Company following the Closing).
9.11. CUSTOMER ACCOUNT MAINTENANCE. Purchaser acknowledges and agrees
that for a period of one year following the Closing, Purchaser shall cause
Company and its Affiliates to maintain all customer accounts consistent with the
requirement of each customer agreement, as may be amended from time to time by
the Company and such customer, including but not limited to the timely payment
of all obligations (whether or not incurred before the Closing Date) and
appropriate reserve maintenance. Notwithstanding the foregoing, nothing herein
shall prevent the Company from terminating, amending or modifying any customer
agreement at any time in accordance with the terms of such agreement. In the
event of any termination of a customer agreement by the Company, the Company
shall perform all of its obligations under such customer agreement, including
the timely payment of all obligations and appropriate reserve maintenance. It is
specifically agreed that no customers shall be third party beneficiaries of this
provision.
9.12. BANK OF AMERICA CREDIT FACILITY. Notwithstanding any
representations, warranties, agreements, or covenants herein to the contrary,
all of Seller's and its subsidiaries' assets, including Seller's ownership
interests in the Company, are pledged to, or are subject to security interests
in favor of, Bank of America, N.A. and other lenders, pursuant to that certain
Credit Agreement dated September 19, 2003, as amended (the "CREDIT AGREEMENT").
Additionally, each of Seller's subsidiaries, including the Company, guaranteed
Seller's obligations to the lenders in the Credit Agreement. To effect the
Contemplated Transactions, Seller must therefore obtain the consent of the
lenders pursuant to the terms of the Credit Agreement (the "LENDER CONSENT"),
and each representation, warranty, agreement or covenant herein is qualified by
this section and to the necessity of obtaining the Lender Consent.
9.13. FIRST DATA LETTER OF CREDIT. On or before April 20, 2004,
Purchaser shall cause First Data to release Seller's $3,000,000 letter of credit
currently securing the Company's obligations under the Processing Agreements
(the "FIRST DATA LETTER OF CREDIT"). If the First Data Letter of Credit is not
released on or before April 20, 2004, Purchaser shall pay Seller $3,000,000
(less the aggregate amount of any draws previously paid by Purchaser to Seller
as provided in the following sentence) in immediately available funds on or
before April 20, 2004. In addition, if a full or partial draw upon the First
Data Letter of Credit is made before it is released or before Purchaser shall
have paid Seller $3,000,000, Purchaser shall pay Seller the amount of any such
draw in immediately available funds within two (2) business days.
9.14. GUARANTY OF NOTE AND FIRST DATA LETTER OF CREDIT. At Closing, Dr.
Luis Xxxxxxx Xxxxxx G. (the "GUARANTOR") shall enter into that certain Guaranty
Agreement attached hereto as EXHIBIT 9.14 (the "GUARANTY AGREEMENT") with Seller
whereby Guarantor shall guarantee both (i) Purchaser's obligations under the
Note, and (ii) Purchaser's obligations under Section 9.13.
26
ARTICLE 10
THE CLOSING
10.1. CLOSING. The closing of the purchase and sale of the Member
Interest and the consummation of the Contemplated Transactions (the "CLOSING")
shall take place at 10:00 a.m., local time, not later than March 15, 2004 in the
offices of Xxxxxx Xxxxxxx in Atlanta, Georgia, or at such other location as the
parties mutually agree. The Closing will take place as soon as practicable after
the satisfaction or waiver (to the extent the same may be waived) of the
conditions set forth in Articles 6, 7 and 8. The date on which the Closing takes
place is hereinafter referred to as the "CLOSING DATE." The following shall
occur on the Closing Date:
(a) DELIVERIES BY THE COMPANY AND SELLER. At the Closing, Seller shall
deliver or cause to be delivered the following to Purchaser:
(1) a certificate in proper form and order for transfer
representing the Member Interest;
(2) certified copies of the resolutions of the Company's manager
and member authorizing and approving this Agreement and the
Contemplated Transactions;
(3) certified copies of the resolutions of Seller's Board of
Directors authorizing and approving this Agreement and the
Contemplated Transactions;
(4) a certificate of the manager of the Company certifying (i)
the Company's Organizational Documents (ii) the incumbency of
each officer of the Company executing this Agreement or any
agreement, instrument or document contemplated hereby, and
(iii) certifying compliance with the conditions set forth in
Sections 7.1 and 7.2;
(5) a certificate of the Secretary of Seller certifying Seller's
Articles of Incorporation and Bylaws and the incumbency of
each officer of Seller executing this Agreement or any
agreement, instrument or document contemplated hereby;
(6) a certificate executed by the President of Seller certifying
compliance with the conditions set forth in Sections 7.1 and
7.2;
(7) the resignations of the managing members and all officers of
the Company;
(8) the Software License Agreement
(9) the Transition Support Agreement;
(10) written evidence of the Asset Transfers; and
(11) the legal opinion of Xxxxxx Xxxxxxx.
(b) DELIVERIES BY PURCHASER. At the Closing, Purchaser shall deliver,
or cause to be delivered, the following to the Company and Seller:
(1) The Cash Payment;
27
(2) the Note;
(3) the Guaranty Agreement;
(4) certified copies of the resolutions of Purchaser's board of
managers authorizing and approving this Agreement and the
Contemplated Transactions;
(5) a certificate of the Secretary of Purchaser certifying
Purchaser's Organizational Documents and the incumbency of
each officer of Purchaser executing this Agreement or any
agreement, instrument or document contemplated hereby;
(6) a certificate executed by the President of Purchaser
certifying compliance with the conditions set forth in
Section 8.1 and 8.2;
(7) the Software License Agreement;
(8) the Transition Support Agreement;
(9) the Insurance Policy; and
(10) the legal opinion of Xxxxxxx, Savage, Kaplowitz, Wolf &
Marcus, LLP.
ARTICLE 11
INDEMNIFICATION
11.1. INDEMNIFICATION BY SELLER IN FAVOR OF PURCHASER. Seller hereby
agrees to indemnify and hold harmless Purchaser for any and all Losses Purchaser
may suffer, sustain or incur which, directly or indirectly, arise or result from
or are incident or related to:
(a) the untruth, inaccuracy or breach of any material representation or
warranty of the Company or Seller contained in this Agreement, the Seller
Disclosure Letter, or any certificate delivered in connection herewith or
therewith;
(b) the breach of any material agreement or covenant of the Company or
Seller contained in this Agreement, in any other document or agreement listed in
Article 10, or in the Seller Disclosure Letter (provided that with respect to
the Company, Seller shall be obligated to indemnify and hold harmless Purchaser
only with respect to pre-Closing agreements and covenants of the Company and not
to any agreement or covenant of the Company post-Closing);
(c) any action, suit, Proceeding, demand, assessment or judgment
(including, without limitation, those commenced or obtained against Seller)
incident to any of the matters indemnified against under clauses (a) or (b)
above; or
(d) the matters described on EXHIBIT 11.1(d).
Seller shall reimburse Purchaser on demand for any Losses Purchaser may suffer
at any time after the execution of the Agreement in accordance with this Article
11. Except as provided in this Agreement, consummation of the Contemplated
Transactions shall not be deemed or construed to be a waiver of any right or
remedy of Purchaser.
28
11.2. INDEMNIFICATION BY PURCHASER AND THE COMPANY IN FAVOR OF SELLER.
Purchaser and, after the Closing, the Company agree, jointly and severally, to
indemnify and hold harmless Seller for any and all Losses Seller may suffer,
sustain, or incur which, directly or indirectly, arise or result from or are
incident or related to:
(a) the untruth, inaccuracy or breach of any material representation or
warranty of Purchaser contained in this Agreement, the Purchaser Disclosure
Letter or any certificate delivered in connection herewith or therewith;
(b) the breach of any material agreement or covenant of Purchaser
contained in this Agreement, in any other document or agreement listed in
Article 10, or in the Purchaser Disclosure Letter;
(c) after the Closing, the breach of any agreement or covenant of the
Company contained in this Agreement or in any other document or agreement listed
in Article 10 that apply to the Company (provided that with respect to the
Company, Purchaser and Company shall be obligated to indemnify and hold harmless
Seller only with respect to post-Closing agreements and covenants of the Company
and not to any agreement or covenant of the Company pre-Closing);
(d) any sum that any third party asserts that Seller owes under any of
the various agreements for which Purchaser has assumed or agreed to obtain
Seller's release under this Agreement including, but not limited to, the
Company's customer agreements, client payouts, the Deerfield Beach Lease and any
other Lease of premises constituting the Leased Real Property, Fines other than
those for which Seller is responsible under Section 9.10, and under the
Processing Agreements;
(e) any Fines, assessments, or other charges made or assessed against
the Company by any merchant, customer, acquiring or issuing bank, First Data,
any credit card association or any other party in the card payment system and
for which payment is sought from Seller (including, but not limited to, any
customer holdbacks or any fees, fines, assessments, or other charges made or
assessed against the Company), related to periods after the Closing, and
related to periods before the Closing Date if such amounts were reserved
against in the Closing Balance Sheet; or
(f) any action, suit, Proceeding, demand, assessment or judgment
(including, without limitation, those commenced or obtained against Purchaser)
incident to any of the matters indemnified against under clauses (a), (b), (c),
(d) or (e) above.
Purchaser and the Company shall reimburse Seller on demand for any Seller Losses
at any time after the execution of the Agreement in accordance with this Article
11. Consummation of the Contemplated Transactions shall not be deemed or
construed to be a waiver of any right or remedy of Seller.
11.3. NOTICE OF CLAIMS. The party entitled to indemnification under the
provisions of this Article 11 (the "CLAIMANT") shall deliver to the party from
whom indemnification is sought (the "OBLIGOR") notice in writing within 60 days
of Claimant's discovery of any Loss in respect of which the right to
indemnification is sought under this Article. This notice shall specify in
reasonable detail the nature of the Loss and the amount of the liability arising
from the Loss (or if the amount is not known, a reasonable estimate of the
amount) (the "CLAIM"). In addition, if the Loss is due to an assertion of a
claim by a third party, the written notice shall specify the name of such third
party asserting such claim. Notwithstanding the above, the failure to give
written notice within such 60 day period shall not result in the waiver or loss
of any right to bring such Claim hereunder after such period unless, and only to
the extent that, the other party is actually prejudiced by such failure. The
Obligor shall satisfy its obligations under this Article within 30 days of
receipt of the above described notice.
29
11.4. DEFENSE OF THIRD PARTY CLAIMS. If the facts pertaining to the
Loss arise out of the claim of any third party, then the Obligor must assume the
defense or prosecution of that claim, including the employment of counsel or
accountants, at the Obligor's 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 a
Proceeding, the Claimant shall have the right, at its expense, to retain
separate counsel. The Obligor may settle any such third party claim in its
discretion so long as: (1) the Obligor bears the entire financial burden of the
settlement, (2) the Claimant is not subjected to any monetary or non-monetary
obligations, and (3) the third party agrees to release Claimant from any and all
liabilities pertaining to the Loss. Both Obligor and Claimant agree to cooperate
in the defense or prosecution of third party claims 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 with such third party claims.
11.5. MITIGATION. The Claimant's rights to indemnification under this
Agreement are subject to common law principles of mitigation. However, no
Claimant will be required to exhaust any remedy against any other person or
source (for example, under an insurance policy) as a condition to pursuing or
obtaining any indemnification under this Agreement. The Claimant will take
commercially reasonable steps to mitigate any Loss after becoming aware of any
event that would reasonably be expected to give rise to a Loss for which
indemnification may be sought under this Article 11, including timely making any
and all available insurance claims and diligently prosecuting such claims;
provided that the Claimant will provide at least ten days prior written notice
to Obligor of any such steps for which the Claimant may incur any documented
out-of-pocket costs exceeding $5,000 in the aggregate, and such expenses will be
at the Obligor's expense and funded by the Obligor on a current basis, unless
the Obligor instructs the Claimant in writing not to take such steps. If the
Claimant receives any payment under an insurance policy to cover a Loss, or is
otherwise reimbursed by any third party, then after the date of the receipt of
such payment, the Loss under this Agreement will not include the amount of the
Loss covered by and equal to such payment; provided, however, that a Loss under
this Agreement will still include the amount of any applicable deductible under
such insurance policy and any Loss incurred in seeking such insurance payment.
To the extent that the Obligor has already paid the Claimant for such Loss on
the date the Claimant receives such payment, the Claimant will reimburse the
Obligor for any expense incurred by the Obligor related to such Loss, including
without limitation defense costs and attorney's fees, up to the amount of the
payment actually received by Claimant.
11.6. SURVIVAL OF INDEMNIFICATION OBLIGATIONS. The indemnification
obligations of Seller contained in Section 11.1 shall survive the Closing Date
by 12 months. The indemnification obligations of Purchaser and the Company
contained in Section 11.2 shall survive the Closing Date by 24 months, except
that the indemnification obligations of Purchaser and the Company contained in
Section 11.2 shall continue in effect:
(a) for the duration of any post-Closing covenants of Purchaser or the
Company set forth in Article 12, but for such additional period such
indemnification obligations shall apply only with respect to those covenants;
(b) for the duration of each agreement listed in Article 10, but for
such additional period such indemnification obligations shall apply only with
respect to such agreement(s); and
(c) notwithstanding anything herein to the contrary, including (a) and
(b) above, Purchaser's indemnification obligations shall terminate on the date
that is no later than 24 months following the Closing Date, and the Insurance
Policy securing the indemnification obligations described herein shall
immediately and automatically terminate on such date.
30
11.7. INDEMNIFICATION AS PURCHASER'S EXCLUSIVE REMEDY. Purchaser is
acquiring the Company on an "as is" basis and has therefore sought minimal
representations, warranties and covenants from Seller and from the Company.
Purchaser represents and warrants that Seller and the Company have granted
Purchaser access to all relevant information necessary to make an informed
decision with regard to the purchase of the Company, and Purchaser also
represents and warrants that officials of both Seller and Company have met with
representatives of Purchaser to answer all of Purchaser's questions regarding
the Company. Accordingly, Purchaser hereby agrees that indemnification as
provided for in this Article 11 shall be its sole and exclusive remedy for any
Claim made pursuant to this Agreement or the Contemplated Transactions. To the
extent that any provision of this Agreement may be interpreted to conflict with
this Section, this Section shall govern to the exclusion of all others.
11.8. SELLER'S RIGHT TO MAKE CLAIMS AGAINST THE INSURANCE POLICY. If
Purchaser and the Company fail to comply with their obligations under Sections
11.2(d) and 11.2(e), such failure shall be deemed to be an "EVENT OF DEFAULT"
permitting Seller to make claims against the Insurance Policy; provided that no
Event of Default shall be deemed to have occurred for so long as Purchaser is
complying diligently and in good faith with its obligations under Section 11.4
and Seller has not been ordered by a court of competent jurisdiction to pay a
specific amount to a third party. Seller's exercise of its rights under this
provision for Events of Default shall not be construed in any way to limit any
other indemnification remedy, including, but not limited to, any direct action
against Purchaser or the Company, available to Seller under this Agreement or
under applicable Law for such Events of Default or for breaches of the other
indemnification obligations of Purchaser and the Company.
11.9. LIMITATIONS. Purchaser will have no Liability (for
indemnification or otherwise) for Claims and/or Losses arising under this
Agreement or the Contemplated Transactions to the extent such Claims and/or
Losses exceed $20 million, and Seller will have no Liability (for
indemnification or otherwise) for Claims and/or Losses arising under this
Agreement or the Contemplated Transactions to the extent such Claims and/or
Losses exceed $5 million.
11.10. SELLER CONTRACT CONSENT MATTERS. Purchaser and Seller agree that
the only non-governmental consents Seller is obligated to obtain pursuant to
this Agreement are as set forth in Section 7.7. As such, notwithstanding
anything in this Agreement to the contrary, Seller's indemnity obligations for
any breach of a representation, warranty, covenant or agreement under this
Agreement related to contract consent matters shall be limited to obtaining the
consents set forth in Section 7.7.
ARTICLE 12
NON-COMPETITION AND NON-SOLICITATION COVENNANTS
12.1. NON-COMPETITION BY PURCHASER AND THE COMPANY. Purchaser
acknowledges and agrees that Seller and its Affiliates will continue to provide
Transaction Services to third parties providing non-Age-Restricted Services
(except as noted in Section 12.3 below) following the Closing throughout the
world. Accordingly, as an agreement ancillary to the purchase of the Member
Interest and as a material inducement to Seller to enter into this Agreement,
Purchaser agrees that for three years after the Closing Date (the
"NON-COMPETITION PERIOD"), neither Purchaser, the Company, nor any of their
Affiliates shall, without Seller's prior written consent, use the software
licensed to Purchaser pursuant to the Software License to provide (whether as an
owner, operator, manager, employee, officer, director, consultant, advisor,
representative or otherwise), directly or indirectly, any Transaction Services
to third parties providing non-Age-Restricted Services anywhere in the world;
provided, however, that this provision shall not apply to third parties for
which non-Age-Restricted Services comprise less than 25% in revenues of the
aggregate Transaction Services provided by Purchaser and the Company.
31
12.2. NON-SOLICITATION OF CUSTOMERS BY PURCHASER AND THE COMPANY.
During the Non-Competition Period, neither Purchaser, the Company nor their
Affiliates shall, without Seller's prior written consent, directly or
indirectly, solicit, raid, entice, induce or contact any third party that or who
was a customer of Seller or its Affiliates (excluding the Company) on the
Closing Date.
12.3. NON-COMPETITION BY SELLER. Seller acknowledges and agrees that
Purchaser, the Company and their Affiliates will continue to engage in
Transaction Services to third parties providing Age-Restricted Services
following the Closing throughout the world. Accordingly, as an agreement
ancillary to the purchase of the Member Interest and as a material inducement to
Purchaser to enter into this Agreement, Seller agrees that during the
Non-Competition Period, neither Seller nor any of its Affiliates shall, without
Purchaser's or the Company's prior written consent, engage (whether as an owner,
operator, manager, employee, officer, director, consultant, advisor,
representative or otherwise), directly or indirectly, in any Transaction Service
to third parties providing Age-Restricted Services anywhere in the world, other
than (i) third parties that or who are customers of Seller or its Affiliates
(excluding the Company) as of the Closing Date and (ii) third parties for which
Age-Restricted Services comprise less than 25% in revenues of the aggregate
Transaction Services provided by Seller.
12.4. NON-SOLICITATION OF CUSTOMERS BY SELLER. During the
Non-Competition Period, neither Seller nor its Affiliates shall, without
Purchaser's prior written consent, directly or indirectly, solicit, raid,
entice, induce or contact any third party that is who was a customer of the
Company on the Closing Date, other than third parties who were also customers of
Seller or another of its Affiliates on the Closing Date.
12.5. REMEDIES. Without limiting the right of the parties to pursue all
other legal and equitable rights available to it, including without limitation,
damages for violations of Sections 12.1 through 12.4, it is agreed that other
remedies cannot fully compensate the parties for such violations of the above
restrictive covenants and that each party shall be entitled to injunctive relief
and/or specific performance to prevent violation or continuing violation
thereof, without bond and without the necessity of showing actual monetary
damages. It is the intent and understanding of each party hereto that if, in any
action before any court or agency legally empowered to enforce the terms of
Sections 12.1 through 12.4, any term, restriction, covenant or promise in
Sections 12.1 through 12.4 is found to be unreasonable and for that reason
unenforceable, then such term, restriction, covenant or promise shall be deemed
modified to the extent necessary to make it enforceable by such court or agency.
ARTICLE 13
MISCELLANEOUS
13.1. TERMINATION. This Agreement may be terminated at any time before
the Closing by:
(a) The mutual consent of Purchaser and Seller; or
(b) Purchaser or Seller, if the conditions set forth in Article 6 shall
not have been satisfied or waived (to the extent they may be waived) by March
16, 2004; or
(c) Purchaser, if the conditions set forth in Article 7 shall not have
been satisfied or waived (to the extent they may be waived) by March 16, 2004;
or
(d) Seller, if the conditions set forth in Article 8 shall not have
been satisfied or waived (to the extent they may be waived) by March 16, 2004;
or
32
(e) Purchaser or Seller, if any permanent injunction, or temporary
injunction extending beyond March 16, 2004, or other Order of a court or other
competent authority preventing the Closing shall have become final and
nonappealable.
No party shall be entitled to terminate this Agreement pursuant to Section
13.1(b) through (e) if such party's intentional breach (or, with respect to the
Company, intentional breach by Seller) of this Agreement has prevented the
satisfaction of a condition. Any termination pursuant to Section 13.1(a) shall
be effected by a written instrument signed by Purchaser and Seller, and any
other termination pursuant to this Section 13.1 (other than a termination
pursuant to Section 13.1(a)) shall be effected by written notice from the party
or parties so terminating to the other parties hereto, which notice shall
specify the Section hereof pursuant to which this Agreement is being terminated.
13.2. BREAK-UP FEE. A break up fee of $1,000,000 (the "BREAK-UP FEE")
shall be payable in the following manner:
(a) By Seller to Purchaser if the Closing does not occur by March 16,
2004, except in the case of a termination by March 15, 2004 pursuant to Sections
13.1(a), (b), (d) or (e); or
(b) By Purchaser to Seller if the Closing does not occur by March 16,
2004, except in the case of a termination by March 16, 2004 pursuant to Sections
13.1(a), (b), (c) or (e).
If the Break-up Fee is payable by Purchaser to Seller pursuant to Section
13.2(b), then Seller shall retain the Initial Deposit. If the Break-up Fee is
payable by Seller to Purchaser pursuant to Section 13.2(a), then Seller shall
immediately return the Initial Deposit to Purchaser and pay to Purchaser the
Break-up Fee within 10 Business Days. Upon payment, the Break-up Fee shall be
the receiving party's sole compensation for such termination, the parties
agreeing that the actual damages that the receiving party might suffer are
impossible to calculate with precision, and that such amount is a good faith
estimate of such damages.
13.3. EFFECT OF TERMINATION. In the event of the termination of this
Agreement as provided in Section 13.1, this Agreement shall be of no further
force or effect, except for Section 9.7, which shall survive the termination of
this Agreement; provided, however, that except with regard to a termination in
which the Break-up Fee is payable pursuant to Section 13.2, the Liability of any
party for any breach by such party of the representations, warranties, covenants
or agreements of such party set forth in this Agreement occurring before the
termination of this Agreement shall survive the termination of this Agreement
and, in addition, in the event of any action for breach of contract in the event
of a termination of this Agreement, the prevailing party shall be reimbursed by
the other party to the action for reasonable attorneys' fees and expenses
relating to such action.
13.4. NOTICES. All notices or other communications pursuant to this
Agreement shall be in writing and shall be deemed to be sufficient if delivered
personally, telecopied, sent by nationally-recognized, overnight courier or
mailed by registered or certified mail (return receipt requested), postage
prepaid, to the parties at the following addresses (or at such other address for
a party as shall be specified by like notice):
33
If to Seller (or the Company pre-Closing):
InterCept, Inc.
0000 Xxxxxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxx
Fax: (000) 000-0000
with a copy to:
Xxxxxxx X. Xxxxxx, Esq.
Xxxxxx Xxxxxxx Xxxxx & Xxxxxxxxxxx, 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 Purchaser (or the Company post-Closing):
Media Billing, L.L.C.
00 Xxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
ATTN: President - Media Billing
with a copy to:
Xxxxxxx, Savage, Kaplowitz, Wolf & Marcus, LLP
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000-0000
Phone: (000)000-0000
Fax: (000)000-0000
ATTN: Xxxxx Xxxxx, Esq.
All such notices and other communications shall be deemed to have been
given and received (a) in the case of personal delivery, on the date of such
delivery, (b) in the case of delivery by telecopy, on the date of such delivery,
(c) in the case of delivery by nationally-recognized, overnight courier, on the
Business Day following dispatch, and (d) in the case of mailing by U.S. mail, on
the fifth Business Day following such mailing. Any party may change its address
from time to time for purposes of notice or other communication hereunder by
giving notice to the other parties in accordance with this section. Each notice
or other communication shall for all purposes of this Agreement be treated as
being effective or having been given upon receipt unless otherwise indicated
herein.
13.5. COMMERCIALLY REASONABLE EFFORTS AND FURTHER ASSURANCES. The
parties to this Agreement shall use their commercially reasonable efforts to
effectuate the Contemplated Transactions. At all times before and after the
Closing, each party hereto, at the reasonable request of another party hereto,
shall execute and deliver such other instruments and do and perform such other
acts and things as may be necessary or desirable for effecting completely the
consummation of this Agreement and the Contemplated Transactions.
34
13.6. NO THIRD PARTY BENEFICIARIES; SUCCESSORS AND ASSIGNS. (a)
Anything contained herein to the contrary notwithstanding, the representations,
warranties, covenants and agreements of the Company and Seller contained in this
Agreement (including, without limitation, the Seller Disclosure Letter hereto)
(1) are being given by the Company and Seller to Purchaser and (2) are solely
for the benefit of Purchaser. Additionally, the representations, warranties,
covenants and agreements of Purchaser contained in this Agreement (including,
without limitation, the Purchaser Disclosure Letter hereto) (1) are being given
by Purchaser to the Company and Seller and (2) are solely for the benefit of
Seller. Accordingly, no third party shall be a third party or other beneficiary
of such representations, warranties, covenants and agreements, and no such third
party shall have any rights of contribution against the Company, Seller or
Purchaser with respect to such representations, warranties, covenants or
agreements or any matter subject to or resulting in indemnification under this
Agreement, or otherwise.
(b) Before the Closing, this Agreement may not be assigned by Seller or
the Company without the prior written consent of Purchaser, and this Agreement
may not be assigned by Purchaser, without the prior written consent of the
Company and Seller. After the Closing, this Agreement may not be assigned by
Seller without the prior written consent of the Company and Purchaser, and this
Agreement may not be assigned by Purchaser or the Company without the prior
written consent of Seller. Any attempted assignment without such consent shall
be void. This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective heirs, executors, administrators,
successors and permitted assigns, as applicable.
13.7. HEADINGS. The headings of the sections of this Agreement are
inserted as a matter of convenience and for reference only and in no way define,
limit or describe the scope of this Agreement or the meaning of any provision of
this Agreement.
13.8. EXTENSION; WAIVER. At any time before the Closing, the parties
may (a) extend the time for the performance of any of the obligations or other
acts of the other parties, (b) waive any inaccuracies in the representations and
warranties contained in this Agreement or in any document delivered pursuant to
this Agreement and (c) waive compliance with any of the agreements or conditions
contained in this Agreement. Any agreement on the part of a party to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party, and any such waiver shall not operate or be
construed as a waiver of any subsequent breach by the other party.
13.9. COUNTERPARTS AND FACSIMILE EXECUTION. This Agreement may be
executed in two or more counterparts, all of which shall be considered one and
the same agreement and shall become effective when one or more counterparts have
been signed by each of the parties and delivered (by facsimile or otherwise) to
the other party, it being understood that all parties need not sign the same
counterpart. Any counterpart or other signature hereupon delivered by facsimile
shall be deemed for all purposes as constituting good and valid execution and
delivery of this Agreement by such party.
13.10. GOVERNING LAW, PERSONAL JURISDICTION AND VENUE. THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE UNITED
STATES OF AMERICA AND THE STATE OF GEORGIA, EXCLUDING CHOICE OF LAW PRINCIPLES.
All parties to this Agreement hereby agree to submit to the personal
jurisdiction and venue of the state and federal courts of Gwinnett County,
Georgia.
13.11. REMEDIES. Seller shall have and retain all rights and remedies
existing in its favor at law or equity, including, without limitation, any
actions for specific performance and/or injunctive or other equitable relief
(including, without limitation, the remedy of rescission) to enforce or prevent
any violations of the provisions of this Agreement. As detailed in Section 11.7
above, Purchaser agrees that
35
its sole remedy for any alleged breach of this Agreement shall be
indemnification as provided for in Article 11.
13.12. AMENDMENT. This Agreement may be amended only by a writing
signed by the Company, Purchaser and Seller.
13.13. COMPLETE AGREEMENT. This Agreement and the other documents
referenced herein and therein contain the entire agreement of the parties with
respect to the subject matter of this Agreement and supersede all prior and
contemporaneous negotiations, agreements, arrangements and understandings
between them with respect to such subject matter. Notwithstanding the above, the
agreements referenced in this document shall survive the Closing and be
effective on their own terms without any limitation by this provision.
13.14. MUTUAL CONTRIBUTION. The parties to this Agreement and their
counsel have mutually contributed to its drafting. Consequently, no provision of
this Agreement shall be construed against any party on the ground that party
drafted the provision or caused it to be drafted.
13.15. MUTUAL WAIVER OF JURY TRIAL. The parties hereto waive all right
to trial by jury in any action, suit or Proceeding brought to enforce or defend
any rights or remedies under this Agreement or any documents related hereto.
Nothing about this Section shall be construed to reduce in any way the effect of
Sections 11.7 and 13.11.
13.16. ARBITRATION. If a dispute shall arise around this Agreement, the
parties agree that they shall submit that dispute to binding arbitration. The
party making claim of a dispute (whether Purchaser or Seller) shall first notify
the other party in writing of its claim. If the other party fails to respond
satisfactory to this notice within 30 days, then the party claiming a dispute
may submit the matter to arbitration, under the application of the then
prevailing commercial arbitration rules of the American Arbitration Association.
Such arbitration shall be held in Atlanta, Georgia before a panel of three (3)
arbitrators, one selected by Seller, one selected by Purchaser, 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. Judgment upon any award rendered by
the arbitrators may be entered in any court of competent jurisdiction.
13.17. INDEPENDENCE OF COVENANTS AND REPRESENTATIONS AND WARRANTIES.
All covenants hereunder shall be given independent effect so that if a certain
action or condition constitutes a default under a certain covenant, the fact
that such action or condition is permitted by another covenant shall not affect
the occurrence of such default, unless expressly permitted under an exception to
such initial covenant. In addition, all representations and warranties hereunder
shall be given independent effect so that if a particular representation or
warranty proves to be incorrect or is breached, the fact that another
representation or warranty concerning the same or similar subject matter is
correct or is not breached will not affect the incorrectness of or a breach of a
representation and warranty hereunder. Each representation, warranty and
covenant shall be given independent effect so that if a particular
representation, warranty or covenant is breached the fact that another
representation, warranty or covenant pertaining to the same or similar subject
matter is not breached will not affect the breach or enforceability of such
representation, warranty or covenant.
[SIGNATURES ON FOLLOWING PAGE]
36
IN WITNESS WHEREOF, the parties hereto have executed this Member
Interest Purchase Agreement as of the day and year first above written.
"Purchaser"
MEDIA BILLING, L.L.C.
By:
--------------------------------------------
Dr. Luis Xxxxxxx Xxxxxx G., manager
By:
--------------------------------------------
Xxxxxxx X. Xxxxx, manager
"Seller"
INTERCEPT, INC.
By
--------------------------------------------
Name:
Title:
"Company"
INTERNET BILLING COMPANY, LLC
By: InterCept, Inc., its sole member and
manager
By:
--------------------------------------------
Name:
Title:
