EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
August 6, 1999
By and Among
THE INTERCEPT GROUP, INC.
(A Georgia Corporation)
And
ZEENET CORPORATION
(A Georgia Corporation)
And
SBS DATA SERVICES, INC.
(An Alabama Corporation)
And
The Shareholders of SBS Data Services, Inc. Named on Schedule I hereto
TABLE OF CONTENTS
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ARTICLE 1 THE MERGER................................................................................... 1
Section 1.1 The Merger............................................................................ 1
Section 1.2 Closing............................................................................... 1
Section 1.3 Effective Time of the Merger.......................................................... 2
Section 1.4 Articles of Incorporation; Bylaws..................................................... 2
ARTICLE 2 OFFICERS AND DIRECTORS OF THE SURVIVING CORPORATION.......................................... 2
ARTICLE 3 CONSIDERATION AND CONVERSION AND EXCHANGE OF SHARES.......................................... 2
Section 3.1 Consideration......................................................................... 2
(a) Company Common Stock......................................................... 2
(b) Purchaser Common Stock....................................................... 3
(c) InterCept Common Stock....................................................... 3
Section 3.2 Escrow of Certain Shares.............................................................. 3
Section 3.3 Fractional Shares..................................................................... 3
Section 3.4 Surrender and Exchange of Certificates................................................ 3
(a) Surrender of Certificates.................................................... 3
(b) Lost Certificates............................................................ 4
(c) Dividends on InterCept Common Stock.......................................... 4
(d) Adjustments.................................................................. 4
Section 3.5 Legending of Securities............................................................... 4
ARTICLE 4 RULES OF CONSTRUCTION........................................................................ 5
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SHAREHOLDERS........................... 8
Section 5.1 Organization.......................................................................... 8
Section 5.2 Capitalization........................................................................ 8
Section 5.3 Authority; No Violation............................................................... 9
Section 5.4 Financial Statements.................................................................. 10
Section 5.5 Broker's and Other Fees............................................................... 10
Section 5.6 Absence of Certain Changes or Events.................................................. 11
Section 5.7 Legal Proceedings..................................................................... 12
Section 5.8 Taxes and Tax Returns................................................................. 13
Section 5.9 Employee Benefit Plans and Relations.................................................. 14
Section 5.10 Compliance with Applicable Laws....................................................... 15
Section 5.11 Certain Contracts..................................................................... 16
Section 5.12 Properties and Insurance.............................................................. 18
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Section 5.13 Environmental Matters................................................................. 19
Section 5.14 Intellectual Property................................................................. 19
(a) Ownership.................................................................... 19
(b) Procedures for Copyright Protection.......................................... 19
(c) Procedures for Trade Secret Protection....................................... 20
(d) Ownership of Software........................................................ 20
(e) Absence of Claims............................................................ 20
Section 5.15 Adequacy of Technical Documentation................................................... 20
Section 5.16 Third-Party Components in Software.................................................... 21
Section 5.17 Third-Party Interests or Marketing Rights in Software................................. 21
Section 5.18 No Parachute Payments................................................................. 21
Section 5.19 Absence of Certain Agreements and Practices........................................... 21
Section 5.20 Major Vendors......................................................................... 22
Section 5.21 Accounts Receivable................................................................... 22
Section 5.22 Bank Accounts......................................................................... 22
Section 5.23 Corporate Records..................................................................... 23
Section 5.24 Combinations Involving the Company.................................................... 23
Section 5.25 Labor Relations....................................................................... 23
Section 5.26 Year 2000 Matters..................................................................... 23
Section 5.27 Change in Control Provisions.......................................................... 24
Section 5.28 Disclosure............................................................................ 24
ARTICLE 6 ADDITIONAL REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS................................ 24
Section 6.1 Securities Act Compliance............................................................. 24
Section 6.2 Access to Information................................................................. 25
Section 6.3 Experience; Investment................................................................ 25
Section 6.4 No Prior Convictions.................................................................. 26
Section 6.5 Tax Advice............................................................................ 26
Section 6.6 Shareholders' Additional Representations.............................................. 26
ARTICLE 7 REPRESENTATIONS AND WARRANTIES OF INTERCEPT.................................................. 27
Section 7.1 Corporate Organization................................................................ 27
Section 7.2 Capitalization........................................................................ 27
Section 7.3 Authority; No Violation............................................................... 27
Section 7.4 Broker's and Other Fees............................................................... 28
Section 7.5 Current Public Information; Financial Statements...................................... 28
Section 7.6 Legal Proceedings..................................................................... 29
Section 7.7 InterCept Common Stock................................................................ 29
Section 7.8 Disclosure............................................................................ 29
ARTICLE 8 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.............................................. 29
Section 8.1 Corporate Organization................................................................ 29
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Section 8.2 Authority; No Violation................................................................. 29
Section 8.3 Broker's and Other Fees................................................................. 30
Section 8.4 Legal Proceedings....................................................................... 30
ARTICLE 9 COVENANTS AND AGREEMENTS OF THE PARTIES........................................................ 31
Section 9.1 Current Information..................................................................... 31
Section 9.2 Confidentiality......................................................................... 31
Section 9.3 Regulatory Matters; Consents; Cooperation, etc.......................................... 31
Section 9.4 Parties' Efforts; Further Assurances; Cooperation....................................... 31
Section 9.5 Public Announcements.................................................................... 32
Section 9.6 Failure to Fulfill Conditions........................................................... 32
Section 9.7 Disclosure Supplements.................................................................. 32
Section 9.8 Release; Covenant Not to Xxx............................................................ 32
Section 9.9 No Transfers............................................................................ 33
Section 9.10 Special Provisions with Respect to the Company.......................................... 34
Section 9.11 Cooperation and Exchange of Information................................................. 34
Section 9.12 Release of Guaranties................................................................... 34
ARTICLE 10 CLOSING CONDITIONS............................................................................. 34
Section 10.1 Conditions of Each Party's Obligations Under this Agreement............................. 34
(a) Approvals and Regulatory Filings............................................... 34
(b) Suits and Proceedings.......................................................... 34
(c) Closing of Other Merger........................................................ 35
Section 10.2 Conditions to the Obligations of InterCept and Purchaser under this Agreement........... 35
(a) Representations and Warranties; Covenants and Agreements; Consents............. 35
(b) Opinion of Counsel............................................................. 35
(c) Certificates................................................................... 35
(d) Nonsolicitation and Confidentiality Agreements................................. 36
(e) Intentionally omitted.......................................................... 36
(f) Termination or Assignment of Certain Agreements................................ 36
(g) Release of Obligations......................................................... 36
(h) Escrow Agreement............................................................... 36
Section 10.3 Conditions to the Obligations of the Company and the Shareholders under this Agreement.. 36
(a) Representations and Warranties; Covenants and Agreements; Consents............. 36
(b) Certificates................................................................... 37
(c) No Material Adverse Effect on InterCept........................................ 37
(d) Approvals...................................................................... 37
(e) Escrow Agreement............................................................... 37
(f) Opinion of InterCept's Counsel................................................. 37
(g) Termination of Guaranties...................................................... 37
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(h) Employment Agreements.......................................................... 37
ARTICLE 11 TERMINATION, AMENDMENT AND WAIVER.............................................................. 37
Section 11.1 Termination............................................................................. 37
Section 11.2 Effect of Termination................................................................... 38
Section 11.3 Specific Performance.................................................................... 38
Section 11.4 Amendment............................................................................... 39
Section 11.5 Extension; Waiver....................................................................... 39
ARTICLE 12 INDEMNIFICATION........................................................................... 39
Section 12.1 Indemnification by the Company and Shareholders......................................... 39
Section 12.2 Indemnification by InterCept............................................................ 39
Section 12.3 Claims for Indemnification.............................................................. 40
Section 12.4 Defense of Claim by Third Parties....................................................... 40
Section 12.5 Third Party Claim Assistance............................................................ 40
Section 12.6 Settlement of Indemnification Claims.................................................... 41
Section 12.7 Manner of Indemnification by the Company and Shareholders............................... 41
Section 12.8 Certain Limitations..................................................................... 41
Section 12.9 Exclusive Remedy........................................................................ 42
Section 12.10 Insurance Reduction..................................................................... 42
ARTICLE 13 MISCELLANEOUS............................................................................. 42
Section 13.1 Expenses................................................................................ 42
Section 13.2 Notices................................................................................. 42
Section 13.3 Parties in Interest..................................................................... 44
Section 13.4 Entire Agreement........................................................................ 44
Section 13.5 Counterparts............................................................................ 44
Section 13.6 Governing Law........................................................................... 44
Section 13.7 Arbitration............................................................................. 45
Section 13.8 Invalidity of any Part.................................................................. 45
Section 13.9 Time of the Essence; Computation of Time................................................ 45
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AGREEMENT AND PLAN OF MERGER
----------------------------
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is dated and effective
as of August 6, 1999, by and among THE INTERCEPT GROUP, INC., a Georgia
corporation ("InterCept"), ZEENET CORPORATION, a Georgia corporation (the
"Purchaser"), SBS DATA SERVICES, INC., an Alabama corporation (the "Company"),
and the shareholders of the Company named on Schedule I hereto, each a resident
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of Alabama (each a "Shareholder" and, collectively, the "Shareholders").
InterCept, the Purchaser, the Company and the Shareholders are hereinafter
collectively called the "Parties."
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Shareholders own all of the outstanding common stock, par
value $1.00 per share of the Company (the "Company Common Stock");
WHEREAS, subject to the terms and conditions of this Agreement, InterCept,
the Purchaser, the Company and the Shareholders desire and deem it in their
respective best interests that the Purchaser be merged with and into the Company
(the "Merger");
WHEREAS, the parties intend that the Merger qualify as a tax-free
transaction pursuant to Section 368(a) of the Internal Revenue Code of 1986, as
amended; and
WHEREAS, the Boards of Directors of InterCept, the Purchaser and the
Company have approved the Merger, and the sole shareholder of the Purchaser and
the Shareholders have approved the Merger.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
Parties agree as follows:
ARTICLE 1
THE MERGER
1.1 The Merger. At the Effective Time (as defined below), the Purchaser
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shall be merged with and into the Company in accordance with the provisions of
this Agreement, the Georgia Business Corporation Code (the "GBCC") and the
Alabama Business Corporation Act (the "ABCA"), and the separate existence of the
Purchaser shall thereupon cease, and the Company, as the surviving corporation
in the Merger (sometimes referred to as the "Surviving Corporation"), shall
continue its corporate existence under the laws of the State of Alabama as a
wholly-owned subsidiary of InterCept. The Merger shall have the effect provided
under applicable laws including, but not limited to, Section 14-2-1106 of the
GBCC and Section 10-2B-11.06 of the ABCA.
1.2 Closing. The consummation of the transactions contemplated by this
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Agreement (the "Closing") shall take place at the offices of Xxxxxx Xxxxxxx
Xxxxx & Xxxxxxxxxxx, L.L.P., 000 Xxxxxxxxx Xxxxxx, X.X., Xxxxx 0000, Xxxxxxx,
Xxxxxxx 00000 at
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10:00 a.m. on August 6, 1999 or at such other place and time as the Purchaser
and the Company may agree (the "Closing Date"). The parties agree to use all
commercially reasonable efforts to hold the Closing on or before August 6, 1999.
At the Closing, the parties shall execute and deliver the certificates, opinions
and other instruments and documents referred to in Article 10.
1.3 Effective Time of the Merger. Contemporaneous with or immediately
----------------------------
following the Closing, the parties shall cause a certificate of merger (the
"Certificate of Merger") to be executed, delivered and filed with the Secretary
of State of the State of Georgia and with the Secretary of State of the State of
Alabama in accordance with the provisions of the GBCC and ABCA. The Merger
shall become effective at the close of business on the date of such filing,
unless a different effective time is specified in the Certificate of Merger (the
"Effective Time").
1.4 Articles of Incorporation; Bylaws. The Certificate of Incorporation
---------------------------------
and Bylaws of the Company shall become the Certificate of Incorporation and
Bylaws of the Surviving Corporation, to the extent the provisions thereof are
permitted under the ABCA, until duly amended in accordance with applicable law.
ARTICLE 2
OFFICERS AND DIRECTORS OF THE SURVIVING CORPORATION
At the Effective Time, the persons who are directors and officers of the
Purchaser at the Effective Time will become the directors and officers of the
Surviving Corporation until such time as they may be replaced in accordance with
the Bylaws of the Surviving Corporation.
ARTICLE 3
CONSIDERATION AND CONVERSION AND EXCHANGE OF SHARES
3.1 Consideration. At the Effective Time, in consideration for and
-------------
fulfillment of the obligations, covenants, terms and conditions set forth in
this Agreement, by virtue of the Merger and without any action on the part of
any holder thereof:
(a) Company Common Stock. Each share of Company Common Stock issued
--------------------
and outstanding at the Effective Time (an aggregate of 1,000 shares) shall
automatically be canceled and extinguished and shall thereafter be converted
into only the right to receive 192.30769 shares of common stock, no par value,
of InterCept (the "InterCept Common Stock"), subject to the escrow provided for
in Section 3.2 below. Each share of Company Common Stock held in the treasury of
Company, if any, shall be automatically canceled and extinguished, and no
payment shall be made in respect of such shares.
(b) Purchaser Common Stock. Each share of the Purchaser's common
----------------------
stock issued and outstanding at the Effective Time shall be converted into and
shall thereafter represent one validly issued, fully paid and nonassessable
share of common stock of the
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Surviving Corporation, which shall then constitute all of the issued and
outstanding shares of the Surviving Corporation.
(c) InterCept Common Stock. Each share of InterCept Common Stock
----------------------
issued and outstanding at the Effective Time shall remain issued and outstanding
from and after the Effective Time.
3.2 Escrow of Certain Shares. At the Closing, Purchaser shall deliver (or
------------------------
cause to be delivered) to the escrow agent set forth in the Escrow Agreement in
the form of Exhibit 3.2 hereto (the "Escrow Agreement"), one certificate for
-----------
InterCept Common Stock equal to ten percent (10%) of the InterCept Common Stock
to be issued in connection with the Merger pursuant to Section 3.1(a)
(collectively, the "Escrow Shares") for the escrow established pursuant to the
Escrow Agreement. Until such Escrow Shares are disbursed under the terms of the
Escrow Agreement, the Shareholders shall be entitled to vote such Escrow Shares
according to their pro rata interest, as provided in the Escrow Agreement.
Dividends, distributions and other proceeds, if any, paid with respect to the
Escrow Shares during the escrow period shall be held in escrow and disbursed
under the Escrow Agreement in the same manner as the Escrow Shares.
Certificates for the remaining shares of InterCept Common Stock to be delivered
in connection with the Merger shall be delivered to the Shareholders in
accordance with Section 3.5 below.
3.3 Fractional Shares. No fractional shares of InterCept Common Stock
-----------------
will be issued, and fractional shares to which the Shareholders would otherwise
be entitled will be disregarded.
3.4 Surrender and Exchange of Certificates.
--------------------------------------
(a) Surrender of Certificates. At the Closing, Purchaser and
-------------------------
InterCept shall deliver certificates for the number of shares of InterCept
Common Stock provided for in Section 3.1. Upon surrender to Purchaser of
certificates representing Company Common Stock (the "Certificates"), and subject
to the Escrow Agreement, the holder of such Certificates shall be entitled to
receive at the Closing in exchange therefor, one or more certificates as
requested by the holder (properly issued, executed and countersigned, as
appropriate) representing that number of whole shares of InterCept Common Stock
to which such Shareholder shall have become entitled pursuant to the provisions
of Section 3.1 and the Certificates so surrendered shall forthwith be canceled.
All payments in respect of Company Common Stock that are made in accordance with
the terms hereof shall be deemed to have been made in full satisfaction of all
rights pertaining to such securities.
(b) Lost Certificates. In the case of any lost, misplaced, stolen or
-----------------
destroyed Certificate, the holder thereof will be required, as a condition
precedent to delivery to such holder of the InterCept Common Stock to which he
is entitled, to deliver to Purchaser an indemnity agreement and a bond in such
sum as InterCept reasonably requests as indemnity against any claim that may be
made against Purchaser with respect to the Certificate alleged to have been
lost, misplaced, stolen or destroyed.
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(c) Dividends on InterCept Common Stock. No holder of a Certificate
-----------------------------------
shall be entitled to delivery of any dividend or other distribution from
InterCept having a record date after the Closing Date until surrender of such
holder's Certificate pursuant to this Section 3.4. Upon such surrender, there
shall be paid to the holder the amount of any dividends or other distributions
(without interest) that theretofore became payable by InterCept, but were not
paid by reason of the foregoing with respect to the number of whole shares of
InterCept Common Stock represented by the Certificate(s) issued upon such
surrender. From and after the Closing Date, InterCept and Purchaser shall,
however, be entitled to treat any such Certificate that has not yet been
surrendered pursuant to Section 3.4(a) as evidencing the ownership of the
aggregate purchase price represented by such Certificate, notwithstanding any
failure to surrender such Certificate.
(d) Adjustments. In the event that at any time after the date hereof
-----------
and prior to the Closing Date, InterCept shall effect (i) a dividend or other
distribution with respect to InterCept Common Stock payable in InterCept Common
Stock or other property (other than cash), (ii) a combination or conversion of
outstanding InterCept Common Stock into a smaller number of shares of such
InterCept Common Stock, or (iii) any reorganization or reclassification, or any
consolidation or merger of InterCept with another corporation where InterCept is
not the surviving corporation, or the sale of all or substantially all of its
assets to another corporation, in such a way that holders of outstanding
InterCept Common Stock, shall be entitled to receive (either directly or upon
subsequent liquidation) stock, securities or other property with respect to or
in exchange for such InterCept Common Stock (any such event described in (i)-
(iii) above referred to as a "Diluting Event"), then, as a condition of such
Diluting Event, lawful and adequate provision shall be made whereby the
Shareholders shall thereafter be entitled to receive (under the same terms
otherwise applicable to their receipt of InterCept Common Stock), in addition to
or in lieu of (as the case may be) the number of shares of InterCept Common
Stock, as the case may be, to which such Shareholders are entitled immediately
prior to such Diluting Event, such shares of stock, securities or other property
as may be issued or payable with respect to or in exchange for that number of
shares of InterCept Common Stock to which the Shareholders were so entitled, and
in any case appropriate provision shall also be made with respect to such
Shareholders' rights and interests to the end that the provisions of this
Section 3.4 shall thereafter be applicable in relation to any shares of stock,
securities or other property thereafter deliverable to such Shareholders
pursuant to the provisions hereof.
3.5 Legending of Securities.
-----------------------
(a) The shares of InterCept Common Stock to be delivered in
connection with this Agreement will be issued in a transaction exempt from
registration under the Securities Act of 1933, as amended (the "Securities Act")
by reason of Section 4(2) thereof, Regulation D promulgated thereunder, or other
private offering exemptions and InterCept and Purchaser are relying on the
representations of the Shareholders with respect to such exemptions. Each
Shareholder understands and agrees that stop transfer instructions with respect
to the shares of InterCept Common Stock received by each Shareholder pursuant to
this
Page 4 of 45
Agreement will be given to InterCept's transfer agent and that there will be
placed on the certificates for such shares a legend stating in substance as
follows:
The securities represented hereby have not been registered under
the Securities Act of 1933, as amended, and may not be offered,
sold, transferred or otherwise disposed of unless registered with
the United States Securities and Exchange Commission and the
securities regulatory authorities of applicable states or unless
an exemption from such registration is available.
The securities represented hereby are subject to the provisions of
an Agreement and Plan of Merger dated August 6, 1999, and may not
be sold or otherwise transferred, except in accordance therewith.
Copies of such agreement may be obtained at the principal executive
offices of The InterCept Group, Inc.
(b) The foregoing legends will also be placed on any certificate
representing securities issued subsequent to the original issuance of the
InterCept Common Stock pursuant to this Agreement as a result of any transfer of
such shares or any stock dividend, stock split or other recapitalization as long
as the InterCept Common Stock issued to the Shareholders pursuant to this
Agreement has not been transferred in such manner to justify the removal of the
legend therefrom.
ARTICLE 4
RULES OF CONSTRUCTION
In the interpretation of this Agreement, unless otherwise provided or
the context otherwise requires:
(a) The singular includes the plural and vice versa and, in
particular (but without limiting the generality of the foregoing), any word or
expression defined in the singular has the corresponding meaning used in the
plural and vice versa;
(b) Any reference to any gender includes the other gender;
(c) Any reference to an Article, Section, Exhibit, clause, subclause,
paragraph, subparagraph, Schedule or recital is a reference to an Article,
Section, Exhibit, clause, subclause, paragraph, subparagraph, Schedule or
recital of this Agreement;
(d) Any reference to any agreement, instrument or other document (1)
shall include all appendices, exhibits and schedules thereto and all agreements,
documents or other writings incorporated by reference therein, and (2) shall be
a reference to such agreement, instrument or other document as amended,
supplemented, modified, suspended, restated or novated from time to time;
(e) Any reference to any statute shall be construed as including all
statutory provisions consolidating, amending or replacing such statute and all
governmental regulations and rules promulgated thereunder;
Page 5 of 45
(f) Any reference to "writing" includes printing, typing, lithography
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and other means of reproducing words in a visible form;
(g) Any reference to a time or date or to a local time or date is a
reference to the time and date in Atlanta, Georgia;
(h) The headings and Article, Section and paragraph numbering
contained in this Agreement are used solely for convenience and do not
constitute a part of this Agreement, nor shall such headings and numbering be
used in any manner to aid in the construction of this Agreement;
(i) References herein to the "Company Disclosure Schedules" mean the
disclosure schedules, dated as of the date hereof, which have been delivered by
the Company and/or the Shareholders to InterCept and the Purchaser and all other
documents, agreements, and other items disclosed by the Company and/or the
Shareholders in writing to InterCept and the Purchaser and attached to such
schedules in connection with this Agreement, and references to a numbered
Company Disclosure Schedule shall mean that portion of the Company Disclosure
Schedules that refers to the specific section or subsection of Article 5 of this
Agreement;
(j) The terms "disclosed by InterCept" and "disclosed by Purchaser"
mean and include, with respect to information concerning any event, fact or
circumstance, information contained in the Purchaser's Disclosure Schedules, in
this Agreement and the other Purchase Agreements, in InterCept's SEC Reports (as
defined herein), in annual and other reports furnished by InterCept to its
shareholders as a group, and in press releases of InterCept and Purchaser
disseminated to (i) major news wire services and (ii) the Nasdaq or a United
States national securities exchange;
(k) The term "including" means "including, without limitation";
(l) The term "Governmental Authority" means any United States
federal, state or local, or foreign, governmental, regulatory or administrative
authority, agency, department, board, investigative body or commission or any
court, tribunal, or judicial or arbitral body;
(m) The term "Knowledge" as used with respect to (1) the Shareholders
(including any references to the Shareholders being aware of a particular
matter) means the actual knowledge of the Shareholders and information which
they reasonably should have known, after inquiry, given the nature of the
disclosure and (2) the Company, InterCept or the Purchaser (including any
references to any such company being aware of a particular matter) means the
actual knowledge of the officers of such company and information which they
reasonably should have known, after inquiry, given the nature of the disclosure;
(n) The term "Material Adverse Effect" with respect to a person or
entity means any circumstance, change in, or effect on the business and affairs
of such person or entity or any Subsidiary thereof that, individually or in the
aggregate with any other
Page 6 of 45
circumstances, changes in, or effects on, the business and affairs of such
person or entity and its Subsidiaries: (1) is, or would reasonably be expected
to be, materially adverse to the business, operations, assets or liabilities,
prospects, results of operations or financial condition of such person or entity
and its Subsidiaries, taken as a whole, or (2) would reasonably be expected to
materially adversely affect the ability of such person or entity and its
Subsidiaries to operate or conduct its or their business and affairs in the
manner in which it is currently operated or conducted or contemplated by such
person or entity to be operated or conducted; provided, however, that a Material
Adverse Effect with respect to InterCept or Purchaser shall not include any
decline in the trading price of InterCept Common Stock for any reason, including
without limitation, any change caused or arising from the failure by InterCept
for any reason to achieve operating results in accordance with market
expectations or any market factors such as volatility, fluctuations in the
market price of stocks generally or general economic factors, nor shall it
include any event or circumstance arising from any such decline unless such
event or circumstance, independent of such decline, would have had a material
and adverse effect on the business of InterCept and its Subsidiaries, taken as a
whole;
(o) The term "person" means any individual, partnership, limited
liability company, firm, corporation, association, trust, joint venture,
unincorporated organization or other entity, as well as any syndicate or group
that would be deemed to be a person under Section 13(d)(3) of the Exchange Act
(as defined herein);
(p) References herein to the "Purchaser Disclosure Schedules" mean
the disclosure schedules, dated as of the date hereof, which have been delivered
by the Purchaser to the Company and the Shareholders and all other documents,
agreements, and other items disclosed by the Purchaser in writing to the Company
and the Shareholders and attached to such schedules in connection with this
Agreement, and references to a numbered Purchaser Disclosure Schedule shall mean
that portion of the Purchaser Disclosure Schedules that refers to the specific
section or subsection of Article 8 of this Agreement;
(q) The term "Subsidiary" means any corporation, partnership, joint
venture or other legal entity in which a specified person or entity, directly or
indirectly, owns or controls the voting of at least a 50% share or other equity
interest or for which such person or entity, directly or indirectly, acts as a
general partner or managing member; and
(r) Each of the Parties acknowledges that it has had the opportunity
to negotiate the terms and provisions of this Agreement, with the assistance and
review of its counsel. This Agreement, therefore, shall be construed without
regard to any presumption or other rule requiring construction against the party
causing the Agreement to be drafted.
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ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SHAREHOLDERS
To induce InterCept and the Purchaser to enter into this Agreement and the
other Purchase Agreements (defined in Section 13.4 below), the Company and the
Shareholders, jointly and severally, hereby represent and warrant to InterCept
and Purchaser as follows:
5.1 Organization.
------------
(a) The Company is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Alabama. The Company has
the corporate power and authority to own or lease all of its properties and
assets and to carry on its business as it is now being conducted, and, except as
disclosed on Company Disclosure Schedule 5.1(a), is duly licensed or qualified
----------------------------------
to do business and is in good standing in each jurisdiction in which it is
required to be so licensed or qualified, except where the failure of the Company
to be so licensed, qualified or in good standing would not have and is not
reasonably likely to have a Material Adverse Effect on the Company.
(b) Company Disclosure Schedule 5.1(b) sets forth true and correct
----------------------------------
copies of the Articles of Incorporation and Bylaws of the Company and all
amendments thereto.
(c) Except as disclosed on Company Disclosure Schedule 5.1(c), the
----------------------------------
Company does not own or control, directly or indirectly, any equity interest in
any corporation, company, association, partnership, joint venture or other
entity.
5.2 Capitalization. The authorized capital stock of the Company consists
--------------
of 10,000 shares of Company Common Stock and no shares of preferred stock or any
other form of capital stock. As of the date hereof, there are 1,000 shares of
Company Common Stock issued and outstanding. Company Disclosure Schedule 5.2
-------------------------------
sets forth the number of shares of Company Common Stock owned by each
Shareholder and the number of shares of Company Common Stock which may be
acquired by each holder of warrants and options to purchase Company Common
Stock. There are no options, warrants, or other rights to acquire Company
Common Stock from the Company. All issued and outstanding shares of Company
Common Stock have been duly authorized and validly issued and are fully paid and
nonassessable, were not issued in violation of any preemptive rights and were
issued pursuant to effective registration statements or under available
exemptions from the registration requirements of the federal and state
securities laws. Except as set forth on Company Disclosure Schedule 5.2, the
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Company has not granted nor is it bound by any outstanding subscriptions,
options, warrants, calls, commitments or agreements of any character calling for
the transfer, purchase, subscription or issuance of any shares of capital stock
of the Company or any securities representing the right to purchase, subscribe
or otherwise receive any shares of such capital stock or any securities
convertible into any such shares, and, except as set forth on Company Disclosure
------------------
Schedule 5.2, there are no agreements or understandings with respect to voting
------------
any such shares.
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5.3 Authority; No Violation.
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(a) Except as disclosed on Company Disclosure Schedule 5.3(a)
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(collectively, the "Company Approvals"), no consents, approvals, authorizations,
clearances or orders of, filings or registrations with or notices to
(collectively "Authorizations") any third party or any Governmental Authority
are necessary on behalf of the Company or any of the Shareholders in connection
with (i) the execution and delivery by the Company and the Shareholders of this
Agreement and the other Purchase Agreements, (ii) the consummation by the
Company and the Shareholders of the transactions contemplated hereby and thereby
and (iii) the performance of the Company's and the Shareholder's obligations
under this Agreement and the Purchase Agreements. The Company has the full
corporate power and authority to execute and deliver this Agreement and the
other Purchase Agreements and to consummate the transactions contemplated hereby
and thereby in accordance with the terms hereof and thereof. The execution and
delivery of this Agreement and the other Purchase Agreements and the
consummation of the transactions contemplated hereby and thereby have been duly
and validly approved by the Board of Directors and Shareholders of the Company
in accordance with the Articles of Incorporation and Bylaws of the Company and
with applicable Laws (as defined below). Except for the Company Approvals, no
other corporate proceedings on the part of the Company are necessary for the
Company and the Shareholders to execute and deliver this Agreement and the other
Purchase Agreements to which they are a party and for the Company and the
Shareholders to be bound by the terms hereof and thereof. This Agreement and
the other Purchase Agreements to which they are a party have been duly and
validly executed and delivered by the Company and the Shareholders and
constitute the valid and binding obligation of the Company and the Shareholders
enforceable against the Company and the Shareholders in accordance with its and
their terms, except to the extent that the availability of the remedy of
specific performance may be limited by equitable principles.
(b) Neither the execution and delivery by the Company and the
Shareholders of this Agreement and the other Purchase Agreements to which they
are a party, nor the consummation by the Company and the Shareholders of the
transactions contemplated hereby and thereby in accordance with the other terms
hereof and thereof, nor compliance by the Company and the Shareholders with any
of the terms or provisions hereof or thereof, will: (i) violate any provision of
the Company's Articles of Incorporation or Bylaws; (ii) assuming that the
Company Approvals are duly obtained, violate any United States federal, state or
local or foreign statute, code, ordinance, rule, regulation, judgment, order,
writ, ruling, decree or injunction of any Governmental Authority (collectively,
"Laws") applicable to the Company, the Shareholders or any of its or their
respective properties or assets; or (iii) violate, conflict with, result in a
breach of any provisions of, constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default) under, result in
the termination of, accelerate the performance required by, or result in the
creation of any lien, mortgage, security interest, pledge, charge, other right
of third parties or other encumbrance (collectively, "Liens") upon any of the
respective properties or assets of the Company or the Shareholders under any of
the terms, conditions or provisions of any note, bond, mortgage, indenture, deed
of trust, license, lease, agreement or other instrument or obligation to which
the Company or the Shareholders is a party, or by which they or any of their
respective properties or assets
Page 9 of 45
may be bound or affected except, with respect to (ii) and (iii) above, such as
individually or in the aggregate will not have a Material Adverse Effect on the
Company, and which will not prevent or delay the consummation of the
transactions contemplated hereby.
5.4 Financial Statements.
--------------------
(a) Company Disclosure Schedule 5.4(a) sets forth copies of: (i) the
----------------------------------
balance sheets of the Company as of June 30, 1999, December 31, 1998, December
31, 1997 and December 31, 1996, and (ii) the statements of income, stockholders'
equity and cash flows for the periods ended June 30, 1999, December 31, 1998,
December 31, 1997 and December 31, 1996 (together with the related notes,
collectively, the "Company Financial Statements"). The Company Financial
Statements for 1997 and 1998 have been audited by Xxxxxxx Guess Xxxxx &
Xxxxxxxx, P.C. and the audit letters of such firm are included therein.
(b) The Company Financial Statements have been prepared in accordance
with generally accepted accounting principles and practices ("GAAP") applied
consistently during the periods involved (except as may be indicated therein or
in the notes thereto), and present fairly the financial position of the Company
as of the respective dates set forth therein, and the consolidated results of
the Company's operations and its cash flows for the respective periods set forth
therein, in accordance with GAAP, except, in the case of interim financial
statements, for normal year-end adjustments consistent with past practice.
(c) The books and records of the Company have been maintained in
material compliance with applicable legal and accounting requirements, including
GAAP.
(d) Except as and to the extent reflected, disclosed or reserved
against in the Company Financial Statements, or as disclosed in Company
-------
Disclosure Schedule 5.4(d), since December 31, 1998, the Company has not
--------------------------
incurred any liabilities or obligations of any kind, whether absolute, accrued,
contingent or otherwise ("Liabilities"), except (1) in the ordinary course of
business and consistent with past practice, (2) Liabilities that in the
aggregate do not have a Material Adverse Effect on the Company and (3) this
Agreement and the other Purchase Agreements.
(e) Since December 31, 1998, to the Company's and the Shareholders'
Knowledge, there has not been any change, occurrence or circumstance affecting
the business, results of operations or financial condition of the Company that
has had, individually or in the aggregate, a Material Adverse Effect on the
Company since that date or which is reasonably likely to have a Material Adverse
Effect on the Company, other than changes, occurrences and circumstances
disclosed by the Company on the Company Disclosure Schedules.
5.5 Broker's and Other Fees. Except as disclosed in Company Disclosure
----------------------- ------------------
Schedule 5.5, neither Company nor any of the Shareholders have employed any
------------
broker or finder or incurred any liability for any broker's or finder's fees or
commissions in connection with any of the transactions contemplated by this
Agreement and the other Purchase Agreements.
Page 10 of 45
5.6 Absence of Certain Changes or Events.
------------------------------------
(a) Except as disclosed in Company Disclosure Schedule 5.6(a) or as
----------------------------------
reflected in the Company Financial Statements for June 30, 1999, the Company and
the Shareholders do not have Knowledge of any facts or conditions which they
reasonably believe to be likely to cause a Material Adverse Effect on the
Company in the next twelve months from that reflected in the Company Financial
Statements.
(b) Except for the execution of this Agreement, as set forth in
Company Disclosure Schedule 5.6(b) or as reflected in the Company Financial
----------------------------------
Statements for June 30, 1999, since December 31, 1998, the Company has conducted
its business only in the ordinary course, consistent with past practice and
neither the Company nor the Shareholders has taken or permitted any of the
actions set forth below:
(1) failed to maintain its existence and status in good standing
in all jurisdictions in which it is required to be qualified or registered to
conduct its business, except where the failure to do so would not have a
Material Adverse Effect on the Company;
(2) failed to maintain all of its tangible assets in good
operating condition (ordinary wear and tear excepted);
(3) changed any provision of its Articles of Incorporation or
Bylaws;
(4) issued any additional shares of Company Common Stock or
other securities, rights to purchase or agreements of any character relating to
the authorized or issued capital stock of the Company or any securities
convertible into shares of such stock, or split, combined or reclassified any
shares of its capital stock, or declared, set aside or paid any dividend or
other distribution (whether in cash, stock or property or any combination
thereof) in respect of its capital stock;
(5) directly or indirectly redeemed, purchased or otherwise
acquired any capital stock of the Company;
(6) granted any severance or termination pay to, or entered into
or amended any employment or severance agreement with, any of its directors,
officers or employees; adopted any new employee benefit plan or arrangement of
any type or increased compensation or benefits to its directors, officers or
employees except with respect to employee increases and discretionary bonus in
the ordinary course of business and consistent with past practices and policies
and, with regard to bonuses in amounts that do not result in a material variance
from the amounts reflected for such payments through the date of the most recent
balance sheet included in the Company Financial Statements;
(7) made any capital expenditures in excess of $50,000
individually or $100,000 in the aggregate outside the ordinary course of
business or acquired in any manner whatsoever any business or entity;
Page 11 of 45
(8) entered into, terminated, modified or amended any agreement
or arrangement with any officer or director of the Company or any "affiliate" of
any such officer or director, as that term is defined in Regulation 14A of the
Exchange Act (an "Affiliate");
(9) made any change in its accounting methods or practices or
any change in the method of valuing assets included in the Company Financial
Statements;
(10) increased, or made any change in any assumptions underlying
the method of calculating any bad debt, contingency or other reserves from those
reflected in the Company Financial Statements;
(11) incurred, paid, discharged or satisfied any Liabilities in
excess of $50,000 in the aggregate, other than in the ordinary course of
business;
(12) written down the value of any inventory or written off as
uncollectible any notes or accounts receivable, except for write-downs and
write-offs in the ordinary course of business;
(13) canceled or waived any claims or rights, or sold,
transferred, distributed or otherwise disposed of any material assets or
properties, except in the ordinary course of business;
(14) declared, filed or permitted to be filed any voluntary or
involuntary bankruptcy, receivership, insolvency or other similar proceeding or
petition with any Governmental Authority with respect to the Company or any of
the Shareholders;
(15) failed to perform its obligations under any Material
Contract (except those being contested in good faith) or entered into, assumed
or amended any agreement that would be a Material Contract other than agreements
to provide services entered into in the ordinary and usual course of business;
(16) taken any action that would or could reasonably be expected
to result in (A) a Material Adverse Effect on the Company or (B) any of the
Company's or the Shareholders' representations and warranties contained in
Article 5 or any of the Shareholders' representations and warranties contained
in Article 6 not being true and correct in any material respect at the Closing
Date, or that would cause any of the conditions to Closing not to be satisfied;
or
(17) directly or indirectly agreed to do any of the foregoing.
(c) Prior to December 31, 1998, neither the Company nor the
Shareholders had taken or permitted any actions described in Section 5.6(b)
above that should have been reflected in the Company Financial Statements but
are not.
5.7 Legal Proceedings. Except as disclosed in Company Disclosure Schedule
----------------- ---------------------------
5.7, neither the Company nor any of the Shareholders is a party to any, and
---
there are no pending
Page 12 of 45
or, to the Company's or the Shareholders' Knowledge, threatened legal,
administrative, arbitral or other proceedings, claims, actions or governmental
investigations of any nature against the Company or the Shareholders. Except as
disclosed in Company Disclosure Schedule 5.7, the Company is not a party to any
-------------------------------
order, judgment or decree entered in any lawsuit or proceeding. Without limiting
the foregoing, except as disclosed in Company Disclosure Schedule 5.7, to the
-------------------------------
Company's or the Shareholders' Knowledge, no actions, suits, demands, notices,
claims, investigations or proceedings are pending or threatened against or
otherwise involving, directly or indirectly, any officer, director, employee or
agent of the Company (in connection with such officer's, director's, employee's
or agent's activities on behalf of the Company or that otherwise relate,
directly or indirectly to the Company or its properties or securities) including
without limitation any notices, demand letters or requests from any Governmental
Authority relating to such potential Liabilities, nor, to the Company's or the
Shareholders' Knowledge, are there any circumstances which they reasonably
believe to be likely to lead to such actions, suits, demands, notices, claims,
investigations or proceedings.
5.8 Taxes and Tax Returns. Except as disclosed in Company Disclosure
--------------------- ------------------
Schedule 5.8:
------------
(a) The Company has duly filed (and until the Closing Date will so
file) all returns, declarations, reports, information returns and statements
("Returns") required to be filed by it in respect of any United States federal,
state or local, or foreign, Taxes and has duly paid (and until the Closing Date
will so pay) all such Taxes due and payable, other than Taxes which are being
contested in good faith (and disclosed by the Company and the Shareholders to
InterCept and Purchaser in writing). As used herein, "Tax" or "Taxes" means and
includes any and all taxes, fees, levies, assessments, duties, tariffs, imposts,
and other charges of any kind (together with any and all interest, penalties,
additions to tax and additional amounts imposed with respect thereto) imposed by
any Governmental Authority, including, without limitation: foreign, domestic,
central, local, state or other jurisdictional taxes or other charges on or with
respect to income, estimated income, franchises, business, occupation, windfall
or other profits, gross receipts, property, sales, use, capital stock, payroll,
employment, social security, workers' compensation, unemployment compensation,
or net worth; taxes or other charges in the nature of excise, withholding, ad
valorem, stamp, transfer, value added, or gains taxes; license, registration and
documentation fees; and customs duties, tariffs, and similar charges. The
Company has established (and until the Closing Date will establish) on its books
and records reserves that are adequate for the payment of all Taxes not yet due
and payable, but are incurred in respect of the Company through such date.
(b) None of the Returns of the Company have been examined by the
Internal Revenue Service (the "IRS"), or any other United States federal, state
or local or any foreign Governmental Authority within the past six years. There
are no audits or other Governmental Authority proceedings presently pending nor,
to the Knowledge of the Company and the Shareholders, any other disputes pending
with respect to, or claims asserted for, Taxes upon the Company, nor has the
Company given any currently outstanding waivers or comparable consents regarding
the application of any statute of limitations with respect to any Taxes or
Returns. There are no Liens for Taxes upon the assets of the Company, except
Liens for
Page 13 of 45
Taxes not yet due. The Company and the Shareholders have complied (and until the
Closing Date will comply) in all respects with all applicable Laws relating to
the payment and withholding of Taxes.
(c) The Company (i) has not requested any extension of time within
which to file any Return which Return has not since been filed (ii) is not a
party to any agreement providing for the indemnification, allocation or sharing
of Taxes; (iii) except as set forth on Company Disclosure Schedule 5.8(c) is not
----------------------------------
required to include in income any adjustment by reason of a voluntary change in
accounting method initiated by the Company (nor to the Company's or the
Shareholders' Knowledge has any Governmental Authority proposed any such
adjustment or change of accounting method); (iv) has not filed a consent with
any Governmental Authority pursuant to which the Company has agreed to recognize
gain (in any manner) relating to or as a result of this Agreement or the
transactions contemplated hereby; or (v) has not been a member of an affiliated
group of corporations within the meaning of Section 1504 of the Internal Revenue
Code of 1986, as amended ("Code").
5.9 Employee Benefit Plans and Relations. Except as disclosed in Company
------------------------------------ -------
Disclosure Schedule 5.9:
-----------------------
(a) The Company does not maintain or contribute to any "employee
pension benefit plan" (the "Company Pension Plans"), as such term is defined in
Section 3 of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), including any pension, profit-sharing, retirement, thrift or stock
bonus plan, "employee welfare benefit plan" (the "Company Welfare Plans"), as
such term is defined in Section 3 of ERISA, or any other stock option plan,
stock purchase plan, restricted stock plan, deferred compensation plan,
severance plan, bonus plan or other similar plan, program or arrangement
(collectively the "Employee Plans"). The Company has not contributed to, or been
required to contribute to, any "Multiemployer Plan," as such term is defined in
Section 3(37) of ERISA.
(b) Each of the Company Pension Plans is intended to be a qualified
plan within the meaning of Section 401(a) of the Code, and neither the Company
nor the Shareholders are aware of any fact or circumstance that would adversely
affect the qualified status of any such plan.
(c) Each of the Company Pension Plans, Company Welfare Plans and
other Employee Plans has been operated in compliance in all material respects
with the provisions of ERISA, the Code, and all other applicable Laws.
(d) Neither the Company nor, to the Company's or the Shareholders'
Knowledge, any trustee, fiduciary or administrator of any Company Pension Plan
or Company Welfare Plan or any trust created thereunder, has engaged in a
"prohibited transaction" as such term is defined in Section 4975 of the Code,
which could subject the Company or any such trustee, fiduciary or administrator
thereof, to the tax or penalty on prohibited transactions imposed by said
Section 4975.
Page 14 of 45
(e) No Company Pension Plan or any trust created thereunder has been
terminated, nor have there been any "reportable events" for which the 30 day
notice has not been waived with respect to any Company Pension Plan, as that
term is defined in Section 4043(b) of ERISA.
(f) There are no pending or, to the Company's or the Shareholders'
Knowledge, threatened or anticipated claims (other than routine claims for
benefits) by, on behalf of or against any of the Company Pension Plans or the
Company Welfare Plans or any trusts related thereto.
(g) Accruals; Funding.
-----------------
(i) Pension Plans. None of the Employee Plans is a Pension Plan
-------------
subject to ERISA Title IV (including those for retired, terminated or other
former employees and agents).
(ii) Other Plans. Company Disclosure Schedule 5.9(g) fully and
----------- ----------------------------------
accurately sets forth any funding liability under each Employee Plan not subject
to ERISA Title IV, whether insured or otherwise, specifically setting forth any
liabilities under any retiree medical arrangement and specifically designating
any insured plan which provides for retroactive premium or other adjustments.
The levels of insurance reserves and accrued liabilities with regard to each
such Employee Plan are reasonable and are sufficient to provide for all incurred
but unreported claims and any retroactive premium adjustments.
(iii) Contributions. Except as set forth on Company Disclosure
------------- ------------------
Schedule 5.9(g): (A) the Company and each trade or business (whether or not
---------------
incorporated), which together with the Company is treated as a single employer
pursuant to Code Section 414(b), (c), (m) or (o) (an "ERISA Affiliate"), has
made full and timely payment of all amounts required to be contributed under the
terms of each Employee Plan and applicable Law, or required to be paid as
expense under such Employee Plan, including the Pension Benefit Guaranty
Corporation ("PBGC") premiums and amounts required to be contributed under Code
Section 412; (B) where applicable, all contributions have been made in
accordance with the actuarial recommendations; and (C) no excise taxes are
assessable as a result of any nondeductible or other contributions made or not
made to an Employee Plan.
(h) Summary plan descriptions and all other returns, reports,
registration statements, prospectuses, documents, statements and communications
required to have been filed, published or disseminated under ERISA or other Laws
and the rules and regulations promulgated by the Department of Labor under ERISA
and the Treasury Department or by the Securities and Exchange Commission ("SEC")
with respect to the Employee Plans have been so filed, published or
disseminated, except where a failure to do so would not have a Material Adverse
Effect on the Company.
5.10 Compliance with Applicable Laws. Except as set forth in Company
------------------------------- -------
Disclosure Schedule 5.10, the Company holds all licenses, franchises, permits,
------------------------
consents and authorizations ("Licenses") necessary for the lawful conduct of its
business, except to the
Page 15 of 45
extent a failure to hold such Licenses would not have a Material Adverse Effect.
No proceeding is pending or, to the Company's or Shareholder's Knowledge,
threatened seeking the revocation or suspension of any License. Except as set
forth on Company Disclosure Schedule 5.10, the Company is and has been in
--------------------------------
compliance in all material respects with all applicable Laws, and neither the
Company nor any Shareholder has received any notices of any allegation of any
violation by the Company of any Laws or Licenses.
5.11 Certain Contracts.
-----------------
(a) Company Disclosure Schedule 5.11(a) lists the following
-----------------------------------
agreements (collectively, the "Material Contracts"), including, without
limitation, leases, purchase contracts and commitments, to which the Company is
a party or by which the Company or any of its properties or assets is bound:
(i) all agreements involving an annual commitment or payment by
any party thereto of more than $100,000 individually or in any group of related
agreements;
(ii) all joint venture, sales agency, sales representative or
distributorship, broker, franchise or similar agreements;
(iii) all license agreements pursuant to which the Company
licenses any intellectual property from another party that are material to the
Company's business and all license agreements pursuant to which the Company
licenses intellectual property to other parties that were not entered into in
the ordinary course of business;
(iv) all leases of real and personal property that is material
to the Company's business and operations;
(v) all notes, bonds, mortgages, security agreements,
guarantees and other agreements and instruments for or relating to any lending
or borrowing by the Company in any amount (exclusive of advances to employees
for expenses in the ordinary course of business);
(vi) all powers of attorney, guarantees, suretyships or similar
agreements; and
(vii) all other agreements (other than agreements with the
Company's customers described in Section 5.11(f) below) to which the Company or
any Shareholder is a party and either (A) which is material to the Company's
business or (B) the breach of or default under which would have a Material
Adverse Effect on the Company (for purposes of this clause (vii) only, breaches
or defaults which cause only cash Liabilities of $50,000 individually or
$100,000 in the aggregate shall not be deemed to cause a "Material Adverse
Effect").
(b) Except as set forth on Company Disclosure Schedule 5.11(b), to
-----------------------------------
the Knowledge of the Company and the Shareholders, each of the Material
Contracts is valid,
Page 16 of 45
binding and enforceable on the parties thereto in accordance with its terms. The
Company has provided a true and complete copy of each Material Contract to
InterCept and Purchaser.
(c) Except as disclosed in Company Disclosure Schedule 5.11(c), (i)
-----------------------------------
the Company is not a party to or bound by any agreement or understanding
(whether written or oral) with respect to the employment of any officers,
employees, directors or consultants, and (ii) the consummation of the
transactions contemplated by this Agreement and the other Purchase Agreements
will not (either alone or upon the occurrence of any additional acts or events)
result in any payment (whether of severance pay or otherwise) or other
obligation becoming due from the Company to any officer, employee, director,
shareholder or consultant thereof. Company Disclosure Schedule 5.11(c) sets
-----------------------------------
forth true and correct copies of all severance or employment agreements with
officers, directors, employees, agents or consultants to which the Company is a
party.
(d) Except as disclosed in Company Disclosure Schedule 5.11(d), no
-----------------------------------
agreement or understanding to which the Company or any Shareholder is a party or
by which any of them is bound limits the freedom of the Company or any
Shareholder to compete in any line of business or with any person.
(e) Except as disclosed in Company Disclosure Schedule 5.11(e),
-----------------------------------
neither the Company nor any Shareholder nor, to the Knowledge of the Company or
the Shareholders, any other party thereto, is in default under any of the
Material Contracts or any other material agreement to which the Company or any
Shareholder is a party or to which its or their properties is bound; to the
Company's and the Shareholders' Knowledge, no event has occurred which (whether
with or without notice, lapse of time or the happening or occurrence of any
other event) would constitute a default thereunder entitling any party to
terminate a Material Contract or other such agreement or to otherwise claim or
collect damages the impact of which would have a Material Adverse Effect on the
Company; and the continuation, validity and effectiveness of all such Material
Contracts and agreements under the current terms thereof and the current rights
and obligations of the Company and the Shareholders thereunder will in no way be
affected, altered or impaired by the consummation of the transactions
contemplated hereby and by the other Purchase Agreements. Except as disclosed
in Company Disclosure Schedule 5.11(e), upon consummation of the transactions
-----------------------------------
contemplated by this Agreement and the other Purchase Agreements, the Company
will be entitled to continue to enjoy the material advantages and benefits of
the business arrangements, agreements, opportunities and relationships of the
Company as it enjoyed prior to the date hereof without interference or
interruption.
(f) Company Disclosure Schedule 5.11(f) sets forth samples of
-----------------------------------
contracts, licenses and other agreements used in the ordinary course of its
business in connection with the sale of its products and services to customers
by the Company. The actual contracts, licenses, and other agreements entered
into with customers contain substantially the same terms as the samples
provided, subject to changes negotiated and entered into in the ordinary course
of business, which changes do not materially adversely impact the rights or
obligations of the Company under such contracts, licenses and agreements.
Page 17 of 45
5.12 Properties and Insurance.
------------------------
(a) Except as disclosed in Company Disclosure Schedule 5.12(a), the
-----------------------------------
Company has good and marketable title to all assets and properties, whether real
or personal, tangible or intangible, reflected in the Company Financial
Statements as of June 30, 1999, or owned or acquired subsequent thereto (except
to the extent that such assets and properties have been disposed of for fair
value in the ordinary course of business since such date), subject to no Liens
except (i) statutory liens for amounts not yet delinquent or which are being
contested in good faith (and for which adequate reserves have been made) and
(ii) such Liens and title imperfections that do not in the aggregate have a
Material Adverse Effect on the Company. The Company as lessee has the right
under valid and subsisting leases to occupy, use, possess and control all real
property leased by the Company as presently occupied, used, possessed and
controlled by the Company or necessary in the operation of its businesses as
currently conducted.
(b) The business operations and insurable material properties and
assets of the Company are insured for its benefit under policies or bonds as in
effect on the date hereof, copies of which are attached hereto as Company
-------
Disclosure Schedule 5.12(b). The Company has not received any notice of
---------------------------
cancellation or notice of a material amendment of any such insurance policy or
bond and the Company is not in default under any such policy or bond, no
coverage thereunder is being disputed and all material claims thereunder have
been filed in a timely fashion.
(c) No person other than the Company is currently entitled to
possession of any of the properties that are material to the business or
operations of the Company or the loss of use of which would have a Material
Adverse Effect on the Company, whether owned or leased by the Company. To the
Company's and the Shareholders' Knowledge, the real property, buildings,
structures and improvements owned or leased by the Company conform in all
material respects to all applicable Laws, including zoning regulations, none of
which would upon consummation of the transactions contemplated hereby adversely
interfere with the use of such properties, buildings, structures or improvements
for the purposes for which they are now utilized. The Company has not received
notice of, and to the Company's and the Shareholders' Knowledge, there does not
exist (i) any pending or contemplated condemnation or eminent domain proceeding
affecting the properties owned or leased by the Company, (ii) any proposal for
increasing the assessed value of any such properties for state, county, local or
other ad valorem Taxes or (iii) any pending or contemplated proceedings or
public improvements that would result in the levy of any special Tax or
assessment against any such properties; and there are no outstanding
requirements or recommendations by the Company's insurance providers requiring
or recommending any repairs or work to be done with reference to any such
properties or any basis for such. The properties and assets owned or leased by
the Company constitute all of the property and assets that the Company uses or
may reasonably need in connection with the operation of its business as
conducted on the Closing Date, and all such property and assets are in good
repair and operating condition, normal wear and tear excepted. The consummation
of the transactions contemplated by this Agreement and the other
Page 18 of 45
Purchase Agreements will not impair the ability of the Company to continue to
use such properties and assets.
5.13 Environmental Matters.
---------------------
(a) The operations of the Company comply, and have complied, in all
material respects with all applicable Laws relating to pollution or protection
of the environment ("Environmental Laws").
(b) The Company has obtained all environmental, health and safety
Licenses and other authorizations necessary for the operation of the Company's
business, all of which are valid and in good standing and are not subject to any
modification or revocation proceeding, and the Company is in compliance in all
material respects with all terms and conditions thereof.
(c) Neither the Company nor any of the Shareholders has received any
notice of any pending or threatened investigation, proceeding or claim to the
effect that the Company is or may be liable to any person or entity, or
responsible or potentially responsible for the costs of any remedial or removal
action or other cleanup costs, as a result of noncompliance with any
Environmental Laws or arising out of the presence, generation, storage or
disposal of hazardous waste, including liability under the United States
Comprehensive Environmental Response, Compensation and Liability Act, as
amended, any state superfund law or any Environmental Law, and there is no past
or present action, or to the Company's and the Shareholders' Knowledge,
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.
5.14 Intellectual Property. The Company develops, markets and licenses
---------------------
certain proprietary application software products and systems to financial
institutions and other customers (the "Software Programs"), and in connection
therewith the Company has developed certain related technical documentation and
user reference manuals (the "Documentation"). The Software Programs and the
Documentation are collectively referred to as the "Software." The Software
Programs are listed on Company Disclosure Schedule 5.14.
--------------------------------
(a) Ownership. Except as set forth in Company Disclosure Schedule
--------- ---------------------------
5.14(a), the Company owns all patents, trademarks, service marks, trade names
-------
and copyrights (including registrations, licenses and applications pertaining
thereto) and all other proprietary information used by the Company in the
conduct of its business. Company Disclosure Schedule 5.14(a) sets forth all
-----------------------------------
domestic and foreign patents, trademarks, service marks, trade names and
copyrights owned or used by the Company and all applications therefor and
registrations thereof.
(b) Procedures for Copyright Protection. Company Disclosure Schedule
----------------------------------- ---------------------------
5.14(b) sets forth the form and placement of the proprietary legends and
-------
copyright notices
Page 19 of 45
displayed in or on the Software including screen displays. In no instance has
the eligibility of the Software for protection under copyright law been
forfeited to the public domain.
(c) Procedures for Trade Secret Protection. Neither the Company nor
--------------------------------------
any Shareholder has ever disclosed source code for any of the Software to a
third party other than the persons identified in Company Disclosure Schedule
---------------------------
5.14(c), each of which has executed a nondisclosure agreement in favor of the
-------
Company. The Company discloses its source code to employees only on a need-to-
know basis in connection with the performance of their duties to the Company.
Except as described in Company Disclosure Schedule 5.14, each current employee
--------------------------------
of the Company and each former employee of the Company whose employment has
terminated since January 1, 1996 has executed and delivered to the Company an
Employment Agreement in the form attached to Company Disclosure Schedule 5.14
--------------------------------
containing provisions for the protection of trade secrets and confidential
information of the Company and the absolute ownership by the Company of all work
resulting from the performance of services by such employee. The source code and
system documentation comprising the Software have at all times been maintained
by the Company in confidence and the Company has not taken (nor has it failed to
take) any action which would be reasonably likely to result in such source code
and system documentation not being protectable as a trade secret under
applicable Laws.
(d) Ownership of Software. Except as disclosed on Company Disclosure
--------------------- ------------------
Schedule 5.14(d), all persons who have contributed to or participated in the
----------------
conception and development of the Software on behalf of the Company have been
full-time employees of the Company hired to prepare such works within the scope
of employment. As a consequence, the Company has all ownership interests in the
Software.
(e) Absence of Claims. Except as set forth in Company Disclosure
----------------- ------------------
Schedule 5.14(e), no claims have been asserted by any person to rights in the
----------------
Software, and to the Knowledge of the Company and the Shareholders, no valid
basis for any such claim exists. To the Knowledge of the Company and the
Shareholders, the use of the Software by the Company and its licensees does not
infringe on the rights of any person (whether arising under copyright, trade
secret, patent, unfair competition or other Laws that protect intellectual
property rights). To the Knowledge of the Company and the Shareholders, the use
by the Company of the patents, trademarks, service marks, trade names and
copyrights identified in Company Disclosure Schedule 5.14(a) does not infringe
-----------------------------------
the rights of any person, and no claim has been asserted that the use by the
Company of any of the foregoing infringes the rights of any person. Neither the
Company nor the Shareholders has received notice of any claim asserted by any
person to the effect that any current or former employee of the Company has
violated the provisions of any noncompete or nondisclosure agreement with such
person, or has disclosed any proprietary information of such person to the
Company or any third party.
5.15 Adequacy of Technical Documentation. The Software includes the source
-----------------------------------
code, system documentation and schematics for all Software Programs, as well as
any programmer comments for documentation and pertinent commentary or
explanation that may be reasonably necessary to render such materials
understandable and usable by a trained computer programmer. The Software also
includes the programs (including compilers),
Page 20 of 45
workbenches, tools and higher level language, if any, used for the development,
maintenance and implementation of the Software Programs.
5.16 Third Party Components in Software. The Company has validly obtained
----------------------------------
the right and license to use, copy, modify and distribute any third-party
programming and materials contained in the Software pursuant to the contracts
identified in Company Disclosure Schedule 5.16, subject to no further license
--------------------------------
fee, royalty or other payment obligations not identified in Company Disclosure
------------------
Schedule 5.16, other than software maintenance payments customarily associated
-------------
therewith. The Software contains no other programming or materials in which any
third party may claim superior, joint or common ownership, including any right
or license. The Software does not contain derivative works of any programming
or materials not owned in their entirety by the Company.
5.17 Third-Party Interests or Marketing Rights in Software. Other than in
-----------------------------------------------------
the ordinary course of business pursuant to the terms of the standard form
agreements attached to Company Disclosure Schedule 5.11(f), the Company has not
-----------------------------------
granted, transferred or assigned any right or interest in the Software to any
person except pursuant to the contracts identified on Company Disclosure
------------------
Schedule 5.17. There are no contracts, agreements, licenses, commitments or
-------------
arrangements in effect with respect to the marketing, distribution, licensing or
promotion of the Software by any independent salesperson, distributor,
sublicensor or other remarketer or sales organization except as set forth on
Company Disclosure Schedule 5.17.
--------------------------------
5.18 No Parachute Payments. Except as disclosed on Company Disclosure
--------------------- ------------------
Schedule 5.18, no officer, director, employee, shareholder or agent (or former
-------------
officer, director, employee, shareholder or agent) of the Company is entitled
now, or will or may be entitled to as a consequence of this Agreement and the
other Purchase Agreements, to any payment or benefit from the Company or
InterCept which if paid or provided would constitute an "excess parachute
payment," as defined in Section 280G of the Code.
5.19 Absence of Certain Agreements and Practices.
-------------------------------------------
(a) Except as set forth in Company Disclosure Schedule 5.19(a) or in
-----------------------------------
connection with customary transactions in the ordinary course of business, no
present or former officer, director or shareholder of the Company:
(i) owes money to the Company;
(ii) has made any claim (as defined in Xxxxxxx 000 xx xxx
Xxxxxx Xxxxxx Bankruptcy Code) against the Company or, to the Company's and the
Shareholders' Knowledge, has any basis for any such claim;
(iii) has any interest in any material property or assets used
by the Company in its business;
Page 21 of 45
(iv) has any benefits that are contingent on the transactions
contemplated by this Agreement and the other Purchase Agreements, other than as
stated herein;
(v) has any agreement with the Company that is not terminable
by the Company without penalty or notice;
(vi) has any agreement providing severance benefits or other
benefits after the termination of employment of such employee (before or after a
change in control) regardless of the reason for such termination of employment;
or
(vii) has any agreement or plan, any of the benefits of which
will be increased, vested or accelerated by the occurrence of any of the
transactions contemplated by this Agreement and the other Purchase Agreements.
(b) Neither the Company nor any of its directors, officers, agents,
affiliates or employees, nor any other person acting on behalf of the Company or
the Shareholders has (i) given or agreed to give any gift or similar benefit
having a value of $1,000 or more to any customer, supplier or governmental
employee or official or any other person, for the purpose of directly or
indirectly furthering the business of the Company, (ii) used any corporate funds
for contributions, payments, gifts or entertainment, or made any expenditures
relating to political activities to government officials or others in violation
of any applicable Laws or (iii) received any unlawful contributions, payments,
gifts or expenditures in connection with the business of the Company.
5.20 Major Vendors. Company Disclosure Schedule 5.20 sets forth a list of
------------- --------------------------------
each licensor, developer, remarketer, distributor and supplier of property or
services to, and each licensee, end-user or customer of, the Company, to whom
the Company paid in the aggregate in excess of $100,000 during calendar year
1998, or for the six months ended June 30, 1999.
5.21 Accounts Receivable. Company Disclosure Schedule 5.21 sets forth the
------------------- --------------------------------
accounts receivable of the Company as of December 31, 1998, as reflected in the
Company Financial Statements as of that date, and the accounts receivable of the
Company as of June 30, 1999, together with an aging of these accounts. These
accounts receivable, and all accounts receivable of the Company created after
June 30, 1999, arose from valid transactions in the ordinary course of business
and to the Company's and the Shareholders' Knowledge, will be good and
collectible at the recorded amounts thereof, except to the extent adequate
reserves therefor have been made on the Company Financial Statements in
accordance with GAAP. To the Company's and the Shareholders' Knowledge, no
portion of the accounts receivable is subject to counterclaim or setoff.
5.22 Bank Accounts. Company Disclosure Schedule 5.22 lists all bank,
------------- --------------------------------
money market, savings and similar accounts and safe deposit boxes of the
Company, specifying the account numbers, the authorized signatories or persons
having access to them, and the passwords used to access such accounts, including
through voice response and internet services.
Page 22 of 45
5.23 Corporate Records. The corporate record books (including the share
-----------------
records) of the Company are materially complete, accurate and up to date with
all necessary signatures and set forth all meetings and actions taken by the
shareholders and directors of the Company and all transactions involving the
shares of the Company (and contain all canceled share certificates).
5.24 Combinations Involving the Company. All mergers, consolidations or
----------------------------------
other business combinations involving the Company and all liquidations,
purchases or other transactions by which the Company or any of its Subsidiaries
acquired or disposed of any of their business and property were conducted in
material compliance with applicable charter documents, bylaws, any other
applicable agreements, instruments and documents and applicable Laws.
5.25 Labor Relations. Except as disclosed on Company Disclosure Schedule
--------------- ---------------------------
5.25, the Company is in material compliance with all federal and state Laws
----
respecting employment and employment practices, terms and conditions of
employment, wages and hours, and is not engaged in any unfair labor or unlawful
employment practice. There is no unlawful employment practice or discrimination
charge pending before the United States Equal Employment Opportunity Commission
("EEOC") or any EEOC recognized state "referral agency." There is no unfair
labor practice charge or complaint against the Company pending before the
National Labor Relations Board ("NLRB"). There is no labor strike, dispute,
slowdown or stoppage actually pending or, to the Company's or the Shareholders'
Knowledge, threatened against or involving or affecting the Company and no NLRB
representation question exists respecting any of its employees. No grievance or
arbitration proceeding is pending and no written claim therefor exists. There
is no collective bargaining agreement that is binding on the Company. Except
for any Material Contract disclosed pursuant to Section 5.11, the Company is not
a party to or bound by any agreement, arrangement or understanding with any
employee or consultant that cannot be terminated on notice of ninety (90) or
fewer days without liability to the Company or that entitles the employee or
consultant to receive any salary continuation or severance payment or retain any
specified position with the Company.
5.26 Year 2000 Matters. The Company has conducted reasonable testing in
-----------------
conformity with industry standards, including but not limited to the FFIEC Year
2000 Management Awareness publication issued on May 5, 1997, as amended or
supplemented, to test the Software, the Company's internal systems and software
and the network connections it maintains as part of its business to determine
whether they are "Millennium Compliant" and, based upon these tests, the Company
and the Shareholders have no Knowledge that any of such Software systems or
connections is not "Millennium Compliant." For the purposes of this Agreement
"Millennium Compliant" means: (a) the functions, calculations, and other
computing processes of the Software (collectively, "Processes") perform as
designed regardless of the date in time on which the Processes are actually
performed and regardless of the date input to the Software, whether or not the
dates include leap years; (b) the Software can accept, store, sort, extract,
sequence, and otherwise manipulate date inputs and date values, and return and
display date values, as designed and in a materially accurate manner, regardless
of the dates used or format of the date input; (c) the Software will function
without
Page 23 of 45
interruptions caused by the date in time on which the Processes are actually
performed or by the date input to the Software; (d) the Software accepts and
responds to four digit year date input in a manner that resolves any material
ambiguities as to the century in an accurate manner; and (e) the Software
displays, prints and provides electronic output of date information in ways that
are unambiguous as to the determination of the century. The Company has provided
the Purchaser with access to the results of such tests.
5.27 Change in Control Provisions. Company Disclosure Schedule 5.27
---------------------------- --------------------------------
contains a true and complete copy of all agreements in effect to which the
Company or any Shareholder is a party and which contain any provisions which
become effective or are accelerated or contingent upon a change in control,
merger, consolidation, sale of assets or stock or other business combination
involving the Company or otherwise require any payment or performance by the
Company or any officer, director or shareholder thereof, now or in the future,
in connection with or as a result of any of the transactions contemplated by
this Agreement or any of the other Purchase Agreements.
5.28 Disclosure. No representation, warranty or statement made by the
----------
Company and/or the Shareholders in this Agreement, the other Purchase Agreements
or in any document or certificate furnished or to be furnished to InterCept or
the Purchaser pursuant to this Agreement or the other Purchase Agreements
contains or will contain any untrue or incomplete statement or omits or will
omit to state any material fact necessary to make the statements contained
herein or therein not misleading. The Company and the Shareholders have
completely and accurately responded in all material respects to all diligence
inquiries made by InterCept, Purchaser and their officers, directors, attorneys,
accountants and other representatives in connection with this Agreement and the
other Purchase Agreements and have disclosed all material facts (and have not
omitted any material facts) Known or reasonably available that are reasonably
necessary in order to make the Company's and the Shareholders' responses to such
inquiries, in light of the circumstances in which such responses were made, not
misleading.
ARTICLE 6
ADDITIONAL REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
To induce InterCept and the Purchaser to enter into this Agreement and the
other Purchase Agreements (defined in Section 13.4 below), each Shareholder
hereby represents and warrants to InterCept, severally and not jointly, as
follows:
6.1 Securities Act Compliance. Each Shareholder acknowledges that none
-------------------------
of the shares of InterCept Common Stock to be delivered to the Shareholders
pursuant to this Agreement will, at the time of delivery, be registered under
the securities laws of any state or federal authority (the "Securities Laws").
Each Shareholder represents and warrants that he is acquiring the InterCept
Common Stock for investment, and not with a view toward, or for resale in
connection with, a distribution of InterCept Common Stock. Each Shareholder
acknowledges that the InterCept Common Stock may be sold, pledged, hypothecated,
disposed of, or otherwise transferred or distributed only (i) pursuant to an
effective registration
Page 24 of 45
statement covering the InterCept Common Stock under the Securities Laws, or (ii)
pursuant to an exemption from the registration requirements of the Securities
Laws.
6.2 Access to Information. Each Shareholder has had access to the books
---------------------
and records of Purchaser and has otherwise had access to sufficient information
about InterCept and Purchaser upon which to analyze the transactions
contemplated by this Agreement. Each Shareholder has been given the opportunity
to ask questions and receive answers from the officers of InterCept and
Purchaser concerning the terms and conditions of the transactions contemplated
by this Agreement and the business and financial condition of each of InterCept
and Purchaser. Each Shareholder has had the opportunity to obtain any
additional information he deems necessary to verify the accuracy and
completeness of information provided by InterCept and Purchaser in connection
with this Agreement and the transactions contemplated hereby.
6.3 Experience; Investment. Each Shareholder has such knowledge and
----------------------
experience in financial and business matters as to enable such Shareholder (a)
to utilize the information made available to him in connection with the
transactions contemplated by this Agreement and the other Purchase Agreements,
(b) to evaluate the merits and risks associated with the acquisition of
InterCept Common Stock pursuant hereto, and (c) to make an informed decision
with respect thereto. Each Shareholder's business and financial experience is
such that InterCept and Purchaser could reasonably assume such Shareholder has
the capacity to protect his own interests in connection with the offer, sale and
issuance of the InterCept Common Stock. Each Shareholder is financially capable
of bearing the risk of loss of any and all consideration surrendered in exchange
for the InterCept Common Stock and acknowledges that an investment in the
InterCept Common Stock involves a high degree of risk, including a possible
total loss of investment, and the purchase price of the InterCept Common Stock
may not be indicative of the future value of the securities. Each Shareholder
represents that because of one or more of the following criteria, such
Shareholder is an "accredited investor" within the meaning of Regulation D
promulgated by the Commission under the Securities Act, by reason of: (a) the
Shareholder is a natural person who has a net worth or joint net worth with the
Shareholder's spouse exceeding $1,000,000 at the time of purchase; (b) the
Shareholder is a natural person who had an individual income in excess of
$200,000 in each of the two most recent years or joint income with that person's
spouse in excess of $300,000 in each of those years and who reasonably expects
to reach the same income level in the current year; (c) the Shareholder is a
corporation, partnership or trust with total assets in excess of $5,000,000; or
(d) all of the Shareholder's shareholders, partners or members, as the case may
be, participating in the investment in the Company, are "accredited investors".
Each Shareholder understands that the officers, directors, attorneys and other
advisors of InterCept and Purchaser will rely upon the representations and
warranties made by such Shareholders in this Agreement in order to establish any
necessary exemption from the registration provisions of the Securities Act and
applicable state securities laws.
6.4 No Prior Convictions. No Shareholder has been convicted of, arrested
--------------------
for, or has any action pending for, a crime involving fraud, embezzlement or
theft or any similar crime.
Page 25 of 45
6.5 Tax Advice. Each Shareholder has reviewed with his tax advisor the
----------
United States federal, state, local and foreign tax consequences of an
investment in the InterCept Common Stock and the transactions contemplated by
this Agreement and the other Purchase Agreements. Such Shareholder is relying
solely on such advisor and not on any statements or representations of InterCept
or the Purchaser or any of its or their agents, and understands that he (and not
InterCept or the Purchaser or any other person or entity) shall be responsible
for his own tax liability that may arise as a result of this investment or the
transactions contemplated by this Agreement and the other Purchase Agreements.
6.6 Shareholders' Additional Representations. To induce InterCept and the
----------------------------------------
Purchaser to enter into this Agreement, each Shareholder also represents and
warrants to InterCept and the Purchaser as follows:
(a) The Shareholder has the right, power, capacity and authority to
execute, deliver and perform this Agreement and to consummate the transactions
contemplated hereby; this Agreement has been duly and validly executed and
delivered by the Shareholder and is entered into voluntarily without promise or
benefit other than as set forth herein; and this Agreement constitutes the
Shareholder's legal, valid and binding obligation, enforceable in accordance
with its terms.
(b) The Shareholder owns, of record and beneficially, valid title to
his shares of Company Common Stock, and such shares are free and clear of all
Liens, Claims (as defined below) and encumbrances. Other than the Company
Common Stock owned by the Shareholder, the Shareholder does not own,
beneficially or of record, or have any right to acquire, now or in the future,
any shares of stock or other securities of any kind of the Company. The
Shareholder has not granted nor is he bound by any outstanding subscriptions,
options, warrants, calls, commitments o agreement of any character calling for
the transfer, purchaser, subscription or issuance of any shares of capital stock
of the Company or any securities representing the right to purchase, subscribe
or otherwise receive any shares of such capital stock or any securities
convertible into any such shares, and there are no agreements or understandings
with respect to voting any such shares.
(c) The Shareholder has not granted nor is he bound by any
outstanding subscriptions, options, warrants, calls, commitments or agreements
of any character calling for the transfer, purchase, subscription or issuance of
any shares of capital stock of the Company or any securities representing the
right to purchase, subscribe or otherwise receive any shares of such capital
stock or any securities convertible into any such shares, and there are no
agreements or understandings with respect to voting any such shares. The
execution, delivery and performance of this Agreement by the Shareholder will
not conflict with or result in a breach of any agreement, instrument, order,
injunction, decree, statute, rule or regulation applicable to the Shareholder or
any of his or her assets. The execution, delivery and performance of this
Agreement by the Shareholder does not require the consent or approval of any
third party or governmental agency or authority which has not been obtained (and
a copy of which is attached hereto).
Page 26 of 45
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF INTERCEPT
To induce the Company and the Shareholders to enter into this Agreement and
the other Purchase Agreements, InterCept hereby represents and warrants to the
Company and the Shareholders as follows:
7.1 Corporate Organization. InterCept is a corporation duly
----------------------
incorporated, validly existing and in good standing under the laws of the State
of Georgia. InterCept has the corporate power and authority to own or lease all
of its properties and assets and to carry on its business as it is now being
conducted, and is duly licensed or qualified to do business and is in good
standing in each jurisdiction in which the nature of the business conducted by
it or the character or location of the properties and assets owned or leased by
it makes such licensing or qualification necessary, except where the failure to
be so licensed, qualified or in good standing would not have a Material Adverse
Effect on InterCept.
7.2 Capitalization. The authorized capital stock of InterCept consists
--------------
of 50,000,000 shares of InterCept Common Stock and 1,000,000 shares of preferred
stock, without par value ("InterCept Preferred Stock"). Of such shares of
InterCept Preferred Stock, 30,000 shares have been designated as Series A
Preferred Stock, none of which are outstanding. As of August 5, 1999, there were
9,923,166 shares of InterCept Common Stock issued and outstanding, and no shares
of InterCept Preferred Stock outstanding. All issued and outstanding shares of
InterCept Common Stock have been duly authorized and validly issued and are
fully paid and nonassessable.
7.3 Authority; No Violation.
-----------------------
(a) No Authorizations are necessary on behalf of InterCept in
connection with the execution and delivery by InterCept of this Agreement and
the consummation by InterCept of the transactions contemplated hereby, other
than such as have been obtained or waived. InterCept has the full corporate
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby in accordance with the terms hereof. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly approved by the
Board of Directors of InterCept in accordance with the Articles of Incorporation
and Bylaws of InterCept and with applicable Laws. No other corporate
proceedings on the part of InterCept are necessary for InterCept to execute and
deliver this Agreement and for InterCept to be bound by the terms hereof. This
Agreement has been duly and validly executed and delivered by InterCept and
constitutes the valid and binding obligation of InterCept enforceable against
InterCept in accordance with its and their terms, except to the extent that the
availability of the remedy of specific performance may be limited by equitable
principles.
(b) Neither the execution and delivery of this Agreement by
InterCept, nor the consummation by InterCept of the transactions contemplated
hereby in accordance with the terms hereof, nor compliance by InterCept with any
of the terms or provisions hereof, will (i) violate any provision of InterCept's
Articles of Incorporation or Bylaws, (ii) violate any Laws
Page 27 of 45
applicable to InterCept or any of its properties or assets, or (iii) except
where a waiver or consent had been obtained or will be obtained prior to
Closing, violate, conflict with, result in a breach of any provisions of,
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, result in the termination of, accelerate the
performance required by, or result in the creation of any Lien upon any of the
respective properties or assets of InterCept under any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which InterCept is a
party, or by which it or any of its properties or assets may be bound or
affected, and which is attached as an exhibit to InterCept's SEC Reports (as
defined below), except, with respect to (ii) and (iii) above, such as
individually or in the aggregate will not have a Material Adverse Effect on
InterCept, and which will not prevent or delay the consummation of the
transactions contemplated hereby.
7.4 Broker's and Other Fees. Neither InterCept nor any of its directors
-----------------------
or officers has employed any broker or finder or incurred any liability for any
broker's or finder's fees or commissions in connection with any of the
transactions contemplated by this Agreement.
7.5 Current Public Information; Financial Statements. InterCept
------------------------------------------------
represents and warrants to the Company and the Shareholders that it is a
"reporting issuer" and has a class of securities registered under Section 12(g)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act").
InterCept has made available to the Company and the Shareholders copies of its
(a) Annual Report on Form 10-K for the period ended December 31, 1998 and the
related proxy statement and (b) Quarterly Reports on Form 10-Q for the periods
ended March 31, 1999 and June 30, 1999 as filed with the SEC, and (c) current
reports on Form 8-K filed since December 31, 1998 (collectively, the "SEC
Reports"). To InterCept's Knowledge, since June 30, 1999, no event has occurred
for which InterCept is required to file a Form 8-K for which InterCept has not
filed such Form 8-K. The SEC Reports, at the time filed, complied as to form in
all material respects with the requirements of the Exchange Act and Securities
Act. None of the SEC Reports contained, when filed with the SEC, any untrue
statement of material fact or omitted to state a material fact necessary in
order to make the statements made, in light of the circumstances under which
they were made, not misleading. The financial statements (including, in each
case, any notes thereto) contained in the SEC Reports were prepared in
accordance with GAAP and fairly presented the financial position, results of
operations and cash flows of InterCept at the respective dates thereof and for
the respective periods indicated therein (subject, in the case of unaudited
statements, to normal and recurring year-end adjustments which were not and are
not expected, individually or in the aggregate, to be material in amount).
7.6 Legal Proceedings. Except as disclosed in the SEC Reports or
-----------------
otherwise disclosed by InterCept to the Company and/or the Shareholders, there
is no action, suit or proceeding before or by any court or governmental agency
or body, domestic or foreign, now pending or, to the Knowledge of InterCept's
chief executive officer, chief operating officer and chief financial officer,
threatened, against or affecting InterCept, or any of its properties, which
could reasonably be expected to materially and adversely affect the ability of
InterCept to perform its obligations pursuant to this Agreement.
Page 28 of 45
7.7 InterCept Common Stock. At the Closing Date, the InterCept Common
----------------------
Stock to be issued to the Shareholders will be duly authorized and validly
issued, fully paid and nonassessable, free of preemptive rights and free and
clear of all Liens created by or through InterCept (except as set forth in this
Agreement and the documents and agreements executed in connection herewith).
7.8 Disclosure. No representation or warranty of InterCept in this
----------
Agreement, nor any financial statements or other written statements or
certificates furnished by InterCept to the Company or the Shareholders in
connection with the transactions contemplated by this Agreement, contains or as
of the Closing Date will contain, any untrue statement of a material fact, or
omit or as of the Closing Date will omit to state a material fact necessary to
make the statements herein or therein not misleading.
ARTICLE 8
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
To induce the Company and the Shareholders to enter into this Agreement and
the other Purchase Agreements, the Purchaser hereby represents and warrants to
the Company and the Shareholders as follows:
8.1 Corporate Organization. Purchaser is a corporation duly incorporated,
----------------------
validly existing and in good standing under the laws of the State of Georgia.
Purchaser has the corporate power and authority to own or lease all of its
properties and assets and to carry on its business as it is now being conducted,
and is duly licensed or qualified to do business and is in good standing in each
jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned or leased by it makes
such licensing or qualification necessary, except where the failure to be so
licensed, qualified or in good standing would not have a Material Adverse Effect
on Purchaser.
8.2 Authority; No Violation. No Authorizations are necessary on behalf of
-----------------------
the Purchaser in connection with (i) the execution and delivery by the Purchaser
of this Agreement and the other Purchase Agreements, (ii) the consummation by
the Purchaser of the transactions contemplated hereby and thereby and (iii) the
performance of the Purchaser's obligations under this Agreement and the other
Purchase Agreements. The Purchaser has the full corporate power and authority
to execute and deliver this Agreement and the other Purchase Agreements to which
it is a party and the consummation by the Purchaser of the other transactions
contemplated hereby and thereby in accordance with the terms hereof and thereof.
The execution and delivery of this Agreement and the other Purchase Agreements
and the consummation of the transactions contemplated hereby and thereby have
been duly and validly approved by the Board of Directors and the sole
shareholder of the Purchaser in accordance with the Articles of Incorporation
and Bylaws of the Purchaser and applicable Laws. No other corporate proceedings
on the part of the Purchaser are necessary to consummate the transactions so
contemplated. This Agreement and the other Purchase Agreements have been duly
and validly executed and delivered by the Purchaser and constitute the valid and
binding obligation of the Purchaser enforceable against the Purchaser in
accordance with its terms,
Page 29 of 45
except to the extent that the availability of the remedy of specific performance
may be limited by equitable principles.
(a) Neither the execution and delivery of this Agreement and the other
Purchase Agreements to which it is a Party by the Purchaser, nor the
consummation by the Purchaser of the transactions contemplated hereby and
thereby in accordance with the terms hereof and thereof, nor compliance by the
Purchaser with any of the terms or provisions hereof and thereof, will (i)
violate any provision of the Purchaser's Articles of Incorporation or Bylaws,
(ii) violate any Laws applicable to the Purchaser or any of its properties or
assets, or (iii) except where a waiver or consent had been obtained or will be
obtained prior to Closing, violate, conflict with, result in a breach of any
provisions of, constitute a default (or an event which, with notice or lapse of
time or both, would constitute a default) under, result in the termination of,
accelerate the performance required by, or result in the creation of any Lien
upon any of the respective properties or assets of the Purchaser under any of
the terms, conditions or provisions of any note, bond, mortgage, indenture, deed
of trust, license, lease, agreement or other instrument or obligation to which
the Purchaser is a party, or by which it or any of its properties or assets may
be bound or affected except, with respect to (ii) and (iii) above, such as
individually or in the aggregate will not have a Material Adverse Effect on the
Purchaser, and which will not prevent or delay the consummation of the
transactions contemplated hereby.
8.3 Broker's and Other Fees. Neither the Purchaser nor any of its
-----------------------
directors or officers has employed any broker or finder or incurred any
liability for any broker's or finder's fees or commissions in connection with
any of the transactions contemplated by this Agreement.
8.4 Legal Proceedings. Except as disclosed by the Purchaser to the
-----------------
Company and/or the Shareholders, there is no action, suit or proceeding before
or by any court or governmental agency or body, domestic or foreign, now pending
or, to the Knowledge of the Purchaser's president and chief financial officer,
threatened, against or affecting the Purchaser, or any of its properties, which
could reasonably be expected to materially and adversely affect the ability of
the Purchaser to perform its obligations pursuant to this Agreement and the
other Purchase Agreements.
ARTICLE 9
COVENANTS AND AGREEMENTS OF THE PARTIES
9.1 Current Information. Each of the Parties will notify the other
-------------------
Parties as soon as practicable after any determination or discovery by it of any
fact or circumstance relating to any Party which it has discovered through the
course of investigation and which represents, or is reasonably likely to
represent, a material breach of any representation, warranty, covenant or
agreement of any Party or which has or is reasonably likely to have a Material
Adverse Effect on any Party.
Page 30 of 45
9.2 Confidentiality. The Parties agree that the terms of that certain
---------------
Confidentiality Agreement dated as of July 27, 1999 (the "Confidentiality
Agreement"), a copy of which is attached hereto as Exhibit 8.5 and is
-----------
incorporated herein by reference, shall continue to be applicable to the Parties
from the date hereof to the Closing Date.
9.3 Regulatory Matters; Consents; Cooperation, etc.
----------------------------------------------
(a) Each of the Parties will promptly furnish each other with copies
of written communications received by them or any of their respective
Subsidiaries from, or delivered by any of the foregoing to, any Governmental
Authorities in respect of the transactions contemplated hereby.
(b) As soon as practicable following the date hereof, each of the
Parties will use its commercially reasonable efforts to obtain all material
consents, waivers and other Approvals under any of its or its Subsidiaries'
agreements, contracts, licenses or leases required to be obtained by such Party
in connection with the consummation of the transactions contemplated hereby.
9.4 Parties' Efforts; Further Assurances; Cooperation. Subject to the
-------------------------------------------------
other provisions in this Agreement, the Parties shall in good faith perform
their obligations under this Agreement before, at and after the Closing Date,
and shall each use all commercially reasonable efforts to do, or cause to be
done, all things necessary, proper or advisable under applicable Laws to obtain
all Authorizations and satisfy all conditions to the obligations of the Parties
under this Agreement and to cause the transactions contemplated by this
Agreement to be carried out promptly in accordance with the terms hereof and
shall cooperate fully with each other and their respective officers, directors,
employees, agents, counsel, accountants and other designees in connection with
any steps required to be taken as part of their respective obligations under
this Agreement. Upon the execution of this Agreement and thereafter, each party
shall take such actions and execute and deliver such documents as may be
reasonably requested by the other Parties in order to consummate the
transactions contemplated by this Agreement.
9.5 Public Announcements. After the Closing Date, none of the
--------------------
Shareholders shall make any public announcement regarding any aspect of this
Agreement without InterCept's prior written consent. Nothing in this Section
shall be deemed to prohibit any Party from making any disclosure which its
counsel deems necessary in order to satisfy such Party's disclosure obligations
imposed by Law or Governmental Authority.
9.6 Failure to Fulfill Conditions. In the event that any Party determines
-----------------------------
that a material condition to its or the other's obligation to consummate the
transactions contemplated hereby cannot be fulfilled on or prior to August 31,
1999 (the "Deadline Date"), it will promptly notify the other Party. Except for
any acquisition or merger discussions Purchaser may enter into with other
persons, each Party will promptly inform the other Parties of any facts
applicable to it that would be likely to prevent or materially delay
consummation of the transactions contemplated by this Agreement.
Page 31 of 45
9.7 Disclosure Supplements. From time to time prior to the Closing Date,
----------------------
each Party hereto will promptly notify the other Party of any inaccuracy in its
respective Disclosure Schedules delivered pursuant hereto including, without
limitation, any matter which, if existing, occurring or known at the date of
this Agreement, would have been required to be set forth or described in such
Schedule or which is necessary to correct any information in such Schedule that
has been rendered inaccurate. Notwithstanding the foregoing, for the purpose of
determining satisfaction of the conditions set forth in Article 8, no such
notification shall be deemed to amend such Disclosure Schedules or shall be
deemed to be part hereof unless agreed to by the other Parties.
9.8 Release; Covenant Not to Xxx.
----------------------------
(a) If the Closing occurs, then the Shareholders and each of them
hereby permanently release Purchaser and the Company, and its officers,
directors, employees, agents, representatives, successors and assigns
(collectively, the "Released Parties") from any and all Claims (as defined
herein), rights and causes of action that any of the Shareholders may have, may
have had or may, at any time, claim to have had against any or all of the
Released Parties, whether arising out of or in connection with any transactions
between the Shareholders and any or all of the Released Parties prior to, or
otherwise arising with respect to any fact, circumstance, act or omission
occurring prior to or on the Closing Date; provided, however, that such release
shall not apply to any breach by Purchaser of is representations, warranties and
agreements set forth in this Agreement and the other Purchase Agreements to
which they are a party.
(b) If the Closing occurs, the Shareholders and each of them covenant
not to xxx or otherwise institute, cause to be instituted or in any way
participate in, any legal or administrative proceeding against any of the
Released Parties with respect to any claims (as defined by Xxxxxxx 000 xx xxx
Xxxxxx Xxxxxx Bankruptcy Code, as amended), debts, demands, actions, causes of
action, suits, accounts, damages and liabilities of every name and nature, both
at law and in equity, whether known or unknown (collectively, the "Claims"),
that the Shareholder or the Company now has, ever had or may, at any time, claim
to have had against any of the Released Parties; provided, however, that such
covenant not to xxx shall not apply to a suit or action based solely upon any
breach by Purchaser of its representations, warranties and agreements set forth
in this Agreement and the other Purchase Agreements to which they are a party.
The Shareholders represent and warrant that they have not voluntarily or
involuntarily assigned or suffered any transfer of any of the Claims to any
other person or entity, and they agree to indemnify and hold harmless the
Released Parties from and against any loss, damage, liability, cost and expense
(including, but not limited to, attorneys' fees incurred in connection therewith
or in connection with enforcing this indemnity) asserted against, imposed on or
incurred by any Released Parties by reason of any such Claims which were
effectively or purportedly assigned or transferred by the Company or the
Shareholders.
(c) If the Closing occurs, then the Purchaser and InterCept and each
of them hereby permanently release the Shareholders and their agents,
representatives and assigns (collectively, the "Shareholder Released Parties")
from any and all Claims, rights and causes
Page 32 of 45
of action that the Purchaser and/or InterCept may have, may have had or may, at
any time, claim to have had against any or all of the Shareholder Released
Parties, whether arising out of or in connection with any transactions between
the Purchaser and/or InterCept and any or all of the Shareholder Released
Parties prior to, or otherwise arising with respect to any fact, circumstance,
act or omission occurring prior to or on the Closing Date; provided, however,
that such release shall not apply to any breach by the Company or the
Shareholders of their representations, warranties and agreements set forth in
this Agreement and the other Purchase Agreements to which they are a party.
(d) If the Closing occurs, the Purchaser and InterCept and each of
them covenant not to xxx or otherwise institute, cause to be instituted or in
any way participate in, any legal or administrative proceeding against any of
the Shareholder Released Parties with respect to any Claims, that the Purchaser
or InterCept now has, ever had or may, at any time, claim to have had against
any of the Shareholder Released Parties; provided, however, that such covenant
not to xxx shall not apply to a suit or action based solely upon any breach by
Purchaser or InterCept of their representations, warranties and agreements set
forth in this Agreement and the other Purchase Agreements to which they are a
party. Purchaser and InterCept and each of them represent and warrant that they
have not voluntarily or involuntarily assigned or suffered any transfer of any
of the Claims to any other person or entity, and they agree to indemnify and
hold harmless the Shareholder Released Parties from and against any loss,
damage, liability, cost and expense (including, but not limited to, attorneys'
fees incurred in connection therewith or in connection with enforcing this
indemnity) asserted against, imposed on or incurred by any Shareholder Released
Parties by reason of any such Claims which were effectively or purportedly
assigned or transferred by the Purchaser or InterCept.
9.9 No Transfers. Except pursuant to this Agreement and with the prior
------------
written consent of InterCept, none of the Shareholders shall transfer, assign,
convey or otherwise dispose of any of the InterCept Common Stock or any rights
with respect to such stock (including voting and conversion or option rights)
for one year after the date of this Agreement; provided, however, that the
Shareholders may make gifts of the InterCept Common Stock to family members and
to trusts, foundations or other entities for charitable or estate planning
purposes, but only if such transferee agrees in writing delivered to and for the
benefit of InterCept that such shares of InterCept Common Stock owned by it
shall be subject to this Agreement.
9.10 Special Provisions with Respect to the Company. If the Closing occurs
----------------------------------------------
as provided herein, then at that time all representations, warranties, covenants
and agreements to the extent made or adopted by the Company (and only to such
extent) shall expire and be of no further force and effect, and the Company's
having made representations, warranties, covenants and agreements shall in no
way limit the liability of the Shareholders for those representations,
warranties, covenants and agreements pursuant to this Agreement.
9.11 Cooperation and Exchange of Information. The Parties agree to
---------------------------------------
furnish, or to cause to be furnished in good faith to each other, such
cooperation and assistance as is
Page 33 of 45
reasonably necessary to file any future Returns, to respond to audits, to
negotiate settlements with Tax authorities and to prosecute and defend against
Tax claims.
9.12 Release of Guaranties. The Purchaser will use its commercially
---------------------
reasonable best efforts to obtain the release of all Shareholders from all
personal guaranties listed on Schedule 9.12 as promptly as practical after the
-------------
Closing.
ARTICLE 10
CLOSING CONDITIONS
10.1 Conditions of Each Party's Obligations Under this Agreement. The
-----------------------------------------------------------
respective obligations of each party under this Agreement shall be subject to
the satisfaction, or, where permissible under applicable Law, waiver at or prior
to the Closing Date of the following conditions:
(a) Approvals and Regulatory Filings. All necessary Authorizations
--------------------------------
of Governmental Authorities required to consummate the transactions contemplated
hereby shall have been obtained without any term or condition which would
materially impair the value of the Company, Purchaser or InterCept. All
conditions required to be satisfied prior to the Closing Date by the terms of
such approvals and consents shall have been satisfied; and all statutory waiting
periods in respect thereof shall have expired.
(b) Suits and Proceedings. The consummation of the transactions
---------------------
contemplated hereby will not violate the provisions of any injunction, order,
judgment, decree or Law applicable or effective with respect to InterCept,
Purchaser or the Company or their officers and directors. No suit or proceeding
shall have been instituted by any person, or, to the Knowledge of InterCept,
Purchaser, Company or the Shareholders, shall have been threatened by any
Governmental Authority, and not subsequently withdrawn, dismissed or otherwise
eliminated, which seeks (i) to prohibit, restrict or delay consummation of the
transactions contemplated hereby or to limit in any material respect the right
of InterCept or Purchaser to control any material aspect of the business of
InterCept, Purchaser or the Company after the Closing Date, or (ii) to subject
InterCept, Purchaser or the Company or their respective directors or officers to
material liability on the ground that it or they have breached any Law or
otherwise acted improperly in relation to the transactions contemplated by this
Agreement.
(c) Closing of Other Merger. The Closing of the transactions
-----------------------
contemplated by the Agreement and Plan of Merger of even date herewith by and
among Direct Access Interactive, Inc., SBS Corporation and the Shareholders (the
"Other Merger Agreement") shall occur contemporaneously with the Closing.
10.2 Conditions to the Obligations of InterCept and Purchaser under this
-------------------------------------------------------------------
Agreement. The obligations of InterCept and the Purchaser under this Agreement
---------
shall be further subject to the satisfaction or waiver, at or prior to the
Closing Date (and continued until the Closing Date), of the following
conditions:
Page 34 of 45
(a) Representations and Warranties; Covenants and Agreements;
---------------------------------------------------------
Consents. The representations and warranties of the Company and the
--------
Shareholders contained in this Agreement shall be true and correct in all
material respects as of the date hereof and shall also be true and correct in
all material respects on the Closing Date as though made on and as of the
Closing Date, except that those representations and warranties which are
confined to a particular date shall speak only as of such date, and the Company
and the Shareholders shall have performed in all material respects the
agreements, covenants and obligations to be performed by it or them at or prior
to the Closing Date. All Authorizations of or with any Governmental Authority
or other third party that are required for or in connection with the execution
and delivery of this Agreement or the consummation of the transactions
contemplated hereby by the Company and the Shareholders shall have been obtained
or made.
(b) Opinion of Counsel. InterCept and Purchaser shall have received
------------------
an opinion of counsel to the Company and the Shareholders, dated the Closing
Date, in form and substance reasonably satisfactory to InterCept and Purchaser,
covering the matters set forth on Exhibit 10.2(b).
---------------
(c) Certificates. The Shareholders shall have furnished InterCept
------------
and Purchaser with such certificates of the Company and its authorized officers,
Shareholders or others and such other documents to evidence fulfillment of the
conditions set forth in this Article 10 and otherwise to consummate the
transactions contemplated pursuant to this Agreement as InterCept and Purchaser
may reasonably request, including certificates in the form attached hereto as
Exhibit 10.2(c).
---------------
(d) Nonsolicitation and Confidentiality Agreements. The Shareholders
----------------------------------------------
and the employees of Company as reasonably requested by Purchaser shall have
executed and delivered to Purchaser, Nonsolicitation and Confidentiality
Agreements substantially in the form attached hereto as Exhibit 10.2(d).
---------------
(e) Intentionally omitted.
(f) Termination or Assignment of Certain Agreements. The Company
-----------------------------------------------
shall have terminated the agreements and contracts listed on Schedule 10.2(f)
----------------
hereto.
(g) Release of Obligations. All obligations of the Company pursuant
----------------------
to any loan, lease, guaranty, commitment or other undertaking of the Company,
the Shareholders or any of its or their Subsidiaries and other Affiliates,
whether as maker, guarantor or otherwise, shall have been fully and permanently
released or satisfied pursuant to documents and agreements satisfactory in all
respects to InterCept, Purchaser and their counsel.
(h) Escrow Agreement. The Shareholders shall have executed and
----------------
delivered to InterCept and Purchaser the Escrow Agreement.
10.3 Conditions to the Obligations of the Company and the Shareholders
-----------------------------------------------------------------
under this Agreement. The obligations of the Company and the Shareholders under
--------------------
this Agreement
Page 35 of 45
shall be further subject to the satisfaction or waiver, at or prior to the
Closing Date, of the following conditions:
(a) Representations and Warranties; Covenants and Agreements;
---------------------------------------------------------
Consents. The representations and warranties of InterCept and the Purchaser
contained in this Agreement shall be true and correct in all material respects
as of the date hereof and shall also be true and correct in all material
respects on the Closing Date as though made on and as of the Closing Date, and
InterCept and Purchaser shall have performed in all material respects the
agreements, covenants and obligations to be performed by them at or prior to the
Closing Date. All Authorizations of or with any Governmental Authority or other
third party that are required for or in connection with the execution and
delivery of this Agreement or the consummation of the transactions contemplated
hereby by InterCept and the Purchaser shall have been obtained or made, except
where the failure to obtain any such Authorizations would not have a Material
Adverse Effect on InterCept and Purchaser.
(b) Certificates. InterCept and Purchaser shall have furnished the
------------
Company and the Shareholders with such certificates of its officers or others
and such other documents to evidence fulfillment of the conditions set forth in
this Article 10 and otherwise to consummate the transactions contemplated
pursuant to this Agreement as the Company and the Shareholders may reasonably
request.
(c) No Material Adverse Effect on InterCept. No Material Adverse
---------------------------------------
Effect with respect to InterCept or Purchaser shall have occurred since the date
of this Agreement except (i) the announcement of this Agreement, and (ii)
conditions effecting global economy or regional economy in which InterCept and
Purchaser operate any part of its or their business.
(d) Approvals. This Agreement and the transactions contemplated
---------
hereby shall have received all required Government Authorizations and other
consents or approvals from third parties (including lenders, licensees and
lessors) required to consummate the transactions contemplated hereby which,
either individually or in the aggregate, if not obtained would have a Material
Adverse Effect.
(e) Escrow Agreement. InterCept and Purchaser shall have executed
----------------
and delivered to the Company and the Shareholders the Escrow Agreement.
(f) Opinion of InterCept's Counsel. The Company and the Shareholders
------------------------------
shall have received an opinion of counsel to InterCept and the Purchaser, dated
the Closing Date, in form and substance reasonably satisfactory to the Company
and the Shareholders, covering the matters set forth on Exhibit 10.3(f).
---------------
(g) Termination of Guaranties. The Shareholders' guaranties of
-------------------------
indebtedness of the Company set forth on Schedule 10.3(g) shall have been
----------------
released.
(h) Employment Agreements. InterCept shall have executed and
---------------------
delivered to Xxxxx X. Xxxxxxxxx and Xxxxxxx X. Xxxxxx employment agreements
substantially in the form attached hereto as Exhibit 10.3(h).
---------------
Page 36 of 45
ARTICLE 11
TERMINATION, AMENDMENT AND WAIVER
11.1 Termination. This Agreement may be terminated prior to the Closing
-----------
Date, whether before or after approval of this Agreement by the shareholders of
the Purchaser, InterCept and the Company:
(a) by mutual written consent of InterCept, Purchaser and the
Shareholders;
(b) by InterCept, Purchaser or the Shareholders if the Closing Date
shall not have occurred on or prior to the Deadline Date; provided, however,
that the right to terminate this Agreement under this Section 11.1(b) shall not
be available to any Party whose action or failure to act has been a principal
cause of or resulted in the failure of the transaction contemplated by this
Agreement to occur on or before such date and such action or failure to act
constitutes a willful and material breach of this Agreement;
(c) by InterCept or Purchaser, if there has been a material breach
of any representation, warranty, covenant, agreement or obligation of the
Company or any Shareholder hereunder in each case which either is not capable of
being remedied, or, if capable of being remedied, shall not have been remedied
within 10 days after receipt by the Company or the Shareholders, as appropriate,
of notice in writing from InterCept or Purchaser specifying the nature of such
breach and requesting that it be remedied;
(d) by the Shareholders, if there has been a material breach of any
representation, warranty, covenant, agreement or obligation of InterCept or the
Purchaser hereunder in each case which either is not capable of being remedied,
or, if capable of being remedied, shall not have been remedied within 10 days
after receipt by InterCept or the Purchaser, as the case may be, of notice in
writing from the Shareholders specifying the nature of such breach and
requesting that it be remedied;
(e) by InterCept or Purchaser if any of the conditions set forth in
Section 10.1 or 10.2 is not satisfied and is no longer capable of being
satisfied by the Closing Date; or
(f) by the Company or Shareholders if any of the conditions set
forth in Section 10.1 or 10.3 is not satisfied and is no longer capable of being
satisfied by the Closing Date;
11.2 Effect of Termination.
---------------------
(a) If any Party terminates and abandons this Agreement pursuant to
Section 11.1, this Agreement, other than Section 9.5(b), this Section 11.2,
Section 11.3, Article 12 and Section 13.1 (each of which shall survive
termination), shall forthwith become void and have no effect, without any
liability on the part of any Party or its officers, directors or shareholders;
provided, however, that nothing contained in this Section 11.2, shall relieve
any Party from any liability for any material breach of this Agreement or the
Confidentiality Agreement.
Page 37 of 45
11.3 Specific Performance. The Parties acknowledge that the rights of
--------------------
each Party to consummate the transactions contemplated hereby are special,
unique, and of extraordinary character, and that, in the event any Party either
violates or fails or refuses to perform any covenant made by it herein, the
other Party or Parties will be without adequate remedy at law. Each Party
agrees, therefore, that in the event that it violates, fails or refuses to
perform any covenant or agreement made by it herein, the other Party or Parties,
so long as it or they are not in breach hereof, may, in addition to the remedies
at law, institute and prosecute an action in a court of competent jurisdiction
to enforce specific performance of such covenant or agreement or seek any other
equitable relief.
11.4 Amendment. This Agreement may not be amended except by an instrument
---------
in writing signed on behalf of all the Parties hereto.
11.5 Extension; Waiver. The Parties may, at any time prior to the Closing
-----------------
Date, (a) extend the time for the performance of any of the obligations or other
acts of the other Parties; (b) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant thereto; or
(c) waive compliance with any of the agreements or conditions contained herein.
Any agreement on the part of any Party to any extension or waiver shall be valid
only if it is set forth in an instrument in writing signed on behalf of the
Party against which the waiver is sought to be enforced and shall apply only to
the specific condition, representation or warranty identified by the writing as
being waived, extended or modified.
ARTICLE 12
INDEMNIFICATION
12.1 Indemnification by the Company and Shareholders. Subject to the
terms of this Article 12, the Company and the Shareholders (but after the
consummation of the transactions contemplated by this Agreement, solely the
Shareholders, and not the Company) shall, jointly and severally, indemnify,
defend, save and hold harmless InterCept, the Purchaser, and their respective
subsidiaries, predecessors, successors, directors, officers, employees, agents,
representatives and assigns (collectively, the "InterCept Indemnified Parties"),
from and against any Claims (including, without limitation, reasonable
attorneys' and accountants' fees and expenses), together with interest and
penalties, if any, awarded by court order or otherwise agreed to (collectively,
"Indemnifiable Damages"), suffered by InterCept Indemnified Parties that arise
out of or result from any of the following (whether or not a third party
initiates the proceeding or claim giving rise to such Indemnifiable Damages):
(a) any breach of any of the representations, warranties, covenants
or agreements made by the Company or the Shareholders in this Agreement; or
(b) any breach of any representation, warranty, covenant or
agreement in a document, certificate or affidavit delivered by the Company or
the Shareholders at the Closing.
Page 38 of 45
12.2 Indemnification by InterCept. Subject to the terms of this Article
----------------------------
12, InterCept and Purchaser shall indemnify, defend, save and hold harmless the
Company and the Shareholders (but after consummation of the transactions
contemplated by this Agreement, solely the Shareholders, and not the Company)
(collectively, the "Company Indemnified Parties"), from and against any
Indemnifiable Damages suffered by the Company Indemnified Parties that arise out
of or result from any of the following (whether or not a third party initiates
the proceeding or claim giving rise to such Indemnifiable Damages):
(a) any breach of any of the representations, warranties, covenants
and agreements made by InterCept or the Purchaser in this Agreement; or
(b) any breach of any representation, warranty, covenant or
agreement in a document, certificate or affidavit delivered by InterCept or the
Purchaser at the Closing.
12.3 Claims for Indemnification. The representations, warranties,
--------------------------
covenants and agreements of the Parties in this Agreement shall survive the
Closing and shall remain in full force and effect until the completion of an
audit and the issuance of an audit opinion by InterCept's independent public
accountants with respect to the Surviving Corporation's fiscal year ended
December 31, 2000, which the Parties agree shall not be later than April 30,
2001; provided, however, that the representations and warranties set forth in
-------- -------
Section 5.8 shall survive until expiration of any applicable statute of
limitations (including any extensions thereof) which will preclude assertion of
Tax claims against the Company or the Surviving Corporation for matters existing
on or prior to the date of this Agreement. The Party seeking indemnification
(the "Indemnified Party") shall give the Party from whom indemnification is
sought (the "Indemnifying Party") a written notice ("Notice of Claim") within
sixty (60) days of the discovery of any loss, liability, claim or expense in
respect of which the right to indemnification contained in this Article 12 may
be claimed; provided, however, that the failure to give such notice within such
sixty (60) day period shall not result in the waiver or loss of any right to
bring such claim hereunder after such period unless, and only to the extent
that, the other Party is actually prejudiced by such failure. In the event a
claim is pending or threatened or the Indemnified Party has a reasonable belief
as to the validity of the basis for such claim, the Indemnified Party may give
written notice (a "Notice of Possible Claim") of such claim to the Indemnifying
Party, regardless of whether a loss has arisen from such claim. A Party shall
have no liability under this Article 12 for breach of a representation or
warranty, unless a Notice of Claim or Notice of Possible Claim therefor is
delivered by the Indemnified Party prior to the Distribution Date (as defined in
the Escrow Agreement); provided, however, that the limitations set forth in this
Section 12.3 shall not apply to liability under this Article 12 for any
intentional breach of a representation or warranty in this Agreement. Any
Notice of Claim or Notice of Possible Claim shall set forth the representations,
warranties, covenants and agreements with respect to which the claim is made,
the specific facts giving rise to an alleged basis for the claim and the amount
of liability asserted or anticipated to be asserted by reason of the claim.
12.4 Defense of Claim by Third Parties. If any claim is made by a third
---------------------------------
party against a Party to this Agreement that, if sustained, would give rise to a
liability of another
Page 39 of 45
Party under this Agreement, the Party against whom the claim is made shall
promptly cause notice of the claim to be delivered to the other Party and shall
afford the other Party and its counsel, at the other Party's sole expense, the
opportunity to join in the defense and settlement of the claim. The failure to
provide such notice will not relieve the Indemnifying Party of liability under
this Agreement unless, and only to the extent that, the Indemnifying Party is
actually prejudiced by such failure.
12.5 Third Party Claim Assistance. From time to time after the Closing,
----------------------------
InterCept, Purchaser, the Company and the Shareholders shall provide or cause
their appropriate employees or representatives to provide the other Parties with
information or data in connection with the handling and defense of any third
party claim or litigation (including counterclaims filed by the parties) in
respect to which a Party may be required to indemnify another Party under this
Agreement. The Party receiving such information or data shall reimburse the
other Parties for all of their reasonable costs and expenses in providing these
services, including, without limitation, (a) all out of pocket, travel and
similar expenses incurred by their personnel in rendering these services; and
(b) all fees and expenses for services performed by third parties engaged by or
at the request of such other Parties.
12.6 Settlement of Indemnification Claims. If a recipient of a Notice of
------------------------------------
Claim desires to dispute such claim, it shall, within thirty (30) days after
receipt of the Notice of Claim, give counter-notice, setting forth the basis for
disputing such claim, to InterCept or the Shareholders, as the case may be. If
no such counter-notice is given within such thirty (30) day period, or if
InterCept, Purchaser or the Shareholders, as the case may be, acknowledges
liability for indemnification, then the amount claimed shall be promptly
satisfied as provided in Section 12.6. If, within thirty (30) days after the
receipt of counter-notice by InterCept, Purchaser or the Shareholders, as the
case may be, the Shareholders, Purchaser and InterCept shall not have reached
agreement as to the claim in question, then the Party disputing the claim shall
satisfy any undisputed amount as specified in Section 12.6 and the disputed
amount of the claim of indemnification shall be submitted to and settled by
arbitration in accordance with the then prevailing commercial arbitration rules
of the American Arbitration Association. Such arbitration shall be held in the
Atlanta, Georgia area before a panel of three (3) arbitrators, one selected by
each of the Parties and the third selected by mutual agreement of the first two,
and all of whom shall be independent and impartial under the rules of the
American Arbitration Association. The decision of the arbitrators shall be
final and binding as to any matter submitted under this Agreement. To the
extent the decision of the arbitrators is that a Party shall be indemnified
hereunder, the amount shall be satisfied as provided in Section 12.6. Judgment
upon any award rendered by the arbitrators may be entered in any court of
competent jurisdiction. The date of the arbitrator's decision or the date a
claim otherwise becomes payable pursuant to this Section 12.6 is referred to as
the "Determination Date."
12.7 Manner of Indemnification by the Company and Shareholders. Where the
---------------------------------------------------------
Shareholders are obligated to indemnify the InterCept Indemnified Parties under
Section 12.1 after the Closing Date, such indemnity obligation must be satisfied
pursuant to the Escrow Agreement by the Shareholders. Thereafter (or, if the
Closing Date fails to occur for any reason), such indemnity obligation must be
satisfied by the Shareholders (or the Company, if
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the Closing Date fails to occur) by paying to that InterCept Indemnified Party
cash in an amount equal to the applicable Indemnified Damages.
12.8 Certain Limitations. The foregoing indemnification obligations are
-------------------
subject to the limitation that no Indemnifying Party shall have any liability
for indemnification for breaches of representations and warranties pursuant to
this Article 12 unless the total Indemnifiable Damages for which the
Indemnifying Party would be liable exceed $100,000 in the aggregate; provided,
--------
however, that the foregoing limitation shall not apply to any Indemnifiable
-------
Damages with respect to, as a result of or involving any intentional breach of a
representation or warranty in this Agreement. In no event shall the liability
under this Article 12 and under Article 11 of the Other Merger Agreement of the
Shareholders and the other Company Indemnified Parties, collectively on the one
hand, or Purchaser, InterCept, Direct Access Interactive, Inc., and the other
InterCept Indemnified Parties, collectively on the other hand, exceed the
greater of (a) $5,000,000 and (b) the amounts, if any, held in escrow pursuant
to Section 3.2 of this Agreement and Section 3.2 of the Other Merger Agreement.
12.9 Exclusive Remedy. In the absence of bad faith, fraud, intentional,
----------------
knowing and willful misconduct, if the Closing occurs, the remedies provided in
this Section 12 shall be the exclusive remedies of the parties hereto in
connection with Indemnifiable Damages which arise from the breaches described in
Sections 12.1(a) and (b) and 12.2(a) and (b) suffered by such party.
12.10 Insurance Reduction. All Indemnifiable Damages shall be determined
-------------------
net of actual insurance proceeds received by the Indemnified Party, less costs
and expenses incurred by the Indemnified Party in pursuing the Claim resulting
in the Indemnifiable Damages; provided, however, that any such offset against
-------- -------
Indemnifiable Damages shall be subject to the paying insurance company's rights
to subrogation and any limitations, restrictions or prohibitions on such offset
imposed or required by the Indemnified Party's insurance policy. Nothing
provided herein shall obligate either Party to pursue recovery for Indemnifiable
Damages under any insurance policy.
ARTICLE 13
MISCELLANEOUS
13.1 Expenses.
--------
(a) Except as otherwise expressly stated herein, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby (including legal and accounting fees and expenses) shall be
borne by the Party incurring such costs and expenses and shall be paid by such
Party.
(b) Notwithstanding any provision in this Agreement to the contrary,
if any of the Parties shall willfully default in its obligations hereunder, the
non-defaulting Party may pursue any remedy available at law or in equity to
enforce its rights and shall be paid by the willfully defaulting Party for all
damages, costs and expenses, including without limitation
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reasonable legal and accounting expenses incurred or suffered by the non-
defaulting Party in connection herewith or in the enforcement of its rights
hereunder.
13.2 Notices. All notices or other communications which are required or
-------
permitted hereunder shall be in writing and sufficient if delivered personally
or by reputable overnight or express courier, sent by registered or certified
mail, postage prepaid, or by telefax (with subsequent delivery via one of the
two previous methods) as follows:
(a) If to InterCept or Purchaser, to:
The InterCept Group, Inc.
Zeenet Corporation
0000 Xxxxxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxx 00000
Attn: President and Chief Financial Officer
Telefax: (000) 000-0000
Copy (which shall not constitute notice) to:
Xxxxxx Xxxxxxx Xxxxx & Xxxxxxxxxxx, LLP
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxx X. Xxxxxxx, Esq.
Telefax: (000) 000-0000
(b) If to the Company (prior to Closing) or the Shareholders, to:
SBS Data Services, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxxx X. Xxxxxxxxx
Telefax: (000) 000-0000
Copy (which shall not constitute notice) to:
Xxxx X. Xxxxx, Esq.
Xxxx & Xxxxxx, LLP
000 X. 00xx Xxxxxx
0000 XxxxxXxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Telefax: (000) 000-0000
Page 42 of 45
(c) If to the Shareholders, to the addresses identified on Schedule
--------
1 hereto:
-
Copy (which shall not constitute notice) to:
Xxxx X. Xxxxx, Esq.
Xxxx & Xxxxxx, LLP
000 X. 00xx Xxxxxx
0000 XxxxxXxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Telefax: (000) 000-0000
or such other addresses and telefax numbers as shall be furnished in writing by
any Party, and any such notice or communications shall be deemed to have been
given as of one business day after the date actually sent via overnight or
express courier, five business days after mailed and upon telefax confirmation
of receipt to addressee by the sender.
13.3 Parties in Interest. This Agreement shall be binding on and shall
-------------------
inure to the benefit of the Parties hereto and their respective successors,
representatives and assigns. This Agreement (and the rights and interests
herein) may not be assigned by any Party without the written consent of the
other Parties; provided, however, InterCept may assign its interests herein to
(a) an entity controlling, controlled by or under common control with InterCept
or (b) a purchaser or transferee of all or substantially all of the business or
assets of InterCept, whether by sale of stock or assets, merger or otherwise.
Any attempted assignment in contravention of the foregoing shall be null and
void. Nothing in this Agreement is intended to confer, expressly or by
implication, upon any other person or entity any rights or remedies under or by
reason of this Agreement.
13.4 Entire Agreement. This Agreement, which includes the Disclosure
----------------
Schedules, Exhibits and the other documents, agreements, certificates and
instruments executed and delivered pursuant to or in connection with this
Agreement (collectively, the "Purchase Agreements"), contains the entire
agreement among the Parties with respect to the transactions contemplated by
this Agreement and supersedes all prior negotiations, arrangements or
understandings, written or oral, with respect thereto.
13.5 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be an original, and each of which shall
constitute one and the same agreement. Any Party may deliver an executed copy
of this Agreement and any documents contemplated hereby by facsimile
transmission to another Party, and such delivery shall have the same force and
effect as any other delivery of a manually signed copy of this Agreement or of
such other documents.
13.6 Governing Law.
-------------
(a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE UNITED STATES OF
Page 43 of 45
AMERICA AND THE STATE OF GEORGIA, EXCLUDING CHOICE OF LAW PRINCIPLES.
(b) InterCept, Purchaser, the Company and the Shareholders consent
to the exclusive jurisdiction and venue of the courts of any county in the State
of Georgia and the United States Federal District Courts of Georgia, in any
judicial proceeding brought to enforce this Agreement. The Parties agree that
any forum other than the State of Georgia is an inconvenient forum and that a
lawsuit (or non-compulsory counterclaim) brought by one Party against another
Party, in a court of any jurisdiction other than the State of Georgia should be
forthwith dismissed or transferred to a court located in the State of Georgia.
13.7 Arbitration.
-----------
(a) Any dispute, controversy or claim arising out of or relating to
this Agreement or any other related documents, agreements, certificates or other
writing, or the breach, termination, construction, validity or enforceability
hereof or thereof, shall be settled by binding arbitration in accordance with
the rules of the American Arbitration Association (except as otherwise provided
in this Section 13.7).
(b) Termination or limitation of InterCept's or Purchaser's rights
in any of its software, products, or any associated intellectual property rights
or documents may not be awarded under any circumstances. The right to demand
arbitration and to receive damages and obtain other available remedies as
provided hereunder shall be the exclusive remedy in the event an arbitration
demand is made, except that InterCept and Purchaser shall be entitled to obtain
equitable relief, such as injunctive relief, from any court of competent
jurisdiction to protect its rights in any of its software products or any
associated intellectual property rights or documents while such proceeding is
pending or in support of any award made pursuant to such arbitration.
13.8 Invalidity of any Part. If any provision or part of this Agreement
----------------------
shall for any reason be held invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any other
provisions of this Agreement and shall be construed as if such invalid, illegal
or unenforceable provision or part thereof had never been contained herein, but
only to the extent of its invalidity, illegality, or unenforceability. Upon any
such determination that any term or other provision is invalid, illegal or
incapable of being enforced, the Parties hereto will negotiate in good faith to
modify this Agreement so as to effect the original intent of the Parties as
closely as possible in an acceptable manner to the end that the transactions
contemplated by this Agreement are consummated to the extent possible.
13.9 Time of the Essence; Computation of Time. Time is of the essence of
----------------------------------------
each and every provision of this Agreement. Whenever the last day for the
exercise of any right or the discharge of any duty under this Agreement shall
fall upon Saturday, Sunday or a federal, public or legal holiday, the Party
having such right or duty shall have until 5:00 p.m., Atlanta, Georgia time on
the next succeeding regular business day to exercise such right or to discharge
such duty.
Page 44 of 45
IN WITNESS WHEREOF, InterCept, Purchaser, the Company and the Shareholders
have caused this Agreement to be executed by their duly authorized officers as
of the day and year first above written.
INTERCEPT
The InterCept Group, Inc.
By: /s/ Xxxxx X. Xxxxxxx
------------------------------
Its: President
------------------------------
PURCHASER
Zeenet Corporation
By: /s/ Xxxxx X. Xxxxxxx
------------------------------
Its: President
------------------------------
THE COMPANY
SBS Data Services, Inc.
By: /s/ Xxxxx X. Xxxxxxxxx
------------------------------
Its: President
------------------------------
THE SHAREHOLDERS:
/s/ Xxxxx X. Xxxxxxxxx
-----------------------------------
Xxxxx X. Xxxxxxxxx
/s/ Xxxxxx X. Xxxx, III
-----------------------------------
Xxxxxx X. Xxxx, III
/s/ Xxxxxxx X. Xxxxxx
-----------------------------------
Xxxxxxx X. Xxxxxx
Page 45 of 45
