Exhibit 10.4
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement ("Agreement"), dated as of the
29th day of June, 1998, is entered into by and among Security First Network
Bank, a federal savings bank ("SFNB"), Security First Technologies Corporation,
a Delaware corporation (the "Corporation") and State Farm Mutual Automobile
Insurance Company, an Illinois corporation (the "Purchaser").
WHEREAS, SFNB is the parent company of Security First
Technologies, Inc. ("S1") and the Corporation;
WHEREAS, at a special meeting (the "Special Meeting"), the
stockholders of SFNB will vote upon a proposed holding company reorganization of
SFNB (the "Reorganization"), pursuant to the Second Amended and Restated Plan of
Reorganization, dated as of March 9, 1998, by and among SFNB, the Corporation
and New Security First Network Bank ("New Bank"), as amended (the "Plan");
WHEREAS, subject to stockholder approval of the Plan and the
other terms and conditions of the Plan, the Reorganization will be effected
pursuant to the following steps: (1) New Bank will be organized as a wholly
owned subsidiary of SFNB, (2) SFNB will contribute its banking business to New
Bank, (3) the Corporation will purchase and assume all of SFNB's other assets
and liabilities in exchange for the issuance to SFNB of the Corporation's common
stock, par value $0.01 per share (the "Common Stock"), (4) SFNB will declare a
distribution to its shareholders of the Common Stock of the Corporation that it
owns, and (5) SFNB will dissolve voluntarily;
WHEREAS, after the Reorganization is consummated, the
Corporation will wholly own New Bank and S1, and the holders of each issued and
outstanding share of SFNB common stock, no par value per share ("SFNB Common
Stock") and SFNB preferred stock, no par value per share ("SFNB Preferred
Stock"), will own, respectively, the Corporation's Common Stock and the
Corporation's Series A preferred stock, par value $0.01 per share (the "Series A
Preferred Stock") to the same extent they owned such securities of SFNB prior to
the Reorganization;
WHEREAS, the stockholders of SFNB will also consider and vote
upon the proposed sale of SFNB's banking business to RBC Holdings (Delaware)
Inc. immediately following the Reorganization;
WHEREAS, Purchaser desires to subscribe for, and acquire from
the Corporation, shares of the Corporation's Series B preferred stock (the
"Preferred Shares"), having the specific terms, relative rights and preferences
set forth in the Certificate of Designation attached hereto as Exhibit I (the
"Series B Preferred Stock"), on the terms and under the conditions specified
herein;
WHEREAS, the Corporation desires to sell and issue to
Purchaser Preferred Shares on the terms and under the conditions specified
herein;
WHEREAS, the number of Preferred Shares to be sold and issued
by the Corporation and subscribed for by the Purchaser shall equal (i)
10,000,000, divided by (ii) the average closing asking price per share of SFNB
Common Stock (or the Corporation's Common Stock if SFNB is then dissolved, or a
combination of both), as quoted on the Nasdaq Stock Market National Market Tier,
for each of the 10 trading days preceding the business day immediately before
the Closing Date under this Agreement; and
WHEREAS, SFNB, the Corporation and the Purchaser desire that
the transactions contemplated hereby be consummated immediately following the
Reorganization.
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in this
Agreement, the sufficiency of which is hereby acknowledged, the parties mutually
agree as follows:
SECTION 1. PURCHASE AND SALE OF THE PREFERRED SHARES.
1.1 SALE AND ISSUANCE OF THE PREFERRED SHARES.
At the Closing (as defined below in section 1.2(a)) and
subject to the terms and conditions of this Agreement, Purchaser does hereby
subscribe for, and agree to purchase, that number of Preferred Shares equal to
(i) 10,000,000, divided by (ii) the average closing asking price per share of
SFNB Common Stock (or the Corporation's Common Stock if SFNB is then dissolved,
or a combination of both), as quoted on the Nasdaq Stock Market National Market
Tier, for each of the 10 trading days preceding the business day immediately
before the Closing Date under
this Agreement, for a total purchase price of $10,000,000 (the "Purchase
Price"), and the Corporation agrees to sell and issue to Purchaser at the
Closing for the Purchase Price, such Preferred Shares (the "Transaction").
1.2 CLOSING.
1.2(a). The closing (the "Closing") of the Transaction shall
take place within three business days after the Reorganization.
1.2(b). The Closing shall take place at 10:00 a.m.,
Washington, D.C. time, at the offices of Xxxxx & Xxxxxxx L.L.P., 000 00xx
Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000, or at such other time and place as the
parties shall mutually agree (the "Closing Date").
SECTION 2. REGISTRATION RIGHTS.
2.1 PIGGYBACK REGISTRATION RIGHTS.
2.1(a). Except as provided at Section 2.1(b) below, if at any
time or times beginning two years after the Closing Date through four years
following the Closing Date the Corporation proposes to make a public offering of
its Common Stock, which requires registration under applicable rules and
regulations of the Securities and Exchange Commission ("SEC") (or any successor
regulator thereto as to federal securities laws), other than an offering not
suitable for inclusion of shares of selling stockholders for offer to the
public, such as shares being offered in connection with an employment benefit
plan or in connection with a merger, the Corporation shall give written notice
of the proposed registration to Purchaser not less than 14 business days prior
to the proposed filing date of the registration form with the SEC, and at the
written request of Purchaser delivered to the Corporation within 10 days after
the receipt of such notice, the Corporation shall include in such registration
and offering, and in any underwriting of such offering, the Converted Common
Shares (as defined below) that have been designated for registration in
Purchaser's request. The Corporation may withdraw any proposed registration
statement or offering of securities under this Section 2 at any time without any
liability to Purchaser hereunder. For purposes of this Agreement, the term
"Converted Common Shares" shall mean the shares of the Corporation's Common
Stock into which the Preferred Shares are convertible pursuant to the terms of
the Preferred Shares.
2.1(b). If a registration in which Purchaser has the right to
participate pursuant to this Section 2 is an underwritten public offering
and the managing underwriter advises the Corporation in writing that in its
opinion the number of securities requested to be included in such registration
exceeds the number that can be sold in such offering consistent with the pricing
expectations of the Corporation, then the Corporation first shall include in
such offering the Common Stock proposed to be sold by the Corporation if
consistent with the aforementioned opinion of the managing underwriter, and
second shall include the Converted Common Shares requested to be included in
such registration by Purchaser and any other Common Stock requested to be
included by other selling stockholders who hold registration rights pursuant to
pre-existing written agreements with the Corporation, if any, pro rata based
upon the number of shares of Common Stock requested by Purchaser and each such
selling stockholder to be included in such registration, or in such other
amounts upon which the Corporation, Purchaser and the other selling stockholders
may agree. The two year limitation on registration rights set forth in Section
2.1(a) shall not apply to any shares of Purchaser's Converted Common Shares
excluded from registration by virtue of this Section 2.1(b).
2.2 DEMAND REGISTRATION RIGHTS.
2.2(a). At any time two years after the Closing Date,
Purchaser may request registration for sale under the Securities Act of 1933, as
amended (the "Securities Act") of any Converted Common Shares owned by Purchaser
(a "Demand Registration"), provided, however, that (i) the Corporation shall
only be obligated to effect one Demand Registration for Purchaser, (ii) the
Corporation shall not be obligated to effect a Demand Registration unless
Purchaser requests registration for sale of Converted Common Shares that
represent at least 50% of the aggregate amount of Converted Common Shares then
owned by Purchaser, and (iii) the Corporation shall not be required to conduct
an underwritten offering. A Demand Registration shall specify the approximate
number of Converted Common Shares requested to be registered and the anticipated
per share price range for such offering.
2.2(b). A Demand Registration shall be deemed to occur when
such registration becomes effective under the Securities Act, except that if,
after it becomes effective, such Demand Registration is interfered with by any
stop order, injunction or other order or requirement of the SEC (or any
successor regulator thereto as to federal securities laws) or any other
governmental authority, such registration shall not be deemed to have been
effected unless such stop order, injunction or other order shall have been
subsequently vacated or removed.
2.3 REGISTRATION PROCEDURES.
2.3(a). The Corporation shall have no obligation to include
Converted Common Shares owned by Purchaser in a registration statement pursuant
to Section 2.1 or Section 2.2 hereof unless and until Purchaser has furnished
the Corporation with all information and statements about or pertaining to
Purchaser in such reasonable detail and on such timely basis as is reasonably
deemed by the Corporation to be necessary or appropriate for the preparation of
the registration statement.
2.3(b). Whenever Purchaser has requested that its Converted
Common Shares be registered pursuant to Section 2.1 or Section 2.2 hereof, the
Corporation shall, subject to its rights under Section 2.1(a) to withdraw the
registration statement and the other provisions of Section 2.1 and Section 2.2:
(1) prepare and file with the SEC a
registration statement with respect to such Converted Common Shares and use its
reasonable efforts to cause such registration statement to become effective as
soon as practicable after the filing thereof (provided that before filing a
registration statement or prospectus or any amendments or supplements thereto,
the Corporation shall furnish counsel for Purchaser with copies of all such
documents proposed to be filed);
(2) prepare and file with the SEC such
amendments and supplements to such registration statement and prospectus
contained therein as may be necessary to keep such registration statement
effective for a period of not less than three months or until Purchaser has
completed the distribution described in such registration statement, whichever
occurs first;
(3) furnish to Purchaser the number of copies
of such registration statement, each amendment and supplement thereto, the
prospectus contained in such registration statement (including each preliminary
prospectus), and such other documents as Purchaser may reasonably request;
(4) use reasonable efforts to register or
qualify such shares under the state blue sky or securities or banking laws
("Blue Sky Laws") of such jurisdictions as Purchaser reasonably requests (and to
keep such registrations and qualifications effective for a period of three
months, or until Purchaser has completed the distribution of such shares,
whichever occurs first), and to do any and all other acts and things that may be
reasonably necessary or advisable to enable Purchaser to consummate the
disposition of such shares in such jurisdictions; provided, however, that the
Corporation will not be required to do any of the
following: (i) qualify generally to do business in any jurisdiction where it
would not be required but for this Section 2.3(b), (ii) subject itself to
taxation in any such jurisdiction, or (iii) file any general consent to service
of process in any such jurisdiction;
(5) promptly notify Purchaser at any time when
a prospectus relating thereto is required to be delivered under applicable
federal securities laws during the period that the Corporation is required to
keep the registration statement effective, of the occurrence of any event as a
result of which the prospectus included in such registration statement contains
an untrue statement of a material fact or omits any fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, and prepare a supplement or amendment to the prospectus so
that, as thereafter delivered to the purchasers of such shares, the prospectus
will not contain an untrue statement of a material fact or omit to state any
fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading;
(6) use reasonable efforts to cause all such
Converted Common Shares to be listed on a securities exchange or the Nasdaq
Stock Market, if the Corporation's Common Stock is then listed on a securities
exchange or the Nasdaq Stock Market; and
(7) provide a transfer agent and registrar (if
the Corporation does not already have such an agent) for all such Converted
Common Shares not later than the effective date of such registration statement.
2.4 REGISTRATION EXPENSES.
2.4(a). If, pursuant to Section 2.1 or Section 2.2 hereof,
Converted Common Shares owned by Purchaser are included in a registration
statement, then Purchaser shall pay all transfer taxes, if any, relating to the
sale of its Converted Common Shares, the fees and expenses of its own counsel,
and its pro rata portion of any underwriting discounts or commissions or the
equivalent thereof.
2.4(b). Except for the fees and expenses specified in Section
2.4(a) hereof and except as provided below in this Section 2.4(b), the
Corporation shall pay all expenses incident to the registration and to the
Corporation's performance of or compliance with this Agreement, including,
without limitation, all registration and filing fees, fees and expenses of
compliance, with Blue Sky Laws, underwriting discounts, fees, and expenses
(other than Purchaser's pro rata portion of any
underwriting discounts or commissions or the equivalent thereof), printing
expenses, messenger and delivery expenses, and fees and expenses of counsel for
the Corporation and all independent certified public accountants and other
persons retained by the Corporation. With respect to any registration pursuant
to Section 2.4 hereof, the Corporation shall pay its internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties) and the expenses and fees for
listing the securities to be registered on an exchange or on the Nasdaq Stock
Market, if applicable.
2.5 INDEMNITY AND CONTRIBUTION.
2.5(a). In the event that any Converted Common Shares owned by
Purchaser are sold by means of a registration statement pursuant to Section 2.1
or Section 2.2 hereof, Purchaser (for the purposes of this paragraph 2.5(a), the
"Indemnifying Person") agrees to indemnify and hold harmless the Corporation,
each of the Corporation's officers and directors, and each person, if any, who
controls or may control the Corporation within the meaning of the Securities Act
(for the purposes of this paragraph 2.5(a), the Corporation, its officers and
directors, and any such other persons being hereinafter referred to individually
as an "Indemnified Person" and collectively as "Indemnified Persons") from and
against all demands, claims, actions or causes of action, assessments, losses,
damages, liabilities, costs, and expenses, including, without limitation,
interest, penalties, and reasonable attorneys' fees and disbursements, asserted
against, resulting to, imposed upon, or incurred by such Indemnified Person,
directly or indirectly (collectively, hereinafter referred to in the singular as
a "Claim" and in the plural as "Claims"), based upon, arising out of, or
resulting from any untrue statement of a material fact contained in the
registration statement or any omission to state therein a material fact
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading, to the extent that
such Claim is based upon, arises out of or results from information furnished to
the Corporation by Purchaser in a written document provided by Purchaser for use
in connection with the registration statement.
2.5(b). The Corporation (for the purposes of this paragraph
2.5(b), the "Indemnifying Person") agrees to indemnify and hold harmless
Purchaser, its officers and directors, each person, if any, who controls or may
control Purchaser within the meaning of the Securities Act and any underwriters
participating in the distribution of Converted Common Shares pursuant to a
registration statement (for the purposes of this paragraph 2.5(b), Purchaser,
its officers and directors, and any such other persons also being hereinafter
referred to individually as an "Indemnified Person" and collectively as
"Indemnified
Persons") from and against all Claims based upon, arising out of, or resulting
from any untrue statement of a material fact contained in the registration
statement or any omission to state therein a material fact necessary in order to
make the statement made therein, in the light of the circumstances under which
they were made, not misleading, to the extent that such Claim is based upon,
arises out of or results from information furnished by the Corporation in a
written document provided by the Corporation for use in connection with the
registration statement.
2.5(c). The indemnification set forth herein shall be in
addition to any liability the Corporation or Purchaser may otherwise have in
connection with any registration of its Common Stock. Within a reasonable time
after receiving definitive notice of any Claim in respect of which an
Indemnified Person may seek indemnification under this Section 2.5, such
Indemnified Person shall submit written notice thereof to Indemnifying Person.
The failure of the Indemnified Person so to notify the Indemnifying Person of
any such Claim shall not relieve the Indemnifying Person from any liability it
may have hereunder except to the extent that (a) such liability was caused or
increased by such omission, or (b) the ability of the Indemnifying Person to
reduce such liability was materially adversely affected by such omission. In
addition, the omission of the Indemnified Person so to notify the Indemnifying
Person of any such Claim shall not relieve the Indemnifying Person from any
liability it may have otherwise than hereunder. The Indemnifying Person shall
have the right to undertake, by counsel or representatives of its own choosing,
the defense, compromise, or settlement (without admitting liability of the
Indemnifying Person) of any such Claim asserted, such defense, compromise, or
settlement to be undertaken at the expense and risk of the Indemnifying Person,
and the Indemnified Person shall have the right to engage separate counsel, at
its own expense, which counsel for the Indemnifying Person shall keep informed
and consult with in a reasonable manner. In the event the Indemnifying Person
shall fail to undertake such defense by its own representatives, the
Indemnifying Person shall give prompt written notice of such election to the
Indemnified Person, and the Indemnified Person shall undertake the defense,
compromise, or settlement (without admitting liability of the Indemnified
Person) thereof on behalf of and for the account and risk of the Indemnifying
Person by counsel or other representatives designated by the Indemnified Person.
In the event that any Claim shall arise out of a transaction or cover any period
or periods wherein the Corporation and Purchaser shall each be liable hereunder
for part of the liability or obligation arising therefrom, then the parties
shall, each choosing its own counsel and bearing its own expenses, defend such
Claim, and no settlement or compromise of such Claim may be made without the
joint consent or approval of the
Corporation and Purchaser. Notwithstanding the foregoing, no Indemnifying Person
shall be obligated hereunder with respect to amounts paid in settlement of any
Claim if such settlement is effected without the consent of such Indemnifying
Person (which consent shall not be unreasonably withheld).
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SFNB.
SFNB represents and warrants to Purchaser as follows:
3.1 ORGANIZATION AND STANDING.
SFNB is a Federal savings bank organized and existing under
the Home Owners' Loan Act of 1933, as amended ("HOLA"). SFNB has the full
corporate power and authority to own and operate its properties and assets, to
carry on its business as currently conducted, to execute and deliver this
Agreement, and, subject to the conditions specified herein, to carry out and
perform its obligations under the terms of this Agreement. SFNB has furnished to
Purchaser a true and complete copy of SFNB's federal stock charter, as currently
in effect, and a true and complete copy of SFNB's bylaws, as currently in
effect, in both cases, certified by its corporate secretary.
3.2 AUTHORIZATION; BINDING OBLIGATION.
SFNB has all requisite corporate power and authority to enter
into and to deliver this Agreement. Except as contemplated herein, all corporate
action on the part of SFNB and its directors, officers and stockholders
necessary for the authorization, execution, delivery and performance of this
Agreement by SFNB, and the performance of SFNB's obligations hereunder have been
taken or will be taken prior to the Closing Date. This Agreement, when executed
and delivered by SFNB, shall constitute a valid and binding obligation of SFNB
enforceable in accordance with its terms, except as may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
effecting the enforcement of creditor's rights.
3.3 SUBSIDIARIES.
As of the date hereof, SFNB's direct subsidiaries are Security
First Technologies, Inc. and Security First Investments, Inc., and SFNB does not
otherwise directly own any other corporation, association or business entity.
Upon consummation of the Reorganization, SFNB will be dissolved voluntarily.
3.4 CAPITALIZATION.
3.4(a). The authorized capital stock of SFNB consists of
25,000,000 shares of SFNB Common Stock, of which 10,843,715 are issued and
outstanding as of June 26, 1998, and 2,500,000 shares of preferred stock, no par
value per share ("SFNB Preferred Stock"), of which 1,637,832 shares have been
designated as Class A and 1,174,110 shares are issued and outstanding as of
March 31, 1998.
3.4(b). As of March 31, 1998, there are options (the "SFNB
Options") outstanding to purchase 4,605,907 shares of SFNB Common Stock, and
except for the SFNB Options and the SFNB Preferred Stock, there are no
outstanding securities convertible into or exchangeable for SFNB Common Stock
and there are no outstanding options, rights (preemptive or otherwise), or
warrants to purchase or to subscribe for any shares of such stock or other
securities of SFNB.
3.5 NON-CONTRAVENTION.
The execution, delivery and performance of, and compliance
with, this Agreement will not (a) violate any provision of the federal stock
charter or bylaws of SFNB; (b) conflict with or result in a breach of, or
default under, or result in the creation of any lien, claim, charge or other
encumbrance upon any of the assets or properties of SFNB pursuant to the
provisions of any agreement, mortgage, indenture or other document or instrument
to which SFNB is a party or by which SFNB or any of its properties or assets is
bound, or (c) violate any existing statutes, laws, ordinances, regulations,
orders and other rules of law applicable to SFNB or any of its properties or
assets, or applicable to SFNB's power or authority to perform its obligations
under this Agreement.
3.6 FINANCIAL STATEMENTS.
SFNB has previously delivered or made available to Purchaser
accurate and complete copies of its audited consolidated financial statements as
of and for the years ended December 31, 1996 and 1997, and the unaudited
consolidated financial statements as of and for the three months ended March 31,
1997 and 1998 (together, all such financial statements are referred to as the
"SFNB Financial Statements"). The consolidated statements of financial condition
of SFNB referred to herein (including the related notes, where applicable)
fairly present (subject, in the case of the unaudited statements, to recurring
audit adjustments normal in nature and amount), the results of the consolidated
operations and consolidated financial condition of SFNB for the respective
fiscal periods or as of the respective dates therein set forth; each of such
statements (including the related notes, where applicable) comply with
applicable accounting requirements and with the published rules and regulations
of the Office of Thrift Supervision (the "OTS") with respect thereto and each of
such
statements (including the related notes, where applicable) has been prepared in
accordance with generally accepted accounting principles ("GAAP") consistently
applied during the periods involved, except in each case as indicated in such
statements or in the notes thereto or, in the case of unaudited statements, as
permitted by Form 10-Q. SFNB's Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1997 and all reports filed under Sections 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934, as amended ("Exchange Act") since
December 31, 1997 comply in all material respects with the appropriate
requirements for such reports under the Exchange Act, and SFNB has previously
delivered or made available to Purchaser true, correct and complete copies of
such reports. Since January 1, 1998, SFNB has filled all reports required to be
filed by it under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act. The
books and records of SFNB have been, and are being, maintained in all material
respects in accordance with GAAP and any other applicable legal and accounting
requirements.
3.7 ASSETS.
SFNB (for purposes of this section, including its
subsidiaries) has good, valid and marketable title to all properties and assets
owned by it, including, without limitation, all properties and assets included
in the SFNB Financial Statements and all properties and assets purchased by SFNB
since December 31, 1997 (except for leased or licensed assets and for properties
or assets reflected in such SFNB Financial Statements which have been sold or
otherwise disposed of in the ordinary course of business), free and clear of all
encumbrances. All personal property of SFNB is in good operating condition and
repair and is suitable and adequate for the uses for which it is intended or is
being used.
3.8 REORGANIZATION.
SFNB has approved the Reorganization, subject to the terms and
conditions specified in the Plan.
3.9 GOVERNMENTAL CONSENT.
No consent, approval or authorization of, or designation,
declaration or filing with, any governmental authority on the part of SFNB is
required in connection with the valid execution and delivery of this Agreement.
3.10 LITIGATION; DISPUTES.
There are no actions, suits, claims, arbitrations, proceedings
or investigations pending, or to the knowledge of SFNB, threatened against,
affecting or involving SFNB in connection with the transactions contemplated by
this Agreement, at law or in equity, or before or by any court, arbitrator or
governmental authority, domestic or foreign.
3.11 ABSENCE OF CERTAIN CHANGES OR EVENTS.
Except as disclosed in its reports filed under Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act, since December 31, 1997 neither SFNB nor
any of its subsidiaries has incurred any material liability, except as
contemplated hereby or in the ordinary course of their business consistent with
their past practices. Since December 31, 1997 SFNB and its subsidiaries have
carried on their respective businesses in the ordinary and usual course
consistent with their past practices.
3.12 COMPLIANCE WITH APPLICABLE LAWS.
Each of SFNB and it subsidiaries have complied in all material
respects with all laws applicable to it or to the operation of its business.
Neither SFNB nor any subsidiary thereof has received any notice of any material
alleged or threatened claim, violation, or liability under any such laws that
has not heretofore been cured and for which there is no remaining liability.
3.13 NO MISREPRESENTATION.
None of the representations and warranties of SFNB set forth
in this Section 3 contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements contained therein, in
light of the circumstances in which they were made, not misleading.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION.
The Corporation represents and warrants to Purchaser as
follows:
4.1 ORGANIZATION AND STANDING.
The Corporation is a Delaware corporation in good standing in
the State of Delaware, and has the full corporate power and authority to own and
operate its properties and assets, to carry on its business as currently
conducted, to execute and deliver this Agreement, to sell and issue the
Preferred Shares hereunder, and, subject to the conditions specified herein, to
carry out and perform its obligations under the terms of this Agreement. The
Corporation has furnished to Purchaser a true and complete copy of the
Corporation's certificate of incorporation, as currently in effect, and a true
and complete copy of the Corporation's bylaws, as currently in effect, in both
cases, certified by its corporate secretary.
4.2 AUTHORIZATION; BINDING OBLIGATION.
The Corporation has all requisite corporate power and
authority to enter into and to deliver this Agreement. Except as contemplated
herein, all corporate action on the part of the Corporation and its directors,
officers and stockholders necessary for the authorization, execution, delivery
and performance of this Agreement by the Corporation, the authorization, sale,
issuance and delivery of the Preferred Shares, and the performance of the
Corporation's obligations hereunder have been taken or will be taken prior to
the Closing Date. This Agreement, when executed and delivered by the
Corporation, shall constitute a valid and binding obligation of the Corporation
enforceable in accordance with its terms, except as may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
effecting the enforcement of creditor's rights.
4.3 CAPITALIZATION.
The authorized capital stock of the Corporation consists of
40,000,000 shares of Common Stock, of which 1,000 are issued and outstanding as
of the date hereof, and 5,000,000 shares of preferred stock, of which none of
the 1,637,832 shares designated Series A Preferred Stock are issued and
outstanding as of the date hereof.
4.4 VALIDITY OF SHARES; ISSUANCE.
The Preferred Shares, when issued in compliance with the
provisions of this Agreement, and the Common Stock, if and when issued to
Purchaser upon conversion of the Preferred Shares into Common Stock, will be
validly issued, fully paid and nonassessable, and free of any
liens or encumbrances, and will be issued in compliance with all applicable
federal banking laws.
4.5 REORGANIZATION.
The Board of Directors of the Corporation approved the
Reorganization, subject to the terms and conditions specified in the Plan.
4.6 NO MISREPRESENTATION.
None of the representations and warranties of the Corporation
set forth in this Section 4 contains any untrue statement of a material fact or
omits to state a material fact necessary to make the statements contained
therein, in light of the circumstances in which they were made, not misleading.
4.7 NON-CONTRAVENTION.
The execution, delivery and performance of, and compliance
with, this Agreement will not (a) violate any provision of the articles of
incorporation or bylaws of the Corporation; (b) conflict with or result in a
breach of, or default under, or result in the creation of any lien, claim,
charge or other encumbrance upon any of the assets or properties of the
Corporation pursuant to the provisions of any agreement, mortgage, indenture or
other document or instrument to which the Corporation is a party or by which the
Corporation or any of its properties or assets is bound, or (c) violate any
existing statutes, laws, ordinances, regulations, orders and other rules of law
applicable to the Corporation or any of its properties or assets, or applicable
to the Corporation's power or authority to perform its obligations under this
Agreement.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
Purchaser represents and warrants to SFNB and the Corporation
as follows:
5.1 ORGANIZATION AND STANDING.
Purchaser is a corporation duly organized, validly existing
and in good standing under the laws of the State of Illinois. Purchaser has the
full corporate power and authority to own and operate its properties and assets,
to carry on its business as currently conducted, to execute and deliver this
Agreement and, subject to the conditions specified herein, to carry out and
perform its obligations under the terms of this Agreement.
5.2 AUTHORIZATION.
Purchaser has all requisite corporate power and authority to
enter into and to deliver this Agreement. All corporate action on the part of
Purchaser and its directors and members necessary for the authorization,
execution, delivery and performance of this Agreement by Purchaser and the
performance of Purchaser's obligations hereunder have been taken. This
Agreement, when executed and delivered by Purchaser, shall constitute a valid
and binding obligation of Purchaser enforceable in accordance with its terms,
except as may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws effecting the enforcement of creditor's rights.
5.3 NON-CONTRAVENTION.
The execution, delivery and performance of, and compliance
with, this Agreement will not (a) violate any provision of the articles of
incorporation or bylaws of Purchaser; (b) conflict with or result in a breach
of, or default under, or result in the creation of any lien, claim, charge or
other encumbrance upon any of the assets or properties of Purchaser pursuant to
the provisions of any agreement, mortgage, indenture or other document or
instrument to which Purchaser is a party or by which Purchaser or any of its
properties or assets is bound, or (c) violate any existing statutes, laws,
ordinances, regulations, orders and other rules of law applicable to Purchaser
or any of its properties or assets, or applicable to Purchaser's power or
authority to perform its obligations under this Agreement.
5.4 GOVERNMENTAL CONSENT.
No consent, approval or authorization of, or designation,
declaration or filing with, any governmental authority on the part of Purchaser
is required in connection with the valid execution and delivery of this
Agreement.
5.5 ADEQUATE RESOURCES.
Purchaser has sufficient cash and other resources to perform
its obligations hereunder.
5.6 INVESTMENT REPRESENTATIONS.
5.6(a). Purchaser has had an opportunity to discuss the
Corporation's business, management and financial affairs with the
Corporation's management. Purchaser is capable of evaluating the merits and
risks of its investment in the Corporation and has the capacity to protect its
own interests.
5.6(b). Purchaser is acquiring the Preferred Shares for
investment for its own account and not with a view to, or for resale in
connection with, any distribution. Purchaser understands that the Preferred
Shares have not been registered under the Securities Act by reason of a specific
exemption from the registration provisions thereof which depends upon, among
other things, the bona fide nature of the investment intent as expressed herein.
5.6(c). Purchaser acknowledges that the Preferred Shares must
be held indefinitely unless they are subsequently registered under applicable
rules and regulations of the SEC or an exemption from registration is available.
5.6(d). Purchaser understands that no public market now exists
for the Preferred Shares and that a public market may never exist for the
Preferred Shares.
5.7 LITIGATION; DISPUTES.
There are no actions, suits, claims, arbitrations, proceedings
or investigations pending, or to the knowledge of Purchaser, threatened against,
affecting or involving Purchaser in connection with the transactions
contemplated by this Agreement, at law or in equity, or before or by any court,
arbitrator or governmental authority, domestic or foreign.
5.8 NO MISREPRESENTATION.
None of the representations and warranties of Purchaser set
forth in this Section 5 contains any untrue statement of a material fact or
omits to state a material fact necessary to make the statements contained
therein, in light of the circumstances in which they were made, not misleading.
SECTION 6. COVENANTS.
6.1 REGULATORY APPLICATIONS; THIRD PARTY CONSENTS.
If applicable, upon the execution and delivery of this
Agreement, Purchaser shall cause to be prepared and filed, as soon as is
reasonably practical, all required applications and notices and any other
filings with governmental authorities which are necessary or contemplated for
consummation of the purchase of the Preferred Shares contemplated hereby. Such
applications and filings shall be in such forms as may be prescribed by the
respective governmental authorities and shall contain such information as they
may require.
6.2 DESIGNATION OF PREFERRED STOCK AND MATTERS AS TO THE
CORPORATION.
The Corporation agrees to take all such action required of the
Corporation to consummate the transactions contemplated hereby.
6.3 REORGANIZATION.
6.3(a). Necessary Actions.
(1) Subject to the terms and conditions of the
Plan, SFNB will take such actions necessary to consummate the Reorganization,
including causing the Corporation to take such actions necessary for the
Corporation to consummate the Reorganization and obtaining required third party
consents; and
(2) SFNB will also cause the Corporation to
file the Certificate of Designation in the form attached hereto as Exhibit I,
and, as the sole stockholder of the Corporation, will cause the Corporation to
take other actions necessary to cause the Corporation to consummate the
transactions contemplated hereby.
6.3(b). Necessary Actions.
(1) Subject to the terms and conditions of the
Plan, the Corporation will take such actions necessary to consummate the
Reorganization, including obtaining required third party consents; and
(2) The Corporation will file the Certificate
of Designation with the Secretary of State of the State of Delaware in the form
attached hereto as Exhibit I.
6.4 OTHER APPROVALS.
The parties shall cooperate and use their best efforts to
obtain all written consents and approvals of other persons in connection with
the purchase of the Preferred Shares contemplated hereby.
SECTION 7. CONDITIONS TO CLOSING.
7.1 CONDITIONS TO OBLIGATIONS OF ALL PARTIES.
The obligations of each party to consummate the transactions
contemplated by this Agreement are subject to the satisfaction, on or before the
Closing Date, of each of the following conditions precedent:
7.1(a). Termination. This Agreement shall not have been
terminated in accordance with its terms.
7.1(b). Regulatory Approvals. All regulatory approvals sought
shall have been obtained and all notice periods shall have expired; no
regulatory approval shall contain any condition that would require any material
modification or nonperformance of the terms of this Agreement; all regulatory
approvals shall remain in full force and effect and all conditions and
requirements set forth in any regulatory approvals that are required to be
satisfied on or before the Closing Date, including the expiration of any waiting
periods, shall have been satisfied or properly waived.
7.1(c). No Governmental Action. No action or proceeding by or
before any governmental authority shall have been instituted or threatened (and
not subsequently dismissed, settled or otherwise terminated) which is reasonably
expected to restrain, prohibit or invalidate the transactions contemplated by
this Agreement or to affect adversely the financial condition and business
prospects of the Corporation.
7.1(d). Reorganization. The consummation of the
Reorganization, including the receipt by SFNB and the Corporation of third party
consents necessary to consummate the Reorganization.
7.1(e). Third Party Consents. Receipt by the parties hereto
of all third party consents required by this Agreement.
7.2 CONDITIONS TO THE OBLIGATIONS OF PURCHASER.
The obligations of Purchaser to purchase the Preferred Shares
contemplated by this Agreement are subject to the satisfaction, on or before the
Closing Date, of each of the following conditions precedent, any one or more of
which may be waived by Purchaser, in its sole and absolute discretion:
7.2(a). Representations and Warranties. The representations
and warranties of SFNB and the Corporation contained in this Agreement shall be
true, correct and complete in all material respects when made and shall be true
and correct on the date of the Reorganization, in the case of SFNB, and the
Closing Date, in the case of the Corporation, with the same force and effect as
if made on the date of the Reorganization and Closing Date, as the case, may be,
except insofar as such Representations and Warranties are rendered inapplicable
as a result of the Reorganization.
7.2(b). Compliance. SFNB and the Corporation shall have in all
material respects performed all obligations and agreements and complied with all
covenants contained in this Agreement to be performed and complied with by SFNB
and the Corporation on or prior to the Closing Date.
7.3 CONDITIONS TO OBLIGATIONS OF SFNB.
The obligations of SFNB to consummate the transactions
contemplated by this Agreement are subject to the satisfaction, on or before the
Closing Date, of each of the following conditions precedent, any one or more of
which may be waived by SFNB, in its sole and absolute discretion:
7.3(a). Representations and Warranties. The representations
and warranties of Purchaser contained in this Agreement shall be true, correct
and complete in all material respects when made and shall be true and correct as
of the Closing Date with the same force and effect as if made on the Closing
Date.
7.3(b). Compliance. Purchaser shall have in all material
respects performed all obligations and agreements and complied with all
covenants contained in this Agreement to be performed and complied with by it on
or prior to the Closing Date.
7.4 CONDITIONS TO OBLIGATIONS OF THE CORPORATION.
The obligations of the Corporation to consummate the
transactions contemplated by this Agreement are subject to the satisfaction, on
or before the Closing Date, of each of the following conditions precedent, any
one or more of which may be waived by the Corporation, in its sole and absolute
discretion:
7.4(a). Representations and Warranties. The representations
and warranties of Purchaser contained in this Agreement shall be true, correct
and complete in all material respects when made and shall be true
and correct as of the Closing Date with the same force and effect as if made on
the Closing Date. 7.4(b). Compliance. Purchaser shall have in all material
respects performed all obligations and agreements and complied with all
covenants contained in this Agreement to be performed and complied with by it on
or prior to the Closing Date.
SECTION 8. CLOSING.
8.1 DELIVERIES BY THE SFNB.
At the Closing, SFNB shall deliver to Purchaser the following:
(1) A copy of the resolutions of the Board of
Directors of SFNB certified by the Secretary of SFNB, as being true, correct and
complete and then in full force and effect, authorizing the execution, delivery
and performance of this Agreement by SFNB, and the performance of SFNB's
obligations hereunder.
(2) A certificate of SFNB signed by the
President of SFNB certifying that the representations and warranties of SFNB
made herein are true, complete and correct in all material respects as of the
date of this Agreement and are true and correct as of the Closing Date, and SFNB
has in all material respects performed all obligations and agreements and
complied with all covenants required to be performed or complied with by SFNB on
or prior to the Closing.
(3) Such other certificates, instruments or
documents as Purchaser may reasonably request in order to effect and document
the transactions contemplated hereby.
8.2 DELIVERIES BY THE CORPORATION.
At the Closing, the Corporation shall deliver to Purchaser the
following:
(1) Certificates registered in Purchaser's
name, representing all of the Preferred Shares.
(2) A copy of the resolutions of the Board of
Directors of the Corporation certified by the Secretary of the Corporation, as
being true, correct and complete and then in full force and effect, authorizing
the execution, delivery and performance of this Agreement by the Corporation,
the authorization, sale, issuance and delivery of the
Preferred Shares, and the performance of the Corporation's obligations
hereunder.
(3) A certificate of the Corporation signed by
the President of the Corporation certifying that the representations and
warranties of the Corporation made herein are true, complete and correct in all
material respects as of the date of this Agreement and are true and correct as
of the Closing Date, and the Corporation has in all material respects performed
all obligations and agreements and complied with all covenants required to be
performed or complied with by the Corporation on or prior to the Closing.
(4) Such other certificates, instruments or
documents as Purchaser may reasonably request in order to effect and document
the transactions contemplated hereby.
8.3 DELIVERIES BY PURCHASER.
At the Closing, Purchaser shall deliver to the Corporation the
following:
(1) The Purchase Price, in cash or by wire
transfer or certified or bank cashier's check, payable to the order of the
Corporation.
(2) A certificate of Purchaser signed by the
President of Purchaser, or such other officer satisfactory to the Corporation,
certifying that the representations and warranties of Purchaser made herein are
true, complete and correct in all material respects as of the date of this
Agreement and are true and correct as of the Closing Date, and Purchaser has in
all material respects performed all obligations and agreements and complied with
all covenants required to be performed or complied with by Purchaser on or prior
to the Closing.
(3) Such other certificates, instruments or
documents as the Corporation and/or SFNB may reasonably request in order to
effect and document the transaction contemplated hereby.
SECTION 9. LEGEND.
9.1 ENDORSEMENT.
Each certificate representing the Preferred Shares or the
Converted Common Shares, as the case may be, shall be endorsed with the
following legend (in addition to any legend required by applicable state
securities laws):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT")
OR ANY OTHER FEDERAL OR STATE SECURITIES LAWS, AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE
REGISTRATION STATEMENT UNDER APPLICABLE FEDERAL SECURITIES LAWS
COVERING SUCH SECURITIES OR THE CORPORATION RECEIVES AN OPINION OF
COUNSEL SATISFACTORY TO THE CORPORATION THAT AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE.
9.2 REMOVAL OF LEGEND.
The legend endorsed on a stock certificate pursuant to Section
9.1 of this Agreement shall be removed and the Corporation shall issue a
certificate without such legend to the holder of such Preferred Shares or
Converted Common Shares, as the case may be, if such Preferred Shares or
Converted Common Shares, are registered under applicable federal securities laws
and a prospectus meeting the requirements of the rules and regulations of the
SEC is available or if such holder provides to the Corporation an opinion of
counsel for such holder of the Preferred Shares or Converted Common Shares
reasonably satisfactory to the Corporation, to the effect that a public sale,
transfer or assignment of such Preferred Shares or Converted Common Shares may
be made without registration and without compliance with any restrictions.
SECTION 10. TERMINATION.
10.1 MUTUAL CONSENT.
The parties may terminate this Agreement at any time by mutual
written agreement.
10.2 OTHER TERMINATION.
SFNB, the Corporation or the Purchaser may terminate this
Agreement by giving notice (a "Termination Notice") to the other parties at the
time designated in this Section or, in the absence of such designation, at any
time up to and including the Closing Date, if any one or more of the following
shall have occurred and be continuing:
10.2(a). Termination By Any Party. Any party may terminate
this Agreement under any one or more of the following circumstances:
(1) at any time after December 31, 1998, if the
Closing shall not have occurred for any reason other than a default or
non-performance of its obligations hereunder by the party giving such notice;
(2) any application for regulatory approval or
notice with any regulatory agency or authority (in each case, in connection with
this Agreement) is denied or withdrawn;
(3) a court or other governmental authority of
competent jurisdiction shall have issued an order, writ, injunction or decree or
shall have taken any other action permanently restraining or otherwise
prohibiting the purchase of Preferred Shares contemplated hereby and such order,
writ, injunction, decree or other action shall have become final and
nonappealable;
(4) the Reorganization is not approved by the
stockholders of SFNB at the Special Meeting.
10.2(b). Termination By Purchaser. Purchaser may terminate
this Agreement on the Closing Date, if any condition precedent set forth in
Sections 7.1 or 7.2 shall not have been satisfied.
10.2(c). Termination By SFNB. SFNB may terminate this
Agreement on the Closing Date, if any condition precedent set forth in Sections
7.1 or 7.3 shall not have been satisfied.
10.2(d). Termination By the Corporation. The Corporation may
terminate this Agreement on the Closing Date, if any condition precedent set
forth in Sections 7.1 or 7.4 shall not have been satisfied.
10.3 EFFECT OF TERMINATION.
Termination of this Agreement pursuant to this Section shall
not relieve any party of any liability for a default or other breach, default or
nonperformance under this Agreement. Notwithstanding the foregoing, no party
hereto shall be liable for consequential or punitive damages in connection with
such termination.
SECTION 11. MISCELLANEOUS.
11.1 ADDITIONAL ACTIONS AND DOCUMENTS.
Each of the parties hereto agrees that it will, at any time,
prior to, at or after the Closing, take or cause to be taken such further
actions, and execute, deliver and file or cause to be executed, delivered and
filed such further documents and instruments (including export license
applications) as may be necessary or reasonably requested in connection with the
consummation of the purchase and sale contemplated by this Agreement or in order
to fully effectuate the purposes, terms and conditions of this Agreement.
11.2 EXPENSES.
Each party hereto shall pay its own expenses incurred in
connection with this Agreement and in the preparation for and consummation of
the transactions contemplated hereby.
11.3 NOTICES.
All notices, demands, requests, or other communications which
may be or are required to be given or made by any party to any other party
pursuant to this Agreement shall be in writing and shall be hand delivered,
mailed by first-class registered or certified mail, return receipt requested,
postage prepaid, or delivered by overnight air courier, addressed as follows:
(i) if to SFNB or the Corporation:
Security First Network Bank/Security First Technologies
Corporation 0000 Xxxxxxxxx Xxxx, XX, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attn.: President
with a copy (which shall not constitute notice) to:
Xxxxx & Xxxxxxx L.L.P.
000 Xxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attn.: Xxxxxx X. Xxxxx, Esq.
(iii) if to Purchaser:
State Farm Mutual Automobile Insurance Company
One State Farm Plaza
Corporate Law -- E7
Xxxxxxxxxxx, Xxxxxxxx 00000
Attn.: J. Xxxxx Xxxxxxx, Esq.
or such other address as the addressee may indicate by written notice to the
other parties. Each notice, demand, request, or communication which shall be
given or made in the manner described above shall be deemed sufficiently given
or made for all purposes at such time as it is delivered to the addressee (with
the return receipt, the delivery receipt, or the affidavit of messenger being
deemed conclusive but not exclusive evidence of such delivery) or at such time
as delivery is refused by the addressee upon presentation.
11.4. WAIVER.
No waiver by any party of any failure or refusal of any other
party to comply with its obligations under this Agreement shall be deemed a
waiver of any other or subsequent failure or refusal to so comply by such other
party. No waiver shall be valid unless in writing signed by the party to be
charged and only to the extent therein set forth.
11.5 BINDING EFFECT.
This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns.
11.6 ENTIRE AGREEMENT; AMENDMENT.
This Agreement, including the other instruments and documents
referred to herein or delivered pursuant hereto, contains the entire agreement
among the parties with respect to the subject matter hereof and supersedes all
prior oral or written agreements, commitments or understandings with respect to
such matters. No amendment, modification or discharge of this Agreement shall be
valid or binding unless set forth in writing and duly executed by the party
against whom enforcement of the amendment, modification or discharge is sought.
11.7 SEVERABILITY.
If any part of any provision of this Agreement shall be
invalid or unenforceable under applicable law, such part shall be ineffective to
the extent of such invalidity or unenforceability only, without in any way
affecting the remaining parts of such provisions or the remaining provisions of
said Agreement.
11.8 HEADINGS.
The headings of the sections and subsections contained in this
Agreement are inserted for convenience only and do not form a part or affect the
meaning, construction or scope thereof.
11.9 GOVERNING LAW.
This Agreement, the rights and obligations of the parties
hereto, and any claims or disputes relating thereto, shall be governed by and
construed under and in accordance with the laws of the State of Georgia,
excluding the choice of law rules thereof.
11.10 SIGNATURE IN COUNTERPARTS.
This Agreement may be executed in separate counterparts, none
of which need contain the signatures of all parties, each of which shall be
deemed to be an original, and all of which taken together constitute one and the
same instrument. It shall not be necessary in making proof of this Agreement to
produce or account for more than the number of counterparts containing the
respective signatures of, or on behalf of, all of the parties hereto.
11.11 NO THIRD PARTY BENEFICIARIES.
Except as expressly provided herein, this Agreement is made
and entered into for the sole protection and benefit of the parties hereto, and
no other person or entity shall have any right of action hereon, right to claim
any right or benefit from the terms contained herein or be deemed a third party
beneficiary hereunder.
11.12 ASSIGNABILITY.
All terms and provisions of this Agreement shall be binding
upon and inure to the benefit of the parties hereto, and their respective
transferees, successors and assigns; provided, however, that neither this
Agreement nor any rights, privileges, duties and obligations of the parties
hereto may be assigned or delegated by any party hereto without the prior
written consent of all the parties to this Agreement and any such purported or
attempted assignment shall be null and void ab initio and of no force or effect
provided, further that Purchaser may assign this Agreement, including rights,
privileges, duties and obligations hereunder to any affiliate of Purchaser which
is wholly or substantially owned directly or indirectly by Purchaser so long as
such assignment does not in any way materially delay or otherwise materially
adversely impact the ability of the parties hereto to effect the transactions
contemplated hereby.
11.13 PARTIES NOT PARTNERS.
Nothing contained in this Agreement shall constitute any party
as a partner with, agent for or principal of any one or more of the other
parties or their successors and assigns
[SIGNATURE PAGE FOLLOWS].
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered as of the date first above written.
SECURITY FIRST NETWORK BANK
By: /s/ Xxxxxx X. Xxxxxxxxx
Name: Xxxxxx X. Xxxxxxxxx
Title: Treasurer
SECURITY FIRST TECHNOLOGIES CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxxx
Name: Xxxxxx X. Xxxxxxxxx
Title: Treasurer
STATE FARM MUTUAL AUTOMOBILE INSURANCE
COMPANY
By: /s/ Xxxxxxx Xxxx
Xxxxxxx Xxxx
Title: Systems Vice President
And
By: /s/ Xxxxxxx Xxxxxxxx
Xxxxxxx Xxxxxxxx
Title: Vice President - Systems
Exhibit I
FORM OF
CERTIFICATE OF DESIGNATION
OF
SECURITY FIRST TECHNOLOGIES CORPORATION
The undersigned DOES HEREBY CERTIFY that the following
resolution was duly adopted on ___________, 1998, by the Board of Directors (the
"Board") of SECURITY FIRST TECHNOLOGIES CORPORATION, a Delaware corporation (the
"Corporation") acting pursuant to the authority granted to the Board in
accordance with the provisions of Section 151(g) of the General Corporation Law
of the State of Delaware:
RESOLVED, that pursuant to authority expressly granted to, and
vested in, the Board by the provisions of the certificate of incorporation of
the Corporation (the "Certificate of Incorporation"), there is hereby created a
Series B Preferred Stock, as set forth below in this Certificate of Designation.
SERIES B REDEEMABLE, CONVERTIBLE PREFERRED STOCK
The Corporation is hereby authorized to issue up to _______
shares of preferred stock, authorized pursuant to Section 4.3 of the
Corporation's Certificate of Incorporation, as a series of preferred stock,
which series shall be designated "Series B Redeemable, Convertible Preferred
Stock" (hereinafter referred to as the "Series B Preferred Stock") and shall
have the following rights and preferences:
1. Dividends
The holders of record of shares (the "Holders") of the Series
B Preferred Stock shall not have any preference with respect to dividends over
the holders of the Common Stock, but shall participate fully and equally, on a
share for share basis, with the Common Stock, with respect to the payment of any
and all dividends or other distributions, whenever declared and whether paid or
payable in cash, the capital stock of the Corporation, the capital stock of any
other entity, or any other property.
2. Voting
Except as otherwise provided by law and except as hereinafter
provided, the Holders of the Series B Preferred Stock shall have no voting
rights and shall not be entitled to notice of meetings of shareholders, and the
exclusive voting power of the Corporation shall be vested in the holders of the
Common Stock. Notwithstanding the foregoing, the Holders of the Series B
Preferred Stock shall be entitled to the following specific limited voting
rights:
(a) The Holders of the Series B Preferred Stock
shall be entitled to vote, as a separate class, with respect to (i) any
amendment or repeal of any of the provisions of the Certificate of Incorporation
or this Certificate of Designation, which would change the specific terms of the
Series B Preferred Stock, as set forth in this Certificate of Designation (or in
any supplementary sections hereto) so as to have an adverse effect on the rights
of the Series B Preferred Stock, including any amendment which would create or
enlarge any class or series ranking prior to the Series B Preferred Stock in
rights and preferences (provided, however, that an amendment which increases the
number of authorized shares of any class or series of capital stock, or
substitutes the surviving entity in a merger or consolidation for the
Corporation, shall not be considered to be such an adverse effect), and (ii) the
approval of a merger or consolidation of the Corporation with another
corporation or the sale, lease, or conveyance (other than by mortgage or pledge)
of the properties or business of the Corporation in exchange for securities of a
corporation other than the Corporation if the Series B Preferred Stock is to be
exchanged for securities of such other corporation and if the terms of such
securities are less favorable in any respect to the holders thereof than the
specific terms of the Series B Preferred Stock as set forth in this Certificate
of Designation (or any supplementary section hereto). No such amendment, repeal,
merger, consolidation, sale, lease, or conveyance shall be approved or adopted
without the affirmative vote, at a meeting duly called for that purpose and upon
notice duly given to the Holders of the Series B Preferred Stock, or the written
consent with or without a meeting, of the Holders of at least two-thirds of the
shares of the Series B Preferred Stock then outstanding, together with any other
vote or consent of the holders of other classes of the capital stock of the
Corporation as may be required; and
(b) The Holders of the Series B Preferred Stock
shall be entitled to vote, along with the holders of the shares of Common Stock,
on the basis as if the Series B Preferred Stock had been converted to shares of
Common Stock pursuant to Section 4 hereof, on (i) any merger, acquisition,
consolidation or other business combination involving the Corporation and
another business entity, (ii) the sale, lease or conveyance (other than by
mortgage or pledge) of all or substantially all of the assets
or properties of the Corporation and (iii) any voluntary dissolution or
liquidation of the Corporation; it being understood, however, that the Holders
of Series B Preferred Stock shall be entitled to vote under the circumstances
described in (i) and (ii) above only if the holders of Common Stock are so
entitled.
3. Redemption.
(a) At any time before the second anniversary
of the Closing Date (as defined in the Stock Purchase Agreement, by and among
Security First Network Bank ("SFNB"), Security First Technologies Corporation
and State Farm Mutual Life Insurance Company, dated as of June 29, 1998)(the
"Agreement), the Corporation shall have the option to redeem this Series B
Preferred Stock by (a) providing the Holder with written notice of its intention
to redeem this Series B Preferred Stock, which notice shall state the redemption
date (the "Redemption Date") and which shall be delivered to the Holder 10
business days prior to the Redemption Date, and (b) delivering to the Holder on
the Redemption Date by wire transfer of immediately available U.S. funds the
amount of cash (the "Redemption Price") equal to (i) the product of (x)
$10,000,000, multiplied by (y) the Two-Year Interest Rate (defined below),
multiplied by (z) the Annualization Factor (defined below), plus (ii)
$10,000,000. For purposes of this section 3(a), the term "Two-Year Interest
Rate" means the percentage rate for the two-year U.S. Treasury Xxxx set forth in
the Wall Street Journal at the Closing Date, and the term "Annualization Factor"
means a fraction, the numerator of which is the number of days between the
Closing Date and the Redemption Date and the denominator of which is 365.
(b) Upon the mailing of the notice pursuant to section 3(a) of
this Certificate of Designation and after the Redemption Date (unless default
shall be made by the Corporation in providing money for the payment of the
Redemption Price and subject to the provisions of this Certificate of
Designation) such shares shall no longer be deemed to be outstanding, and all
rights of the Holders thereof as shareholders of the Corporation (except the
right to receive from the Corporation the Redemption Price) shall cease.
4. Conversion
At any time after the second anniversary of the Closing Date,
the Holders of the Series B Preferred Stock shall have the option to convert all
(but not fewer than all) of such shares into shares of Common Stock of the
Corporation, pursuant to the following terms and conditions:
(a) The shares of Series B Preferred Stock
shall be convertible into that number of shares of the Corporation's Common
Stock equal to (x) 10,000,000, divided by (y) the "Conversion Price," which is
the product of (i) 1.4 and (ii) $_______________ which amount equals the average
closing asking price per share of SFNB's common stock (or the Corporation's
Common Stock if SFNB is then dissolved, or a combination of both), as quoted on
the Nasdaq Stock Market National Market Tier, for each of the 10 trading days
preceding the business day immediately before the Closing Date under the
Agreement.
(b) The option to convert shares of the Series
B Preferred Stock into shares of Common Stock of the Corporation shall be
exercisable by delivering the certificate or certificates for the shares to be
converted, properly endorsed to the Corporation or in blank, along with a
written notice of its intention to convert such shares, to the Secretary of the
Corporation at the home office of the Corporation. The conversion of the shares
of Series B Preferred Stock shall be effective as of the date on which the
Corporation receives such both certificate or certificates and such notice of
conversion.
(c) All shares of Common Stock issued upon the
conversion of any shares of Series B Preferred Stock shall be fully paid and
non-assessable.
(d) The number of shares of Common Stock of the
Corporation into which the shares of Series B Preferred Stock can be converted
shall be subject to adjustment from time to time as follows:
(i) If, at any time after the issuance
of any shares of Series B Preferred Stock, the Corporation pays or makes a
dividend or other distribution on any class of capital stock of the Corporation
in Common Stock of the Corporation, then the number of shares of Common Stock
into which each share of Series B Preferred Stock may be converted shall be
increased by multiplying such number by a fraction, the denominator of which is
the number of shares of such Common Stock outstanding at the close of business
on the day immediately preceding the date of such distribution and the numerator
of which is the sum of such number of shares and the total number of shares
constituting such dividend or other distribution, such increase to become
effective immediately after the opening of business on the day following such
distribution.
(ii) If, at any time after the issuance
of any shares of Series B Preferred Stock, the outstanding shares of Common
Stock of the Corporation are subdivided into a greater number of
such shares, then the number of shares of Common Stock into which each share of
Series B Preferred Stock may be converted shall be proportionately increased,
and, conversely, if, at any time after the issuance of any shares of Series B
Preferred Stock, the outstanding shares of Common Stock of the Corporation are
combined into a smaller number of such shares, then the number of shares of
Common Stock into which each share of Series B Preferred Stock may be converted
shall be proportionately decreased, such increase or decrease, as the case may
be, to become effective immediately after the opening of business on the day
following the day upon which such subdivision or combination becomes effective.
(iii) The reclassification (including any
reclassification upon a merger in which the Corporation is the continuing
corporation) of the Common Stock of the Corporation into securities, including
other than shares of such Common Stock, shall be deemed to involve a subdivision
or combination, as the case may be, of the number of shares of the Common Stock
of the Corporation outstanding immediately prior to such reclassification into
the number of shares of such Common Stock outstanding immediately thereafter and
the effective date of such reclassification shall be deemed to be the day upon
which such subdivision or combination becomes effective, within the meaning of
subparagraph (ii) above.
5. Liquidation
In the event of the liquidation, dissolution, or winding up of
the Corporation, whether voluntary or involuntary, the Holders of the shares of
Series B Preferred Stock shall be entitled to share ratably, without distinction
as to class, in all of the assets of the Corporation available for distribution
to shareholders.
6. Reservation of Common Stock
So long as any shares of Series B Preferred Stock are
outstanding, the Corporation shall maintain a sufficient number of authorized
but unissued shares of Common Stock to provide for the conversion of all
outstanding shares of Series B Preferred Stock into shares of Common Stock.
IN WITNESS WHEREOF, SECURITY FIRST TECHNOLOGIES CORPORATION
has caused this Certificate of Designation to be made under the seal of the
Corporation and signed by _________________, its
President, and attested by _____________, its Secretary, this ____ day of
________, 1998.
SECURITY FIRST TECHNOLOGIES CORPORATION
By:_________________________________________
President
[SEAL]
Attest:
_________________________
Secretary
