STOCK PURCHASE AGREEMENT
BY AND AMONG
XXXXX.XXX, INC.,
A GEORGIA CORPORATION,
AND
PEACHTREE CAPITAL CORPORATION,
A GEORGIA CORPORATION,
AND
XXXXXXXX X. XXXXXXX & XXXXXX XXXXXXX,
SHAREHOLDES OF PEACHTREE CAPITAL CORPORATION
DATED DECEMBER 27, 2001
TABLE OF CONTENTS
PAGE
ARTICLE 1 THE PURCHASE.........................................................................................2
SECTION 1.1. PURCHASE TRANSACTION.....................................................................2
SECTION 1.2. EFFECTIVE TIME AND CLOSING OF THE PURCHASE...............................................2
SECTION 1.3. TERMS AND CONDITIONS; CONVERSION OF SHARES...............................................3
ARTICLE 2 PURCHASE PRICE; EXCHANGE OF SHARES...................................................................3
SECTION 2.1. PURCHASE PRICE; PAYMENT FOR SHARES.......................................................3
SECTION 2.2. RIGHTS OF FORMER COMPANY SHAREHOLDERS....................................................3
SECTION 2.3. PURCHASE PRICE ADJUSTMENTS...............................................................4
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SHAREHOLDERS...................................5
SECTION 3.1. AUTHORIZATION; ORGANIZATION..............................................................5
SECTION 3.2. CAPITALIZATION; STRUCTURE................................................................6
SECTION 3.3. FINANCIAL STATEMENTS.....................................................................7
SECTION 3.4. UNDISCLOSED LIABILITIES..................................................................7
SECTION 3.5. REAL PROPERTY............................................................................8
SECTION 3.6. LITIGATION...............................................................................9
SECTION 3.7. INTELLECTUAL PROPERTY....................................................................9
SECTION 3.8. LICENSES................................................................................10
SECTION 3.9. COMPLIANCE WITH LAWS....................................................................10
SECTION 3.10. INSURANCE...............................................................................10
SECTION 3.11. MATERIAL CONTRACTS......................................................................10
SECTION 3.12. BROKERS, FINDERS, ETC...................................................................11
SECTION 3.13. TAXES...................................................................................11
SECTION 3.14. PENSION AND EMPLOYEE BENEFIT PLANS......................................................12
SECTION 3.15. LABOR AND EMPLOYMENT MATTERS............................................................14
SECTION 3.16. ENVIRONMENTAL MATTERS...................................................................15
SECTION 3.17. AGREEMENTS AFFECTING COMPETITION........................................................15
SECTION 3.18. TRANSACTIONS WITH RELATED PARTIES.......................................................16
SECTION 3.19. MAJOR VENDORS AND CUSTOMERS.............................................................16
SECTION 3.20. ABSENCE OF CERTAIN COMMERCIAL PRACTICES.................................................16
SECTION 3.21. ACCOUNTS RECEIVABLE.....................................................................17
SECTION 3.22. DISCLOSURE..............................................................................17
SECTION 3.23. SECURITIES LAW REPRESENTATIONS..........................................................17
SECTION 3.24. SHAREHOLDERS' ADDITIONAL REPRESENTATIONS................................................19
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF EBANK.............................................................20
ARTICLE 5 COVENANTS AND AGREEMENTS OF THE PARTIES.....................................................................21
SECTION 5.1. SHAREHOLDER APPROVAL BY UNANIMOUS CONSENT...............................................21
SECTION 5.3. SHAREHOLDER AGREEMENT TO SIGN IN OTHER CAPACITIES.......................................21
SECTION 5.3. AFFILIATES..............................................................................22
SECTION 5.4. EMPLOYEE BENEFIT PLANS..................................................................22
ARTICLE 6 CONDITIONS PRECEDENTS TO EBANK'S OBLIGATIONS................................................................23
SECTION 6.1. ACCURACY OF REPRESENTATIONS.............................................................23
SECTION 6.2. PERFORMANCE OF COMPANY AND SHAREHOLDERS.................................................23
SECTION 6.3. MATERIAL CHANGES........................................................................23
SECTION 6.4. ABSENCE OF LITIGATION...................................................................23
SECTION 6.5. CERTIFICATES OF THE COMPANY AND SHAREHOLDERS............................................23
SECTION 6.6. CORPORATE APPROVAL......................................................................23
SECTION 6.7. APPROVALS...............................................................................24
SECTION 6.8. EMPLOYMENT AGREEMENTS...................................................................24
SECTION 6.9. CONSULTING AGREEMENTS...................................................................24
SECTION 6.10. SPACE AND COST-SHARING AGREEMENT........................................................24
SECTION 6.11. INDEMNITY AGREEMENT.....................................................................24
ARTICLE 7 CONDITIONS PRECEDENT TO THE COMPANY'S AND THE SHAREHOLDERS' OBLIGATIONS....................................24
SECTION 7.1. ACCURACY OF REPRESENTATIONS.............................................................24
SECTION 7.2. PERFORMANCE OF EBANK....................................................................25
SECTION 7.3. ABSENCE OF LITIGATION...................................................................25
SECTION 7.4. CERTIFICATES OF EBANK...................................................................25
SECTION 7.5. CORPORATE APPROVAL......................................................................25
SECTION 7.6. THIRD PARTY APPROVALS...................................................................25
SECTION 7.7. REGISTRATION RIGHTS AGREEMENT...........................................................25
SECTION 7.8. CONSULTING AGREEMENT....................................................................25
SECTION 7.9. SPACE AND COST-SHARING AGREEMENT........................................................25
SECTION 7.10. DESIGNATIONS............................................................................25
ARTICLE 8 CLOSING.............................................................................................26
SECTION 8.1. TIME AND PLACE OF CLOSING...............................................................26
SECTION 8.2. DELIVERIES BY THE COMPANY AND THE SHAREHOLDER...........................................26
SECTION 8.3. DELIVERIES BY EBANK.....................................................................26
SECTION 8.4. POST CLOSING DELIVERIES AND POWER OF ATTORNEY...........................................27
ARTICLE 9 SURVIVAL; INDEMNIFICATION...........................................................................27
SECTION 9.1. SURVIVAL................................................................................27
SECTION 9.2. INDEMNIFICATION.........................................................................28
SECTION 9.3. PROCEDURE FOR THIRD-PARTY CLAIMS........................................................29
ARTICLE 10 RESTRICTIVE COVENANTS...............................................................................30
SECTION 10.1. RESTRICTIVE COVENANTS...................................................................30
ARTICLE 11 OTHER AGREEMENTS....................................................................................31
SECTION 11.1. EFFECTIVE DATE..........................................................................31
SECTION 11.2. ARBITRATION.............................................................................31
SECTION 11.3. RESCISSION OF ACQUISITION TRANSACTION UPON FAILURE TO OBTAIN REGULATORY APPROVALS.......32
SECTION 11.4. RIGHT OF FIRST REFUSAL..................................................................32
ARTICLE 12 MISCELLANEOUS.............................................................................................33
SECTION 12.1. INTEGRATION; SEVERABILITY...............................................................33
SECTION 12.2. EXPENSES................................................................................33
SECTION 12.3. NOTICES.................................................................................33
SECTION 12.4. PUBLIC ANNOUNCEMENTS....................................................................34
SECTION 12.5. REMEDIES................................................................................34
SECTION 12.6. OPPORTUNITY TO OBTAIN ASSISTANCE OF COUNSEL.............................................35
SECTION 12.7. GOVERNING LAW AND JURISDICTION..........................................................35
SECTION 12.8. ASSIGNMENT; AMENDMENTS; BINDING AGREEMENT...............................................35
SECTION 12.9. COUNTERPARTS; FACSIMILES................................................................35
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement") is dated as of December 27,
2001, by and among Xxxxx.xxx, Inc., a Georgia corporation ("Ebank"), Peachtree
Capital Corporation, a Georgia corporation (the "Company"), and Xxxxxxxx X.
Xxxxxxx and Xxxxxx Xxxxxxx, individual residents of the State of Georgia (the
"Shareholders" or each a "Shareholder").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, subject to the terms and conditions of this Agreement, the
Shareholders, the Company, and Ebank desire and deem it in their respective best
interests that Ebank purchase all the stock of the Company from the Shareholders
(the "Purchase"); and
WHEREAS, the Shareholders own all of the outstanding capital stock of
the Company and desire to sell all of their shares of the Company to Ebank; and
WHEREAS, the Board of Directors of Ebank has approved of the Purchase
and other transactions contemplated hereby by unanimous written consent; and
WHEREAS, the Board of Directors of the Company has approved this
agreement and all representations contained herein by unanimous written consent.
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the parties hereto agree as follows:
ARTICLE 1
THE PURCHASE
Section 1.1 Purchase Transaction. Subject to the terms and conditions
hereof, the parties hereto agree that Ebank shall purchase all of the Company's
stock from the Shareholders and the Company shall become a wholly-owned
subsidiary of Ebank. In the period following the purchase, the Company shall
also be known for the purposes of this Agreement as the "Surviving Corporation."
Subject to the terms and conditions hereof, the parties hereto shall take all
actions necessary in accordance with applicable law and their respective
Articles of Incorporation and Bylaws to cause the Purchase to be consummated.
Section 1.2 Effective Time and Closing of the Purchase. The
consummation of the transactions contemplated by this Agreement (the "Closing")
shall become effective on the date (the "Closing Date") and time (the "Effective
Time") as provided for in Article 8 of this Agreement.
Section 1.3 Terms and Conditions; Conversion of Shares. The effect of
the Purchase on the Articles of Incorporation, Bylaws, directors and officers of
the Surviving Corporation, and the manner and basis of acquiring the shares of
capital stock of the Company from the Shareholders for cash and Series B-1
Preferred Stock and Series B-2 Preferred Stock of Ebank (both as defined below),
shall be as set forth in this Agreement.
ARTICLE 2
PURCHASE PRICE; EXCHANGE OF SHARES
Section 2.1 Purchase Price; Payment for Shares. In exchange for all the
outstanding capital stock of the Company, $1.00 par value per share (the
"Company Common Stock"), Ebank shall (i) issue and deliver 76,792 shares of
Ebank's Series B-1 Preferred stock, no par value (the "Series B-1 Preferred
Stock") and 76,792 shares of Ebank's Series B-2 Preferred stock, no par value
(the "Series B-2 Preferred Stock") (the Series B-1 Preferred Stock and the
Series B-2 Preferred Stock, and any shares acquired by conversion thereof, are
collectively referred to as the "Purchase Shares"), and (ii) pay $400,000 in
cash at Closing. Subject to the provisions of this Article 2, at the Effective
Time, by virtue of the Purchase and without any action on the part of the
holders thereof all shares of Company Common Stock held in the treasury, if any,
immediately prior to the Effective Time shall be canceled and extinguished and
no stock or cash shall be delivered or deliverable in exchange therefor.
Section 2.2 Rights of Former Company Shareholders.
(a) At the Closing, the stock transfer books of the Company shall be
closed as to holders of Company Common Stock immediately prior to the Effective
Time, and no transfer of Company Common Stock by any such holder shall
thereafter be made or recognized. Until surrendered for exchange in accordance
with the provisions of Section 2.2(b) of this Agreement, each certificate
theretofore representing shares of Company Common Stock shall from and after the
Effective Time represent for all purposes only the right to receive the
consideration provided in Section 2.1 and 2.3 of this Agreement in exchange
therefor.
(b) At the Closing or immediately after the Effective Time, each holder
of shares of Company Common Stock issued and outstanding at the Effective Time
shall surrender the certificate or certificates representing such shares to
Ebank and shall promptly upon surrender thereof receive in exchange therefor the
consideration provided in Section 2.1 of this Agreement. Ebank shall not be
obligated to deliver the consideration to which any former holder of Company
Common Stock is entitled as a result of the Purchase until such holder
surrenders such holder's certificate or certificates representing the shares of
Company Common Stock for exchange as provided in this Section 2.2(b). The
certificate or certificates of Company Common Stock so surrendered shall be duly
endorsed as Ebank may require.
Section 2.3 Preferred Stock Purchase Price Adjustments.
(a) Purchase Price Adjustments. The Series B-1 Preferred Stock and
Series B-2 Preferred Stock designations attached hereto as Exhibit 2.3(a)-1 and
Exhibit 2.3(a)-2 provide that the respective Purchase Prices of the Purchase
Shares may be adjusted (the "Purchase Price Adjustments") following the "First
Measuring Year" and the "Second Measuring Year," both as defined in the
respective preferred stock designations (the First Measuring Year and the Second
Measuring Year are collectively referred to as the "Adjustment Years"). The
respective Purchase Price Adjustments are based upon the Company, in its role as
the Surviving Corporation, achieving certain revenue targets (the "Revenue
Targets"). The Revenue Targets will be based solely on the financial performance
of the Surviving Corporation as determined by the financial statements of
Surviving Corporation for the Adjustment Years as mutually agreed upon by the
Shareholders and Ebank. The respective financial statements shall be completed
no later than the January 31st following the end of each of the Adjustment
Years.
(b) Obligations of Ebank to Surviving Corporation Following the
Purchase. During the Adjustment Years, the parties acknowledge and agree that
Surviving Corporation shall operate financially independent from Ebank, and
Ebank is not in any way obligated to contribute capital, products, or services
to Surviving Corporation following consummation of the Purchase in order to
assist the Surviving Corporation to achieve the Revenue Targets. During the
Adjustment Years, Ebank agrees: (i) to maintain the Surviving Corporation
business operations as a separate business; and (ii) not to merge or consolidate
the Surviving Corporation with Ebank or any other Ebank subsidiary (unless the
Surviving Corporation's business operations are maintained and recorded in a
separate division or similar manner in order to maintain a consistent track of
the Revenue Targets anticipated by Section 2.3(a)). Notwithstanding the above
statements, the parties acknowledge that Ebank and Surviving Corporation may
cooperate during the Adjustment Years by contributing capital, products, or
services to one another, however, such cooperation is not obligated and is
independent of either parties' obligations under this Agreement. Ebank and
Surviving Corporation agree that it is to the benefit of both parties to work
together and to use their respective commercially reasonable best efforts to
make available to the other party their respective products and services.
(c) Treatment of Pre-Purchase Revenue and Expenses Following the
Effective Time. The parties acknowledge and agree that the Shareholders are
entitled to receive from Surviving Corporation all revenues earned by the
Company prior to the Purchase, and the Shareholders are also responsible to pay
Surviving Corporation for all expenses incurred by the Company prior to the
Purchase. After the Purchase, if necessary, Surviving Corporation shall pay to
the Shareholders all commissions and income earned, but not received by the
Company for transactions completed prior to the Purchase, less all expenses
incurred but not paid by the Company prior to the Purchase. Additionally,
Surviving Corporation shall also reimburse Shareholders for items prepaid by
Shareholders for the benefit of the Surviving Corporation prior to the Purchase.
At December 31, 2001, any remaining working capital in excess of the
$15,000 clearing deposit (which shall be retained by the Surviving Corporation
following the Purchase) in the Surviving Corporation shall be left to fund
expenses of the Surviving Corporation, and reimbursed to the Shareholders
following the Purchase. Shareholders and Ebank shall mutually agree upon the
total revenues, expenses and working capital contributions to be reconciled
between the Company and Shareholders pursuant to this Subsection (c) no later
than 45 days after completion of the Purchase.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF COMPANY
AND THE SHAREHOLDERS
The Company and the Shareholders hereby represent and warrant to Ebank
as follows:
Section 3.1 Authorization; Organization.
(a) The Company is a corporation duly organized and validly existing
and in good standing under the laws of the State of Georgia and has all
requisite corporate power and authority to own, lease or operate its properties
and assets and to carry on its business as now being conducted. The Company is
duly qualified to transact business and is in good standing in each jurisdiction
in which the nature of property owned or leased by it or the conduct of its
business requires it to be so qualified, except where the failure to do so would
not have a material adverse effect on its business, operations, properties,
assets or condition, financial or otherwise (a "Material Adverse Effect").
(b) The Company has full corporate power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to consummate
the Purchase and the other transactions provided for herein and in all other
documents and agreements executed in connection herewith and therewith
(collectively, the "Purchase Documents"). The Board of Directors of the Company
and the Shareholders have unanimously approved the execution, delivery and
performance of this Agreement and the consummation of the transactions provided
for herein.
(c) This Agreement has been duly and voluntarily executed and delivered
by the Company and the Shareholders and constitutes the legal, valid and binding
obligations of each of them, enforceable in accordance with its terms.
(d) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not conflict with or
result in a violation, breach, default, right to accelerate or increase in
obligations under the Company's Articles or Bylaws, any law or statute or any
order, judgment or decree by which the Company is bound by name or any license,
lease or other agreement to which the Company is a party or by which its assets
and business may be affected.
(e) The Company's Articles, Bylaws and stock book and, in all material
respects, its minute books are complete and correct and contain all amendments
thereto to date, a record of all corporate proceedings of the Company, and a
record of all stock issuances and transfers of the Company.
(f) The Company does not have any subsidiaries and never has had any
subsidiaries. The Company does not conduct nor ever has conducted any business
under any trade name or other fictitious name.
(g) The Company is not a party to any joint venture or other similar
agreement or arrangement that involves any sharing of profits of the Company or
its assets or is similar to or competitive with the business.
(h) The Shareholders are the sole record and beneficial owners of the
Company Common Stock, and such Company Common Stock is free and clear of all
mortgages, liens, pledges, security interests, charges, proxies, claims,
restrictions, options and encumbrances of any nature whatsoever (collectively,
"Liens"). The Shareholders have the full legal right, power and authority to
vote the shares of Common Stock held by them. The Shareholders have not
transferred or assigned any right, power or authority with respect to any shares
of Company Common Stock to any other person or entity.
Section 3.2. Capitalization; Structure.
(a) The authorized capital stock of the Company consists of 100,000
authorized shares of Company Common Stock, of which 1,000 shares are issued and
outstanding. All of the outstanding shares of Company Common Stock have been
duly and validly authorized and issued, and are all fully paid and
nonassessable. No shares of the Company's capital stock have been issued in
violation of any preemptive rights, any rights of first refusal or any similar
restrictions. There are no: (i) outstanding options (including phantom options),
warrants or other rights (including preemptive rights) of any kind relating to
the sale, issuance or voting of any shares of capital stock of the Company; (ii)
securities convertible into, exchangeable for or evidencing the right to
purchase any such shares; or (iii) contracts, commitments, agreements,
understandings or arrangements of any kind relating to the issuance, transfer or
voting of such shares, any such convertible or exchangeable securities or any
such options, warrants or rights.
(b) All transactions whereby the Company repurchased, redeemed,
canceled or reacquired shares of its capital stock and the solicitation of
shareholder consents in connection with this Agreement have been effected in
compliance with all applicable corporate and securities laws, and documentation
prepared by or on behalf of the Company in connection therewith did not include
any untrue statement of any material fact or omit to state any material fact
necessary to make the statements made therein correct and complete.
Section 3.3. Financial Statements. Attached hereto as Exhibit 3.3 is a
true and complete copy of the audited balance sheets of the Company at December
31, 2000, 1999, and 1998 and related audited statements of operations, changes
in stockholders' equity and cash flows and the unaudited balance sheet of the
Company at September 30, 2001, and the related unaudited statements of
operations, changes in stockholders' equity and cash flows for the period ended
September 30, 2001, including related footnotes (collectively, the "Financial
Statements"). The Financial Statements:
(a) have been prepared from, and are in accordance with, the books and
records of the Company;
(b) fairly present the financial position, results of operations and
cash flows of the Company as of and for the periods set forth therein; and
(c) have been prepared in accordance with generally accepted accounting
principles ("GAAP") consistently applied throughout the indicated periods
(except that, in the case of the monthly unaudited Financial Statements, there
are no footnotes).
Section 3.4. Undisclosed Liabilities.
(a) Other than as shown on Schedule 3.4(a), the Company does not have
any material liabilities or obligations of any nature, known or which reasonably
should be known (whether accrued, absolute, contingent or otherwise)
("Liabilities") that would, individually or in the aggregate have a Material
Adverse Effect on the Company.
(b) Since December 31, 2000, the Company has conducted its business
only in the normal course and has not:
(i) suffered any physical damage, destruction or casualty loss
(whether or not such loss or damage shall have been covered by
insurance) which adversely affects the properties, business or
prospects of the Company, or suffered any deterioration in the
operating condition of any physical assets of the Company, normal wear
and tear excepted;
(ii) incurred, created, assumed or guaranteed any liability or
obligation of any nature (whether absolute, accrued, contingent or
otherwise), except in the ordinary course of business;
(iii) increased, or made any change in any assumptions
underlying the method of calculating, any bad debt, contingency or
other reserves;
(iv) made any change in the method of valuing assets included
in the Financial Statements;
(v) made any change in any method of accounting or keeping its
books of account or accounting practices or systems of internal
accounting controls;
(vi) paid, discharged or satisfied any liability or obligation
(whether absolute, accrued, contingent or otherwise), other than by
payment, discharge or satisfaction in the ordinary course of business;
(vii) permitted or allowed any of its assets (real, personal
or mixed, tangible or intangible) to be subjected to any Lien;
(viii) 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;
(ix) canceled or waived any claims or rights, or sold,
transferred, distributed or otherwise disposed of any assets or
properties, except in the ordinary course of business;
(x) experienced any strike, walkout, similar labor trouble or
other similar event; or
(xi) increased the salaries or other remuneration payable or
to become payable to, or made any advance (excluding advances for
ordinary business expenses) or loan to, any officer, director, employee
or shareholder (except normal merit increases made in the ordinary
course of business and consistent with past practice), or established,
made any increase in, or any addition to, other benefits (including,
without limitation, any Employee Plans, as defined in Section 3.14
below) to which any of them may be entitled, or made any payments to
any Employee Plan, except payments in the ordinary course of business
and consistent with past practice, or entered into any agreement,
arrangement or transaction with any such person not in the ordinary
course of business, or failed to make any required payment under any
Employee Plan.
Section 3.5. Real Property. The Company does not own any real property
and, as of the Closing, it will have only an agreement and sublease for
Company's sole office location that will include the material terms as set forth
in Exhibit 6.9 (theleased space and improvements thereon constituting the
"Facilities"). The Surviving Corporation may continue to use the facilities
after the completion of the Purchase.
(a) Condition. The Facilities are in good condition and
repair, in satisfactory working order, are suitable for use in the
Company's business as presently conducted, have been maintained in
accordance with reasonable maintenance procedures, and are structurally
sound with no material defects. There are no latent defects in or to
the Facilities or any portion thereof. There are no problems or
deficiencies in any utility services to any of the Facilities
including, without limitation, electrical, gas, water, sewer and
telephone.
(b) Compliance. To the best knowledge of the Company and the Shareholders,
the present use of the Facilities is in compliance with all applicable
zoning ordinances, building codes, fire codes, or health department
ordinances pertaining thereto; the Facilities are in compliance with
all federal, state and local laws and ordinances relating to clean air,
water, waste disposal, toxic substances and other environmental
regulations; the Facilities are in compliance with all laws and
ordinances relating to occupational health and safety; and the Company
has not received any notices of any purported violations of any of the
foregoing.
Section 3.6. Litigation. There are no suits, claims, investigations or
proceedings pending or threatened against the Company, its officers or directors
in their capacities as officers or directors, the Shareholders or any other
person or entity for whom the Shareholders or the Company may be vicariously
liable at law or in equity. The Shareholders are not subject to, and the Company
is not operating under or subject to, any order, writ, injunction or decree of
any court or governmental authority in which any of them is named.
Section 3.7. Intellectual Property.
(a) Ownership. The Company does not own any patents, trademarks,
service marks, trade names or copyrights (including registrations, licenses and
applications pertaining thereto) and all other proprietary information used by
the Company in the conduct of its business (the "Intellectual Property").
Schedule 3.7(a) sets forth the trade names owned and used by the Company.
(b) Ownership and Protection of Software Licenses. The Company is not
licensed to use any software applications nor is it required to use any software
in order to operate its business in the normal course other than software
legally provided to the Company from Xxxxxxx & Associates. After Closing,
Shareholders shall cause Xxxxxxx & Associates to continue to provide Company and
Surviving Corporation with all software applications provided to Company as of
the date of the Agreement, unless otherwise agreed to by Shareholders and Ebank.
(c) Absence of Claims. No claims have been asserted by any person to
rights in the Intellectual Property of the Company, and no valid basis for any
such claim exists. The use of the Intellectual Property by the Company and does
not infringe on the rights of any person (whether arising under copyright, trade
secret, patent, unfair competition or other state or federal laws which protect
intellectual property rights). No claim has been 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.
Section 3.8. Licenses. The Company has all government licenses,
consents, permits, franchises, approvals and other governmental authorizations
("Licenses") required for its business as currently conducted. The Licenses are
set forth on Schedule 3.8. No proceeding is pending or threatened seeking the
revocation or suspension of any License.
Section 3.9. Compliance with Laws. The Company's businesses have been
operated and maintained in all material respects in compliance with all
statutes, laws, regulations, ordinances, rules, judgments, orders or decrees
applicable thereto. There is not outstanding and, to the Company's and the
Shareholders' best knowledge, there are no threatened orders, writs,
injunctions, or decrees of any court, governmental agency, or arbitration
tribunal against the Company affecting, involving, or relating to its business
or assets. The Company is not in violation of any applicable federal, state, or
local law, regulation, ordinance, zoning requirement, governmental restriction,
order, judgment, or decree affecting, involving, or relating to its business or
assets (including under ownership by Ebank) or the Company's assets, and neither
the Company nor the Shareholders have received any notices of any allegation of
any such violation. The foregoing shall be deemed to include laws and
regulations relating to the securities and brokerage laws, patent, copyright,
and trademark laws, state trade secret and unfair competition laws of the U.S.
and foreign jurisdictions, environmental laws and to all other applicable laws,
including equal opportunity, wage and hour, and other employment matters, and
antitrust and trade regulation laws.
Section 3.10. Insurance. Schedule 3.10 lists all policies of casualty,
liability, workers' compensation, life and other forms of insurance by which the
Company is currently insured or has been insured since inception of the Company
and includes for each policy in effect the period through which premiums have
been paid. All of the policies indicated as in force in Schedule 3.10 are in
full force and effect and no notice of cancellation has been received with
respect thereto and are sufficient for compliance in all material respects with
all requirements of law and all agreements to which the Company is a party.
Section 3.11. Material Contracts. Schedule 3.11 lists the following
agreements (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 is bound:
(a) all contracts which involve future obligations on the part of the
Company in an aggregate amount during any 12 month period exceeding $10,000 in
the case of purchase orders and commitments or $5,000 in the case of any other
type of contract;
(b) all joint ventures, sales agency, sales representative or
distributorship, broker, franchise, license or similar contracts;
(c) all real estate leases and other leases of material assets;
(d) all notes, bonds, mortgages, security agreements, guarantees and
other agreements and instruments for or relating to any lending by the Company
in any amount
(exclusive of advances to employees for expenses in the ordinary course of
business) or any borrowing of $5,000 or more;
(e) all powers of attorney, guarantees, suretyships or similar
agreements given by the Company; and
(f) all other written material agreements to which the Shareholders are
a party or to which any of Company Common Stock may be or become subject.
Each contract set forth in Schedule 3.11 is valid, binding and
enforceable in accordance with its terms, and neither the Company, nor the
Shareholders nor any other party to any such contract is in material breach or
material default of the express written terms of such contracts.
Section 3.12. Brokers, Finders, etc. Neither the Shareholders nor the
Company have employed any broker, finder, consultant or other intermediary in
connection with the transactions contemplated by this Agreement who might be
entitled to a fee or commission in connection with such transactions.
Section 3.13. Taxes.
(a) Filing of Tax Returns. The Company has timely filed with the
appropriate taxing authorities all returns (including, without limitation,
information returns and other material information) in respect of Taxes (as
hereinafter defined) required to be filed through the date hereof. All such
returns and other information filed are complete and accurate in all material
respects. All distributions and expenses made by the Company for salaries and
other deductible expenses, as reflected on such returns, are properly
categorized thereon.
(b) Payment of Taxes. All Taxes that are due and payable by the Company
(whether or not shown on any return) before the date hereof have been paid. In
the opinion of the Company and the Shareholders, an adequate reserve has been
established on the Financial Statements for all unpaid Taxes payable by the
Company with respect to all periods through the date of such Financial
Statements, and the Company is not, in the Shareholders' reasonable judgment,
required to reserve for any liability for Taxes in excess of the reserves so
established. No portion of the reserve established on the Financial Statements
for Taxes reflects any contingent liability or other potential liability for
Taxes that are due and payable, or that may become due and payable in the
future, as a result of an audit, amended return or otherwise.
(c) Audit History. The Company and its Shareholders warrant that:
(i) There are no deficiencies for Taxes have been claimed,
proposed or assessed by any taxing or other governmental authority
against the Company which have not been paid or otherwise finally
settled and resolved;
(ii) The Company has not waived the statute of limitations in
respect of any Tax or agreed to any extension of time with respect to
the assessment of any Tax; and
(iii) The Company is not currently under audit with respect to
Taxes by any governmental authority, and no such authority in a
jurisdiction where the Company does not file Tax returns or pay Taxes
has claimed that the Company is required to file Tax returns or
otherwise is subject to taxation.
(d) Withholding Taxes. The Company has withheld and paid all Taxes
required to have been withheld and paid in connection with amounts paid or owing
to any employee, independent contractor, creditor, shareholder or other third
party.
(e) Taxes. For purposes of this Agreement, "Taxes" shall mean all
federal, state, local, foreign and other taxes, assessments, or other
governmental charges, including, without limitation, income, estimated income,
business, occupation, franchise, property, sales, gross receipts, excise,
employment, or withholding taxes, including interest, penalties and additions in
connection therewith.
Section 3.14. Pension and Employee Benefit Plans.
(a) For purposes of this Agreement, the terms set forth below shall
have the following meanings:
(i) "Code": The Internal Revenue Code of 1986, as amended,
together with the regulations promulgated thereunder;
(ii) "Employee Plans": All plans, programs, arrangements,
practices or contracts pursuant to which the Company provides or is
obligated to provide or has within the last six years been obligated to
provide, directly or indirectly, benefits or compensation to or on
behalf of employees or former employees of the Company, whether formal
or informal, whether or not written, whether or not terminated,
including but not limited to the following:
(A) Executive Arrangements -- any bonus,
incentive compensation, stock option, deferred compensation,
commission, severance, golden parachute or other executive
compensation plan, employment contract, arrangement or
practice;
(B) ERISA plans -- any Pension Plan or
Welfare Plan, as defined in Section 3 of ERISA, including but
not limited to any multi-employer plan, defined benefit
pension plan, profit sharing plan, savings or thrift plan,
stock bonus plan, employee stock ownership plan, or any plan,
fund, program, arrangement or practice providing for medical
hospitalization, accident, sickness, disability, severance pay
or life insurance benefits; and
(C) Other Employee Fringe Benefits -- any
stock purchase, vacation, scholarship, day care, prepaid legal
services, severance pay, or fringe benefit plan, program,
arrangement, contract, or practice;
(iii) "ERISA": The Employee Retirement Income Security Act of
1974, as amended, and the rulings and regulations thereunder; and
(iv) "ERISA Affiliate": A corporation that is or was a member
of a controlled group of corporations with the Company or a trade or
business that is under common control with the Company or which
together with the Company is treated as a single employer, in each case
within the meaning of Section 414 of the Code.
(b) Schedule 3.14 lists or describes all Employee Plans maintained or
contributed to by the Company pursuant to which the Company provides benefits or
compensation to or on behalf of employees or former employees of the Company.
The Company does not have any ERISA Affiliates.
(c) Each Employee Plan (and related trust or funding vehicle, if any)
has at all times been administered and maintained in accordance with its terms
and the applicable law including, without limitation, the filing of Forms 5500
and all other applicable reports.
(d) To the extent any Employee Plan is subject to approval by any
governmental agency, such Employee Plan has received such approval and such
approval is current.
(e) The Company is not subject to, and no facts exist which could
subject the Company to, any liability whatsoever which is directly or indirectly
related to any Employee Plan, including, but not limited to, liability for
benefits payments or related claims (other than the ordinary claims by
participants or beneficiaries which have been made for benefits called for under
the terms of such Employee Plans), any liability for any Tax or related penalty
under the Code, or liability for any damages or penalties arising under Title I
or Title IV of ERISA.
(f) No Employee Plan has engaged in or been a party to any "prohibited
transaction" (as defined in ERISA or the Code), and the Company has not
incurred, and does
not reasonably expect to incur, any liability under Chapter 43 of the Code or
Section 502 of ERISA with respect to any Employee Plan.
(g) No ERISA Welfare Plan provides benefits to former employees of the
Company, other than continuation coverage required by Section 4980B of the Code
and Section 601 of ERISA.
(h) There are no pending or threatened claims, suits or other
proceedings with respect to any Employee Plan other than the ordinary claims by
participants or beneficiaries which have been made for benefits called for under
the terms of such Employee Plans and which will be paid under such Employee
Plans in the ordinary course.
(i) There is no requirement that the Surviving Corporation or Ebank
make any further contributions to any Employee Plan after the date of this
Agreement, and each Employee Plan which provides benefits to or on behalf of
employees or former employees of the Company may be terminated by the Surviving
Corporation or Ebank in its sole discretion without liability of any kind or
description whatsoever to Surviving Corporation, Ebank or any other person,
entity or governmental agency.
(j) The Company is not a party to or obligated under any agreement,
plan, contract or other arrangements that will result, separately or in the
aggregate, in the payment of any "excess parachute payment" within the meaning
of Section 28OG of the Code.
Section 3.15. Labor and Employment Matters. The Company and its
Shareholders warrant the following:
(a) the Company is not a party to any collective bargaining agreements;
(b) the Company is in compliance in all material respects with all
applicable laws respecting employment and employment practices, terms and
conditions of employment, wages and hours, occupational safety and health and is
not engaged in any unfair labor or unfair employment practices;
(c) there is no unfair labor practice, charge or complaint or any other
matter against or involving the Company pending or threatened before the
National Labor Relations Board or any court of law;
(d) there is no labor strike, dispute, slowdown or stoppage actually
pending or threatened against the Company, and the Company has not experienced
any organized work stoppage, organizational drive or other labor difficulty
since its inception;
(e) there are no charges, investigations, administrative proceedings or
formal complaints of discrimination (including discrimination based upon sex,
age, marital status, race, national origin, sexual preference, handicap or
veteran status) pending or
threatened before the Equal Employment Opportunity Commission or any federal,
state or local agency or court against the Company and no known basis for any
such claim exists; and
(f) there are no citations, investigations, administrative proceedings
or formal complaints of violations of local, state or federal occupational
safety and health laws pending threatened before the Occupational Safety and
Health Review Commission or any federal, state or local agency or court against
the Company.
(g) Schedule 3.15(g) lists all employment, consulting, loan-out,
retainer or other contracts or agreements involving any person employed by the
Company as an employee or independent contractor to which the Company is a party
or by which it is bound. The Company is not and no other party to any such
agreement or contract is in default with respect to any material term or
condition thereof (including the making of contributions and recording services
therefor), nor has any event occurred which through the passage of time or the
giving of notice, or both, would constitute a default thereunder or would cause
the acceleration of any obligation of any party thereto.
(h) Schedule 3.15(h) lists the names and current compensation levels of
all employees and consultants of the Company.
Section 3.16. Environmental Matters.
(a) The operations of the Company comply, and have complied, in all
respects with all applicable environmental laws.
(b) The Company has obtained all environmental, health and safety
permits, approvals, licenses and other authorizations necessary for the
operation of its 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 respects with all terms and conditions thereof.
(c) The Company has not received any written notice of any pending or
threatened investigation, proceeding or claim to the effect that it is or may be
liable to any person, or responsible or potentially responsible for the costs of
any remedial or removal action or other cleanup costs, as a result of
noncompliance with any applicable environmental laws or arising out of the
presence, generation, storage or disposal of hazardous waste, including
liability under the Comprehensive Environmental Response, Compensation and
Liability Act, as amended, or any state superfund law, and there is no past or
present action, activity, condition or circumstance that could be expected to
give rise to any such liability on the part of the Company to any person, or for
any such cleanup costs.
Section 3.17. Agreements Affecting Competition. The Company is not a
party to or is bound by any agreement which presently restricts or precludes the
Company or any present or future affiliate of the Company from conducting any
business anywhere in the world, or upon
the occurrence of any event, the giving of notice or the passage of time, by its
terms would have such an effect. Notwithstanding the above, the Company is a
registered broker-dealer and a registered investment advisor, and as such, the
Company's activities, including where it may conduct activities, are regulated
by the NASD, the Securities and Exchange Commission, and other laws and
regulations which govern the activities of parties conducting such regulated
activities.
Section 3.18. Transactions with Related Parties. Except as disclosed on
Schedule 3.18, in connection with customary transactions in the ordinary course
of business, no officer, director or shareholder of the Company or any relative
or affiliate thereof:
(a) owes money to the Company;
(b) has any claim against the Company;
(c) has any interest in any property or assets used by the Company in
its business;
(d) has any benefits which are contingent on the transactions
contemplated by this Agreement, other than as stated herein;
(e) has any agreement with the Company that is not terminable by the
Company without penalty or notice;
(f) has any agreement providing severance benefits or other benefits
(which are conditioned upon a change of control) after the termination of
employment of such employee regardless of the reason for such termination of
employment; or
(g) 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.
Section 3.19. Major Vendors and Customers. Schedule 3.19 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 or billed in the aggregate in excess of
$25,000 during calendar year 1999 or 2000, except for financial services clients
that the Company serviced in the Company's ordinary course of business.
Section 3.20. Absence of Certain Commercial Practices. Neither the
Company, nor any of its directors, officers, agents, affiliates or employees,
nor the Shareholders, nor any other person acting on behalf of the Company or
the Shareholders, have (a) given or agreed to give any gift or similar benefit
having a value of $100 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, (b) 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 (c) received any unlawful contributions, payments, gifts or
expenditures in connection with the business of the Company.
Section 3.21. Accounts Receivable. Pursuant to Section 2.2(c) of this
Agreement, the parties have agreed that accounts receivables related to services
performed prior to Closing shall be paid by Ebank to the Shareholders in
accordance with Section 2.2(c). For this reason, as of the Closing Date, no
accounts receivables are disclosed.
Section 3.22. Disclosure. No representation, warranty, or statement
made by the Company or the Shareholders in this Agreement or in any document or
certificate furnished or to be furnished to Ebank pursuant to this Agreement
contains or will contain any untrue statement or omits or will omit to state any
fact necessary to make the statements contained herein or therein not
misleading. All facts known or reasonably available to the Company and the
Shareholders that are material to the financial condition, operation, or
prospects of the Company's businesses and assets have been disclosed to Ebank.
Section 3.23. Securities Law Representations.
(a) Access to Information. The Company and the Shareholders acknowledge
that all documents, records, and books pertaining to Ebank have been made
available for inspection by the Company and the Shareholders. The Company and
Shareholders have had an opportunity to ask questions of and receive answers
from the officers of Ebank concerning the terms and conditions of the offering
of the Purchase Shares, and to obtain additional information from the officers
of Ebank. All such questions have been answered to the full satisfaction of the
Company and Shareholders.
(b) Statements. The Company and the Shareholders acknowledge that, from
time to time, statements about Ebank may be made, in writing or otherwise, that
may purport to contain information about Ebank, including in newspaper articles,
internet chat rooms and other publications and communications, and that such
statements have been and may be materially incorrect or misleading. The Company
and the Shareholders agree that neither Ebank nor any of its affiliates or
representatives has made any representation or warranty as to the accuracy or
completeness of any such information or statements. Furthermore, the Company and
the Shareholders have not relied, and will not rely, upon any such statements in
making any investment decision in connection with the Purchase Shares; rather,
the only representations or statements that the Company and the Shareholders
have relied upon or will rely upon are those made by Ebank in this Agreement.
(c) Experience; Investment. The Company and the Shareholders have such
knowledge and experience in financial and business matters as to enable such the
Company and Shareholders (a) to utilize the information made available to them
in connection with the offering of the Purchase Shares, (b) to evaluate the
merits and risks associated with a purchase of the Purchase Shares, and (c) to
make an informed decision with respect thereto. The Company and the
Shareholders' business and financial experience is such that Ebank could
reasonably assume that the Company and the Shareholders have the capacity to
protect their own interests in connection with the offer, sale and issuance of
the Purchase Shares. The Company and the Shareholders are financially capable of
bearing the risk of loss of any and all consideration paid for the Purchase
Shares, and acknowledge that an investment in the Purchase Shares involves a
high degree of risk, and the purchase price for the Purchase Shares has been
determined by negotiation between Ebank and the Company and the Shareholders and
may not be indicative of the future value of the securities. The Shareholders
are acquiring the Purchase Shares for their own account, not as a nominee or
agent, and not with a view to, or for sale in connection with, any distribution
thereof. The Shareholders understand that as of the consummation of the
Purchase, the Purchase Shares have not been registered under the Securities Act,
or any state securities laws, by reason of specific exemptions from the
registration provisions of the Securities Act and such laws that may depend
upon, among other things, the bona fide nature of Purchasers' investment intent
as expressed herein. The Shareholders are "accredited investors" within the
meaning of Regulation D promulgated by the Securities and Exchange Commission
under the Securities Act by reason of such Shareholders' net worth in excess of
$1,000,000. Shareholders acknowledges that Ebank and its officers, directors and
other affiliates will rely upon the representations and warranties made by
Shareholders in this Agreement in order to establish an exemption from the
registration requirements of the Securities Act and applicable state securities
laws and that Ebank shall place legends on the Purchase Shares and stop transfer
instructions on its books to reflect that the Purchase Shares have not been
registered under the Securities Act and applicable state laws.
(d) Transfer. Shareholders agree that they will not transfer any
Purchase Shares without registration under the Securities Act and applicable
state securities laws unless the transfer is exempt from registration under the
Securities Act and such laws and is made in compliance with the restrictive
legends to be placed on the Purchase Shares; and in the case of any exemption,
Shareholders may only transfer the Purchase Shares if Ebank has received an
opinion of counsel satisfactory to Ebank that such transaction does not require
registration of the Purchase Shares. Shareholders acknowledge that the following
legends will be placed on the Purchase Shares and any shares into which the
Purchase Shares may be convertible:
"The shares represented by this certificate were issued in a
transaction to which Rule 145 promulgated under the Securities Act of
1933 applies. ADDITIONALLY, THESE SHARES HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 OR ANY APPLICABLE STATE SECURITIES LAWS AND
MAY NOT BE TRANSFERRED, NOR WILL ANY ASSIGNEE OR ENDORSEE HEREOF BE
RECOGNIZED AS AN OWNER FOR ANY PURPOSE UNLESS A REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933 AND ANY STATE SECURITIES LAWS
APPLICABLE TO THE SECURITIES SHALL BE IN EFFECT OR UNLESS THE
AVAILABILITY OF AN EXEMPTION FROM REGISTRATION WITH RESPECT TO ANY
PROPOSED TRANSFER OR DISPOSITION OF THESE
SECURITIES SHALL BE ESTABLISHED IN AN OPINION OF COUNSEL
SATISFACTORY TO THE CORPORATION.
THESE SECURITIES HAVE BEEN ISSUED OR SOLD IN RELIANCE ON PARAGRAPH (13)
OF CODE SECTION 10-5-9 OF THE 'GEORGIA SECURITIES ACT OF 1973,' AND MAY
NOT BE SOLD OR TRANSFERRED EXCEPT IN A TRANSACTION WHICH IS EXEMPT
UNDER SUCH ACT OR PURSUANT TO AN EFFECTIVE REGISTRATION UNDER SUCH
ACT."
Section 3.24. Shareholders' Additional Representations. To induce Ebank
to enter into this Agreement, each Shareholder represents and warrants to Ebank
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 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 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 its material
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 or applied for (and
copies of which approvals or applications are attached hereto).
(c) The Shareholder hereby represents and warrants that he is not aware
as of the date hereof of any claim (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 any name and nature (collectively,
"Claims") that such Shareholder may have, or which such Shareholder is aware may
arise in the future against Ebank, the Surviving Corporation, or any of their
subsidiaries, officers, directors, employees, shareholders, attorneys, agents,
successors, assigns, representatives, or affiliates.
(d) The Shareholder has reviewed with his or her tax advisor the United
States federal and state tax consequences of an investment in the Purchase
Shares and the transactions contemplated by this Agreement. The Shareholder is
relying solely on such advisors, except for a
tax opinion provided to Shareholder in connection with the Purchase, and not on
any statements or representations of Ebank, the Company or the agent of either,
except for the statements, representations and covenants provided in this
Agreement, and understands that he or she (and not Ebank or any other party)
shall be responsible for his or her own tax liability that will arise as a
result of this investment or the transactions contemplated by this Agreement.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF EBANK
The Ebank hereby represents and warrants to the Company and the
Shareholders as follows:
(a) Corporate Existence and Issuance of Shares. Ebank is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Georgia. Ebank is duly qualified to transact business and is in good
standing in such jurisdiction in which the nature of property owned or leased by
it or the conduct of its business requires it to be so qualified, except where
the failure to do so would not have a Material Adverse Effect on its business,
taken as a whole. The Purchase Shares to be issued in exchange for shares of the
Company when issued will be validly authorized, issued and outstanding, fully
paid, and nonassessable and subject to no preemptive rights. Ebank will also
reserve shares of common stock sufficient to meet the underlying conversion
rights of the Purchase Shares.
(b) Corporate Power and Authorization. Ebank has the corporate power,
authority and legal right to execute, deliver and perform this Agreement. The
execution, delivery and performance of this Agreement by Ebank has been duly
authorized by all necessary corporate action. This Agreement has been duly
executed and delivered by Ebank and constitutes the legal, valid, and binding
obligation of Ebank, enforceable against it in accordance with its terms.
(c) Validity of Contemplated Transactions, etc. The execution,
delivery, and performance of this Agreement by Ebank does not and will not
violate, conflict with or result in the breach of any term, condition or
provision of, or require the consent of any other party to, (a) any existing
law, ordinance, or governmental rule or regulation to which Ebank is subject,
(b) any judgment, order, writ, injunction, decree or award of any court,
arbitrator or governmental or regulatory official, body or authority which is
applicable to Ebank, (c) the Articles of Incorporation or By-Laws of, or any
securities issued by Ebank, or (d) any mortgage, indenture, agreement, contract,
commitment, lease, plan or other instrument, document or understanding, oral or
written, to which Ebank is a party or by which it is otherwise bound. Except as
aforesaid, no authorization, approval or consent of, and no registration or
filing with, any governmental or regulatory official, body or authority is
required in connection with the execution, delivery and performance of this
Agreement by Ebank.
(d) Broker's or Finder's Fees. Other than Xxxxxxxx Xxxxxx, Ebank has
not authorized any person to act as broker, finder, or in any other similar
capacity in connection with the transactions contemplated by this Agreement.
Ebank is solely responsible for any broker or finder compensation owed to
Xxxxxxxx Xxxxxx in connection with this Agreement.
(e) Current Public Information; Financial Statements. Ebank represents
and warrants to the Shareholder that it is a "reporting issuer" and has a class
of securities registered under Section 12(g) of the Securities Exchange Act of
1934, (the "1934 Act"). Ebank has made available to the Shareholder copies of
Ebank's Form 10-KSB annual Report for the year ended December 31, 2000 and Form
10-QSB for the fiscal quarter ended September 30, 2001 (collectively, the "SEC
Reports"). Such SEC Reports, at the time filed, complied as to form in all
material respects with the requirements of the 1934 Act. None of the SEC Reports
contains any untrue statement of material fact or omits 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 audited 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 Ebank and its consolidated subsidiaries
as 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).
(f) Litigation. Except as disclosed in the SEC Reports, there is no
action, suit or proceeding before or by any court or governmental agency or
body, domestic or foreign, now pending against Ebank, or any of its properties,
which, if decided adversely to Ebank (1) could reasonably be expected to result
in any Material Adverse Effect on Ebank, or which could reasonably be expected
to materially and adversely affect the properties or assets of Ebank or (2)
could reasonably be expected to materially and adversely affect the ability of
Ebank to perform its obligations pursuant to this Agreement.
ARTICLE 5
COVENANTS AND AGREEMENTS OF THE PARTIES
Section 5.1 Shareholder Approval by Unanimous Consent. By signing this
Agreement, each Shareholder agrees that he is evidencing his irrevocable
approval in all respects to the transactions contemplated by this Agreement. The
Shareholder hereby waives his right to assert dissenter's or appraisal rights or
other rights or Claims which may hinder or delay the Purchase.
Section 5.2 Shareholder Agreement to Sign in Other Capacities Each
Shareholder agrees that by signing this Agreement he or she will sign in any
other capacity required to give effect to the terms herein, including as
principals of other entities.
Section 5.3 Affiliates. The Shareholders, each of whom is an
"affiliate" of the Company for purposes of Rule 145 under the Securities Act of
1933 (the "1933 Act") and who will receive Purchase Shares in connection with
the Purchase agree that they will not sell, pledge, transfer or otherwise
dispose of any shares of Company Common Stock, the Purchase Shares, or shares of
Ebank Common Stock received upon conversion of the Purchase Shares except in
compliance with the applicable provisions of the 1933 Act and the rules and
regulations thereunder, including Rule 145. The certificates representing the
Purchase Shares issued to "affiliates" of the Company will bear an appropriate
legend reflecting the foregoing and Ebank shall be entitled to issue stop orders
to the transfer agent for the Purchase Shares consistent with the terms of such
legends.
Section 5.4 Employee Benefit Plans. Notwithstanding anything in this
Agreement to the contrary, the Company and each Shareholder do hereby agree and
covenant that, (i) as of the Closing, the Company shall not sponsor any Benefit
Plan or Applicable Benefit Plan (defined hereinafter); (ii) immediately prior to
the Closing, each Applicable Benefit Plan shall have been terminated; and (iii)
as of the Closing, the Company shall not have any liability, or responsibility
to act or omit to act in any regard, in relation to any Benefit Plan or
Applicable Benefit Plan. It is agreed and understood that prior to Closing, the
Company will fund and then terminate any Employee Benefit Plans and will pay out
any amounts required by those plans. The Company has no Benefit Plan or
Applicable Benefit Plan other than a Simple XXX Plan that the Company will
terminate and cease funding at Closing. For purposes of this Section 5.4, the
phrase "Benefit Plan" shall include, without limitation, (i) each pension,
retirement, profit-sharing, cash or deferred, deferred compensation, stock
option, phantom stock, stock appreciation rights, employee stock ownership,
severance pay, vacation, paid time off, education-reimbursement, bonus,
incentive, and other or similar plan, program or other arrangement, (ii) each
cafeteria, Section 125, medical, vision, dental, disability, death benefit, life
insurance, health and/or accident plan, program or other arrangement, (iii) each
written or unwritten employee or other or similar program, arrangement,
agreement or understanding, whether arrived at through collective bargaining or
otherwise, and (iv) each other employee benefit plan, voluntary employees'
beneficiary association, fringe benefit plan, and other or similar plan, program
or other arrangement, agreement or understanding, including, without limitation,
each "employee benefit plan," as that term is defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended. The phrases
"Applicable Benefit Plan" and "Applicable Benefit Plans" shall include, without
limitation, (i) each and every Benefit Plan which, at any time up to the
Closing, was sponsored by, was contributed to or required to be contributed to
by, or was otherwise connected with, the Company.
ARTICLE 6
CONDITIONS PRECEDENT TO EBANK'S OBLIGATIONS
The obligations of Ebank to consummate the transactions contemplated by
this Agreement are subject to the satisfaction, at or before the Closing, of all
the conditions set forth below (with the effectiveness of all agreements listed
below being expressly conditioned upon consummation of the Purchase). Ebank may
waive any or all of these conditions in whole or in part without prior notice;
provided, however, that except to the extent, if any, that such waiver
constitutes an election of remedies under Georgia law, no such waiver of a
condition shall constitute a waiver by Ebank of any of its other rights or
remedies, at law or in equity, if the Company or the Shareholders shall be in
default of any of their representations, warranties or covenants under this
Agreement.
Section 6.1 Accuracy of Representations. The representations and
warranties of the Company and the Shareholders in this Agreement or any Schedule
hereto or in any written statement delivered by any of them at the Closing to
Ebank shall be true in all material respects as of the date hereof.
Section 6.2 Performance of the Company and Shareholders. The Company
and the Shareholders shall have performed, satisfied and complied with all
covenants, agreements and conditions required by this Agreement to be performed
or complied with by them on or before the Closing Date of the Purchase.
Section 6.3 Material Changes. During the period from September 30, 2001
to the Closing Date, there shall not have been any material adverse change in
the financial condition or the results of operations of the Company, and the
Company shall not have sustained any material loss or damage to its assets,
whether or not insured, that materially affects its ability to conduct a
material part of its business. The officers of the Company will execute and
deliver to Ebank certificates certifying the same.
Section 6.4 Absence of Litigation. No action, suit or proceeding before
any court, governmental body or authority, other than routine regulatory and tax
inspections, audits and reviews, pertaining to the transactions contemplated by
this Agreement or its consummation, shall have been instituted or threatened.
Section 6.5 Certificates of the Company and Shareholders. Ebank shall
have received certificates, dated the Closing Date, signed by the Company and
the Shareholders, certifying that the conditions specified in Sections 6.1, 6.2,
6.3 and 6.4 have been fulfilled.
Section 6.6 Corporate Approval. The execution and delivery of this
Agreement by the Company, and the performance of their covenants and obligations
hereunder, shall have been duly authorized by the Company's Boards of Directors
and the Shareholders, and Ebank shall have received copies of all resolutions or
consents pertaining to those authorizations, certified by the Secretary of the
Company.
Section 6.7 Approvals. This Agreement and the transactions contemplated
hereby shall have received all approvals, consents, authorizations and waivers
from governmental and regulatory agencies and other third parties (including
lenders 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.
Section 6.8 Employment Agreement. At or prior to Closing of the
Purchase, Ebank shall enter into separate agreements with Xxxx Xxxxxx and Xxxxxx
Xxxxxxx for employment with the Surviving Corporation, the material terms of
which are as set forth on Exhibit 6.8, and the effectiveness of which shall be
expressly contingent upon the occurrence of Closing.
Section 6.9 Consulting Agreement. At or prior to Closing of the
Purchase, Ebank shall enter an agreement with Xxxxxxx & Associates for the
retention of Xxxxxxxx Xxxxxxx as an independent consultant with the Surviving
Corporation, the material terms of which are as set forth on Exhibit 6.9, and
the effectiveness of which shall be expressly contingent upon the occurrence of
Closing.
Section 6.10 Space and Cost-Sharing Agreement. Ebank and Xxxxxxx
Xxxxxxx and Associates shall enter into an agreement providing for the use of
office space, the provision of financial services, and the sharing of certain
office assets and expenses containing the material terms as set forth on Exhibit
6.10.
Section 6.11 Indemnity Agreement. Ebank and Xxxxxxxx Xxxxxxx shall have
entered into an indemnity agreement in form attached hereto as Exhibit 6.11.
ARTICLE 7
CONDITIONS PRECEDENT TO COMPANY'S AND
THE SHAREHOLDERS' OBLIGATIONS
The obligations of the Company and the Shareholders to consummate the
transactions contemplated by this Agreement are subject to the satisfaction, at
or before the Closing, of all the conditions set forth below. The Company and
the Shareholders may waive any or all of these conditions in whole or in part
without prior notice; provided, however, that no such waiver of a condition
shall constitute a waiver by the Company or the Shareholders of any of their
other rights or remedies, at law or at equity, if the Surviving Corporation or
Ebank shall be in default of any of their representations, warranties or
covenants under this Agreement.
Section 7.1 Accuracy of Representations. The representations and
warranties by Ebank in this Agreement or in any written statement delivered to
the Company and the Shareholders under this Agreement shall be true in all
material respects as of the date hereof and on and as of the Closing Date as
though made at that time.
Section 7.2 Performance of Ebank. Ebank shall have performed, satisfied
and complied with all covenants, agreements and conditions required by this
Agreement to be performed or complied with by it on or before the Closing Date.
Section 7.3 Absence of Litigation. No action, suit or proceeding before
any court, governmental body or authority, other than routine regulatory and tax
inspections, audits and reviews, pertaining to the transactions contemplated by
this Agreement or its consummation, shall have been instituted or threatened.
Section 7.4 Certificates of Ebank. The Company shall have received a
certificate, dated the Closing Date, signed by Ebank's president or vice
president and secretary or assistant secretary, certifying that the conditions
specified in Sections 7.1, 7.2 and 7.3 have been fulfilled.
Section 7.5 Corporate Approval. The execution and delivery of this
Agreement by Ebank and the performance of its covenants and obligations
hereunder, shall have been duly authorized by the Board of Directors of Ebank.
The Shareholders and the Company shall have received copies of all resolutions
pertaining to these authorizations, certified by Ebank's corporate secretary.
Section 7.6 Third Party Approvals. This Agreement and the transactions
contemplated hereby shall have received all approvals, consents, authorizations
and waivers from governmental and regulatory agencies required to consummate the
transactions, which, either individually or in the aggregate, if not obtained
would have a Material Adverse Effect on the financial condition, results of
operation or business of the Company.
Section 7.7 Registration Rights Agreement. The Shareholders shall have
received a Registration Rights Agreements, substantially in the form attached
hereto as Exhibit 7.8 executed by Ebank.
Section 7.8 Consulting Agreement. At or prior to Closing of the
Purchase, Ebank shall enter an agreement with Xxxxxxx & Associates for the
retention of Xxxxxxxx Xxxxxxx as an independent consultant with the Surviving
Corporation, the material terms of which are as set forth on Exhibit 6.9, and
the effectiveness of which shall be expressly contingent upon the occurrence of
Closing.
Section 7.9 Space and Cost-Sharing Agreement. Ebank and Xxxxxxx Xxxxxxx
and Associates shall enter into an agreement providing for the use of office
space, the provision of financial services, and the sharing of certain office
assets and expenses containing the material terms as set forth on Exhibit 6.10.
Section 7.10 Designations. Ebank shall have filed with the Georgia
Secretary of State the necessary Amendment to its Articles of Incorporation
setting forth the Designations of Preferences, Limitations, and Relative Rights
of Series B-1 and Series B-2 Preferred Stock of Ebank as set for in Exhibits
2.3(a)-1 and 2.3(a)-2.
ARTICLE 8
CLOSING
Section 8.1 Time and Place of Closing. The Closing of the transactions
contemplated hereunder shall take place as soon as practicable on execution and
delivery of this Agreement on such date as the parties shall agree, but in no
event later than December 31, 2001, and effective as of the Effective Time when
the Closing is completed. The Closing shall take place at the offices of Xxxxxx
Xxxxxxx Xxxxx & Xxxxxxxxxxx, L.L.P., 000 Xxxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx,
Xxxxxxx 00000 at 10:00 a.m., Atlanta Time, on the Closing Date.
Section 8.2. Deliveries by the Company and the Shareholder. At the
Closing, the Company and the Shareholder shall deliver to Ebank:
(a) stock certificates evidencing all of the shares of Company Common
Stock, canceled or duly endorsed in blank or with stock powers endorsed in
blank;
(b) Articles of Incorporation of the Company, certified by the
Secretary of State of the State of Georgia, and a true and correct copy of the
Bylaws of the Company, certified as of the Closing Date by the Secretary of the
Company;
(c) good standing certificates relating to the Company from the State
of Georgia and each other jurisdiction in which the Company is qualified to
conduct business;
(d) the corporate seal and all stock ledgers and minute books of the
Company in existence as of the Closing, accompanied by a certificate of the
secretary of the Company certifying that the stock ledgers and minutes books
are, to the best of her information and belief, true, correct and complete as of
the Closing Date;
(e) the Purchase Documents duly executed by the Company and the
Shareholders, as applicable;
(f) a Secretary's Certificate attesting to the incumbency of the
officers of the Company executing this Agreement and the other certificates and
agreements delivered by the Company at the Closing; and
(g) the documents and instruments referred to in Articles 6 and 7
hereof.
Section 8.3 Deliveries by Ebank. At the Closing, Ebank shall deliver to
the Company and the Shareholders:
(a) a Secretary's Certificate attesting to the incumbency of the
officers of Ebank executing this Agreement and the other certificates and
agreements delivered by Ebank at the Closing;
(b) resolutions of the Board of Directors of Ebank authorizing the
execution and delivery of this Agreement and the performance of the transactions
contemplated hereby, certified by the secretary of Ebank;
(c) the Purchase Documents duly executed by Ebank, as applicable;
(d) the Purchase Shares and the $400,000 cash proceeds; and
(e) the documents and instruments referred to in Articles 6 and 7
hereof.
Section 8.4. Post Closing Deliveries and Power of Attorney. The
Shareholders, Ebank, and the Company (in its role as the Surviving Corporation)
agree that, from time to time after the Closing, each of them will execute and
deliver such further instruments of conveyance and transfer and take such other
action as may be necessary to carry out the purposes and intent of this
Agreement. Each Shareholder absolutely and irrevocably appoints Xxxxx X. Box,
the President of Ebank, and his successors holding the same officer position
with Ebank, as his or her true and lawful agent and attorney-in-fact, with full
power of substitution, in the name of the Shareholder, to execute and do all
such assurances, acts and things which the Shareholder has covenanted and agreed
to do under this Agreement but which the Shareholder has failed to execute or do
within three days of the Surviving Corporation's or Ebank's request therefor,
including but not limited to executing, on behalf of the Shareholder, such
transfer or conveyance documents and other agreements that the Surviving
Corporation or Ebank may deem proper in and for the exercise of any such powers,
authorities or discretion. This Power of Attorney grants to such officer of
Ebank, as agent for the Shareholders, all powers granted to agents and
attorneys-in-fact generally under applicable law. Each Shareholder hereby
ratifies and confirms and agrees to ratify and confirm whatever lawful acts such
officers shall do in the exercise of the power of attorney granted hereby, which
power of attorney shall be deemed to be coupled with an interest, is irrevocable
and shall survive the disability, incapacity or incompetency of the Shareholder.
ARTICLE 9
SURVIVAL; INDEMNIFICATION
Section 9.1 Survival. The parties' respective representations and
warranties contained in this Agreement will survive execution and delivery of
this Agreement and Closing and shall remain in full force and effect until the
running of the applicable statute of limitations; provided, however, that the
representations and warranties set forth in Section 3.13 shall survive until
expiration of any applicable statute of limitations (including any extensions
thereof) which will preclude assertion of Tax claims against the Company for
matters existing on or prior to the date of this Agreement. Any claim made or
notice of a claim given as to any breach or alleged breach of a representation
or warranty shall extend the applicable survival period set forth above until
such claim has been resolved and satisfied by agreement of the
parties or by the entry of a final, non-appealable judgment of a court having
jurisdiction over such claim.
Section 9.2 Indemnification.
(a) Indemnification by Shareholders. Subject to the terms of this
Article 9, the Shareholders hereby covenant and agree to indemnify, defend,
save, and hold harmless the Surviving Corporation and Ebank and their respective
officers, directors, employees, agents, affiliates or any of their respective
successors, predecessors, assigns or personal representatives (collectively, the
"Ebank Indemnified Parties"), from and against any demands, claims, actions,
losses, damages, deficiencies, liabilities, costs and expenses (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 the
Ebank Indemnified Parties which arise out of or result from:
(i) any misrepresentation in or breach of any of the
representations, warranties or covenants made by the Company or the
Shareholders in this Agreement;
(ii) any misrepresentation in a document, certificate or
affidavit delivered by or on behalf of the Company or the Shareholders
in connection with this Agreement;
(iii) the continued existence after the execution of this
Agreement of any Lien in violation of this Agreement;
(iv) any guaranty, Claim against or other material liability
of the Company not otherwise disclosed hereunder or in any Schedule
hereto, including but not limited to, any claims relating to any unpaid
Taxes; or
(v) any claim alleging misconduct of, by or under the control
of the Company or the Shareholders which is criminal or of a grossly
negligent character that is attributable to events occurring prior to
the execution of this Agreement.
(b) Indemnification by Ebank. Subject to the terms of this Article 9,
Ebank hereby covenants and agrees to indemnify, defend, save, and hold harmless
the Shareholders and their representatives, trustees and permitted assigns from
and against any Indemnifiable Damages suffered by them which arise out of or
result from:
(i) any misrepresentation in or breach of any of the
representations, warranties or covenants made by Ebank in this
Agreement;
(ii) any misrepresentation in a document, certificate or
affidavit delivered by or on behalf of Ebank in connection with this
Agreement; or
(iii) any claim alleging misconduct of, by or under the
control of the Ebank which is criminal or of a grossly negligent
character that is attributable to events occurring prior to the
execution of this Agreement.
(c) Limitations on Amount. None of Ebank, the Surviving Corporation, or
the Shareholders will have liability (for indemnification or otherwise) with
respect to the matters described in clause 9.2(a) or 9.2(b) or for any other
matter unless and until the total of all damages with respect to such matters
exceeds $10,000. However, this provision in Section 9.3(c) will not apply to any
breach of any of the representations and warranties of the Company, the
Shareholders, or Ebank where the party had knowledge at any time prior to the
date on which such representation or warranty is made that the representation or
warranty was not accurate. Further, the provisions of this Section 9.3(c) will
not apply to an intentional breach by any party of any covenant or obligation.
Section 9.3 Procedure for Third-Party Claims.
(a) Promptly after obtaining knowledge of any claim or demand which has
given rise to, or could reasonably give rise to, a claim for indemnification
hereunder, the party seeking indemnification shall give written notice of such
claim ("Notice of Claim") to the other party within 60 days, but failure to do
so will not prejudice any right of recovery to the extent that damage did not
arise as a result of such failure to provide timely notice. The Notice of Claim
shall set forth a brief description of the facts giving rise to such claim and
the amount (or a reasonable estimate) of the liability, loss, damage or expense
suffered, or which may be suffered, by the party seeking indemnification, and
shall be accompanied by all documentation in the case of a third-party claim
against the indemnified party.
(b) In the case of a third party claim, upon receiving the Notice of
Claim, the indemnifying party shall resist, settle or otherwise dispose of such
claim in such manner as it shall deem appropriate, including the employment of
counsel, and shall be responsible for the payment of all settlements, judgments,
costs and expenses, including the reasonable fees and expenses of any counsel
retained. The indemnified party shall have the right to employ separate counsel
in any such action and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the indemnified party's expense unless:
(i) the employment has been specifically authorized by the
indemnifying party in writing;
(ii) the indemnifying party has improperly failed to assume
the defense and employ counsel; or
(iii) the named parties to any action (including any impleaded
parties) include the Surviving Corporation, Ebank and/or the
Shareholders, and the indemnified party has been advised by such
counsel that representation of the Surviving Corporation, Ebank and/or
the Shareholders by the same counsel would be
inappropriate under applicable standards of professional conduct due
to actual or potential differing interests between them (in which
case, if the indemnified party notifies the indemnifying party in
writing that the indemnified party elects to employ separate counsel
at the expense of the indemnifying party, the indemnifying party shall
have neither the right nor the obligation to assume the defense of
such action on behalf of the indemnified party).
(c) The party seeking indemnification shall comply with the foregoing
procedure for each claim arising hereunder, whether or not the amount of such
claims exceeds any minimum amount. All Notices of Claim for general
contingencies must be delivered within the time frame permitted by Section 9.2.
The indemnified party shall cooperate with the indemnifying party in defending
any such claim and provide any books, records, information or testimony
requested, which is in the hands of or under the control of the indemnified
party or obtainable by the indemnified party without unreasonable expense.
ARTICLE 10
RESTRICTIVE COVENANTS
Section 10.1 Restrictive Covenants. The covenants in this Section are
necessary to induce Ebank to purchase the Company Common Stock from the
Shareholders because of the personal nature of the relationship that exists
between the Shareholders and the customers and employees of the Company.
(a) Covenant not to Compete. The Shareholders covenant and agree that
for a period of four years after the Closing Date, the Shareholders will not
provide Services that are competitive with or substantially similar to those
provided by the Company within a 40 mile radius of the Company's main office
located at 0000 Xxxxxxxxx Xx., XX, Xxxxxxx, XX 00000. For purposes of this
Agreement, "Services" shall mean the management of financial assets, the
assistance in the execution of securities and insurance transactions, the
provision of insurance and insurance planning, and the management of an entity
that provides any of these enumerated services. Notwithstanding the prior
definition of "Services," Services shall not mean accounting and tax planning
services of the type that Xxxxxxx & Associates provides to its customers on the
date of this Agreement.
(b) Covenant not to Solicit Customers. The Shareholders recognize and
acknowledge that the Company's customer base was one of the primary assets
motivating Ebank to purchase the Company from the Shareholders. The Shareholders
further acknowledge that information regarding these customers and the specific
needs of such customers is essential to the success of the Surviving
Corporation's business and its continued goodwill and that its customer list is
a property interest of the Surviving Corporation, having been developed by it at
great effort and expense. The Shareholders covenant and agree that for a period
of five years after the Closing Date, the Shareholders shall not, directly or
indirectly, alone or in association with or on behalf of any other person or
entity, solicit for any service or business offering Services competitive with
the Surviving Corporation any person or entity (a)
who was a customer of the Company within 60 days prior to the Closing of this
Agreement or (b) who becomes a customer of the Surviving Corporation during
Xxxxxxxx Xxxxxxx' continued service period to the Surviving Corporation;
provided that this restriction shall only apply to customers and clients with
whom Xxxxxxxx Xxxxxxx had material contact within 12 months prior to her last
date of employment.
(c) Covenant not to Solicit Employees. The Shareholders covenant and
agree that for a period of five years after the Closing Date, the Shareholders
shall not, directly or indirectly, alone or in association with or on behalf of
any other person or entity solicit or attempt to solicit or induce any person or
persons employed by the Company, including persons hired subsequent to the date
of this Agreement, to leave such employment for employment with another
business, or to breach his or her employment agreement with the Company;
provided that this restriction shall only apply to employees with whom Xxxxxxxx
Xxxxxxx had material contact within 12 months prior to her last date of service
to the Surviving Corporation.
(d) Change in Control of the Surviving Corporation. For a period of two
years following the Closing, if at any time more than 50% of the capital voting
stock of Peachtree Capital is transferred to a person or entity other than Ebank
or a subsidiary or affiliate of Ebank (a "Change in Control Event"), then
following such Change in Control Event, if (i) the Change in Control Event
occurs prior to the end of the First Measuring Year or the Second Measuring Year
(individually a "Measuring Year"), then the Revenue Targets (as set forth in the
Purchase Share designations) for the Measuring Year(s) during which, or after,
the Change in Control Event occurs shall be treated as if they were fully
satisfied, and (ii) if Ebank elects not to pay Xxxxxxxx Xxxxxxx an amount equal
to $125,000 in six equal monthly installments commencing within 30 days of the
Change in Control event, then the restrictive covenants contained in this
Article 10 shall terminate and be of no further force and effect.
ARTICLE 11
OTHER AGREEMENTS
Section 11.1 Effective Date. Notwithstanding the actual date of
execution and delivery of this Agreement, the parties agree that, for all
purposes (including legal, tax and accounting), this Agreement shall be deemed
dated and effective as of December 27, 2001.
Section 11.2 Arbitration. The parties hereto shall, in good-faith,
attempt to settle any dispute, controversy, or claim arising out of or relating
to this Agreement or any other related Purchase Documents, agreements,
certificates, or other writing, or the breach, termination, construction,
validity, or enforceability hereof or thereof, for a period of 60 days after
notification to all parties of the dispute. If there is no resolution within
those 60 days, the dispute shall be settled by binding arbitration held in
Atlanta, Georgia in accordance with the rules of the American Arbitration
Association in force at the time. 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 the Surviving Corporation and/or Ebank 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 intellectual property rights or
documents while such proceeding is pending or in support of any award made
pursuant to such arbitration.
/s/ COH /s/ SH
------------------------- -----------------------
initial (Xxxxxxxx Xxxxxxx) initial (Xxxxxx Xxxxxxx)
Section 11.3 Rescission of Acquisition Transaction Upon Failure to
Obtain Regulatory Approvals. In order to continue its operation as a
broker-dealer, the Company must receive regulatory approval (the "Required
Approvals") for the change in control of its ownership as contemplated under
this Agreement from both the Securities and Exchange Commission and the National
Association of Securities Dealers. If the Company has not received the Required
Approvals by the 75th day following Closing, then either Ebank or the
Shareholders shall have the right to rescind the transactions contemplated by
this Agreement (the "Rescission Option"). The party exercising the Rescission
Option shall deliver written notice of its election to rescind to all other
parties to this Agreement, and within 10 business days after delivery of the
written notice, the parties shall close the rescission transactions (the
"Rescission Closing"). At the Rescission Closing, (i) Ebank shall transfer all
Company Common Stock to the Shareholders, (ii) the Shareholders shall pay
$400,000 in immediately available funds and transfer all Purchase Shares to
Ebank, and (iii) all other agreements entered into between the parties in
connection with this Agreement representing continuing financial obligations or
liabilities shall be terminated. Notwithstanding this provision, the parties
hereto shall use commercially reasonable efforts, and will at all times act in
good-faith, to obtain the Required Approvals.
Section 11.4 Right of First Refusal. For a period of two years
following the Closing, if Ebank proposes to sell or otherwise transfer all of
the Company Common Stock to an entity that is not affiliated with Ebank, then
the Shareholders shall first be given the right to purchase all the Company
Common Stock that Ebank proposes to transfer (the "First Refusal Right"). If
Ebank proposes to transfer the Company Common Stock, Ebank shall give written
notice of its intention to the Shareholders. The Shareholders shall have 10 days
from the date of receipt (the "Exercise Period") of any such notice to agree to
purchase all such Company Common Stock. If the Shareholders fail to exercise the
First Right of Refusal within the Exercise Period to purchase all of the Company
Common Stock, then Ebank shall have the right thereafter to freely sell or
transfer the Company Common Stock and the First Right of Refusal shall
terminate. If the Shareholders exercise their First Right of Refusal during the
Exercise Period to purchase all of the Company Common Stock, then within 10 days
thereafter, the parties shall close the purchase transaction (the "Repurchase
Closing"). At the Repurchase Closing, (i) Ebank shall transfer all Company
Common Stock to the Shareholders, (ii) the Shareholders shall pay $462,500 in
immediately available funds, (iii) the Shareholders shall transfer all Purchase
Shares to Ebank, including any shares of Ebank common stock into which the
Series B-1 Shares have been converted, (iv) if the Shareholders have sold shares
of common stock that they received from the conversion of their Series B-1
Shares and the
remaining shares of common stock owned by the Shareholders on the date prior to
receipt of written notice from Ebank are valued (as of the day prior to the
Repurchase Closing) below $225,000, then the Shareholders shall pay Ebank an
amount in cash to cover the difference between $225,000 and the value of the
Shareholder's remaining shares of common stock, and (v) all other agreements
entered into between the parties in connection with this Agreement representing
continuing financial obligations or liabilities shall be terminated.
ARTICLE 12
MISCELLANEOUS
Section 12.1 Integration; Severability. Except for the continuing
contract obligations between the parties set forth in the agreements described
in Sections 6.8, 6.9, 6.10, 6.11, and 7.8 to be executed at Closing, this
Agreement represents the entire understanding of the Company, Ebank and the
Shareholders with respect to the subject matter hereof and there are no other
written or oral agreements or understandings between the parties with respect
thereto. If for any reason any term, provision or portion thereof of this
Agreement is held to be unenforceable, invalid or illegal, such provision or
portion thereof shall be deemed modified to the minimum extent necessary to make
such provision consistent with the applicable law and the remaining portions and
provisions of this Agreement shall continue in full force and effect thereafter.
Section 12.2 Expenses. All legal, accounting and other costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such costs and
expenses.
Section 12.3 Notices. All notices hereunder shall be sufficiently given
for all purposes hereunder if in writing and delivered personally, sent by
documented overnight delivery service, or to the extent receipt is confirmed,
facsimile, or other electronic transmission service to the appropriate address
or number as follows:
To the Shareholders:
Xxxxxxxx X. Xxxxxxx
One Buckhead Plaza
Suite 1825
0000 Xxxxxxxxx Xx., XX
Xxxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
Xxxxxx Xxxxxxx
One Buckhead Plaza
Suite 1825
0000 Xxxxxxxxx Xx., XX
Xxxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
To the Company:
Peachtree Capital, Inc.
Xxxxxxxx X. Xxxxxxx, President
One Buckhead Plaza
Suite 1825
0000 Xxxxxxxxx Xx., XX
Xxxxxxx, Xxxxxxx 00000
To Ebank:
xxxxx.xxx, Inc.
0000 Xxxxx Xxxxx Xx.
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxx X. Box, President and Chief Operating Officer
Facsimile: (000) 000-0000
With a copy to:
Xxxx X. Xxxxxxx, Esq.
Xxxxxx Xxxxxxx Xxxxx & Xxxxxxxxxxx, L.L.P.
First Union Plaza - Suite 1400
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
Section 12.4 Public Announcements. The Company and the Shareholders
shall not make any public announcement or other public disclosure regarding this
Agreement or its terms without the consent of Ebank except to the extent that
such disclosure is required by applicable law. Notwithstanding the foregoing,
the parties may communicate with their respective employees, customers,
suppliers, creditors, shareholders and relevant governmental agencies as may be
necessary and appropriate in connection with the implementation and consummation
of the terms of this Agreement.
Section 12.5 Remedies. Each of the parties acknowledges that money
damages would not be a sufficient remedy for any breach of this Agreement and
that irreparable harm would result if this Agreement were not specifically
enforced. Therefore, the rights and obligations of the parties under this
Agreement shall be enforceable by a decree of specific performance issued by any
court of competent jurisdiction, and appropriate injunctive relief may be
applied for and granted in connection therewith. A party's right to specific
performance shall be in addition to all other legal or equitable remedies
available to such party.
Section 12.6 Opportunity to Obtain Assistance of Counsel. Each party
hereto acknowledges that they have had the opportunity to obtain the assistance
of counsel in negotiating and preparing the terms of this Agreement; therefore,
this Agreement shall be construed without regard to any presumption or other
rule requiring construction against the party causing the Agreement to be
drafted.
Section 12.7 Governing Law and Jurisdiction. This Agreement shall be
interpreted and enforced construed in accordance with the laws of the State of
Georgia (excluding conflict of laws principles). The parties consent to the
exclusive jurisdiction and venue of the courts of any county in the State of
Georgia and the United States District Court for any District of Georgia in any
action or judicial proceeding brought to enforce, construe or interpret this
Agreement or any other documents or agreements contemplated hereby. The parties
agree that any forum other than the State of Georgia is an inconvenient forum
and that a suit (or non-compulsory counterclaim) brought by any party against
the Surviving Corporation or Ebank or any of their affiliates (including the
Ebank Indemnified Parties) in a court of any state other than the State of
Georgia should be forthwith dismissed or transferred to a court located in the
State of Georgia.
Section 12.8 Assignment; Amendments; Binding Agreement. The
Shareholders may not assign any of their rights or responsibilities hereunder
without the prior written consent of the Surviving Corporation or Ebank; any
attempted assignment without such prior written consent of the Surviving
Corporation or Ebank shall be null and void. Neither Ebank nor the Surviving
Corporation may assign any of its rights or responsibilities hereunder, except
to Subsidiaries or other affiliates of Ebank, without the prior written consent
of the Shareholders; any attempted assignment without such prior written consent
of the Shareholders shall be null and void. No amendment or modification of this
Agreement shall be binding unless the same shall be in writing and executed by
the parties hereto. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their successors, representatives, receivers,
trustees and permitted assigns.
Section 12.9 Counterparts; Facsimiles. This Agreement may be executed
in two or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument. To the maximum
extent permitted by law or by any applicable governmental authority, any
document may be signed and transmitted by facsimile with the same validity as if
it were an ink-signed document.
[Signatures Appear on Next Page]
IN WITNESS WHEREOF, this Stock Purchase Agreement has been executed by
each of the parties as of the date first above written.
Xxxxx.xxx, Inc.
By: /s/ Xxxxx X. Box
Name: Xxxxx X. Box
Title: President and CEO
Peachtree Capital, Inc.
By: /s/ Xxxxxxxx X. Xxxxxxx
Name: Xxxxxxxx X. Xxxxxxx
Title: President
Shareholders:
Xxxxxxxx X. Xxxxxxx
Xxxxxx Xxxxxxx
