Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
AMONG
PRIVATE BUSINESS, INC.,
CSL ACQUISITION CORPORATION,
CAPTIVA SOLUTIONS, LLC
AND
THE CAPTIVA SIGNATORIES
OCTOBER 20, 2005
TABLE OF CONTENTS
ARTICLE I THE MERGER..................................................................................1
1.1 The Merger..............................................................................1
1.2 Effective Time..........................................................................2
1.3 Effects of the Merger...................................................................2
1.4 Charter and Bylaws......................................................................2
ARTICLE II EFFECT OF THE MERGER ON THE CAPITAL STOCK AND UNITS OF THE CONSTITUENT COMPANIES...........3
2.1 Effect on Capital Securities............................................................3
2.2 Exchange of Units.......................................................................4
2.3 Captiva Options.........................................................................5
2.4 Merger Consideration Adjustments........................................................5
ARTICLE III REPRESENTATIONS AND WARRANTIES............................................................7
3.1 Representations and Warranties of Captiva and the Captiva Signatories...................7
3.2 Representations and Warranties of the Captiva Members..................................22
3.3 Representations and Warranties of PBiz.................................................23
ARTICLE IV CONDUCT OF THE PARTIES....................................................................27
4.1 Conduct of Captiva.....................................................................27
4.2 Conduct of PBiz........................................................................29
ARTICLE V ADDITIONAL AGREEMENTS......................................................................30
5.1 Proxy Statement........................................................................30
5.2 Shareholder Approval...................................................................31
5.3 Access to Information; Confidentiality Covenant........................................31
5.4 Commercially Reasonable Efforts; Notification..........................................32
5.5 Fees and Expenses......................................................................33
5.6 Public Announcements...................................................................33
5.7 Agreement to Defend....................................................................33
5.8 Amendment of Disclosure Schedules......................................................33
5.9 Other Actions..........................................................................33
5.10 2005 Equity Incentive Plan.............................................................34
5.11 Non-Solicitation of PBiz Employees.....................................................34
5.12 Financing Cooperation..................................................................34
5.13 Information Supplied...................................................................35
ARTICLE VI CONDITIONS PRECEDENT......................................................................35
6.1 Conditions to Each Party's Obligation to Effect the Merger.............................35
6.2 Conditions of PBiz.....................................................................36
6.3 Conditions of Captiva..................................................................37
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER........................................................38
7.1 Termination............................................................................38
7.2 Effect of Termination..................................................................38
7.3 Amendment..............................................................................38
7.4 Extension; Waiver......................................................................39
7.5 Procedure for Termination, Amendment, Extension or Waiver..............................39
ARTICLE VIII INDEMNIFICATION.........................................................................39
8.1 Survival...............................................................................39
8.2 Indemnification and Payment of Damages by Captiva and the Captiva Members..............39
8.3 Indemnification and Payment of Damages by PBiz.........................................40
8.4 Procedure for Making Indemnification Claims............................................40
8.5 Time Limitations.......................................................................41
8.6 Limitations on Amount - Captiva Members................................................41
8.7 Limitations on Amount - PBiz...........................................................42
8.8 Procedure for Indemnification - Third Party Claims.....................................43
8.9 Procedure for Indemnification - Other Claims...........................................44
ARTICLE IX Noncompete AND OTHER AGREEMENTS...........................................................44
9.1 Noncompete.............................................................................44
9.2 Nonsolicitation........................................................................44
ARTICLE X POST-CLOSING TAX MATTERS...................................................................45
10.1 Post-Closing Tax Matters...............................................................45
ARTICLE XI GENERAL PROVISIONS........................................................................47
11.1 Notices................................................................................47
11.2 Additional Definitions.................................................................47
11.3 Interpretation.........................................................................50
11.4 Counterparts...........................................................................50
11.5 Entire Agreement; No Third-Party Beneficiaries.........................................50
11.6 Governing Law..........................................................................50
11.7 Assignment.............................................................................50
11.8 Enforcement of the Agreement...........................................................50
11.9 Severability...........................................................................50
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (the "AGREEMENT"), dated October 20,
2005 (the "EXECUTION DATE"), is by and among PRIVATE BUSINESS, INC., a Tennessee
corporation ("PBIZ"), CSL ACQUISITION CORPoration ("PBIZ SUB"), a Tennessee
corporation and a wholly owned subsidiary of PBiz, CAPTIVA SOLUTIONS, LLC, a
Georgia limited liability company (together with its Subsidiaries, "CAPTIVA"),
and the members of Captiva set forth on the signature pages hereto (the "CAPTIVA
SIGNATORIES" and, together with the other members of Captiva, the "CAPTIVA
MEMBERS"). PBiz and Captiva shall be referred to collectively herein as the
"CONSTITUENT COMPANIES."
WHEREAS, the Captiva Signatories are the beneficial owners of the majority
of membership interests of Captiva and the Captiva Members own all of the
membership interests of Captiva;
WHEREAS, Captiva is engaged in the financial services business (the
"BUSINESS");
WHEREAS, the board of directors of PBiz, the board of managers of Captiva,
and the Captiva Signatories have determined that a business combination between
PBiz Sub and Captiva is advisable and in the best interests of their respective
companies and equity holders and presents an opportunity for their respective
companies to achieve long-term strategic and financial benefits;
WHEREAS, the controlling shareholder of PBiz has entered into a voting
agreement with Captiva to vote in favor of the Merger as of the date hereof;
WHEREAS, the Captiva Members and the board of directors of PBiz Sub have
approved the merger of Captiva with and into PBiz Sub (the "MERGER"), upon the
terms and subject to the conditions of this Agreement, whereby the issued and
outstanding membership interests of Captiva (the "CAPTIVA UNITS"), will be
converted into the right to receive such share of the Merger Consideration (as
defined below) as provided in this Agreement.
WHEREAS, PBiz, PBiz Sub, Captiva, and the Captiva Signatories desire to
make certain representations, warranties and agreements in connection with the
Merger and also to prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the premises and the representations,
warranties and agreements herein contained, the parties agree as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. Upon the terms and subject to the conditions hereof and
in accordance with the Tennessee Business Corporation Act (the "TBCA") and the
Georgia Limited Liability Company Act (the "GLLCA"), Captiva shall be merged
with and into PBiz Sub at the
Effective Time. Following the Merger, the separate corporate existence of
Captiva shall cease and PBiz Sub shall continue as the surviving corporation
(the "SURVIVING CORPORATION") and shall succeed to and assume all the rights and
obligations of Captiva in accordance with the TBCA and the GLLCA.
1.2 EFFECTIVE TIME. As soon as practicable following the satisfaction or
waiver of the conditions set forth in Article VI, the Surviving Corporation
shall file the articles of merger required by the TBCA and the GLLCA (the
"ARTICLES OF MERGER") with respect to the Merger and other appropriate documents
executed in accordance with the relevant provisions of the TBCA and the GLLCA.
The Merger shall become effective at such time as the Articles of Merger are
duly filed with the Tennessee and Georgia Secretaries of State, or at such other
time as Captiva and PBiz shall agree should be specified in the Articles of
Merger (such time being the "EFFECTIVE TIME"). The closing of the Merger (the
"CLOSING") shall take place at the offices of PBiz's counsel within two (2)
business days following the date of the meeting of PBiz's shareholders to
approve the Merger (the "PBIZ SHAREHOLDERS MEETING"), or, if any of the
conditions set forth in Article VI have not been satisfied, then as soon as
practicable thereafter, or on such other date as PBiz and Captiva shall agree
(the "CLOSING DATE").
1.3 EFFECTS OF THE MERGER. The Merger shall have the effects set forth
in the TBCA and the GLLCA. If at any time after the Effective Time, the
Surviving Corporation shall consider or be advised that any further assignments
or assurances in law or otherwise are necessary or desirable to vest, perfect or
confirm, of record or otherwise, in the Surviving Corporation, all rights, title
and interests in all real estate and other property and all privileges, powers
and franchises of Captiva, the Surviving Corporation and its proper officers and
directors, in the name and on behalf of Captiva, shall execute and deliver all
such proper deeds, assignments and assurances in law and do all things necessary
and proper to vest, perfect or confirm title to such property or rights in the
Surviving Corporation and otherwise to carry out the purpose and intent of this
Agreement, and the proper officers and directors of the Surviving Corporation
are fully authorized in the name of PBiz Sub to take any and all such action.
1.4 CHARTER AND BYLAWS.
(a) The Charter of PBiz Sub, as in effect immediately prior to the
Effective Time and as set forth in Exhibit 1.4(a) hereto, shall be the Charter
of the Surviving Corporation until thereafter changed or amended as provided
therein or by applicable law.
(b) The bylaws of PBiz Sub, as in effect immediately prior to the
Effective Time and as set forth in Exhibit 1.4(b) hereto, shall be the Bylaws of
the Surviving Corporation until thereafter changed or amended as provided
therein or by applicable law.
(c) The board of directors and proper officers of PBiz Sub as in
effect immediately prior to the Effective Time shall become the board of
directors and proper officers of the Surviving Corporation, until thereafter
changed in accordance with applicable law.
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ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK
AND UNITS OF THE CONSTITUENT COMPANIES
2.1 EFFECT ON CAPITAL SECURITIES. As of the Effective Time, by virtue of
the Merger and without any action on the part of the holder of PBiz, PBiz Sub,
Captiva or the Captiva Members:
(a) Conversion of Securities.
(i) Each share of common stock, no par value, of PBiz Sub
issued and outstanding immediately prior to the Effective Time shall continue
without change and shall represent validly issued, fully paid and nonassessable
shares of common stock of the Surviving Corporation.
(ii) Each Captiva Unit issued and outstanding immediately
prior to the Effective Time, shall, by virtue of the Merger and without any
action on the part of the holder thereof, automatically be canceled and
extinguished and converted into the right to receive a portion of the Merger
Consideration (as defined below) as specified on Section 2.1(a)(ii) of the
Captiva Disclosure Schedule (as defined below).
(b) Merger Consideration. The merger consideration payable by PBiz
to the Captiva Members for their Captiva Units and in consideration for the
agreements contained herein, will be Seven Million Dollars ($7,000,000), payable
in cash and PBiz Common Stock (as defined below) and subject to adjustment as
described in Section 2.4, plus the Earnout Payment (as defined below)
(collectively referred to as the "MERGER CONSIDERATION"). The Merger
Consideration shall be subject to adjustment as set forth in this Agreement and
shall be payable to the Captiva Members in the following manner:
(i) Six Million Dollars ($6,000,000), subject to adjustment
as described in Section 2.4, in immediately available funds by wire transfer at
Closing; and
(ii) Seven Hundred and Fifty-Seven Thousand, Five Hundred and
Seventy-Six (757,576) shares (the "CLOSING DATE PBIZ SHARES") of PBiz common
stock, no par value (the "PBIZ COMMON STOCK"), payable at Closing; and
(iii) that number of shares of PBiz Common Stock (the "EARNOUT
PAYMENT") having an aggregate market value equal to ten percent (10%) of the
PBiz Acquired Revenues (as defined below). The term "PBIZ ACQUIRED REVENUES"
shall equal: (x) the average monthly revenue earned by the Acquired Businesses
(as defined below) for the months between: (A) the later to occur of January 1,
2006 and the date each such Acquired Business was acquired by PBiz; and (B)
December 31, 2006; multiplied by (y) twelve (12); provided that in no event
shall the PBiz Acquired Revenues exceed $16.0 million. The term "ACQUIRED
BUSINESS" shall mean any business entity (whether acquired through an
acquisition of equity or assets) that is acquired by PBiz (or any of its
Subsidiaries) during the twelve (12) month period following
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Closing. In addition to the foregoing, Acquired Business shall include the
businesses described in Exhibit 2.1(b)(iii) attached hereto. The Earnout Payment
shall be calculated upon completion of the audit of the consolidated financial
statements of PBiz for the fiscal year ending December 31, 2006 and, to the
extent earned, shall be delivered to the Captiva Members no later than the fifth
(5th) business day following the day on which PBiz files with the SEC (as
defined below) its annual report on Form 10-K for the fiscal year ended December
31, 2006. The Earnout Payment shall be based upon the average closing price per
share of the PBiz Common Stock on the Nasdaq SmallCap Market for the ten (10)
consecutive trading days ending two (2) trading days prior to the Execution
Date. G. Xxxx Xxxxx is hereby duly appointed to act as the representative of the
Captiva Members with respect to the Earnout Payment (the "CAPTIVA DESIGNEE") and
has full power and authority to amend, modify or waive any provision of this
Agreement related to the Earnout and to take any and all other actions he deems
necessary or appropriate in that regard, all without further consent or
direction from, or notice to, the Captiva Members or any other party. The
Earnout Payment shall be subject to the following restrictions (and shall bear
restrictive legends corresponding thereto):
(A) with respect to one-third (1/3) of the Earnout
Payment, the Captiva Members shall not be restricted from the sale or transfer
of such shares except pursuant to restrictions on transfer pursuant to the
Securities Act of 1933, as amended (the "SECURITIES ACT"), and the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT");
(B) with respect to one-third (1/3) of the Earnout
Payment, the Captiva Members shall not sell, give, encumber, pledge,
hypothecate, convey, assign or otherwise transfer, whether outright or as
security, inter vivos or testamentary, with or without consideration, voluntary
or involuntary, all or any part of any right, title or interest (including but
not limited to voting rights, by voting trust, grant of proxy or otherwise) in
or to any of such shares for a period of twelve (12) months following the
issuance of such shares, in addition to any restrictions on transfer pursuant to
the Securities Act and the Exchange Act; and
(C) with respect to the remaining one-third (1/3) of
the Earnout Payment, the Captiva Members shall not sell, give, encumber, pledge,
hypothecate, convey, assign or otherwise transfer, whether outright or as
security, inter vivos or testamentary, with or without consideration, voluntary
or involuntary, all or any part of any right, title or interest (including but
not limited to voting rights, by voting trust, grant of proxy or otherwise) in
or to any of such shares for a period of twenty-four (24) months following the
issuance of such shares, in addition to any restrictions on transfer pursuant to
the Securities Act and the Exchange Act.
(c) No Fractional PBiz Common Shares. No fractional shares of PBiz
Common Stock shall be issued in the Merger. All fractional shares of PBiz Common
Stock that a Captiva Member would otherwise be entitled to receive as a result
of the Merger shall be rounded up to the next whole share.
2.2 EXCHANGE OF UNITS. The procedures for exchanging Captiva Units for
the Merger Consideration pursuant to the Merger are as follows:
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(a) Exchange Agent. PBiz shall act as exchange agent for the
purpose of effectuating the exchange of the Merger Consideration for the Captiva
Units that immediately prior to the Effective Time represented outstanding
Captiva Units, which were converted into the right to receive the Merger
Consideration.
(b) Exchange Procedures. At the Effective Time, PBiz shall deliver
the Merger Consideration (other than the Earnout Payment) to the Captiva Members
for exchange in accordance with the terms and conditions of this Agreement. At
the Effective Time, upon surrender to PBiz by each Captiva Member of all of the
Captiva Units owned by such Captiva Member, each Captiva Member shall be
entitled to immediately receive in exchange therefor the portion of the Merger
Consideration to which such Captiva Member is entitled pursuant to this
Agreement.
(c) No Further Ownership Rights in the Captiva Units. All Merger
Consideration paid upon surrender of the Captiva Units in accordance with the
terms hereof shall be deemed to have been issued in full satisfaction of all
rights pertaining to the Captiva Units represented thereby (other than the
Earnout Payment).
2.3 CAPTIVA OPTIONS. Captiva shall cause all outstanding options,
warrants and rights to acquire Captiva Units, each of which is identified on
Section 3.1(b) of the Captiva Disclosure Schedule (the "CAPTIVA OPTIONS"), to be
exercised immediately prior to the Effective Time. The holders of the Captiva
Options (each a "CAPTIVA OPTION HOLDER") that exercise such Captiva Options
shall receive Captiva Units immediately prior to the Effective Time pursuant to
the terms of such Captiva Options. Any Captiva Options that are not exercised
prior to the Effective Time shall be terminated without consideration to such
Captiva Option Holder. The cashless exercise of the Captiva Options shall occur
immediately prior to Closing and will not affect the allocation of the Merger
Consideration, as Schedule 2.1(a)(ii) will reflect that exercise.
2.4 MERGER CONSIDERATION ADJUSTMENTS.
(a) Not later than five (5) business days prior to the Closing
Date, Captiva shall deliver to PBiz the most recently prepared month-end balance
sheet of Captiva and a good faith estimate (the "CLOSING ESTIMATE") of the
amounts of the following items as of the Closing Date: (i) the long-term debt of
Captiva on the Closing Date (the "LONG-TERM DEBT"); (ii) the capital leases of
Captiva on the Closing Date (the "CAPITAL LEASES"); and (iii) the aggregate
amount of trade payables and other short-term debt of Captiva on the Closing
Date (the "TRADE PAYABLES"), which aggregate amount of trade payables shall not
include (x) the legal fees incurred by Captiva in connection with the
Acquisition Targets prior to Closing described in Section 2.4(d) below, and (y)
Transaction-related expenses, including legal fees (which Transaction-related
expenses shall be paid by Captiva at or before Closing).
(b) At Closing, PBiz will pay in full the Long-Term Debt and the
Capital Leases, and the cash portion of the Merger Consideration shall be
reduced at Closing by the paid amounts.
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(c) In the event the amount of the Trade Payables shown on the
Closing Estimate exceeds Four Hundred Seventy Five Thousand Dollars ($475,000)
(the "TARGET TRADE PAYABLES"), then the cash portion of the Merger Consideration
shall be reduced at Closing by the difference between the Trade Payables shown
on the Closing Estimate and the Target Trade Payables.
(d) PBiz shall assume and pay at Closing up to One Hundred
Thousand Dollars ($100,000) in legal fees accrued by Captiva for work on or
after September 1, 2005 through the Closing Date in connection with its pursuit
of the Acquisition Targets; such amount shall not reduce the cash portion of the
Merger Consideration. In the event the legal fees of Captiva incurred between
September 1, 2005 and the Closing Date in connection with its pursuit of the
Acquisition Targets exceed One Hundred Thousand Dollars ($100,000), then PBiz
shall assume and pay at Closing the amount of such excess, and the cash portion
of the Merger Consideration shall be reduced by the amount of such excess.
(e) Within thirty (30) days after the Closing Date, PBiz will
prepare and deliver to the Captiva Designee a balance sheet setting forth the
actual Long-Term Debt, Capital Leases, and Trade Payables of Captiva as of the
Closing Date (the "Closing Date Balance Sheet"). If the Captiva Designee has any
objections to the Closing Date Balance Sheet, he shall notify PBiz in writing
within ten (10) days of receipt of the Closing Date Balance Sheet and deliver a
detailed written statement describing his objections. PBiz and the Captiva
Designee shall use their reasonable efforts to resolve any such objections
themselves. If PBiz and Captiva Designee cannot resolve any such objections
within thirty (30) days after PBiz receives Captiva Designee's statement of
objections, such dispute shall be referred to a mutually acceptable nationally
recognized accounting firm that has not performed services for PBiz or Captiva
within the preceding three years for conclusive and binding resolution. PBiz and
the Captiva Members shall each pay one-half of the fees and expenses of such
accounting firm.
(f)
(i) If the sum of Long-Term Debt, Capital Leases, and Trade
Payables shown on the Closing Date Balance Sheet is less than the Closing
Estimate, PBiz will pay the Captiva Members, pro rata according to the Captiva
Units held by each such Captiva Member at Closing, in cash an amount equal to
the amount by which the sum of such items as shown on the Closing Date Balance
Sheet is less than the Closing Estimate. PBiz shall make such payments to the
Captiva Members on a date not later than five (5) business days after the
earlier to occur of (A) the date that the Captiva Designee notifies PBiz that he
accepts the Closing Date Balance Sheet, (B) the expiration of the ten (10)
business day period specified in Section 2.4(e) above without objection by the
Captiva Designee, (C) the date that PBiz and the Captiva Designee finally
resolve any objections by the Captiva Designee, or (D) the conclusive and
binding resolution of the matter by a nationally recognized accounting firm as
provided in Section 2.4(e) above.
(ii) If the sum of Long-Term Debt, Capital Leases, and Trade
Payables shown on the Closing Date Balance Sheet exceeds the Closing Estimate,
the Captiva Members will pay PBiz in cash an amount equal to the amount by which
the sum of such items as shown
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on the Closing Date Balance Sheet exceeds the Closing Estimate. The Captiva
Members shall make such payments to PBiz, pro rata according to the Captiva
Units held by each such Captiva Member at Closing, on a date not later than ten
(10) business days after the earlier to occur of (A) the date that the Captiva
Designee notifies PBiz that he accepts the Closing Date Balance Sheet, (B) the
expiration of the ten (10) business day period specified in Section 2.4(e) above
without objection by the Captiva Designee, (C) the date that PBiz and the
Captiva Designee finally resolve any objections by the Captiva Designee, or (D)
the conclusive and binding resolution of the matter by a nationally recognized
accounting firm as provided in Section 2.4(e) above.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF CAPTIVA AND THE CAPTIVA
SIGNATORIES. Captiva, and each of the Captiva Signatories (severally and not
jointly), represents and warrants to PBiz, as of the date hereof and as of the
Closing Date, subject to any matters disclosed in the Disclosure Schedule of
Captiva provided to PBiz on the date hereof (the "CAPTIVA DISCLOSURE SCHEDULE"),
and except as expressly contemplated by this Agreement:
(a) Organization; Standing and Power. Captiva is a limited
liability company duly organized, validly existing and in good standing under
the laws of the State of Georgia and has the requisite limited liability power
and authority to carry on its business as now being conducted. Captiva is duly
qualified to do business and is in good standing in each jurisdiction in which
the nature of its business or the ownership or leasing of its properties makes
such qualification necessary, other than in such jurisdictions where the failure
to be so qualified to do business or in good standing (individually or in the
aggregate) would not be reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Captiva.
(b) Capital Structure. The Captiva Members are the record and
beneficial owners of all of the membership interests in Captiva. The issued and
outstanding membership interests of Captiva are as set forth in Section 3.1(b)
of the Captiva Disclosure Schedule. Except as set forth in Section 3.1(b) of the
Captiva Disclosure Schedule, there are no outstanding or authorized rights,
warrants, options, subscriptions, restricted units, convertible debt
instruments, option plans, agreements or commitments of any character giving any
Person any right to require Captiva to sell or issue any membership interests or
other securities nor does Captiva have any obligation of any nature to
repurchase any outstanding capital stock or other securities. All outstanding
membership interests of Captiva are validly issued, fully paid and nonassessable
and not subject to preemptive rights, and were not issued in violation of the
Securities Act, any preemptive rights or other preferential rights of
subscription or purchase. Captiva does not own, directly or indirectly, any
capital stock or other ownership interest in any Person.
(c) Authority; Non-Contravention. Captiva has the requisite
limited liability company power and authority to enter into this Agreement and
to consummate the transactions contemplated hereby. The execution and delivery
of this Agreement by Captiva and the consummation by Captiva of the transactions
contemplated hereby have been duly authorized by
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all necessary limited liability company action on the part of Captiva. This
Agreement and other agreements and documents executed by Captiva in connection
herewith have been duly and validly executed and delivered by Captiva and
constitute valid and binding obligations of Captiva, enforceable against Captiva
in accordance with their respective terms, except that except that (i) such
enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium
or other similar laws or judicial decisions now or hereafter in effect relating
to creditors' rights generally, (ii) the remedy of specific performance and
injunctive relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought, and (iii) the
enforceability of any indemnification provision contained herein may be limited
by applicable federal or state securities laws. No consent, approval, order or
authorization of, or registration, declaration or filing with, any governmental
entity or other Person is required by or with respect to Captiva in connection
with the execution and delivery of this Agreement by Captiva or the consummation
by Captiva of the transactions contemplated hereby, except for the filing of the
Articles of Merger in the State of Georgia and appropriate documents with the
relevant authorities of other states in which Captiva is qualified to do
business.
(d) Captiva Financial Statements; Books and Records.
(i) Captiva has delivered to PBiz: (a) an audited
consolidated balance sheet of Total Bank Technology, LLC as at December 31,
2004, and the related audited consolidated statement of income, changes in
stockholders' equity, and cash flow for the fiscal year then ended (including
the notes thereto), together with the report thereon of Stockman, Kast, Xxxx Co
LLP, independent certified public accountants (the "AUDITED FINANCIAL
STATEMENTS"), and (b) an unaudited consolidated balance sheet of Captiva as at
September 30, 2005 and the related pro forma unaudited consolidated statements
of income, changes in member's equity, and cash flow for the nine months then
ended, including the activities of Total Bank Technology, LLC from January 1,
2005 and the activities of Captiva from April 1, 2005 (the "INTERIM FINANCIAL
STATEMENTS" which, together with the Audited Financial Statements shall be
referred to as the "FINANCIAL STATEMENTS"). The Financial Statements have been
prepared in accordance with generally accepted accounting principles ("GAAP")
and fairly present the financial condition and the results of operations,
changes in stockholders'/members' equity, and cash flow of Captiva as at the
respective dates of and for the periods referred to in the Financial Statements,
subject, in the case of the Interim Financial Statements, to (x) normal
recurring year-end adjustments (the effect of which will not, individually or in
the aggregate, be materially adverse), (y) the absence of notes (that, if
presented, would not differ materially from those included in the consolidated
audited financial statements for the year ended December 31, 2004 other than to
reflect the acquisition by Captiva of the assets of Total Bank Technology, LLC
and related matters), and (z) the allocation of the purchase price of Total Bank
Technology, LLC and the related amortization, which has not been based on a
third party valuation and is subject to review or change based on such a review.
The Financial Statements reflect the consistent application of such accounting
principles throughout the periods involved. No financial statements of any
Person other than Captiva are required by GAAP to be included in the
consolidated financial statements of Captiva.
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(ii) The books of account, minute books, unit record books,
and other records of Captiva, all of which have been made available to PBiz, are
complete and correct in all material respects and have been maintained in
accordance with sound business practices, including the maintenance of an
adequate system of internal controls and procedures. Captiva maintains accurate
books and records reflecting its assets and liabilities and maintains proper and
adequate internal accounting controls which provide assurance that: (i)
transactions are executed with management's authorization, (ii) transactions are
recorded as necessary to permit preparation of the consolidated financial
statements of Captiva and to maintain accountability for Captiva's consolidated
assets, (iii) access to Captiva assets is permitted only in accordance with
management's authorization; (iv) the reporting of Captiva's assets is compared
with existing assets at regular intervals; and (v) accounts, notes and other
receivables and inventory are recorded accurately, and proper and adequate
procedures are implemented to effect the collection thereof on a current and
timely basis. The minute books of Captiva contain accurate and complete records
of all meetings held of, and limited liability company action taken by, the
members and the board of managers of Captiva, and no formal meeting of any such
members or board of managers has been held for which minutes have not been
prepared and are not contained in such minute books. The board of managers of
Captiva has not formed any committees. At the Closing, all of those books and
records will be in the possession of Captiva.
(e) Captiva Material Contracts. Section 3.1(e) of the Captiva
Disclosure Schedule lists all written contracts, agreements, leases, instruments
or legally binding contractual commitments ("CONTRACTS") that are of a type
described below (collectively, the "CAPTIVA MATERIAL CONTRACTS") as of the date
of this Agreement:
(i) Any Contract between Captiva and a customer of Captiva
or between Captiva and any entity that has purchased goods or services from
Captiva in excess of $25,000 or more in 2005 to date;
(ii) any Contract requiring aggregate future payments by or
to Captiva in excess of $25,000;
(iii) any Contract relating to the borrowing of money or
guaranty of indebtedness to which Captiva is a party;
(iv) any collective bargaining or other arrangement with any
labor union to which Captiva is a party;
(v) any Contract to which Captiva is a party granting a
first refusal, first offer or similar preferential right to purchase or acquire
any of the equity interests or assets of Captiva;
(vi) any Contract limiting, restricting or prohibiting
Captiva from conducting business anywhere in the United States or elsewhere in
the world or any Contract limiting the freedom of Captiva to engage in any line
of business or to compete with any other Person;
9
(vii) any joint venture, partnership, limited liability
company or similar Contract to which Captiva is a party; and
(viii) any employment Contract (whether written or oral and
other than employment agreements which are terminable at will and upon
termination are without penalty or severance obligation), severance agreement or
other similar binding agreement or policy with any employee of Captiva.
Captiva has made available to PBiz a true and complete copy of each
written Captiva Material Contract (and a written description of each oral
Captiva Material Contract), including all material amendments or other
modifications thereto. Each Captiva Material Contract is a valid and legally
binding obligation of Captiva, enforceable against Captiva in accordance with
its terms, subject only to bankruptcy, reorganization, receivership or other
laws affecting creditors' rights generally and general principles of equity
(whether applied in an action at law or in equity), provided that no
representation or warranty is made herein with respect to the enforceability of
agreements restricting competition or the solicitation of customers or
employees. Captiva and, to the Actual Knowledge of Captiva and the Captiva
Signatories, the other parties thereto, are in substantial compliance with all
obligations required to be performed by them under the Captiva Material
Contracts, and Captiva is not in breach or default thereunder in any material
respect. Except as shown on Section 3.1(e) of the Captiva Disclosure Schedule,
the consummation of the transactions contemplated by this Agreement will not
conflict with or result in any breach of or constitute a default of Captiva
under any Captiva Material Contract (assuming the repayment at Closing of
certain Captiva obligations as provided for elsewhere in this Agreement).
(f) Absence of Certain Changes or Events. Except as shown on
Section 3.1(f) of the Captiva Disclosure Schedule, since June 1, 2005, the date
that Captiva acquired the assets of Total Bank Technology, LLC, Captiva has
conducted its business only in the ordinary course consistent with past
practice, and there has not been (i) as of the date hereof, any matter that is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect with respect to Captiva; (ii) any declaration, setting aside or payment
(as a dividend or otherwise) (whether in cash, stock or property) with respect
to any of the equity interests in Captiva; (iii) (A) any granting by Captiva to
any executive officer of Captiva of any increase in compensation, (B) any
granting by Captiva to any such executive officer of any increase in severance
or termination pay, or (C) any entry by Captiva into any employment, severance
or termination agreement with any such executive officer; (iv) any amendment of
any material term of any outstanding equity security of Captiva (other than the
one-for-8 forward split of the units of membership interest of Captiva effected
on August 5, 2005); (v) any repurchase, redemption or other acquisition by
Captiva of any outstanding equity securities of, or other ownership interests
in, Captiva; (vi) any material damage, destruction or other property loss,
whether or not covered by insurance; or (vii) any change in accounting methods,
principles or practices by Captiva materially affecting its assets, liabilities
or business.
(g) Litigation.
10
(i) Except as set forth in Section 3.1(g) of the Captiva
Disclosure Schedule, as of the date of this Agreement, there is no pending
action, arbitration, audit, claim, hearing, investigation, litigation, or suit
(whether civil, criminal, administrative, investigative, or informal) commenced,
brought, conducted, or heard by or before, or otherwise involving, any
governmental body or arbitrator (a "PROCEEDING"):
(A) that has been commenced by or against Captiva or
that otherwise relates to or may affect the business of, or any of the assets
owned or used by, Captiva; or
(B) that challenges, or that may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, the Merger.
To the Knowledge of Captiva and the Captiva Signatories, (1)
no such Proceeding has been threatened in writing, and (2) no event has occurred
or circumstance exists that may give rise to or serve as a basis for the
commencement of any such Proceeding. Captiva has delivered to PBiz copies of all
pleadings, correspondence, and other documents relating to each Proceeding
listed in Section 3.1(g) of the Captiva Disclosure Schedule. The Proceedings
listed in Section 3.1(g) of the Captiva Disclosure Schedule will not have a
Material Adverse Effect on the business, operations, assets, condition, or
prospects of Captiva.
(ii) Except as set forth in Section 3.1(g) of the Captiva
Disclosure Schedule:
(A) there is no award, decision, injunction, judgment,
order, ruling, subpoena, or verdict entered, issued, made, or rendered by any
court, administrative agency, or other governmental body or by any arbitrator
(an "ORDER") to which Captiva, or any of the assets owned or used by Captiva, is
subject;
(B) none of the Captiva Signatories is subject to any
Order that relates to the business of, or any of the assets owned or used by,
Captiva; and
(C) neither Captiva nor to the Actual Knowledge of
Captiva and the Captiva Signatories (and expressly subject to Section 3.1(y)
with respect to each of the Captiva Signatories), no officer, manager, agent, or
employee of Captiva is subject to any Order that prohibits such officer,
manager, agent, or employee from engaging in or continuing any conduct,
activity, or practice relating to the business of Captiva.
(D) Captiva is, and at all times has been, in full
compliance with all of the terms and requirements of each Order to which it, or
any of the assets owned or used by it, is or has been subject;
(E) no event has occurred or circumstance exists that
may constitute or result in (with or without notice or lapse of time) a
violation of or failure to comply with any term or requirement of any Order to
which Captiva, or any of the assets owned or used by Captiva, is subject; and
11
(F) Captiva has not received any notice or other
communication from any governmental body or any other Person regarding any
actual, alleged, possible, or potential violation of, or failure to comply with,
any term or requirement of any Order to which Captiva, or any of the assets
owned or used by Captiva, is or has been subject.
(h) Tax Matters.
(i) As used herein, "TAX" or "TAXES" means any federal,
state, local, or foreign income, gross receipts, license, payroll, employment,
excise, severance, stamp, occupation, premium, windfall profits, environmental
(including taxes under section 59A of the Internal Revenue Code of 1986, as
amended (the "CODE")), customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability, real
property, personal property, sales, use, transfer, registration, value added,
alternative or add-on minimum, estimated, or other tax of any kind whatsoever,
whether computed on a separate or consolidated, unitary or combined basis or in
any other manner, including any interest, penalty, or addition thereto, whether
disputed or not and including any obligation to indemnify or otherwise assume or
succeed to the Tax liability of any other person. "TAX RETURN" means any return,
declaration, report, claim for refund, or information return or statement
relating to Taxes, including any schedule or attachment thereto, and including
any amendment thereof.
(ii) Captiva has timely filed all Tax Returns that it was
required to file. All such Tax Returns were correct and complete in all respects
and were prepared in substantial compliance with all applicable laws and
regulations. All Taxes owed by Captiva (whether or not shown or required to be
shown on any Tax Return) have been paid. Captiva currently is not the
beneficiary of any extension of time within which to file any Tax Return. No
claim has ever been made by an authority in a jurisdiction where Captiva does
not file Tax Returns that Captiva is or may be subject to taxation by that
jurisdiction. There are no liens on any of the assets of Captiva that arose in
connection with any failure (or alleged failure) to pay any Tax.
(iii) Captiva has withheld and paid all Taxes required to have
been withheld and paid in connection with any amounts paid or owing to any
employee, independent contractor, creditor, member, or other third party, and
all Forms W-2 and 1099 required with respect thereto have been properly
completed and timely filed.
(iv) There is no dispute or claim concerning any Tax
liability of Captiva either (A) claimed or raised by any authority in writing or
(B) as to which any manager or officer of Captiva has Knowledge based upon
personal contact with any agent of such authority.
(v) Section 3.1(h) of the Captiva Disclosure Schedule (a)
lists all federal, state, local, and foreign income Tax Returns filed with
respect to Captiva for all periods, (b) indicates those Tax Returns that have
been audited, and (c) indicates those Tax Returns that currently are the subject
of audit. Correct and complete copies of all income Tax Returns, examination
reports, and statements of deficiencies assessed against or agreed to by Captiva
for all periods have been delivered to PBiz.
12
(vi) Captiva has not waived any statute of limitations in
respect of Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency.
(vii) The unpaid Taxes of Captiva (a) did not, as of the most
recent fiscal month end, exceed the reserve for Tax liability (rather than any
reserve for deferred Taxes established to reflect timing differences between
book and Tax income) set forth on the face of the balance sheet (rather than in
any notes thereto) contained in the most recent Interim Financial Statements and
(b) do not exceed that reserve as adjusted for the passage of time through the
Closing Date in accordance with the past custom and practice of Captiva in
filing its Tax Returns.
(viii) Captiva is not a party to an agreement, contract,
arrangement or plan that has resulted in or could result in, separately or in
the aggregate, an obligation to make a payment that is not deductible under Code
sections 280G or 162(m) or any corresponding provision of state, local or
foreign law. Captiva has disclosed on its federal income Tax Returns all
positions taken therein that could give rise to a substantial understatement of
federal income Tax within the meaning of Code section 6662. Captiva has not been
a United States real property holding corporation within the meaning of Code
section 897(c)(2) during the applicable period specified in Code section
897(c)(1)(A)(ii). Captiva is not a party to any Tax allocation or sharing
agreement. Captiva (A) has not been a member of an affiliated group filing a
consolidated federal income Tax Return and (B) has no liability for the Taxes of
any person under United States Treasury Regulation section 1.1502-6 (or any
similar provision of state, local, or foreign law), as a transferee or
successor, by contract, or otherwise.
(i) Compliance with Laws. Captiva holds all permits, licenses,
variances, exemptions, orders, franchises and approvals of all governmental
entities (the "CAPTIVA PERMITS") that are required for the conduct of its
business as presently conducted, except where the failure to obtain and hold the
same would not, in the aggregate, have a Material Adverse Effect. Captiva is in
compliance in all material respects with the terms of the Captiva Permits.
Captiva has not materially violated or materially failed to comply with, nor has
it received any written notice of any alleged material violation of or material
failure to comply with, any statute, law, ordinance, regulation, rule, permit or
order of any governmental entity, any arbitration award or any judgment, decree
or order of any court or other governmental entity, applicable to Captiva or its
business, assets or operations.
(j) Intellectual Property and Software.
(i) Section 3.1(j) of the Captiva Disclosure Schedule
accurately identifies the following information:
(A) Section 3.1(j)(i)(A) of the Captiva Disclosure
Schedule accurately identifies and describes each product or service currently
marketed, licensed or sold by Captiva, including any product or service
currently under development by Captiva and each contract or license pursuant to
which Captiva markets, licenses or sells the products or services of a third
party.
13
(B) Captiva has no Registered IP.
(C) Section 3.1(j)(i)(C) of the Captiva Disclosure
Schedule accurately identifies (1) all Intellectual Property Rights or
Intellectual Property licensed to Captiva (other than any non-customized
software that (x) is so licensed solely in executable or object code form
pursuant to a nonexclusive, internal use software license, (y) is not
incorporated into, or used directly in the development, manufacturing or
distribution of, the products or services of Captiva and (z) is generally
available on standard terms for less than $10,000), and (2) the corresponding
Contract or Contracts pursuant to which such Intellectual Property Rights or
Intellectual Property is licensed to Captiva.
(D) Section 3.1(j)(i)(D) of the Captiva Disclosure
Schedule accurately identifies each Contract pursuant to which any Person has
been granted any license under, or otherwise has received or acquired any right
(whether or not currently exercisable) or interest in, any Captiva IP. Captiva
is not bound by, and no Captiva IP is subject to, any Contract containing any
covenant or other provision that in any way limits or restricts the ability of
Captiva to use, exploit, assert, or enforce any Captiva IP anywhere in the
world. Captiva has no distributor or reseller agreements.
(ii) Except as described in Section 3.1(j)(ii) of the
Captiva Disclosure Schedule, Captiva exclusively owns all right,
title, and interest to and in the Captiva IP (other than
Intellectual Property Rights licensed to Captiva, as identified in
Section 3.1(j)(i)(C) of the Captiva Disclosure Schedule) free and
clear of any encumbrances (other than licenses granted pursuant to
the Contracts listed in Section 3.1(j)(i)(D) of the Captiva
Disclosure Schedule). Without limiting the generality of the
foregoing:
(A) Each Person who is a current employee or
contractor of Captiva and who is involved in the creation or development of any
Captiva IP either: (i) was an employee of Captiva or the predecessor owners of
the Captiva IP acting within the scope of his or her employment or (ii) has
signed a valid, enforceable agreement containing an effective "work for hire"
provision or an assignment of Intellectual Property Rights to Captiva and
confidentiality provisions protecting the Captiva IP. Except as set forth in
Section 3.1(j)(ii) of the Captiva Disclosure Schedule, no current or former
member, officer, director, or employee of Captiva or the predecessor owners of
the Captiva IP has any claim, right (whether or not currently exercisable) or
interest to or in any accounting right, royalty right, or other economic right
or interest in Captiva's current use of the Captiva IP.
(B) To the Knowledge of Captiva and the Captiva
Signatories, no funding, facilities or personnel of any governmental body were
used, directly or indirectly, to develop or create, in whole or in part, any
Captiva IP.
(C) Captiva owns or otherwise has license to all
Intellectual Property and/or Intellectual Property Rights used to conduct the
business of Captiva as currently conducted and presently planned by Captiva to
be conducted.
14
(iii) All Captiva IP is enforceable; provided, however, that
with respect to the unregistered common law trademark "Total Bank
System" may be subject to the rights of prior users. Without
limiting the generality of the foregoing:
(A) Except as set forth on Section 3.1(j)(ii) of the
Captiva Disclosure Schedule, neither Captiva nor any predecessor owners of the
Captiva IP has assigned or otherwise transferred ownership of, or agreed to
assign or otherwise transfer ownership of, any Captiva IP to any other Person.
(B) To the Knowledge of Captiva and the Captiva
Signatories, there is no basis for a claim that any Captiva IP is invalid or
unenforceable.
(iv) To the Knowledge of Captiva and the Captiva Signatories,
no Person has infringed, misappropriated, or otherwise violated, and no Person
is currently infringing, misappropriating, or otherwise violating, any Captiva
IP. Section 3.1(j)(iv) of the Captiva Disclosure Schedule accurately identifies
(and Captiva has provided to PBiz a complete and accurate copy of) each letter
or other written or electronic communication or correspondence that has been
sent or otherwise delivered by or to Captiva or any representative of any of
Captiva regarding any actual, alleged, or suspected infringement or
misappropriation of any Captiva IP, and provides a brief description of the
current status of the matter referred to in such letter, communication or
correspondence.
(v) Neither the execution, delivery or performance of this
Agreement nor the consummation of any of the transactions contemplated by this
Agreement will, with or without notice or the lapse of time, result in or give
any other Person the right or option to cause or declare (i) a loss of, or
encumbrance on, any Captiva IP, (ii) a breach of any Contract listed or required
to be listed in Section 3.1(j) of the Captiva Disclosure Schedule, (iii) the
release, disclosure or delivery of any Captiva IP by or to any escrow agent or
other Person or (iv) the grant, assignment or transfer to any other Person of
any license or other right or interest under, to or in any of the Captiva IP.
(vi) The Captiva IP does not infringe (directly,
contributorily, by inducement or otherwise), misappropriate or otherwise violate
any Intellectual Property or Intellectual Property Right of any other Person
that is not a patent right or a trademark right. To the Actual Knowledge of
Captiva and the Captiva Signatories, the Captiva IP does not infringe (directly,
contributorily, by inducement or otherwise), misappropriate or otherwise violate
any patent right or trademark right of any other Person. Without limiting the
generality of the foregoing:
(A) No infringement, misappropriation or similar claim
or Proceeding is pending or, to the Knowledge of Captiva and the Captiva
Signatories, has been threatened against Captiva or against any other Person who
may be entitled to be indemnified, defended, held harmless or reimbursed by
Captiva with respect to such claim or Proceeding. Except as set forth in any
Contract listed in Section 3.1(j)(i)(D) of the Captiva Disclosure Schedule,
Captiva is not bound by any Contract to indemnify, defend, hold harmless or
reimburse any other Person with respect to any intellectual property
infringement,
15
misappropriation or similar claim. Except as set forth in any Contract listed in
Section 3.1(j)(i)(D) of the Captiva Disclosure Schedule, Captiva is not
obligated to discharge or otherwise take responsibility for, any existing or
potential liability or another Person for infringement, misappropriation or
violation of any Intellectual Property or Intellectual Property Right.
(B) To the Knowledge of Captiva and the Captiva
Signatories no claim or proceeding involving any Intellectual Property or
Intellectual Property Right licensed to Captiva and required to be listed in
Section 3.1(j) of the Captiva Disclosure Schedule is pending or has been
threatened, except for any such claim or Proceeding that, if adversely
determined, would not adversely affect (1) the use or exploitation of such
Intellectual Property or Intellectual Property Right by Captiva or (2) the
distribution or sale of any product or service being developed, offered,
distributed or sold by Captiva.
(vii) To the Knowledge of Captiva and the Captiva Signatories,
except as set forth in Section 3.1(j)(vii) of the Captiva Disclosure
Schedule, neither the current production version of the Total Bank
System (TBS2000) nor any of its components (collectively, the
"Captiva Software"):
(A) (1) Contains any bug, defect or error (including
any bug, defect or error relating to or resulting from the display,
manipulation, processing, storage, transmission or use of date data) that
materially and adversely affects the use, functionality or performance of the
Captiva Software or any product or system containing or used in conjunction with
such Captiva Software to the extent that any customer of Captiva would be
prevented from using each feature and function of the Captiva Software in the
ordinary course of its business or (2) except as specified in the complete and
accurate list (which list has been previously provided by Captiva to PBiz) of
all known bugs, defects, or errors in the current version of the Captiva
Software, known as TBS2000, fails to comply with any applicable warranty or
other contractual commitment relating to the use, functionality or performance
of such software or any product or system containing or used in conjunction with
such Captiva Software. The new version of Captiva's Software, known internally
as "Retriever," is currently in Beta testing and has not yet completed quality
and assurance testing. Captiva has provided PBiz with an up to date list of
issues, bugs and errors to the Knowledge of Captiva and the Captiva Signatories
and future development plans with regard to Retriever, with the understanding
that additional issues will be identified as Beta testing and quality and
assurance testing are completed.
(B) Contains any "back door," "drop dead device,"
"time bomb," "Trojan horse," "virus" or "worm" (as such terms are commonly
understood in the software industry) or any other code designed or intended to
have, or to be capable of performing, any of the following functions: (1)
disrupting, disabling, harming or otherwise impeding in any manner the operation
of, or providing unauthorized access to, a computer system or network or other
device on which such code is stored or installed or (2) damaging or destroying
any data or file without the user's consent.
(C) Is subject to any "copyleft" or other obligation
or condition (including any obligation or condition under any "open source"
license such as the GNU Public
16
License, Lesser GNU Public License or Mozilla Public License) that (1) would
require, or would condition the use or distribution of such Captiva Software on,
the disclosure, licensing or distribution of any source code for any portion of
such Captiva Software or (2) would otherwise impose any limitation, restriction
or condition on the right or ability of Captiva to use or distribute any Captiva
Software.
(viii) Except as disclosed in Section 3.1(j) of the Captiva
Disclosure Schedule, no source code for any Captiva Software has been delivered,
licensed or made available to any escrow agent or other Person who is not, as of
the date of this Agreement, an employee of Captiva. Except as disclosed in
Section 3.1(j)(ii) of the Captiva Disclosure Schedule, Captiva has no duty or
obligation (whether present, contingent or otherwise) to deliver, license or
make available the source code for any Captiva Software to any escrow agent or
other Person who is not, as of the date of this Agreement, an employee of
Captiva. To the Knowledge of Captiva and the Captiva Signatories, no event has
occurred, and no circumstance or condition exists, that (with or without notice
or lapse of time) will, or could reasonably be expected to, result in the
delivery, license or disclosure of any source code for any Captiva Software to
any other Person who is not, as of the date of this Agreement, an employee of
Captiva.
(k) Employee Benefit Matters.
(i) Section 3.1(k) of the Disclosure Schedule lists each
Employee Benefit Plan that is maintained by Captiva, to which Captiva
contributes or has any obligation to contribute, or with respect to which
Captiva has any liability. As used herein, "EMPLOYEE BENEFIT PLAN" means any
"employee benefit plan" (as such term is defined in section 3(3) of the Employee
Retirement Income Security Act of 1874, as amended ("ERISA")) and any other
employee benefit plan, program or arrangement of any kind.
(ii) Each such Employee Benefit Plan (and each related trust,
insurance contract, or fund) has been maintained, funded and administered in
accordance with the terms of such Employee Benefit Plan and the terms of any
applicable collective bargaining agreement and complies in form and in operation
in all material respects with the applicable requirements of ERISA, the Code,
and other applicable laws.
(iii) All required reports and descriptions (including Form
5500 annual reports, summary annual reports, and summary plan descriptions) have
been timely filed and/or distributed in accordance with the applicable
requirements of ERISA and the Code with respect to each such Employee Benefit
Plan. The requirements of Part 6 of Subtitle B of Title I of ERISA and Code
section 4980B and of any similar state law ("COBRA") have been met with respect
to each such Employee Benefit Plan and each Employee Benefit Plan maintained by
any entity that is treated as a single employer with Captiva for purposes of
Code section 414 (an "ERISA Affiliate") that is an "Employee Welfare Benefit
Plan" (as defined in ERISA section 3(1)) subject to COBRA.
(iv) All contributions (including all employer contributions
and employee salary reduction contributions) that are due have been made within
the time periods prescribed by ERISA and the Code to each such Employee Benefit
Plan that is an "Employee
17
Pension Benefit Plan" (as defined in ERISA section 3(2)) and all contributions
for any period ending on or before the Closing Date that are not yet due have
been made to each such Employee Pension Benefit Plan or accrued in accordance
with the past custom and practice of Captiva. All premiums or other payments for
all periods ending on or before the Closing Date have been paid with respect to
each such Employee Benefit Plan that is an Employee Welfare Benefit Plan.
(v) Each such Employee Benefit Plan that is intended to meet
the requirements of a "qualified plan" under Code section 401(a) has received a
determination from the Internal Revenue Service that such Employee Benefit Plan
is so qualified, and nothing material has occurred since the date of such
determination that could adversely affect the qualified status of any such
Employee Benefit Plan. All such Employee Benefit Plans have been or will be
timely amended for the requirements of the Tax legislation commonly known as
"GUST" and "EGTRRA" and have been or will be submitted to the Internal Revenue
Service for a favorable determination letter on the GUST requirements within the
remedial amendment period prescribed by GUST.
(vi) There have been no "prohibited transactions" (within the
meaning of ERISA section 406 or Code section 4975" with respect to any such
Employee Benefit Plan or any Employee Benefit Plan maintained by an ERISA
Affiliate. No "fiduciary" as defined in ERISA section 3(21) has any material
liability for breach of fiduciary duty or any other failure to act or comply in
connection with the administration or investment of the assets of any such
Employee Benefit Plan. No action, suit, proceeding, hearing, or investigation
with respect to the administration or the investment of the assets of any such
Employee Benefit Plan (other than routine claims for benefits) is pending or
threatened. The Captiva Signatories have no Knowledge of any basis for any such
action, suit, proceeding, hearing, or investigation.
(vii) Correct and complete copies of the plan documents and
summary plan descriptions, the most recent determination letter received from
the Internal Revenue Service, the most recent annual report (Form 5500, with all
applicable attachments), and all related trust agreements, insurance contracts,
and other funding arrangements that implement each such Employee Benefit Plan
have been delivered to PBiz.
(viii) Neither Captiva nor any ERISA Affiliate contributes to,
has any obligation to contribute to, or has any liability under or with respect
to any Employee Pension Benefit Plan that is a "defined benefit plan" (as
defined in ERISA section 3(35)). No asset of any of Captiva is subject to any
lien under ERISA or the Code.
(ix) Neither Captiva nor any ERISA Affiliate contributes to,
has any obligation to contribute to, or has any liability (including withdrawal
liability as defined in ERISA section 4201) under or with respect to any
"Multiemployer Plan" as defined in ERISA section 3(37).
(x) Captiva does not maintain, contribute to or have an
obligation to contribute to, nor does it have any liability with respect to, any
Employee Welfare Benefit Plan providing health or life insurance or other
welfare-type benefits for current or future retired or
18
terminated managers, officers or employees (or any spouse or other dependent
thereof) of Captiva or of any other person other than in accordance with COBRA.
(xi) Deferred Compensation. Except (i) as otherwise disclosed
pursuant to Section 3.1(k) or the Disclosure Schedule, (ii) for Capitva's usual
and customary payroll-related practices or policies, (iii) for the "Deferred
Compensation" (as defined below) due from Captiva to G. Xxxx Xxxxx in the amount
of Twenty Five Thousand Dollars ($25,000) per month (plus applicable Taxes
associated therewith) from the period of April 1, 2005 through the Closing Date,
which amount shall not exceed Three Hundred Thousand Dollars ($300,000) in the
aggregate (the "XXXXX DEFERRED COMPENSATION") and (iv) for the Captiva Options,
Captiva does not owe Deferred Compensation to any Person. "Deferred
Compensation" means any payment that is compensatory in nature that is postponed
or otherwise deferred to a future date.
(l) Labor Matters. Section 3.1(l) of the Captiva Disclosure
Schedule sets forth as of the date of this Agreement a list of all current
employees of Captiva, their base salary and target bonuses (if applicable) for
fiscal year 2005, and their vesting with respect to the Captiva Benefit Plans.
With respect to employees of Captiva:
(i) Captiva is and has been since inception in substantial
compliance with all applicable laws governing employment and employment
practices, terms and conditions of employment and wages and hours, including
without limitation the Family and Medical Leave Act, laws governing labor
relations and any such laws respecting employment discrimination, and has not
engaged in any unfair labor practice.
(ii) There is no unfair labor practice charge, Proceeding,
governmental investigation, citation or action of any kind pending or, to the
Knowledge of Captiva and the Captiva Signatories, proposed or threatened against
Captiva relating to employment, employment practices, terms and conditions of
employment or wages and hours.
(iii) Captiva does not have a collective bargaining
relationship or duty to bargain with any labor union or organization, and has
not recognized any labor union or organization as the collective bargaining
representative of any of its employees relating to the business of Captiva, and
neither Captiva nor the Captiva Signatories have any Knowledge of any union
organizing activity during the past year.
(m) No Undisclosed Liabilities. Captiva does not have any material
liabilities or obligations of any nature (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether determined or determinable, whether liquidated or
unliquidated and whether due or to become due, including any liability for
Taxes) other than: (i) such liabilities or obligations that have been
specifically disclosed or provided in the Financial Statements; (ii) liabilities
or obligations incurred after September 30, 2005, in the ordinary course of
business consistent with past practice; and (iii) liabilities or obligations
under this Agreement or incurred in connection with the transactions
contemplated hereby.
19
(n) Insurance. Section 3.1(n) of the Captiva Disclosure Schedule
describes all material insurance policies of Captiva (the "CAPTIVA INSURANCE
POLICIES"). Complete and accurate copies of all the Captiva Insurance Policies
and endorsements thereto have been provided to PBiz. Each Captiva Insurance
Policy is in full force and effect and is valid, outstanding and enforceable,
subject to applicable bankruptcy, insolvency, reorganization or other laws
affecting the enforcement of creditor's rights generally and general principles
of equity, and all premiums due thereon have been paid in full. Captiva has
complied in all material respects with the provisions of each Captiva Insurance
Policy under which it is the insured party. No insurer under any Captiva
Insurance Policy has canceled, failed to renew, or, to the Knowledge of Captiva
and the Captiva Signatories, generally disclaimed liability under any such
policy and to the Knowledge of Captiva and the Captiva Signatories no grounds
exist to cancel or avoid any such policies or coverage. All material claims
under the Captiva Insurance Policies have been filed in a timely fashion. The
insurance covered by Captiva is adequate to conduct its Business and is
consistent with prudent industry practice.
(o) State Takeover Statutes; Anti-Takeover Provisions. Neither the
GLLCA nor the articles of organization of Captiva nor the operating agreement of
Captiva contains any anti-takeover provisions. To the Knowledge of Captiva and
the Captiva Signatories and the Captiva Signatories, no other "control share
acquisition", "fair price" or other anti-takeover laws or regulations enacted
under state or federal laws in the United States apply to the ability of the
Captiva Signatories, Captiva or its Affiliates to enter into this Agreement or
to consummate any of the transactions contemplated hereby. Captiva has taken all
actions with respect to the terms of its articles of organization and its
operating agreement necessary to enter into and consummate the Merger on the
terms set forth in this Agreement.
(p) [INTENTIONALLY OMITTED]
(q) Environmental Matters.
(i) Hazardous Substances. As used in this Section 3.1(q),
the term "HAZARDOUS SUBSTANCES" means any hazardous or toxic substance, material
or waste including, but not limited to, those substances, materials, and wastes
defined in Section 101 of the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended ("CERCLA"), listed in the United States
Department of Transportation Table (49 CFR 172.101) or by the Environmental
Protection Agency as hazardous substances pursuant to 40 CFR Part 302, or which
are regulated under any other Environmental Law (as defined herein), or any
hydrocarbons, petroleum, petroleum products, asbestos, polychlorinated
biphenyls, formaldehyde, radioactive substances, flammables or explosives.
(ii) Compliance with Laws and Regulations. Except as set
forth in Section 3.1(q) of the Captiva Disclosure Schedule, all operations, use
or occupancy of any land and real estate owned or leased by Captiva or any of
its current or former Subsidiaries, including all structures, improvements,
fixed assets and fixtures including fixed machinery and fixed equipment situated
thereon or forming a part thereof and all appurtenances, easements and
rights-of-way related thereto (collectively, the "CAPTIVA REAL ESTATE"), or any
portion thereof, by Captiva or any of its current or former Subsidiaries, have
been in material compliance with any
20
and all laws, regulations, orders, codes, judicial decisions, decrees, licenses,
permits and other applicable requirements of governmental authorities with
respect to Hazardous Substances, pollution or protection of human health and
safety (collectively, "ENVIRONMENTAL LAW") including, but not limited to, the
release, emission, discharge, storage and removal of Hazardous Substances.
Captiva and its current and former Subsidiaries have kept the Captiva Real
Estate free of any lien imposed pursuant to Environmental Law. To the Actual
Knowledge of Captiva and the Captiva Signatories, all prior owners, operators
and occupants of the Captiva Real Estate complied with Environmental Law. Except
for uses and storage or presence of Hazardous Substances reasonably necessary or
incidental to the customary operation of a business similar to the Facilities:
(iii) (A) Neither Captiva nor any of its current or former
Subsidiaries have allowed the use, generation, treatment, handling, manufacture,
voluntary transmission or storage of any Hazardous Substances over, in or upon
the Captiva Real Estate, nor, to the Actual Knowledge of Captiva and the Captiva
Signatories, has the Captiva Real Estate ever been used for any of the
foregoing.
(B) Neither Captiva nor any of its current or former
Subsidiaries have installed or permitted to be installed in or on the Captiva
Real Estate friable asbestos or any substance containing asbestos in condition
or amount deemed hazardous by Environmental Law respecting such material.
(C) Neither Captiva nor any of its current or former
Subsidiaries at any time engaged in or permitted, nor to the Actual Knowledge of
Captiva and the Captiva Signatories, has any of their tenants or any other
occupants of the Captiva Real Estate, or any portion thereof, engaged in or
permitted any dumping, discharge, disposal, spillage, or leakage (whether legal
or illegal, accidental or intentional) of Hazardous Substances at, on, in or
about the Captiva Real Estate or any portion thereof that would subject the
Captiva Real Estate, Captiva, PBiz or PBiz Sub to clean-up obligations imposed
by governmental authorities.
(iv) Except as set forth on Section 3.1(q) of the Captiva
Disclosure Schedule, neither Captiva nor any of its current or former
Subsidiaries: (A) has either received or been issued a notice, demand, request
for information, citation, summons or complaint regarding an alleged failure to
comply with Environmental Law; or (B) is subject to any existing, pending, or
threatened investigation or inquiry by any governmental authority for failure to
comply with, or any remedial obligations under, Environmental Law, and there are
no circumstances known to Captiva that could serve as a basis therefor. Neither
Captiva nor any of its current or former Subsidiaries have assumed any liability
of any third party for clean up under, or noncompliance with, Environmental Law.
(v) Captiva has furnished to PBiz a copy of any
environmental audit, study, report or other analysis on the Captiva Real Estate
in the possession of Captiva.
(r) Brokers. No broker, investment banker or other Person is
entitled to receive from Captiva any investment banking, broker's, finder's or
similar fee or commission in connection with this Agreement or the transactions
contemplated hereby.
21
(s) Captiva Approvals. The Captiva Members unanimously have
approved this Agreement. Salem Capital Partners, LP, which holds a warrant to
purchase Captiva Units, has consented to the allocation of the Merger
Consideration as specified on Schedule 2.1(a)(ii) hereto. No other approval by
any equity holder of Captiva or any Captiva Option Holder is required for the
consummation of the transactions contemplated hereby.
(t) Affiliate Agreements. Except as set forth on Section 3.1(t) of
the Captiva Disclosure Schedule, there are no material oral or written
agreements or transactions between Captiva on the one hand, and any (i) officer
or manager of Captiva; (ii) record or beneficial owner of five percent or more
of the voting securities of Captiva or (iii) to the Knowledge of Captiva and the
Captiva Signatories, an Affiliate of any such officer, director or beneficial
owner, on the other hand, other than payment of compensation for services
rendered in the ordinary course of employment or service as a director for
Captiva.
(u) Customers. Section 3.1(u) of the Captiva Disclosure Schedule
contains a list of all of the customers of Captiva for each of the last two
fiscal years and identifies those Persons that are current customers of Captiva
(the "CAPTIVA CUSTOMERS"). Since January 1, 2005, (i) there has not been any
change adverse to Captiva in its business relationship with any of the Captiva
Customers, and (ii) Captiva has not received any material complaints concerning
its products and services, (iii) no Captiva Customer has delivered a written
notice to Captiva of its intent to terminate, reduce or suspend its business
relationship with Captiva, and (iv) to the Actual Knowledge of Captiva and the
Captiva Signatories, no Captiva Customer has a current intention to terminate,
reduce or suspend its business relationship with Captiva.
(v) Title to Assets. Captiva has good and marketable title to all
the assets and personal property used in, and necessary for, the conduct of the
business of Captiva, (i) as currently conducted, and (ii) as proposed to be
conducted over the next twelve (12) months.
(w) Disclosure. No representation or warranty of Captiva or any of
the Captiva Members in this Agreement, and no statement in the Captiva
Disclosure Schedule or otherwise contained in this Agreement or in any related
document furnished or to be furnished to PBiz under this Agreement, contains or
will contain any untrue statement of a material fact or omits or will omit to
state a material fact or any fact necessary to make the statements herein or
therein, in light of the circumstances in which they were made, not misleading.
(x) Investment Company Act. Captiva is not an "investment
company," or a company "controlled" by an "investment company," within the
meaning of the Investment Company Act of 1940, as amended.
(y) Agreements Restricting Members. Each Captiva Signatory, as to
himself or itself only, represents and warrants that such Captiva Signatory is
not party to any Contract limiting, restricting or prohibiting such Captiva
Signatory from conducting business anywhere in the United States or elsewhere in
the world or any Contract limiting the freedom of such Captiva Signatory to
engage in any line of business or to compete with any other Person.
3.2 REPRESENTATIONS AND WARRANTIES OF THE CAPTIVA MEMBERS
22
Each Captiva Member, by execution of the signature page hereto or, if not
a Captiva Signatory, by execution of an acknowledgement in the form attached
hereto as Exhibit 3.2 (the "CAPTIVA MEMBER ACKNOWLEDGEMENTS"): (i) understands
that the shares of PBiz Common Stock to be issued to such Captiva Member
pursuant to this Agreement have not been, and, as of the date of issuance, will
not be, registered under the Securities Act, or under any state securities laws,
and are being offered and sold in reliance upon federal and state exemptions for
transactions not involving any public offering, (ii) is acquiring shares of PBiz
Common Stock solely for his, her or its own account for investment purposes, and
not with a view to the distribution thereof, (iii) is a sophisticated investor
with knowledge and experience in business and financial matters, (iv) has
received access to the PBiz SEC Documents (as defined below) concerning PBiz and
has had the opportunity to obtain additional information as desired in order to
evaluate the merits and the risks inherent in holding shares of PBiz Common
Stock, (v) is able to bear the economic risk and lack of liquidity inherent in
holding shares of PBiz Common Stock, and (vi) is, except as set forth on Exhibit
3.2, an "accredited investor" as that term is defined in Regulation D as
promulgated under the Exchange Act.
3.3 REPRESENTATIONS AND WARRANTIES OF PBiz.
PBiz represents and warrants to the Captiva Members, as of the date hereof
and as of the Closing Date, subject to any matters disclosed in the Disclosure
Schedule of PBiz provided to the Captiva Members on the date hereof (the "PBIZ
DISCLOSURE SCHEDULE") and except as expressly contemplated by this Agreement:
(a) Organization; Standing and Power. PBiz is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Tennessee and has the requisite corporate power and authority to carry on its
business as now being conducted. PBiz is duly qualified to do business and is in
good standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification necessary, other
than in such jurisdictions where the failure to be so qualified to do business
or in good standing (individually or in the aggregate) would not be reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
PBiz.
(b) Authority; Non-Contravention. The board of directors of PBiz
has approved the Merger and this Agreement. PBiz has the requisite corporate
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by PBiz and the consummation by PBiz of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on the part of PBiz,
subject to approval by the PBiz shareholders. This Agreement and other
agreements and documents executed by PBiz and its Affiliates in connection
herewith have been duly and validly executed and delivered by PBiz and
constitute valid and binding obligations of PBiz, enforceable against PBiz in
accordance with their respective terms, except that (i) such enforcement may be
subject to bankruptcy, insolvency, reorganization, moratorium or other similar
laws or judicial decisions now or hereafter in effect relating to creditors'
rights generally, (ii) the remedy of specific performance and injunctive relief
may be subject to equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought, and (iii) the enforceability of
any indemnification provision contained herein may be limited by
23
applicable federal or state securities laws. No consent, approval, order or
authorization of, or registration, declaration or filing with, any governmental
entity or other Person is required by or with respect to PBiz or any of its
Subsidiaries in connection with the execution and delivery of this Agreement by
PBiz or the consummation by PBiz of the transactions contemplated hereby, except
for (i) the filing with the Securities and Exchange Commission (the "SEC") of
the Proxy Statement, and (ii) the PBiz Shareholder Approval, and such other
consents, approvals, orders, authorizations, registrations, declarations and
filings as may be required under the "takeover" or "blue sky" laws of various
states and such other consents, approvals, orders, authorizations,
registrations, declarations and filings the failure of which to be obtained or
made would not be reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on PBiz.
(c) PBiz SEC Documents. PBiz has filed all required reports,
schedules, forms, statements, and other documents with the SEC and such
documents, together with all exhibits and schedules thereto and documents
incorporated by reference therein are collectively referred to herein as the
"PBIZ SEC DOCUMENTS". As of their respective dates, the PBiz SEC Documents
complied in all material respects with the requirements of the Securities Act or
the Exchange Act, as the case may be, and the rules and regulations of the SEC
promulgated thereunder applicable to such PBiz SEC Documents, and none of the
PBiz SEC Documents contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The consolidated financial statements of PBiz included in
the PBiz SEC Documents complied in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with GAAP (except, in the case
of unaudited statements, as permitted by Form 10-Q of the SEC) and fairly
present the consolidated financial position of PBiz and its consolidated
Subsidiaries as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments and other adjustments
described therein). Except as set forth in the PBiz SEC Documents, since the
date of filing of the most recent financial statements included in a quarterly
report on Form 10-Q for the quarter ended June 30, 2005, there has been no
Material Adverse Effect with respect to PBiz. The unaudited consolidated
financial statements of PBiz for the first eight months of 2005 previously
delivered to Captiva were prepared in accordance with GAAP applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto or as permitted by Rule 10-01 of Regulation S-X of the SEC) and
fairly present the consolidated financial position of PBiz and its consolidated
Subsidiaries as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended (subject to normal year-end
audit adjustments and other adjustments described therein).
(d) Compliance with Laws. Neither PBiz nor any of its Subsidiaries
has materially violated or materially failed to comply with, nor has it received
any written notice of any alleged material violation of or material failure to
comply with, any statute, law, ordinance, regulation, rule, permit or order of
any governmental entity, any arbitration award or any judgment, decree or order
of any court or other governmental entity, applicable to PBiz or any of its
Subsidiaries or their respective businesses, assets or operations, except for
any such failure as would not be reasonably likely to have a Material Adverse
Effect on PBiz.
24
(e) Brokers. No broker, investment banker or other Person is
entitled to receive from PBiz or any of its Subsidiaries any investment banking,
broker's, finder's or similar fee or commission in connection with this
Agreement or the transactions contemplated hereby, other than any fee for the
opinion of PBiz's financial advisor for which PBiz is solely responsible.
(f) PBiz Sub Organization. PBiz Sub is a corporation duly
organized, validly existing and in good standing under the laws of Tennessee.
PBiz Sub was formed solely for the purpose of engaging in the transactions
contemplated by this Agreement and has engaged in no business activities other
than as contemplated by this Agreement.
(g) PBiz Sub Authorization. PBiz Sub has all necessary corporate
power and authority to execute and deliver this Agreement and to consummate the
Merger. The execution and delivery of this Agreement and the consummation of the
Merger have been duly and validly authorized by the board of directors of PBiz
Sub and by PBiz as the sole shareholder of PBiz Sub, and no other corporate
proceedings on the part of PBiz Sub are necessary to authorize this Agreement or
to consummate the Merger. This Agreement has been duly and validly executed and
delivered by PBiz Sub and constitutes a valid, legal and binding agreement of
PBiz Sub, enforceable against PBiz Sub in accordance with its terms, except that
(i) such enforcement may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws or judicial decisions now or hereafter in
effect relating to creditors' rights generally, (ii) the remedy of specific
performance and injunctive relief may be subject to equitable defenses and to
the discretion of the court before which any proceeding therefor may be brought,
and (iii) the enforceability of any indemnification provision contained herein
may be limited by applicable federal or state securities laws.
(h) Capital Structure. The authorized capital stock of PBiz
consists of 100,000,000 shares authorized shares of PBiz Common Stock and
20,000,000 shares of preferred stock, no par value ("PBIZ PREFERRED STOCK"). As
of the execution date of this Agreement: (i) 14,809,307 shares of PBiz Common
Stock are issued and outstanding, (ii) 20,000 shares of Series A
non-convertible, no par value, PBiz Preferred Stock are issued and outstanding,
along with related warrants to purchase 16,000,000 shares of PBiz Common Stock;
(iii) 40,031 shares of Series B convertible, no par value, PBiz Preferred Stock
are issued and outstanding and are convertible into 40,031 shares of PBiz Common
Stock; and (iv) options to acquire 1,972,222 shares of PBiz Common Stock were
granted and are outstanding under PBiz's stock option plans (collectively, the
"PBIZ STOCK OPTION PLANS"). The numbers of shares issuable upon conversion of
all outstanding shares of Series B PBiz Preferred Stock and upon exercise of all
of the PBiz Stock Options are as set forth above, and no event has occurred that
would cause an increase in such number. Except as set forth above, there are no
outstanding or authorized rights, warrants, options, subscriptions, restricted
shares, convertible debt instruments, stock options plans, agreements or
commitments of any character giving any Person any right to require PBiz to sell
or issue any capital stock or other securities nor does PBiz or any of its
Subsidiaries have any obligation of any nature to repurchase any outstanding
capital stock or other securities. All outstanding shares of PBiz Common Stock
are validly issued, fully paid and nonassessable and not subject to preemptive
rights.
25
(i) [Intentionally omitted.]
(j) Required Vote of PBiz Shareholders. The affirmative vote of
the holders of a majority of the outstanding shares of PBiz Common Stock is
required to approve the Merger. No other vote of the shareholders of PBiz is
required by law, rule, regulation, the charter or by-laws of PBiz or otherwise
in order for PBiz to consummate the Merger and the transactions contemplated
thereby.
(k) Board Approval. PBiz's board of directors has (i) determined
that this Agreement and the transactions contemplated hereby, including the
Merger, are in the best interests of PBiz and its shareholders, (ii) approved
this Agreement and the transactions contemplated hereby in accordance with the
Tennessee Business Corporation Act and (iii) resolved to recommend to its
shareholders that they vote in favor of adopting and approving this Agreement
and the Merger in accordance with the terms hereof.
(l) No Shareholder Rights Plan. PBiz has no rights agreement or
poison pill or similar form of anti-takeover shareholder protection mechanism or
agreement in place.
(m) Absence of Certain Changes or Events. Since June 30, 2005,
PBiz has conducted its business only in the ordinary course consistent with past
practices, and there has not been (i) as of the date hereof, any matter which is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect with respect to PBiz; (ii) any declaration, setting aside or payment (as
a dividend or otherwise) (whether in cash, stock or property) with respect to
any of PBiz's capital stock; (iii) (A) any granting by PBiz or any of its
Subsidiaries to any executive officer of PBiz or any of its Subsidiaries of any
increase in compensation, (B) any granting by PBiz or any of its Subsidiaries to
any such executive officer of any increase in severance or termination pay, or
(C) any entry by PBiz or any of its Subsidiaries into any employment, severance
or termination agreement with any such executive officer; (iv) any amendment of
any material term of any outstanding equity security of PBiz or any Subsidiary;
(v) any repurchase, redemption or other acquisition by PBiz or any Subsidiary of
any outstanding shares of capital stock or other equity securities of, or other
ownership interests in, PBiz or any Subsidiary; (vi) any material damage,
destruction or other property loss, whether or not covered by insurance; or
(vii) any change in accounting methods, principles or practices by PBiz
materially affecting its assets, liabilities or business.
(n) Litigation. There is no claim, suit, action, proceeding or
investigation ("PBIZ LITIGATION") pending or, to PBiz's knowledge, threatened
against PBiz or any of its Subsidiaries that is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect or that could
prevent or materially delay the ability of PBiz to consummate the transactions
contemplated by this Agreement. There is no judgment, decree, injunction, rule
or order of any governmental entity or arbitrator outstanding against PBiz or
any of its Subsidiaries having, or which, insofar as reasonably can be foreseen,
in the future could have, any such effect.
(o) No Undisclosed Liabilities. Neither PBiz nor its Subsidiaries
has any material liabilities or obligations of any nature (whether known or
unknown, whether asserted or
26
unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether determined or determinable, whether liquidated or unliquidated and
whether due or to become due, including any liability for Taxes) other than: (i)
such liabilities or obligations that have been specifically disclosed or
provided on PBiz's annual report on Form 10-K for the year ended December 31,
2004; (ii) such liabilities or obligations that have been specifically disclosed
or provided on PBiz's quarterly report on Form 10-Q for the quarter ended June
30, 2005; (iii) such liabilities or obligations that have been specifically
disclosed or provided on the unaudited consolidated financial statements of PBiz
for the first eight months of 2005 previously delivered pursuant hereto; (iv)
liabilities or obligations incurred after June 30, 2005, in the ordinary course
of business consistent with past practice which would not be reasonably likely
to have, individually or in the aggregate, a Material Adverse Effect; (v)
liabilities or obligations under this Agreement or incurred in connection with
the transactions contemplated hereby; and (vi) other liabilities or obligations,
that would not be reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect.
ARTICLE IV
CONDUCT OF THE PARTIES
4.1 CONDUCT OF CAPTIVA. During the period from the date of this
Agreement to the Effective Time, Captiva will operate its business in good faith
and consistent with past practices, with the goal of preserving intact its
assets and current business organization, maintaining the Captiva Material
Contracts, and preserving its relationships with customers, suppliers,
creditors, brokers, agents and others having business dealings with Captiva.
Without limiting the generality of the foregoing, and except as otherwise agreed
to in writing by the Chief Executive Officer of PBiz, Captiva agrees as follows:
(a) Issuance of Securities. Captiva shall not issue, sell or grant
any membership interests, or any securities or rights convertible into,
exchangeable for, or evidencing the right to subscribe for any shares of
membership interests, or any rights, warrants, options, calls, commitments or
any other agreements of any character to purchase or acquire any membership
interests or any securities or rights convertible into, exchangeable for, or
evidencing the right to subscribe for, any membership interests or any other
securities in respect of, in lieu of, or in substitution for, membership
interests outstanding on the date hereof; provided, however, that Captiva may
issue additional membership interests: (i) in connection with the consummation
of the acquisition of either or both of the Acquisition Targets (as defined
below), which consummation shall have been approved by PBiz in accordance with
the terms of Section 4.1(e), so long as the Persons that receive membership
interests in connection with such acquisitions shall become parties under this
Agreement as Captiva Signatories and shall execute an addendum to this
Agreement; and (ii) pursuant to the exercise of currently outstanding Captiva
Options.
(b) Dividends and Redemptions. Captiva shall not: (i) split,
combine, subdivide or reclassify any membership interests; (ii) declare, set
aside for payment or pay any dividend, or make any other distribution in respect
of any membership interests; or (iii) redeem
27
or repurchase any membership interests, any outstanding Captiva Options, or any
outstanding securities that are convertible into or exchangeable for any
membership interests of Captiva.
(c) Restructuring. Captiva shall not: (i) adopt a plan of complete
or partial liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization, other than the plan of merger
evidenced by this Agreement, or (ii) make any change in the outstanding
membership interests or securities convertible or exchangeable into membership
interests by way of any reclassification, recapitalization, split or
combination, exchange or readjustment of membership interests, or any dividend
or distribution thereof or announce or create a record date with respect to any
of the foregoing.
(d) Indebtedness. Captiva shall not incur any additional
indebtedness for money borrowed or guarantee any such indebtedness of another
Person or enter into any arrangement having the economic effect of any of the
foregoing; provided, however, that Captiva may borrow, repay, and re-borrow
principal under its existing revolving credit facility.
(e) Acquisitions. Without the prior written consent of PBiz,
Captiva shall not acquire or agree to acquire (i) by merging or consolidating
with, or by purchasing a substantial portion of the assets of, or by any other
manner, any business or any corporation, limited liability company, partnership,
joint venture, association or other business organization or division thereof
(except as provided for in this Section 4.1(e)), or (ii) any assets that,
individually or in the aggregate, are material to Captiva. Captiva has
negotiated to acquire three companies (the "ACQUISITION TARGETS"), each of which
Captiva has disclosed to PBiz. Captiva shall provide timely updates to PBiz of
its negotiations with such entities and shall not enter into definitive
agreements to acquire the equity or assets of the Acquisition Targets, and will
not consummate the transactions contemplated by any such definitive agreements,
without the prior written consent of PBiz.
(f) No Dispositions or Encumbrances. Captiva shall not sell,
lease, license or otherwise encumber or subject to any lien or otherwise dispose
of any material properties or assets.
(g) Contracts. Except in the ordinary course of business, Captiva
shall not (i) enter into any Captiva Material Contract, or (ii) modify, amend or
transfer in any material respect, or terminate, any Captiva Material Contract to
which Captiva is a party or waive, release, or assign any material rights or
claims thereunder.
(h) Employee Matters. Except as set forth in Section 4.1(h) of the
Captiva Disclosure Schedule, Captiva shall not adopt or amend (except as may be
required by law or as otherwise specifically permitted hereunder) any bonus,
profit sharing, compensation, stock option, pension, retirement, deferred
compensation, employment or other employee benefit plan, agreement, trust, fund
or other arrangement for the benefit or welfare of any employee, manager or
former manager or employee, increase the compensation or fringe benefits of any
officer or increase the compensation or fringe benefits of any employee or
former employee or pay any benefit not required by any existing plan,
arrangement or agreement.
28
(i) Accounting Policies and Procedures. Captiva shall not make any
change to its accounting methods, principles or practices, except as may be
required by GAAP.
(j) Claims. Captiva shall not waive, assign or release any
material rights or claims except in the ordinary course of business consistent
with past practice, and will not settle any material Proceeding.
(k) Taxes. Without the prior written consent of PBiz, Captiva
shall not make or change any election, change an annual accounting period, adopt
or change any accounting method, file any amended Tax Return, enter into any
closing agreement, settle any Tax claim or assessment relating to Captiva,
surrender any right to claim a refund of Taxes, consent to any extension or
waiver of the limitation period applicable to any Tax claim or assessment
relating to Captiva, or take any other similar action relating to the filing of
any Tax Return or the payment of any Tax, if such election, adoption, change,
amendment, agreement, settlement, surrender, consent or other action would have
the effect of increasing the Tax liability of Captiva for any period ending
after the Closing Date or decreasing any Tax attribute of Captiva existing on
the Closing Date.
(l) Insurance. Captiva shall use commercially reasonable efforts
to maintain in full force and effect all Captiva Insurance Policies currently in
effect.
(m) No Agreements. Captiva shall not authorize, recommend, propose
or announce an intention to do any of the foregoing, or agree or enter into any
contract to do any of the foregoing.
4.2 CONDUCT OF PBiz
During the period from the date of this Agreement to the Effective Time, PBiz
will operate its business in good faith and consistent with past practices.
Without limiting the generality of the foregoing, and except as otherwise agreed
to in writing by the Chief Executive Officer of Captiva, PBiz agrees as follows:
(a) Dividends and Redemptions. PBiz shall not: (i) split, combine,
subdivide or reclassify any capital stock; (ii) declare, set aside for payment
or pay any dividend, or make any other distribution in respect of any capital
stock; or (iii) redeem or repurchase any capital stock, outstanding options,
warrants, or rights of any kind to acquire any shares of, or any outstanding
securities that are convertible into or exchangeable for any shares of, capital
stock of PBiz or any of its Subsidiaries, except for (x) dividends by a wholly
owned Subsidiary of PBiz to PBiz or another wholly owned Subsidiary of PBiz and
(y) repurchases of unvested shares in connection with the termination of a
relationship with any employee, consultant or director pursuant to stock option
or purchase agreements in effect on the date hereof.
(b) Indebtedness. PBiz shall not incur any additional indebtedness
for money borrowed or guarantee any such indebtedness of another Person or enter
into any arrangement having the economic effect of any of the foregoing;
provided, however, that PBiz may (i)
29
borrow, repay, and re-borrow principal under its existing revolving credit
facility; and (ii) obtain financing for the Merger and the acquisition of the
Acquisition Targets.
(c) Contracts. Except in the ordinary course of business, PBiz
shall not (i) enter into any material contract, or (ii) modify, amend or
transfer in any material respect, or terminate, any material contract to which
PBiz is a party or waive, release, or assign any material rights or claims
thereunder.
(d) Employee Matters. Except for the 2005 Equity Incentive Plan
(as defined below), PBiz shall not adopt or amend (except as may be required by
law or as otherwise specifically permitted hereunder) any bonus, profit sharing,
compensation, stock option, pension, retirement, deferred compensation,
employment or other employee benefit plan, agreement, trust, fund or other
arrangement for the benefit or welfare of any employee, manager or former
manager or employee, increase the compensation or fringe benefits of any officer
or increase the compensation or fringe benefits of any employee or former
employee or pay any benefit not required by any existing plan, arrangement or
agreement.
(e) Accounting Policies and Procedures. PBiz shall not make any
change to its accounting methods, principles or practices, except as may be
required by GAAP.
(f) No Agreements. PBiz shall not authorize, recommend, propose or
announce an intention to do any of the foregoing, or agree or enter into any
contract to do any of the foregoing.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 PROXY STATEMENT.
(a) As promptly as practicable after the execution of this
Agreement, PBiz shall prepare and file with the SEC a Proxy Statement (the
"PROXY STATEMENT"). Captiva shall furnish all information concerning itself as
reasonably requested by PBiz in connection with its preparation of the Proxy
Statement. As promptly as practicable after the filing of the Proxy Statement,
PBiz shall mail the Proxy Statement to its shareholders, and, if necessary,
after the Proxy Statement shall have been so mailed, promptly circulate amended,
supplemental, or supplemented proxy materials, and, if required in connection
therewith, resolicit proxies.
(b) The Proxy Statement shall include the unanimous recommendation
of the disinterested members of the board of directors of PBiz to the
shareholders of PBiz (a) in favor of approval and adoption of the Merger and
approval of the issuance of the shares of PBiz Common Stock in the Merger, and
(b) in favor of the adoption of the 2005 Equity Incentive Plan (as defined in
Section 5.10).
(c) If at any time prior to the Effective Time, Captiva or PBiz
discovers any information relating to either party, or any of their respective
Affiliates, officers, managers, or directors, that should be set forth in an
amendment or supplement to the Proxy Statement, so
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that the document will not include any misstatement of a material fact or omit
to state any material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, the party that
discovers any misleading information shall promptly notify the other parties
hereto and an appropriate amendment or supplement describing the information
shall be promptly filed with the SEC and, to the extent required by law or
regulation, disseminated to the shareholders of PBiz.
5.2 SHAREHOLDER APPROVAL.
(a) PBiz, acting through its board of directors, shall, in
accordance with the provisions of this Agreement, applicable law and its Charter
and Bylaws, promptly and duly call, give notice of, and convene and hold as soon
as practicable a special meeting of shareholders for the purpose of obtaining
shareholder approval of the Merger and related actions, including the adoption
of the 2005 Equity Incentive Plan (as defined below) described in this Agreement
(the "PBiz SHAREHOLDER APPROVAL").
(b) PBiz shall use its commercially reasonable efforts to solicit
from its shareholders proxies in favor of such approval, and shall take all
other action necessary or advisable to secure the vote or consent of
shareholders required by applicable law and the Nasdaq SmallCap Market, as
applicable, to obtain such approvals in accordance with the provisions of this
Agreement.
5.3 ACCESS TO INFORMATION; CONFIDENTIALITY COVENANT. Upon reasonable
notice, PBiz and Captiva shall each (and shall cause each of their respective
Subsidiaries to) afford to the officers, employees, accountants, counsel and
other representatives of the other, reasonable access during normal business
hours during the period from the date hereof to the Effective Time, to all of
its properties, books, contracts, commitments and records, and during such
period, each of PBiz and Captiva shall (and shall cause each of their respective
Subsidiaries to) furnish promptly to the other (i) a copy of each report,
schedule, registration statement and other document filed or received by it
during such period pursuant to the requirements of the Exchange Act or the
Securities Act (including all comment letters from the staff of the SEC) and
(ii) all other information concerning its business, properties and personnel as
such other party may reasonably request. PBiz, Captiva and the Captiva Members
agree that they will not, and they will cause their respective representatives
not to, use any information obtained pursuant to this Section 5.3 for any
purpose unrelated to the consummation of the transactions contemplated by this
Agreement, both prior to and following the Closing Date. The Confidentiality
Agreement dated August 4, 2005 (the "CONFIDENTIALITY AGREEMENT"), by and between
Captiva and PBiz, shall apply with respect to information furnished by PBiz,
Captiva, and their respective Subsidiaries and representatives thereunder or
hereunder and any other activities contemplated thereby. The parties agree that
this Agreement and the transactions contemplated hereby shall not constitute a
violation of the Confidentiality Agreement and that the provisions hereof shall
supersede provisions of the Confidentiality Agreement in the event of a
conflict.
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5.4 COMMERCIALLY REASONABLE EFFORTS; NOTIFICATION.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, except to the extent otherwise required by United States regulatory
considerations and otherwise provided in this Section 5.4, each of PBiz and
Captiva agrees to use commercially reasonable efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, and to assist and cooperate
with the other parties in doing, all things necessary, proper or advisable to
consummate and make effective, in the most expeditious manner practicable, the
Merger, and the other transactions contemplated by this Agreement, including (i)
the obtaining of all necessary actions or nonactions, waivers, consents and
approvals from governmental entities and the making of all necessary
registrations and filings (including filings with governmental entities, if any)
and the taking of all reasonable steps as may be necessary to obtain an approval
or waiver from, or to avoid a Proceeding by, any governmental entity, (ii) the
obtaining of all necessary consents, approvals or waivers from third parties,
(iii) the defending of any Proceeding challenging this Agreement or the
consummation of the transactions contemplated hereby, including seeking to have
any stay or temporary restraining order entered by any court or other
governmental entity vacated or reversed, and (iv) the execution and delivery of
any additional instruments necessary to consummate the transactions contemplated
by this Agreement. In connection with and without limiting the foregoing,
Captiva and its board of managers shall (i) take all action reasonably necessary
to ensure that no state takeover statute or similar statute or regulation is or
becomes applicable to the Merger and (ii) if any state takeover statute or
similar statute or regulation becomes applicable to the Merger, take all action
reasonably necessary to ensure that the Merger may be consummated as promptly as
practicable on the terms contemplated by this Agreement and otherwise to
minimize the effect of such statute or regulation on the Merger.
(b) Captiva shall give prompt notice to PBiz, and PBiz shall give
prompt notice to Captiva, of (i) any representation or warranty made by it
contained in this Agreement becoming untrue or inaccurate in any material
respect, or (ii) the failure by it to comply with or satisfy in any material
respect any covenant, condition or agreement to be complied with or satisfied by
it under this Agreement; provided, however, that no such notification shall
affect the representations or warranties or covenants or agreements of the
parties or the conditions to the obligations of the parties hereunder.
(c) PBiz shall promptly prepare and submit to the Nasdaq SmallCap
Market a listing application covering the shares of PBiz Common Stock issuable
in the Merger as of the Closing Date, and shall use its commercially reasonable
efforts to obtain, prior to the Effective Time, approval for the listing of such
shares of PBiz Common Stock, subject to official notice of issuance, and Captiva
shall cooperate with PBI with respect to such listing.
(d) Not later than January 31, 2007, PBiz shall prepare and submit
to the Nasdaq SmallCap Market a listing application covering the shares of PBiz
Common Stock issuable as the Earnout Payment, and shall use its commercially
reasonable efforts to obtain, as soon as practical thereafter, approval for the
listing of such shares of PBiz Common Stock, subject to official notice of
issuance.
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(e) Each of PBiz and Captiva agrees to use commercially reasonable
efforts to cause Captiva and its employees to be covered by the Pbiz Insurance
Policies at the Effective Time.
5.5 FEES AND EXPENSES. All fees and expenses incurred in connection with
the Merger, this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such fees or expenses, whether or not the Merger is
consummated; provided, however, that in the event Closing occurs, the Captiva
Signatories shall be solely responsible for all fees and expenses of Captiva in
connection with the Merger, this Agreement and the transactions contemplated
hereby (with the exception of up to One Hundred Thousand Dollars ($100,000) of
reasonable legal fees incurred by Captiva in connection with its pursuit of the
Acquisition Targets between September 1, 2005 and the Closing Date, which fees
shall be paid by PBiz at Closing).
5.6 PUBLIC ANNOUNCEMENTS. PBiz and Captiva will consult with each other
before issuing any press release with respect to the transactions contemplated
by this Agreement and shall not issue any such press release prior to each party
having had the opportunity to review and comment on such press release. The
parties agree that any press release(s) to be issued in connection with the
execution of this Agreement shall be mutually agreed upon prior to the issuance
thereof. Notwithstanding the foregoing, either party may make such disclosures,
including press releases, as and when counsel for such party determines is
required by applicable law or stock exchange regulation, provided that the party
making the disclosure shall endeavor to consult with the other party prior to
making such disclosure, and shall provide a copy of such disclosure to the other
party as promptly as practicable and in no event later than the time such
disclosure is made to any third party.
5.7 AGREEMENT TO DEFEND. In the event any claim, action, suit,
investigation or other proceeding by any governmental entity or other Person or
other legal or administrative proceeding is commenced that questions the
validity or legality of the transactions contemplated hereby or seeks damages in
connection therewith, the parties hereto agree to cooperate and use their
commercially reasonable efforts to defend against and respond thereto.
5.8 AMENDMENT OF DISCLOSURE SCHEDULES. Each Constituent Company shall
promptly (and, in any event, within a reasonable time prior to Closing) notify
the other of (i) any event which would render inaccurate in any material respect
any portion of its Disclosure Schedule, or (ii) any change or addition which the
Constituent Corporation proposes to make to any portion of its Disclosure
Schedule. No notification made pursuant to this Section shall be deemed to cure
any breach of any representation, warranty or covenant made in this Agreement or
to modify any sections of the applicable Disclosure Schedule unless the parties
specifically agree thereto in writing, nor shall any such notification be
considered to constitute or give rise to a waiver by either party of any
condition set forth in this Agreement unless the party specifically agrees.
5.9 OTHER ACTIONS. Except as contemplated by this Agreement, neither
PBiz nor Captiva shall, and neither shall permit any of its Subsidiaries to,
take or agree or commit to take any action that is reasonably likely to result
in any of its respective representations or warranties
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hereunder being untrue in any material respect or in any of the conditions to
the Merger set forth in Article VI not being satisfied.
5.10 2005 EQUITY INCENTIVE PLAN.
(a) At the Effective Time, PBiz shall adopt a Private Business,
Inc. 2005 Equity Incentive Plan (the "2005 EQUITY INCENTIVE PLAN") for the
benefit of PBiz management. The 2005 Equity Incentive Plan shall reserve
5,036,880 shares of PBiz Common Stock for issuance thereunder. Options shall be
issued at Closing under the 2005 Equity Incentive Plan to the individuals and in
the amounts and with the exercise prices as described on Exhibit 5.10(a)
attached hereto covering an aggregate of 3,374,710 shares.
(b) PBiz shall take all corporate action necessary to reserve for
issuance a sufficient number of shares of PBiz Common Stock for delivery upon
the exercise of the options issuable under the 2005 Equity Incentive Plan. As
soon as practical and in no event more than ten (10) days after the Effective
Time, PBiz shall file with the SEC a registration statement on Form S-8 (or
successor form) to register the PBiz Common Stock that is issuable upon exercise
of the options issuable under the 2005 Equity Incentive Plan (to the extent that
Form S-8 or its successor may be used to register shares issuable upon the
exercise of such options) and will use its commercially reasonable best efforts
to cause the registration statement to remain effective, and to maintain the
current status of the prospectus or prospectuses contained therein, until the
exercise or expiration of such options.
5.11 NON-SOLICITATION OF PBiz EMPLOYEES. The Captiva Signatories covenant
and agree with PBiz that, for a period of twelve (12) months from the Execution
Date, they will not directly or indirectly solicit for employment or employ any
person who is employed by PBiz or any of its Subsidiaries unless such person is
not so employed for at least twelve (12) months.
5.12 FINANCING COOPERATION
(a) Prior to the Closing, each of Captiva and PBiz shall use its
commercially reasonable efforts to assist the other in connection with the
arrangement of any financing to be consummated prior to or contemporaneously
with the Closing in respect of the transactions contemplated by this Agreement,
including any refinancing or replacement of any existing, or the arrangement of
any new, facility for indebtedness of Captiva or PBiz.
(b) Without limiting the generality of the foregoing, for each
fiscal month, quarter and year ending between the date of this Agreement and the
Effective Time, Captiva will use commercially reasonable effects to deliver to
PBiz:
(i) unaudited monthly consolidated financial statements for
Captiva within ten (10) business days after the end of each fiscal month;
(ii) unaudited quarterly consolidated financial statements,
including notes, for Captiva within twenty (20) business days after the end of
each fiscal quarter;
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(iii) audited annual consolidated financial statements for
Captiva within forty (40) business days after the end of any fiscal year; and
(iv) any other similar regularly prepared financial
statements or financial information regarding Captiva that PBiz may reasonably
request.
5.13 INFORMATION SUPPLIED.
(a) Captiva hereby covenants that none of the information supplied
or to be supplied by Captiva for inclusion in the Proxy Statement (as defined in
Section 5.1) will, at the date the Proxy Statement is first mailed to PBiz's
shareholders, contain any untrue statement of a material fact involving Captiva
or omit to state any material fact required to be stated therein or necessary in
order to make the statements therein involving Captiva, in light of the
circumstances under which they are made, not misleading. As of the time of PBiz
Shareholders Meeting, Captiva will have provided all necessary information
regarding Captiva required to enable PBiz to cause the Proxy Statement to have
been amended or supplemented, if and to the extent required, to comply with
applicable federal and state law.
(b) PBiz hereby covenants that the Proxy Statement, at the date
the Proxy Statement is first mailed to PBiz's shareholders (i) will not contain
any untrue statement of a material fact involving PBiz or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein involving PBiz, in light of the circumstances under which
they are made, not misleading and (ii) will comply as to form in all material
respects with the requirements of the Exchange Act and the rules and regulations
thereunder; except that no representation or warranty is made by PBiz with
respect to statements made in the Proxy Statement based on information supplied
by Captiva for inclusion therein. At the time of the PBiz Shareholders Meeting,
PBiz will have amended and supplemented the Proxy Statement to the extent, if
any, required by applicable federal and state law. (The covenant in the
preceding sentence expressly assumes that Captiva has complied with its covenant
in Section 5.13(a) above.)
ARTICLE VI
CONDITIONS PRECEDENT
6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Shareholder Approval. The PBiz Shareholder Approval shall have
been obtained.
(b) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger shall be in effect;
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provided, however, that the parties hereto shall, subject to Section 5.4, use
commercially reasonable efforts to have any such injunction, order, restraint or
prohibition vacated.
(c) Blue Sky Filings. There shall have been obtained any and all
material permits, approvals and consents of securities or "blue sky" authorities
of any jurisdiction that are necessary so that the consummation of the Merger
and the transactions contemplated thereby will be in compliance with applicable
laws, the failure to comply with which would be reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect.
(d) Xxxxx Employment Agreement. PBiz shall have entered into an
employment agreement with G. Xxxx Xxxxx on terms reasonably satisfactory to PBiz
and Xx. Xxxxx, substantially in the form attached hereto as Exhibit 6.1(d).
(e) Registration Rights Agreement. PBiz and the Captiva Members
shall have entered into a Registration Rights Agreement in the form attached
hereto as Exhibit 6.1(e) (the "REGISTRATION RIGHTS AGREEMENT").
6.2 CONDITIONS OF PBiz. The obligation of PBiz to consummate the Merger
is further subject to the satisfaction or waiver on or prior to the Closing Date
of the following conditions:
(a) Compliance. The agreements and covenants of Captiva to be
complied with or performed on or before the Closing Date pursuant to the terms
hereof shall have been duly complied with or performed in all material respects
and PBiz shall have received a certificate dated the Closing Date and executed
on behalf of Captiva by the chief executive officer and the chief financial
officer or principal accounting officer of Captiva certifying to such effect.
(b) Certifications. Captiva shall have furnished PBiz with a
certified copy of a resolution or resolutions duly adopted by the Captiva board
of managers and the Captiva Members approving this Agreement and consummation of
the Merger and the transactions contemplated hereby.
(c) Representations and Warranties. The representations and
warranties of Captiva contained in this Agreement (other than any
representations and warranties made as of a specific date) shall be true in all
material respects (except to the extent the representation or warranty is
already qualified by materiality, in which case it shall be true in all
respects) on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of such date, except as
contemplated or permitted by this Agreement, and PBiz shall have received a
certificate from Captiva to that effect dated the Closing Date and executed on
behalf of Captiva by the chief executive officer and the chief financial officer
or principal accounting officer of Captiva.
(d) Consents. PBiz shall have received evidence, in form and
substance reasonably satisfactory to it, that such licenses, permits, consents,
approvals, authorizations, qualifications and orders of governmental entities
and other third parties that are required have been obtained in connection with
the transactions contemplated hereby.
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(e) Material Adverse Effect. There shall not have occurred or
become known to PBiz any events or changes that have had or would, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect on
Captiva, before and after giving effect to the transactions contemplated hereby.
(f) Salem Warrant. That certain Common Membership Units Purchase
Warrant issued by Captiva to Salem Capital Partners, LP, a North Carolina
limited partnership, shall have been duly exercised in full according to its
terms.
6.3 CONDITIONS OF CAPTIVA. The obligation of Captiva to consummate the
Merger is further subject to the satisfaction or waiver on or prior to the
Closing Date of the following conditions:
(a) Compliance. The agreements and covenants of PBiz to be
complied with or performed on or before the Closing Date pursuant to the terms
hereof shall have been duly complied with or performed in all material respects
and Captiva shall have received a certificate from PBiz dated the Closing Date
and executed on behalf of PBiz by the chief executive officer and the chief
financial officer of PBiz certifying to such effect.
(b) Certifications. PBiz shall have furnished Captiva with:
(i) a certified copy of a resolution or resolutions duly
adopted by the board of directors of PBiz approving this Agreement and
consummation of the Merger and the transactions contemplated hereby and
directing the submission of the Merger to a vote of the shareholders of PBiz;
and
(ii) a certified copy of a resolution or resolutions duly
adopted by the shareholders of PBiz approving the Merger and the transactions
contemplated hereby.
(c) Representations and Warranties. The representations and
warranties of PBiz contained in this Agreement (other than any representations
and warranties made as of a specific date) shall be true in all material
respects (except to the extent the representation or warranty is already
qualified by materiality, in which case it shall be true in all respects) on and
as of the Closing Date with the same effect as though such representations and
warranties had been made on and as of such date, except as contemplated or
permitted by this Agreement, and Captiva shall have received a certificate from
PBiz to that effect dated the Closing Date and executed on behalf of PBiz by the
chief executive officer and the chief financial officer of PBiz.
(d) Consents. Captiva shall have received evidence, in form and
substance reasonably satisfactory to it, that such licenses, permits, consents,
approvals, authorizations, qualifications and orders of governmental entities
and other third parties that are required and material to the operations of PBiz
have been obtained in connection with the transactions contemplated hereby.
(e) Material Adverse Effect. There shall not have occurred or
become known to Captiva any events or changes that have had or would,
individually or in the aggregate,
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reasonably be expected to have a Material Adverse Effect on PBiz, before and
after giving effect to the transactions contemplated hereby.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 TERMINATION. This Agreement may be terminated and the Merger
abandoned at any time prior to the Effective Time, whether before or after
approval of matters presented in connection with the Merger by the shareholders
of PBiz, as follows:
(a) by mutual written consent of PBiz and Captiva;
(b) by either PBiz or Captiva:
(i) if the PBiz Shareholder Approval is not attained upon a
vote at the PBiz Shareholder Meeting or at any adjournment thereof;
(ii) if any court of competent jurisdiction or any
governmental entity shall have issued an order, decree or ruling or taken any
other action permanently enjoining, restraining or otherwise prohibiting the
Merger; or
(iii) if the Merger shall not have been consummated on or
before December 31, 2005, unless the failure to consummate the Merger is the
result of a material breach of this Agreement by the party seeking to terminate
this Agreement.
(c) by PBiz, if Captiva breaches in any material respect any of
its representations or warranties herein or fails to perform in any material
respect any of its covenants, agreements or obligations under this Agreement,
which breach has not been cured within twenty (20) days following receipt by
Captiva of notice of breach;
(d) by Captiva, if PBiz breaches in any material respect any of
its representations or warranties herein or fails to perform in any material
respect any of its covenants, agreements or obligations under this Agreement,
which breach has not been cured within twenty (20) days following receipt by
PBiz of notice of breach.
7.2 EFFECT OF TERMINATION. In the event of termination of this Agreement
by either Captiva or PBiz as provided in Section 7.1, this Agreement shall
forthwith become void and have no effect, without any current or future
liability or obligation on the part of PBiz or Captiva, other than the
confidentiality provisions of Section 5.3 and the provisions of Section 5.5. Any
termination of this Agreement pursuant to Section 7.1 hereof shall not relieve
any party hereto for liabilities related to any breach of any of its
representations, warranties, covenants or agreements in this Agreement, which
right to recover damages shall be in addition to (and not exclusive of) any
other remedy at law or in equity available to any party.
7.3 AMENDMENT. This Agreement may be amended by the parties at any time
before or after any required approval of matters presented in connection with
the Merger by the
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shareholders of PBiz; provided, however, that after any such approval, there
shall be made no amendment that by law requires further approval by such
shareholders without the further approval of such shareholders. This Agreement
may not be amended except by an instrument in writing signed on behalf of each
of the parties hereto.
7.4 EXTENSION; WAIVER. At any time prior to the Effective Time, the
parties may, to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or the other acts of the other parties,
(b) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto, or (c) waive compliance
with any of the agreements or conditions contained herein. Any agreement on the
part of a party to any such extension or waiver shall be valid only if set forth
in an instrument in writing signed on behalf of such party. The failure of any
party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of such rights.
7.5 PROCEDURE FOR TERMINATION, AMENDMENT, EXTENSION OR WAIVER. A
termination of this Agreement pursuant to Section 7.1, an amendment of this
Agreement pursuant to Section 7.3 or an extension or waiver pursuant to Section
7.4 shall, in order to be effective, require in the case of PBiz or Captiva,
action by the PBiz board of directors or the Captiva board of managers,
respectively, or their duly authorized designees.
ARTICLE VIII
INDEMNIFICATION
8.1 SURVIVAL. All representations, warranties, covenants, and
obligations in this Agreement, the Disclosure Schedules, the supplements to the
Disclosure Schedules, the certificates delivered pursuant to Sections 6.2 and
6.3, and any other certificate or document delivered pursuant to this Agreement
will survive the Closing.
8.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY CAPTIVA AND THE CAPTIVA
MEMBERS. Subject to the limitations set forth in this Article VIII, the Captiva
Members, severally but not jointly, will indemnify and hold harmless PBiz, PBiz
Sub, and their respective representatives, shareholders, controlling persons,
and affiliates (collectively, the "INDEMNIFIED PERSONS") for, and will pay to
the Indemnified Persons the amount of, any loss, liability, claim, damage
(including incidental and consequential damages), expense (including costs of
investigation and defense and reasonable attorneys' fees actually incurred) or
diminution of value, whether or not involving a third-party claim (collectively,
"DAMAGES"), arising, directly or indirectly, from or in connection with:
(a) any Breach of any representation or warranty made by Captiva
or the Captiva Signatories in this Agreement or the remaining Captiva Members in
the Acknowledgements (without giving effect to any supplement to the Captiva
Disclosure Schedule), the Captiva Disclosure Schedule, the supplements to the
Captiva Disclosure Schedule, or any other certificate or document delivered by
Captiva or the Captiva Members pursuant to this Agreement;
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(b) any Breach of any representation or warranty made by Captiva
or the Captiva Members in this Agreement as if such representation or warranty
were made on and as of the Closing Date without giving effect to any supplement
to the Captiva Disclosure Schedule;
(c) any Breach by Captiva or the Captiva Members of any covenant
or obligation of any of Captiva or the Captiva Members in this Agreement; or
(d) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by any such Person with any of Captiva or the Captiva
Members (or any Person acting on their behalf) in connection with any of the
transactions contemplated by this Agreement.
8.3 INDEMNIFICATION AND PAYMENT OF DAMAGES BY PBiz. PBiz will indemnify
and hold harmless the Captiva Members, and will pay to the Captiva Members the
amount of any Damages arising, directly or indirectly, from or in connection
with (a) any Breach of any representation or warranty made by PBiz or PBiz Sub
in this Agreement (without giving effect to any supplement to the PBiz
Disclosure Schedule) or in any certificate delivered by PBiz or PBiz Sub
pursuant to this Agreement, (b) any Breach by PBiz or PBiz Sub of any covenant
or obligation of PBiz or PBiz Sub in this Agreement, or (c) any claim by any
Person for brokerage or finder's fees or commissions or similar payments based
upon any agreement or understanding alleged to have been made by such Person
with PBiz or PBiz Sub (or any Person acting on its behalf) in connection with
any of the transaction contemplated by this Agreement.
8.4 PROCEDURE FOR MAKING INDEMNIFICATION CLAIMS.
(a) Subject to Section 8.8 regarding third party claims, the party
entitled to indemnification hereunder (the "CLAIMANT") shall deliver to the
Party from whom indemnification is sought hereunder (the "OBLIGOR") notice in
writing (a "NOTICE OF CLAIM") within 30 days of Claimant's discovery of any
Damages in respect of which the right to indemnification is sought under this
Agreement, specifying in reasonable detail the nature of the Damages, and, if
known, the amount, or, if not known, an estimate of the amount, of the liability
arising therefrom (a "CLAIM"). Notwithstanding the above, the failure to give
Notice of Claim within such 30-day period shall not result in the waiver or loss
of any right to bring such Claim hereunder after such period unless, and only to
the extent that, the other party is actually prejudiced by such failure. The
Claimant shall provide to the Obligor as promptly as practicable thereafter
information and documentation reasonably requested by the Obligor to support and
verify the Claim asserted, provided that, in so doing, it may condition any
disclosure in the interest of preserving privileges of importance in any
foreseeable Proceeding.
(b) If an Obligor desires to dispute any Claim, it shall, within
30 days after receipt of the Notice of Claim, give counternotice, setting forth
the basis for disputing such Claim, to the Claimant. If no such counternotice is
given within such 30-day period, or if the Obligor acknowledges liability for
indemnification, then the amount claimed shall be satisfied (i) if by PBiz, in
cash promptly paid pro rata to the Captiva Members based on the number of
Captiva Units owned by such Captiva Members on the Closing Date, and (ii) if by
the Captiva Members, as provided in Section 8.6 below. If, within 60 days after
the Claimant receives the
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counternotice, the Obligor and the Claimant shall not have reached agreement as
to the Claim in question, then the party disputing the Claim shall satisfy any
undisputed amount as specified in the preceding sentence and the disputed amount
of the Claim shall be submitted to and settled by arbitration in Nashville,
Tennessee in accordance with the then prevailing commercial arbitration rules of
the American Arbitration Association. The arbitration shall be held before a
panel of three arbitrators, one selected by each of PBiz (acting through its
Board of Directors) and the Captiva Designee and the third selected by mutual
agreement of PBiz (acting through its Board of Directors) and the Captiva
Designee, and all of whom shall be independent and impartial under the
commercial rules of the American Arbitration Association. The decision of the
arbitrators shall be final and binding as to any matter submitted under this
Agreement. To the extent the decision of the arbitrators is that a Party shall
be indemnified under this Agreement, the amount shall be satisfied as provided
in this Section 8.4(b). Judgment upon any award rendered by the arbitrators may
be entered in any court of competent jurisdiction. The date on which an award
shall be determined (the "RESOLUTION DATE") shall mean any of the following
dates, as applicable: (a) the date that PBiz and the Captiva Designee enter into
a written agreement whereby the Obligor agrees to indemnify the Claimant; (b)
the day after the 30th day following delivery of the Notice of Claim if the
Obligor has failed to provide a counternotice to the Claimant within such 30 day
period; or (c) the date of the arbitrators' written decision.
8.5 TIME LIMITATIONS. If the Closing occurs, the Captiva Members shall
have no liability (for indemnification or otherwise) with respect to any
representation or warranty, or covenant or obligation to be performed and
complied with prior to the Closing Date, unless on or before the close of
business on the thirtieth (30th) day following receipt by PBiz of its
consolidated audited financial statements together with an executed final audit
report for fiscal year 2006 from its independent auditors (but in no event
beyond April 30, 2007) (such date referred to herein as the "INDEMNIFICATION
NOTIFICATION DATE"), PBiz notifies the Captiva Members of a claim specifying the
factual basis of that claim in reasonable detail to the extent then known by
PBiz. If the Closing occurs, PBiz, PBiz Sub, and Captiva will have no liability
(for indemnification or otherwise) with respect to any representation or
warranty, or covenant or obligation to be performed and complied with prior to
the Closing Date, unless on or before the Indemnification Notification Date, the
Captiva Designee notifies PBiz of a claim specifying the factual basis of that
claim in reasonable detail to the extent then known by the Captiva Designee.
8.6 LIMITATIONS ON AMOUNT - CAPTIVA MEMBERS.
(a) The Captiva Members will have no liability (for
indemnification or otherwise) with respect to the matters described in Section
8.2 hereof, until the total of all Damages with respect to such matters exceeds
One Hundred Thousand Dollars ($100,000), at which time the Captiva Members shall
be obligated to indemnify the Indemnified Persons for all indemnity obligations,
including the first $100,000 of indemnity claims. In no event, however, will the
Captiva Members be liable for Damages in excess of an aggregate of One Million
Seven Hundred and Fifty Thousand Dollars ($1,750,000) with respect to such
matters.
(b) The recourse of PBiz to recover an indemnity claim hereunder
shall be limited to the following sources, in the order provided, until the
indemnification claims of PBiz are paid in full (subject to the $1,750,000 limit
provided in Section 8.6(a) above): (i)
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cancellation of the Closing Date PBiz Shares; (ii) cancellation of the Earnout
Payment; and (iii) up to Two Hundred Thousand Dollars ($200,000) in cash each,
pro rata, from G. Xxxx Xxxxx and Cut Bank, LLLP. PBiz shall not be entitled to
recover any indemnity claim from a Captiva Member other than through (x)
cancellation of the applicable number of such shares of PBiz Common Stock as
provided in clauses (i) and (ii) of the preceding sentence, and (y) the payment
of cash by G. Xxxx Xxxxx and Cut Bank, LLLP as provided in clause (iii) of the
preceding sentence. To facilitate resolution of indemnity claims in this manner,
PBiz shall issue share certificates evidencing the Closing Date PBiz Shares
(with a legend thereon to the extent that such shares are subject to
cancellation as provided in this Agreement) but shall retain possession of such
certificates until the Final Indemnification Settlement Date, when such shares
shall be cancelled or distributed to the Captiva Members as provided in the
following Section 8.6(c).
(c) The number of shares of PBiz Common Stock that shall be
cancelled to satisfy a particular indemnity claim shall be determined based upon
the average closing price per share of the PBiz Common Stock on the Nasdaq
SmallCap Market for the ten (10) consecutive trading days ending two (2)
business days prior to the "FINAL INDEMNIFICATION SETTLEMENT DATE," which shall
be the later of (i) the Indemnification Notification Date; and (ii) the
Resolution Date of any pending indemnity claims as of the Indemnification
Notification Date. On the Final Indemnification Settlement Date, shares valued
as described in the preceding sentence in an aggregate amount equal to the
indemnity claim(s) (subject to the $1,750,000 limit provided in Section 8.6(a)
above) shall be cancelled pro rata from: first, the Closing Date PBiz Shares,
and second, the Earnout Payment. PBiz shall promptly distribute certificates for
the remaining shares, if any, to the Captiva Members. If and only if the shares
of PBiz Common Stock that are cancelled to satisfy the indemnity claim(s) are
insufficient to satisfy the entire amount of such indemnity claim(s) (subject to
the $1,750,000 limit provided in Section 8.6(a) above), then PBiz may notify Xx.
Xxxxx and Cut Bank, LLLP of such remaining obligation, and Xx. Xxxxx and Cut
Bank, LLLP shall satisfy the remaining obligation, pro rata, by paying PBiz in
cash not later than 30 days after receiving such notification, up to the
$200,000 limit for each of them as specified in Section 8.6(b) above. (Cut Bank,
LLLP agrees to hold at least $200,000 of the cash portion of the purchase price
in its possession until the date that is 45 days after the Final Indemnification
Settlement Date.)
(d) Notwithstanding anything in this Section 8.6 to the contrary,
the limitations set forth in this Section 8.6 will not apply in the event of
fraud, willful misconduct or bad faith.
8.7 LIMITATIONS ON AMOUNT - PBiz. PBiz will have no liability (for
indemnification or otherwise) with respect to the matters described in Section
8.3 until the total of all Damages with respect to such matters exceeds One
Hundred Thousand Dollars ($100,000), at which time PBiz shall be obligated to
indemnify the indemnified party for all indemnity obligations, including the
first $100,000 of indemnity claims. In no event, however, will PBiz be liable
for Damages in excess of One Million Dollars ($1,000,000) with respect to such
matters. Notwithstanding anything in this Section 8.7 to the contrary, the
limitations set forth in this Section 8.7 will not apply in the event of fraud,
willful misconduct or bad faith.
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8.8 PROCEDURE FOR INDEMNIFICATION - THIRD PARTY CLAIMS.
(a) Promptly after receipt by an indemnified party under Section
8.2 or 8.3 of notice of the commencement of any Proceeding against it, such
indemnified party will, if a claim is to be made against an indemnifying party
under such Section, give notice to the indemnifying party of the commencement of
such claim, but the failure to notify the indemnifying party will not relieve
the indemnifying party of any liability that it may have to any indemnified
party, except to the extent that the indemnifying party demonstrates that the
defense of such action is materially prejudiced by the indemnifying party's
failure to give such notice.
(b) If any Proceeding referred to in Section 8.8(a) is brought
against an indemnified party and it gives notice to the indemnifying party of
the commencement of such Proceeding, the indemnifying party will be entitled to
participate in such Proceeding and, to the extent that it wishes (unless (i) the
indemnifying party is also a party to such Proceeding and the indemnified party
determines in good faith that joint representation would be inappropriate, or
(ii) the indemnifying party fails to provide reasonable assurance to the
indemnified party of its financial capacity to defend such Proceeding and
provide indemnification with respect to such Proceeding), to assume the defense
of such Proceeding with counsel satisfactory to the indemnified party and, after
notice from the indemnifying party to the indemnified party of its election to
assume the defense of such Proceeding, the indemnifying party will not, as long
as it diligently conducts such defense, be liable to the indemnified party under
this Section 8 for any fees of other counsel or any other expenses with respect
to the defense of such Proceeding, in each case subsequently incurred by the
indemnified party in connection with the defense of such Proceeding, other than
reasonable costs of investigation. If the indemnifying party assumes the defense
of a Proceeding, (i) it will be conclusively established for purposes of this
Agreement that the claims made in that Proceeding are within the scope of and
subject to indemnification; (ii) no compromise or settlement of such claims may
be effected by the indemnifying party without the indemnified party's consent
unless (A) there is no finding or admission of any violation of legal
requirements or any violation of the rights of any Person and no effect on any
other claims that may be made against the indemnified party, and (B) the sole
relief provided is monetary damages that are paid in full by the indemnifying
party; and (iii) the indemnified party will have no liability with respect to
any compromise or settlement of such claims effected without its consent. If
notice is given to an indemnifying party of the commencement of any Proceeding
and the indemnifying party does not, within ten days after the indemnified
party's notice is given, give notice to the indemnified party of its election to
assume the defense of such Proceeding, the indemnifying party will be bound by
any determination made in such Proceeding or any compromise or settlement
effected by the indemnified party.
(c) Notwithstanding the foregoing, if an indemnified party
determines in good faith that there is a reasonable probability that a
Proceeding may adversely affect it or its affiliates other than as a result of
monetary damages for which it would be entitled to indemnification under this
Agreement, the indemnified party may, by notice to the indemnifying party,
assume the exclusive right to defend, compromise, or settle such Proceeding, but
the indemnifying party will not be bound by any determination of a Proceeding so
defended or any compromise or settlement effected without its consent (which may
not be unreasonably withheld).
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8.9 PROCEDURE FOR INDEMNIFICATION - OTHER CLAIMS. A claim for
indemnification for any matter not involving a third-party claim may be asserted
by notice to the party from whom indemnification is sought.
ARTICLE IX NONCOMPETE AND OTHER AGREEMENTS
9.1 NONCOMPETE
Each of the Captiva Signatories set forth on Exhibit 9.1 hereof hereby
covenants and agrees with PBiz that, during the Noncompete Period (as such term
is defined herein) and within the Noncompete Area (as such term is defined
herein), such Captiva Member shall not directly or indirectly, (i) acquire,
lease, manage, consult for, serve as agent or subcontractor for, finance, invest
in, own any part of or exercise management control over any financial services
business or other business that provides any goods or services competitive with
the goods and services provided, or contemplated to be provided, by PBiz, any of
its Subsidiaries, any of the Acquisition Targets, or Captiva as of the Closing;
or (ii) offer to provide or provide goods or services competitive with the goods
and services provided by, or contemplated to be provided, by PBiz, any of its
Subsidiaries, any of the Acquisition Targets, or Captiva as of the Closing to
any customer or client that is located within the Noncompete Area, (iii) solicit
for employment or employ any person who at Closing or thereafter became an
employee of PBiz, any of its Subsidiaries, any of the Acquisition Targets, or
Captiva as of the Closing unless such person is not so employed for at least
twelve (12) months, or (iv) with respect to any customer or client with whom
PBiz, any of its Subsidiaries, any of the Acquisition Targets, or Captiva
contracts with in connection with their business, either solicit the same in a
manner which could adversely affect PBiz, any of its Subsidiaries, any of the
Acquisition Targets, or Captiva, or make statements to the same which disparage
PBiz, any of its Subsidiaries, any of the Acquisition Targets, or Captiva or
their respective operations in any way. The "NONCOMPETE PERIOD" shall commence
at the Closing and terminate on the last day of the thirteenth (13th) month
following Closing, subject to extension as set forth in Exhibit 9.1. The
"NONCOMPETE AREA" shall mean the continental United States. Ownership of less
than five percent (5%) of the stock of a publicly held company shall not be
deemed a breach of this covenant.
9.2 NONSOLICITATION
Each of the Captiva Signatories hereby agrees for a period of two (2)
years from the Effective Date of Closing (i) not to solicit for employment or
employ any person who was an employee of or consultant to Captiva at Closing and
thereafter became an employee of or consultant to PBiz or any of its
Subsidiaries unless such person is not so employed or engaged for at least
twelve (12) months, (ii) not to solicit any person or entity who was a customer
or client of Captiva on the Closing Date in a manner which could adversely
affect PBiz or any of its Subsidiaries, or (iii) make statements to any such
customer or client that disparage PBiz or any of its Subsidiaries in any way.
In the event of a breach of Section 9.1 or 9.2, each Captiva Signatory
recognizes that monetary damages shall be inadequate to compensate PBiz, and
PBiz shall be entitled, without the posting of a bond or similar security, to an
injunction restraining such breach, with the costs (including
44
attorney's fees) of securing such injunction to be borne by such Captiva
Signatory. Nothing contained herein shall be construed as prohibiting PBiz from
pursuing any other remedy available for such breach or threatened breach. All
parties hereby acknowledge the necessity of protection against the competition
described herein and that the nature and scope of such protection has been
carefully considered by the parties. The period provided and the area covered
are expressly represented and agreed to be fair, reasonable and necessary. The
consideration provided for herein is deemed to be sufficient and adequate to
compensate the Captiva Signatories for agreeing to the restrictions contained in
this Article IX. If, however, any court determines that the forgoing
restrictions are not reasonable, such restrictions shall be modified, rewritten
or interpreted to include as much of their nature and scope as will render them
enforceable.
ARTICLE X
POST-CLOSING TAX MATTERS
10.1 POST-CLOSING TAX MATTERS. The following provisions shall govern the
allocation of responsibility as between the parties hereto for certain tax
matters following the Closing Date:
(a) Tax Indemnification. Each Captiva Member shall jointly and
severally indemnify PBiz, PBiz Sub and Captiva and hold them harmless from and
against, any loss, claim, liability, expense, or other damage attributable to
(i) all Taxes (or the non-payment thereof) of Captiva for all taxable periods
ending on or before the Closing Date and the portion through the end of the
Closing Date for any taxable period that includes (but does not end on) the
Closing Date ("PRE-CLOSING TAX PERIOD"), (ii) all Taxes of any member of an
affiliated, consolidated, combined or unitary group of which Captiva (or any of
its predecessors) is or was a member on or prior to the Closing Date, including
pursuant to United States Treasury Regulation section 1.1502-6 or any analogous
or similar state, local, or foreign law or regulation, and (iii) any and all
Taxes of any Person (other than Captiva) imposed on Captiva as a transferee or
successor, by contract or pursuant to any law, rule, or regulation, which Taxes
relate to an event or transaction occurring before the Closing.
(b) Straddle Period. In the case of any taxable period that
includes (but does not end on) the Closing Date (a "STRADDLE PERIOD"), the
amount of any Taxes based on or measured by income or receipts of Captiva for
the Pre-Closing Tax Period shall be determined based on an interim closing of
the books as of the close of business on the Closing Date and the amount of
other Taxes of Captiva for a Straddle Period that relates to the Pre-Closing Tax
Period shall be deemed to be the amount of such Tax for the entire taxable
period multiplied by a fraction the numerator of which is the number of days in
the taxable period ending on the Closing Date and the denominator of which is
the number of days in such Straddle Period.
(c) Responsibility for Filing Tax Returns. The Captiva Signatories
shall prepare or cause to be prepared and file or cause to be filed all Tax
Returns for Captiva for all periods ending on or before the Closing Date. The
Captiva Signatories shall permit PBiz to review and comment on each such Tax
Return described in the preceding sentence prior to filing.
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(d) Cooperation on Tax Matters.
(i) Captiva and the Captiva Signatories shall cooperate
fully, as and to the extent reasonably requested by the other party, in
connection with the filing of Tax Returns pursuant to Section 9.1(c) and any
audit, litigation or other proceeding with respect to Taxes. Such cooperation
shall include the retention and (upon the other party's request) the provision
of records and information that are reasonably relevant to any such audit,
litigation or other proceeding and making employees available on a mutually
convenient basis to provide additional information and explanation of any
material provided hereunder. Captiva and the Captiva Signatories agree (A) to
retain all books and records with respect to Tax matters pertinent to Captiva
relating to any taxable period beginning before the Closing Date until the
expiration of the statute of limitations (and any extensions thereof) of the
respective taxable periods, and to abide by all record retention agreements
entered into with any taxing authority, and (B) to give the other party
reasonable written notice prior to transferring, destroying or discarding any
such books and records and, if the other party so requests, Captiva or the
Captiva Signatories, as the case may be, shall allow the other party to take
possession of such books and records.
(ii) PBiz, PBiz Sub, Captiva, and the Captiva Signatories
further agree, upon request, to use their best efforts to obtain any certificate
or other document from any governmental authority or any other Person as may be
necessary to mitigate, reduce or eliminate any Tax that could be imposed
(including, but not limited to, with respect to the transactions contemplated
hereby).
(e) Tax-Sharing Agreements. All tax-sharing agreements or similar
agreements with respect to or involving Captiva shall be terminated as of the
Closing Date and, after the Closing Date, Captiva shall not be bound thereby or
have any liability thereunder.
(f) Certain Taxes and Fees. All transfer, documentary, sales, use,
stamp, registration and other such Taxes, and all conveyance fees, recording
charges and other fees and charges (including any penalties and interest)
incurred in connection with consummation of the transactions contemplated by
this Agreement shall be paid by the Captiva Signatories when due, and the
Captiva Signatories will, at their own expense, file all necessary Tax Returns
and other documentation with respect to all such Taxes, fees and charges, and,
if required by applicable law, PBiz will, and will cause PBiz Sub to, join in
the execution of any such Tax Returns and other documentation.
(g) Allocations of Captiva Income and Loss. PBiz and PBiz Sub
acknowledge that Captiva is taxed as a partnership for federal income tax
purposes, and that the transactions set forth herein will result in a
termination of the partnership as of the Closing Date pursuant to section
708(b)(1)(B) of the Code. Accordingly, all items of income or deduction arising
during any period ending on or prior to the Closing Date shall be allocated to
the Captiva Members pursuant to the operating agreement of Captiva, and the
Captiva Members shall be allocated no items of income or deduction arising
during any period beginning on or after the Closing Date.
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ARTICLE XI
GENERAL PROVISIONS
11.1 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by facsimile or
sent by nationally recognized overnight courier to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(a) if to the Captiva Signatories prior to Closing, to Captiva, to
Captiva Solutions, LLC
000 Xxxxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxx 00000
Attention: G. Xxxx Xxxxx
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxx X. Xxxxxx
Xxxxxx Xxxxxxx Xxxxx & Xxxxxxxxxxx LLP
14th Floor
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000-0000
Facsimile: (000) 000-0000
(b) if to PBiz or, at following Closing, Captiva, to
Private Business, Inc.
0000 Xxxxxxxx Xxxxxxxxx
Xxxxxxxxx, XX 00000
Attention: Chief Executive Officer
Facsimile: (000) 000-0000
with a copy to:
Xxxxx Xxx
Xxxxxxx Xxxxxx Xxxx Xxxxxxx & Manner, P.C.
000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
11.2 ADDITIONAL DEFINITIONS. For purposes of this Agreement:
"ACTUAL KNOWLEDGE" shall mean an individual will be deemed to have
"Actual Knowledge" of a particular fact or other matter if such individual is
actually aware of such fact,
47
without conducting, and without any obligation to conduct, an investigation
concerning the existence of such fact or other matter. A Person (other than an
individual and other than Captiva) will be deemed to have "Actual Knowledge" of
a particular fact or other matter if any individual who is serving, or who has
at any time served, as a director, manager, officer, partner, executor, or
trustee of such Person (or in any similar capacity) has, or at any time had,
Actual Knowledge of such fact or other matter. Captiva will be deemed to have
"Actual Knowledge" of a particular fact or other matter only if any of the
Captiva Signatories or Captiva's employee Xxx Xxxxx has, or at any time had,
Actual Knowledge of such fact.
"AFFILIATE" is each Person who is an affiliate for purposes of Rule
145 under the Securities Act.
a "BREACH" of a representation, warranty, covenant, obligation, or
other provision of this Agreement or any instrument delivered pursuant to this
Agreement will be deemed to have occurred if there is or has been (a) any
inaccuracy in or breach of, or any failure to perform or comply with, such
representation, warranty, covenant, obligation, or other provision, or (b) any
claim (by any Person) or other occurrence or circumstance that renders such
representation or warranty inaccurate or violates such covenant, obligation, or
other provision, and the term "Breach" means any such inaccuracy, breach,
failure, claim, occurrence, or circumstance.
"CAPTIVA IP" means all Intellectual Property Rights in the following
Intellectual Property owned by Captiva including, but not limited to, the Total
Bank System software and the unregistered common law trademark, "Total Bank
System."
"CAPTIVA IP CONTRACT" means any Contract to which Captiva is a party
or by which Captiva is bound, that contains any assignment or license of, or
covenant not to assert or enforce, any Intellectual Property Right or that
otherwise relates to any Captiva IP or any Intellectual Property developed by,
with, or for Captiva.
"EMPLOYMENT ARRANGEMENT" shall mean an arrangement between a Captiva
Member and PBiz or any of its Affiliates pursuant to which such Captiva Member
receives fees, compensation, or other payment as consideration for services
rendered to PBiz or any of its Affiliates.
"INTELLECTUAL PROPERTY" means and includes algorithms, apparatus,
circuit designs and assemblies, gate arrays, IP cores, net lists, photomasks,
semiconductor devices, test vectors, databases, data collections, customer
lists, vendor lists, diagrams, formulae, inventions (whether or not patentable),
know-how, trade secrets, logos, marks (including brand names, product names,
logos, and slogans), methods, network configurations and architectures,
processes, proprietary information, protocols, schematics, specifications,
software, software code (in any form, including source code and executable or
object code), subroutines, techniques, user interfaces, URLs, web sites, works
of authorship, and other forms of technology (whether or not embodied in any
tangible form and including all tangible embodiments of the foregoing, such as
instruction manuals, laboratory notebooks, prototypes, samples, studies, and
summaries). Intellectual Property includes, but is not limited to Intellectual
Property Rights and Registered IP.
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"INTELLECTUAL PROPERTY RIGHTS" means and includes all past, present,
and future rights of the following types, which may exist or be created under
the laws of any jurisdiction in the world, whether given through license or
otherwise: (i) rights associated with works of authorship, including exclusive
exploitation rights, copyrights, moral rights, and mask works, (ii) trademark
and trade name rights and similar rights, (iii) trade secret rights, (iv)
patents and industrial property rights, (v) other proprietary rights in
Intellectual Property of every kind and nature and (vi) rights in or relating to
registrations, renewals, extensions, combinations, divisions, reissues of,
applications for, and enforcement of any of the rights referred to in clauses
"(i)" through "(v)" above.
"KNOWLEDGE" shall mean an individual will be deemed to have
"Knowledge" of a particular fact or other matter if such individual is actually
aware of such fact or other matter or a prudent individual could be expected to
discover or otherwise become aware of such fact or other matter in the course of
conducting a reasonably comprehensive investigation concerning the existence of
such fact or other matter. A Person (other than an individual and other than
Captiva) will be deemed to have "Knowledge" of a particular fact or other matter
if any individual who is serving, or who has at any time served, as a director,
manager, officer, partner, executor, or trustee of such Person (or in any
similar capacity) has, or at any time had, Knowledge of such fact or other
matter. Captiva will be deemed to have "Knowledge" of a particular fact or other
matter only if any of the Captiva Signatories or Captiva's employee Xxx Xxxxx
has, or at any time had, Knowledge of such fact.
"MATERIAL ADVERSE EFFECT" shall mean, with respect to any entity or
group of entities, a material adverse effect on the business, operations,
assets, liabilities, financial condition, or results of operations, of such
entity or group of entities taken as a whole, or on the ability of such entity
or group of entities to perform in all material respects its or their
obligations hereunder, or which would prevent or materially delay the
consummation of the transactions contemplated hereby, other than any change,
circumstance or effect (i) relating to the economy or securities markets in
general, (ii) relating to the industries in which Captiva or PBiz operate and
not specifically relating to Captiva or PBiz, (iii) any generally applicable
change in law, rule or regulation or GAAP, or interpretation thereof, or (iv)
resulting from the execution of this Agreement, the announcement of this
Agreement and the transactions contemplated hereby or any change in the value of
Captiva or the PBiz Common Stock relating to such execution or announcement;
"PERSON" means an individual, corporation, partnership, joint
venture, limited liability company, association, trust, unincorporated
organization or other entity;
"REGISTERED IP" means all Intellectual Property Rights that are
registered, filed, or issued under the authority of any governmental body,
including all patents, registered copyrights, registered mask works and
registered trademarks and all applications for any of the foregoing.
a "SUBSIDIARY" of a Person means any corporation, partnership or
other legal entity of which securities or other ownership interests having
ordinary voting power to elect a
49
majority of the board of directors or other Persons performing similar functions
are directly or indirectly owned by such first mentioned Person.
11.3 INTERPRETATION. When a reference is made in this Agreement to a
Section, Exhibit or Schedule, such reference shall be to a Section of, or an
Exhibit or Schedule to, this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the word "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation."
11.4 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
11.5 ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This Agreement
(including the documents and instruments referred to herein) constitute the
entire agreement and supersede all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof
and are not intended to confer and shall not upon any Person other than the
parties any rights or remedies hereunder.
11.6 GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Tennessee, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
11.7 ASSIGNMENT. Neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by any of the parties without the
prior written consent of the other parties. This Agreement will be binding upon,
inure to the benefit of, and be enforceable by, the parties and their respective
successors and assigns.
11.8 ENFORCEMENT OF THE AGREEMENT.
(a) The parties agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of the United States located in the
Middle District of Tennessee, this being in addition to any other remedy to
which they are entitled at law or in equity.
(b) If either party breaches its obligations under this Agreement,
such party shall pay the costs and expenses (including legal fees and expenses)
reasonably incurred by any other Person obtaining successful disposition in
connection with actions taken to enforce this Agreement.
11.9 SEVERABILITY. In the event any one or more of the provisions
contained in this Agreement should be held invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected
50
or impaired thereby. The parties shall endeavor in good faith negotiations to
replace the invalid, illegal or unenforceable provisions with valid provisions,
the economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
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IN WITNESS WHEREOF, PBiz, PBiz Sub, Captiva and the Captiva Signatories
have caused this Agreement to be signed by their respective duly authorized
officers, all as of the date first written above.
PRIVATE BUSINESS, INC. CAPTIVA SOLUTIONS, LLC
By: /s/ Xxxxx X. Xxxxxx By: /s/ G. Xxxx Xxxxx
------------------- -----------------
Title: Chief Executive Officer G. Xxxx Xxxxx,
Chief Executive Officer
CSL ACQUISITION CORPORATION
By: /s/ Xxxxx X. Xxxxxx
-------------------
Title: President
CAPTIVA SIGNATORIES
/s/ G. Xxxx Xxxxx
-----------------
G. Xxxx Xxxxx
Cut Bank, LLLP
By: Xxxxxx Management, LLC,
its general partner
By: /s/ Xxxxx X. Xxxxx
------------------
Xxxxx X. Xxxxx, Manager
/s/ Xxxxxxx X. Xxxxxx
---------------------
Xxxxxxx X. Xxxxxx
/s/ W. Xxxx Xxxxxx
------------------
W. Xxxx Xxxxxx
[Signature page to Agreement and Plan of Merger]
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