EXHIBIT 2.2
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (hereinafter the "AGREEMENT") dated as
of June 29, 2001, by and among GLOBAL AXCESS CORP. a Nevada corporation (the
"Company"), GLOBAL ACQUISITION CORP. I, a Nevada corporation ("Merger Sub"),
CARDSERVICE INTERNATIONAL, INC., a California corporation ("CSI") and NATIONWIDE
MONEY SERVICES, INC., a Nevada corporation ("NWM" and together with the Company,
Merger Sub, CSI and NWM, the "Parties").
RECITALS
WHEREAS, CSI owns one hundred percent (100%) of the issued and
outstanding shares of NWM and Company owns 100% of the issued and outstanding
shares of Merger Sub;
WHEREAS, the Company, Merger Sub and NWM believe it is in the best
interests of their respective companies and the stockholders of those companies
that, subject to the terms and conditions set forth herein, the Company will
acquire NWM through the merger of Merger Sub with and into NWM;
WHEREAS, concurrently with the execution of this Agreement, and as a
condition and inducement to CSI's willingness to enter into this Agreement,
Company and certain principal stockholders of Company are entering into an
Investor Rights Agreement in substantially the form attached hereto as Exhibit
A;
WHEREAS, concurrently with the execution of this Agreement, and as a
condition and inducement to CSI's willingness to enter into this Agreement,
Company is entering into a Guaranty substantially in the form attached hereto as
Exhibit B relating to that certain Secured Promissory Note of NWM in an
aggregate principal amount of up to $2,000,000 dated as of even date herewith
(the "NWM Note"); and
WHEREAS, the Parties intend, by executing this Agreement, to adopt a
plan of reorganization within Section 368 of the Internal Revenue Code of 1986,
as amended (the "Code");
NOW, THEREFORE, in consideration of the mutual promises, covenants,
representations, warranties and agreements set forth herein, the Parties hereto
agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. At the Effective Time (as defined in Section 1.2) and
subject to and upon the terms and conditions of this Agreement and the
applicable provisions of Nevada law, NWM shall be merged with and into Merger
Sub (the "Merger"), the separate corporate existence of Merger Sub shall cease
and NWM shall continue as the surviving corporation and a
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wholly owned subsidiary of Company. NWM, as the surviving corporation after the
Merger, is hereinafter sometimes referred to as the "Surviving Corporation."
1.2 Effective Time; Closing. Subject to the provisions of this
Agreement, the parties hereto shall cause the Merger to be consummated by filing
a Certificate of Merger in the form attached hereto as Exhibit C with the
Secretary of State of the State of Nevada in accordance with the relevant
provisions of Nevada law (the "Merger Documents") (the time of such filing being
the "Effective Time") as soon as practicable on or after the Closing Date (as
herein defined). The closing of the Merger (the "Closing") shall take place at
the offices of O'Melveny & Xxxxx LLP, 000 Xxxxx Xxxx Xxxxxx, Xxx Xxxxxxx,
Xxxxxxxxxx, at a time and date to be specified by the parties, which shall be no
later than the second business day after the satisfaction or waiver of the
conditions set forth in Articles IV and V, or at such other time, date and
location as the parties hereto agree in writing (the "Closing Date").
1.3 Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in this Agreement and the applicable provisions of
Nevada law. Without limiting the generality of the foregoing, the Surviving
Corporation shall possess all the rights, privileges, powers and franchises, and
shall be subject to all the debts, restrictions, disabilities and duties, of NWM
and Merger Sub, all without further act or deed.
1.4 Articles of Incorporation; Bylaws.
(a) At the Effective Time, the Articles of Incorporation of the
Surviving Corporation shall be the Articles of Incorporation of NWM.
(b) The Bylaws of Merger Sub, as in effect immediately prior to the
Effective Time, shall be, at the Effective Time, the Bylaws of NWM, until
thereafter amended.
1.5 Directors and Officers. The initial directors of the Surviving
Corporation shall be the directors of Merger Sub immediately prior to the
Effective Time, until their respective successors are duly elected or appointed
and qualified. The initial officers of the Surviving Corporation shall be the
officers of Merger Sub immediately prior to the Effective Time, until their
respective successors are duly appointed.
1.6 Effect on Capital Stock. Subject to the terms and conditions of
this Agreement, at the Effective Time, by virtue of the Merger and without any
action on the part of Merger Sub, NWM or the holders of any of the following
securities, the following shall occur:
(a) Conversion of Company Stock. All of the shares of the NWM's
common stock, no par value (the "NWM Stock"), issued and outstanding immediately
prior to the Effective Time will be canceled and extinguished and automatically
converted (subject to Sections 1.6(e) and 1.6(f)) and upon surrender of the
certificate or certificates representing shares of NWM Stock in the manner
provided in Section 1.7 (or in the case of a lost, stolen or destroyed
certificate, upon delivery of an affidavit and indemnity, if required, pursuant
to Section 1.9), into the right to receive in the aggregate 3,725,000 shares of
common stock, $0.001 par value per
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share, of Company ("Company Common Stock"), plus the Adjustment Shares (as
defined below), if any (together, the "Company Consideration Shares").
The Company Consideration Shares referred to in this Section
1.6(a) shall be adjusted to reflect fully the effect of any stock issuance,
stock split, stock dividend (including any dividend or distribution of stock
convertible into Company capital stock, whether common stock or preferred
stock), reorganization, recapitalization or other similar change with respect to
Company capital stock after the date hereof and prior to the Effective Time.
(b) Price Adjustment. If, on the date that is five days before
the one year anniversary of the Effective Time, the average of the closing
per-share prices of Company Common Stock for the ten trading days prior to such
date (the "Ten Day Average") as reported on the over-the-counter bulletin board
market (the "OTC-BB") or such other market on which such shares are traded is
less than $1.00, the Company agrees to promptly (but in no event later than the
day before the one year anniversary of the Effective Time) issue to CSI
additional shares of Company Common Stock such that the total value of shares of
Company Common Stock issued to CSI (based on the Ten Day Average) shall equal or
exceed $3,725,000 (the "Price Adjustment Shares").
(c) NOL Adjustment. If, at any time within ten years following the
Closing Date, the Company or the Surviving Corporation or any affiliate thereof
claims any net operating losses formerly carried on the books of NWM and
acquired by the Surviving Corporation pursuant to the Merger, the Company agrees
to promptly (but in no event later than 10 days after each tax return is filed
that claims any of such net operating losses) issue to CSI additional shares of
Company Common Stock having a value (based on the Ten Day Average determined
with reference to the date such tax return is filed) equal to 120% of the value
of such net operating losses so utilized (the "NOL Adjustment Shares", and
together with the Price Adjustment Shares, the "Adjustment Shares"); provided
that the Company shall not be obligated to issue shares of Company Common Stock
pursuant to this paragraph having a value (based upon the respective Ten Day
Averages at the times such shares were granted) greater than $225,000 in the
aggregate.
(d) Cancellation of Company-Owned Stock. Each share of NWM Stock held
by NWM or owned by Merger Sub, Company or any direct or indirect wholly owned
subsidiary of Company or of NWM immediately prior to the Effective Time, shall
be canceled and extinguished without any conversion thereof.
(e) Capital Stock of Merger Sub. Each share of common stock, $0.01
par value per share, of Merger Sub (the "Merger Sub Common Stock") issued and
outstanding immediately prior to the Effective Time shall remain outstanding as
shares of common stock of the Surviving Corporation. Each certificate evidencing
ownership of shares of Merger Sub Common Stock shall evidence ownership of such
shares of capital stock of the Surviving Corporation.
(f) Fractional Shares. No fraction of a share of Company Common Stock
will be issued by virtue of the Merger, but in lieu thereof each holder of
shares of NWM Stock who would otherwise be entitled to a fraction of a share of
Company Common Stock (after
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aggregating all fractional shares of Company Common Stock that otherwise would
be received by such holder) shall, upon surrender of such holder's
Certificate(s) (as defined in Section 1.7(b)) receive from Company an amount of
cash (rounded to the nearest whole cent), without interest, equal to the product
of (i) such fraction, multiplied by (ii) the average closing price of Company
Common Stock for the ten trading days immediately preceding the last full
trading day prior to the Effective Time, as reported on the OTC-BB.
1.7 Surrender of Certificates.
(a) Exchange Agent. Company shall act as the exchange agent in the
Merger.
(b) Exchange Procedures. At the Effective Time, the Company shall
deliver to CSI 3,750,000 shares of Company Common Stock and payment in lieu of
fractional shares which CSI has the right to receive pursuant to Section 1.6(f)
in exchange for the surrender of the certificate or certificates (the
"Certificates"), which immediately prior to the Effective Time represented
outstanding shares of NWM Stock which were converted into the right to receive
the Company Consideration Shares and cash in lieu of any fractional shares
pursuant to Section 1.6(f). The Certificates so surrendered shall forthwith be
canceled. Until so surrendered, outstanding Certificates will be deemed from and
after the Effective Time, for all corporate purposes, to evidence only the right
to receive the Company Consideration Shares and the right to receive an amount
in cash in lieu of the issuance of any fractional shares in accordance with
Section 1.6(f).
(c) Transfers of Ownership. If certificates representing shares of
Company Common Stock are to be issued in a name other than that in which the
Certificates surrendered in exchange therefor are registered, it will be a
condition of the issuance thereof that the Certificates so surrendered will be
properly endorsed and otherwise in proper form for transfer and that the persons
requesting such exchange will have paid to Parent or any agent designated by it
any transfer or other taxes required by reason of the issuance of certificates
representing shares of Company Common Stock in any name other than that of the
registered holder of the Certificates surrendered, or established to the
satisfaction of Company or any agent designated by it that such tax has been
paid or is not payable.
1.8 No Further Ownership Rights in Company Stock. Delivery of the
Company Consideration Shares (together with any cash paid in respect thereof
pursuant to Sections 1.6(f)) shall be deemed to have been delivered in full
satisfaction of all rights pertaining to such shares of NWM Stock, and there
shall be no further registration of transfers on the records of the Surviving
Corporation of shares of NWM Stock which were outstanding immediately prior to
the Effective Time. If, after the Effective Time, Certificates are presented to
the Surviving Corporation for any reason, they shall be canceled and exchanged
as provided in this Article I.
1.9 Lost, Stolen or Destroyed Certificates. In the event that any
Certificates shall have been lost, stolen or destroyed, Company shall issue in
exchange for such lost, stolen or destroyed Certificates, upon the making of an
affidavit of that fact by the holder thereof, the Company Consideration Shares
and cash for fractional shares, if any, as may be required
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pursuant to Section 1.6(f); provided, however, that Company may, in its
discretion and as a condition precedent to the issuance of the Company
Consideration Shares, cash and other distributions, require the owner of such
lost, stolen or destroyed Certificates to deliver an indemnity agreement
reasonably satisfactory in form and amount to Company as indemnity against any
claim that may be made against Company or the Surviving Corporation with respect
to the Certificates alleged to have been lost, stolen or destroyed.
1.10 Taking of Necessary Action; Further Action. If, at any time after
the Effective Time, any further action is necessary or desirable to carry out
the purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of NWM and Merger Sub, the current officers and directors of NWM
and Merger Sub will take all such lawful and necessary action.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to CSI that:
2.1 Due Organization and Qualification; Subsidiaries; Due
Authorization.
(a) The Company and Merger Sub are corporations duly incorporated,
validly existing and in good standing under the laws of their respective
jurisdictions of formation, with full corporate power and authority to own,
lease and operate their respective business and properties and to carry on their
respective business in the places and in the manner as presently conducted or
proposed to be conducted. The Company and Merger Sub are in good standing as
foreign corporations in each jurisdiction in which their respective properties
are owned, leased or operated, or the business conducted by either of them
requires such qualification, except for any such failure, which when taken
together with all other failures, is not likely to have a material adverse
effect on the business of the Company and Merger Sub taken as a whole.
(b) Except for Xxxxxxx & Associates, LLC and Merger Sub, the Company
does not own, directly or indirectly, any capital stock, equity or interest in
any corporation, firm, partnership, joint venture or other entity.
(c) The Company and Merger Sub have all requisite corporate power and
authority to execute and deliver this Agreement and each other document being
executed in connection herewith to which each is a party, and to consummate the
transactions contemplated hereby and thereby. The Company and Merger Sub have
taken all corporate action necessary for the execution and delivery of this
Agreement and each other document being executed in connection herewith to which
each is a party and the consummation of the transactions contemplated hereby and
thereby, and this Agreement and each such other document being executed in
connection herewith constitutes the valid and binding obligation of the Company
and Merger Sub, enforceable against the Company and Merger Sub in accordance
with its respective terms, except as may be affected by bankruptcy, insolvency,
moratoria or other similar laws affecting the enforcement of creditors' rights
generally and subject to the qualification that the
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availability of equitable remedies is subject to the discretion of the court
before which any proceeding may be brought.
(d) Merger Sub was formed for the specific purpose of consuming the
Merger and has not (a) engaged in any business activities, (b) conducted
operations other than in connection with the Merger, or (c) incurred any
liabilities other than in connection with the Merger.
2.2 No Conflicts or Defaults. The execution and delivery of this
Agreement by the Company and Merger Sub and the consummation of the transactions
contemplated hereby do not and shall not:
(a) Contravene the Articles of Incorporation or By-laws of the
Company or Merger Sub or
(b) With or without the giving of notice or the passage of time:
(1) Violate, conflict with, or result in a breach of, or a
default or loss of rights under, any material covenant, agreement, mortgage,
indenture, lease, instrument, permit or license to which the Company or Merger
Sub is a party or by which the Company or Merger Sub or any of their respective
assets are bound, or any judgment, order or decree, or any law, rule or
regulation to which the Company or Merger Sub or any of their respective assets
are subject,
(2) Result in the creation of, or give any party the right to
create, any lien, charge, encumbrance or any other right or adverse interest
("Liens") upon any of the assets of the Company or Merger Sub,
(3) Terminate or give any party the right to terminate, amend,
abandon or refuse to perform, any material agreement, arrangement or commitment
to which the Company or Merger Sub are a party or by which the Company's or
Merger Sub's or assets are bound, or
(4) Accelerate or modify, or give any party the right to
accelerate or modify, the time within which, or the terms under which, the
Company or Merger Sub are to perform any duties or obligations or receive any
rights or benefits under any material agreement, arrangement or commitment to
which either is a party.
2.3 Capitalization.
(a) The authorized capital stock of the Company immediately prior to
giving effect to the transactions contemplated hereby consists of one hundred
million (100,000,000) shares allocated as seventy five million (75,000,000)
shares of common stock and twenty five million (25,000,000) shares of preferred
stock, of which ten million two hundred three thousand seven hundred
thirty-seven (12,598,737) shares of Company Common Stock are issued and
outstanding. Additionally, the Company has reserved, subject to the exercise the
options and warrants to purchase shares of Company Common Stock allocated as
follows: (A) Series A
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Warrants to purchase three hundred thousand (300,000) shares of Company Common
Stock (the "Series A Warrants") at an exercise price of $2.50 expiring 30 days
after the date that the price of Company Common Stock reaches $3.12 on the
OTC-BB; (B) Series B Warrants to purchase three hundred fifty five thousand
(355,000) shares of Company Common Stock (the "Series B Warrants") at an
exercise price of $5.00 expiring on September 30, 2002; (C) Series C Warrants to
purchase three hundred fifty five thousand (355,000) shares of Company Common
Stock (the "Series C Warrants") at an exercise price of $7.50 expiring on
September 20, 2002; (D) Series D Warrants to purchase three hundred eleven
thousand six hundred fifty eight (311,658) shares of Company Common Stock (the
"Series D Warrants") at an exercise price of $10.00 expiring on September 30,
2002; (E) Series E Warrants to purchase three hundred eleven thousand six
hundred fifty eight (311,658) shares of Company Common Stock (the "Series E
Warrants") at an exercise price of $10.00 expiring on September 30, 2002; (F)
incentive stock options to purchase three hundred and forty thousand (340,000)
common shares of Company Common Stock at an exercise price of $4.00 with
expirations in accordance with the Second Amended and Restated Global Axcess
Stock Option Agreement; (G) stock options to purchase five hundred thousand
(500,000) shares of Company Common Stock exercisable at a price of fifty cents
($0.50) per share. All issued and outstanding shares, options and warrants shall
be duly and validly issued, fully paid, and non-assessable, and not issued in
violation of any applicable securities laws. All outstanding shares of capital
stock of the Company were issued in compliance with all applicable federal and
state laws. The offers and sales of all the Company's outstanding securities
were at all relevant times either registered under the Securities Act and the
applicable state securities or Blue Sky laws, or exempt from such registration
pursuant to the exemption claimed therefor. There are no preemptive rights to
acquire any securities of the Company.
2.4 No Defaults. Neither the Company, nor, to the Company's
knowledge, any other person or entity is in breach in any material respect of,
or in default in any material respect under, any material contract, agreement,
arrangement, commitment or plan to which the Company is a party, and no event or
action has occurred, is pending or is threatened, which, after the giving of
notice, passage of time or otherwise, would constitute or result in such a
material breach or material default by the Company or, to the knowledge of the
Company, any other person or entity. The Company has not received any notice of
default under any contract, agreement, arrangement, commitment or plan to which
it is a party, which default has not been cured to the satisfaction of, or duly
waived by, the party claiming such default on or before the date hereof.
2.5 Compliance with Law.
(a) The Company has conducted its business and affairs in accordance
with all applicable federal, state and local laws, ordinances, rules,
regulations, court and administrative orders, decrees or processes, and
requirement of insurance carriers. The Company has not received any notice of
violation or claimed violation of any such law, ordinance, rule, regulation,
order, decree, process or requirement.
(b) The Company is in compliance in all material respects with all
applicable federal, state, local and foreign laws and regulations relating to
the protection of the environment and human health. There are no claims,
notices, actions, suits, hearings, investigations, inquiries
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or proceedings pending or, to the knowledge of the Company, threatened, against
the Company that is based on or related to any environmental matters or the
failure to have any required environmental permits, and there are no past or
present conditions that the Company has reason to believe are likely to give
rise to any material liability or other obligations of the Company under any
environmental laws.
2.6 Permits and Licenses. The Company has all certificates of
occupancy, rights, permits, certificates, licenses, franchises, approvals and
other authorizations as are reasonably necessary to conduct its respective
business and to own, lease, use, operate and occupy its assets, at the places
and in the manner now conducted and operated, except those the absence of which
would not materially adversely affect its respective business. As of the date
hereof, the Company has not received any written or oral notice or claim
pertaining to the failure to obtain any material permit, certificate, license,
approval or other authorization required by any federal, state or local agency
or other regulatory body, the failure of which to obtain would materially and
adversely affect its business.
2.7 Ordinary Course. Since its inception, the Company has conducted
its business and maintained its assets and equipment in accordance with good
business practices and has kept its books of account, records and files,
substantially in accordance with generally accepted accounting procedures.
2.8 Litigation.
(a) There is no claim, dispute, action, suit, proceeding or
investigation pending or, to the knowledge of the Company, threatened, against
or affecting the Company or its business, or challenging the validity or
propriety of the transactions contemplated by this Agreement or the Asset
Purchase Agreement and Plan of Reorganization by and between the Company (f/k/a
Xxxxxxxxxxx.xxx Inc.) and IFT Financial Group Inc. dated as of May 9, 2001, as
amended (the "IFT Agreement"), at law or in equity or admiralty or before any
federal, state, local, foreign or other governmental authority, board, agency,
commission or instrumentality, nor to the knowledge of the Company, has any such
claim, dispute, action, suit, proceeding or investigation been pending or
threatened, during the 12-month period preceding the date hereof;
(b) There is no outstanding judgment, order, writ, ruling,
injunction, stipulation or decree of any court, arbitrator or federal, state,
local, foreign or other governmental authority, board, agency, commission or
instrumentality, against or materially affecting the Company or its business;
and
(c) The Company has not received any written or verbal inquiry from
any federal, state, local, foreign or other governmental authority, board,
agency, commission or instrumentality concerning the possible violation of any
law, rule or regulation or any matter disclosed in respect of its business.
2.9 Certificate of Incorporation and By-laws. The Articles of
Incorporation and By-laws (or similar governing documents) of the Company, and
all amendments to each in the forms delivered to CSI, are true, correct and
complete.
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2.10 Employee Benefit Plans. The Company does not maintain, nor has
the Company maintained in the past, any employee benefit plans ("as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
"ERISA"), or any plans, programs, policies, practices, arrangements or contracts
(whether group or individual) providing for payments, benefits or reimbursements
to employees of the Company, former employees, their beneficiaries and
dependents under which such employees, former employees, their beneficiaries and
dependents are covered through an employment relationship with the Company, or
any entity required to be aggregated in a controlled group or affiliated service
group with the Company for purposes of ERISA or the Internal Revenue Code of
1986 (the "Code") (including, without limitation, under Section 414(b), (c), (m)
or (o) of the Code or Section 4001 of ERISA, at any relevant time ("Benefit
Plans").
2.11 Patents; Trademarks and Intellectual Property Rights. The Company
owns or possesses sufficient legal rights to all patents, trademarks, service
marks, trade names, copyrights, trade secrets, licenses, information, internet
web site(s), proprietary rights and processes necessary for its business as now
conducted without any conflict with or infringement of the rights of others.
There are no outstanding options, licenses or agreements of any kind relating to
the foregoing, and the Company is not bound by, or a party to, any options,
licenses or agreements of any kind with respect to the patents, trademarks,
service marks, trade names, copyrights, trade secrets, licenses, information,
proprietary rights and processes of any other person or entity.
2.12 Brokers. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried out by the Company directly
with NWM and CSI without the intervention of any Person on behalf of the Company
in such a manner as to give rise to any valid claim by any Person against CSI
for a finder's fee, brokerage commission or similar payment. Without limiting in
any way the foregoing, the Company expects to pay a finders fee payable to Acts
2000, Inc. in respect of the Merger in the amount of 5% of the consideration
payable in the Merger consisting of $37,500 in cash and 149,000 restricted
shares of Company Common Stock.
2.13 Affiliate Transactions.
(a) Neither the Company nor any officer, director or employee of the
Company (or any of the relatives or Affiliates (as such term is defined in Rule
12b-2 promulgated under the Securities and Exchange Act of 1934, as amended (the
"Exchange Act")) of any of the aforementioned Persons) is a party to any
agreement, contract, commitment or transaction with the Company or affecting the
business of the Company, or has any interest in any property, whether real,
personal or mixed, or tangible or intangible, used in or necessary to the
Company which will subject CSI to any liability or obligation from and after the
Closing Date.
(b) Except for indebtedness of the Company to Xxxxx Xxxx in the
amount of $212,000, (1) the Company has no indebtedness due from its officers,
directors or stockholders or any of their respective relatives or Affiliates,
and (2) none of the officers, directors or stockholders of the Company or their
respective relatives or Affiliates has any material and un-
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liquidated claims against the Company. Claims shall not be considered material
for the purposes of this Section 2.13(b) if it provides for expenditures of less
than $5,000 in aggregate and has been entered into by the Company in the
ordinary course of business. This Section 2.13(b) specifically excludes any
claims for reimbursement of expenses incurred by any officer or director of the
Company in the ordinary course of business.
2.14 No Anti-Dilution Adjustment. The issuance of the Company
Consideration Shares contemplated by this Agreement will not give any holder of
any of the Company's outstanding capital stock, options, warrants or other
convertible securities or rights to purchase shares of the Company's capital
stock, the right to purchase or receive any additional shares of capital stock,
the right to be issued any capital stock and/or the right to purchase or receive
capital stock at a reduced price
2.15 No Regulatory Problems. The Company:
(a) Has not filed a registration statement that is the subject of any
proceeding or examination under Section 8 of the Securities Act, or that is the
subject of any refusal order or stop order thereunder. The Company has complied
with the all provisions of the Exchange Act and all provisions for registration
under the Securities Act of 1933, as amended (the "Securities Act") and all
applicable blue sky laws in connection with its stock offerings. There are no
outstanding, pending or threatened stop orders or other actions or
investigations relating thereto. All information regarding the Company which has
been provided to CSI by the Company or set forth in any document disseminated to
the public or filed with the NASD or the Securities and Exchange Commission (the
"Commission") is true, complete and accurate in all material respects.
(b) Is not subject to any pending proceeding under Rule 258 of the
Securities Act or any similar rule adopted under Section 3(b) of the Securities
Act, or to an order entered thereunder;
(c) Has not been convicted of any felony or misdemeanor in connection
with the purchase or sale of any security or involving the making of any false
filing with the Commission;
(d) Is not subject to any order, judgment, or decree of any court of
competent jurisdiction temporarily, preliminary or permanently restraining or
enjoining, the Company from engaging in or continuing any conduct or practice in
connection with the purchase or sale of any security or involving the making of
any false filing with the Commission; and
(e) Is not subject to a United States Postal Service false
representation order entered under Section 3005 of Xxxxx 00, Xxxxxx Xxxxxx Code;
or a temporary restraining order or preliminary injunction entered under Section
3007 of Title 39, United States Code, with respect to conduct alleged to have
violated Section 3005 of Xxxxx 00, Xxxxxx Xxxxxx Code. To its knowledge, none of
the Company's directors, officers, or beneficial owners of five percent or more
of any class of its equity securities:
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(1) Has been convicted of any felony or misdemeanor in
connection with the purchase or sale of any security, involving the making of a
false filing with the Commission, or arising out of the conduct of the business
of an underwriter, broker, dealer, municipal securities dealer, or investment
advisor;
(2) Is subject to any order, judgment, or decree of any court
of competent jurisdiction temporarily or preliminary enjoining or restraining,
or is subject to any order, judgment, or decree of any court of competent
jurisdiction, permanently enjoining or restraining such person from engaging in,
or continuing, any conduct or practice in connection with the purchase or sale
of any security involving the making of a false filing with the Commission;
(3) Is subject to an order of the Commission entered pursuant
to Section 15(b), 15B(a), or 15B(c) of the Exchange Act, or is subject to an
order of the Commission entered pursuant to Section 203(e) or (f) of the
Investment Advisers Act of 1940;
(4) Has been suspended or expelled from membership in, or
suspended or barred from association with a member of, an exchange registered as
a national securities exchange pursuant to Section 6 of the Exchange Act, an
association registered as a national securities association under Section 15A of
the Exchange Act, or a Canadian securities exchange or association for any act
or omission to act constituting conduct inconsistent with just and equitable
principles of trade; or
(5) Is subject to a United States Postal Service false
representation order entered under Section 3005 of Xxxxx 00, Xxxxxx Xxxxxx Code;
or is subject to a restraining order or preliminary injunction entered under
Section 3007 of Title 39, United States Code, with respect to conduct alleged to
have violated Section 3005 of Xxxxx 00, Xxxxxx Xxxxxx Code.
2.16 Company SEC Filings; Financial Statement.
(a) Company has made available to CSI a complete copy of each report,
schedule, registration statement and definitive proxy statement filed by Company
with the Commission on or after January 1, 2000 (the "Company SEC Reports"),
which are all the forms, reports and documents required to be filed by the
Company with the Commission since January 1, 2000. The Company SEC Reports (i)
were prepared in accordance with the requirements of the Securities Act or the
Exchange Act, as the case may be, and (ii) did not at the time they were filed
(or if amended or superseded by a filing prior to the date of this Agreement,
then on the date of such filing) contain any untrue statement of a material fact
or omit 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.
(b) Each set of financial statements (including, in each case, any
related notes thereto) contained in the Company SEC Reports was prepared in
accordance with GAAP applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto or, in the case of
unaudited statements, do not contain footnotes as permitted by Form 10-Q of the
Exchange Act) and each fairly presents the consolidated financial position of
11
Company at the respective dates thereof and the consolidated results of its
operations and cash flows for the periods indicated, except that the unaudited
interim financial statements were or are subject to normal year-end adjustments
which were not or are not expected to be material.
(c) Company has made available to CSI a complete and correct copy of
any amendments or modifications, which have not yet been filed with the
Commission but which are required to be filed, to agreements, documents or other
instruments which previously had been filed by Company with the Commission
pursuant to the Securities Act or the Exchange Act.
2.17 Financial Statements. The attached Schedule 2.17 contains a true
and correct copy of the IFT Financial Group, Inc. financial statements for the
year ended December 31, 2000 and the subsequent three (3) months ended March 31,
2001 (all such statements being the "IFT Financial Statements"). The IFT
Financial Statements, together with the notes thereto, have been prepared in
accordance with generally accepted accounting principles applied on a basis
consistent throughout all periods presented, subject to audit adjustments, which
are not expected to be material. The IFT Financial Statements present fairly the
financial position of IFT Financial Group, Inc. as of the dates and for the
periods indicated. The books of account and other financial records of IFT
Financial Group, Inc. have been maintained in accordance with good business
practices and generally accepted accounting procedures.
2.18 Acquisition of IFT. The IFT Agreement is effective and has been
completely consummated. No contingency exists whereby the IFT Agreement or the
transactions contemplated thereby may be unwound, rescinded or otherwise
nullified. A complete copy of the IFT Agreement, together with all amendments,
schedules, exhibits and related documents has been provided to CSI and its
counsel.
2.19 Taxes. Company has filed all United States federal, state,
county, local and foreign national, provincial and local tax returns and reports
which were required to be filed on or prior to the date hereof, and has paid all
taxes (and related penalties, fines and interest) which have become due pursuant
to such returns or reports or pursuant to any assessment which has become
payable, or, to the extent its liability for any taxes (and any related
penalties, fines and interest) has not been fully discharged, the same have been
properly reflected as a liability on the books and records of Company and
adequate reserves therefor have been established. All such returns and reports
filed on or prior to the date hereof have been properly prepared and are true,
correct (and to the extent such returns reflect judgments made by Company, such
judgments were reasonable under the circumstances) and complete in all material
respects. No extension for the filing of any such return or report is currently
in effect. All taxes and any penalties, fines and interest which have been
asserted to be payable as a result of any audits have been paid. Company has not
given or been requested to give waivers of any statute of limitations relating
to the payment of any taxes (or any related penalties, fines and interest).
There are no claims pending or, to the knowledge of Company, threatened, against
Company for past due taxes. All payments for withholding taxes, unemployment
insurance and other amounts required to be paid for periods prior to the date
hereof to any governmental authority in respect of employment obligations of
Company, have been paid or shall be paid prior to the Closing and have been duly
provided for on the books and records of Company.
12
2.20 Miscellaneous. The representations and warranties made by the
Company in this Agreement and the statements made by or on behalf of the Company
in any certificate, document or exhibit furnished in connection with the
transactions contemplated hereby or thereby or in any public filing with the
Commission or any other regulatory agency, do not contain any untrue statement
of a material fact or omit to state any material fact necessary in order to make
such representations or warranties or other such statements, in light of the
circumstances under, and at the time at, which they were made, not false or
misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLING PARTIES
NWM and CSI, individually and collectively represent and warrant
to the Company that:
3.1 Due Organization and Qualification; Subsidiaries; Due
Authorization.
(a) Each of CSI, NWM and EFT Integration, Inc., a Nevada corporation
and a wholly-owned subsidiary of NWM ("EFTI"), are duly incorporated, validly
existing and in good standing under the laws of their respective jurisdictions
of formation, with full corporate power and authority to own, lease and operate
its business and properties and to carry on its business in the places and in
the manner as presently conducted or, with respect to NWM and EFTI, as proposed
to be conducted. Each of NWM and EFTI are in good standing as a foreign
corporation in each jurisdiction in which their respective properties are owned,
leased or operated, or their respective business is conducted, by each of them
that requires such qualification except for any such failure, which when taken
together with all other failures, is not likely to have a material adverse
effect on the business of NWM and EFTI taken as a whole.
(b) CSI and NWM each have all requisite power and authority to
execute and deliver this Agreement and each other document being executed in
connection herewith to which it is a party, and to consummate the transactions
contemplated hereby and thereby. CSI and NWM each have taken all corporate and
individual action necessary for the execution and delivery of this Agreement and
each other document being executed in connection herewith to which it is a party
and the consummation of the transactions contemplated hereby, and this Agreement
and each such other document or agreement contemplated hereby constitutes the
valid and binding obligation of each of CSI and NWM, enforceable against each of
them in accordance with its respective terms, except as may be affected by
bankruptcy, insolvency, moratoria or other similar laws affecting the
enforcement of creditors' rights generally and subject to the qualification that
the availability of equitable remedies is subject to the discretion of the court
before which any proceeding therefor may be brought.
3.2 No Conflicts or Defaults. The execution and delivery of this
Agreement by each of CSI and NWM and the consummation of the transactions
contemplated hereby do not and shall not:
(a) Contravene the Articles of Incorporation or Bylaws of CSI or NWM
or;
13
(b) With or without the giving of notice or the passage of time:
(1) Violate, conflict with, or result in a breach of, or a
default or loss of rights under, any material covenant, agreement, mortgage,
indenture, lease, instrument, permit or license to which CSI, NWM or EFTI is/are
a party or by which CSI, NWM, or EFTI or any of their respective assets are
bound, or any judgment, order or decree, or any law, rule or regulation to which
CSI, NWM or EFTI or any of their respective assets are subject,
(2) Result in the creation of, or give any party the right to
create, any Lien upon any of the assets of CSI,
(3) Terminate or give any party the right to terminate, amend,
abandon or refuse to perform, any material agreement, arrangement or commitment
to which CSI is a party or by which CSI or any of its assets are bound, or
(4) Accelerate or modify, or give any party the right to
accelerate or modify, the time within which, or the terms under which, CSI is to
perform any duties or obligations or receive any rights or benefits under any
material agreement, arrangement or commitment to which it is a party.
3.3 Capitalization. As of the date hereof and immediately prior to
giving effect to the transactions contemplated hereby, 100 shares of common
stock of EFTI and 3,000 shares of common stock of NWM are issued and
outstanding. All of the outstanding shares of NWM and EFTI are, and as of the
Closing Date will be, duly authorized, validly issued, fully paid and
non-assessable. Such shares are not subject to any preemptive or subscription
right, any voting trust agreement or other contract, agreement, arrangement,
option, warrant, call, commitment or other right of any character obligating or
entitling NWM or EFTI to issue, sell, redeem or repurchase any of their
respective shares of capital stock, and there are no outstanding shares or other
equitable interest of any kind convertible into or exchangeable for any of their
respective shares of capital stock.
3.4 Financial Statements. The attached Schedule 3.4 contains a true
and correct copy of NWM and EFTI's respective financial statements for the year
ended December 31, 2000, and the subsequent three (3) months ended March 31,
2001 (all such statements being the "NWM and EFTI Financial Statements"). Such
statements present fairly the financial position of NWM and EFTI as of the dates
and for the periods indicated, subject to audit adjustments. The books of
account and other financial records of NWM and EFTI have been maintained in
accordance with good business practices and generally accepted accounting
procedures.
3.5 Further Financial Matters. NWM and EFTI have no material
liabilities or obligations, whether secured or unsecured, accrued, determined,
absolute or contingent, asserted or unasserted or otherwise, which are required
to be reflected or reserved in a balance sheet under generally accepted
accounting principles and which are not so reflected or reserved.
14
3.6 Taxes. Except for NWM's 2000 federal tax teturn, for which an
extension has been filed, NWM and EFTI have filed all United States federal,
state, county, local and foreign national, provincial and local tax returns and
reports which were required to be filed on or prior to the date hereof, and have
paid all taxes (and any related penalties, fines and interest) which have become
due pursuant to such returns or reports or pursuant to any assessment which has
become payable, or, to the extent its liability for any taxes (and any related
penalties, fines and interest) has not been fully discharged, the same have been
properly reflected as a liability on the books and records of NWM and EFTI and
adequate reserves therefor have been established. All such returns and reports
filed on or prior to the date hereof have been properly prepared and are true,
correct (and to the extent such returns reflect judgments made by NWM and EFTI,
such judgments were reasonable under the circumstances) and complete in all
material respects. No extension for the filing of any such return or report is
currently in effect except with respect to NWM's 2000 federal tax return. All
taxes and any penalties, fines and interest which have been asserted to be
payable as a result of any audits have been paid. Except with respect to a
waiver relating to NWM's 1997 taxes, NWM and EFTI have not given or been
requested to give waivers of any statute of limitations relating to the payment
of any taxes (or any related penalties, fines and interest). There are no claims
pending or, to the knowledge of NWM and EFTI, threatened, against NWM and EFTI
for past due taxes. All payments for withholding taxes, unemployment insurance
and other amounts required to be paid for periods prior to the date hereof to
any governmental authority in respect of employment obligations of NWM and EFTI,
have been paid or shall be paid prior to the Closing and have been duly provided
for on the books and records of NWM and EFTI.
3.7 Indebtedness; Contracts; No Defaults.
(a) Except for the NWM Note and the items listed on Schedule 3.7(a),
there are no material instruments, agreements, indentures, mortgages,
guarantees, notes, commitments, accommodations, letters of credit or other
arrangements or understandings relating to the borrowing of money by NWM or EFTI
or the extension of credit to NWM or EFTI, whether written or oral, to which NWM
or EFTI is a party. An agreement shall not be considered material for the
purposes of this Section 3.7(a) if it relates to an aggregate amount of less
than $10,000 and has been entered into by NWM or EFTI in the ordinary course of
business.
(b) Neither NWM nor EFTI, nor, to the knowledge of CSI, NWM or EFTI,
any other person or entity, is in breach in any material respect of, or in
default in any material respect under, any material contract, agreement,
arrangement, commitment or plan to which NWM or EFTI is a party, and no event or
action has occurred, is pending or is threatened, which, after the giving of
notice, passage of time or otherwise, would constitute or result in such a
material breach or material default by NWM or EFTI, or, to the knowledge of CSI,
NWM or EFTI, any other person or entity. Neither NWM nor EFTI has received any
notice of default under any contract, agreement, arrangement, commitment or plan
to which either or both are party, which default has not been cured to the
satisfaction of, or duly waived by, the party claiming such default on or before
the date hereof.
3.8 Personal Property. NWM and EFTI have good and marketable title to
all of their respective tangible personal property and assets, free and clear of
all Liens or mortgages,
15
except for any Lien for current taxes not yet due and payable and such
restrictions, if any, on the disposition of securities as may be imposed by
federal or applicable state securities laws.
3.9 Real Property.
(a) Schedule 3.9 to this Agreement contains a true and correct copy
of all documents reflecting a true and complete list of all real property owned
by, or leased or subleased by or to, NWM or CSI (the "NWM and EFTI Real
Property").
(b) Each lease to which NWM or EFTI is a party is valid, binding and
in full force and effect with respect to NWM or EFTI, and, to the knowledge of
CSI, all other parties thereto; no notice of default or termination under any
such lease is outstanding.
3.10 Compliance with Law.
(a) NWM and EFTI have conducted their respective businesses or
affairs in accordance with all applicable federal, state or local laws,
ordinances, rules, regulations, court or administrative orders, decrees or
processes, and requirements of insurance carriers except for those failures
which would not have a material adverse effect on NWM or EFTI. Neither NWM nor
EFTI have received any notice of violation or claimed violation of any such law,
ordinance, rule, regulation, order, decree, process or requirement.
(b) NWM and EFTI are in compliance in all material respects with all
applicable federal, state, local and foreign laws and regulations relating to
the protection of the environment and human health to the knowledge of CSI, NWM
and EFTI, there are no claims, notices, actions, suits, hearings,
investigations, inquiries or proceedings pending or threatened against NWM or
EFTI that are based on or related to any environmental matters or the failure to
have any required environmental permits, and there are no past or present
conditions that NWM or EFTI has reason to believe are likely to give rise to any
material liability or other obligations of NWM or EFTI under any environmental
laws.
3.11 Permits and Licenses. NWM and EFTI have all certificates of
occupancy, rights, permits, certificates, licenses, franchises, approvals and
other authorizations as are reasonably necessary to conduct their respective
business and to own, lease, use, operate and occupy their respective assets, at
the places and in the manner now conducted and operated, except those the
absence of which would not materially adversely affect their respective
businesses. As of the date hereof, NWM and EFTI have not received any written or
oral notice or claim pertaining to the failure to obtain any material permit,
certificate, license, approval or other authorization required by any federal,
state or local agency or other regulatory body, the failure of which to obtain
would materially and adversely affect its business.
3.12 Ordinary Course. Xxxxx Xxxxx 00, 0000, XXX and EFTI have
conducted their respective businesses, maintained their respective real property
and equipment and kept their respective books of account, records and files,
substantially in the manner of the ordinary course of business.
16
3.13 No Adverse Changes. Since March 31, 2001, except for the
repayment of certain indebtedness to CSI in the amount of approximately $550,000
received in settlement of a dispute between NWM and Affiliated Computer
Services, Inc. (the "ACS Dispute"), there has not been:
(a) Any material adverse change in the business, prospects, the
financial or other condition, or the respective assets or liabilities of NWM or
EFTI, or
(b) Any material loss sustained by NWM or EFTI, including, but not
limited to any loss on account of theft, fire, flood, explosion, accident or
other calamity, whether or not insured, which has materially and adversely
interfered, or may materially and adversely interfere, with the operation of NWM
or EFTI's respective businesses,
3.14 Litigation.
(a) Except with respect to the ACS Dispute, to the knowledge of CSI,
NWM or EFTI, there is no claim, dispute, action, suit, proceeding or
investigation pending or threatened, against or affecting the business of NWM or
EFTI, or challenging the validity or propriety of the transactions contemplated
by this Agreement, at law or in equity or admiralty or before any federal,
state, local, foreign or other governmental authority, board, agency, commission
or instrumentality, nor to the knowledge of CSI, NWM or EFTI has any such claim,
dispute, action, suit, proceeding or investigation been pending or threatened,
during the 12-month period preceding the date hereof.
(b) There is no outstanding judgment, order, writ, ruling,
injunction, stipulation or decree of any court, arbitrator or federal, state,
local, foreign or other governmental authority, board, agency, commission or
instrumentality, against or materially affecting the business of NWM or EFTI;
and
(c) CSI has not received any written or verbal inquiry from any
federal, state, local, foreign or other governmental authority, board, agency,
commission or instrumentality concerning the possible violation of any law, rule
or regulation by NWM or EFTI in respect of the business of NWM or EFTI which is
reasonably likely to have a material adverse effect.
3.15 Insurance. Insurance policies are in effect with respect to NWM
and EFTI relating to all risks customarily insured against by companies in their
respective industry. All such policies are in full force and effect, and none of
CSI, NWM or EFTI has received any notice from any insurance company suspending,
revoking, modifying or canceling (or threatening such action) any insurance
policy issued with respect to NWM or EFTI.
3.16 Articles of Incorporation and By-laws; Minute Books. The Articles
of Incorporation and By-laws (or similar governing documents) of NWM and EFTI
and all amendments to each are true, correct and complete. The minute book of
each of NWM and EFTI contains true and complete records of all meetings and
consents in lieu of meetings of their respective Board of Directors (and any
committees thereof), or similar governing bodies, since the time of its
organization. The stock records of NWM and EFTI are true, correct and complete.
17
3.17 Employee Benefit Plans. Neither NWM nor EFTI maintains, nor have
either maintained in the past, any employee benefit plans (as defined in Section
3(3) of ERISA), or any plans, programs, policies, practices, arrangements or
contracts (whether group or individual) providing for payments, benefits or
reimbursements to employees of NWM or EFTI, former employees, their
beneficiaries and dependents under which such employees, former employees, their
beneficiaries and dependents are covered through an employment relationship with
NWM or EFTI for purposes of ERISA or the Code (including, without limitation,
under Section 414(b), (c), (m) or (o) of the Code or Section 4001 of ERISA, at
any relevant time, except as disclosed on Schedule 3.17 hereto, and by reference
incorporated herein.)
3.18 Patents; Trademarks and Intellectual Property Rights. NWM and
EFTI own or possess sufficient legal rights to all patents, trademarks, service
marks, trade names, copyrights, trade secrets, licenses, information, Internet
web site(s) proprietary rights and processes necessary for its business as now
conducted without any conflict with or infringement of the rights of others.
There are no outstanding options, licenses or agreements of any kind relating to
the foregoing, and neither of NWM or EFTI are bound by, or a party to, any
options, licenses or agreements of any kind with respect to the patents,
trademarks, service marks, trade names, copyrights, trade secrets, licenses,
information, proprietary rights and processes of any other person or entity.
3.19 Brokers. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried out by CSI and NWM with the
Company or its affiliates or predecessors without the intervention of any person
on behalf of CSI or NWM in such a manner as to give rise to any valid claim by
any person against Company for a finder's fee, brokerage commission or similar
payment.
3.20 Purchase for Investment. CSI represents and warrants to the
Company as follows:
(a) CSI is acquiring the Company Consideration Shares for its own
account for investment and not with a view to, or for sale in connection with,
any distribution thereof.
(b) CSI represents that it has not been organized, reorganized or
recapitalized specifically for the purpose of investing in the Company.
(c) CSI is an "accredited investor" as such term is defined in
Regulation D promulgated under the Securities Act. CSI has reviewed the
representations concerning the Company contained in this Agreement, and has had
the opportunity to make inquiry concerning the Company, its business and its
personnel.
(d) Notwithstanding the foregoing, nothing herein shall in any way
affect or modify the representations and warranties of the Company set forth in
this Agreement, on which CSI and NWM have relied in entering into the
transactions contemplated by this Agreement.
3.21 Restricted Securities. CSI understands that the Company
Consideration Shares may not be sold, transferred, or otherwise disposed of
without registration under the Act
18
or an exemption therefrom, and that in the absence of an effective registration
statement covering the Company Consideration Shares or any available exemption
from registration under the Act, the Company Consideration Shares must be held
indefinitely. CSI is aware that the Company Consideration Shares may not be sold
pursuant to Rule 144 promulgated under the Act unless all of the conditions of
that Rule are met.
ARTICLE IV
CONDITIONS PRECEDENT TO COMPANY'S OBLIGATIONS
All obligations of Company under this Agreement are subject to
the fulfillment and satisfaction, prior to or at the Closing, of each of the
following conditions, any one or more of which may be waived by:
4.1 Representations and Warranties. The representations and
warranties of CSI, NWM and EFTI contained in this Agreement and in any
certificate delivered in accordance with this agreement will be true and correct
on and as of the Closing Date as though newly made at and as of that time.
4.2 Performance of CSI and NWM. Each of the agreements of CSI and NWM
to be performed on or before the Closing Date pursuant to the terms of this
Agreement will have been duly performed on or before the Closing Date.
4.3 Approvals. Any consent, approval, authorization or order of any
court, governmental agency, administrative body or other person or entity
required for the consummation of the transactions contemplated by this Agreement
will have been obtained and will be in effect on the Closing Date.
4.4 No Orders; Legal Proceedings. No law will have been enacted,
entered, issued, promulgated or enforced by any governmental agency, nor will
any action or proceeding have been instituted and remain pending or threatened
and remain so at the Closing Date, that prohibits or restricts or would (if
successful) prohibit or restrict the transactions contemplated by the Agreement.
4.5 Approval of Documentation. The form and substance of all
certificates, instruments of transfer, and other documents will be reasonably
satisfactory in all respects to Company and its counsel.
ARTICLE V
CONDITIONS PRECEDENT TO CSI AND NWM'S OBLIGATIONS
All obligations of CSI and NWM under this Agreement are subject
to the fulfillment and satisfaction, prior to or on the Closing Date, of each of
the following conditions, any one or more of which may be waived by CSI:
5.1 Representations and Warranties. The representations and
warranties of Company contained in this Agreement and in any certificate
delivered in accordance with this agreement
19
will be true and correct on and as of the Closing Date as though newly made at
and as of that time.
5.2 Performance of Company. Each of the agreements of Company to be
performed on or before the Closing Date pursuant to the terms of this Agreement
will have been duly performed on or before the Closing Date.
5.3 Approval of Documentation. The form and substance of all
certificates and other documents delivered hereunder will be reasonably
satisfactory in all respects to CSI and its counsel.
5.4 Related Agreements. The Investor Rights Agreement in the form set
forth as Exhibit A attached hereto must have been executed and delivered by all
parties thereto. The Guaranty in the form set forth as Exhibit B attached hereto
must have been executed and delivered by Company.
5.5 No Orders; Legal Proceedings. No law will have been enacted,
entered, issued, promulgated or enforced by any governmental agency, nor will
any action or proceeding have been instituted and remain pending or threatened
and remain so at the Closing Date, that prohibits or restricts or would (if
successful) prohibit or restrict the transactions contemplated by the Agreement.
ARTICLE VI
OTHER AGREEMENTS
6.1 Directors' and Officers' Indemnification. Any and all provisions
of the Articles of Incorporation and By-laws of the Surviving Corporation and
EFTI concerning elimination or limitation of liability and indemnification of
directors and officers shall be the same following the Merger as that of NWM and
EFTI prior to the Merger and shall not be amended in any manner that would
adversely affect the rights thereunder of any Person that is as of the date
hereof an officer or director of NWM or EFTI. Upon the consummation of the
Merger, Company shall assume and become liable for, jointly and severally with
Surviving Corporation and EFTI, any liability and all obligations of NWM and
EFTI under such provisions.
6.2 Obligations of Merger Sub and Surviving Corporation. Company
shall take all necessary actions, subject to the terms and provisions hereof, to
cause Merger Sub and, after the Effective Time, the Surviving Corporation and
EFTI to perform all of its obligations under this Agreement and to consummate
the Merger.
6.3 Tax-Free Reorganization. Neither CSI, NWM, Company nor Merger Sub
will, either before or after consummation of the Merger, take any action that
would cause the Merger to fail to constitute a "reorganization" within the
meaning of Code Section 368; no party hereto shall take any position on any
federal, state and/or local income on franchise tax return, or any other tax
reporting position that is inconsistent with the treatment of the transaction as
20
a reorganization within the meaning of Code Section 368(a) in which no gain or
loss is recognized except with respect to cash paid in lieu of fractional
shares.
6.4 Tax Matters.
(a) From and after the Closing, CSI, Company, the Surviving
Corporation and EFTI shall cooperate fully, as and to the extent reasonably
requested by the other, in connection with the preparation and filing of any tax
return, statement, report or form (including any report required pursuant to
Section 6043 of the Code and all regulations promulgated thereunder), 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 which 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.
(b) CSI will prepare or cause to be prepared all tax returns which
include NWM and EFTI for any tax period ending on or before the close of
business on the Closing Date. Company will prepare or cause to be prepared all
tax returns of the Surviving Corporation and EFTI for any tax period ending
after the close of business on the Closing Date. Each party will cooperate with
the other by providing information necessary for the preparation of any tax
combined returns.
6.5 Indemnity of Lease Guarantees. Company and Surviving Corporation
and each of their respective successors and assigns hereby agree to indemnify,
defend and hold CSI and its affiliates harmless from and against any and all
losses, costs, claims, damages, liabilities, and expenses (including, without
limitation, reasonable legal fees and expenses) incurred by CSI of its
affiliates with respect to the enforcement or attempted enforcement of any and
all (i) guarantees entered into by CSI or its affiliates relating to lease
obligations of NWM or EFTI and (ii) leases entered into by CSI or it affiliates,
as primary obligor, for or on behalf of NWM or EFTI. CSI hereby assigns to NWM
and the Surviving Corporation, and NWM and the Surviving Corporation hereby
accept, all of CSI's rights and obligations under the leases identified on
Schedule 6.5 that identify CSI as the lessee.
ARTICLE VII
MISCELLANEOUS
7.1 Survival of Representations and Warranties. None of the
representations and warranties made by any party hereto in this Agreement or in
any document or certificate delivered pursuant hereto shall survive past the
Effective Time of the Merger.
7.2 Notice. All communications, notices, requests, consents or
demands given or required under this Agreement shall be in writing and shall be
deemed to have been duly given when delivered to, or received by prepaid
registered or certified mail or recognized overnight courier addressed to, or
upon receipt of a facsimile sent to, the party for whom intended, as follows, or
to such other address or facsimile number as may be furnished by such party by
notice in the manner provided herein:
21
If to the Company: Global Axcess Corp.
Xxxxxxx Xxxx, President
0000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxx Xxxxx, XX. 00000
With copies to Xxxxx X. Xxxxx, Xx., Esq.
000 Xxxx X. Xxxxxx, Xxxxx 0000
Xxx Xxxxx, XX 00000
If to CSI: Cardservices International, Inc.
0000 Xxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attn: Xxx Xxxxxxxxxx
With copies to: Xxxx X. Xxxxx, Esq.
O'Melveny & Xxxxx LLP
000 X. Xxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
7.3 Entire Agreement. This Agreement along with the Exhibits and
Schedules and any instruments and agreements to be executed pursuant to this
Agreement, sets forth the entire understanding of the Parties hereto with
respect to its subject matter, merges and supersedes all prior and
contemporaneous oral and/or written understandings with respect to its subject
matter and may not be waived or modified, in whole or in part, except by a
writing signed by each of the Parties hereto. No waiver of any provision of this
Agreement in any instance shall be deemed to be a waiver of the same or any
other provision in any other instance. Failure of any party to enforce any
provision of this Agreement shall not be construed as a waiver of its rights
under such provision.
7.4 Successors and Assigns. This Agreement shall be binding upon,
enforceable against and inure to the benefit of, the Parties hereto and their
respective heirs, administrators, executors, personal representatives,
successors and assigns, and nothing herein is intended to confer any right,
remedy or benefit upon any other person.
7.5 Governing Law, Venue and Jurisdiction. This Agreement will be
construed and enforced in accordance with and governed by the laws of the State
of California, except for matters arising under the Act, without reference to
principles of conflicts of law. Each party hereto hereby stipulates to and
agrees to submit to venue and jurisdiction of any Court of competent
jurisdiction within the County of San Diego or the County of Los Angeles in the
State of California, regarding any claim or action arising out of this
agreement. Each of the Parties consents to the jurisdiction of the federal
courts whose districts encompass any part of the Counties of San Diego and Los
Angeles in connection with any dispute arising under this Agreement and hereby
waives, to the maximum extent permitted by law, any objection, including any
objection based on forum non conveniens, to the bringing of such proceeding in
such jurisdictions. Each party hereby agrees that if another party to this
Agreement obtains a judgment against it in such a proceeding, the party which
obtained such judgment may enforce
22
same by summary judgment in the courts of any country having jurisdiction over
the party against whom such judgment was obtained, and each party hereby waives
any defenses available to it under local law and agrees to the enforcement of
such a judgment. Each party to this Agreement irrevocably consents to the
service of process in any such proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, to such party at its address set
forth herein. Nothing herein shall affect the right of any party to serve
process in any other manner permitted by law.
7.6 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
7.7 Construction. Headings contained in this Agreement are for
convenience only and shall not be used in the interpretation of this Agreement.
References herein to Articles, Sections and Exhibits are to the articles,
sections and exhibits, respectively, of this Agreement. The Disclosure Schedule
is hereby incorporated herein by reference and made a part of this Agreement. As
used herein, the singular includes the plural, and the masculine, feminine and
neuter gender each includes the others where the context so indicates.
7.8 Severability. If any provision of this Agreement is held to be
invalid or unenforceable by a court of competent jurisdiction, this Agreement
shall be interpreted and enforceable as if such provision were severed or
limited, but only to the extent necessary to render such provision and this
Agreement enforceable.
7.9 Attorney Fees. To the extent legal action is required to
interpret or enforce the terms of this Agreement, the prevailing party shall be
entitled to recover its costs and attorneys' fees from the other party.
7.10 Time is of the Essence. The Parties acknowledge and agree that
time is of the essence with respect to the consummation of the transactions
contemplated hereby.
7.11 Drafting Party. The provisions of this Agreement, and the
documents and instruments referred to herein, have been examined, negotiated,
drafted and revised by each party hereto and no implication shall be drawn nor
made against any party hereto by virtue of the drafting of this Agreement. Each
party hereto has been encouraged to have counsel represent them regarding the
transactions contemplated by this Agreement and each party hereby represents and
warrants that they have retained such counsel to the extent they have deemed
necessary and prudent.
7.12 No Waiver. No waiver of any breach of any provision of this
Agreement will be deemed a waiver of any other breach of this Agreement. No
extension of time for performance of any act will be deemed an extension of the
time for performance of any other act.
7.13 Expenses. Each Party will pay all of its expenses, including
attorney and accountant fees in connection with the negotiation of this
Agreement and the agreements and transactions contemplated hereby, the
performance of its obligations hereunder or thereunder,
23
and the consummation of the transactions contemplated hereby; provided that in
any proceeding or other attempt to enforce, construe or to determine the
validity of this Agreement or any document or agreement contemplated hereby, the
non-prevailing Party will pay the reasonable expenses of the prevailing Party,
including reasonable attorneys fees and costs.
7.14 No Third Party Beneficiaries. This Agreement will not confer any
rights or remedies upon any person other than the Parties and their respective
successors and assigns, as applicable.
7.15 Remedies. The rights and remedies of the Parties hereunder are
cumulative and are not in lieu of, but are in addition to, any other rights or
remedies which the Parties may have under any other agreement, or at law or in
equity.
24
IN WITNESS WHEREOF, the Parties have executed and delivered this
Agreement, including attachments, schedules and Exhibits, effective as of the
date set forth in the introductory paragraph of this Agreement.
Dated: June 29, 2001 /s/ Xxxxxxx Xxxx
---------------------------------
GLOBAL AXCESS CORP.,
a Nevada corporation
By: Xxxxxxx Xxxx, President
Dated: June 29, 2001 /s/ Xxxxx Xxxxx
---------------------------------
GLOBAL ACQUISITION CORP. I,
a Nevada corporation
By: Xxxxx Xxxxx, President
Dated: June 29, 2001 /s/ Xxxxxx Xxxxxxxx
---------------------------------
CARDSERVICE INTERNATIONAL, INC.,
a California corporation
By: Xxxxxx Xxxxxxxx, President
Dated: June 29, 2001 /s/ Xxxxxxx X. Xxxxx
---------------------------------
NATIONWIDE MONEY SERVICES, INC.
a Nevada corporation
By: Xxxxxxx X. Xxxxx
S-1
EXHIBIT A
INVESTOR RIGHTS AGREEMENT
THIS INVESTOR RIGHTS AGREEMENT (this "Agreement") is made and
entered into as of June 29, 2001, between Global Axcess Corp., a Nevada
corporation ("Company"), Cardservice International, Inc., a California
corporation ("CSI") and the undersigned principal stockholders of Company (each
individually a "Stockholder" and collectively, the "Stockholders").
RECITALS
A. Company, Global Acquisition Corp. I, a Nevada corporation
("Merger Sub"), CSI and Nationwide Money Services, Inc., a Nevada corporation
("NWM") are entering into an Agreement and Plan of Merger (the "Merger
Agreement") which provides for the merger (the "Merger") of NWM with and into
Merger Sub.
B. Upon consummation of the Merger as contemplated by the Merger
Agreement, the shares of capital stock of NWM held by CSI will be converted into
shares of common stock, $0.001 par value per share, of Company (the "Company
Common Stock").
C. IFT Financial Group, Inc. ("IFT") currently owns greater than 71%
of the issued and outstanding Company Common Stock.
D. IFT proposes to dissolve and to distribute all of the shares
owned by IFT to the other Stockholders party hereto.
E. As an inducement to CSI to enter into the Merger Agreement and in
consideration of the execution of the Merger Agreement by CSI, Company and the
Stockholders (either as current Stockholders of Company or as prospective
Stockholders of Company) agree as set forth below.
F. Capitalized terms used in this Agreement and not defined herein
shall have the meanings ascribed to them in the Merger Agreement.
NOW THEREFORE, intending to be legally bound, the parties hereto
agree as follows:
1. Voting by Stockholders.
(a) In any and all elections of directors of Company (whether at a
meeting or by written consent in lieu of a meeting), each Stockholder or
affiliate thereof shall vote or cause to be voted all Company Common Stock owned
by such Stockholder or affiliate thereof, or over which such Stockholder or
affiliate thereof has voting control, and otherwise use such Stockholder's best
efforts, so as to fix the number of directors of Company at between four and
seven and to elect as a director of Company an individual designated by CSI who
shall be a
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person with background and experience in the automated teller machine industry
or, after consultation with the Company, such other person as CSI reasonably
believes can contribute to the management of Company. CSI shall notify the
Company of its selection of a director designee following the closing of the
Merger.
(b) Company shall provide CSI with prior written notice of an
intended mailing of notice to stockholders for a meeting at which directors are
to be elected, and CSI shall notify Company in writing, prior to such mailing,
of the persons designated by it as its respective nominee for election as a
director. Company agrees to forward such information to the Stockholders. If CSI
shall fail to give notice to Company as provided above, it shall be deemed that
the designee of CSI, as the case may be, then serving as a director shall be its
respective designee for reelection.
(c) Neither the Stockholders nor their affiliates shall vote to
remove any director designated and elected pursuant to this Agreement except for
bad faith or willful misconduct, provided that the Stockholders and their
affiliates shall vote to remove any such director at the request of the party
who designated such director pursuant to this Agreement.
2. Piggyback Registration. If at any time Company proposes to
register any of its common stock or preferred stock ("Other Securities") under
the Securities Act (other than a registration on Form S-4 or S-8 or any
successor form thereto), whether or not for sale for its own account, in a
manner which would permit registration of Registrable Securities (as defined
below) for sale for cash to the public under the Securities Act, it will each
such time give prompt written notice to CSI or its successors and assigns as the
record holder of Registrable Securities (a "Holder") of its intention to do so
at least 10 business days prior to the anticipated filing date of the
registration statement relating to such registration. Such notice shall offer
each such Holder the opportunity to include in such registration statement such
number of Registrable Securities as each such Holder may request. Upon the
written request of any such Holder made within 5 business days after the receipt
of Company's notice (which request shall specify the number of Registrable
Securities intended to be disposed of), Company shall effect, in connection with
the registration of the Other Securities, the registration under the Securities
Act of all Registrable Securities which Company has been so requested to
register; provided that:
(a) Company shall not be obligated to include, in connection
with any registration of Other Securities, (i) more than 25% of the
Registrable Securities of any Holder in any registrations consummated
during the first six months following the Closing under the Merger
Agreement; (ii) more than 50% of the Registrable Securities of any Holder
in any registrations consummated during the twelve months following the
Closing under the Merger Agreement; and (iii) more than 75% of the
Registrable Securities of any Holder in any registrations consummated
during the first eighteen months following the Closing under the Merger
Agreement;
(b) if at any time after giving written notice of its intention
to register any securities and prior to the effective date of such
registration, Company shall determine for any reason not to register or to
delay registration of such securities, Company may, at its election, give
written notice of such determination to the Holders
A-2
who requested inclusion and, thereupon, (A) in the case of a determination
not to register, Company shall be relieved of its obligation to register
any Registrable Securities in connection with such registration and (B) in
the case of a determination to delay such registration, Company shall be
permitted to delay registration of any Registrable Securities requested to
be included in such registration for the same period as the delay in
registering such Other Securities;
(c) (i) if the registration referred to in the first sentence of
this Section 2 is to be an underwritten primary registration on behalf of
Company, and the managing underwriter advises Company in writing (with a
copy to the Holders who requested registration) that, in such firm's
opinion, such offering would be materially and adversely affected by the
inclusion therein of the Registrable Securities requested to be included
therein, Company shall include in such registration: (1) all securities
Company proposes to sell for its own account ("the Company Securities") and
(2) up to the full number of Registrable Securities in excess of the number
and dollar amount of the Company Securities which, in the good faith
opinion of such managing underwriter, can be a sold without materially and
adversely affecting such offering of the Company Securities (and, if less
than the full number of such Registrable Securities, allocated pro rata
among the Holders of such Registrable Securities on the basis of the number
of securities requested to be included therein by each such Holder), and
(ii) if the registration referred to in the first sentence of this Section
2 is to be an underwritten secondary registration on behalf of holders of
securities (other than Registrable Securities) of Company (the "Other
Holders"), and the managing underwriter advises Company in writing (with a
copy to the Holders who requested registration) that in its good faith
opinion such offering would be materially and adversely affected by the
inclusion therein of the Registrable Securities requested to be included
therein, Company shall include in such registration the amount of
securities (including Registrable Securities) that such managing
underwriter advises, allocated pro rata among the Other Holders and the
Holders on the basis of the number of securities (including Registrable
Securities) requested to be included therein by each Other Holder and each
Holder;
(d) company shall not be required to effect any registration of
Registrable Securities under this Section 2 incidental to the registration
of any of its securities in connection with any reincorporation, dividend
reinvestment plans or stock option or other executive or employee benefit
or compensation plans; and
(e) any Holder desiring to sell Registrable Securities must
execute an underwriting or similar agreement and complete and execute all
reasonable questionnaires, powers of attorney, indemnities, lock-up letters
and other documents reasonably required under the underwriting arrangement.
For the purposes of this Section 2 and Section 3, Registrable
Securities means the shares of Company Common Stock issued to CSI pursuant to
the Merger Agreement, any stock or other securities into which or for which such
shares of Company Common Stock may thereafter be changed, converted or
exchanged, and any other securities issued to the Holders of such shares of
Company Common Stock (or such shares into which or for which such shares are
A-3
so changed, converted or exchanged) upon any reclassification, share
combination, share subdivision, share dividend, merger, consolidation or similar
transaction, provided that any such securities shall cease to be Registrable
Securities if (i) a registration statement with respect to the sale of such
securities shall have become effective under the Securities Act and such
securities shall have been disposed of in accordance with the plan of
distribution set forth in such registration statement, (ii) such securities
shall have been transferred pursuant to Rule 144, or (iii) such securities are
held by a Holder other than CSI and Company has furnished to such Holder an
opinion of counsel, which opinion shall be reasonably satisfactory to such
Holder, to the effect that all of such securities are permitted to be
distributed by such Holder in one transaction pursuant to Rule 144(k).
3. Demand Registration.
(a) If Company has not previously given a notice to Holders as
provided by Section 8, at any time after the second anniversary of the Closing
under the Merger Agreement, upon written notice from a Holder requesting that
Company effect the registration under the Securities Act of any or all of the
Registrable Securities held by such Holder, which notice shall specify the
number of Registrable Securities for which registration is requested and the
intended method or methods of disposition of such Registrable Securities,
Company shall have the right, exercisable within 10 days by written notice to
such Holder, to purchase all of the Registrable Securities requested to be
registered by such Holder at a cash price per share equal to the arithmetic mean
of each of the closing sales prices per share of Company Common Stock on the
over-the-counter bulletin board market (or such other market on which shares of
Company Common Stock are then traded) for each of the 15 consecutive trading
days ending on the fifth trading day immediately preceding the date of the
written notice from the Holder under this Section 3(a). The closing of such
purchase shall take place no later than 15 days after the date of the written
notice from Company under this Section 3(a). If Company gives written notice
under this Section 3(a), the written notice from the Holder under this Section
3(a) shall not be deemed a request for registration for purposes of Section
3(b).
(b) If Company does not exercise its right to purchase under Section
3(a) above, Company shall, within 15 days after receipt of the Holder's request,
serve written notice (the "Request Notice") of such registration request to all
other Holders of Registrable Securities. The Request Notice will state that
Company will include in such registration all Registrable Securities, subject to
the limitations of this Section 3(b) and to compliance with the other provisions
of this Agreement, as to which Company receives written requests for inclusion
within 15 days after the date of the Request Notice. As promptly as practicable
after such 15 day period, Company shall use its best efforts to effect the
registration under the Securities Act of the Registrable Securities to be
included for disposition in accordance with the intended method or methods of
disposition stated in the Holder's request, provided that:
(i) if prior to receipt of a registration request pursuant to
this Section 3(b), Company had commenced a financing plan through a formal
"all hands" meeting with outside advisors, including an underwriter if such
financing plan is an underwritten offering, and, in the good-faith judgment
of Company's underwriter, confirmed to Company in writing (with a copy to
the Holders
A-4
requesting registration), a registration by the requesting Holders at the
time and on the terms requested would materially and adversely affect such
financing plan of Company (a "Transaction Blackout"), Company shall give
written notice of such events to the Holders requesting registration and
shall not be required to serve the Request Notice and effect a registration
pursuant to this Section 3(b) until the earliest of (A) Company's
abandonment of such offering, (B) 90 days after the termination of such
offering, (C) the termination of any "hold back" period obtained by the
underwriter(s) of such offering from any person, including Company, in
connection therewith or (D) 110 days after receipt by the Holder requesting
registration of the written notice of Transaction Blackout from Company;
(ii) if, at the time of receipt of a registration request or
while a registration request is pending pursuant to this Section 3(b),
Company has determined in good faith that (A) the filing of a registration
statement would jeopardize or delay a contemplated material transaction
other than a financing plan involving Company or would require the
disclosure of material information that Company has a bona fide business
purpose for preserving as confidential, or (B) Company then is unable to
comply with SEC requirements applicable to the requested registration,
Company shall not be required to effect a registration pursuant to this
Section 3(b) until the earlier of (1) the date upon which such contemplated
transaction is completed or abandoned or such material information is
otherwise disclosed to the public or ceases to be material or Company is
able to so comply with applicable SEC requirements, as the case may be, and
(2) 90 days after Company makes such good-faith determination, provided
that Company shall not be permitted to delay a requested registration in
reliance on this clause (ii) more than once in any 180-day period; and
(iii) Company shall be obligated to file only one registration
statement pursuant to this Section 3(b) and shall not be obligated to file
a registration statement relating to a registration request pursuant to
this Section 3(b) if such registration request (including Registrable
Securities requested to be included in response to a Request Notice) is for
a number of Registrable Securities which have an aggregate market value
less than $1 million.
(c) Notwithstanding any other provision of this Agreement to the
contrary, a registration requested pursuant to this Section 3 shall not be
deemed to have been effected (and, therefore, not requested for purposes of
Section 3(b)), (A) until the registration statement with respect thereto has
become effective under the Securities Act (unless the registration statement
fails to become effective because the Holders request that the registration be
withdrawn for a reason other than contemplated in clause (B)); (B) if it is
withdrawn based upon material adverse information relating to Company that is
different from the information known to the Holder requesting registration at
the time of the Holder's request for registration; or (C) if after it has become
effective such registration is interfered with by any stop order, injunction or
other order or requirement of the SEC or other governmental agency or court for
A-5
any reason other than a misrepresentation or an omission by a Holder whose
Registrable Securities are the subject of such registration statement.
(d) If the Registrable Securities are to be sold in an underwritten
offering, the underwriter or underwriters and manager or managers that will
administer the offering will be selected by Company, and the Holders who desire
to sell Registrable Securities must execute an underwriting or similar agreement
and complete and execute all reasonable questionnaires, powers of attorneys,
indemnities, lock-up letters and other documents reasonably required under the
underwriting arrangement.
4. Obligations of Company. In the case of each offering of
Registrable Securities made pursuant to Section 2 or 3 of this Agreement,
Company agrees to (i) prepare and file with the Securities and Exchange
Commission (the "SEC") on one or more registration statements in accordance with
Section 2 or 3, as applicable with respect to the shares of Registrable
Securities, and shall use commercially reasonable efforts to cause such
registration statement to become effective; (ii) except as provided herein, keep
such registration statement effective until the earlier of the sale of all of
the shares of Registrable Securities so registered or 90 days after the
effectiveness of such registration statement; (iii) promptly prepare and file
with the SEC such amendments and supplements to such registration statement and
the prospectus used in connection therewith as may be necessary to comply with
the provisions of the Securities Act with respect to the sale or other
disposition of all securities proposed to be registered in such registration
statement in order to keep such registration statement effective until the
earlier of the sale of all of the shares of Registrable Securities so registered
or 90 days after the effectiveness of such registration statement; (iv) furnish
to the Holders without charge such number of copies of such registration
statement, each amendment and supplement thereto, and any prospectus (including
any preliminary prospectus and any amended or supplemented prospectus) in
conformity with the requirements of the Securities Act, and such other documents
as the Holders may reasonably request in order to effect the offering and sale
of the shares of the Registrable Securities to be offered and sold, but only
while Company shall be required under the provisions hereof to cause the
registration statement to remain current; (v) use its commercially reasonable
efforts to register or qualify the shares of the Registrable Securities covered
by such registration statement under the securities or blue sky laws of such
jurisdictions as the Holders shall reasonably request (provided that Company
shall not be required in connection therewith or as a condition thereto to
qualify to do business or to file a general consent to service of process in any
such jurisdiction where it has not been qualified), keep such registration or
qualification in effect for as long as such registration statement remains in
effect, and do any and all other acts or things which may be necessary or
advisable to enable the Holders to consummate the public sale or other
disposition of the Registrable Securities in such jurisdictions; (vi) cause all
such Registrable Securities to be listed on each securities exchange on which
similar securities issued by Company are then listed, and enter into such
customary agreements as may be required in furtherance thereof, including,
without limitation, listing applications and indemnification agreements in
customary form; (vii) notify the Holders upon the happening of any event as a
result of which, or the discovery that, the prospectus included in such
registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light
A-6
of the circumstances then existing; (viii) so long as the registration statement
remains effective, promptly prepare, file and furnish to the Holders a
reasonable number of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter delivered to the
purchasers of the Registrable Securities, such prospectus shall not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading in
the light of the circumstances then existing; (ix) notify the Holders, promptly
after it shall receive notice thereof, of the date and time the registration
statement and each post-effective amendment thereto has become effective or a
supplement to any prospectus forming a part of such registration statement has
been filed; (x) notify the Holders promptly of any request by the SEC for the
amending or supplementing of such registration statement or prospectus or for
additional information; and (xi) advise the Holders, promptly after it shall
receive notice or obtain knowledge thereof, of the issuance of any stop order by
the SEC suspending the effectiveness of the registration statement or the
issuance by any state securities commission or other regulatory authority of any
order suspending the qualification or exemption from qualification of any of the
Registrable Securities under state securities or "blue sky" laws, or the
initiation or threatening of any proceeding for that purpose, and promptly use
its commercially reasonable efforts to prevent the issuance of any stop order or
other order or to obtain its withdrawal if such stop order should be issued.
5. Expenses. In the case of each offering of Registrable Securities
made pursuant to Section 2 or 3 of this Agreement, Company agrees to pay the
expenses incurred by Company in connection with any registration of Registrable
Securities pursuant to this Agreement, including all SEC and blue sky
registration and filing fees, printing expenses, transfer agents' and
registrars' fees, the fees and disbursements of Company's counsel and
independent accountants and the reasonable fees and disbursements of one counsel
to the Holders. The Holders shall be responsible for all commissions and
transfer taxes.
6. Indemnification and Contribution.
(a) In the case of each offering of Registrable Securities made
pursuant to Section 2 or 3 of this Agreement, Company agrees to indemnify and
hold harmless each Holder, its officers and directors, each underwriter of
Registrable Securities so offered and each person, if any, who controls any of
the foregoing persons within the meaning of the Securities Act, from and against
any and all claims, liabilities, losses, damages, expenses and judgments, joint
or several, to which they or any of them may become subject, under the
Securities Act or otherwise, including any amount paid in settlement of any
litigation commenced or threatened, and shall promptly reimburse them, as and
when incurred, for any reasonable legal or other expenses incurred by them in
connection with investigating any claims and defending any actions, insofar as
such losses, claims, damages, liabilities or actions shall arise out of, or
shall be based upon, any untrue statement or alleged untrue statement of a
material fact contained in the registration statement (or in any preliminary or
final prospectus included therein) or any amendment thereof or supplement
thereto, or in any document incorporated by reference therein, or any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading; provided,
however, that Company shall not be liable to a particular Holder in any such
case to the extent that any such loss, claim, damage, liability or action arises
out of, or is based upon,
A-7
any untrue statement or alleged untrue statement, or any omission, if such
statement or omission shall have been made in reliance upon and in conformity
with information relating to such Holder furnished to Company in writing by or
on behalf of such Holder specifically for use in the preparation of the
registration statement (or in any preliminary or final prospectus included
therein) or any amendment thereof or supplement thereto. Such indemnity shall
remain in full force and effect regardless of any investigation made by or on
behalf of a Holder and shall survive the transfer of such securities. The
foregoing indemnity agreement is in addition to any liability which Company may
otherwise have to each Holder, its officers and directors, underwriters of the
Registrable Securities or any controlling person of the foregoing; provided
that, as to any underwriter or person controlling any underwriter, this
indemnity does not apply to any loss, claim, damage, liability or action arising
out of or based upon any untrue statement or alleged untrue statement or
omission or alleged omission in any preliminary prospectus if a copy of a
prospectus was required to be sent or given and was not sent or given by or on
behalf of an underwriter to such person asserting such loss, claim, damage,
liability or action at or prior to the written confirmation of the sale of the
Registrable Securities as required by the Securities Act, such untrue statement
or omission had been corrected in such prospectus, and copies of the corrected
prospectus were provided to such underwriter prior to the giving or sending of
such written confirmation.
(b) In the case of each offering made pursuant to this Agreement,
each Holder of Registrable Securities included in such offering, by exercising
its registration rights hereunder, agrees to indemnify and hold harmless
Company, its officers and directors and each person, if any, who controls any of
the foregoing within the meaning of the Securities Act (and if requested by the
underwriters, each underwriter who participates in the offering and each person,
if any, who controls any such underwriter within the meaning of the Securities
Act), from and against any and all claims, liabilities, losses, damages,
expenses and judgments, joint or several, to which they or any of them may
become subject under the Securities Act or otherwise, including any amount paid
in settlement of any litigation commenced or threatened, and shall promptly
reimburse them, as and when incurred, for any legal or other expenses incurred
by them in connection with investigating any claims and defending any actions,
insofar as any such losses, claims, damages, liabilities or actions shall arise
out of, or shall be based upon, any untrue statement or alleged untrue statement
of a material fact contained in the registration statement (or in any
preliminary or final prospectus included therein) or any amendment thereof or
supplement thereto, or any omission or alleged omission to state therein a
material fact relating to the Holder required to be stated therein or necessary
to make the statements therein not misleading, but in each case only to the
extent that such untrue statement of a material fact is contained in, or such
material fact relating to the Holder is omitted from, information relating to
such Holder furnished in writing to Company by or on behalf of such Holder
specifically for use in the preparation of such registration statement (or in
any preliminary or final prospectus included therein) or any amendment or
supplement thereto. The foregoing indemnity is in addition to any liability
which such Holder may otherwise have to Company, or any of its directors,
officers or controlling persons; provided, however, that, as to any underwriter
or any person controlling any underwriter, this indemnity does not apply to any
loss, claim, damage, liability or action arising out of or based upon any untrue
statement or alleged untrue statement or omission or alleged omission in any
preliminary prospectus if a copy of a prospectus was required to be sent or
given
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and was not sent or given by or on behalf of an underwriter to such person
asserting such loss, claim damage, liability or action at or prior to the
written confirmation of the sale of the Registrable Securities as required by
the Securities Act, such untrue statement or omission had been corrected in such
prospectus, and copies of the corrected prospectus were provided to such
underwriter prior to giving or mailing of such written confirmation; and
provided, further, that in no event shall any such Holder be liable for any
amount in excess of the net proceeds received from the sale of the Registrable
Securities by such Holder in the subject offering.
(c) Each party indemnified under paragraph (a) or (b) of this Section
6 shall, promptly after receipt of notice of any claim or the commencement of
any action against such indemnified party in respect of which indemnity may be
sought, notify the indemnifying party in writing of the claim or the
commencement thereof; provided that the failure to notify the indemnifying party
shall not relieve it from any liability which it may have to an indemnified
party on account of the indemnity agreement contained in paragraph (a) or (b) of
this Section 6, except to the extent the indemnifying party was prejudiced by
such failure, and in no event shall relieve the indemnifying party from any
other liability which it may have to such indemnified party. If any such claim
or action shall be brought against an indemnified party, and it shall notify the
indemnifying party thereof, the indemnifying party shall be entitled to
participate therein, and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 6 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided that each
indemnified party, its officers and directors, if any, and each person, if any,
who controls such indemnified party within the meaning of the Securities Act,
shall have the right to employ separate counsel reasonably approved by the
indemnifying party to represent them if the named parties to any action
(including any impleaded parties) include both such indemnified party and an
indemnifying party, and such indemnified party shall have been advised by
counsel either (i) that there may be one or more legal defenses available to
such indemnified party that are different from or additional to those available
to such indemnifying party or (ii) a conflict may exist between such indemnified
party and such indemnifying party, and in that event the fees and expenses of
one such separate counsel for all such indemnified parties shall be paid by the
indemnifying party. An indemnified party will not enter into any settlement
agreement which is not approved by the indemnifying party, such approval not to
be unreasonably withheld. The indemnifying party may not agree to any settlement
of any such claim or action which provides for any remedy or relief other than
monetary damages for which the indemnifying party shall be responsible
hereunder, without the prior written consent of the indemnified party, which
consent shall not be unreasonably withheld. In any action hereunder as to which
the indemnifying party has assumed the defense thereof with counsel reasonably
satisfactory to the indemnified party, the indemnified party shall continue to
be entitled to participate in the defense thereof, with counsel of its own
choice, but, except as set forth above, the indemnifying party shall not be
obligated hereunder to reimburse the indemnified party for the costs thereof. In
all instances, the indemnified party shall cooperate fully with the indemnifying
party or its counsel in the defense of each claim or action.
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(d) If the indemnification provided for in this Section 6 shall for
any reason be unavailable to an indemnified party in respect of any loss, claim,
damage or liability, or any action in respect thereof, referred to herein, then
each indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof, in such
proportion as shall be appropriate to reflect the relative fault of the
indemnifying party on the one hand and the indemnified party on the other with
respect to the statements or omissions which resulted in such loss, claim,
damage or liability, or action in respect thereof, as well as any other relevant
equitable considerations. The relative fault shall be determined by reference to
whether the untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied by the
indemnifying party on the one hand or the indemnified party on the other, the
intent of the parties and their relative knowledge, access to information and
opportunity to correct or prevent such statement or omission, but not by
reference to any indemnified party's stock ownership in Company. In no event,
however, shall a Holder be required to contribute in excess of the amount of the
net proceeds received by such Holder in connection with the sale of Registrable
Securities in the offering which is the subject of such loss, claim, damage or
liability. The amount paid or payable by an indemnified party as a result of the
loss, claim, damage or liability, or action in respect thereof, referred to
above in this Section shall be deemed to include, for purposes of this
paragraph, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claims.
No person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
7. Rule 144 Reporting. With a view to making available the benefits
of certain rules and regulations of the SEC which may at any time permit the
sale of the Registrable Securities to the public without registration, Company
agrees to:
(a) Make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act, at all times in
accordance with the requirements of Rule 144(c);
(b) Use its best efforts to file with the SEC in a timely manner all
reports and other documents required of Company under the Securities Act and the
1934 Act; and
(c) So long as a Holder owns any Registrable Securities, furnish to
such Holder forthwith upon request (i) a written statement by Company as to its
compliance with the reporting requirements of Rule 144 and of the Securities Act
and the 1934 Act, (ii) a copy of the most recent annual or quarterly report of
Company and (iii) such other reports and documents of Company as a Holder
reasonably may request in availing itself of any rule or regulation of the SEC
allowing a Holder to sell any such securities without registration.
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8. Miscellaneous.
(a) Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, then the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
(b) Binding Effect and Assignment. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns (and, for the
purposes of Section 1 hereof, the transferees of the shares of Company Common
Stock).
(c) Amendments and Modification. This Agreement may not be modified,
amended, altered or supplemented except upon the execution and delivery of a
written agreement executed by the parties hereto.
(d) No Inconsistent Agreements. With respect to the provisions of
Sections 2 through 6 of this Agreement, Company has not entered into, nor will
Company enter into, any agreement that is inconsistent with the rights granted
to the Holders of Registrable Securities in this Agreement or otherwise
conflicts with the provisions hereof.
(e) Notices. All notices and other communications pursuant to this
Agreement shall be in writing and shall be deemed given on the date of delivery
if delivered personally or by a commercial delivery service, or sent via
telecopy (receipt confirmed) to the parties at the following addresses or
telecopy numbers (or such other address or telecopy numbers for a party as shall
be specified by like notice):
If to Company: Global Axcess Corp.
0000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: President
Facsimile: (000) 000-0000
With a copy (not constituting notice) to:
Xxxxx X. Xxxxx, Xx., Esq.
000 Xxxx X. Xxxxxx
Xxxxx 0000
Xxx Xxxxx, XX 00000
If to Stockholder: Cardservice International, Inc.
0000 Xxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attn: Xxx Xxxxxxxxxx
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With a copy (not constituting notice) to:
O'Melveny & Xxxxx LLP
000 X. Xxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
(f) Governing Law. This Agreement shall be governed by the laws of
the State of California, without reference to rules of conflicts of law.
(g) Entire Agreement. This Agreement contains the entire
understanding of the parties in respect of the subject matter hereof, and
supersedes all prior negotiations and understandings between the parties with
respect to such subject matter.
(h) Effect of Headings. The section headings are for convenience only
and shall not affect the construction or interpretation of this Agreement.
(i) Terms. Capitalized terms not otherwise defined herein shall have
the meaning given such terms in the Merger Agreement.
(j) Counterparts. This Agreement may be executed in several
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
[The remainder of this page has been intentionally left blank]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed on the day and year first above written.
GLOBAL AXCESS CORPORATION CARDSERVICE INTERNATIONAL, INC.
By: /s/ Xxxxxxx Xxxx By: /s/ Xxxxxx Xxxxxxxx
------------------------------ -----------------------------
Name: Xxxxxxx Xxxx Name: Xxxxxx Xxxxxxxx
Title: President Title: President
STOCKHOLDERS:
IFT FINANCIAL GROUP INC.
By: /s/ Xxxxxxx Xxxx
-----------------------------
Name: Xxxxxxx Xxxx
Title: President
/s/ Xxxxx Xxxx
-----------------------------
Xxxxx Xxxx
/s/ Xxxxxxx Xxxx
-----------------------------
Xxxxxxx Xxxx
/s/ Xxxxx Xxxx
-----------------------------
Xxxxx Xxxx
/s/ Xxxxxxx Xxxxx
-----------------------------
Xxxxxxx Xxxxx
/s/ Xxxxxxx Xxxxxxx
-----------------------------
Xxxxxxx Xxxxxxx
/s/ Xxxxxx Mehlmax
-----------------------------
Xxxxxx Mehlmax
/s/ Xxxxx Xxxxx
-----------------------------
Cambranch Capital, Inc.
by: Xxxxx, Idler, President
[Signature page to Investor Rights Agreement]
A-13
EXHIBIT B
GUARANTY
This Guaranty is entered into as of June 29, 2001 by the
undersigned (the "Guarantor"), in favor of and for the benefit of CARDSERVICE
INTERNATIONAL, INC., a California corporation, as Lender ("Lender") under that
certain Loan Agreement dated as of June 22, 2001, between Lender and NATIONWIDE
MONEY SERVICES, INC., a Nevada corporation ("Company"). Said Loan Agreement, as
it may hereafter be amended, supplemented or otherwise modified from time to
time, being the "Loan Agreement"; capitalized terms defined therein and not
otherwise defined herein being used herein as therein defined).
1. Guaranty. (a) In order to induce Lender to continue to extend
credit to Company pursuant to the Loan Agreement, Guarantor irrevocably and
unconditionally guaranties, as primary obligor and not merely as surety, the due
and punctual payment in full of all Guarantied Obligations (as hereinafter
defined) when the same shall become due, whether at stated maturity, by
acceleration, demand or otherwise (including amounts that would become due but
for the operation of the automatic stay under Section 362(a) of the Bankruptcy
Code, 11 U.S.C. ss. 362(a)). The term "Guarantied Obligations" is used herein in
its most comprehensive sense and includes any and all obligations of Company in
respect of notes, advances, borrowings, loans, debts, interest, fees, costs,
expenses (including, without limitation, legal fees and expenses of counsel and
allocated costs of internal counsel), indemnities and liabilities of whatsoever
nature, now or hereafter made, incurred or created, whether absolute or
contingent, liquidated or unliquidated, whether due or not due, and however
arising under or in connection with the Loan Agreement, this Guaranty and the
other Loan Documents.
Guarantor acknowledges that the Guarantied Obligations are being
incurred for and will inure to its benefit.
Any interest on any portion of the Guarantied Obligations that
accrues after the commencement of any proceeding, voluntary or involuntary,
involving the bankruptcy, insolvency, receivership, reorganization, liquidation
or arrangement of Company (or, if interest on any portion of the Guarantied
Obligations ceases to accrue by operation of law by reason of the commencement
of said proceeding, such interest as would have accrued on such portion of the
Guarantied Obligations if said proceeding had not been commenced) shall be
included in the Guarantied Obligations because it is the intention of Guarantor
and Lender that the Guarantied Obligations should be determined without regard
to any rule of law or order that may relieve Company of any portion of such
Guarantied Obligations.
In the event that all or any portion of the Guarantied
Obligations is paid by Company, the obligations of Guarantor hereunder shall
continue and remain in full force and effect or be reinstated, as the case may
be, in the event that all or any part of such payment(s) is rescinded or
recovered directly or indirectly from Lender as a preference, fraudulent
transfer or
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otherwise, and any such payments that are so rescinded or recovered shall
constitute Guarantied Obligations.
Subject to the other provisions of this Section 1, upon the
failure of Company to pay any of the Guarantied Obligations when and as the same
shall become due, Guarantor will upon demand pay, or cause to be paid, in cash,
to Lender, an amount equal to the aggregate of the unpaid Guarantied
Obligations.
2. Guaranty Absolute; Continuing Guaranty. The obligations of
Guarantor hereunder are irrevocable, absolute, independent and unconditional and
shall not be affected by any circumstance which constitutes a legal or equitable
discharge of a guarantor or surety other than payment in full of the Guarantied
Obligations. In furtherance of the foregoing and without limiting the generality
thereof, Guarantor agrees that: (a) this Guaranty is a guaranty of payment when
due and not of collectibility; (b) Lender may enforce this Guaranty upon the
occurrence of an Event of Default under the Loan Agreement notwithstanding the
existence of any dispute between Company and Lender with respect to the
existence of such event; and (c) the obligations of Guarantor hereunder are
independent of the obligations of Company under the Loan Documents and a
separate action or actions may be brought and prosecuted against Guarantor
whether or not any action is brought against Company and whether or not Company
is joined in any such action or actions. This Guaranty is a continuing guaranty
and shall be binding upon Guarantor and its successors and assigns, and
Guarantor irrevocably waives any right (including without limitation any such
right arising under California Civil Code Section 2815) to revoke this Guaranty
a to future transactions giving rise to any Guarantied Obligations.
3. Actions by Beneficiaries. Lender may from time to time, without
notice or demand and without affecting the validity or enforceability of this
Guaranty or giving rise to any limitation, impairment or discharge of
Guarantor's liability hereunder, (a) renew, extend, accelerate or otherwise
change the time, place, manner or terms of payment of the Guarantied
Obligations, (b) settle, compromise, release or discharge, or accept or refuse
any offer of performance with respect to, or substitutions for, the Guarantied
Obligations or any agreement relating thereto and/or subordinate the payment of
the same to the payment of any other obligations, (c) request and accept other
guaranties of the Guarantied Obligations and take and hold security for the
payment of this Guaranty or the Guarantied Obligations, (d) release, exchange,
compromise, subordinate or modify, with or without consideration, any security
for payment of the Guarantied Obligations, any other guaranties of the
Guarantied Obligations, or any other obligation of any Person with respect to
the Guarantied Obligations, (e) enforce and apply any security now or hereafter
held by or for the benefit of Lender in respect of this Guaranty or the
Guarantied Obligations and direct the order or manner of sale thereof, or
exercise any other right or remedy that Lender may have against any such
security, as Lender in its discretion may determine consistent with the Loan
Agreement and any applicable security agreement, including foreclosure on any
such security pursuant to one or more judicial or nonjudicial sales, whether or
not every aspect of any such sale is commercially reasonable, and (f) exercise
any other rights available to Lender under the Loan Documents.
4. No Discharge. This Guaranty and the obligations of Guarantor
hereunder shall be valid and enforceable and shall not be subject to any
limitation, impairment or discharge
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for any reason (other than payment in full of the Guarantied Obligations),
including without limitation the occurrence of any of the following, whether or
not Guarantor shall have had notice or knowledge of any of them: (a) any failure
to assert or enforce or agreement not to assert or enforce, or the stay or
enjoining, by order of court, by operation of law or otherwise, of the exercise
or enforcement of, any claim or demand or any right, power or remedy with
respect to the Guarantied Obligations or any agreement relating thereto, or with
respect to any other guaranty of or security for the payment of the Guarantied
Obligations, (b) any waiver or modification of, or any consent to departure
from, any of the terms or provisions of the Loan Agreement, any of the other
Loan Documents or any agreement or instrument executed pursuant thereto, or of
any other guaranty or security for the Guarantied Obligations, (c) the
Guarantied Obligations, or any agreement relating thereto, at any time being
found to be illegal, invalid or unenforceable in any respect, (d) the
application of payments received from any source to the payment of indebtedness
other than the Guarantied Obligations, even though Lender might have elected to
apply such payment to any part or all of the Guarantied Obligations, (e) any
failure to perfect or continue perfection of a security interest in any
collateral which secures any of the Guarantied Obligations, (f) any defenses,
set-offs or counterclaims which Company may assert against Lender in respect of
the Guarantied Obligations, including but not limited to failure of
consideration, breach of warranty, payment, statute of frauds, statute of
limitations, accord and satisfaction and usury, and (g) any other act or thing
or omission, or delay to do any other act or thing, which may or might in any
manner or to any extent vary the risk of Guarantor as an obligor in respect of
the Guarantied Obligations.
5. Waivers. Guarantor waives, for the benefit of Lender: (a) any
right to require Lender, as a condition of payment or performance by such
Guarantor, to (i) proceed against Company, any other guarantor (including any
other Guarantor) of the Guarantied Obligations or any other Person, (ii) proceed
against or exhaust any security held from Company, any other guarantor of the
Guarantied Obligations or any other Person, (iii) proceed against or have resort
to any balance of any deposit account or credit on the books of Lender in favor
of Company or any other Person, or (iv) pursue any other remedy in the power of
Lender; (b) any defense arising by reason of the incapacity, lack of authority
or any disability or other defense of Company including, without limitation, any
defense based on or arising out of the lack of validity or the unenforceability
of the Guarantied Obligations or any agreement or instrument relating thereto or
by reason of the cessation of the liability of Company from any cause other than
payment in full of the Guarantied Obligations; (c) any defense based upon any
statute or rule of law which provides that the obligation of a surety must be
neither larger in amount nor in other respects more burdensome than that of the
principal; (d) any defense based upon Lender's errors or omissions in the
administration of the Guarantied Obligations, except behavior that amounts to
bad faith; (e) (i) any principles or provisions of law, statutory or otherwise,
that are or might be in conflict with the terms of this Guaranty and any legal
or equitable discharge of such Guarantor's obligations hereunder, (ii) the
benefit of any statute of limitations affecting such Guarantor's liability
hereunder or the enforcement hereof, (iii) any rights to set-offs, recoupments
and counterclaims, and (iv) promptness, diligence and any requirement that
Lender protect, secure, perfect or insure any Lien or any property subject
thereto; (f) notices, demands, presentments, protests, notices of protest,
notices of dishonor and notices of any action or inaction, including acceptance
of this Guaranty, notices of default under the Loan Agreement, or
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any agreement or instrument related thereto, notices of any renewal, extension
or modification of the Guarantied Obligations or any agreement related thereto,
notices of any extension of credit to Company and notices of any of the matters
referred to in Sections 3 and 4 hereof and any right to consent to any thereof;
and (g) to the fullest extent permitted by law, any defenses or benefits that
may be derived from or afforded by law which limit the liability of or exonerate
guarantors or sureties, or which may conflict with the terms of this Guaranty.
As used in this paragraph, any reference to "the principal"
includes Company, and any reference to "the creditor" includes Lender. In
accordance with Section 2856 of the California Civil Code (a) Guarantor waives
any and all rights and defenses available to it by reason of Sections 2787 to
2855, inclusive, 2899 and 3433 of the California Civil Code, including without
limitation any and all rights or defenses such Guarantor may have by reason of
protection afforded to the principal with respect to any of the Guarantied
Obligations, or to any other guarantor of any of the Guarantied Obligations with
respect to any of such guarantor's obligations under its guaranty, in either
case pursuant to the antideficiency or other laws of the State of California
limiting or discharging the principal's indebtedness or such guarantor's
obligations, including without limitation Section 580a, 580b, 580d, or 726 of
the California Code of Civil Procedure; and (b) Guarantor waives all rights and
defenses arising out of an election of remedies by the creditor, even though
that election of remedies, such as a nonjudicial foreclosure with respect to
security for a Guarantied Obligation, has destroyed such Guarantor's rights of
subrogation and reimbursement against the principal by the operation of Section
580d of the Code of Civil Procedure or otherwise; and even though that election
of remedies by the creditor, such as nonjudicial foreclosure with respect to
security for an obligation of any other guarantor of any of the Guarantied
Obligations, has destroyed such Guarantor's rights of contribution against such
other guarantor. No other provision of this Guaranty shall be construed as
limiting the generality of any of the covenants and waivers set forth in this
paragraph.
6. Guarantor's Rights of Subrogation, Contribution, Etc.;
Subordination of Other Obligations. Guarantor waives any claim, right or remedy,
direct or indirect, that such Guarantor now has or may hereafter have against
Company or any of its assets in connection with this Guaranty or the performance
by such Guarantor of its obligations hereunder, in each case whether such claim,
right or remedy arises in equity, under contract, by statute (including without
limitation under California Civil Code Section 2847, 2848 or 2849), under common
law or otherwise and including without limitation (a) any right of subrogation,
reimbursement or indemnification that such Guarantor now has or may hereafter
have against Company, (b) any right to enforce, or to participate in, any claim,
right or remedy that Lender now has or may hereafter have against Company, and
(c) any benefit of, and any right to participate in, any collateral or security
now or hereafter held by Lender. In addition, until the Guarantied Obligations
shall have been paid in full, Guarantor shall withhold exercise of any right of
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contribution such Guarantor may have against any other guarantor of any of the
Guarantied Obligations. Guarantor further agrees that, to the extent the waiver
or agreement to withhold the exercise of its rights of subrogation,
reimbursement, indemnification and contribution as set forth herein is found by
a court of competent jurisdiction to be void or voidable for any reason, any
rights of subrogation, reimbursement or indemnification such Guarantor may have
against Company or against any collateral or security, and any rights of
contribution such Guarantor may have against any such other guarantor, shall be
junior and subordinate to any rights Lender may have against Company, to all
right, title and interest Lender may have in any such collateral or security,
and to any right Lender may have against such other guarantor.
Any indebtedness of Company now or hereafter held by Guarantor is
subordinated in right of payment to the Guarantied Obligations, and any such
indebtedness of Company to Guarantor collected or received by such Guarantor
after an Event of Default has occurred and is continuing, and any amount paid to
a Guarantor on account of any subrogation, reimbursement, indemnification or
contribution rights referred to in the preceding paragraph when all Guarantied
Obligations have not been paid in full, shall be held in trust for Lender on
behalf of Lender and shall forthwith be paid over to Lender for the benefit of
Lender to be credited and applied against the Guarantied Obligations.
7. Expenses. Guarantors jointly and severally agree to pay, or cause
to be paid, on demand, and to save Lender harmless against liability for, (i)
any and all costs and expenses (including fees and disbursements of counsel and
allocated costs of internal counsel) incurred or expended by Lender in
connection with the enforcement of or preservation of any rights under this
Guaranty and (ii) any and all costs and expenses (including those arising from
rights of indemnification) required to be paid by Guarantor under the provisions
of any other Loan Document.
8. Financial Condition of Company. Lender shall not have any
obligation, and Guarantor waives any duty on the part of Lender, to disclose or
discuss with such Guarantor its assessment, or such Guarantor's assessment, of
the financial condition of Company or any matter or fact relating to the
business, operations or condition of Company. Guarantor has adequate means to
obtain information from Company on a continuing basis concerning the financial
condition of Company and its ability to perform its obligations under the Loan
Documents, and Guarantor assumes the responsibility for being and keeping
informed of the financial condition of Company and of all circumstances bearing
upon the risk of nonpayment of the Guarantied Obligations.
9. Covenants. Guarantor agrees that, so long as any part of the
Guaranteed Obligations shall remain unpaid, such Guarantor will, unless the
Lender shall otherwise consent in writing, perform or observe, and cause Company
to perform or observe, all of the terms, covenants and agreements that the Loan
Documents state that Company is to cause a Guarantor to perform or observe.
10. Set Off. In addition to any other rights Lender may have under
law or in equity, if any amount shall at any time be due and owing by a
Guarantor to Lender under this Guaranty, Lender is authorized at any time or
from time to time, without notice (any such notice being expressly waived), to
set off and to appropriate and to apply any and all deposits (general or
special, including but not limited to indebtedness evidence by certificates of
deposit, whether matured or unmatured) and any other indebtedness of Lender
owing to Guarantor and any other property of such Guarantor held by Lender to or
for the credit or the account of such Guarantor
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against and on account of the Guarantied Obligations and liabilities of such
Guarantor to Lender under this Guaranty.
11. Amendments and Waivers. No amendment, modification, termination
or waiver of any provision of this Guaranty, and no consent to any departure by
Guarantor therefrom, shall in any event be effective without the written
concurrence of Lender and, in the case of any such amendment or modification,
Guarantor. Any such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which it was given.
12. Miscellaneous. It is not necessary for Lender to inquire into the
capacity or powers of Guarantor or Company or the officers, directors or any
agents acting or purporting to act on behalf of any of them.
The rights, powers and remedies given to Lender by this Guaranty
are cumulative and shall be in addition to and independent of all rights, powers
and remedies given to Lender by virtue of any statute or rule of law or in any
of the Loan Documents or any agreement between Guarantor and Lender or between
Company and Lender. Any forbearance or failure to exercise, and any delay by
Lender in exercising, any right, power or remedy hereunder shall not impair any
such right, power or remedy or be construed to be a waiver thereof, nor shall it
preclude the further exercise of any such right, power or remedy.
In case any provision in or obligation under this Guaranty shall
be invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF GUARANTOR AND
LENDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, THE INTERNAL LAWS OF THE STATE OF CALIFORNIA, WITHOUT REGARD TO CONFLICTS
OF LAWS PRINCIPLES.
This Guaranty shall inure to the benefit of Lender and its
respective successors and assigns.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST GUARANTOR ARISING OUT OF
OR RELATING TO THIS GUARANTY MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF
COMPETENT JURISDICTION IN THE STATE OF CALIFORNIA, AND BY EXECUTION AND DELIVERY
OF THIS GUARANTY GUARANTOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS
PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE
AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY
AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS
GUARANTY. Guarantor agrees that service of all process in any such proceeding in
any such court may be made by registered or certified mail, return receipt
requested, to such Guarantor at its address set forth below its
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signature hereto, such service being acknowledged by such Guarantor to be
sufficient for personal jurisdiction in any action against such Guarantor in any
such court and to be otherwise effective and binding service in every respect.
Nothing herein shall affect the right to serve process in any other manner
permitted by law or shall limit the right of Lender to bring proceedings against
such Guarantor in the courts of any other jurisdiction.
GUARANTOR AND, BY ITS ACCEPTANCE OF THE BENEFITS HEREOF, LENDER
EACH AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION BASED UPON OR ARISING OUT OF THIS GUARANTY. The scope of this waiver
is intended to be all-encompassing of any and all disputes that may be filed in
any court and that relate to the subject matter of this transaction, including
without limitation contract claims, tort claims, breach of duty claims and all
other common law and statutory claims. Guarantor and, by its acceptance of the
benefits hereof, Lender each (i) acknowledges that this waiver is a material
inducement for such Guarantor and Lender to enter into a business relationship,
that such Guarantor and Lender have already relied on this waiver in entering
into this Guaranty or accepting the benefits thereof, as the case may be, and
that each will continue to rely on this waiver in their related future dealings,
and (ii) further warrants and represents that each has reviewed this waiver with
its legal counsel and that each knowingly and voluntarily waives its jury trial
rights following consultation with legal counsel. THIS WAIVER IS IRREVOCABLE,
MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS
OF THIS GUARANTY. In the event of litigation, this Guaranty may be filed as a
written consent to a trial by the court.
13. Counterparts. This Guaranty may be executed in any number of
counterparts and by the different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed to be an original for
all purposes; but all such counterparts together shall constitute but one and
the same instrument.
B-7
IN WITNESS WHEREOF, Guarantor and, solely for purposes of the
waiver of the right to jury trial contained in Section 12, Lender have caused
this Guaranty to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
GLOBAL AXCESS CORP.
By: /s/ Xxxxxxx Xxxx
------------------------
Xxxxxxx Xxxx
Title: President
Address: 0000 Xxxxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
CARDSERVICE INTERNATIONAL, INC.
By: /s/ Xxxxxx Xxxxxxxx
------------------------
Xxxxxx Xxxxxxxx
Title: President
B-8
C-2
EXHIBIT C
ARTICLES OF MERGER
OF
NATIONWIDE MONEY SERVICES, INC.
AND
GLOBAL ACQUISITION CORP. I
To the Secretary of State
State of Nevada
Pursuant to the provisions of Chapter 92A, Nevada Revised Statutes, the
constituent domestic corporations herein named do hereby submit the following
Articles of Merger.
1. The name and state of incorporation of each of the constituent
corporations (the "Constituent ------------ Corporations") to the merger are:
Name State of Incorporation
GLOBAL ACQUISITION CORP. I Nevada
NATIONWIDE MONEY SERVICES, INC. Nevada
2. An Agreement and Plan of Merger, dated as of June 29, 2001
(the "Merger Agreement"), among Global Axcess Corp., a Nevada corporation,
Global Acquisition Corp. I, a Nevada corporation ("Merger Sub"), Cardservice
International, a California corporation and Nationwide Money Services, Inc., a
Nevada corporation ("NWM") providing for the merger (the "Merger") of Merger Sub
with and into NWM, has been approved, adopted, certified, executed and
acknowledged by each of the Constituent Corporations in accordance with the
provisions of Chapter 92A, Nevada Revised Statutes.
3. The Merger Agreement was approved by the unanimous written
consent of the stockholders of Merger Sub pursuant to the provisions of Chapter
92A, Nevada Revised Statutes.
4. The Merger Agreement was approved by the unanimous written
consent of the stockholders of NWM pursuant to the provisions of Chapter 92A,
Nevada Revised Statutes.
5. The surviving corporation is NWM, which shall retain its name -
Nationwide Money Services, Inc. (the "Surviving Corporation").
C-1
6. The Articles of Incorporation of NWM shall, upon effectiveness of
the Merger, be that of the Surviving Corporation, without amendment.
7. The By-Laws of NWM shall, upon the effectiveness of the Merger,
be that of the Surviving Corporation.
8. The directors and officers of Merger Sub holding office
immediately prior to the effective time shall, upon the effectiveness of the
Merger, be that of the Surviving Corporation and shall hold office in accordance
with the Surviving Corporation's By-Laws.
9. The executed Merger Agreement is on file at the offices of
the Surviving Corporation located at 000 Xxxxx Xxxxx Xxxx Xxxxx, Xxxxx 000,
Xxxxx Xxxxx Xxxxx, XX 00000.
10. A copy of the Merger Agreement will be furnished by the Surviving
Corporation, on request and without cost, to any stockholder of either of the
Constituent Corporations.
11. The Merger shall become effective immediately upon filing of
these Articles of Merger with the Secretary of State of the State of Nevada
Dated as of June 29, 2001
GLOBAL ACQUISITION CORP. I
/s/
President
/s/
Secretary
/s/
NATIONWIDE MONEY SERVICES, INC.
/s/
President
/s/
Secretary
C-2
TABLE OF CONTENTS
Page
ARTICLE I
THE MERGER
1.1 The Merger........................................................... 1
1.2 Effective Time; Closing.............................................. 2
1.3 Effect of the Merger................................................. 2
1.4 Articles of Incorporation; Bylaws.................................... 2
1.5 Directors and Officers............................................... 2
1.6 Effect on Capital Stock.............................................. 2
1.7 Surrender of Certificates............................................ 4
1.8 No Further Ownership Rights in Company Stock......................... 4
1.9 Lost, Stolen or Destroyed Certificates............................... 4
1.10 Taking of Necessary Action; Further Action........................... 5
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
2.1 Due Organization and Qualification; Subsidiaries; Due Authorization.. 5
2.2 No Conflicts or Defaults............................................. 6
2.3 Capitalization....................................................... 6
2.4 No Defaults.......................................................... 7
2.5 Compliance with Law.................................................. 7
2.6 Permits and Licenses................................................. 8
2.7 Ordinary Course...................................................... 8
2.8 Litigation........................................................... 8
2.9 Certificate of Incorporation and By-laws............................. 8
2.10 Employee Benefit Plans............................................... 9
2.11 Patents; Trademarks and Intellectual Property Rights................. 9
2.12 Brokers.............................................................. 9
2.13 Affiliate Transactions............................................... 9
2.14 No Anti-Dilution Adjustment..........................................10
2.15 No Regulatory Problems...............................................10
2.16 Company SEC Filings; Financial Statement.............................11
2.17 Financial Statements.................................................12
2.18 Acquisition of IFT...................................................12
2.19 Taxes................................................................12
2.20 Miscellaneous........................................................13
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLING PARTIES
3.1 Due Organization and Qualification; Subsidiaries; Due Authorization..13
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3.2 No Conflicts or Defaults.............................................13
3.3 Capitalization.......................................................14
3.4 Financial Statements.................................................14
3.5 Further Financial Matters............................................14
3.6 Taxes................................................................15
3.7 Indebtedness; Contracts; No Defaults.................................15
3.8 Personal Property....................................................15
3.9 Real Property........................................................16
3.10 Compliance with Law..................................................16
3.11 Permits and Licenses.................................................16
3.12 Ordinary Course......................................................16
3.13 No Adverse Changes...................................................17
3.14 Litigation...........................................................17
3.15 Insurance............................................................17
3.16 Articles of Incorporation and By-laws; Minute Books..................17
3.17 Employee Benefit Plans...............................................18
3.18 Patents; Trademarks and Intellectual Property Rights.................18
3.19 Brokers..............................................................18
3.20 Purchase for Investment..............................................18
3.21 Restricted Securities................................................18
ARTICLE IV
CONDITIONS PRECEDENT TO COMPANY'S OBLIGATIONS
4.1 Representations and Warranties.......................................19
4.2 Performance of CSI and NWM...........................................19
ARTICLE V
CONDITIONS PRECEDENT TO CSI AND NWM'S OBLIGATIONS
5.1 Representations and Warranties.......................................19
5.2 Performance of Company...............................................20
5.3 Approval of Documentation............................................20
5.4 Related Agreements...................................................20
ARTICLE VI
OTHER AGREEMENTS
6.1 Directors' and Officers' Indemnification.............................20
6.2 Obligations of Merger Sub and Surviving Corporation..................20
6.3 Tax-Free Reorganization..............................................20
6.4 Tax Matters..........................................................21
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6.5 Indemnity of Lease Guarantees........................................21
ARTICLE VII
MISCELLANEOUS
7.1 Survival of Representations and Warranties...........................21
7.2 Notice...............................................................21
7.3 Entire Agreement.....................................................22
7.4 Successors and Assigns...............................................22
7.5 Governing Law, Venue and Jurisdiction................................22
7.6 Counterparts.........................................................23
7.7 Construction.........................................................23
7.8 Severability.........................................................23
7.9 Attorney Fees........................................................23
7.10 Time is of the Essence...............................................23
7.11 Drafting Party.......................................................23
7.12 No Waiver............................................................23
7.13 Expenses.............................................................23
7.14 No Third Party Beneficiaries.........................................24
7.15 Remedies.............................................................24
EXHIBITS
Exhibit A -- Investor Rights Agreement.......................................A-1
Exhibit B -- Guaranty........................................................B-1
Exhibit C -- Articles of Merger..............................................C-1
SCHEDULES
Schedule 2.17 -- IFT Financial Statements
Schedule 3.4 -- NWM and EFTI Financial Statements
Schedule 3.7(a) -- Indebtedness, etc.
Schedule 3.9 -- Real Property
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