THIS AGREEMENT IS SUBJECT TO ARBITRATION PURSUANT TO
CHAPTER 48 OF TITLE 15 OF THE CODE OF LAWS OF SOUTH CAROLINA
AMENDED AND RESTATED AGREEMENT
This Amended and Restated Agreement (this "Agreement") is dated as of
July 15, 1996, executed as of this 17th day of September, 1996 (except Sections
2.3(iii) and 6.6 are dated as of September 16, 1996) by and among Carolina First
Bank, a South Carolina corporation ("CFB"), Internet Organizing Group, Inc., a
Georgia corporation ("IOG"), the Organizers (as set forth on the Signature Page
hereof, which include Xxxxxx International, Limited and which are hereinafter
referred to as the "Organizers"), and the Xxxxxx Group of Investors (as set
forth on the Signature Page hereof and which are hereinafter referred to as the
"Xxxxxx Group").
PREAMBLE
WHEREAS this Agreement amends and restates in full that certain Agreement
entered into July 15, 1996 by and among CFB, IOG, the Organizers (as set forth
on the Signature Page thereof, and the Xxxxxx Group of Investors (as set forth
on the Signature Page thereof);
NOW, THEREFORE, in consideration of the mutual covenants and
representations contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
SECTION I. CERTAIN COVENANTS OF THE PARTIES
1.1 CERTAIN DEFINITIONS. As used in this Agreement, the following terms
have the definitions indicated.
"Accrued Interest Payable" means interest on Deposits which is accrued but
has neither been posted to a deposit account nor paid as of the Transfer Date.
"Accrued Interest Receivable" means interest on loans which is accrued but
unpaid as of the Closing Date.
"Cash Items" means all cash items, suspense items and items in process of
collection, that are related to the IB Deposits.
"CFB IB Operation" shall mean the CFB Internet banking operation described
in Section 2.2 hereof.
"Deposit" shall have the meaning set forth in Section 3(1) of the Federal
Deposit Insurance Act, 12 U.S.C. Section 1813(1), including, without limitation,
individual retirement accounts and cash management accounts.
"IB Contracts" means any leases, contracts and other agreements owned by
CFB and utilized principally in the CFB IB Operation.
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"IB Deposit" means a Deposit (except South Carolina Deposits), including
Accrued Interest Payable thereon, which has been gathered through the CFB IB
Operation.
"IB Loan" means any loan substantially effected through the CFB IB
Operation and any other loans of such types or categories and in such amounts as
are agreed upon by the parties hereto, together with any Accrued Interest
Receivable thereon, the related servicing rights and all records associated
therewith.
"Net Book Value" means the value of an asset on the books of CFB as of the
date of the Transfer determined in accordance with Generally Accepted Accounting
Principles ("GAAP"), but without regard to any general allowance for credit
losses.
"Premier Charter" shall mean the thrift charter of Premier Bank, FSB.
"South Carolina Deposits" shall mean IB Deposits associated with customers
who on the date hereof, are customers of CFB.
"Transfer" shall mean the transfer of the assets and liabilities of the CFB
IB Operation to IOG, all as more specifically set forth in Section III and other
sections of this Agreement.
SECTION II. CERTAIN COVENANTS OF THE PARTIES
2.1. ACQUISITION OF CHARTER. IOG shall use its best efforts to acquire the
Premier Charter on substantially the terms and otherwise as contemplated in that
certain H(e)-1 Application of IOG filed (or to be filed) with the Office of
Thrift Supervision, a copy of which has been provided to CFB. In the event that
IOG does not reasonably expect to obtain the Premier Charter on reasonably
acceptable terms or in a timely manner, IOG shall use its best efforts to
acquire another banking charter on reasonably acceptable terms (such other
charter, or the Premier Charter being hereinafter referred to as the "Charter").
2.2. CFB INTERNET BANKING OPERATIONS. Prior to the Transfer, CFB shall
conduct certain Internet banking operations (the "CFB IB Operation"), which
shall consist of the following:
(i) As soon as reasonably practicable following the date hereof,
CFB shall offer certain banking products via the Internet under the name
"The Atlanta Internet Bank, a product of Carolina First Bank" (hereinafter
referred to as the "AIB Product"). The AIB Product and the CFB IB Operation
shall be offered and conducted as otherwise described herein, including as
described on Exhibit A attached hereto.
(ii) IOG shall provide the management and financial expertise and
software required for the operation of CFB's IB Operation all as
contemplated herein, including as set forth in Exhibit A attached hereto
(the "IOG Services"). IOG shall perform the IOG Services in compliance
with applicable law, and in a manner consistent with the reasonable
standards in the industry (with due consideration being given to the
relative newness of this segment of the banking industry). Notwithstanding
the foregoing, the parties acknowledge that IOG shall not have liability
for any actions taken by CFB in connection with the CFB IB Operation, and
CFB shall indemnify IOG for any liability inuring to IOG as a result of
CFB's actions. The IOG
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Services will be provided beginning on the date hereof and ending on the
earlier of the Transfer or the termination of this Agreement, all as
described herein.
(iii) Notwithstanding IOG's authority and responsibilities with
respect to CFB IB Operation (as contemplated in Exhibit A), IOG shall not
effect any of the following without the prior consent of CFB:
(a) Enter into contracts on behalf of CFB;
(b) Incur expenses on its own behalf in connection with the CFB
IB Operation which is reasonably expected to involve more
than an aggregate of $20,000.
(c) Conduct any operations not specifically contemplated in this
Agreement (including, without limitation, make expenditures
not contemplated in the Expense Estimate attached hereto as
Exhibit B).
(d) Amend its Articles of Incorporation or Bylaws (with respect
to which, CFB's consent shall not be unreasonably withheld).
(iv) In connection with the CFB IB Operation, CFB shall perform such
services as are specifically set forth herein, including in Exhibit A. All
actions taken by CFB in connection with the CFB IB Operation shall be in
compliance with applicable law and in a manner consistent with the
reasonable standards in the industry (with due consideration being given to
the relative newness of this segment of the banking industry).
Notwithstanding the foregoing, the parties acknowledge that CFB shall not
have liability for any actions taken by IOG in connection with its
providing the IOG Services, and IOG shall indemnify CFB for any liability
inuring to CFB as a result of IOG's actions.
2.3. FUNDING OBLIGATIONS. (i) CFB shall fund the reasonable expenses of
the CFB IB Operation from the date hereof through March 31, 1997 (which date may
be extended by CFB). Notwithstanding the foregoing except as set forth in
Section 2.3(ii), CFB shall not be required to fund the CFB IB Operation if the
amounts expended by CFB as contemplated in Exhibit B, plus losses associated
with the CFB IB Operation exceeds $1,125,985 (the "CFB Funding Cap") (CFB's
actual expenditures and net losses associated with the CFB IB Operation being
hereinafter referred to as the "CFB Expenditures"). Subject to Section 2.3(ii),
in the event that the CFB Funding Cap is reached, then CFB may elect not to
provide further funding and may terminate the CFB IB Operation as contemplated
in Section 8.1(v).
(ii) In the event that (A) the CFB Funding Cap is reached (the "Cap
Date") and IOG is not in default under this Agreement (except for a default
resulting from the March 31, 1997 deadline having been reached) or (B) this
Agreement is terminated under Section 8.1(iv) (such date of termination or the
Cap Date being hereinafter referred to as the "Termination Date"), CFB (unless
it reasonably determines that there is no reasonable likelihood that the
Transfer will occur before the earlier of 120 days from the Termination Date or
July 31, 1997) shall continue to fund the reasonable costs of the CFB IB
Operation until the earlier of 120 days from the Termination Date, July 31,
1997, or the Transfer; provided, however, that all costs during such period
shall be subject to approval of CFB and provided further that CFB shall not be
obligated to expend additional amounts in excess of $200,000 (the $200,000,
together with any other expenses of CFB in excess of the CFB Funding Cap, being
hereinafter referred to as the
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"Reimbursable Expenses"). At July 31, 1997, the Reimbursable Expenses shall
become immediately due and payable by IOG to CFB, which debt shall be payable on
a priority basis (prior to repayment of any expenses of other parties set forth
on the Signature Page hereof).
(iii) Concurrently with the execution hereof, the Xxxxxx Group (jointly
and severally) agree to purchase 9,000 shares of IOG common stock (as such share
amount shall have been equitably adjusted for splits, reverse splits and similar
matters) for $1,080,000, payable in cash on the date hereof.
2.4 RETENTION OF IOG. In connection with the provision by IOG of the IOG
Services, the parties agree that at all times, IOG and all of its employees
shall be considered an independent contractor of CFB and the parties shall take
such action as may be reasonably necessary to ensure such treatment. All work
done by IOG in connection with the CFB IB Operation shall be the property of IOG
and, unless CFB consents otherwise, IOG shall enter into all contracts executed
in connection with the CFB IB Operation in its own name and on its own behalf
(such that IOG will be deemed to be the owner and beneficiary of such
contracts).
2.5. CONSIDERATION FOR THE IOG SERVICES. In connection with the provision
of the IOG Services, CFB shall pay to IOG its reasonable expenses prior to the
Transfer, all as contemplated on Exhibit B attached hereto; provided, however,
that in no event shall CFB be required to pay amounts for items in excess of the
amounts set forth in Exhibit B attached hereto or to pay amounts (or incur
losses) in excess of the amount set forth in Section 2.3. CFB shall make its
payments only to IOG and shall have no liability to IOG employees utilized in
providing the IOG Services.
2.6. DIRECT SOLICITATION. In connection with the CFB IB Operation, IOG
shall not directly solicit current CFB customers for its banking services.
Notwithstanding the foregoing, the parties acknowledge that this Section 2.6
shall not preclude general multi-state solicitation.
2.7. COOPERATION AND ACCESS. The parties shall reasonably cooperate in
order to effect the transactions contemplated herein. The parties hereby to
provide the other with full and complete access at all reasonable times to the
CFB IB Operation and all matters related thereto.
SECTION III. TRANSFER OF THE CFB IB OPERATION
3.1. TRANSFER OF ASSETS. Upon consummation of the IOG's acquisition of the
Charter and upon receipt of all necessary or desirable regulatory approvals
associated with the acquisition of the Charter, the Transfer, and the issuance
of the stock contemplated in this Section III, CFB shall transfer the CFB IB
Operation to IOG (the "Transfer"), which shall include the transfer of the
following assets and the assumption of the following liabilities:
(i) The assets transferred shall include the following:
(1) any tangible assets purchased by and utilized exclusively by the
CFB IB Operation, including all furniture, fixtures and equipment
utilized exclusively by the CFB IB Operation;
(2) all IB Contracts;
(3) all IB Loans;
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(4) the Cash Items;
(5) any accrued but uncollected income directly associated with the
CFB IB operation; and
(6) all other assets, of any kind and type (tangible or intangible)
associated exclusively with the CFB IB Operation, including,
without limitation, the accounting records associated with the
CFB IB Operation.
(ii) The liabilities transferred by CFB and assumed by IOG shall include
the following:
(1) all IB Deposits and all obligations of CFB to provide services
incidental to the IB Deposits;
(2) all liabilities associated with the IB Contracts;
(3) any accrued but unpaid expenses directly associated with the CFB
IB Operation; and
(4) any other liabilities associated exclusively with the CFB IB
Operation and any other liabilities as may be agreed upon by the
parties.
The parties acknowledge that they expect that the Transfer will occur in
connection with an initial public offering of IOG or a private placement of
securities raising at least $10 million (although such shall not be required).
3.2. CONSIDERATION FOR THE TRANSFER. In connection with the Transfer,
(i) IOG shall issue to CFB 40,000 shares of IOG Common Stock (the "CFB
Shares," which term may include the "Warrants" as defined below if the issuance
of such Warrants is required) and
(ii) IOG shall pay to CFB a purchase price calculated as follows:
(1) 100% of the face value of all Cash Items; plus
(2) 100% of the Reimbursable Expenses not actually reimbursed; plus
(3) 100% of the absolute value of any net losses associated with the
CFB IB Operation (excluding the Reimbursable Expenses); plus
(4) 100% of the Net Book Value of the Branch Loans; minus
(5) 100% of the total amount of the Branch Deposits on deposit at the
date of the Transfer.
If the results of the above calculations are positive, that amount shall be paid
by IOG to CFB, but if the results of the above calculations are negative, that
amount shall be paid by CFB to IOG. The parties agree that CFB shall be entitled
to receive the CFB Shares so long as it has funded the reasonable expenses of
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the CFB IB Operation prior to the Transfer, even if the total CFB Expenditures
do not equal or exceed the amount of the CFB Funding Cap.
3.3. CLOSING DELIVERIES AND DOCUMENTS. Upon the consummation of the
Transfer, the parties shall deliver to each other such documents as are
typically provided in connection with the purchase and sale of branches,
including bills of sale, assignments, and assignment and assumption agreements,
and officer's certificates. The parties may also mutually elect to enter into a
separate transfer agreement containing standard representations, warranties and
covenants typical of such transactions.
3.4 CERTAIN TRANSFER MATTERS. Upon the Transfer, IOG shall be responsible
for completing Forms 1099 for customers who were set up in connection with the
CFB IB Operation, and other similar customer related matters.
3.5. RETENTION OF SOUTH CAROLINA CUSTOMERS. Upon the Transfer, IOG will
reasonably cooperate with CFB in order to assist CFB in setting up an Internet
operation to service customers associated with the SC Deposits. CFB shall pay
IOG's out of pocket costs associated with such assistance.
3.6. EQUITY MAINTENANCE. In the event that CFB does not receive final
approval to own the CFB Shares as contemplated above at the time of the
Transfer, IOG shall issue to CFB warrants equal exercisable into the CFB Shares
(the "Warrants"), which Warrants:
(i) shall be exercisable upon such terms as shall be acceptable to
CFB and applicable regulatory agencies;
(ii) shall have shall have an exercise price equal to $.01 (which may
be paid via "cashless exercise"); and
(iii) shall have a term of at least 15 years.
The parties acknowledge that they expect that the form of the Warrants
would be substantially the same as the warrants to purchase common stock of
Affinity Technology Group, Inc. currently owned by CFB.
3.7. REIMBURSEMENT. If, after the date hereof, IOG procures equity capital
(or debt convertible into equity capital) exceeding $6 million (the "New
Capital"), whether in one or a series of offerings, then to the extent that the
New Capital exceeds $6 million, all parties hereto shall be reimbursed, on a pro
rata basis, (dollar for dollar until paid in full) for the reasonable expenses
incurred by the CFB IB Operation (which for CFB will be the CFB Expenditures).
The parties acknowledge, on their respective behalf, that Exhibit D sets forth
the expenses reimbursable under this Section 3.7 which were incurred prior to
June 1, 1996.
SECTION IV. MANAGEMENT AND RELATED MATTERS
4.1. DIRECTORS. In the event that CFB receives regulatory approval to have
a representative or representatives serve as members of the Board of Directors
of IOG, CFB shall be entitled to designate as part of management's slate, three
directors (and the Board of IOG shall not be composed of more than 11 persons).
In the event that CFB is not permitted to designate a director (assuming
applicable law permits), IOG shall permit a representative of CFB to be present
at all IOG Board meetings.
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4.2. EXECUTIVE COMMITTEE. In the event that the IOG Board of Directors
establishes an executive committee, such committee must include the
CFB-designated director as a member; provided that CFB receives regulatory
approval to have a representative serve as a member of the Board of Directors of
IOG.
4.3. VOTING OF STOCK AND OTHER ACTIONS. CFB, the Organizers and the Xxxxxx
Group hereby agree to vote their IOG Common Stock and take such other reasonable
action as may be necessary to cause the actions set forth in this Section IV to
occur. Each party to this Section IV hereby agree that each of them shall not
vote their IOG capital stock or take any actions which are contrary to the
purposes and intent set forth in this Section IV; provided, however, that this
Section shall not impose restraints upon the actions of any party which would be
inconsistent with any applicable fiduciary duties.
4.4. TERMINATION OF VOTING AGREEMENT. The provisions of this Section IV
shall terminate completely upon the completion of an underwritten public
offering whereby IOG is registered under Section 12(b) or 12(g) of the
Securities Exchange Act of 1934, as amended.
4.5. CONSENT OF CFB. IOG shall obtain the prior written consent of CFB in
connection with the matters set forth below, which consent shall not be
unreasonably withheld:
(i) the issuance by IOG of any shares of capital stock (or securities
convertible into capital stock), except as contemplated in Section 6.6 hereof;
(ii) the selection of investment bankers, attorneys, consultants and
other vendors which would be required to establish operations and obtain
regulatory approvals; and
(iii) material employment-related decisions with respect to executive
officers and key employees.
(iv) amendments to IOG's Articles of Incorporation or Bylaws.
SECTION V. REPRESENTATIONS OF CFB
CFB represents and warrants as follows:
5.1. ORGANIZATION, GOOD-STANDING AND CONDUCT OF BUSINESS. CFB is a
corporation, duly organized, validly existing and in good standing under the
laws of the State of South Carolina, and has full power and authority and all
necessary governmental and regulatory authorization to own its properties and
assets and to carry on its business as it is presently being conducted.
5.2. CORPORATE AUTHORITY. The execution, delivery and performance of this
Agreement have been duly authorized by the Board of Directors of CFB. No further
corporate acts or proceedings on the part of CFB are required or necessary to
authorize this Agreement.
5.3. BINDING EFFECT. When executed, this Agreement will constitute a valid
and legally binding obligation of CFB, enforceable against CFB in accordance
with its terms, subject to (i) applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to rights of creditors of FDIC-insured institutions or the relief of
debtors generally, (ii) laws relating to the safety and soundness of depository
institutions, and (iii) general principles of equity. The
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Agreement, when executed and delivered by CFB in accordance with the provisions
hereof, shall be duly authorized, executed and delivered by CFB and enforceable
against CFB in accordance with its terms, subject to the exceptions in the
previous sentence.
5.4. NON-CONTRAVENTION AND DEFAULTS; NO LIENS. Neither the execution or
delivery of this Agreement, nor the fulfillment of, or compliance with, the
terms and provisions hereof, will (i) result in a breach of the terms,
conditions or provisions of, or constitute a default under, or result in a
violation of, termination of or acceleration of the performance provided by the
terms of, any agreement to which CFB is a party or by which it may be bound,
(ii) violate any provision of any law, rule or regulation, (iii) result in the
creation or imposition of any lien, charge, restriction, security interest or
encumbrance of any nature whatsoever on any asset of CFB, or (iv) violate any
provisions of CFB's Articles of Incorporation or Bylaws.
5.5. NECESSARY APPROVALS. Except for regulatory approvals applicable
solely to financial institutions (which approvals (if any are determined by CFB
to be required) will be obtained by CFB prior to consummation of the
transactions contemplated herein), no consent, approval, authorization,
registration, or filing with or by any governmental authority, foreign or
domestic, is required on the part of CFB in connection with the execution and
delivery of this Agreement or the consummation by CFB of the transactions
contemplated hereby.
5.6. INVESTMENT STATUS AND INVESTMENT INTENT. CFB is acquiring the CFB
Shares (and/or the Warrants, as the case may be) for investment for CFB's own
account and not with a view to, or for resale in connection with, any
distribution thereof, and CFB has no present intention of selling or
distributing the common stock of IOG. CFB does not have any contract,
undertaking, agreement or arrangement with any person to sell, transfer or grant
participation to such person or to any third person with respect to any of the
common stock of IOG. CFB understands that the common stock of IOG to be
acquired by CFB has not been registered under the Securities Act of 1933, as
amended, or under any state securities laws by reason of specific exemption from
the registration provisions of the Securities Act and state securities laws
which depends upon, among other things, the bona fide nature of the investment
intent as expressed herein.
SECTION VI. REPRESENTATIONS OF IOG
IOG represents and warrants, and the Organizers to the best of their
knowledge, represent and warrant, as follows as of the date hereof:
6.1. ORGANIZATION, GOOD-STANDING AND CONDUCT OF BUSINESS. IOG is a
corporation, duly organized, validly existing and in good standing under the
laws of the State of Georgia, and has full power and authority and all necessary
governmental and regulatory authorization to own its properties and assets and
to carry on its business as it is presently being conducted.
6.2. CORPORATE AUTHORITY. The execution, delivery and performance of this
Agreement have been duly authorized by the Board of Directors of IOG. No
further corporate acts or proceedings on the part of IOG are required or
necessary to authorize this Agreement.
6.3. BINDING EFFECT. When executed, this Agreement will constitute a valid
and legally binding obligation of IOG, enforceable against IOG in accordance
with its terms, subject to (i) applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
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relating to rights of creditors or the relief of debtors generally and (ii)
general principles of equity. The Agreement, when executed and delivered by IOG
accordance with the provisions hereof, shall be duly authorized, executed and
delivered by IOG and enforceable against IOG in accordance with its terms,
subject to the exceptions in the previous sentence.
6.4. NON-CONTRAVENTION AND DEFAULTS; NO LIENS. Neither the execution or
delivery of this Agreement, nor the fulfillment of, or compliance with, the
terms and provisions hereof, will (i) result in a breach of the terms,
conditions or provisions of, or constitute a default under, or result in a
violation of, termination of or acceleration of the performance provided by the
terms of, any agreement to which IOG is a party or by which it may be bound,
(ii) violate any provision of any law, rule or regulation, (iii) result in the
creation or imposition of any lien, charge, restriction, security interest or
encumbrance of any nature whatsoever on any asset of IOG, or (iv) violate any
provisions of IOG's Certificate of Incorporation or Bylaws, copies of which are
attached hereto as Exhibit C.
6.5. NECESSARY APPROVALS. No consent, approval, authorization,
registration, or filing with or by any governmental authority, foreign or
domestic, is required on the part of IOG in connection with the execution and
delivery of this Agreement or the consummation by IOG of the transactions
contemplated hereby.
6.6. CAPITALIZATION. The authorized capital stock of IOG consists solely
of 100,000 authorized shares of common stock ("IOG Common Stock"), of which
40,000 are issued and outstanding, 31,000 of which are owned by the Organizers
and 9,000 of which are being issued contemporaneously herewith to the Xxxxxx
Group as contemplated in Section 2.3(iii) hereof. All of the issued and
outstanding shares of IOG are validly issued and fully paid and nonassessable.
Except for the CFB Shares (as defined below), there are no outstanding
obligations, options, warrants or commitments of any kind or nature or any
outstanding securities or other instruments convertible into shares of any class
of capital stock of IOG, or pursuant to which IOG is or may become obligated to
issue any shares of its capital stock. None of the shares of the IOG Common
Stock is subject to any restrictions as to the transfer thereof, except as set
forth in IOG's Certificate of Incorporation, Bylaws, or restrictions on account
of applicable federal or state securities laws. IOG does not hold 5% or more of
any class of equity securities of any other company or legal entity. The CFB
Shares (as defined below) will, when issued, be validly issued, fully paid and
nonassessable. IOG and the Organizers represent that the $1,000,000 referenced
in Section 2.3(iii) hereof has been contributed to IOG.
6.7. LIABILITIES AND LITIGATION. IOG has no liabilities other than as
referenced in this Agreement. There are no claims, actions, suits or proceedings
pending or, to IOG's knowledge, threatened against IOG, or to its knowledge
affecting IOG, at law or in equity, before or by any Federal, state, municipal,
administrative or other court, governmental department, commission, board, or
agency, an adverse determination of which could have a material adverse effect
on the business or operations of IOG (including its ultimate ownership and
operation of the Operation), and IOG knows of no basis for any of the foregoing.
There is no order, writ, injunction, or decree of any court, domestic or
foreign, or any Federal or state agency affecting IOG or to which IOG is
subject.
6.8. OPERATIONS OF THE CFB IB OPERATION AND RIGHTS OF IOG. IOG is not
aware of any reason why the AIB Product, when in service, will not operate as
previously demonstrated to CFB. Upon execution hereof and after the Transfer,
IOG will have (or will reasonably expect to obtain) all necessary rights,
licenses and authority to operate the CFB IB Operation as previously described
to CFB.
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SECTION VII. REGULATORY MATTERS AND COMPLIANCE
7.1. REGULATORY APPROVALS. Consummation of the transactions contemplated
herein shall be subject to receipt of all necessary regulatory approvals, and
neither party shall be required to consummate any transactions contemplated
herein unless all necessary or reasonably desirable regulatory approvals have
been obtained. Notwithstanding anything to the contrary herein, in no event
shall this Agreement be construed to require either party to take, or impose any
liability on either party as a result of its failure to take, any action which
is not permissible under applicable law. The consummation of any transaction
contemplated herein shall constitute a representation by each party to the other
that all regulatory approvals necessary for that particular transaction have
been received.
7.2. EXPENSE OF REGULATORY APPROVALS; COOPERATION. Each party shall be
responsible for obtaining any regulatory approvals related to its consummation
of the transactions contemplated herein. Each party shall use their respective
best efforts to obtain all regulatory approvals and shall cooperate with the
other party in order to facilitate the procurement of all regulatory approvals.
7.3. COMPLIANCE WITH APPLICABLE LAW. Each party shall be responsible for
compliance (and hereby covenants to comply) with all applicable laws and
regulations in connection with their respective actions taken in connection with
the CFB IB Operation; provided, however, that CFB shall have final authority
over all regulatory-related matters, including the authority to require IOG to
take such actions as CFB deems reasonably necessary or in order to comply with
applicable laws and regulations (as reasonably interpreted by CFB).
SECTION VIII. TERMINATION
8.1. BASES FOR TERMINATION. This Agreement may be terminated at any time:
(i) by mutual consent of the parties;
(ii) upon 30 days' written notice, by either CFB or IOG, at that
party's option, if a permanent injunction or other order, including any order
denying any required regulatory consent or approval, shall have been issued by
any Federal or state court of competent jurisdiction in the United States or by
any United States Federal or state governmental or regulatory body, which order
prevents the consummation of the transactions substantially as contemplated
herein;
(iii) by either CFB or IOG, if the other party has failed to comply
with the agreements or fulfill the conditions contained herein, provided,
however, that any such failure of compliance or fulfillment must be material and
the breaching party must be given notice of the failure to comply and a
reasonable period of time to cure;
(iv) upon 30 days' written notice, by either CFB or IOG if it becomes
likely (in the reasonable opinion of the terminating party) that the CFB IB
Operation will not be able to be operated and transferred as contemplated herein
or will not be transferred on or before June 30, 1997 (and in the event of such
termination, CFB shall be issued the percentage of the CFB Shares (or Warrants)
equal to the percentage derived from dividing the CFB Expenditures by the CFB
Funding Cap;
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(v) upon 30 days' written notice, by CFB if the CFB IB Operation
experiences cumulative losses which, when added to the amounts expended by CFB
as contemplated in Exhibit B hereof, exceed the CFB Funding Cap.
8.2. STANDARD OF LIABILITY. In the event of termination of this Agreement
by any party as provided above in Section 8.1(i) or (ii) or (iv), this Agreement
shall forthwith become void and there shall be no liability hereunder on the
part of any party, or their respective agents, representatives or affiliates,
except for intentional breach.
8.3. EFFECT OF TERMINATION. In the event of termination of this Agreement
by any party, Section 9.1, any agreements between the two parties as to
indemnification, and any covenants contained herein which are specifically
contemplated as being performed after termination shall survive such termination
and provided, further, that any termination hereof shall not preclude any party
hereto from recovering any legal or equitable damages or relief to which it is
entitled.
8.4. FURTHER AGREEMENTS AFTER TERMINATION. In the event of a termination
of this Agreement pursuant to Section 8.1(ii) or (iv), each of the Organizers
and each member of the Xxxxxx Group hereby agree not to participate in the
formation or operation of any entity (other than IOG) which utilizes any of the
assets, principal employees, or expertise of any form or type created, utilized
or acquired by IOG or CFB in connection with the CFB IB Operation; provided,
however, that this Section 8.4 shall not preclude an individual set forth on the
Signature Page hereof from seeking gainful employment with another banking
entity so long as such is not part of an effort to transfer assets and/or
expertise of IOG to another entity.
SECTION IX. MISCELLANEOUS PROVISIONS
9.1. CONFIDENTIALITY AND NO-USE. Each party will and, will cause its
employees and agents to, hold in strict confidence, unless disclosure is
compelled by judicial or administrative process, or in the opinion of its
counsel, by other requirements of law, all Confidential Information of the other
party and will not disclose the same to any person. Confidential Information
shall be used only for the purpose of and in connection with consummating the
transaction contemplated herein. Each party will and will cause its employees
and agents to hold in strict confidence all Confidential Information except for
such disclosure as may be required in the ordinary course of business, or unless
disclosure is compelled by judicial or administrative process, or in the opinion
of its counsel, by other requirements of law. During the pendency of this
Agreement, each party agrees that it shall use Confidential Information only in
connection with the business of IOG and not for any other purpose. In the event
that this Agreement is terminated because of a breach hereof, the breaching
party shall never be entitled to use Confidential Information. Subsequent
shareholders of IOG shall be required to agree to confidentiality and no-use
provisions substantially similar to the provisions contained in this Section
9.1. The term "Confidential Information" shall mean all information of any kind
concerning a party hereto (or an affiliate of a party) that is furnished by such
party or on its behalf in connection with this Agreement, except information (i)
ascertainable or obtained from public or published information, (ii) received
from a third party not known to the recipient of Confidential Information to be
under an obligation to keep such information confidential, (iii) which is or
becomes known to the public (other than through a breach of this Agreement),
(iv) of which the recipient was in possession prior to disclosure thereof in
connection herewith, or (v) which was independently developed by the recipient
without the benefit of Confidential Information.
11
9.2. ANTI-DILUTION. All share amounts set forth herein shall be subject to
equitable adjustment in the event of stock splits, stock dividends, reverse
stock splits, other similar recapitalizations, and issuances of IOG Common Stock
(or securities convertible into IOG Common Stock) at less than fair market value
(as determined from time to time by the Board of Directors, consistent with
their duty of care); provided, however, that such equitable adjustment shall be
used only to preserve and not increase the benefits herein to the relevant
party.
9.3. ARBITRATION. Any dispute arising under this Agreement shall be
referred to and resolved by arbitration in Atlanta, Georgia (if initiated by
CFB) or Greenville, South Carolina (if initiated by any other party hereto), in
accordance with the rules of the American Arbitration Association, by a panel of
three arbitrators, one of whom shall be selected by the IOG, one of whom shall
be selected by CFB and the third of whom shall be selected by the arbitrators
selected by IOG and CFB. A determination made in accordance with such rules
shall be delivered in writing to the panics hereto and shall be final and
binding and conclusive upon them. Each party shall pay its or his own legal,
accounting and other fees in connection with such an arbitration; provided,
however, that the arbitrators may award arbitration costs, including legal,
auditing and other fees to the prevailing party in the arbitration proceeding if
the arbitrators determine that such an award is appropriate.
9.4. ENTIRE AGREEMENT. This Agreement contains the entire agreement of the
parties with respect to the subject matter contained herein and there are no
agreements, warranties, covenants or undertakings other than those expressly set
forth herein.
9.5. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns; provided, however, that the Agreement shall not be assigned by
either of the parties hereto without the prior written consent of the other
party hereto, which consent shall not be unreasonably withheld, and provided
further, that any actions required or permitted to be taken herein by a party
may be taken by an affiliate of such party, provided that such substitution does
not have a material adverse affect on the attendant benefits to the other party.
It is expressly acknowledged (and consented to by the parties) that it shall be
deemed reasonable for CFB to assign all or part of its rights or obligations
under this agreement to its parent corporation or a wholly-owned subsidiary of
its parent corporation, formed as a small business investment company. This
Agreement shall not construed to create or permit third party beneficiaries.
9.6. LAW GOVERNING. This Agreement shall be governed by and construed in
accordance with the laws of the State of South Carolina.
9.7. AMENDMENT. This Agreement may not be amended except by an instrument
in writing signed on behalf of all of the parties.
9.8. WAIVER. Any term, provision or condition of this Agreement (other
than that required by law) may be waived in writing at any time by the party
which is entitled to the benefits thereof.
9.9. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
12
9.10. CONSTRUCTION. The parties acknowledge that representations,
acknowledgements or covenants expressly made herein by one or more parties to
this Agreement are being made only by the parties stated herein as making such
representations, acknowledgements or covenants, and no other party shall be
deemed to guarantee accuracy or performance of such provisions, unless such is
expressly stated.
END OF PAGE - NEXT PAGE IS SIGNATURE PAGE
13
In witness whereof, the parties have executed this Agreement as of the date
first written above.
Witness: CAROLINA FIRST BANK
/s/ Xxxxxx Z. Rangeley By: /s/ Xxxx X. Xxxxxxx, Xx.
-------------------------------------- -----------------------------------
Xxxx X. Xxxxxxx, Xx.
INTERNET ORGANIZING GROUP, INC.
/s/ Xxxx Xxxxxxx By: /s/ T. Xxxxxxx Xxxxxxx
-------------------------------------- -----------------------------------
T. Xxxxxxx Xxxxxxx
XXXXXX GROUP OF INVESTORS (See Attached Page)
ORGANIZERS
/s/ Xxxxxx X. Sebstain
-------------------------------------- -----------------------------------
(signature) (signature)
-------------------------------------- -----------------------------------
Print name and Title (or if an Print name and title (of if an
individual so state) individual so state)
-------------------------------------- -----------------------------------
(signature) (signature)
-------------------------------------- -----------------------------------
Print name and Title (or if an Print name and title (of if an
individual so state) individual so state)
Xxxxxx International, Limited
/s/ Xxxxx X. Xxxxxx
--------------------------------------
By: Xxxxx X. Xxxxxx, Authorized Person
14
XXXXXX INVESTORS
By: Xxxxx X. Xxxxxx, As Agent By: Xxxxx X. Xxxxxx, As Agent
-------------------------------------- -----------------------------------
Xxxxx Xxxxxx Nils Xxxx Xxxxx
Lightning Asset Management Ltd. By: Xxxxx X. Xxxxxx, As Agent
-----------------------------------
By: Xxxxx X. Xxxxxx, As Agent Xxxx X.X. Xxxxxx
-----------------------------------
Name:
----------------------------
Title: By: Xxxxx X. Xxxxxx, As Agent
--------------------------- -----------------------------------
Xxxxxxx Xxxxxx
Xx Xxxxxx Investment Management Ltd.
No. 1 London Account Darier Hentschii & CTE
Attn: Xx. Xxxx Xxxxxxx
By: Xxxxx X. Xxxxxx, As Agent
-----------------------------------
Name: By: Xxxxx X. Xxxxxx, As Agent
---------------------------- --------------------------------
Title: Name:
--------------------------- -------------------------
Title:
------------------------
Xx Xxxxxx Investment Management Ltd.
A/C IOM 300 By: Xxxxx X. Xxxxxx, As Agent
-----------------------------------
Xxxxxxx Xxxxxx-Xxxxxxxx
By: Xxxxx X. Xxxxxx, As Agent
-----------------------------------
Name:
----------------------------
Title: By: Xxxxx X. Xxxxxx, As Agent
--------------------------- -----------------------------------
Xx. Xxxxxx Xxxxxx
Grabrun Investment Corporation
c/o X. Xxxxxxxxxxxx
By: Xxxxx X. Xxxxxx, As Agent
-----------------------------------
Name:
----------------------------
Title:
---------------------------
By: Xxxxx X. Xxxxxx, As Agent
--------------------------------------
Nezhet Tayib
By: Xxxxx X. Xxxxxx, As Agent
--------------------------------------
Xxxxxxx Xxxxxx
15
EXHIBIT A
DESCRIPTION OF AIB BANKING PRODUCT AND CFB IB OPERATIONS
TABLE OF CONTENTS
Overview
1.0 General Description
2.0 Deposit Accounts To Be Offered Thru the Product
2.1 Checking
2.2 Money Market Deposit Accounts
2.3 CD's and CD IRA's
2.4 Transfers
2.5 Automated Sweeps
2.6 Account Fees and Charges; Interest Fees
3.0 Xxxx Payment Services
4.0 Customer Access to Their Accounts
4.1 Access Through Personal Computers (PC's)
4.2 Access Via TouchTone Phone
4.3 Access Via Fax
4.4 Access Via ATM/Debit Card
4.5 Access Via Physical Check
5.0 Deposits
5.1 Direct Deposits
5.2 Mail
5.3 External Transfer
6.0 Term of Arrangement Between CFB and IOG
7.0 Key IOG Vendors and Suppliers
7.1 AT&T Corporation
7.2 Edify Corporation
7.3 BiSys
7.4 Checkfree
7.5 Other Vendors and Suppliers
8.0 Reserved
9.0 Marketing, Advertising and Promotion
10.0 Customer Sign-Up
11.0 Account Opening Fulfillment
11.1 Quick Fulfillment
11.2 Final Fulfillment
12.0 Customer Service
12.1 e-Mail
12.2 TouchTone VRU
12.3 Mail
13.0 Passwords and PIN's
13.1 PC and TouchTone Passwords/PIN's
13.2 ATM/Debit Card PIN's
14.0 IOG Physical Facilities
15.0 IOG Staffing
16.0 Audits and Examinations
16
17.0 Certain CFB Responsibilities
17.1 Legal/Regulatory
17.2 Route & Transit Number
17.3 Wire Transfer
17.4 General Ledger Consolidation
17.5 AIB Product Expenditures
18.0 Certain IOG Responsibilities
18.1 Systems, Communications, Xxxx Paying and Operations
17
OVERVIEW
This Exhibit A describes the CFB IB Operations and the AIB Product anticipated
to be offered during the period of time from the date hereof through the date of
Transfer (which is contemplated to be on or before October 1, 1996 (the "First
Phase"). The parties expect to perform a live test using a subset of the AIB
Product beginning on or about July 15, 1996 and that the AIB Product;s first
phase will be offered to the general public on or about September 1, 1996. The
live test will include approximately 50 customers who will be employees of the
respective parties involved in the project.
All of the provisions of this Exhibit A shall be construed so as to comply with
applicable law and regulations. In the event that any of the provisions herein
are contrary to applicable law or regulations, such provisions shall be
automatically deemed to have been amended (including being deleted entirely, if
necessary) to the extent necessary to comply with applicable law or regulations.
Unless stated otherwise, each of the items set forth below as being a part of
the CFB IB Operation are expected to be made available on or about the date that
PC access is provided to the general public.
1.0 GENERAL DESCRIPTION
IOG will develop, implement and manage the CFB IB Operation, all as
contemplated herein. In connection therewith, and except as set forth
otherwise herein. IOG will provide full backoffice operations, systems and
administrative support in connection with the CFB IB Operation, including a
full range of customer service activities. Credit accounts and services
may be offered during the First Phase, upon approval of CFB as to terms.
2.0 DEPOSIT ACCOUNTS TO BE OFFERED THRU THE AIB PRODUCT
Customers will be offered checking, MMDA and CD accounts. Customers will
be able to establish multiple checking, MMDA, and CD accounts and will be
able to perform certain kinds of maintenance to their accounts (e.g.
address changes).
2.1 CHECKING
Checking accounts will include physical checks and deposits, ATM/debit
cards, physical and electronic consolidated statements, direct
deposits, and pre-authorized debits. Both non-interest bearing and
interest bearing checking accounts will be offered and may be combined
under a tiered interest checking approach. Overdraft protection lines
of credit may be offered, upon approvals of the terms of such lines by
CFB.
2.2 MONEY MARKET DEPOSIT ACCOUNTS
Customers will be able to open and make deposits to and withdrawals
from money market deposit accounts. Required statements may be
rendered under consolidated statements. Customers will be able to
initiate self-directed transfers to and from their money market
deposit account and their checking accounts. Automated sweeps and
fixed transfers may also be established.
18
2.3 CD'S AND CD IRA'S
Customers will be able to purchase CD's of varying maturities.
Handling of maturity notices will be determined and will likely
include electronic notification. Automatic rollover features will
also be provided. CD balances and other related information may be
reported under consolidated statements.
2.4 TRANSFERS
Customers, through one or more means of access, will be able to self-
initiate internal funds transfers between accounts. Customers may be
provided with the ability to initiate external transfers subject to
CFB approval.
2.5 AUTOMATED SWEEPS
Automated sweeps between accounts (e.g. between checking accounts
and/or MMDA's) may also be included, subject to regulatory
restrictions governing the number of withdrawals per month.
Additionally, sweeps may be used to automatically cover overdrafts
occurring on customers' checking accounts.
2.6 ACCOUNT FEES AND CHARGES; INTEREST FEES
Account fees and charges will be recommended periodically by IOG to
CFB, and finally determined by CFB. Generally, all fees and charges
are anticipated to be debited against the customers' selected primary
checking accounts. Interest pricing on all deposit accounts will be
recommended periodically by IOG to CFB, and finally determined by CFB.
3.0 XXXX PAYMENT SERVICES
Customers will be provided with full PC-based and TouchTone-based xxxx
paying services. This will include both ACH and physical check
remittances. Customers will also be able to perform a full range of
maintenance transactions in connection with the xxxx payment services
including but not limited to payee setups, changes and deletions.
Customers will be able to establish both variable and fixed payments. Xxxx
payment transaction descriptions will meet required electronic funds
transfer regulations. Funds clearing for payments will be determined
according to industry standards and will be subject to CFB approval prior
to implementation.
4.0 CUSTOMER ACCESS TO THEIR ACCOUNTS
Customers will be able to access their accounts and related services
through the devices and means described herein.
4.1 ACCESS THROUGH PERSONAL COMPUTERS (PC'S)
Customers will be able to access their accounts through their PC's via
modem through the Internet and through an optional "intranet" dial-up.
Access will be Web-based, whereby customers will use PC-based browsers
to dial into their respective Internet
19
access providers and then navigate to the AIB Product's Web Site. If
the customer is a customer of the Internet access provider on which
the AIB Product's Web-site resides, the customer will be able to
connect directly to the AIB Product under "intranet" access.
Security will be provided and managed by the Web-site hosting vendor
(which is expected to be AT&T).
4.2 ACCESS VIA TOUCHTONE PHONE
Customers will be able to access their accounts via use of TouchTone
phones and will be able to perform a range of transactions and other
functions subject to the restrictions inherent in this form of access
device. In addition, customers will be able to select a menu option
which will connect them directly to customer service personnel who
will be able to perform a full range of customer support functions
including both technical and banking-related customer service. The
Voice Response Unit ("VRU") services are anticipated to be provided by
the same vendor which provides the Web-site hosting for the AIB
Product.
4.3 ACCESS VIA FAX
Customers will be able to initiate, either through the PC or through
TouchTone phone, certain fax-based services, such as ordering
statements and copies of checks.
4.4 ACCESS VIA ATM/DEBIT CARD
ATM/debit card access will be available to checking accounts, except
that MMDA's will have ATM access only. Customers, upon acceptance of
their account application, will be issued ATM and/or debit cards. IOG
will make the arrangements necessary for ATM networks access, subject
to prior approval by CFB. ATM/debit card access will be provided by a
third party vendor.
4.5 ACCESS VIA PHYSICAL CHECK
Customers will have access via physical check to only checking
accounts and MMDA's. Customers will be issued checks containing a
CFB-supplied route and transit number and will be able to write checks
against their accounts in accordance with existing banking operations.
Canceled checks will not be returned. Customers will be able to order
copies of checks as needed and, additionally, check images will be
considered for access by customers through their PC's. Customers may
also be able to order copies of checks, either through PC's or
TouchTone phones, and direct the copies to be sent to fax. Overdraft
conditions will be handled within required deadlines if not otherwise
covered through account sweeps. Also, pre-authorized debits, as
earlier described, will be included.
5.0 DEPOSITS
Customers will be able to make deposits to their accounts through a number
of means as set forth herein.
20
5.1 DIRECT DEPOSIT
Customers will be provided with direct deposit services through their
checking accounts. Purchases of CD's and deposits to MMDA's can be
made via transfers and other transactions which can be self-initialed
by the customer through one or more of the access devices earlier
described.
5.2 MAIL
Customers will be supplied with self-mailers which can be used to
enclose and mail, via U.S. Postal Service, deposits to their accounts.
The self-mailers are anticipated to be addressed to a servicing
lockbox established by CFB in Columbia, South Carolina. Deposits will
be captured and processed under procedures to be worked out between
CFB and IOG Physical deposit receipts will not be returned. Customers
will be able to obtain copies upon request.
5.3 EXTERNAL TRANSFER
External transfer shall include both ACH and Wire Transfers.
Customers, at the appropriate time, will be able to initiate transfers
from accounts at other banks and broker-based money market funds to
their selected checking accounts.
6.0 TERM OF ARRANGEMENT BETWEEN CFB AND IOG
The IOG Services will be provided beginning on the date hereof and ending
on the earlier of the Transfer or October 31, 1996, all as described in the
Agreement.
7.0 KEY IOG VENDORS AND SUPPLIERS
In performing the development, implementation and management services, IOG
intends on contracting with a number of different-vendors and suppliers,
all of which must be approved by CFB. The parties agree that all vendor
contracts will be entered into between the vendor and IOG. Certain key
vendors and suppliers (all of which are acceptable to CFB) are listed
below.
7.1 AT&T CORPORATION
IOG will use AT&T's data and voice communications services, including
but not limited to its WorldNet, Easy World Wide Web and other
services, to provide a full range of access channels to customers, as
well as the connectivity required between other vendors, suppliers and
IOG. AT&T will be responsible for providing point to point data and
voice communications between the key vendors and IOG. AT&T will have
primary responsibility for providing and maintaining electronic
security. In connection with security, IOG shall provide to CFB a
report from AT&T and its in-house security expert (Xxxxx Xxxxxxxx)
attesting to their reviews and tests and detailing their particular
observations, comments and concerns on each of the following dates:
(1) on the date that the live test begins and (2) on the date when the
AIB Product is made available to the general public, all of which must
be reasonably satisfactory to CFB in order to continue the CFB IB
Operation.
21
7.2 EDIFY CORPORATION
IOG will use the server-based software platforms offered by Edify to
establish "front-end" customer access across multiple types of access
devices (e.g. PC, TouchTone and Fax) as well as to handle "back-end"
interfacing and transaction messaging between the other vendors,
including but not limited to, the core processing vendor and the xxxx
paying services vendor. The Edify server-based software platform will
be hosted by AT&T within its networking architecture.
7.3 BISYS
BiSys will provide core account processing services including but not
limited to systems processing connected with deposit accounts, check
imaging, items capture, ACH and general ledger for the purposes of the
first phase. Additionally, BiSys may provide other processing
services connected with future phases of the AIB Product.
7.4 CHECKFREE
It is anticipated that Checkfree will provide xxxx paying services.
It is further anticipated that these services will be provided through
AT&T under AT&T's contracts with Checkfree.
7.5 OTHER VENDORS AND SUPPLIERS
Other needed services will be contracted, including but not limited
to, check printers, ATM/debit card plastics vendors, and ATM networks
access (e.g. Plus, Cirrus, etc.). Where it is expedient and mutually
acceptable, such services may be arranged through CFB.
8.0 RESERVED
9.0 MARKETING, ADVERTISING AND PROMOTION
IOG, in conjunction with one or more of its key vendors, will be
responsible for all marketing, advertising and promotion of the AIB
Product, including but not limited to, Web site promotion and advertising.
Marketing will also include media and public relations. Promotional
incentives may also be used. Additionally, IOG will develop physical
literature, including but not limited to, promotional literature, sign-up
kits, and other printed media forms. Because the AIB Product will be
accessible through the Internet, it is expected that customer account
applications will be received from locations nationwide and
internationally. Applications received from residents of foreign countries
will not be accepted.
10.0 CUSTOMER SIGN-UP
All account agreements, disclosures, and other contractual customer
documents will be prepared by IOG and submitted to CFB for approval. New
customers will sign up using an account application. No account will be
opened without an original signed physical account agreement.
22
It is anticipated that prospective customers will be able to complete a
PC-based account application which includes a printout of the account
agreement for signing and mailing along with a concurrent e-mailed message
being delivered to IOG. All account applications will be processed by IOG,
including but not limited to, the processing of matters related to credit
investigation and other steps necessary for fraud prevention and approval
of ATM and debit cards. IOG plans to be able to process properly-completed
account applications with 24 hours after receipt.
11.0 ACCOUNT OPENING FULFILLMENT
Upon receipt and acceptance of a new customer account application, a two
step fulfillment process will be accomplished.
11.1 QUICK FULFILLMENT
Immediately upon acceptance, the customer's account(s) will be
established on the core processing system and initial deposits will be
processed. If the customer has selected xxxx paying services to be
included, then the xxxx paying service will be notified along with any
initial payees which the customer has directed to be established.
Concurrently, a temporary password will be assigned to enable the
customer to gain initial access via a PC and a TouchTone phone. A
package will be sent to the customer containing information about the
AIB Product and the related services and will include, if requested by
the customer, the necessary browser software along with other
materials, including but not limited to an initial set of "counter
checks and deposit slips." The temporary password will be mailed
under separate envelope for security reasons. It is anticipated that
the quick fulfillment will be sent by IOG to the customer within
approximately 24 hours after account acceptance.
11.2 FINAL FULFILLMENT
Within approximately 14 days after account acceptance, the customer
will receive certain additional items, including but not limited to, a
personal set of checks and deposit slips, a physical checkbook
register and an ATM and/or Debit Card.
12.0 CUSTOMER SERVICE
Customer service will be coordinated between IOG, AT&T and Checkfree,
depending upon the customer's service need. AT&T will be providing
customers with technical support (Tier I). Customer service will generally
be available 7 days a week, 24 hours per day. The customer will have three
ways to request service.
12.1 E-MAIL
The customer will be able to send and receive e-mail to and from
IOG/CFB, AT&T and Checkfree. Additionally, using the Edify
server-based platform, customers who have two phone lines will be able
to contact IOG customer service representatives by
23
voice, and the customer service representative receiving the call will
be able to pull up the customer's current PC view through the PC under
a "co-session" approach.
12.2 TOUCHTONE VRU
The customer will be provided with an 800 number which connects into a
VRU within AT&T's service environment. The customer will be provided
with a set of menu options to select depending upon the service or
information needed including but not limited to connecting with an IOG
customer service representative.
12.3 MAIL
Customers will also be provided an address for submitting customer
service requests. This address will be a post office box established
by IOG in the Atlanta, Georgia area, unless CFB determines that for
regulatory purposes, the post office box must be in South Carolina.
13.0 PASSWORDS AND PIN'S
13.1 PC AND TOUCHTONE PASSWORDS/PIN'S
PC and TouchTone access passwords and PIN's will be managed under the
Edify server-based software platform hosted within the AT&T
environment. IOG, BiSys and AT&T will further define specific
procedures for the establishment and administration of passwords and
PIN's in connection with AT&T's overall security responsibility.
Customers will be able to change their passwords and PIN's through
their PC's and TouchTone phones at any time.
13.2 ATM/DEBIT CARD PIN'S
Issuance and administration of PIN's connected with ATM/debit cards
will be agreed upon by IOG and the appropriate vendors.
14.0 IOG PHYSICAL FACILITIES
IOG will establish physical operational facilities in the Atlanta, Georgia
area and, to the maximum extent possible, all operational activities
connected with the AIB Product, including but not limited to customer
service and administration, will be performed at those facilities. IOG
will be responsible for establishing and maintaining required physical
security measures. Notwithstanding the foregoing, for regulatory purposes,
CFB may require that the physical facilities be located in South Carolina.
15.0 IOG STAFFING
IOG will be responsible for the hiring, training and supervision of all
personnel, full time, part time and temporary, needed to support activities
being performed at IOG's physical facility. IOG will be responsible for
accomplishing security background checks on
24
prospective employees. IOG (and its employees) shall be deemed to be
independent contractors of CFB, all as more particularly contemplated in
the Agreement.
16.0 AUDITS AND EXAMINATIONS
IOG and its vendors and suppliers will cooperate and provide full access to
auditors of CFB and bank regulatory and other examiners. Additionally, IOG
will undertake to establish any certifications and registrations needed in
connection with the AIB Product and the related services contemplated
herein.
17.0 CERTAIN CFB RESPONSIBILITIES
17.1 LEGAL/REGULATORY
CFB will allow the CFB IB Operations to be conducted under its
charter. CFB shall be responsible for conducting any audits of the
CFB IB Operations or taking such other actions that may be mandated
under applicable law or regulation.
17.2 ROUTE & TRANSIT NUMBER
CFB will provide a route and transit number to be used for items
processing activities to be performed by IOG.
17.3 WIRE TRANSFER
CFB will provide wire transfer services support to IOG, but only with
respect to collected funds. Joint analysis is currently being
conducted to determine implementation requirements.
17.4 GENERAL LEDGER CONSOLIDATION
CFB and IOG will agree upon the procedures for consolidating the
depository and cash balances of the AIB Product (housed under the core
processing services of BiSys) into CFB's books. IOG will maintain a
general ledger separately. CFB will be responsible for funds
investment and income allocation. Joint analysis is currently being
conducted to determine implementation requirements.
17.5 AIB PRODUCT EXPENDITURES
CFB, in conjunction with IOG, will track operating and capital
expenditures related to the development, implementation and management
of the AIB Product.
18.0 CERTAIN IOG RESPONSIBILITIES
18.1 SYSTEMS, COMMUNICATIONS, XXXX PAYING AND OPERATIONS
IOG will be responsible for developing, implementing and managing all
systems (core processing, Web-based, etc.), communications (voice and
data), and back office
25
operations, including but not limited to new accounts setup and
fulfillment, staffing, items processing, customer service, equipment
and facilities (except as previously described herein) in conjunction
with the key vendors described above.
26
EXHIBIT B
INTERNET ORGANIZING GROUP, INC. 07/03/96
PROJECTED INTERIM OPERATING EXPENSES AND CASH FLOW REQUIREMENTS
PROJECTED FROM JUNE 1, 1996 THROUGH MARCH 31, 1997
------------------------------------------------------------
INTERIM OPERATING EXPENSES
------------------------------------------------------------
SALARIES & CONSULTING EXPENSES
Salaries & Benefits $ 153,060
CFB Salaries & Consulting Fees 94,000
Technology 8,000
Operations 17,200
---------
Total Salaries & Consulting: $ 272,260
------------------------------------------------------------
OCCUPANCY EXPENSE
Lease Expense $ 14,875
Taxes & Insurance 10,100
Maintenance/Leasehold Improvements 2,500
---------
Total Occupancy: $ 27,475
------------------------------------------------------------
OTHER ORGANIZING EXPENSES
Legal Expenses $ 40,000
Accounting 1,000
Application Fees 18,000
Travel/Meetings 23,500
CFB Travel/Meetings and Other 10,000
Marketing
Collateral/Marketing Material 63,500
WorldNet Advertising 50,000
Logo/Web Site 31,100
ATM Cards/Check Printing 8,850
Monthly Processing Fees 25,500
ATM Network Fees 10,000
---------
Total Other Expenses: $ 281,450
------------------------------------------------------------
TOTAL INTERIM OPERATING EXPENSES: $ 581,185
------------------------------------------------------------
OTHER CASH FLOW
------------------------------------------------------------
FF&E
Banking Stations/Network $ 100,500
Security Equipment 20,500
Employee Break Room Facility 2,000
Furniture/Equipment 34,000
Supplies (Forms) 18,000
Telephone Equipment/Communication 56,500
---------
Total FF&E: $ 231,500
------------------------------------------------------------
CAPITALIZED CONTRACTS
AT&T (includes Edify) $ 200,000
Bisys 80,000
---------
Total Capitalized Contracts: $ 280,000
------------------------------------------------------------
TOTAL OTHER CASH FLOW: $ 511,500
------------------------------------------------------------
CFB Salaries, Consulting Fees and Travel
before June 1, 1996 $ 33,300
------------------------------------------------------------
TOTAL CASH REQUIREMENTS $1,125,985
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27
AGREEMENT
This Agreement is entered into as of this 6th day of December, 1996 by
and between Carolina First Corporation, a South Carolina corporation ("CFC") and
Internet Organizing Group, Inc., a Georgia corporation ("IOG").
WHEREAS the parties hereto, among other parties, have entered into an
Agreement pursuant to which IOG is obligated to issue to CFC 40,000 shares of
IOG common stock, subject to certain conditions (the "Initial Agreement");
WHEREAS it is in the best interest of the parties that such shares be
issued in the near future;
WHEREAS as a condition to the issuance of such shares, the Board of
Governors of the Federal Reserve System (the "Federal Reserve Board") has
required that CFC commit that CFC will cause the activities of IOG not to change
from the managerial and technical services currently being performed for CFC (it
being understood that preparations for the anticipated stock offering and
acquisition of a thrift charter are incidental to such activities);
WHEREAS CFC has made such a commitment to the Federal Reserve (the
"Commitment");
NOW, THEREFORE, in consideration of the mutual covenants and
representations contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
IOG shall not engage in any activities other than the managerial and
technical services currently being performed for CFC (it being understood that
preparations for IOG's anticipated stock offering and acquisition of a thrift
charter are incidental to such activities). The parties agree that IOG may
engaged in any other than activities which are then permissible banking or
non-banking activities under applicable regulations of the Federal Reserve
Board, so long as any necessary regulatory approvals are received. The parties
agree to cooperate to seek necessary approvals for any such activity in which
IOG wants to engage.
This Agreement shall terminate when the Federal Reserve permits the
Commitment to terminate. This Agreement contains the entire agreement of the
parties with respect to the subject matter contained herein (and supersedes the
Initial Agreement to the extent necessary to give effect to the provisions
hereof) and there are no covenants or undertakings other than those expressly
set forth herein. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns. This
Agreement shall not construed to create or permit third party beneficiaries.
This Agreement shall be governed by and construed in accordance with the laws of
the State of South Carolina. This Agreement may not be amended except by an
instrument in writing signed on behalf of all of the parties. Any term,
provision or condition of this Agreement (other than that required by law) may
be waived in writing at any time by the party which is entitled to the benefits
thereof. This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
In witness whereof, the parties have executed this Agreement as of the date
first written above.
Witness: CAROLINA FIRST CORPORATION
/s/ Xxxxxxx Hummers By: /s/ Xxxx X. Xxxxxxx, Xx.
--------------------------- ------------------------------------
Xxxx X. Xxxxxxx, Xx.
INTERNET ORGANIZING GROUP, INC.
/s/ Xxxxxxx X. Xxxxxx By: /s/ Xxxxxx Xxxxxxxxx
--------------------------- ------------------------------------
Xxxxxx Xxxxxxxxx
March 18, 1997
Net.B@nk, Inc.
0000 Xxxxxxxxx Xxxxxxxx Xx.
Xxxxxxxx 00, Xxxxx 000
Xxxxxxx, XX 00000
Re: Operating Agreement dated July 15, 1996 ("the Agreement")
Gentlemen:
Section 2.3 of the Agreement provides that Carolina First Bank ("CFB") will fund
the reasonable expenses of the CFB IB Operation through March 31, 1997 and,
subject to certain funding and time limitations and certain conditions set forth
therein, further provides that the funding termination date may be extended to
July 31, 1997, or the Transfer, whichever occurs first. Inasmuch as it appears
that it is reasonably likely that the Transfer will occur on or before July 31,
1997, CFB hereby commits to extend the funding obligation until the earlier of
July 31, 1997 or such time as the Reimbursable Expenses equal $1,325,985.
Net.B@nk, Inc. hereby consents to the transfer from CFB to Carolina first
corporation of the right to receive 40,000 shares of Net.B@nk Common Stock
(subject to any intervening stock dividend or stock split) pursuant to the
Transfer as provided for in Section 3.2 of the Operating Agreement.
Notwithstanding the foregoing, if the Reimbursable Expenses reach the funding
limit of $1,325,985 specified above prior to July 31, 1997 and if CFB is
reasonably satisfied at such date that the contemplated initial Public Offering
of Net.B@nk Common Stock being underwritten by Xxxxxx Xxxxxx & Company, Inc. and
Interstate/Xxxxxxx Lane Corporation will take place on or before July 31, 1997,
CFB will continue until July 31, 1997 to advance such additional reimbursable
Expenses, in excess of the $1,325,985, as CFB deems reasonably necessary for the
continued operation of the CFB IB Operation. Any such additional sums advanced
shall be repayable as provided in Section 2.3 hereof along with all other
Reimbursable Expenses so repayable, and any such repayment shall be further
subject to the provisions of Section 3.7 of the Operating Agreement.
Net.B@nk, Inc.
March 18, 1997
Page 2
If and to the extent that CFB and Net.B@nk, Inc. determine that external equity
financing is not sufficient to enable Net.B@nk to acquire the Premier charter
and the acquisition of the IB Operation from CFB will not occur, then provided
that Net.B@nk is not otherwise in default under the terms of the Operating
Agreement, as hereby amended, CFB will retain Net.B@nk as an outsourced service
provided for the purpose of providing data processing, internet access, and
other service to CFB in order that CFB may continue to provide internet banking
services to the customer as the IB Operation.
In return for the outsourced service to be provided by Net.B@nk, CFB will pay to
Net.B@nk an amount equal to the minimum monthly cash needed by Net.B@nk to
maintain a going concern status; provided, that the maximum amount to be
provided to Net.B@nk shall not exceed $45,000 per month. The terms of the
outsourced services to be provided by Net.B@nk to CFB shall be set forth in a
definitive outsource service agreement to be negotiated, but containing terms
and conditions typical for such an agreement. Such agreement shall have an
initial term ending December 31, 1997, at which time either party may terminate
the agreement. CFB and Net.B@nk acknowledge that Deloitte & Touche may consider
the provisions of this letter agreement in connection with its review of the
financial status of Net.B@nk.
Capitalized terms used herein shall have the meanings set forth in the Operating
Agreement.
If the foregoing correctly sets forth your understanding of our agreement,
please so indicate in the space hereinafter provided.
Sincerely,
CAROLINA FIRST BANK ACCEPTED AND AGREED TO:
By: /s/ Xxxxxxx Hummers NET.B@NK, INC.
---------------------------
By: /s/ X. X. Xxxxxx
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