EXHIBIT 10.1
THIS AGREEMENT IS SUBJECT TO ARBITRATION PURSUANT TO
CHAPTER 48 OF TITLE 15 OF THE CODE OF LAWS OF SOUTH CAROLINA
AGREEMENT
This Agreement is entered into as of this ____ day of July, 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, and which are hereinafter referred to as the
"Organizers"), and the Kelton Group of Investors (as set forth on the Signature
Page hereof and which are hereinafter referred to as the "Kelton Group").
PREAMBLE
WHEREAS the parties hereto have engaged in discussions regarding the
establishment of an Internet banking operation;
WHEREAS the parties wish to formalize their discussions and enter into a
binding agreement with respect to the Operation, all upon the terms and
conditions set forth herein;
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. ss1813(l),
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.
"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,
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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 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
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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 "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) Simultaneous with the Transfer (as defined in Section 3.1 below),
the Kelton Group (jointly and severally) agree to purchase 13,300 shares of IOG
common stock (as such share amount shall have been equitably adjusted for
splits, reverse splits and similar matters) for $1,000,000, payable upon
consummation of the Transfer.
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.
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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;
(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 calculation 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
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
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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.
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
Kelton 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)
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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 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
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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
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
26,700 shares are issued and outstanding and all of which are owned by the
Organizers. 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)
and 13,300 shares of IOG Common Stock to be issued to the Kelton Group as
contemplated in Section 2.3(iii) hereof, there are no outstanding obligations,
options, warrants or commitments of any kind or nature or any outstanding
securities or other instruments
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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.
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.
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
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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;
(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 Kelton 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
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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.
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 parties 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
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be deemed to be an original, but all of which together shall constitute one and
the same instrument.
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
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In witness whereof, the parties have executed this Agreement as of the
date first written above.
Witness: CAROLINA FIRST BANK
__________________________ By: /s/Mack I. Whittle, Jr.
Mack I. Whittle, Jr.
INTERNET ORGANIZING GROUP, INC.
__________________________ By: /s/T. Stephen Johnson
T. Stephen Johnson
KELTON GROUP OF INVESTORS
(All of whom are individuals)
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ORGANIZERS
(All of whom are individuals)
___________________________ /s/ Edward J. Sebastian
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{Exhibits will be provided upon request of the Commission.}
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