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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of report (date of earliest event reported): November 6, 1998
HOMECOM COMMUNICATIONS, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 0-29204 58-2153309
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(State or Other Jurisdiction of (Commission file Number) (I.R.S. Employer
Incorporation or Organization Identification No.)
3535 Piedmont Road, Atlanta, Georgia 30305
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (404) 237-4646
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 5. OTHER EVENTS
On November 6, 1998 the Company signed a definitive agreement and plan
of merger (the "Merger Agreement") to acquire, among other things, all of the
outstanding shares of First Institutional Marketing, Inc. and certain of its
affiliates ("FIMI") for 1,252,174 shares of common stock. In addition, the
Company entered into employment agreements for an initial term of 3 years with
the three principals of FIMI, calling for them to continue in their current
roles for the acquired companies. The Merger Agreement is subject to certain
conditions, including regulatory and other approvals, as well as approval by the
Company's shareholders. The Company expects this transaction to close within 60
to 90 days, at which time an additional report on Form 8-k will be filed. The
Merger Agreement is incorporated herein by reference as Exhibit 10.48 to this
Report.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits.
10.48 Agreement and Plan of Merger by and among HomeCom
Communications, Inc, FIMI Securities Acquisition Corp.,
Inc., ATF Acquisition Corp., Inc. and Daniel A. Delity,
James Wm. Ellsworth, and David B. Frank dated as of
November 6, 1998, together with exhibits.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
HOMECOM COMMUNICATIONS, INC.
(Registrant)
Date: November 18, 1998 By: /s/ Harvey Sax
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Harvey Sax, President and
Chief Executive Officer
(Principal Executive Officer)
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Exhibit Index
<TABLE>
<CAPTION>
Exhibit Description Page
<S> <C> <C>
10.48 Agreement and Plan of Merger by and among HomeCom
Communications, Inc, FIMI Securities Acquisition Corp.,
Inc., ATF Acquisition Corp., Inc. and Daniel A. Delity,
James Wm. Ellsworth, and David B. Frank dated as of
November 6, 1998, together with exhibits.
</TABLE>
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Exhibit 10.48
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
HOMECOM COMMUNICATIONS, INC.,
FIMI SECURITIES ACQUISITION CORP., INC.
ATF ACQUISITION CORP., INC.
AND
DANIEL A. DELITY, JAMES WM. ELLSWORTH AND DAVID B. FRANK
AS OF NOVEMBER 6, 1998
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TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
ARTICLE I. THE MERGER AND RELATED MATTERS..............................
ARTICLE II. CONVERSION OF SHARES........................................
ARTICLE III. REPRESENTATIONS, WARRANTIES AND
COVENANTS OF SELLER........................................................
ARTICLE IV. REPRESENTATIONS, WARRANTIES AND
COVENANTS OF BUYER.........................................................
ARTICLE V. COVENANTS OF SELLER.........................................
ARTICLE VI. COVENANTS OF BUYER..........................................
ARTICLE VII. CLOSING.....................................................
ARTICLE VIII. POST-CLOSING OBLIGATIONS....................................
ARTICLE IX. INDEMNIFICATION; DUE DILIGENCE; CONFIDENTIALITY.............
ARTICLE X. MISCELLANEOUS...............................................
</TABLE>
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SCHEDULE OF SCHEDULES AND EXHIBITS
SCHEDULE 1.1
SCHEDULE 2.1
SCHEDULE 2.2
SCHEDULE 3.3
SCHEDULE 3.4
SCHEDULE 3.6
SCHEDULE 3.8
SCHEDULE 3.9
SCHEDULE 3.10
SCHEDULE 3.12
SCHEDULE 3.13
SCHEDULE 3.16
SCHEDULE 3.17
SCHEDULE 3.18
SCHEDULE 3.19
SCHEDULE 3.20
SCHEDULE 3.21
SCHEDULE 3.22
SCHEDULE 3.24
SCHEDULE 3.26
SCHEDULE 4.3
SCHEDULE 5.1(b)(vii)
SCHEDULE 7.1(a)(viii)
SCHEDULE 8.2
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SCHEDULE OF SCHEDULES AND EXHIBITS (CONT.)
<TABLE>
<S> <C>
EXHIBIT "A" - ESCROW AND SECURITY AGREEMENT
EXHIBIT "B" - PROMISSORY NOTES
EXHIBIT "C" - STOCK PLEDGE AGREEMENT
EXHIBIT "D" - EMPLOYMENT AGREEMENTS
EXHIBIT "E" - NON-COMPETITION AGREEMENTS
EXHIBIT "F" - SELLER OPINION OF COUNSEL
EXHIBIT "G" - PREMIER LOAN AGREEMENT, SECURITY AGREEMENT AND
NOTE
EXHIBIT "H" - PREMIER LICENSING AGREEMENT
EXHIBIT "I" - PREMIER STOCK OPTION AGREEMENT AND IRREVOCABLE
PROXIES
EXHIBIT "J" - LETTER AGREEMENTS OF MESSRS. DELITY, ELLSWORTH &
FRANK
EXHIBIT "K" - FIMI LOAN AGREEMENT, SECURITY AGREEMENT AND NOTE
EXHIBIT "L" - FIMI LICENSING AGREEMENT
EXHIBIT "M" - FIMI STOCK OPTION AGREEMENT AND IRREVOCABLE PROXIES
EXHIBIT "N" - BUYER OPINION OF COUNSEL
EXHIBIT "O" - IRC ss.1445 COMPLIANCE
EXHIBIT "P" - LETTER AGREEMENT OF HARVEY SAX
EXHIBIT "Q" - AGREEMENT AND PLAN OF REORGANIZATION BETWEEN
PREMIER AND FIMI SECURITIES
EXHIBIT "R" - AGREEMENT AND PLAN OF REORGANIZATION BETWEEN FIMI
AND FIMI SECURITIES
</TABLE>
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (the "Agreement") is made and
entered into as of this __________ day of November, 1998, by and among HOMECOM
COMMUNICATIONS, INC., a Delaware corporation (the "Parent"), FIMI SECURITIES
ACQUISITION CORP., INC. ("FSAC"), and ATF ACQUISITION CORP., INC. ("ATFAC"),
each a wholly owned subsidiary of Parent, incorporated in Delaware (Parent,
FSAC, and ATFAC are collectively referred to herein as "Buyer") and DANIEL A.
DELITY, JAMES WM. ELLSWORTH and DAVID B. FRANK (collectively, the "Seller").
W I T N E S S E T H
A. Seller owns all of the issued and outstanding capital stock,
equity interests, warrants or claims to ownership interests of any sort
whatsoever (the "Shares") of First Institutional Marketing, Inc., an Oklahoma
corporation ("FIMI"), Premier Financial Services, Inc. ("Premier"), FIMI
Securities, Inc., a NASD registered broker/dealer formed under the laws of the
state of Texas ("FIMI Securities"), and All Things Financial, Inc. ("ATFI"), a
Florida corporation (FIMI, Premier, FIMI Securities and ATFI are collectively
referred to herein as the "Company");
B. Seller desires to sell and Buyer desires to acquire FIMI
Securities and ATFI by merger of (i) FSAC into FIMI Securities and (ii) ATFAC
into ATFI;
C. Seller desires to sell and Buyer desires to acquire by way of
option, as described herein, all of the shares of capital stock of Premier, and
FIMI;
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D. Immediately following the Closing (as defined herein), FIMI
Securities desires to acquire and each of Premier and FIMI desires to sell all
of its assets used or held for use in its business pursuant to agreements and
plans of reorganization;
E. The parties hereto desire, but can provide no assurances,
that the merger constitute a reorganization for federal income tax purposes
under Section 368 of the Internal Revenue Code, as amended, and the regulations
thereunder (the "Code"); and
F. Unless otherwise defined herein, definitions of capitalized
terms are set forth in Schedule 1.1 attached hereto.
NOW THEREFORE, in consideration of the premises, the mutual covenants
and agreements herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
ARTICLE I
THE MERGER AND RELATED MATTERS
1.1 The Merger. At the Effective Time and subject to the terms
and conditions of this Agreement and in accordance with the Delaware
Corporation Law, the Oklahoma Business Corporation Act, the Texas Business
Corporation Code, and the Florida Business Corporation Act, as applicable, the
Merger shall have the effect set forth herein and in Section 259 of the
Delaware Corporation Law, and the Florida Business Corporation Act.
a) FIMI Securities Merger
(i) FSAC shall be merged with and into FIMI
Securities;
(ii) the separate existence of FSAC shall cease;
and
(iii) FIMI Securities shall continue as the
surviving corporation.
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b) ATFI Merger
(i) ATFAC shall be merged with and into ATFI;
(ii) the separate existence of ATFAC shall
cease; and
(iii) ATFI shall continue as the surviving
corporation.
1.2 Effective Time of Merger. The Merger shall become effective
at the Effective Time.
1.3 Certificate of Incorporation; By-laws. The Certificate of
Incorporation and By-laws of each of the Companies comprising the Company, as
in effect immediately prior to the Effective Time, shall become the Certificate
of Incorporation and By-laws of the Surviving Corporations.
1.4 Taking of Necessary Action; Further Action. The Buyer and
Seller, respectively, shall take all such further action as may be reasonably
necessary or appropriate in order to effectuate the transactions contemplated
herein. If at any time after the Effective Time, any further action is
necessary or desirable to carry out the purposes of this Agreement or to vest
the surviving corporations with full right, title, and possession of all
assets, properties, rights, privileges, powers and franchises of the Buyer or
Seller, the officers and directors of such corporations are fully authorized in
the name of the respective corporations or otherwise to take, and shall take,
all such lawful or necessary action.
ARTICLE II
CONVERSION OF SHARES
2.1 Exchange of Shares. In accordance with the terms and
conditions hereof, at the Closing hereinafter specified, (i) Seller shall
exchange all of the Shares of FIMI Securities and ATFI upon surrender to Parent
of the certificates representing all of the Shares for shares of Parent Common
Stock, as shown in Schedule 2.1, adjusted as provided in Paragraph 2.7 and
payable as
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provided in Paragraph 2.2 (the "Merger Price") and (ii) immediately following
the Closing previously described in this Paragraph 2.1, Premier and FIMI each
shall exchange all of its assets used or held for use in its business for
shares of Parent Company Common Stock (collectively, the "Asset Sale Price") as
shown on Schedule 2.1 (collectively, the "Asset Sale Shares"). The total number
of shares of Parent Common Stock to be delivered pursuant to (i) and (ii) above
shall be equal to 1,252,174 (the "Total Transaction Shares") as allocated among
each corporation comprising the Company by Seller at Closing as shown on
Schedule 2.1.
2.2 Payment of Merger Price and Asset Sale Price. The Merger
Price and Asset Sale Price shall be paid to the Seller in common stock of
Parent, par value $.0001 per share, (the "Parent Common Stock") having a value
equal to the Merger Price and Asset Sale Price and warrants to purchase common
stock of Buyer (the "Merger Price Warrants") in such amounts as shown on
Schedule 2.2. The per share value of the Parent Common Stock delivered to
Seller in payment of the Merger Price and to each of Premier and FIMI in
payment of the Asset Sale Price shall be $2.875 per share (the "Per Share
Value"). All Parent Common Stock delivered to Seller pursuant to this Agreement
in payment of the Merger Price shall be solely the property of Seller and
Seller shall have full disposition and voting powers with respect thereto,
subject to the limitations described herein. All Parent Common Stock delivered
to each of Premier and FIMI in payment of the Asset Sale Price shall be solely
the property of each of Premier and FIMI, respectively, and such entities shall
have full disposition and voting powers with respect thereto, subject to the
limitations described herein.
2.3 Registration of Parent Common Stock. Fifty (50%) percent of
the Total Transaction Shares to be delivered at the Closings as described
hereunder in accordance with Paragraph 2.2 (the "Registered Shares") shall be
registered with the United States Securities and Exchange Commission
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(the "SEC") pursuant to a registration statement to be filed by the Parent
under the Securities Act of 1933, as amended (the "Securities Act"), no later
than thirty (30) days of the date hereof on Form S-3 or other form as permitted
by law (the "Registration Statement"). The Parent shall be under no obligation
to register the remaining fifty (50%) percent of the Total Transaction Shares
of the Parent Common Stock with the SEC to be delivered at the Closings in
accordance with Paragraph 2.2 (the "Unregistered Shares").
2.4 Restriction on Sale of Parent Common Stock.
(a) Seller hereby covenants and agrees to sell no more
than fifty (50%) percent of the Registered Shares (the "First Gated Shares")
during the ninety (90) day period following Closing. Seller further covenants
and agrees to limit sales of the First Gated Shares, on a cumulative basis, to
no more than one-third of the First Gated Shares in each of the first three
thirty day periods following the Closing; provided, however, that in the event
the common stock of the Parent shall have traded above $4.813 per share on each
of the five trading days prior to any single sale of the First Gated Shares, no
such 90-day restriction shall apply to the First Gated Shares if such sale is
made at a per share price of $4.813 or greater.
(b) As to the remaining fifty (50%) percent of the
Registered Shares (the "Second Gated Shares"), Seller hereby covenants and
agrees to sell no such shares until after ninety (90) days following the
Closing and thereafter to limit sales of the Second Gated Shares on a
cumulative basis, to no more than one-sixth of the Second Gated Shares in each
of the following six months; provided, however, that in the event the common
stock of the Buyer shall have traded above $10.00 per share for the five (5)
trading days immediately preceding any such single sale, no such restriction
shall apply to the Second Gated Shares if such sale is made at a per share
price of $10.00 per share or greater.
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(c) Fifty (50%) percent of the Unregistered Shares (the
"Third Gated Shares") may be sold by Seller in accordance with SEC Rule 144
promulgated under the Securities Act of 1933, as amended (the "1933 Act") and
applicable law.
(d) Seller hereby further covenants and agrees that the
remaining fifty (50%) percent of the Unregistered Shares (the "Fourth Gated
Shares") shall be held by Seller and not sold or transferred by Seller, in
whole or in part, at any time during the two year period immediately following
the Closing Date.
(e) Notwithstanding any other provision hereof except
the provision of Paragraph 2.5, Seller shall be under no contractual
restrictions with respect to the sale of any of the Registered Shares or the
Unregistered Shares in the event that (i) Parent shall be subject to a bona
fide tender offer or bona fide merger proposal or other Change of Control
Event, (ii) Parent shall suffer a Materially Adverse Event, (iii) Parent shall
fail to maintain the effectiveness of the Registration Statement covering the
Registered Shares for a consecutive period of thirty (30) days or more (other
than during Blackout Periods as defined below), or (iv) Parent shall fail to
maintain the listing of Parent Common Stock on a national stock exchange or on
the Nasdaq SmallCap Market. Notwithstanding anything contained in this Section
2.4(e), Parent shall be required to notify Seller of any of the happening of
(i), (ii), (iii), or (iv) herein and Parent shall have thirty (30) days to cure
such event prior to the termination of any such contractual restrictions on
resale of Parent Common Stock. As used in this Section 2.4(e) with respect to
Buyer, Material Adverse Event shall mean an event which has resulted in a loss,
liability, or damage in excess of $2,000,000 in the aggregate or
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a loss of any material license or agreement in each case which would materially
and adversely affect the business of the Parent taken as a whole. As used
herein, Blackout Period shall mean (i) such times when the Board of Directors
of the Parent is in possession of material, non-public information involving
the Company which would be required to be disclosed to the public before any
member of the Board of Directors would be able to sell any equity securities of
the Parent in reliance upon the antifraud provisions of the 1933 Act or (ii)
such times when the Registration Statement can no longer be used because it
requires updating due to material changes required to be made in the
Registration Statement.
2.5 Piggy-Back Registration Rights as to Unregistered Shares. If
at any time prior to the expiration of two years from the Closing Date, Parent
proposes to file with the SEC a Registration Statement relating to an offering
for its own account or the account of others under the Securities Act of any of
its securities (other than on Form S-4 or Form S-8 or their then equivalents
relating to securities to be issued solely in connection with the acquisition
of any entity or business or securities to be issued in payment of compensation
for services or in connection with stock options or other Plans, as defined in
Paragraph 3.8), Parent shall promptly send to Seller (or its assignee or
distributee) written notice of Parent's intention to file a Registration
Statement and of Seller's rights under this Paragraph 2.5. If within twenty
(20) days after receipt of such notice, a Seller, or an assignee or distributee
of Seller, shall so request in writing, Parent shall include in such
Registration Statement all or any part of the Unregistered Shares (excluding
the Fourth Gated Shares) such person requests to be registered, subject to the
priorities and limitations set forth herein. If an offering in connection with
which Seller has registration rights under this paragraph is an underwritten
offering,
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then any Unregistered Shares included in such Registration Statement shall,
unless otherwise agreed to by Parent, be offered and sold using the same
underwriter or underwriters and on the same terms and conditions as other
shares of Parent Common Stock included in such underwritten offering. If the
registration is to be an underwritten public offering for the account of Parent
and the managing underwriter(s) advise Parent in writing, that in their
reasonable good faith opinion, marketing or other factors dictate that a
limitation on the number of Shares of Parent Common Stock which may be included
in the Registration Statement (the "Registration Limit") is necessary to
facilitate and not adversely affect the proposed offering, then Parent may
impose the Registration Limit on the offering and shall include securities in
such Registration Statement up to the Registration Limit in the following
priority: (i) first, up to the full number of securities Parent proposes to
sell for its own account, (ii) second, up to the full number of securities
proposed to be registered for the account of the holders of securities entitled
to inclusion of their securities in the Registration Statement by reason of
demand registration rights, and (iii) third, the securities requested to be
registered by other holders of securities (including Seller and its assignees
or distributees) entitled to participate in the registration pro rata based on
the number each has requested to be included in such registration.
2.6 Escrow. Five (5%) percent of the Total Transaction Shares in
the form of Fourth Gated Shares (the"Escrowed Fourth Gated Shares"), shall be
placed in escrow (the "Escrow") at Closing (the "Escrowed Shares") in
accordance with the term of an escrow agreement and related stock pledge
agreement (collectively, the "Escrow Agreement") substantially in the form
attached hereto as Exhibit "A." The Escrow Agreement shall provide that
Escrowed Shares shall be released and returned to Parent (on behalf of Buyer)
from the Escrow in payment or partial payment of the Indemnity Amount (as
defined in Paragraph 9.4) due from Seller to Buyer under the indemnities
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provided in Paragraph 9.1 of this Agreement. Each of the Escrowed Shares
released to Parent shall be deemed to have a value equal to the average of the
closing sale price of the Parent Common Stock as reported in The Wall Street
Journal or other financial publication for the last five (5) trading days
immediately preceding the date that the Escrowed Shares are released to the
Parent in payment of the Indemnity Amount. The term of the Escrow shall be the
longer of the two years immediately following the Closing Date or the time
required to finally determine, by final, non-appealable court order or
agreement of the parties, all indemnity claims timely asserted by Buyer. Upon
the expiration of the Escrow, all Shares remaining therein shall be delivered
by escrow agent to Seller free and clear of all liens, claims and encumbrances.
In the event Buyer makes an indemnity claim against Seller pursuant to this
Agreement, Buyer agrees to first seek to satisfy any such claim from the
Escrowed Shares prior to seeking collection against any other assets of the
Sellers. However, notwithstanding anything contained herein to the contrary,
nothing shall prevent Buyer from seeking indemnification against the Sellers to
the full extent provided in Section 9.4 herein in an amount exceeding the value
of the Escrowed Shares to the extent that such claim exceeds the value of the
Escrowed Shares.
2.7 Adjustment to the Merger Price. In the event the Registration
Statement does not become effective within sixty (60) days after the date of
execution of this Agreement (the "Registration Penalty Date"), then Seller will
be awarded a penalty fee which shall increase the amount of Parent Common Stock
to be included in the Total Transaction Shares (based upon the per share value
of Parent Common Stock calculated in accordance with Section 2.2 herein) by
five (5%) percent for each full month following the Registration Penalty Date
that the Registration Statement is not declared effective (pro-rated for
partial months); provided, however, that no penalty shall accrue to the benefit
of Seller should the effectiveness of the Registration Statement be delayed by
the SEC through no fault of Parent.
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2.8 Closing. Each of the closings of the transactions provided
for in this Agreement including any separate closing under the Stock Option
Agreement referred to in Section 7.1(xxvii) and (xxxii) or the Premier Merger
Agreement and FIMI Merger Agreement referred to in Sections 8.9 and 8.10,
respectively, (the "Closing") shall take place at the offices of the attorneys
for Parent in Atlanta, Georgia, on a mutually agreed date within five (5)
business days following the parties determination that all conditions to their
respective obligations hereunder (other than those requiring an exchange of a
certificate, opinion, or other documents at the Closing or the taking of other
action at, or concurrently with, the Closing) have been fulfilled, or such
other time and place as the parties may mutually agree. In the event that at
the Closing no conditions to the obligations of the parties hereto exist which
have not been satisfied or waived, the parties shall (i) deliver to each other
at Closing the certificates, opinions, and other documents required to be
delivered at Closing under Article VI and (ii) at the Closing, or as soon as
practicable thereafter, the Buyer shall cause the Merger to be consummated for
each Company comprising the Company by making the following filings with:
(a) FIMI Securities Merger
(i) the Secretary of State of the State of Texas, a
Certificate of Merger in such form as required by, and executed in
accordance with the Texas Business Corporation Act;
(ii) the Secretary of State of the State of Delaware
Articles of Merger in such form as required by and executed in
accordance with the Delaware General Corporation Code;
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(b) ATFI Merger
(i) the Secretary of State of the State of Florida, a
Certificate of Merger in such form as required by, and executed in
accordance with the Florida Business Corporation Act;
(ii) the Secretary of State of the State of Delaware
Articles of Merger in such form as required by and executed in
accordance with the Delaware General Corporation Code.
The date upon which a Closing takes place shall, with respect to that
transaction, be referred to as the "Closing Date."
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ARTICLE III
REPRESENTATIONS, WARRANTIES
AND COVENANTS OF SELLER
Seller hereby jointly and severally represents, warrants and covenants
to Buyer (subject to the limitations set forth in Section 9.4 herein) as set
forth in this Article II. Such representations, warrants and covenants shall be
true as of the date of this Agreement and as of the Closing Date.
3.1 Status of Shares. With respect to the Shares:
(a) The Shares have been duly authorized, validly
issued, and are fully paid and nonassessable;
(b) The Shares represent all of the issued capital stock
in each of the companies comprising the Company;
(c) Seller owns both beneficially and of record, and has
good and marketable title to, the Shares, free and clear of any mortgage,
pledge, lien, encumbrance, security interest, restriction, charge or claim of
any kind (collectively, the "Liens") and the Shares are not subject to any
restrictions or limitations prohibiting or restricting transfer, (i) other than
restrictions on transferability imposed generally on securities by federal or
state securities laws, none of which will prevent the transactions contemplated
hereby assuming the Regulatory Approvals referred to below in clause (d) are
obtained, and (ii) other than the state insurance regulatory laws of the States
of Texas and Oklahoma, and related regulations that restrict ownership or
transfer of insurance agencies;
(d) Subject to the receipt of the consents, approvals,
orders or authorizations of, or registrations, qualifications or filings with,
governmental authorities and subject to state insurance
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regulatory laws of the States of Texas and Oklahoma and related regulations
that restrict ownership or transfer of insurance agencies (the "Regulatory
Approvals"), Seller has full right, power and authority to sell and transfer
the Shares pursuant to this Agreement; and
(e) The certificates representing the Shares will at the
Closing be genuine and, together with any supporting papers, will at such time
be in such form as to enable Company to reflect on its stock transfer books
immediately the transfer to Buyer of the shares of stock represented thereby.
3.2 Authorization; Etc. Each Seller has full power and authority
to enter into this Agreement and to carry out the transactions contemplated
hereby. Each Seller and each Company has taken all action required by law, or
otherwise to authorize the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by Seller and constitutes the valid and
binding obligation of Seller enforceable in accordance with its terms, subject
to general principles of equity and except as the enforceability thereof may be
limited by applicable bankruptcy, insolvency, reorganization, or other similar
laws of general application relating to creditors' rights.
3.3 Corporate Existence, Organization and Qualification of
Company. Schedule 3.3 sets forth the number of authorized shares of capital
stock, the number of outstanding shares of capital stock, the par value of such
capital stock and the state of incorporation of each corporation included in
the definition of Company. Each such corporation is a corporation duly
incorporated, validly existing and in good standing under the laws of the state
of its incorporation, all of such corporations to extent required by applicable
state law as a group have no state or local franchise taxes (not including
taxes based on income, gross receipts or assets), fees or penalties due and
unpaid, and each
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has full corporate power and authority to carry on the business as now
conducted by it. Each such corporation is duly qualified or licensed and in
good standing as a foreign corporation duly authorized to do business in each
of the jurisdictions indicated on Schedule 2.3 and there are no other
jurisdictions in which the failure to so qualify or be licensed would have a
materially adverse effect on each corporation included within the definition of
Company. No such corporation has outstanding securities convertible into or
exchangeable or exercisable for any shares of its capital stock, nor does it
have outstanding any rights to subscribe for or to purchase, or any options for
the purchase of, or any agreements providing for the issuance (contingent or
otherwise) of, or any calls, commitments, or claims of any character relating
to, any shares of its capital stock or any securities convertible into or
exchangeable or exercisable for any shares of its capital stock.
3.4 Company Subsidiaries. Except as set forth in Schedule 3.4,
none of the corporations included in the definition of Company has any
subsidiaries.
3.5 Partnerships. None of the corporations included within the
definition of Company owns an interest, directly or indirectly, in any general
limited partnership or limited liability company.
3.6 No Violation. Except as set forth in Schedule 3.6 and subject
to obtaining the Regulatory Approvals, neither the execution and delivery of
this Agreement nor the consummation of the transactions contemplated hereby:
(a) Violate any provision of the charter or Bylaws of
any of the companies included in the definition of Company;
(b) Violate, are in conflict with, constitute a default
(or an event which, with or without due notice or lapse of time, or both, would
constitute a default) under, or require the consent
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or approval of any other person under, or cause or permit the acceleration of
the maturity of, or excuse performance by any person of its obligations under
or by any such person to terminate, any debt, obligation, contract, commitment
or other agreement (i) to which Seller or any company included in the
definition of Company is a party or by which either is bound, and (ii) which is
material to the business, financial condition or operations of (y) Seller or
(z) any company included in the definition of any company included in the
definition of Company;
(c) Result in the creation or imposition of any Lien
upon any property or assets of Seller or any company included in the definition
of Company under any debt, obligation, contract, commitment or other agreement
to which either is a party or by which either is bound and which is material to
the business, financial condition or operations of any Company included in the
definition of Company; or
(d) Violate any material statute or law or any judgment,
decree or order or material regulation or rule of any court or governmental
authority or arbitration tribunal binding upon Seller or any company included
in the definition of Company, or violate or result in the revocation,
cancellation, suspension or adverse modification of any material franchise,
license, permit or other governmental authorization or approval of any company
included in the definition of Company. Notwithstanding the foregoing or any
provision of this Agreement to the contrary, Seller makes no representation or
warranty regarding the compliance of the transactions contemplated by this
Agreement with the state insurance laws or related regulations of the States of
Texas and Oklahoma relating to the ownership and transfer of insurance agencies
and their licenses.
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3.7 Financial Statements.
(a) Seller has delivered to Buyer complete and correct
copies of audited, combined financial statements for each corporation included
within the definition of Company dated as of December 31, 1997, and 1996. Such
audited financial statements, including the notes thereto, and schedules are
referred to herein collectively as the "Financial Statements." The Financial
Statements consist of (i) a statement of operations for the years ending
December 31, 1997, and 1996, (ii) a statement of cash flows for the years
ending December 31, 1997 and 1996, in each case presenting combined information
with respect to each company included in the definition of Company. The
Financial Statements (x) have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the periods
indicated except as indicated thereon, (y) are in all material respects
accurate and complete and present fairly the financial position of each
corporation included within the definition of Company on a combined basis as of
December 31, 1997 and 1996 and the results of operations and cash flows for the
years ended December 31, 1997, and 1996, and (z) Seller has provided Buyer,
upon the execution of this Agreement, with certificates of the chief financial
officers of Company certifying that such is the case.
3.8 Labor and Employment Contract Plans. Except as disclosed in
Schedule 3.8, each corporation included within the definition of Company is not
a party to any (a) employment agreements, consulting agreements or similar
arrangements which will survive the Closing, (b) profit-sharing, bonus,
incentive compensation, deferred compensation, stock option or stock purchase
plans, or other arrangements, agreements or plans providing for employee
benefits (including but not limited to vacation, sick leave, medical,
hospitalization, life insurance and other insurance plans, or related benefits)
(collectively, the "Plans") under which employees of each corporation included
within the definition of Company will continue to be eligible after Closing or
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which Plans are qualified under ERISA (as hereinafter defined) or (c) all
collective bargaining or union contracts. Schedule 3.8 contains an accurate and
complete list as of September 30, 1998, of the names and current salary or
payment rates (expressed on an annual basis) of all persons (including
independent commission agents) employed by or under contract with each
corporation included within the definition of Company whose current rate of pay
which, including any bonus or indirect compensation, if annualized, will result
in such person earning an excess of $50,000 per year in 1997 or $36,000 or
higher through September 30, 1998. There is no pending or, to Seller's or each
corporation included within the definition of Company's knowledge, threatened
labor dispute, strike, work stoppage, or union campaign against Company or
threatening to affect in any materially adverse way Company's business or
assets. Each corporation included in the definition of Company has complied in
all material respects with all of its obligations under the arrangements,
agreements and plans listed in Schedule 3.8 and with all applicable laws
relating to the employment of labor, including without limitation all
provisions thereof relating to wages, hours, equal opportunity, collective
bargaining and the payment of social security and other similar taxes. There
are no violations of such obligations or laws which are material to each
corporation included in the definition of Company.
3.9 ERISA. There are no "Pension Plans" within the meaning of the
Employee Retirement Income Security Act of 1974, as amended, and the
regulations thereunder ("ERISA"), which apply to each corporation included
within the definition of Company which: (a) have not been operated in
compliance with ERISA and IRC ss. 401 or ss. 501; (b) have, on a plan
termination basis, any unfunded liabilities or any liabilities to the Pension
Benefit Guaranty Corporation; or (c) have had any prohibited transactions under
IRC ss. 4975 or ERISA ss. 406, any accumulated funding
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deficiencies (as defined in ERISA ss. 2302 or IRC ss. 412), reportable events
(as defined in ERISA ss. 4043) or plan termination (as defined in Title 17 of
ERISA or IRC ss. 411). Each corporation included within the definition of
Company maintains no plans outside the United States. Except as set forth in
Schedule 3.9, each corporation included within the definition of Company does
not maintain nor contribute to any employee welfare benefit plan, as such term
is defined in ERISA, whether insured or otherwise, and each such welfare plan
is in material compliance with the provisions of ERISA. Each corporation
included within the definition of Company has never been obligated to
contribute to any "multiemployer plan" or "multiple employer plan" (as such
terms are defined in ERISA ss. 4001). Except as set forth in Schedule 3.9, no
filing, application or other matter with respect to any of such plans is
pending with the Internal Revenue Service, Pension Benefit Guaranty
Corporation, United States Department of Labor or other governmental body, none
of such plans has been terminated since September 1, 1974, neither the Pension
Benefit Guaranty Corporation, nor any other person has taken any action to
terminate any of such plans (and to the best of Seller's and each corporation
included within the definition of Company's knowledge, there exists no basis
for any such action) and no trustee has been appointed by any court or
governmental body to administer any thereof.
3.10 Litigation.
(a) Schedule 3.10 accurately identifies all actions or
proceedings pending as of the date hereof against each corporation included
within the definition of Company before any court, governmental body or
arbitration tribunal other than proceedings disclosed on other schedules to
this Agreement. Except as disclosed in Schedule 3.10, neither Seller nor each
corporation included within the definition of Company has received prior to the
date hereof written notice of the
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commencement or pendency of any governmental investigation of each corporation
included within the definition of Company.
(b) Except for matters identified on Schedule 3.10, to
the best of the knowledge of the Seller, there is, as of the date hereof, no
action or proceeding pending, or to the knowledge of Seller or each corporation
included within the definition of Company threatened, which questions the
validity or legality of this Agreement or any action taken or to be taken
pursuant hereto or the consummation of the transactions contemplated hereby or
which, if adversely determined, would materially and adversely affect the
business, financial condition or operations of any corporation included within
the definition of Company.
(c) Seller shall give Buyer prompt written notice of the
commencement of any action, proceeding or investigation involving any
corporation included within the definition of Company after the date hereof
that would be required to be described on Schedule 3.10 had such action,
proceeding or investigation been open on the date hereof.
3.11 Court Orders and Decrees. Each corporation included within
the definition of Company is not in violation of any term of any material
judgment, decree, injunction or order of any court, governmental agency or
arbitration tribunal outstanding against it or by which it is bound. There is
no such outstanding judgment, decree, injunction, or order which could
reasonably be expected to have a material adverse effect upon the financial
condition, operations or business of any corporation included within the
definition of Company.
3.12 Compliance with Instruments, Laws, Etc. Except as disclosed
on Schedule 3.12, to the best of the knowledge of Seller, none of the
corporations included within the definition of Company is in violation of and
none has received any notice of violation which would have a
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material adverse effect on any of the corporations included within the
definition of the Company of (a) any provision of its charter or Bylaws, or any
agreement pertaining to indebtedness, (b) any material provision of any other
obligation, contract, commitment, or other agreement or (c) any material
federal or state law, regulation, rule or administrative order.
3.13 Title to Properties; Encumbrances. Except as disclosed on
Schedule 3.13, each corporation included within the definition of Company has
good title to all of the properties and assets (real, personal, and mixed,
tangible and intangible) reflected on the Financial Statements or acquired
since December 31, 1997, in each case free and clear of all Liens except (a)
materialman's, mechanics', carriers', workers', repairman's, and other similar
liens arising or incurred in the ordinary course of business or statutory
landlord's liens under leases to which it is a party, provided that either the
underlying obligation is not in default or such obligation or Lien is being
contested in good faith and adequate reserves have been established for the
payment or discharge of such Lien to the extent required by generally accepted
accounting principles; (b) Liens disclosed in the Financial Statements; and (c)
Liens for taxes not yet delinquent or the validity or amount of which are being
contested in good faith; provided that adequate reserves have been established
for the payment of such taxes to the extent required by generally accepted
accounting principles. The rights, properties and assets of each corporation
included within the definition of Company include all the rights, properties
and assets necessary for each corporation included within the definition of
Company to conduct its businesses in all material respects in the same manner
as currently conducted.
3.14 Inventory. Each corporation included within the definition
of Company has no inventory.
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3.15 Technical Facilities. The technical facilities utilized by
each corporation included within the definition of Company are in good
operating condition, subject to normal wear and tear, are suitable for the
purpose for which they are used and are adequate and sufficient for all of the
current operations of each corporation included within the definition of
Company.
3.16 Status of Licenses.
(a) Each corporation included within the definition of
Company has all state and federal licenses that are necessary for its business
and operations including, without limitation, (i) a broker dealer license by
FIMI Securities, Inc. with the SEC, and the National Association of Securities
Dealers ("NASD"), (ii) state licenses to conduct business as an insurance
agency in all of the states listed on Schedule 2.16, and (iii) individual
insurance agent licenses for all of the states listed on Schedule 3.16 (the
"Licenses"). Except as set forth in Schedule 3.16, all such Licenses are valid
and in full force and effect and shall remain valid and in full force and
effect for the benefit of Buyer at the Closing. All of the state and federal
Licenses of any corporation included within the definition of the Company as
utilized by any corporation included within the definition of the Company in
its business and operations are set forth on Schedule 3.16. Except as disclosed
thereon as of the Closing Date, the Licenses identified on Schedule 3.16 are in
full force and effect and have not been suspended, modified in any material
adverse respect, canceled or revoked, and any corporation included within the
definition of the Company has operated and will continue from the date hereof
to the Closing to operate in compliance with all material terms thereof or any
renewals thereof.
(b) Except as identified on Schedule 3.16, all other
material permits, concessions, grants, franchises and other governmental
authorizations and approvals necessary for the conduct
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of the business of any corporation included within the definition of the
Company as currently conducted have been duly obtained and are in full force
and effect, have not been suspended, modified in any materially adverse
respect, canceled or revoked, and any corporation included within the
definition of the Company has operated and until Closing will continue to
operate in compliance with all material terms thereof or any applicable
renewals thereof.
(c) Except as described in Schedule 3.16, neither Seller
nor each corporation included within the definition of Company has notice of
and, to the best of Seller's and each corporation's, included within the
definition of Company, knowledge, there is not pending, as of the date hereof,
any application, petition, objection or other pleading with the governmental
body having jurisdiction or authority over any part of the business or
operations of any corporation included within the definition of the Company,
which question the validity of or contests any License or which, if accepted or
granted, would result in the revocation, cancellation, suspension or any
materially adverse modification of any license, permit, concession, grant,
franchise or other License of any corporation included within the definition of
the Company.
(d) Seller shall give Buyer prompt written notice of the
filing of any material application, petition, objection or other pleading from
the date hereof to the Closing that would be required to be described on
Schedule 3.16 had such action occurred prior to the date hereof.
3.17 Status of Leases and Agreements.
(a) Schedule 3.17 identifies completely and accurately
each lease and other agreement for the use of property to which each
corporation included within the definition of Company is a party; and
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(b) Except as disclosed in Schedule 3.17, all leases and
other agreements for the use of property by each corporation included within
the definition of Company or by which it is bound, are in full force and effect
and each corporation included within the definition of Company has not received
any notice of termination or cancellation of any such lease or other agreement.
There is no breach by each corporation included within the definition of
Company of any such lease and other agreement which could result in the
termination or cancellation thereof, or the imposition of damages against each
corporation included within the definition of Company.
3.18 Customer Agreements. Except as provided in Schedule 3.18,
neither Seller nor each corporation included within the definition of Company
knows of any current customers of each corporation included within the
definition of Company which, when taken in aggregate, would constitute a
material portion of Company's business (in excess of 15% of its business) which
intend(s) to discontinue the use of any service provided by each corporation
included within the definition of Company, including if the transactions
contemplated hereby are consummated.
3.19 Bank Accounts. Schedule 3.19 identifies all accounts and
safety deposit boxes with banks or other financial institutions maintained by
or on behalf of each corporation included within the definition of Company,
together with the authorized signatories to such accounts.
3.20 Patents, Trade Names, Trademarks, Licenses, Etc.
(a) Each corporation included within the definition of
Company does not own and has not licensed or otherwise does not have the right
to use any patents, trademarks, trade names, copyrights, technology, know-how
and processes which are material to the conduct of its business as currently
conducted.
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(b) Schedule 3.20 accurately identifies all significant
computer software for financial reporting, engineering functions and studies
and inventory control, or used by each corporation included within the
definition of Company, which each corporation included within the definition of
Company will continue to have the right to use after the Closing.
(c) No claims have been asserted against each
corporation included within the definition of Company by any person contesting
the use by Company of the patents, trademarks, trade names, copyrights,
technology, know-how or processes or challenging or questioning the validity or
enforceability of any such license or other right to use of such patent,
trademark, trade name, copyright, technology, know-how or processes, and to the
best of Seller's knowledge, there is no valid basis for any such claim and the
use of such patents, trademarks, trade names, copyrights, technology, know-how
or processes by each corporation included within the definition of Company does
not infringe on the rights of any person.
3.21 No Undisclosed Liability. Except as disclosed in Schedule
3.21 or disclosed in the Financial Statements or the Closing Date Balance
Sheet, each corporation included within the definition of Company has no
liabilities, whether absolute, accrued, contingent or otherwise, whatsoever
which are required under generally accepted accounting principles to be
disclosed or reserved against in the Financial Statements or the Closing Date
Balance Sheet.
3.22 Taxes and Tax Returns.
(a) Except as set forth in Schedule 3.22, all federal,
state, local, and foreign tax reports and returns with respect to taxable
periods ending after December 31, 1994, required to be filed by or on behalf of
any corporation included within the definition of the Company have been duly
filed on a timely basis other than any such reports and returns for which there
is no material
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monetary penalty for failure to file, and all taxes, including, without
limitation, income, gross receipts, ad valorem, value added, turnover, sales,
use, personal property (tangible and intangible), stamp leasing, lease, user,
leasing, excise, franchise, transfer, fuel, excess profits, occupational
(including without limitation, deposits required by law to be made with respect
to withholding taxes for employees) and interest equalization, and other
charges of federal, state, local at foreign taxing authorities, including all
interest and penalties or late charges on the foregoing (the "Taxes")
attributable to the periods covered by such reports and returns which Seller
and each corporation included within the definition of Company believe in good
faith to be due have been duly paid. Seller and any corporation included within
the definition of the Company believe in good faith that all such reports and
returns, insofar as they relate to any corporation included within the
definition of the Company, have been prepared in accordance with all laws and
regulations pertaining thereto.
(b) The reserves for taxes maintained by any corporation
included within the definition of the Company, all of which constitute current
liabilities, will be adequate under generally accepted accounting principles to
cover the liability of such entities for all Taxes for all periods ending on or
prior to the Closing Date.
(c) There are no tax Liens upon any property or assets
of any corporation included within the definition of the Company other than
Liens for Taxes not yet delinquent or the validity or amount of which are being
contested in good faith and for the payment of which adequate reserves have
been established to the extent required by generally accepted accounting
principles.
(d) Schedule 3.22 sets forth the latest taxable period
ending after December 31, 1994, for which the federal income tax returns of any
corporation included within the definition of the Company or any affiliated
group which includes Company have been examined by the Internal
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Revenue Service (the "IRS") and the income taxes due as a result of such
examination have been finally determined. Schedule 3.22 sets forth all proposed
adjustments which have been raised in writing by the Internal Revenue Service
in any examination in respect of any corporation included within the definition
of the Company which, by application of similar principles, reasonably could be
expected to result in a proposed deficiency for any other tax period of any
corporation included within the definition of the Company not so examined.
Except to the extent set forth in Schedule 3.22:
(i) all deficiencies and assessments resulting
from examination of federal, state and local tax returns and reports
of any corporation included within the definition of the Company with
respect to taxable periods ending after December 31, 1994, have been
paid;
(ii) there are no outstanding agreements or
waivers extending the statutory period of limitation applicable to any
federal, state, local, or foreign to, return or report of any
corporation included within the definition of the Company for any
period; and
(iii) there are no agreements by Seller or any
corporation included within the definition of the Company for the
extension of the time for the assessment of any Taxes.
(e) Seller and any corporation included within the
definition of the Company do not currently have, nor at any time after December
31, 1994, have had, in effect a tax sharing or similar tax allocation agreement
among and between each other, other than:
(i) an election to allocate consolidated
federal income tax liability pursuant to Reg. Sec. 1.1552l(a)(1) and Reg. Sec.
1.1502-33(d)(2)(ii);
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(ii) an allocation of federal, state and local
income and franchise taxes for financial statement purposes; and
(iii) any election as to a tax sharing or similar
tax allocation method which is deemed to be made under any federal, state or
local tax laws as a result of the filing of a combined or consolidated tax
return.
(f) True copies of all federal income tax returns of any
corporation included within the definition of the Company for all tax periods
ending after December 31, 1994, have been heretofore delivered to Buyer.
3.23 Insurance. Each corporation included within the definition of
Company is covered as of the date hereof under insurance policies. The Company
will continue to cover each corporation included within the definition of
Company under such insurance policies in accordance with each corporation's,
included within the definition of Company, normal business practice from the
date hereof through the Closing Date.
3.24 Contracts.
(a) Schedule 3.24 lists all written agreements,
contracts and commitments of each corporation included within the definition of
Company or by which each corporation included within the definition of Company
is bound which (i) create indebtedness for money borrowed or any Liens, (ii)
(x) involve or may involve payments by or to each corporation included within
the definition of Company of more than $50,000, and (y) cannot be terminated by
each corporation included within the definition of Company without penalty upon
notice of 60 days or less, or (iii) are material to the business, financial
condition or operations of each corporation included within the definition of
Company as a whole or which impose material restrictions or obligations (other
than the payment
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of money) on Company in any case. To the best of Seller's and each
corporation's, included within the definition of Company, knowledge, there are
no oral agreements, contracts or commitments of Company or by which each
corporation included within the definition of Company is bound in excess of
$100,000 in the aggregate.
(b) Each of the agreements, contracts and commitments
listed on Schedule 3.24 is valid and in full force and effect and (i) there is
no material default thereunder or claim of default and (ii) there has not
occurred any event which, with the passage of time or the giving of notice (or
both), would constitute a default thereunder, in any case either on the part of
each corporation included within the definition of Company or, to the best of
Seller's and each corporation's, included within the definition of Company,
knowledge, on the part of any other party thereto.
(c) Except as set forth on Schedule 3.24, there is no
agreement, contract or commitment which limits the right of each corporation
included within the definition of Company to engage in any business or compete
with any person.
(d) Seller has delivered or made available to Buyer
complete and correct copies of all written agreements, contracts and
commitments identified on any Schedule to this Agreement, together with all
written amendments thereto and waivers and consents with respect thereto.
3.25 Full Disclosure. Except as disclosed in this Agreement,
Seller and each corporation included within the definition of Company know of
no fact existing relating to Seller or Company which Seller or Company has not
disclosed to Buyer which has or will have a material adverse effect on the
consummation by Seller and each corporation included within the definition of
Company of the transactions contemplated hereby.
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3.26 Changes. Since December 31, 1997, each corporation included
within the definition of Company has conducted its business only in the
ordinary and usual course consistent with past business practice. Except as
discussed in Schedule 3.26, it has done none of the acts described in
subparagraph 5.1(b) to the extent that any such act amounts individually to in
excess of $50,000.
3.27 Certain Transactions. None of the officers, directors, or
employees of the Company is presently a party to any transaction with each
corporation included within the definition of Company (other than for services
as employees, officers, and directors), including any contract, agreement, or
other arrangement providing for the furnishing of services to or by, providing
for rental of real or personal property to or from, or otherwise requiring
payments or sales commission or fees to or from any officer, director, or such
employee or, to the knowledge of the Seller, any corporation, partnership,
trust, or other entity in which any officer, director, or any such employee has
a substantial interest or is an officer, director, trustee, or partner.
3.28 Financial Condition After Closing Date. Except as provided in
Section 3.25, Seller makes no representations or warranties with respect to the
financial condition or results of operations of any corporation included within
the definition of Company for any period after the Closing Date.
3.29 Seller's Representations and Warranties. Seller knows of no
fact which would cause any representation or warranty of Seller, any
corporation included within the definition of Company or the Buyer contained in
this Agreement to not be true and complete.
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ARTICLE IV
REPRESENTATIONS, WARRANTIES
AND COVENANTS OF BUYER
Buyer hereby jointly and severally represents, warrants and covenants
to Seller as set forth in this Article IV. Such representations, warranties and
covenants shall be true as of the date of this Agreement and as of the Closing
Date.
4.1 Organization and Standing of Buyer. Each Buyer is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware and has full corporate power and authority to
carry on its business and operations as currently conducted.
4.2 Authorization, Etc. Buyer has full corporate power and
authority to enter into this Agreement and to carry out the transactions
contemplated hereby. Buyer has taken all action required by law, its
Certificate of Incorporation, its Bylaws or otherwise to authorize the
execution and delivery of this Agreement and the consummation of transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by duly authorized officers of Buyer and constitutes the valid and
binding obligation of Buyer enforceable in accordance with its terms, subject
to general principles of equity and except as the enforceability thereof may be
limited by applicable bankruptcy, insolvency, reorganization, or other similar
laws of general application relating to creditors' rights.
4.3 No Violation. Except as set forth in Schedule 4.3 and subject
to obtaining the Regulatory Approvals, neither the execution and delivery of
this Agreement nor the consideration of the transactions contemplated hereby
will:
(a) Violate any provision of the Certificate of
Incorporation or Bylaws of Buyer;
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(b) Violate, be in conflict with, constitute a default
(or event which, with or without due notice or of time, or both, would
constitute a default) under, or require the consent or approval of any other
person under, or cause or permit the acceleration of the maturity of, any debt,
obligation, contract, commitment or other agreement (i) to which Buyer is a
party, and (ii) which is material to the business or financial condition of
Buyer;
(c) Result in the creation or imposition of any Lien
upon any property or assets of Buyer under any debt, obligation, contract,
commitment other agreement to which Buyer is a party or by which Buyer is
bound; or
(d) Violate any statute or law or any judgment, decree,
order, regulation or rule of any court or governmental authority or arbitration
tribunal binding upon Buyer.
4.4 Investment Intent. Buyer is acquiring the Shares for its own
account and not with a view to, or for resale in connection with, the
distribution thereof.
4.5 Qualified Transferee. Buyer is financially and legally
qualified, and has the requisite financial, technical and business
capabilities, and assuming the accuracy of Seller's representations,
warranties, and covenants contained herein, to obtain all material Regulatory
Approvals promptly and to operate the business of Company after the Closing.
There are no claims, suits or other proceedings before any court, governmental
agency or arbitration tribunal in which issues are raised which, if finally
determined adversely to Buyer, would have the effect of impairing Buyer's
ability promptly to obtain Regulatory Approvals, or to consummate the
transactions contemplated by this Agreement.
4.6 Litigation. There is on the date hereof no action or
proceeding pending or, to Buyer's knowledge, threatened against or involving
Buyer before any court, governmental agency or
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arbitration tribunal, which, if adversely determined, would materially and
adversely affect the ability of Buyer to consummate the transactions provided
for herein. Buyer is not in violation of any term of any judgment, decree,
injunction or order outstanding against it or them, which violation would have
a material and adverse effect on the ability of Buyer to consummate the
transactions provided for herein. Buyer shall give Seller prompt written notice
of the commencement of any action, proceeding or investigation involving Buyer
after the date hereof that would, if adversely determined, materially and
adversely affect the ability of Buyer to consummate the transactions provided
for herein.
4.7 Compliance with Instruments, Laws, Etc. To the best of the
knowledge of Buyer, Buyer is not in violation of and has not received any
notice of violation which would have a material adverse effect on (a) any
provision of its charter or Bylaws, or any agreement pertaining to
indebtedness, (b) any material provision of any other obligation, contract,
commitment, or other agreement, or (c) any material federal or state law,
regulation, rule or administrative order.
4.8 SEC Documents. Since January 1, 1998, Parent has filed all
reports, schedules, forms, statements and other documents required to be filed
by it with the SEC pursuant to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the "1934 Act") (all of the foregoing filed
prior to the date hereof and all exhibits included therein and financial
statements and schedules thereto and documents incorporated by reference
therein, being hereinafter referred to as the "SEC Documents"). No information
included in the SEC Documents when filed contained any untrue statement of a
material fact or omits to state any material fact necessary in order to make
the statements therein, in the light of the circumstances under which they are
or were made, not misleading.
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4.9 Buyer's Representations and Warranties. Buyer knows of no
fact which would cause any representation or warranty of Buyer or Seller
contained in this Agreement to not be true and complete.
4.10 Full Disclosure. Except as disclosed in this Agreement, Buyer
knows of no fact existing with respect to the Buyer which Buyer has not
disclosed to Seller which has or will have a material adverse effect on the
consummation of the transactions by Buyer contemplated hereby.
4.11 Financial Condition After Closing Date. Except as provided in
Section 4.10, Buyer makes no representation or warranty with respect to the
financial condition or results of operations of the Buyer after the Closing
Date.
4.12 No Plan to Sell Assets, Etc. Buyer has no plan or intention
to sell or otherwise dispose of any of the assets of Company or the stock of
Company acquired in the transactions contemplated herein, except for
dispositions made in the ordinary course of business or transfers described in
Section 368(a)(2)(C) of the Code.
ARTICLE V
COVENANTS OF SELLER
5.1 Conduct of Business Pending Closing. From the date hereof and
until Closing, Seller warrants and covenants that, pending and as a condition
precedent to Closing, except otherwise consented to in writing by Buyer or as
contemplated by this Agreement:
(a) It shall cause each corporation included within the
definition of Company:
(i) to conduct its business only in the
ordinary and usual course consistent with reasonable business
practice;
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(ii) to use its best efforts to promote the
business of each corporation included within the definition of Company
and retain its customers, managers, employees, licensors and
contractors; and
(iii) except for transactions in the ordinary and
usual course of business consistent with reasonable business practice,
and without being required to make any unusual expenditures or suffer
any unusual losses, to use its best reasonable efforts:
(w) to keep the organization of its
business intact, to preserve and maintain its assets, and to
preserve the goodwill of its suppliers, customers and others
having business relations with it;
(x) to preserve the relationships and
goodwill between it and its employees and keep Buyer advised
of any changes in personnel that would affect the long-term
operations of each corporation included within the definition
of Company;
(y) to continue to carry its existing
insurance, subject to variations in amounts required by the
ordinary operations of its business and any increases
mutually agreed upon by Seller and Buyer; and
(z) to comply with and perform the
leases and other agreements to which it is a party or by
which it is bound.
(b) It shall not permit each corporation included within
the definition of Company to:
(i) merge or consolidate with, or purchase
substantially all of the assets of, or otherwise acquire, any business
of any corporation, partnership, association or other business
organization or division thereof;
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(ii) vary significantly its business methods and
practices with its present and prospective customers and subscribers,
including but not limited to the price and terms upon which it offers
its service except to the extent consistent with the ordinary and
usual course of business;
(iii) except for transactions in the ordinary and
usual course of business consistent with reasonable business practice;
(y) grant any increase in salaries
payable or to become payable or grant any bonus to any
officer, employee, agent, or representative, or
(z) increase benefits payable to any
officer, employee, agent, or representative under any Plan of
each corporation included within the definition of Company or
any Subsidiary or by which Company, or any Subsidiary will be
bound after Closing or create, become bound by or modify any
such Plan.
(iv) enter into, become bound by or modify, or
unless required by law, engage in any negotiations with respect to,
any collective bargaining or union agreement or commitment;
(v) enter into any employment or consulting
agreement or other such agreement not terminable by its terms without
penalty or payment on thirty (30) days' or less notice after the
Closing with any person;
(vi) declare, set aside, or pay any dividend or
make any distribution in respect of its equity securities, except for
monthly distributions of $7,500, made to cover salaries and a $500
monthly car allowance for each of David Frank, Jim Ellsworth, and
Daniel Delity and monthly payments of $2,766 each to David Frank and
Jim Ellsworth and
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$4,468 to Daniel Delity to satisfy the monthly obligations of the
Sellers pursuant to those three certain promissory notes executed by
each of Seller, effective as of May 1, 1998, in the original principal
amount of $720,000 to Shelby Smith (the "Shelby Smith Notes") copies
of which are attached hereto as "Schedule 4.1(b)(vii)";
(vii) purchase, redeem, or otherwise acquire any
of its equity securities or reclassify, split up or otherwise dispose
of any of such equity securities;
(viii) issue, sell or otherwise dispose of any
of its equity securities, or create, sell or otherwise dispose of any
options, rights, conversion rights or other agreements or commitments
of any kind relating to the issuance, sale or disposition of any of
its equity securities except such sales or dispositions exclusively
among each corporation included within the definition of Company and
its Subsidiaries;
(ix) change its accounting method or treatment
of any material item;
(x) pay any obligation or liability, fixed or
contingent, other than current liabilities or the current portion of
long-term liabilities;
(xi) enter into or become bound by any agreement
or commitment having a term in excess of one year or obligating it to
pay more than $50,000 in the aggregate under any such agreement or
commitment;
(xii) enter into or become bound by any new or
renewed lease agreements or commitments having an economic value in
excess of $100,000 in aggregate;
(xiii) except in the ordinary and usual course of
business consistent with reasonable business practice, waive or
compromise any material right or claim;
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(xiv) except in the ordinary and usual course of
business consistent with reasonable business practice, cancel, without
full payment, any note, loan, or other obligation owing to it;
(xv) except in the ordinary and usual course of
business consistent with reasonable business practice, directly or
indirectly modify, amend, cancel, or terminate any of the material
leases, contracts or agreements to which it is a party, including but
not limited to the partnership or joint venture commitments;
(xvi) amend, modify, or otherwise alter in any
way the Articles of Incorporation or By-laws of any company comprising
the Company; or
(xvii) enter into any agreement obligating it to
do any of the foregoing prohibited acts.
(c) Seller will not transfer, sell, convey, assign, or
otherwise encumber any of the Shares.
5.2 [LEFT INTENTIONALLY BLANK]
5.3 Access and Information. Upon reasonable notice, Seller will
allow Buyer, its counsel, accountants, lenders, capital providers and other
agents and representatives, (i) to have full access, during normal business
hours, throughout the period prior to Closing to the employees, agents,
representatives, affiliates, files, customers, suppliers, lenders, contracts,
properties, books and records of each corporation included within the
definition of Company, (ii) to discuss its affairs, finances and accounts with
its officers and accountants, and (iii) to be furnished all such information
concerning the business and affairs of Company as Buyer or its representatives
may reasonably request.
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5.4 BancAssurance Holdings, Inc. Each corporation included within
the definition of Company and Seller are in the exploration stage of a project
to form a new entity or entities, tentatively called "BancAssurance Holdings,
Inc." ("BancAssurance"), to engage in captive insurance business with financial
institutions (the "BancAssurance Project"). Each corporation included within
the definition of Company shall continue the diligent pursuit of the
BancAssurance Project so as to maximize the benefit to each corporation
included within the definition of Company of such project pending the Closing
of the transaction contemplated by this Agreement. It is anticipated that upon
consummation of any proposed transaction, each corporation included within the
definition of Company may, alone or in combination with a financial institution
or institutions and others, own any entity which is an outgrowth of the
BancAssurance Project (the "BancAssurance Entity"). No interest in the
BancAssurance Entity will be owned by Seller or by any affiliate of Company
which is not included in the definition of Company and no such transactions or
any binding written or oral agreement related to such project will be made by
Seller or the Company without the prior written consent of Buyer. Each person
constituting the Seller shall have the option to purchase up to five (5%)
percent of the securities of BancAssurance owned by Buyer or its affiliates at
an exercise price equal to such entities' GAAP basis in such securities in the
event that (i) such securities are sold in a public or private offering by
Buyer or (ii) BancAssurance consummates an initial public offering of its
securities.
5.5 Post-Closing Availability. Seller hereby agrees that, from
time to time after Closing at Buyer's request and without further
consideration, Seller will execute and deliver such other instruments of
conveyance, assignment and transfer and take such other action as Buyer may
require to more effectively convey, transfer to and vest in Buyer, and to put
Buyer in possession of, the Shares purchased hereunder and otherwise to effect
the consummation of the transactions contemplated hereby.
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5.6 Employment Agreements. Each Seller, i.e., Messrs. Delity,
Ellsworth and Frank, shall enter into an employment agreement with Buyer and
Company (the "Employment Agreement") for a three year term. Each Employment
Agreement shall be substantially in the form attached hereto as Exhibit "D."
5.7 Non-Competition Agreement. Seller shall enter into a
Non-Competition Agreement with Buyer (the "Non-Competition Agreement")
substantially in the form attached hereto as Exhibit "E."
5.8 Best Reasonable Efforts. Seller shall use its best reasonable
efforts to consummate the transactions contemplated by this Agreement and to
obtain as quickly as practicable the approvals and consents necessary for such
consummation.
5.9 Notice to Customers. Subject to Paragraph 9.6, Seller shall,
upon the request of Buyer, cooperate with and assist Buyer in informing
customers of Company of the change in control of Company.
5.10 Disclosure as to Representations and Warranties. Seller shall
promptly inform Buyer in writing if at any time Seller or each corporation
included within the definition of Company shall become aware of any fact which
would cause any representation or warranty of Seller contained in this
Agreement or in any certificate delivered pursuant hereto to not be true and
complete as and as of such time.
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5.11 Compliance with Securities Laws. Seller agrees to comply
with all applicable state and federal securities laws, rules, and regulations,
as may be in effect from time to time with respect to their ownership, purchase
or sale of Parent Common Stock.
ARTICLE VI
COVENANTS OF BUYER
6.1 Notice to Customers. Subject to Paragraph 9.7, Buyer shall
cooperate with Seller in informing customers of each corporation included
within the definition of Company of the change in control of each corporation
included within the definition of Company.
6.2 Registration Statement. Buyer shall prepare and file with the
SEC the Registration Statement for 626,087 shares of the Parent Common Stock to
be used to pay Seller the Merger Price. Buyer shall use reasonable diligence
and effort to have the Registration Statement become effective within sixty
(60) days of the date hereof.
6.3 Access and Information. Upon reasonable notice, Buyer will
allow Seller, its counsel, accountants, lenders, capital providers and other
agents and representatives, (i) to have full access, during normal business
hours, throughout the period prior to Closing to the employees, agents,
representatives, affiliates, files, customers, suppliers, lenders, contracts,
properties, books and records of Company, (ii) to discuss its affairs, finances
and accounts with its officers and accountants, and (iii) to be furnished all
such information concerning the business and affairs of Company as Seller its
representatives may reasonably request.
6.4 Best Reasonable Efforts. Buyer shall use its best reasonable
efforts to consummate the transactions contemplated by this Agreement and to
obtain as quickly as practicable the approvals and consents necessary for such
consummation.
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6.5 Disclosure as to Seller's Representations and Warranties.
Buyer shall promptly inform Seller in writing if at any time Buyer shall become
aware of any fact which would cause any representation or warranty of Buyer
contained in this Agreement to not be true and complete at and as of such time.
6.6 Post-Closing Availability. Buyer hereby agrees that, from
time to time after Closing at Seller's request and without further
consideration, Buyer will execute and deliver such other instruments of
conveyance, assignment and transfer and take such other action as Seller may
require to more effectively convey, transfer to and vest in Seller, and to put
Seller in possession of, the Parent Common Stock purchased hereunder and
otherwise to effect the consummation of the transactions contemplated hereby.
6.7 Following the Closing, Buyer will continue the historic
business of FSAC and ATF or use a significant portion of FSAC's and ATF's
historic business assets in a business.
6.8 Buyer will not take any action that would be inconsistent
with, or fail to take any action that is reasonably necessary or appropriate to
ensure, the qualification or treatment of the transactions contemplated herein
as an A and C Reorganization as defined by Section 368 of the Code, including
Section 368(a)(1)(C).
ARTICLE VII
CLOSING
7.1 Conditions Precedent to Closing.
(a) Buyer's obligation to close the purchase and sale of
the Shares shall be subject to satisfaction of all of the conditions set forth
in this subparagraph 7.1(a) (unless expressly waived in writing by it at, or
any time prior to, Closing):
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(i) The representations and warranties of Seller
contained in this Agreement or in any certificate delivered pursuant
hereto by or on behalf of Parent or Seller shall have been true and
complete when made and shall also be true and complete at and as of
the time of Closing (except for changes permitted under Section 5.1 of
Article V).
(ii) Seller shall have caused all covenants,
agreements and conditions required by this Agreement to be performed
or complied with by it prior to or at Closing to be so performed or
complied with.
(iii) Seller shall have delivered to Buyer a
certificate, signed by each of Seller and dated as of the Closing
Date, certifying as to the fulfillment of the conditions set forth in
clauses (i) and (ii) of this subparagraph 7.1(a).
(iv) No action or proceeding shall have been
instituted and remain pending by or before any court or other
governmental body or arbitration tribunal seeking, and there shall not
be in effect any injunction, order or decree of a court of competent
jurisdiction the effect of which is, (x) to restrain or prohibit or to
recover damages in respect of the transactions contemplated by this
Agreement, (y) to revoke or suspend any material license, permit,
order or approval, or (z) to question the validity or legality of this
Agreement or any action taken or to be taken pursuant hereto or the
consummation of the transactions contemplated hereby, and there shall
be no such action or proceeding pending which, if adversely
determined, would materially and adversely affect, or injunction,
order or decree in effect which materially and adversely affects, the
business, financial condition and operations of Company.
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(v) Regulatory approvals from NASD Regulation,
Inc. and the State Securities Board of the State of Texas ("Texas B.D.
Approval") to the change in ownership of FIMI Securities, Inc. from
Sellers to Buyer shall have been obtained and the termination of any
required waiting period shall have occurred on terms reasonably
satisfactory in all material respects to Buyer and Seller ("NASD
Approval").
(vi) All lessors under leases and parties to
agreements of Company, other than such leases and agreements which do
not require consent for the consummation of the transactions
contemplated by this Agreement, shall have consented to the
consummation of the transactions contemplated hereby. At Closing,
Seller shall deliver to Buyer copies of all consents referred to in
the preceding sentence.
(vii) Seller shall have furnished Buyer with an
opinion of counsel as to the status of Seller and each corporation
included within the definition of Company and the transactions
contemplated by this Agreement substantially in the form of Exhibit
"F."
(viii) Except as provided in Schedule 7.1(a)
(viii), since December 31, 1997, there shall not have been any
material adverse change in the business, financial condition or
operations of each corporation included within the definition of
Company.
(ix) All corporate proceedings in connection
with the transactions contemplated by this Agreement, and all
documents and instruments incident thereto, shall be reasonably
satisfactory in all material respects in substance and form to Buyer.
(x) The Employment Agreements shall have been
executed by Sellers, Messrs. Delity, Ellsworth and Frank,
respectively.
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(xi) The Non-Competition Agreements shall have
been executed by Sellers, Messrs. Delity, Ellsworth, and Frank,
respectively.
(xii) Stock certificates representing the Shares
shall have been duly endorsed for transfer to Buyer, or accompanied by
a proper and duly executed instrument of assignment to Buyer, and
shall have all necessary stock transfer stamps attached.
(xiii) Resignations shall have been executed by
all of the directors of each company constituting the Company (except
for Messrs, Delity, Ellsworth, and Frank).
(xiv) The originals (to the extent reasonably
available to Seller) or duplicates of all of the minute books, stock
books and all other corporate and business records or documents of
Company shall have been delivered or made available to Buyer;
(xv) Either an affidavit that Seller is not a
foreign person (as provided in I.R.C. ss. 1445(b)(2)) or an affidavit
of each corporation included within the definition of Company that
complies with I.R.C. ss. 1445(b)(3) shall have been properly executed
in the form attached hereto as Exhibit "O."
(xvi) All books and records of each corporation
included within the definition of Company shall have been delivered or
made available to Buyer at each corporation's, included within the
definition of Company, corporate headquarters in Houston, Texas.
(xvii) The shareholders of Buyer shall have
approved this Agreement at the Buyer's Annual Meeting of Shareholders
in accordance with applicable law, and Messrs. Delity and Ellsworth
shall have been appointed as directors of Parent.
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(xviii) The Shelby Smith Promissory Notes shall
have been paid in full and marked canceled by Shelby Smith.
(xix) The Shares shall have been released by
Shelby Smith from that certain Security Agreement - Pledge, effective
as of May 1, 1998, free and clear of any liens.
(xx) At Closing, Seller shall present its
management internal accounting of the balance sheets and working
capital of Company as of the month end just prior to the Closing Date
(the "Closing Date Balance Sheet") and management's representation
affirming such balance sheet. The Closing Date Balance Sheet shall
fairly present the net worth and working capital of Company as of the
date specified and the net worth and working capital of Company and
shall not be less than as reflected on the December 31, 1997, balance
sheets of Company.
(xxi) Each Seller shall have executed his
respective Closing Promissory Note to Buyer in an amount in the
appropriate amount, which in the aggregate will not exceed $400,000.
(xxii) Seller shall have executed the Closing
Stock Pledge Agreement and shall have pledged the Fourth Gated Shares
Collateral pursuant thereto.
(xxiii) Each of FIMI Securities and ATF shall have
filed an election with the IRS to have each Company within the
definition of the Company elect to be taxed as a "C" corporation, in a
form satisfactory to Buyer.
(xxiv) Each Company consisting of the Company and
the respective Buyer merger partners shall have delivered the
Certificates of Merger identified in Section 1.9 herein.
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(xxv) Premier and FIMI Securities shall have
executed that certain Loan Agreement, Security Agreement and
Promissory Note, substantially in the form attached as Exhibit "G"
hereto.
(xxvi) Premier and FIMI Securities shall have
entered into that certain Licensing Agreement with Parent,
substantially in the form attached as Exhibit "H" hereto.
(xxvii) Seller shall have entered into that Stock
Option Agreement with Parent and shall have executed those Irrevocable
Proxies relating to the capital stock of Premier, substantially in the
form attached as Exhibit "I" hereto.
(xxviii) Each of Sellers have executed a commitment
in the form attached hereto as Exhibit "J" to vote his Shares of
Parent Common Stock to elect Mr. Harvey Sax as director of the Parent
at the next annual meeting of shareholders of Parent at which Mr. Sax
can stand for re-election and to so nominate Mr. Sax for re-election
to the extent that they are directors of the Parent.
(xxix) FIMI and FIMI Securities shall have
executed that certain Loan Agreement, Security Agreement and
Promissory Note, substantially in the form attached as Exhibit "K"
hereto.
(xxx) FIMI and FIMI Securities shall have entered
into that certain Licensing Agreement with Parent, substantially in
the form attached as Exhibit "L" hereto.
(xxxi) Seller shall have entered into that Stock
Option Agreement with Parent and shall have executed those Irrevocable
Proxies relating to the capital stock of FIMI, substantially in the
form attached as Exhibit "M" hereto.
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(b) Seller's obligation to close the purchase and sale
Of the Shares shall be subject to satisfaction of all of the conditions set
forth in this subparagraph 7.1(b) (unless expressly waived in writing by it at,
or any time prior to, Closing):
(i) The representations and warranties of Buyer
contained in this Agreement or in any certificate delivered pursuant
hereto by or on behalf of Buyer shall have been true and complete when
made and shall also be true and complete at and as of the time of
Closing.
(ii) Buyer shall have caused all covenants,
agreements and conditions required by this Agreement to be performed
or complied with by it prior to or at Closing to be so performed or
complied with.
(iii) Buyer shall have delivered to Seller a
certificate, signed by its chairman, president or a vice president,
and dated as of the Closing Date, certifying as to the fulfillment of
the conditions sat forth in clauses (i) and (ii) of this subparagraph
7.1(b).
(iv) There shall not be in effect any
injunction, order or decree of a court of competent jurisdiction that
prohibits or delays consummation of the sale of the Shares by Seller
and no action or proceeding alleging that the consummation of the sale
of the Shares by Seller violates or will violate any federal or state
law, rule or regulation shall have been instituted by or before any
court or governmental body to restrain or prohibit Seller from
selling, or to recover damages from Seller in respect of the sale of
the Shares, unless Buyer elects to fully indemnity and defend Seller
in respect thereof.
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(v) The Registration Statement shall been
declared effective by the SEC and shall remain in effect with respect
to the Registered Shares ("Registration Statement Effectiveness").
(vi) Regulatory approval from NASD Regulation,
Inc. and the State of Texas to the change in ownership of FIMI
Securities, Inc. from Sellers to Buyer of the transactions
contemplated by this Agreement shall have been obtained and the
termination of any required waiting period shall have occurred on
terms reasonably satisfactory in all respects to Buyer and Sellers.
(vii) Buyer shall have furnished Seller with an
opinion of counsel as to the status of Buyer and the transactions
contemplated by this Agreement substantially in the form of Exhibit
"N."
(viii) All corporate proceedings in connection
with the transactions contemplated by this Agreement and all documents
and instruments incident thereto, shall be reasonably satisfactory in
all material respects in substance and form to Seller.
(ix) Parent shall have furnished evidence to the
reasonable satisfaction of Seller that Parent's assets include a
minimum of $2,000,000 in cash or cash equivalent as of the Closing
Date and that Parent Common Stock is currently listed and tradeable on
a public exchange.
(x) Buyer shall have delivered the Buyer's
Common Stock to Seller in such amounts as shown on Schedule 2.2
together with the Merger Price Warrants, subject to the contribution
of the Escrowed Fourth Gated Shares pursuant to the Escrow Agreement
and the Closing Stock Pledge Agreement.
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(xi) The shareholders of Buyer shall have
approved this Agreement at the Buyer's Annual Meeting of Shareholders
in accordance with applicable law (the "Parent Shareholder Approval"),
and Messrs. Delity and Ellsworth shall have been appointed as
directors of Parent.
(xii) The Shelby Smith Promissory Notes shall
have been paid in full and marked canceled by Shelby Smith.
(xiii) The Shares have been released by Shelby
Smith from that certain Security Agreement - Pledge, effective as of
May 1, 1998, free and clear of any Liens.
(xiv) Parent shall have loaned to Seller an
aggregate of $400,000 to pay in full the Shelby Smith Notes pursuant
to the Closing Promissory Notes.
(xv) Each Company consisting of the Company and
the respective Buyer merger partners shall have delivered the
Certificates of Merger identified in Section 1.9 herein.
(xvi) Premier and FIMI Securities shall have
executed that certain Loan Agreement, Security Agreement and
Promissory Note, substantially in the form attached as Exhibit "G"
hereto.
(xvii) Premier and FIMI Securities shall have
entered into that certain Licensing Agreement with Parent,
substantially in the form attached as Exhibit "H" hereto.
(xviii) Seller shall have entered into that Stock
Option Agreement with Parent and executed Irrevocable Proxies relating
to the capital stock of Premier, substantially in the form attached as
Exhibit "I" hereto.
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(xix) Harvey Sax has executed a commitment, in
the form attached hereto as Exhibit "P," to vote his shares of Parent
Common Stock to elect Mr. Delity and Mr. Ellsworth as directors of the
Parent at the next annual meeting of shareholders of Parent.
(xx) FIMI and FIMI Securities shall have
executed that certain Loan Agreement, Security Agreement and
Promissory Note, substantially in the form attached as Exhibit "K"
hereto.
(xxi) FIMI and FIMI Securities shall have entered
into that certain Licensing Agreement with FIMI Securities,
substantially in the form attached as Exhibit "L" hereto.
(xxii) Seller shall have entered into that Stock
Option Agreement with Parent and shall have executed those Irrevocable
Proxies relating to the capital stock of FIMI, substantially in the
form attached as Exhibit "M" hereto.
ARTICLE VIII
POST-CLOSING OBLIGATIONS
8.1 Consolidated Financial Statements. Parent shall prepare
consolidated financial statements of Company and Buyer as required by SEC rules
and regulations.
8.2 Subchapter S Corporation 1998 Taxes. Prior to the Closing
Date, each of the companies comprising the Company shall distribute funds to
Seller sufficient to pay the estimated federal income tax of Seller on the pro
rata share of pass through income of each such company attributable to the
period of Seller's ownership of Company during fiscal 1998. The amount of such
distribution shall be calculated assuming a thirty-six (36%) percent effective
tax rate and shall be reduced by any distributions made from Company to Seller
(in excess of regular salary, expense
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reimbursements and any payments made in connection with regular monthly
payments to each of Messrs. Delity, Frank and Ellsworth to satisfy the Shelby
Smith Notes as described in Section 5.1 (b)(vii)) which are attributable to the
period of Seller's ownership of Company during fiscal 1998. After the Closing,
Buyer shall distribute to Seller any additional funds to pay any shortfall
between the estimated tax and the actual tax as deferred at the end of 1998, in
each case, and Seller shall distribute to Buyer any funds paid in excess of the
actual taxes paid, as reasonably determined by the Parent and Seller.
8.3 Cooperation. Following the Closing Date, Seller shall
cooperate in the execution of any documents, and the taking of any actions
which are reasonable and necessary to effectuate the transaction contemplated
by this Agreement and the achievement of its intended objectives.
8.4 Candidates' Board of Directors. Until all the Parent's Common
Stock shall be freely tradeable by Sellers, Parent agrees that Messrs. Delity,
Ellsworth, and Frank shall remain on the Board of Directors of each Company
included with the definition of the Company as long as each such person remains
employed by the Parent.
8.5 Continuing Management. During the term of each of their
respective employment agreements, Mr. Delity shall be President and CEO of each
corporation included within the definition of Company, except for FIMI
Securities, Inc. where he will be Vice President; Mr. Ellsworth shall be the
Executive Vice President and CFO of each corporation included within the
definition of Company; and Mr. Frank shall be their Executive Vice President
and COO of each corporation included within the definition of Company, except
for FIMI Security, Inc. where he will be President.
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8.6 Information Right. Seller shall have the right to receive
monthly financial statements of the Parent (as and when prepared) and such
other information as they may from time to time reasonably request (and at
their expense). Seller agrees to keep such information confidential and not
disclose it to third parties.
8.7 Closing Balance Sheet. Seller and Buyer shall have sixty (60)
days following Closing to review the Closing Date Balance Sheet and agree to
adjustments to same, if and as appropriate. If Buyer and Seller cannot agree,
then their respective accountants shall name a third independent accountant to
review and finally determine any disputed adjustments.
8.8 Seller's Personal Licenses. After the Closing, to the extent
permitted by law and required by Buyer, Seller's personal Licenses to transact
the business and operations of any corporation included within the definition
of the Company shall be made available and shall be usable by or for the
benefit of Buyer and/or any corporation included within the definition of the
Company to continue the business of any corporation included within the
definition of the Company without interruption at and after the Closing, and to
the extent permitted by such applicable law shall remain in full force and
effect and usable by or for the benefit of Buyer and/or any corporation
included within the definition of the Company so long as Seller remains
employed by Buyer and/or Company.
8.9 Sale of Assets of Premier. Immediately following the Closing,
Parent agrees to cause FIMI Securities to acquire and Seller shall cause
Premier to sell all of its assets used or held for use in its business pursuant
to that certain Agreement and Plan of Reorganization in the form attached as
Exhibit "Q" hereto (the "Premier Merger Agreement"). Seller shall immediately
upon consummation of this transaction cause all Asset Sale Shares to be
distributed to the Seller.
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8.10 Sale of Assets of FIMI. Immediately following the Closing,
Parent agrees to cause FIMI Securities to acquire and Seller shall cause FIMI
to sell all of its assets used or held for use in its business pursuant to that
certain agreement and Plan of Reorganization in the form attached as Exhibit
"R" hereto (the "FIMI Merger Agreement"). Seller shall immediately upon
consummation of this transaction cause all Asset Sale Shares to be distributed
to the Seller.
ARTICLE IX
INDEMNIFICATION; DUE DILIGENCE; CONFIDENTIALITY
9.1 Indemnification by Seller. Seller hereby indemnifies and
agrees to hold Buyer and each corporation included within the definition of
Company harmless from, against, and in respect of (and shall on demand
reimburse any such entity for):
(a) Any and all loss, liability, or damage suffered or
incurred by Buyer or each corporation included within the definition of Company
or any entity into which the foregoing are merged by reason of any untrue
representation, breach of warranty or nonfulfillment of any covenant or
agreement by Seller contained in this Agreement or in any agreement or
certificate delivered to Buyer pursuant hereto;
(b) Any and all Taxes payable by Buyer or Company or any
entity with which any of the foregoing are consolidated attributable to the
business and operations of each corporation included within the definition of
Company for periods prior to the Closing; and
(c) Any and all actions, suits, proceedings, claims,
demands, assessments, judgments, costs and expenses including without
limitation, reasonable legal fees and expenses, incident to any of the
foregoing or incurred in attempting to oppose the imposition thereof or in
connection with any investigation thereof, or in enforcing this indemnity,
provided, however, that
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no claim arising out of a breach of any representation or warranty made by
Seller in this Agreement shall be asserted by Buyer against Seller under this
Paragraph 9.1 unless written notice of such claim setting forth in reasonable
detail the nature thereof shall have been given to Seller prior to the
termination, if any, of the survival period relating to such claim as provided
in Paragraph 9.3.
9.2 Indemnification by Buyer. Buyer hereby indemnifies and agrees
to hold Seller harmless from, against, and in respect of (and shall on demand
reimburse for):
(a) Any and all loss, liability, or damage suffered or
incurred by Seller by reason of any untrue representation, breach of warranty
or nonfulfillment of any covenant or Agreement of Buyer contained in this
Agreement or in any agreement or certificate delivered to Seller pursuant
hereto; and
(b) Any and all actions, suits, proceedings, claims,
demands, assessments, judgments, costs and expenses, including, without
limitation, reasonable legal fees and expenses, incident to any of the
foregoing and incurred in attempting to oppose the imposition thereof or in
connection with any investigation thereof, or in enforcing this indemnity;
provided, however, that no claim arising out of a breach of any representation
or warranty made by Buyer in this Agreement shall be asserted by Seller against
Buyer under this Paragraph 9.2 unless written notice of such claim setting
forth in reasonable detail the nature thereof shall have been given to Buyer
prior to the termination, if any, of the survival period relating to such claim
as provided in Paragraph 9.3.
9.3 Survival of Representations and Warranties. Each
representation and warranty, covenant, or agreement made by either party hereto
in this Agreement or in any agreement, document, certificate, or other
instrument delivered pursuant to this Agreement shall survive the Closing and
expire on the second anniversary of the applicable Closing Date, unless a claim
is
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initiated by a party hereto by notice given to the party against whom such
claim is made on or before the second anniversary of the applicable Closing
Date.
9.4 Limitations on Indemnification. Neither party will be liable
under this Agreement for losses, damages or liabilities ("Losses") resulting
from the inaccuracy or breach of any representation or warranty until such
Losses exceed in the aggregate $50,000 and, in that event, the damaged party
shall be entitled to recovery only to the extent the aggregate amount of such
Losses exceeds $50,000. The indemnification obligations hereunder by either
party shall be limited to a number calculated by multiplying the Total
Transaction Shares by the closing bid price of the Parent Common Stock on the
business day immediately preceding the date hereof (the "Indemnity Amount"). In
addition, the individual liability of each person included within the
definition of Seller shall be limited to the amount equal to the Indemnity
Amount multiplied by the percentage of the Total Transaction Shares received by
each Seller as shown and calculated on Schedule 2.2. The amount of Losses an
indemnified party is liable for shall be called the "Indemnity Amount."
9.5 Third Party Claims. In order for Seller or Buyer, as the case
may be (the "Indemnified Party"), to be entitled to any indemnification
provided for under this Agreement in respect of, arising out of or involving a
claim made by any person, firm, governmental authority or corporation against
the Indemnified Party (a "Third Party Claim"), such Indemnified Party must
notify the indemnifying party in writing of the Third Party Claim within a
reasonable time after receipt by such Indemnified Party of written notice of
the Third Party Claim unless the indemnifying party shall have previously
received knowledge thereof, but the failure to so notify the indemnifying party
shall not relieve it of any liability that it may have to any Indemnified Party
except to the extent the indemnifying party demonstrates that it is materially
prejudiced thereby. Thereafter, the
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Indemnified Party shall deliver to the indemnifying party, within a reasonable
time after the Indemnified Party's receipt thereof, copies of all notices and
documents (including court papers) received by the Indemnified Party relating
to the Third Party Claim.
(a) If a Third Party Claim is made against an
Indemnified Party, the indemnifying party will be entitled to participate in
the defense thereof, and if it so chooses, to assume the defense thereof with
counsel selected by the indemnifying party. Should the indemnifying party so
elect to assume the defense of a Third Party Claim, the indemnifying party will
not be liable to the Indemnified Party for any legal expenses subsequently
incurred by the Indemnified Party in connection with the defense thereof, other
than reasonable costs of investigation. If the indemnifying party elects to so
assume the defense of a Third Party Claim, the Indemnified Party (i) will
cooperate in all reasonable respects with the indemnifying party in connection
with such defense, (ii) will not admit any liability with respect to, or
settle, compromise, or discharge, any Third Party Claim without the
indemnifying party's prior written consent, and (iii) will agree to any
settlement, compromise, or discharge of a Third Party Claim which the
indemnifying party may recommend if (y) the sole relief provided against the
Indemnified Party is monetary damages which are paid by the indemnifying party
and the Indemnified Party is completely released in connection with such Third
Party Claim, and (z) such settlement, compromise or discharge involves no
finding or admission of any violation of law or of the rights of any person or
of any breach of any agreement by the Indemnified Party;
(b) In the event the indemnifying party shall assume the
defense of any Third Party Claim, the Indemnified Party shall be entitled to
participate in (but not control) such defense with its own counsel at its own
expense. If the indemnifying party does not assume the defense of
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any such Third Party Claim within a reasonable time under the circumstances,
the Indemnified Party may defend the same in such manner as it may deem
appropriate, including, but not limited to settling such claim or litigation
after giving notice of same to the indemnifying party on such terms as the
Indemnified Party may deem appropriate, and the indemnifying party will
promptly reimburse the Indemnified Party in accordance with the provisions of
this Paragraph 9.5; and
(c) Notwithstanding the foregoing, if an Indemnified
Party determines in good faith that there is reasonable probability that an
action may materially and adversely affect it or its affiliates other than as a
result of monetary damages, such Indemnified Party may, by notice to the
indemnifying party, assume the exclusive right to defend, compromise, or settle
such action, but the indemnifying party shall be entitled to participate
therein (with control remaining with the Indemnified Party) and shall not be
bound by any determination of an action so defended or any compromise or
settlement thereof effected without its consent (which shall not be
unreasonably withheld). Any claim for indemnification made by a party hereto
shall be made by written notice which notice shall specify in reasonable detail
the nature and any particulars of the event, omission or occurrence giving rise
to a right of indemnification. Indemnifying Party shall have fifteen (15) days
following its receipt of such notice to indicate to the Indemnified Party in
writing its willingness to so indemnify or its intention to contest the making
of any such claim for indemnification.
9.6 Confidentiality.
(a) For a period of three years from the date of this
Agreement, Seller will hold in confidence and use its reasonable efforts to
have all of its affiliates, employees, agents, representatives, lenders and
capital providers hold in confidence all of the books, records, financial
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information, customer lists, business plans, operating plans, or other
knowledge or information of a confidential or proprietary nature (the
"Confidential Information") with respect to Buyer and, if the Closing does
occur, with respect to Company and will not disclose, publish, use (except as
required in connection with the transaction contemplated by this Agreement) or
permit others to disclose, publish or use the same; provided, however, that the
foregoing restriction shall not apply to any Confidential Information which (i)
becomes generally available to the public in any manner or form through no
fault of Seller, its employees, agents, or representatives, (ii) is
independently developed by Seller without benefit of the above-described
information, or rightfully received from another source on a nonconfidential
basis, (iii) is released for disclosure with Buyer's consent, (iv) is required
to be provided, published or used by law, or by a court or a governmental
agency (Seller agrees to give Buyer prior notice of any such required
disclosure so as to afford Buyer at its expense the opportunity to seek an
appropriate protective order), (v) is necessary in connection with a bona fide
dispute between Buyer and Seller in order to seek an appropriate protective
order; or (vi) is necessary in connection with a bona fide dispute in order to
establish rights under this Agreement. In the event the Closing does not occur,
Seller shall promptly return to Buyer all Confidential Information and
non-public documents obtained from Buyer and any copies of such documents made
for or by Buyer.
(b) Buyer has held and will continue to hold such
Confidential Information as it receives from Seller in confidence and will not
prior to the Closing furnish such information to its affiliates, employees,
agents, representatives, lenders or funding sources for any use other than in
evaluating and implementing the transactions contemplated in this Agreement,
other than as required by applicable law. In the event the Closing does not
occur, Buyer shall promptly return to Seller all
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Confidential Information and non-public documents obtained from Seller and any
copies of such documents made for or by Buyer. For a period of three years from
the date of termination of this Agreement if the Closing does not occur, Buyer
will hold in confidence and use its reasonable efforts to have all its
affiliates, employees, agents, representatives, lenders and funding sources who
had access to Confidential Information with respect to Seller and Company to
hold such information in confidence and not disclose, publish, use or permit
others to use the same; provided, however, that the foregoing restrictions
shall not apply to any portion of the foregoing which (i) becomes generally
available to the public in any manner or form through no fault of Buyer, its
employees, agents or representatives, (ii) is independently developed by Buyer
without benefit of the above-described information, or rightfully received from
another source on a nonconfidential basis, (iii) is released for disclosure
with Seller's consent, or (iv) is required by a court or a governmental agency
(and Buyer agrees to give Seller prior notice of any such required disclosure
so as to afford Seller at its expense, the opportunity to seek an appropriate
protective order) or is otherwise required by law or is necessary in order to
establish rights under this Agreement.
9.7 Specific Performance. In the event of any breach or
threatened breach by either party of the provisions of Paragraph 9.6 of this
Agreement, the other party shall be entitled in respect thereof to an
injunction or other appropriate order (without the necessity of setting any
bond in connection therewith or demonstrating that any harm will result from
this breach thereof) restraining such party from violating such provisions or
requiring such party to perform its obligations hereunder. In the event that
any court with competent jurisdiction determines such provisions to be too
broad to enforce as written, such court is authorized by the parties to
construe and enforce such provisions only to the broadest extent permitted by
law.
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ARTICLE X
MISCELLANEOUS
10.1 Termination.
(a) In the event that the Closing Date has not occurred
by February 1, 1999, unless otherwise extended by the parties hereto in writing
(the "Termination Date"), this agreement (except for Section 10.3) shall be
terminated and declared null and void.
(b) If the Closing Date has not occurred by the Termination
Date due to a failure to obtain (i) NASD Approval or Texas Approval, (ii)
Registration Statement Effectiveness, or (iii) Parent Shareholder approval,
(the "Mandatory Approvals"), then neither party shall be liable to the other
party for a failure to close the transaction, unless the party has failed to
use its best efforts to cause such act to occur
(c) If the Closing Date has not occurred by the Termination
Date due to a material breach of this Agreement, then the non-breaching party
shall be entitled to any and all remedies available at law or in equity;
provided, however, that no punitive damages may be claimed or awarded against
any party.
10.2 Notices. All notices or other communications hereunder shall be
in writing and shall be deemed to have been duly given (i) on the date
delivered personally or by confirmed facsimile as set forth below; (ii) two (2)
days after being sent by Express Mail or such other similar service (i.e.,
Federal Express) and addressed as set forth below; or (iii) four (4) days after
being mailed by certified or registered mail, return receipt requested, postage
prepaid, and addressed as set forth below, as follows:
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If to Seller: First Institutional Marketing, Inc.
5555 San Felipe, Fifth Floor
Houston, Texas 77056
Attn: James Wm. Ellsworth
Facsimile: (713) 961-5967
With a copy to: Stumpf, Falgout, Craddock, & Massey
1400 Post Oak Boulevard, Suite 400
Houston, Texas 77056
Attn: Larry Fontana
Facsimile: (713) 871-0408
If to Buyer: HomeCom Communications, Inc.
Fourteen Piedmont Center, Suite 100
3535 Piedmont Road
Atlanta, Georgia 30305
Attn: Harvey Sax
Facsimile: (404) 237-3060
With a copy to: Sims Moss Kline & Davis LLP
400 Northpark Town Center, Suite 310
1000 Abernathy Road, N.E.
Atlanta, Georgia 30328
Attn: Raymond L. Moss, Esq.
Facsimile: (770) 481-7210
or to such other address as a party shall have designated to the other by like
notice.
10.3 Entire Agreement; Amendments. This Agreement (i) constitutes
the entire agreement of the parties hereto and supersedes all prior agreements,
understandings, representations or warranties, both written and oral, between
the parties with respect to the subject matter hereof, (including, but not
limited to, that certain letter of intent dated June 12, 1998, between the
parties hereto as subsequently amended) and (ii) may be amended or modified
only by a written instrument executed by Buyer and Seller.
10.4 Expenses. Except as otherwise expressly herein provided, each
party to this Agreement shall pay its own expenses (including, without
limitation, the fees and expenses of its
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agents, representatives, counsel and accountants) incidental to the preparation
and carrying out of this Agreement. However, in the event that a Closing
occurs, Seller shall be entitled to have the Company pay the reasonable and
actual fees and expenses of their counsel up to $25,000 and fifty (50%) percent
of fees and expenses associated with the preparation of the Financial
Statements. For the purposes of calculating the Closing Date financial
condition of Company, Seller shall be given credit for such fees described in
this paragraph so that the payment of such fees by Company shall not be counted
as diminutions to the net worth, working capital, or overall financial
condition of Company.
10.5 Transfer Taxes. Any and all sales, documentary, conveyance or
the transfer taxes levied by any federal, state, or local government or
authority which become payable by reason of the acquisition of the Shares at
Closing (excluding any taxes based on income or gain) shall be borne by Seller.
Any and all sales, documentary, conveyance, or the transfer taxes levied by any
federal, state, or local government or authority which become payable by reason
of the acquisition of the Parent Common Stock (excluding any taxes based on
income or gain) shall be borne by Buyer.
10.6 Brokers. Each party represents to the other that it has not
used the services of a broker and that no broker or finder shall be entitled to
any compensation in connection with the transaction contemplated by this
Agreement by reason of such party's actions. Seller agrees to indemnify Buyer
against any claim by any third person for any commission, brokerage fee,
finder's fee or other payment alleged to be due as a result of this transaction
based upon any alleged agreement or understanding between such third person and
Seller or Company, whether expressed or implied from the actions of Seller or
its agents. Buyer agrees to indemnify Seller against any claim by any third
person for any commission, brokerage fee, finder's fee or other payment alleged
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to be due as a result of this transaction based upon any alleged agreement or
understanding between such third person or Buyer, whether expressed or implied
from the actions of Buyer or its agents.
10.7 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10.8 Parties in Interest. This Agreement shall inure to the
benefit of and be binding upon Buyer and Seller and their respective successors
and assigns. Nothing in this Agreement, express or implied, is intended to
confer upon any other person any rights or remedies under or by reason of this
Agreement.
10.9 Knowledge. Whenever any provision of this Agreement makes any
statement "to the knowledge" of any entity, other than a living person, or that
any such entity "knows" some fact or by similar formulation, such entity will
be deemed to have such knowledge or know such fact if, and only if, a
responsible officer of such entity has such knowledge or knows such fact.
10.10 Applicable Law. This Agreement and the rights and obligations
of the parties hereunder shall be construed and enforced in accordance with and
governed by the laws of the State of Georgia without giving effect to the
principles of conflicts of law thereof. Venue shall lie in Superior Court of
Fulton County, Georgia, or the United States District Court for the Northern
District of Georgia, Atlanta Division. The parties hereto acknowledge that such
court has the jurisdiction to interpret and enforce the provisions of this
Agreement and the parties waive any and all objections which they may have as
to personal jurisdiction or venue in any of the above courts.
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10.11 Waiver. No provision in this Agreement shall be deemed waived
by course of conduct, including the act of Closing under Article VII, unless
such waiver is in writing signed by all parties and stating specifically that
it was intended to modify this Agreement.
10.12 Schedule and Exhibits. The schedules and exhibits attached
hereto shall be deemed to be incorporated by reference to this Agreement as if
fully set forth herein. Seller shall have the right in good faith to amend or
supplement the Schedules to this Agreement up to the Closing in order to update
such Schedules for facts or circumstances which occur after the date hereof and
prior to Closing, provided, however, that Buyer shall have the right to
terminate this Agreement without payment or penalty in the event that Seller so
amends, supplements or otherwise changes the Schedules between the date hereof
and prior to Closing, but only if Sellers' amendment, supplement, or change is
the actual cause (although not reasonably the only cause)of Buyer's decision to
terminate.
10.13 Announcements. Except to the extent required by law, prior to
Closing neither party shall make any public announcement or other disclosure
with respect hereto or the transactions contemplated hereby or disclose the
terms hereof to any third party without the consent of the other, which consent
shall not be unreasonably withheld.
10.14 Independent Advisors. Each of Buyer and Seller has retained
its own legal counsel and tax advisors in connection with the foregoing
transaction at its sole cost and expense. Each party has relied exclusively
upon the legal and tax advice given by its respective advisors.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the day and year first above written.
PARENT:
HOMECOM COMMUNICATIONS, INC.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
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FIMI SECURITIES ACQUISITION CORP., INC.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
ATF ACQUISITION CORP., INC.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
SELLER:
------------------------------------
Daniel A. Delity
------------------------------------
James Wm. Ellsworth
------------------------------------
David B. Frank
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SCHEDULE 1.1
DEFINITIONS
"CHANGE OF CONTROL EVENT" shall mean any transaction, whether by
merger, consolidation, asset sale, or reverse stock split, which results in the
acquisition or beneficial ownership (as such term is defined under the rules
and regulations promulgated under the Securities Act of 1934, as amended) by
any person or entity or any group or entity or any group or persons or entity
acting in concert of 50% or more of the outstanding shares of Common Stock of
Parent.
"EFFECTIVE DATE" shall mean the date on which the Effective Time falls.
"EFFECTIVE TIME" shall mean the time that the Certificates of Merger
(with respect to the Merger) are filed with the Secretary of State of the State
of Delaware in accordance with Delaware Corporation Law, with the Secretary of
State of the State of Florida in accordance to Florida Business Corporation
Act, and the Secretary of State of the State of Texas in accordance with Texas
Business Corporation Code.
GENDER. Where the context so requires, the neuter gender shall be
construed to include the masculine and feminine gender, and the singular shall
be construed to include the plural and the plural the singular.
"MERGER" shall mean the merger of(i) FSAC with and into FIMI
Securities and (ii) ATFAC with and into ATFI.
"SURVIVING CORPORATIONS" shall mean FIMI Securities and ATFI upon the
Effective Time of the Merger.
<PAGE> 71
SCHEDULE 2.1
<PAGE> 72
SCHEDULE 2.2
FORM OF WARRANT
THE WARRANT REPRESENTED BY THIS CERTIFICATE AND THE SHARES ISSUABLE UPON
EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS IN RELIANCE ON EXEMPTIONS
FROM REGISTRATION REQUIREMENTS UNDER SAID LAWS, INCLUDING IN PARTICULAR,
SECTION 10-5-9(13) OF THE GEORGIA SECURITIES ACT OF 1973, AS AMENDED, AND
NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED,
ASSIGNED OR OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH
RESPECT THERETO IS EFFECTIVE UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES
LAWS, OR (2) THE COMPANY RECEIVES AN OPINION OF COUNSEL FROM ITS COUNSEL, THAT
SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR TRANSFERRED IN THE
MANNER CONTEMPLATED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT
OR APPLICABLE STATE SECURITIES LAWS.
HOMECOM COMMUNICATIONS, INC.
WARRANT TO PURCHASE COMMON STOCK
Warrant No. Issued to
----------------------- ----------------------------
Date of Issuance: , 199
-------------------- ----
HomeCom Communications, Inc., a Delaware corporation (the "COMPANY"),
hereby certifies that, for value received, _______________, the registered
holder hereof (the "Holder"), is entitled, subject to the terms set forth
below, to purchase from the Company upon surrender of this Warrant, at any time
or times on or after the date hereof, but not after 5:00 P.M. Eastern Standard
Time on the Expiration Date (as defined herein), the Warrant Shares (as defined
herein) at the purchase price per share provided in Section 1(b) below (the
"WARRANT EXERCISE PRICE").
This Warrant is issued by the Company to the Holder in connection with
the Agreement and Plan of Merger dated as of _________________, 1998 (the
"Merger Agreement").
Section 1. General Provisions.
(a) Employment Agreement. This Warrant is issued
pursuant to the terms of that certain Merger Agreement.
<PAGE> 73
(b) Definitions. The following words and terms as used
in this Warrant shall have the following meanings:
"CANDIDATES" means First Institutional Marketing,
Inc., Premier Financial Services, Inc., FIMI Securities, Inc. and All Things
Financial, Inc.
"COMMON STOCK" means (i) the Company's common stock,
par value $.0001 per share, and (ii) any capital stock into which such Common
Stock shall have been changed or any capital stock resulting from a
reclassification of such Common Stock.
"EXPIRATION DATE" means five (5) years from the date
of this Warrant or, if such date falls on a Saturday, Sunday or other day on
which banks are required or authorized to be closed in the City of Atlanta or
the State of Georgia (a "HOLIDAY"), the next preceding date that is not a
Holiday.
"PERSON" means an individual, a limited liability
company, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization and a government or any department or agency
thereof.
"SECURITIES ACT" means the Securities Act of 1933,
as amended.
"WARRANT" shall mean this Warrant and all Warrants
issued in exchange, transfer or replacement of any thereof.
"WARRANT EXERCISE PRICE" shall be equal to $3.7375
per share, subject to adjustment as hereinafter provided.
"WARRANT SHARES" means 100,000 shares of Common
Stock, subject to the following forfeiture and vesting provisions provided
herein. If Candidates as a whole do not maintain a minimum of break-even
operational cash flow performance (the "Breakeven Performance") in any of the
first 3 years (consisting each of 12 calender months) (excluding costs and
initiatives mandated by the Company), then the Warrant Shares to be issued
hereunder shall be reduced by one-third (33,333 underlying shares) for each
such year ("Reduced Warrant Shares"), provided however that in the event that
the Candidates, taken as a whole, shall recover and make up any negative cash
in connection with Breakeven Performance in any subsequent 12 calendar month
period (not to extend beyond the fourth year from the date hereof), the Company
agrees to restore any such Reduced Warrant Shares. The Company and the Holder
acknowledge that the Warrant shall vest as follows: After 12 months from the
date hereof and for two (2) successive 12 calendar month periods, as long as
the (i) Employment Agreement remains in full force and effect and (ii)
Breakeven Performance for the prior 12 calendar month period has been
satisfied, 33,333 of such Warrant Shares shall vest and become immediately
exercisable, in whole or in part, by the Holder. For purposes of calculating
the beginning of the first 12 calendar month period, such period shall commence
at the beginning of the calendar quarter in which this Agreement is executed.
<PAGE> 74
(c) Other Definitional Provisions.
(i) Except as otherwise specified herein, all
references herein (A) to the Company shall be deemed to include the Company's
successors, and (B) to any applicable law defined or referred to herein, shall
be deemed references to such applicable law as the same may have been or may be
amended or supplemented from time to time.
(ii) When used in this Warrant, the words
"HEREIN," "HEREOF," and "HEREUNDER," and words of similar import, shall refer
to this Warrant as a whole and not to any provision of this Warrant, and the
words "SECTION," "SCHEDULE," and "EXHIBIT" shall refer to Sections of, and
Schedules and Exhibits to, this Warrant unless otherwise specified.
(iii) Whenever the context so requires, the
neuter gender includes the masculine or feminine, and the singular number
includes the plural, and vice versa.
Section 2. Exercise of Warrant.
(a) Subject to the terms and conditions hereof, this
Warrant may be exercised by the holder hereof then registered on the books of
the Company during normal business hours on any business day on or after the
opening of business on the date hereof and prior to 5:00 P.M. Eastern Time on
the Expiration Date by (i) delivery of a written notice, in the form of the
subscription notice attached as Exhibit A hereto, of such holder's election to
exercise this Warrant, which notice shall specify the number of Warrant Shares
to be purchased, (ii) payment to the Company of an amount equal to the Warrant
Exercise Price multiplied by the number of Warrant Shares as to which the
Warrant is being exercised (plus any applicable issue or transfer taxes (the
"AGGREGATE EXERCISE PRICE") in cash or by check or wire transfer, and (iii) the
surrender of this Warrant, at the principal office of the Company; provided,
that if such Warrant Shares are to be issued in any name other than that of the
registered holder of this Warrant, such issuance shall be deemed a transfer and
the provisions of Section 7 shall be applicable.
(b) In the event of any exercise of the rights
represented by this Warrant in compliance with Section 2(a), a certificate or
certificates for the Warrant Shares so purchased, in such denominations as may
be requested by the holder hereof and registered in the name of, or as directed
by, the holder, shall be delivered at the Company's expense to, or as directed
by, such holder as soon as practicable after such rights shall have been so
exercised.
(c) Unless the rights represented by this Warrant shall
have expired or shall have been fully exercised, the Company shall, as soon as
practicable and at its own expense, issue a new Warrant identical in all
respects to the Warrant exercised except (i) it shall represent rights to
purchase the number of Warrant Shares purchasable immediately prior to such
exercise under the Warrant exercised, less the number of Warrant Shares with
respect to which such Warrant is exercised, and (ii) the holder thereof shall
be deemed for all corporate purposes to have become
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the holder of record of such Warrant Shares immediately prior to the close of
business on the date on which the Warrant is surrendered and payment of the
amount due in respect of such exercise and all applicable taxes is made,
irrespective of the date of delivery of certificates evidencing such Warrant
Shares, except that, if the date of such surrender and payment is a date when
the stock transfer books of the Company are properly closed, such person shall
be deemed to have become the holder of such Warrant Shares at the opening of
business on the next succeeding date on which the stock transfer books are
open.
(d) No fractional shares of Common Stock are to be
issued upon the exercise of this Warrant, but rather the number of shares of
Common Stock issued upon exercise of this Warrant shall be rounded up or down
to the nearest whole number.
Section 3. Covenants as to Common Stock. The Company hereby
covenants and agrees as follows:
(a) This Warrant is, and any Warrants issued in
substitution for or replacement of this Warrant will upon issuance be, duly
authorized and validly issued.
(b) All Warrant Shares which may be issued upon the
exercise of the rights represented by this Warrant will, upon issuance, be
validly issued, fully paid and nonassessable and free from all taxes, liens and
charges with respect to the issue thereof.
(c) During the period within which the rights
represented by this Warrant may be exercised, the Company will at all times
have authorized and reserved a sufficient number of the number of shares of
Common Stock needed to provide for the exercise of the rights then represented
by this Warrant and the par value of said shares will at all times be less than
or equal to the applicable Warrant Exercise Price.
(d) The Company will not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities, or any other
voluntary action, avoid or seek to avoid the observance or performance of any
of the terms to be observed or performed by it hereunder, but will at all times
in good faith assist in the carrying out of all the provisions of this Warrant
and in the taking of all such action as may reasonably be requested by the
holder of this Warrant in order to protect the exercise privilege of the holder
of this Warrant against impairment, consistent with the tenor and purpose of
this Warrant. Without limiting the generality of the foregoing, the Company (i)
will not increase the par value of any shares of Common Stock receivable upon
the exercise of this Warrant above the Exercise Price then in effect, and (ii)
will take all such actions as may be necessary or appropriate in order that the
Company may validly and legally issue fully paid and nonassessable shares of
Common Stock upon the exercise of this Warrant.
(e) This Warrant will be binding upon any entity
succeeding to the Company by merger, consolidation or acquisition of all or
substantially all of the Company's assets.
-3-
<PAGE> 76
Section 4. Taxes. The Company shall not be required to pay any
tax or taxes attributable to the initial issuance of the Warrant Shares or any
permitted transfer involved in the issue or delivery of any certificates for
Warrant Shares in a name other than that of the registered holder hereof or
upon any permitted transfer of this Warrant.
Section 5. Warrant Holder Not Deemed a Stockholder. Except as
otherwise specifically provided herein, no holder, as such, of this Warrant
shall be entitled to vote or receive dividends or be deemed the holder of
shares of the Company for any purpose, nor shall anything contained in this
Warrant be construed to confer upon the holder hereof, as such, any of the
rights of a stockholder of the Company or any right to vote, give or withhold
consent to any corporate action (whether any reorganization, issue of stock,
reclassification of stock, consolidation, merger, conveyance or otherwise),
receive notice of meetings, receive dividends or subscription rights, or
otherwise, prior to the issuance to the holder of this Warrant of the Warrant
Shares which he or she is then entitled to receive upon the due exercise of
this Warrant. In addition, nothing contained in this Warrant shall be construed
as imposing any liabilities on such holder to purchase any securities or as a
stockholder of the Company, whether such liabilities are asserted by the
Company or by creditors of the Company. Notwithstanding this Section 5, the
Company will provide the holder of this Warrant with copies of the same notices
and other information given to the stockholders of the Company generally,
contemporaneously with the giving thereof to the stockholders.
Section 6. Representations of Holder. The holder of this
Warrant, by the acceptance hereof, represents that it is acquiring this Warrant
and the Warrant Shares for its own account for investment and not with a view
to, or for sale in connection with, any distribution hereof or of any of the
shares of Common Stock or other securities issuable upon the exercise thereof,
and not with any present intention of distributing any of the same. Upon
exercise of this Warrant, the holder shall, if requested by the Company,
confirm in writing, in a form satisfactory to the Company, that the Warrant
Shares so purchased are being acquired solely for the holder's own account and
not as a nominee for any other party, for investment. If such holder cannot
make such representations because they would be factually incorrect, it shall
be a condition to such holder's exercise of the Warrant that the Company
receive such other representations as the Company considers reasonably
necessary to assure the Company that the issuance of its securities upon
exercise of the Warrant shall not violate any United States or state securities
laws.
-4-
<PAGE> 77
Section 7. Ownership and Transfer.
(a) The Company shall maintain at its principal
executive offices (or such other office or agency of the Company as it may
designate by notice to the holder hereof), a register for this Warrant, in
which the Company shall record the name and address of the person in whose name
this Warrant has been issued, as well as the name and address of each
transferred. The Company may treat the person in whose name any Warrant is
registered on the register as the owner and holder thereof for all purposes,
notwithstanding any notice to the contrary, but in all events recognizing any
transfers made in accordance with the terms of this Warrant. In the event of
the death of the Holder, the heirs or estate of such Holder shall be entitled
to the vested portion of the Warrants issued by Company for the remaining term
of the Warrant.
(b) This Warrant and the rights granted to the Holder
hereof are transferable, in whole or in part, upon surrender of this Warrant,
together with a properly executed warrant power in the form of Exhibit B
attached hereof; provided, however, that any transfer or assignment shall be
subject to the conditions set forth in Section 7(c) below. The rights of the
Holder of this Warrant to transfer this Warrant and the rights granted to the
Holder as provided for herein shall include, but not be limited to, the right
to make such a transfer to a family member or corporation, partnership, trust
or other entity which is owned or controlled by, or under common control with,
the Holder of this Warrant.
(c) The holder of this Warrant understands that this
Warrant has not been and is not expected to be, registered under the Securities
Act or any state securities laws, and may not be offered for sale, sold,
assigned or transferred unless (a) subsequently registered thereunder, or (b)
such holder shall have delivered to the Company an opinion of counsel,
satisfactory in form, scope and substance to the Company, to the effect that
the securities to be sold, assigned or transferred may be sold, assigned or
transferred pursuant to an exemption from such registration; any sale of such
securities made in reliance on Rule 144 promulgated under the Securities Act
may be made only in accordance with the terms of said Rule and further, if said
Rule is not applicable, any resale of such securities under circumstances in
which the seller (or the person through whom the sale is made) may be deemed to
be an underwriter (as that term is defined in the Securities Act) may require
compliance with some other exemption under the Securities Act or the rules and
regulations of the Securities and Exchange Commission thereunder.
(d) The Company is obligated to register the Warrant
Shares for resale exclusively by way of inclusion of such Warrant Shares in any
Registration Statement to be filed by the Company in the future pursuant to
Form S-8 as long as in any such event, the Holder remains the holder of this
Warrant and is employed or has been retained as a consultant to the Company.
-5-
<PAGE> 78
Section 8. Adjustment of Warrant Exercise Price and Number of
Shares. In order to prevent dilution of the rights granted under this Warrant,
the Warrant Exercise Price and the number of shares of Common Stock issuable
upon exercise of this Warrant shall be adjusted from time to time as follows:
(a) Adjustment of Warrant Exercise Price upon
Subdivision or Combination of Common Stock. If the Company at any time
subdivides (by any stock split, stock dividend, recapitalization or otherwise)
one or more classes of its outstanding shares of Common Stock into a greater
number of shares, the Warrant Exercise Price in effect immediately prior to
such subdivision will be proportionately reduced and the number of shares of
Common Stock obtainable upon exercise of this Warrant will be proportionately
increased. If the Company at any time combines (by combination, reverse stock
split or otherwise) one or more classes of its outstanding shares of Common
Stock into a smaller number of shares, the Warrant Exercise Price in effect
immediately prior to such combination will be proportionately increased and the
number of shares of Common Stock obtainable upon exercise of this Warrant will
be proportionately decreased.
(b) Reorganization, Reclassification, Consolidation,
Merger or Sale. Any recapitalization, reorganization, reclassification,
consolidation, merger, sale of all or substantially all of the Company's assets
to another Person (as defined below) or other transaction which is effected in
such a way that holders of Common Stock are entitled to receive (either
directly or upon subsequent liquidation) stock, securities or assets with
respect to or in exchange for Common Stock is referred to herein as "ORGANIC
CHANGE." Prior to the consummation of any Organic Change, the Company will make
appropriate provision to insure that each holder of Warrants will thereafter
have the right to acquire and receive in lieu of or in addition to (as the case
may be) the shares of Common Stock immediately theretofore acquirable and
receivable upon the exercise of such holder's Warrants, such shares of stock,
securities or assets as may be issued or payable with respect to or in exchange
for the number of shares of Common Stock immediately theretofore acquirable and
receivable upon the exercise of such holder's Warrants had such Organic Change
not taken place. In any such case, the Company will make appropriate provision
of such Warrants with respect to such holders' rights and interests to insure
that the provisions of this Section 8 and Section 9 below will thereafter be
applicable to the Warrants. The Company will not effect any such consolidation,
merger or sale, unless prior to the consummation thereof, the successor entity
(if other than the company) resulting from consolidation or merger or the
entity purchasing such assets assumes, by written instrument (in form and
substance satisfactory to the holders of Warrants representing a majority of
shares of Common Stock issuable upon exercise of the Warrants then
outstanding), the obligation to delivery to each holder of Warrants such shares
of stock, securities or assets as, in accordance with the foregoing provisions,
such holder may be entitled to acquire.
-6-
<PAGE> 79
(c) Notices.
(i) Immediately upon any adjustment of the
Warrant Exercise Price, the Company will give written notice thereof to the
holder of this Warrant, setting forth in reasonable detail and certifying the
calculation of such adjustment.
(ii) The Company will give written notice to the
holder of this Warrant at least twenty (20) days prior to the date on which the
Company closes its books or takes a record (A) with respect to any dividend or
distribution upon the Common Stock, (B) with respect to any pro rata
subscription offer to holders of Common Stock, or (C) for determining rights to
vote with respect to any Organic Change, dissolution or liquidation, except
that in no event shall such notice be provided to such holder prior to such
information being made known to the public.
(iii) The Company will also give written notice
to the holder of this Warrant at least twenty (20) days prior to the date on
which any Organic Change, dissolution or liquidation will take place.
Section 9. Purchase Rights. In addition to any adjustments
pursuant to Section 8 above, if at any time the Company grants, issues or sells
any Options, Convertible Securities or rights to purchase stock, warrants,
securities or other property pro rata to the record holders of any class of
Common Stock (the "PURCHASE RIGHTS"), then the holder of this Warrant will be
entitled to acquire, upon the terms applicable to such Purchase Rights, the
aggregate Purchase Rights which such holder could have acquired if such holder
had held the number of shares of Common Stock acquirable upon complete exercise
of this Warrant immediately before the date on which a record is taken for the
grant, issuance or sale of such Purchase Rights, or, if no such record is
taken, the date as of which the record holders of Common Stock are to be
determined for the grant, issue or sale of such Purchase Rights.
Section 10. Lost, Stolen, Mutilated or Destroyed Warrant. If
this Warrant is lost, stolen, mutilated or destroyed, the Company shall, on
receipt of an indemnification undertaking, issue a new Warrant of like
denomination and tenor as the Warrant so lost, stolen, mutilated or destroyed.
Section 11. Notice. Any notices, consents, waivers or other
communications required or permitted to be given under the terms of this
Warrant must be in writing and will be deemed to have been delivered (i) upon
receipt, when delivered personally; (ii) upon receipt, when sent by facsimile,
provided a copy is mailed by U.S. certified mail, return receipt requested;
(iii) three (3) days after being sent by U.S. certified mail, return receipt
requested; or (iv) one (1) day after deposit with a nationally recognized
overnight delivery service, in each case properly addressed to the party to
receive the same. The addresses and facsimile numbers for such communications
shall be:
-7-
<PAGE> 80
If to the Company: HomeCom Communications, Inc.
Fourteen Piedmont Center, Suite 100
3535 Piedmont Road
Attention: President
Telephone: (404) 237-4646
Facsimile: (404) 237-3060
With a copy to: Sims Moss Kline & Davis LLP
400 Northpark Town Center, Suite 310
1000 Abernathy Road, N.E.
Atlanta, Georgia 30328
Attn: Raymond L. Moss, Esq.
Facsimile: (770) 481-7210
If to a holder of this Warrant, to it at the address set
forth below such holder's signature on the signature page
hereof.
Each party shall provide five (5) days' prior written notice to the other party
of any change in address or facsimile number.
Section 12. Miscellaneous. This Warrant and any term hereof may
be changed, waived, discharged or terminated only by an instrument in writing
signed by the party or holder hereof against which enforcement of such change,
waiver, discharge or termination is sought. The headings in this Warrant are
for convenience of reference only and shall not limit or otherwise affect the
meaning hereof. This Warrant shall be governed by and interpreted under the
laws of the State of Georgia, without regard to principles of conflicts of
laws. Venue shall lie in Superior Court of Fulton County, Georgia, or the
United States District Court for the Northern District of Georgia, Atlanta
Division. The parties hereto acknowledge that such court has the jurisdiction
to interpret and enforce the provisions of this Agreement and the parties waive
any and all objections which they may have as to personal jurisdiction or venue
in any of the above courts.
Section 13. Date. The date of this Warrant is ________________
______, 199___. This Warrant, in all events, shall be wholly void and of no
effect after the close of business on the Expiration Date, except that
notwithstanding any other provisions hereof, the provisions of Section 7 shall
continue in full force and effect after such date as to any Warrant Shares or
other securities issued upon the exercise of this Warrant.
IN WITNESS WHEREOF, the parties hereto have duly caused this Agreement
to be executed as of the day and year first above written.
"HOLDER"
------------------------------------
"THE COMPANY"
HomeCom Communications, Inc.,
a Delaware corporation
By:
---------------------------------
Title:
------------------------------
-8-
<PAGE> 81
EXHIBIT A TO WARRANT
EXERCISE FORM
(to be signed only upon exercise of Warrant)
To: HomeCom Communications, Inc.
The undersigned, the holder of the attached Warrant, hereby irrevocably elects
to exercise the purchase right represented by that Warrant for, and to purchase
under the Warrant, ______________ shares of Common Stock of HomeCom
Communications, Inc. (the "Company") and herewith:
_______________________________ makes payments of $___________ for
those shares,
and requests that the certificates for those shares be issued in its name, and
delivered to the following
address:_____________________________________________________________________.
Dated: __________________ _______, 19____.
----------------------------------------
Signature
(Signature must conform in all
respects to name of holder as
specified on the face of the
Warrant.)
----------------------------------------
Address
----------------------------------------
<PAGE> 82
EXHIBIT B TO WARRANT
FORM OF WARRANT POWER
FOR VALUE RECEIVED, the undersigned does hereby assign and transfer to
__________________________ ________________________, Federal Identification No.
________________________, a warrant to purchase ________________________ shares
of the capital stock of HOMECOM COMMUNICATIONS, INC., a Delaware corporation,
represented by warrant certificate No. _______________, standing in the name of
the undersigned on the books of said corporation. The undersigned does hereby
irrevocably constitute and appoint ___________________________, attorney to
transfer the warrants of said corporation, with full power of substitution in
the premises.
Dated:
--------------------------
---------------------------------------
By:
------------------------------------
Its:
------------------------------------
<PAGE> 83
SCHEDULE 3.3
FIRST INSTITUTIONAL MARKETING, INC.
Corporate Organization
Schedule 3.3
November 6, 1998
<TABLE>
<CAPTION>
par amount Amount
Name State type value authorized Issued
- ---- ----- ---- ----- ---------- ------
<S> <C> <C> <C> <C> <C>
First Oklahoma Common No par 10,000 930
Institutional value
Marketing, Inc.
Premier Texas Common $1.00 100,000 930
Financial
Services, Inc.
All Things Florida Common $1.00 10,000 930
Financial, Inc.
FIMI Texas Common No par 1,000,000 930
Securities, Inc. value
</TABLE>
<PAGE> 84
SCHEDULE 3.4
FIRST INSTITUTIONAL MARKETING, INC.
Corporate Subsidiaries
Schedule 3.4
November 6, 1998
<TABLE>
<CAPTION>
Name State Type par Value authorized issued
- ---- ----- ---- --------- ---------- ------
<S> <C> <C> <C> <C> <C>
First Institutional Ohio Voting No par 10 1
Marketing Agency, Common value
Inc.
a subsidiary of FIMI Non-Voting No par 840 499
Securities, Inc. Common value
</TABLE>
<PAGE> 85
SCHEDULE 3.6
FIRST INSTITUTIONAL MARKETING, INC.
No Violations
Schedule 3.6
November 6, 1998
None.
<PAGE> 86
SCHEDULE 3.8
FIRST INSTITUTIONAL MARKETING, INC.
Employee Contracts and Plans
Schedule 3.8
October 23, 1998
Employment and Consulting Contracts:
<TABLE>
<CAPTION>
Name Amount per Month Duration Type
---- ---------------- -------- ----
<S> <C> <C> <C>
Shelby J. Smith $1,000 3 months consulting
Robert Graf $5,180 plus indefinite at will
commission employment
</TABLE>
Employee Benefit Plans:
<TABLE>
<S> <C> <C>
Vacation Plan two weeks paid per year,
available after one year
Medical Plan United HealthCare PPO, HMO
Long Term Disability Plan Provident Co.s
Sick Leave 10 days per year
Subjective Incentive Bonus Cash bonuses based on performance
as and when determined by Senior
Management
</TABLE>
Employees Earning Greater than $50,000/yr:
<TABLE>
<CAPTION>
Name Annual Salary Commission Bonus to date
---- ------------- ---------- -------------
Draw (discretionary)
---- ---------------
<S> <C> <C> <C>
Daniel Delity $149,616 n/a $24,000
David Frank $129,192 n/a $24,000
James Ellsworth $129,192 n/a $24,000
Thomas Piche $156,000 n/a
Wael Khalil $120,000 n/a
J. Andrew Alvis $ 84,000 n/a
Jay W. Carter $ 52,000 $ 3,000
Tracy Hilton $ 52,000
Michael Dyck $ 48,000 $ 3,000
Robert Graf $ 62,160 $ 24,000
HL Robinson >$50,000
Tim Legamaro >$50,000
</TABLE>
<PAGE> 87
SCHEDULE 3.9
FIRST INSTITUTIONAL MARKETING, INC.
ERISA Plans
Schedule 3.9
November 6, 1998
Premier Financial Services, Inc. terminated its 401(k) and 125
Cafeteria Plans on May 31, 1998.
<PAGE> 88
SCHEDULE 3.10
FIRST INSTITUTIONAL MARKETING, INC.
Litigation
Schedule 3.10
November 6, 1998
Iberia Savings and Nolan Knight vs. First Institutional Marketing, Inc. and
FIMI Securities, Inc.
<PAGE> 89
SCHEDULE 3.12
FIRST INSTITUTIONAL MARKETING, INC.
Compliance with Instruments
Schedule 3.12
October 23, 1998
On August 24, 1998 FIMI was notified by First Transamerica Life that
FIMI was in arrears on a $15,000 note payable. This debt by its terms is
payable from commissions earned on the sale of First Transamerica's
Trans-Saver 2000 product. It is accrued in the financial statements of FIMI.
Given that Transamerica has pulled this product from most states, that
Transamerica has failed to repay FIMI the majority of its TransSaver video and
sales materials expenses and the salient terms of the Note; FIMI intends to
refuse to make payments on this Note other than as provided in the Note (i.e.,
by deduction from commissions earned).
<PAGE> 90
SCHEDULE 3.13
FIRST INSTITUTIONAL MARKETING, INC.
Title to Properties
Schedule 3.13
November 6, 1998
By capital leases executed on May 5, 1998 and August 26, 1998, FIMI
leased approximately 25 Pentium II workstations, three laptops, a Proliant 1600
server and related accessories. All such equipment is subject to a first
priority security interest of the Lessor. Total purchase price of the equipment
was approx. $84,000.
By Lease Agreement with Marathon Oil Company, FIMI leases its office
space at 5555 San Felipe, Suite 575, Houston, TX.
<PAGE> 91
SCHEDULE 3.16
FIRST INSTITUTIONAL MARKETING, INC.
Licenses
Schedule 3.16
October 23, 1998
Life Insurance Licenses:
<TABLE>
<CAPTION>
STATE Agency Individual Comment
----- ------ ---------- -------
(Sellers only)
<S> <C> <C> <C>
Alabama Dan pending
Alaska
Arizona FIMI David Expires 07/31/99
Arkansas PFS Dan Expires 10/01/99
California PFS Dan Expires 10/31/00
Colorado FIMI Expires 01/01/00
Connecticut PFS Dan Expires 01/31/00
Delaware David pending
District of FIMI Expires 04/30/99
Columbia
Florida David
Georgia Dan
Hawaii
Idaho FIMI Dan pending
pending
Illinois FIMI Dan Expires 10/10/99
Indiana FIMI Dan Expires 03/31/00
Iowa Dave pending
Kansas FIMI Dan pending Expires 05/01/99
Kentucky Dave pending
Louisiana Dan Expires 04/30/00
Maine FIMI Dave pending
pending
Maryland FIMI Dan Expires 06/30/99
Massachusetts Dave pending
Michigan PFS Perpetual
Minnesota FIMI Dan Expires 10/31/00
Mississippi Dave pending
Missouri FIMI Dan Expires 09/07/00
Montana FIMI Dave pending
pending
</TABLE>
<PAGE> 92
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Agency Individual Comment
(Sellers only)
Nebraska PFS Dan Expires 04/03/99
Nevada
New
Hampshire
New Jersey PFS Expires 07/31/02
New Mexico Dan pending
New York FIMI David Expires 06/30/99
North Carolina FIMI Dan Perpetual
North Dakota
Ohio FIMI-OH Dan Perpetual renewed by ins. Carrier
Oklahoma FIMI Dan Expires 03/31/99
Oregon
Pennsylvania FIMI Dan pending Renewed 09/08/01
Rhode Island
South PFS Dan pending Perpetual, fees paid till 12/31/99
Carolina
South
Dakota
Tennessee Dan
Texas PFS Dan, David and Expires 01/06/99
Jim
Utah FIMI Expires 07/31/00
Vermont
Virginia FIMI/PFS Perpetual - no fees
Washington PFS 04/06/99
West Virginia Dan pending
Wisconsin Dan pending
Wyoming
</TABLE>
<PAGE> 93
Securities Licenses:
<TABLE>
<CAPTION>
Entity/Principals Type State Registrations
----------------- ---- -------------------
<S> <C> <C>
FIMI Securities, Inc. NASD B/D under Rule 15c3-1(a)(vi), and Arkansas, Georgia, Texas,
Rule 15c3-3K(2)(ii) Pending -- Cal, Ohio, LA
David B Frank General Securities Principal Texas, (Arizona, Florida, New
General Securities Representative Jersey, New York - pending)
Agent
James Wm. Ellsworth Financial and Operations Principal Texas - pending
Aaron K. Hevle Financial and Operations Principal Texas
Daniel A. Delity General Securities Representative Texas
</TABLE>
<PAGE> 94
SCHEDULE 3.17
FIRST INSTITUTIONAL MARKETING, INC.
Status of Leases
Schedule 3.17
November 6, 1998
Capital Lease, dated May 5, 1998 by and between Premier Financial Services,
Inc. and Bevenco, Inc. in the amount of $26,755.
Capital Lease, dated August 25, 1998 by and between Premier Financial Services,
Inc. and Bevenco, Inc. in the amount of $57,032.
Lease Agreement, dated November 1, 1998 by and between Marathon Oil Company and
FIMI for the lease of office space at 5555 San Felipe, Suite 575, Houston, TX.
Lease and Service Agreement, by and between First Bank of California and
Premier Financial Services, Inc.
Lease and Service Agreement, by and between First Bank of Texas and Premier
Financial Services, Inc.
Lease and Service Agreement, by and between First Commercial and Premier
Financial Services, Inc.
Lease and Service Agreement, by and between Prime Bank and Premier Financial
Services, Inc.
Lease and Service Agreement, by and between Longview Bank & Trust and Premier
Financial Services, Inc.
<PAGE> 95
SCHEDULE 3.18
<PAGE> 96
SCHEDULE 3.19
FIRST INSTITUTIONAL MARKETING, INC.
Bank Accounts
Schedule 3.19
November 6, 1998
<TABLE>
<CAPTION>
BANK ACCOUNT ACCOUNT COMPANY BANK SIGNATORIES
NUMBER
<S> <C> <C> <C> <C>
CHECKING A160004677 Premier Bank One David B. Frank
Financial Daniel A. Delity
Srvs.
MONEY MARKET A1600010674 Premier Bank One David B. Frank
Financial Daniel A. Delity
Srvs
CHECKING A160009908 FIMI OK. Bank One David B. Frank
Daniel A. Delity
MONEY MARKET A0160010682 FIMI OK. Bank One David B. Frank
Daniel A. Delity
CHECKING A1883923599 FIMI Bank One David B. Frank
Securities Daniel A. Delity
125 PLAN A1883925925 Premier Bank One David B. Frank
Financial Daniel A. Delity
Srvs
401K A1883925743 Premier Bank One David B. Frank
Financial Daniel A. Delity
Srvs
PAYROLL A0160009379 Premier Bank One David B. Frank
Financial Daniel A. Delity
Srvs
MONEY MARKET A1883924035 FIMI Bank One David B. Frank
Securities Daniel A. Delity
CHECKING A3603640624 All Things Nations Bank David B. Frank
Financial Daniel A. Delity
CHECKING A568108672 Premier Prime Bank David B. Frank
Financial Daniel A. Delity
Srvs
CHECKING A0187089 Premier Longview David B. Frank
Financial Bank & Daniel A. Delity
Srvs Trust
CHECKING A9800814277 Premier First Bank David B. Frank
Financial Daniel A. Delity
Srvs
CHECKING A0510070114 Premier First David B. Frank
Financial Commercial Daniel A. Delity
Srvs
CHECKING BTI First B & T David B.Frank
Insurance Daniel A. Delity
Agency James Ellsworth
CHECKING A9410900636 Premier First B& T David B. Frank
Financial Daniel A. Delity
Srv James Ellsworth
</TABLE>
<PAGE> 97
SCHEDULE 3.20
FIRST INSTITUTIONAL MARKETING, INC.
Patents, Trademarks, Software
Schedule 3.20
November 6, 1998
Patents
There are no patents, trademarks, tradenames, or copyrights that have
been recorded or prosecuted for FIMI's benefit.
Software
FIMI operates in a Windows NT environment. Its most significant
application software includes BusinessWorks97 for accounting, Maximizer for
client contact data management, Access for production data management, and the
MS Office suite of application software.
<PAGE> 98
SCHEDULE 3.21
FIRST INSTITUTIONAL MARKETING, INC.
Undisclosed Liabilities
Schedule 3.21
November 6, 1998
Other than occasional commissions payable to agents for policies that
have not been properly reported to FIMI, several negative account balances with
carriers (e.g., American Enterprise Life -- these negative balances arise due
to charge backs on commissions and are generally passed through to the
producer), the potential for a liability to IberiaSavings/Nolan Knight (see
Litigation), Shelby Smith's 1998 tax distribution (on his portion of 1998
earnings), and the First Transamerica $15,000 Note Payable (recorded in 1998);
there are no liabilities that are required to be disclosed or reserved against
in the 1997 Financial Statements of the Closing Date Balance Sheet.
<PAGE> 99
SCHEDULE 3.22
FIRST INSTITUTIONAL MARKETING, INC.
Taxes and Tax Returns
Schedule 3.22
November 6, 1998
All material federal, state, and local tax returns have been filed.
The IRS has not examined any of the income tax returns of the Companies. During
1998 the IRS has reviewed the payroll tax returns (Forms 941 and 940) for the
years 1993, 1994, 1995, 1996 and 1997. As a result of those reviews Premier
Financial Services made additional payments totaling less than $5,000 for years
1993 through 1995. Several over and under payments were noted in the 1997
returns such that at this time Premier has a net receivable of several thousand
dollars for payroll tax over payments. To avoid these situations in the future,
in May 1998 FIMI commenced using a national payroll processing service that
will make payroll tax deposits and resolve issues related thereto.
<PAGE> 100
SCHEDULE 3.24
FIRST INSTITUTIONAL MARKETING, INC.
Contracts
Schedule 3.24
November 6, 1998
Indebtedness for Borrowed Money
American Express Corporate Card
The Bevenco Equipment Leases (see Leases Schedule)
First Transamerica Note Payable
Cananwill -- E&O insurance premium financing
First Madison Settlement
Significant Carrier Contracts
Carrier Contracts
AIM/Cigna Variable Annuity"
Allianz Life Insurance Co. of N. America"
Allmerica Finl Life Ins. & Annuity Co."
American National - "
American Skandia Life"
AmerUs Life Insurance Company"
ARM Financial Group"
CNA Life"
COVA Financial Srvcs Life Insurance Co."
First Penn-Pacific Life Insurance Co."
Fiserv Investor Services, Inc."
Jefferson Pilot/Alexander Hamilton Life"
Keyport Life Insurance Company"
Liberty Life Assurance Company, Boston"
Life of the Southwest"
Lincoln Benefit Life Insurance Company"
Pacific Fidelity Life Insurance Company"
Pacific Mutual Variable Annuity"
Paul Revere Insurance Group"
Paul Revere Varible Annuity Insurance"
Nationwide Variable Annuity Company"
Protective Life Insurance Company"
Provident Life and Accident Insur. Co."
Safeco Insurance Companies"
Security Benefit Life Insurance Company"
Security Benefit Variable Annuity"
Old Line Life Insurance Company"
Transamerica Life and Annuity Co."
United Life & Annuity Insurance Company"
United of Omaha Variable Annuity"
<PAGE> 101
Significant Bank Client Contracts
American State Bank
AnchorBank, S.S.B."
Arrowhead Central Credit Union
BSC Securities
Calumet Federal Saving & Loan Assn."
Capital Select Investments Corp."
Carolina First Financial
Carthage Bank"
Centier Bank"
Central Texas Bank - Flatonia"
Central Texas Bank - Gonzales"
Columbia Federal Savings Bank"
Coastal Securities L.P."
Coffee County Bank"
Comerica Bank-Michigan"
Comerica Bank-Texas"
Community Bank and Trust Company"
County Bank, The"
Dime Savings Bank of Williamsburgh"
Eastern Savings Bank, FSB"
Exchange Bank"
F&M Bank & Trust Co."
Financial Insurance, Inc."
First Bank"
First Bank and Trust"
First Capital Financial
First Commercial Investments, Inc."
First Community Bank"
First Fed. S & L Assoc. of Port Angeles"
First National Bank & Trust Company"
First National Bank of Bastrop"
First National Bank of Herminie"
First National Bank of Zanesville"
FirstFed Financial of Wabash"
Great Southern Savings Bank"
Highland Lakes Bank
Independent Bankers Association of America - various member banks
Interchange State Bank"
Klein Bank
LaGrange State Bank
Legamaro Financial Services, Inc."
Marine Midland Bank"
Merchants NB Terre Haute"
Mire Venable-Mid South National Bank"
North American State Bank
Old National Bank of Evansville
<PAGE> 102
Pinnacle Bank"
Prague National Bank"
Prime Bank"
Signal Securities, Inc."
State Bank"
Sunpoint Securities, Inc."
Synergy Financial Group"
Synergy-Bridge City State Bank"
Thompson, Steve DBA Kelmar Marketing
Tinker Financial Services
TransFinancial Bank
Union Federal Savings Bank
Western National Bank
White Oak Financial
Significant Service Providers
Service Providers
National Network Integrators -- systems administration $4,500 per month for 12
months
Gainer Donnelly & Desroches -- auditors
Andrew Shebay CPA -- auditor FIMI Securities, Inc.
Stumpf Falgout Craddock and Massey -- attorneys
FISERVE Investor Services, Inc.
Americantelco
Qwest
United HealthCare
Marathon Oil CO. Office Lease
Federal Express
NASD Regulation
Significant Commitments
FIMI Contests (accrued @12/31/97 and Closing Balance sheet date)
Several non disclosure agreements -- e.g. Moneystar, ITSA, QuickQuote, others
BAI Holdings, Inc. Subscriptions
IBAA override
<PAGE> 103
SCHEDULE 3.26
FIRST INSTITUTIONAL MARKETING, INC.
Changes
Schedule 3.26
November 6, 1998
Capital Leases with Bevenco (see Leases)
Shelby Smith Buyout
Adoption of Bylaws on January 1, 1998 (All Things Financial)
<PAGE> 104
SCHEDULE 4.3
<PAGE> 105
SCHEDULE 5.1(B)(VII)
<PAGE> 106
SCHEDULE 7.1(A)(VIII)
<PAGE> 107
SCHEDULE 8.2
<PAGE> 108
EXHIBIT "A-1"
ESCROW AGREEMENT
THIS AGREEMENT (the "Escrow Agreement") is made as of ___________, 1998, by
and among (i) DANIEL A. DELITY, JAMES WM. ELLSWORTH and DAVID B. FRANK
(collectively, the "Pledgor"); (ii) HOMECOM COMMUNICATIONS, INC., a Delaware
Corporation (the "Parent"), FIMI SECURITIES ACQUISITION CORP., INC. and ATF
ACQUISITION CORP., INC., each a wholly-owned subsidiary of Parent, incorporated
in Delaware (hereinafter collectively with the Parent called the "Pledgee"); and
(iii) BANK OF NEW YORK, a New York corporation (hereinafter referred to as
"Escrow Agent").
WHEREAS, Pledgor has certain obligations to indemnify Pledgee (the
"Obligations") under Section 9.1 of that certain Agreement and Plan of Merger of
even date herewith between Pledgor and Pledgee (the "Merger Agreement");
WHEREAS, to secure the Obligations, Pledgor has executed a Pledge and
Security Agreement of even date herewith in favor of Pledgee (the "Pledge");
WHEREAS, the Pledge provides for 62,609 shares of common stock of the
Parent (the "Pledged Shares") to be held in escrow for the benefit of the
Pledgee until the full payment, satisfaction or lapse of the Obligations; and
WHEREAS, the Pledgee and Pledgor agree that the Pledged Shares shall be
deposited with Escrow Agent subject to the terms and conditions of this Escrow
Agreement;
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt, sufficiency and adequacy of which are
hereby acknowledged, the parties hereto agree as follows:
1. The Pledgor shall deliver the Pledged Shares to the Escrow Agent as
required by the Pledge. The Escrow Agent shall hold the Pledged Shares until
released to the Parent (on behalf of the Pledgee) or to the Pledgee or the
Pledgor in accordance with the Pledge. It is agreed that the Escrow Agent shall
act as a depository of the Pledged Shares only and shall not be required to take
notice of any default or breach of warranty, representation, covenant or
agreement of any party contained in the Merger Agreement or Pledge, as amended,
or any other agreement between Pledgor and Pledgee. Escrow Agent shall have no
responsibility or duty to obtain, collect or enforce any obligations of Pledgor,
nor shall Escrow Agent have any responsibility or duty to determine any
"Indemnity Amount" or other Obligation due from the Pledgor to the Pledgee, the
proper application of any payment or when or if the Obligations have been paid
or satisfied in full or have lapsed.
2. The Escrow Agent shall hold the Pledged Shares until they are
released and delivered to the Pledgee or the Pledgor, as the case may be, as
provided in Section 9 of the
<PAGE> 109
Pledge. Upon delivery of the Pledged Shares to the Pledgee or the Pledgor as the
case may be, this Agreement and the Pledge shall terminate except that Escrow
Agent's right to indemnification under Section 4(d) herein.
3. Pledgee agrees to reimburse Escrow Agent in an amount identified in
Exhibit "A" attached hereto together with its reasonable expenses incurred in
the performance of its services hereunder.
4. The acceptance by the Escrow Agent of its duties hereunder is subject
to the following terms and conditions, which Pledgor and Pledgee agree shall
govern and control with respect to the Escrow Agent's rights, duties,
liabilities and immunities:
(a) The Escrow Agent shall be entitled to rely and act upon any
notice, request, waiver, consent, receipt or other paper or document furnished
to it, not only as to its due execution and the validity and effectiveness of
its provisions but also as to the truth and accuracy of any information
contained therein. The Escrow Agent is also relieved from the necessity of
satisfying itself as to the authority of any person executing this Agreement or
as to the authenticity of any signature to this Agreement.
(b) The Escrow Agent shall not be liable for any error of judgment,
or for any act done or step taken or omitted by it in good faith, or for any
bonafide mistake of fact or law, or for anything which it may do or refrain from
doing in connection herewith, except for its own gross negligence or willful
misconduct.
(c) The Escrow Agent shall have no duties except those which are
specifically set forth herein. No waiver, modification, amendment, termination
or rescission of this Escrow Agreement shall be effective or binding upon the
Escrow Agent unless Escrow Agent shall have specifically consented thereto in
writing.
(d) Escrow Agent shall have no liability or responsibility to Pledgor
or Pledgee for any losses, claims, damages, liabilities, costs or expenses
provided that such losses are not the result of Escrow Agent's own gross
negligence or willful misconduct. Pledgor and Pledgee hereby, jointly and
severally, agree to indemnify, defend and hold harmless Escrow Agent against any
and all losses, claims, damages, liabilities, costs and expenses (including
court costs and reasonable attorneys' fees) which may be imposed upon or
incurred by Escrow Agent in connection with the subject matter of this Escrow
Agreement and Escrow Agent's performance of its obligations hereunder, and all
such losses, claims, damages, liabilities, costs and expenses shall be for the
account of and shall be borne and paid by Pledgor and Pledgee equally, provided
that such losses are not the result of Escrow Agent's own gross negligence or
willful misconduct.
(e) Escrow Agent's sole responsibility shall be to receive the
Pledged Shares, hold the Pledged Shares and release the Pledged Shares in
accordance with Section 9 of the Pledge. Should any dispute arise among Pledgor
and Pledgee as to the proper disposition of the
-2-
<PAGE> 110
Pledged Shares, then Pledgor and Pledgee agree that Escrow Agent may file a
declaratory judgment action or an interpleader action to obtain a resolution of
such dispute. Such a declaratory judgement action or interpleader action may be
filed in the U.S. District Court for the Northern District of Georgia, Atlanta
Division, or the Superior Court of Fulton County, Georgia, at the sole and
absolute discretion of Escrow Agent. Pledgor and Pledgee, by signing this
Agreement, expressly consent and agree to the jurisdiction and venue of such
courts and waive and renounce any right to object to the personal jurisdiction
or venue of such court and further waive and renounce any right to removal based
on diversity of citizenship or transfer to another venue based on forum,
non-convenience or any other basis.
5. This Escrow Agreement may be amended, modified or canceled only
by the written consent of all parties hereto. The Escrow Agent (and any
successor Escrow Agent) may resign by notifying Pledgee and Pledgor in writing
and, until a successor Escrow Agent is appointed by Pledgee and Pledgor and
accepts such appointment, the Escrow Agent's only duty hereunder shall be to
hold any then-remaining Pledged Shares in accordance with the original
provisions of this Escrow Agreement.
6. Any notices or other communications required or permitted hereunder
shall be in writing and delivered by facsimile transmission and by regular mail,
postage prepaid, as follows:
If to Pledgee, to:
---------------------------
---------------------------
---------------------------
Facsimile: ( )
--- -----------
Copy to Counsel for Pledgee:
---------------------------
---------------------------
---------------------------
Facsimile: ( )
--- -----------
If to Pledgor, to:
---------------------------
---------------------------
---------------------------
Facsimile: ( )
--- -----------
Copy to Counsel for Pledgor:
---------------------------
---------------------------
---------------------------
Facsimile: ( )
--- -----------
If to Escrow Agent:
---------------------------
---------------------------
---------------------------
Facsimile: ( )
--- -----------
-3-
<PAGE> 111
or at any such other address as shall be furnished in writing by any such party
to the other parties hereto. Such notices or other communications so given shall
be deemed effectively given when actually received. All notices given to the
party hereto shall be copied to all other parties hereto.
7. This Escrow Agreement shall be governed by the laws of the State of
Georgia without giving effect to the principles of conflicts of law. Whenever
possible each provision of this Escrow Agreement shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Agreement shall be prohibited or invalid under such law, such provision
shall be deemed severed herefrom and ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement. Venue shall lie in the United
States District Court for the Northern District of Georgia, Atlanta Division, or
the Superior Court of Fulton County, Georgia. The parties hereto acknowledge
that such court has the jurisdiction to interpret and enforce the provisions of
this Agreement and the parties waive any and all objections which they may have
as to personal jurisdiction or venue in any of the above courts.
8. This Escrow Agreement may be executed in multiple counterparts, each
of which shall constitute an original, but all of which taken together shall
constitute one and the same instrument.
9. This Agreement shall terminate in the event of (i) the delivery of all
of the Pledged Shares to the Pledgor and/or the Pledgee, (ii) the filing of a
declaratory judgment action or interpleader action by Escrow Agreement pursuant
to Section 4(e) hereunder, or (iii) two years from the date of this Agreement,
unless a claim for indemnification has been made in accordance with Section 9.3
and the Merger Agreement.
IN WITNESS WHEREOF, the parties hereto have duly caused this Escrow
Agreement to be duly executed as of the date first above written.
PLEDGOR:
------------------------------------------
Daniel A. Delity
------------------------------------------
James Wm. Ellsworth
------------------------------------------
David B. Frank
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<PAGE> 112
PLEDGEE:
HOMECOM COMMUNICATIONS, INC.
By:
-----------------------------------
Name:
----------------------------------
Title:
---------------------------------
FIMI SECURITIES ACQUISITION CORP., INC.
By:
---------------------------------
Name:
--------------------------------
Title:
-------------------------------
ATF ACQUISITION CORP., INC.
By:
---------------------------------
Name:
--------------------------------
Title:
-------------------------------
ESCROW AGENT
BANK OF NEW YORK:
By:
---------------------------------
Name:
--------------------------------
Title:
-------------------------------
-5-
<PAGE> 113
EXHIBIT "A-2"
PLEDGE AND SECURITY AGREEMENT
This Pledge (the "Pledge") is by and between DANIEL A. DELITY, JAMES
WM. ELLSWORTH and DAVID B. FRANK (collectively, the "Pledgor") and HOMECOM
COMMUNICATIONS, INC., a Delaware Corporation (the "Parent"), FIMI SECURITIES
ACQUISITION CORP., INC. AND ATF ACQUISITION CORP., INC., each a wholly-owned
subsidiary of Parent, incorporated in Delaware (hereinafter collectively with
the Parent called the "Pledgee").
The Pledgor and Pledgee have executed a certain Agreement and Plan of
Merger between Pledgor and Pledgee of even date herewith (the "Merger
Agreement"). The Pledgor undertakes certain obligations to indemnify the Pledgee
in Article IX of the Merger Agreement.
As an inducement to the Pledgee to enter into the Merger Agreement, and
in consideration thereof, the Pledgor has agreed to secure the due and punctual
payment and performance of all of its obligations to indemnify the Pledgee
pursuant to Section 9.1 of the Merger Agreement (the "Obligations").
Accordingly, the Pledgor hereby agrees with the Pledgee as follows:
SECTION 1. Pledge. As collateral security for payment in full of the
Obligations, the Pledgor hereby (i) transfers, sets over and delivers unto [Bank
of New York] as Escrow Agent for Pledgor and Pledgee, pursuant to an Escrow
Agreement, dated of even date herewith between the Pledgor, the Pledgee and the
Escrow Agent, stock certificates numbered ____ representing 62,609 shares of the
common stock of the Parent (the "Pledged Securities") and (ii) pledges,
hypothecates and grants to the Pledgee a security interest in the Pledged
Securities. Upon delivery of the Pledged Securities to the Escrow Agent, such
Pledged Securities shall be accompanied by duly executed stock powers in blank
and by such other instruments or documents as the Pledgee or its counsel may
reasonably request.
SECTION 2. Obligations Secured. This Pledge is made, and the security
interest created hereby is granted to the Pledgee, to secure the full payment
and performance of the Obligations.
SECTION 3. Representations and Warranties. The Pledgor hereby
represents and warrants that, except for the security interest granted to the
Pledgee, the Pledgor is the legal and equitable owner of the Pledged Securities,
that to the best of its knowledge there are no liens, charges, encumbrances and
security interests of any kind and nature arising by through or under Pledgor,
the Pledgor will make no voluntary assignment, pledge, mortgage, hypothecation
or transfer of the Pledged Securities, the Pledgor has good right and legal
authority to pledge the Pledged Securities in the manner hereby done or
contemplated and will defend its title thereto against the claims of all persons
and the pledge of the Pledged Securities is effective to vest in the Pledgee the
rights of the Pledgee in the Pledged Securities as set forth herein. Pledgee
acknowledges that the Pledgor's ownership of the Pledged Securities was acquired
from Parent pursuant to the Merger Agreement and therefore Pledgor's title to
the Pledged Shares is as good as Pledgee had at the time of issuance
<PAGE> 114
to the Pledgee.
SECTION 4. Voting Rights; Dividends, Etc.
(a) So long as the Pledged Securities are held by the
Escrow Agent, the Pledgor shall be entitled to exercise any and all voting
rights and power consensual rights and powers accruing to an owner of the
Pledged Securities or any part thereof for any purpose not inconsistent with the
terms of this Pledge or any agreement giving rise to any of the Obligations:
(b) Any and all dividends or other distributions on
account of the Pledged Securities including but not limited to regular
dividends, liquidating dividends, other distributions in property, return of
capital or other distributions of money or property made on or in respect of
Pledged Securities, whether resulting from a subdivision, combination or
reclassification of outstanding capital stock of any corporation, the capital
stock of which is pledged hereunder or received in exchange for Pledged
Securities or any part thereof or as a result of any merger, consolidation,
acquisition or other exchange of assets or on the liquidation, whether voluntary
or involuntary, of any issuer of the Pledged Securities, or otherwise, shall be
and become part of the Pledged Securities pledged hereunder and, if received by
the Pledgor, shall forthwith be delivered to the Pledgee to be held as
collateral subject to the terms of this Pledge.
(c) The Pledgee shall execute and deliver to the Pledgor,
or cause to be executed and delivered to the Pledgor, as appropriate, all such
proxies, powers of attorney, dividend orders and other instruments as the
Pledgor may reasonably request for the purpose of enabling the Pledgor to
exercise the voting and/or consensual rights and powers which Pledgor is
entitled to exercise pursuant to paragraph.
(d) Upon the delivery of the Pledged Securities to
Pledgee in accordance with Section 9 herein, all rights of the Pledgor to
exercise the voting and/or consensual rights and powers which Pledgor is
entitled to exercise pursuant to paragraph (a) and (b) above and/or to receive
the dividends which Pledgor is authorized to receive and retain pursuant to
paragraph (a) and (b) above shall cease, and all such rights thereupon shall
become vested in the Pledgee, which shall have the sole and exclusive right and
authority to exercise such voting and/or consensual rights and powers which the
Pledgor shall otherwise be entitled to exercise pursuant to paragraph (a) and
(b) above and/or to receive and retain the dividends which the Pledgor shall
otherwise be authorized to retain pursuant to paragraph (a) and (b) above. Any
and all money and other property paid over to or received by the Pledgee
pursuant to the provisions of this paragraph (d) shall be retained by the
Pledgee as additional collateral hereunder and shall be applied in accordance
with the provisions of Section 9 hereof.
SECTION 5. Remedies. If (i) an Event of Default shall have occurred and
be continuing, and (ii) all or any portion of the Pledged Securities have been
released and delivered to the Parent (on behalf of the Pledgee), then the Parent
may elect to hold such Pledged Securities as treasury stock or cancel them in
full and final satisfaction of that portion of the Obligations represented by
the value of such Pledged Securities determined as follows: the average of the
closing sale trading price of Parent common stock as reported in the Wall Street
Journal or other financial publication
-2-
<PAGE> 115
for the last five (5) trading days immediately preceding the date the Pledged
Securities are actually released by Escrow Agent and delivered to the Parent.
The Pledgee and Pledgor agree that the exercise of any such remedy by the Parent
shall be conclusively deemed to conform to commercially reasonable standards
under the Uniform Commercial Code as in effect in the State of Georgia.
SECTION 6. Parent Appointed Attorney-in-Fact. The Parent hereby
constitutes and appoints the Pledgee the attorney-in-fact of the Pledgor for the
purpose of carrying out the provisions of Section 5 of this Pledge, which
appointment is irrevocable and coupled with an interest. Without limiting the
generality of the foregoing, the Pledgee shall have the right to execute any
stock power or endorse any stock certificate with respect to any Pledged
Securities released and delivered to it and to ask for, demand, sue for,
collect, receive, and give acquittance for any and all moneys due or to become
due under and by virtue of any of the Pledged Securities, to endorse checks,
drafts, orders and other instruments for the payment of money payable to the
Pledgor, representing any interest or dividend or other distribution payable in
respect of the Pledged Securities or any part thereof or on account thereof and
to give full discharge for the same, to settle, compromise, prosecute, or defend
any action, claim or proceeding with respect thereto, and to sell, assign,
endorse, pledge, transfer and make any agreement respecting, or otherwise
dealing with, the same.
SECTION 7. Event of Default Defined. For purposes of this Pledge, an
"Event of Default" shall exist hereunder upon the failure of Pledgor to pay or
perform any Obligation within fifteen (15) days of the receipt of written demand
from any Pledgee.
SECTION 8. Application of the Value of Pledged Securities. The value of
Pledged Securities determined in accordance with Section 5 shall be applied by
the Pledgee as follows:
First: to the payment of all costs and expenses incurred by
the Pledgee in connection herewith, including but not limited to, all
court costs and the fees and disbursements of counsel for the Pledgee
in connection herewith, and to the repayment of all advances made by
the Pledgee hereunder for the account of the Pledgor, and the payment
of all costs and expenses paid or incurred by the Pledgee in connection
with the exercise of any right or remedy hereunder; and
Second: to the payment in full of all other Obligations.
Any amounts remaining after such application shall be promptly remitted to the
Pledgor, its successors, legal representatives or assigns, or as otherwise
provided by law.
SECTION 9. Escrow Agreement. The Escrow Agent shall hold the Pledged
Securities pursuant to the terms of the Escrow Agreement. Upon the full payment,
satisfaction or lapse of the Obligations, the Pledged Securities shall be
promptly released by the Escrow Agent to the Pledgor or the Pledgee, as the case
may be, in the manner provided in the Escrow Agreement. Upon the occurrence of
an Event of Default under this Pledge, the Pledgee shall notify the Escrow Agent
and the Pledgor in writing of the occurrence of the Event of Default and the
-3-
<PAGE> 116
"Indemnity Amount" which is due under the Merger Agreement. Upon receipt of
notice from the Pledgor that an Event of Default has occurred, the Escrow Agent
shall promptly give Pledgor and Pledgee fifteen (15) days advanced written
notice of the proposed release of the Pledged Securities, stating the basis
therefor. Should the Pledgor give the Escrow Agent written notice that it
disputes the occurrence of an Event of Default, the Escrow Agent may either hold
the Pledged Securities until a final judgment of a court of competent
jurisdiction is entered directing the Escrow Agent as to the proper disposition
of the Pledged Securities or the Escrow Agent may file an interpleader action or
a declaratory judgment action against the Pledgee and the Pledgor seeking a
determination of the proper disposition of the Pledged Securities. If the Escrow
Agent receives no written notice from the Pledgor of a dispute as to the
existence of an Event of Default, then Pledged Securities having a value
(determined by the Escrow Agent in accordance with Section 5 hereof) equal to
the "Indemnity Amount" stated in the notice received from the Pledgee, shall be
released by the Escrow Agent to the Parent (on behalf of the Pledgee), but the
remaining Pledged Securities, if any, shall remain subject to the terms and
conditions of this Pledge.
SECTION 10. Termination Pledge. Upon the satisfaction and/or expiration
of all obligations under Article IX of the Merger Agreement, this Pledge
Agreement shall terminate.
SECTION 11. Notice. All notices or other communications which are
required or permitted hereunder or under the Escrow Agreement shall be in
writing and sufficient for purposes of this Pledge if delivered by hand, by
facsimile transmission, by registered or certified mail, postage prepaid, or by
courier or overnight carrier, to the persons at the addresses set forth below
(or at such other address as may be provided hereunder), and shall be deemed to
have been delivered as of the date so delivered:
As to Pledgor: ____________________________
____________________________
____________________________
Facsimile: (___) ____________
Copy to Pledgor's Counsel: ____________________________
____________________________
____________________________
Facsimile: (___) ____________
As to Pledgee: ____________________________
____________________________
____________________________
Facsimile: (___) ____________
Copy to Pledgee's Counsel: Sims Moss Kline & Davis LLP
400 Northpark Town Center, Suite 310
1000 Abernathy Road, N.E.
Atlanta, Georgia 30328
-4-
<PAGE> 117
Facsimile: (770) 481-7210
As to Escrow Agent: ____________________________
____________________________
____________________________
Facsimile: (___) ____________
SECTION 12. Further Assurances. The Pledgor agrees that it will join
with the Pledgee in executing and will file or record such notices, financing
statements or other documents as may be reasonably necessary to the perfection
of the security interest of the Pledgee hereunder, and as the Pledgee or its
counsel may reasonably request, such instruments to be in form and substance
satisfactory to the Pledgee and its counsel, and that Pledgor will do such
further acts and things and execute and deliver to the Pledgee such additional
conveyances, assignments, agreements and instruments as the Pledgee may at any
time reasonably request in connection with the administration and enforcement of
this Pledge or relative to the Pledged Securities or any part thereof or in
order to assure and confirm unto the Pledgee its rights, powers and remedies
hereunder.
SECTION 13. No Waiver. No failure on the part of the Pledgee to
exercise, and no delay on its part in exercising any right, power or remedy
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, power, or remedy preclude any other or the further
exercise thereof or the exercise of any other right, power or remedy. All
remedies hereunder are cumulative and are not exclusive of any other remedies
provided by law.
SECTION 14. Governing Law; Amendments. This Pledge has been executed
and delivered in the State of Georgia and shall in all respects be construed in
accordance with and governed by the laws of said State without regard to
principles of conflicts of law. Venue shall lie in the United States District
Court for the Northern District of Georgia, Atlanta Division, or the Superior
Court of Fulton County, Georgia. The parties hereto acknowledge that such court
has the jurisdiction to interpret and enforce the provisions of this Agreement
and the parties waive any and all objections which they may have as to personal
jurisdiction or venue in any of the above courts. This Pledge may not be amended
or modified nor may any of the Pledged Securities be released or the security
interest granted hereby extended, except in writing signed by the parties
hereto.
SECTION 15. Binding Agreement; Notices. This Pledge, and the terms,
covenants and conditions hereof, shall be binding upon and inure to the benefit
of the Pledgee and to all holders of the indebtedness secured hereby and to the
Pledgor and its successors, legal representatives and assigns. Pledgee shall not
be permitted to transfer, assign or negotiate its rights or remedies hereunder
without the prior written consent of the Pledgor. No notice to or demand on the
Pledgor shall entitle the Pledgor to any other or further notice or demand in
the same, similar or other circumstances. Any notice shall be conclusively
deemed to have been received and shall be effective on the day on which
delivered to the Pledgee or the Pledgor at the respective addresses set forth in
Section 10.
SECTION 16. Headings. Section headings used herein are for convenience
only and are
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<PAGE> 118
not to affect the construction of or be taken into consideration in interpreting
this Pledge.
SECTION 17. Counterparts. This Pledge may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
when taken together shall constitute but one and the same instrument.
-6-
<PAGE> 119
IN WITNESS WHEREOF, the parties hereto have caused this Pledge to be
executed as of this ______ day of ___________, 1998.
PLEDGOR:
--------------------------------------------
Daniel A. Delity
--------------------------------------------
James Wm. Ellsworth
--------------------------------------------
David B. Frank
PLEDGEE:
HOMECOM COMMUNICATIONS, INC.
By:
-----------------------------------------
Name:
----------------------------------
Title:
---------------------------------
FIMI SECURITIES ACQUISITION CORP., INC.
By:
-----------------------------------------
Name:
----------------------------------
Title:
---------------------------------
-7-
<PAGE> 120
ATF ACQUISITION CORP., INC.
By:
-----------------------------------------
Name:
----------------------------------
Title:
---------------------------------
-8-
<PAGE> 121
EXHIBIT "B"
PROMISSORY NOTE
$__________________ Atlanta, Georgia Effective ________, 199____
FOR VALUE RECEIVED, after date, without grace, in the manner, on the
dates and in the amount herein stipulated, the undersigned,
______________________________ (the "Maker") promises to pay to the order of
HomeCom Communications, Inc. (the "Payee"), at its office at Fourteen Piedmont
Center, Suite 100, 3535 Piedmont Road, Atlanta, Georgia 30305, or such other
place as the Payee shall designate in writing to the tile Maker, which at the
time of payment is legal tender of the United States of America for the payment
of public and private debts, the principal sum
of_______________________________________________________ DOLLARS
($________________) (the "Principal Amount"), together with interest thereon
from and after date hereof until maturity at a fixed rate per annum which shall
from day to day be equal to nine percent (9%).
This Note shall be due and payable in twelve (12) monthly installments
of interest, which installments shall be due and payable on the first day of
each calendar month commencing on ___________________ ________, 199___. The
Principal Amount shall become immediately due and payable on
___________________, 199___. The Maker shall have the privilege to prepay at any
time, and from time to time, all or any part of the principal amount of this
Note, without notice, penalty or fee. Maker shall be obligated to pay a late fee
of 5% of the amount of the installment being paid late when such payment is made
after the 10th day of the month.
The Maker expressly agrees that in the event of a default in the
payment of any installment of this Note when due, then the Payee may, at his
option, after written notice of such default is provided to Maker by Payee and a
period of ten (10) days has expired from the date such notice is received by
Maker within which period Maker have failed to cure such default, then without
further demand, notice or presentment, declare the unpaid principal balance of
this Note and all interest then accrued at once due and payable. Except as
expressly provided above, Maker hereby (i) waives demand and presentment for
payment of this Note, notice of non-payment, protest, notice of protest, notice
of intent to accelerate maturity, notice of acceleration of maturity, filing of
suit, diligence in collection or enforcing any of the security for this Note;
(ii) agree that he is and shall be directly and primarily liable for the
repayment of all sums due and owing under this Note, (iii) consents to any and
all renewals and extensions in the time of payment and to any other indulgence
with respect to this Note; (iv) agrees that the Payee shall not be required
first to institute suit or exhaust its remedies against the Maker, or to enforce
its rights against him or any security for this Note.
In the event default is made in the prompt payment of this Note when
due or declared due, and the same is placed in the hands of an attorney for
collection, or suit is brought on same, or the same is collected through any
Probate, Bankruptcy Court, or any judicial proceeding whatsoever, then the Maker
agrees and promises to pay the Payee's reasonable attorney's fees.
<PAGE> 122
It is expressly provided and stipulated that notwithstanding any
provision of this Note, in no event shall the aggregate of all interest paid by
the Maker to the Payee under this Note ever exceed the Maximum Rate on the
principal balance of this Note from time to time advanced and remaining unpaid.
In furtherance thereof, none of the terms of this Note shall ever be construed
to create a contract to pay for the use, forbearance or detention of money,
interest at a rate in excess of the Maximum Rate permitted to be charged of the
Maker under such laws. The Maker shall never be liable for interest in excess of
the Maximum Rate. "Maximum Rate" means the maximum lawful nonusurious rate of
interest (if any) which under Applicable Law the Payee is permitted to charge
the Maker on this Note from time to time.
This Note shall be construed and enforced in accordance with the laws
of the State of Georgia.
All notices required or permitted under this Note shall be in writing
and shall be deemed to have been sufficiently given or served for all purposes
when presented personally or three (3) days after deposited with the United
States Postal Service, postage prepaid, certified mail, return receipt
requested, to the Maker at the address set forth below, or at such other address
of which the Maker shall have notified the Payee in writing at least thirty (30)
days prior to the date of the Payee giving such notice. Where appropriate, any
pertinent noun, verb or pronoun shall be construed and interpreted to include
both the proper number and gender. This Note shall not be renewed, extended, or
modified except by a written instrument evidencing the same.
This Note constitutes one of the Closing Promissory Notes, as such term
is defined in that certain Agreement and Plan of Merger of even date herewith by
and among Maker's affiliate, Payee and the certain other persons described
therein (the "Merger Agreement").
This Note is secured by that certain Security Agreement - Pledge of
even date herewith executed by Maker in favor of Payee covering certain Shares
of capital stock of the Payee owned by Maker (the "Pledge Shares"), as more
fully described and defined in the Stock Purchase Agreement. At the option of
the Maker, the Principal Amount can be paid and satisfied in whole or in part by
assignment and release to the Payee of Pledged Shares. Such Pledged Shares shall
be valued on the basis of $2.875 per share.
The remedies of the Holder as provided herein and in any other
documents governing or securing repayment hereof shall be cumulative and
concurrent and may be pursued singly, successively, or together, at the sole
discretion of the Holder, and may be exercised as often as occasion therefor
shall arise.
Time is of the essence of this Note.
THIS PROMISSORY NOTE REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES.
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<PAGE> 123
Notwithstanding anything to the contrary contained herein or in any
instrument securing the payment hereof, including without limitation, the
Security Agreement - Pledge, the exclusive remedies of the Holder hereof for the
failure of Maker to pay any portion of the principal or interest owing hereunder
or to perform any of its obligations under any instrument securing the payment
hereof, shall be limited to proceeding against the Collateral as defined in and
encumbered by the Security Agreement - Pledge. Should Maker fail to pay any sum
required to be paid hereunder, or fail to perform any obligation required to be
performed under any instrument securing the payment hereof, any judicial
proceedings brought by the holder hereof against Maker shall be limited to
proceedings against the Collateral defined in and encumbered by the Security
Agreement - Pledge, and no attachment, execution, or other writ or process shall
be sought, issued, or levied upon any other assets, properties, or funds of
Maker. Without limiting the generality of the foregoing, no deficiency judgment
shall ever besought or obtained by the holder hereof against Maker in connection
with this Note.
EXECUTED as of the date first above written.
MAKER:
--------------------------------------------
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<PAGE> 124
EXHIBIT "C"
SECURITY AGREEMENT-PLEDGE
THIS SECURITY AGREEMENT-PLEDGE is executed effective the ______ day of
____________, 199____, by _______________________________________ ("Pledgor"),
in favor of HOMECOM COMMUNICATIONS, INC., a Delaware corporation ("Secured
Party").
FOR VALUE RECEIVED, the receipt and sufficiency of which is hereby
acknowledged, Pledgor hereby grants to Secured Party the pledge and security
interest hereinafter set forth and agrees with Secured Party as follows:
ARTICLE I - SECURITY INTEREST
Section 1.01 Pledge of Stock. Pledgor hereby grants to Secured Party a
pledge of and security interest in and agrees and acknowledges that Secured
Party has and shall continue to have a pledge of and security interest in
__________________ shares of Common Stock, par value $0.001 per share of Secured
Party, represented by stock certificate Nos. ______________________. All
property described above in which Secured Party is herein granted a security
interest shall hereinafter be called the "Collateral." The undersigned agrees to
execute such stock powers, endorse such instruments or execute such additional
pledge agreements or other documents as may be required by Secured Party in
order to effectively grant to Secured Party the pledge of and security interest
in the Collateral.
Section 1.02 Obligations Secured. The security interest, pledge and
assignment granted hereby is to secure the payment of the indebtedness of
Pledgor to Secured Party evidenced by that certain $_______________________
Promissory Note (the "Promissory Note") of even date herewith executed by
Pledgor and payable to the order of Secured Party (hereinafter called the
"Obligations").
ARTICLE 2 - WARRANTIES AND COVENANTS OF PLEDGOR
Pledgor hereby warrants, covenants and agrees that:
Section 2.01 Title to Collateral. Secured Party hereby acknowledges
that Pledgor's title to the Collateral was acquired from Secured Party pursuant
to the terms of that certain Merger Agreement of even date herewith (the "Merger
Agreement"), and therefore Pledgor's title to the Collateral is as good as
Secured Party had thereto. Based on the preceding sentence, Pledgor is the owner
of the Collateral, free of any adverse claim, security interest, restriction or
encumbrance, except for the security interest evidenced hereby, and Pledgor will
defend the Collateral against all claims and demands of all persons at any time
claiming the same or any interest therein, except those persons claiming by
through or under Secured Party. As to the Collateral, Pledgor further represents
and warrants (as of the time of delivery of same to Secured Party) that such
Collateral is not subject to any other interest, option or right of any third
person which Pledgor has granted.
<PAGE> 125
Section 2.02 Conveyance of Collateral. Pledgor will not sell or offer
to sell or otherwise transfer or encumber the Collateral or any interest therein
without the written consent of Secured Party, except as set forth in the Stock
Purchase Agreement. Pledgor will keep the Collateral free from any and all
adverse liens, security interests and encumbrances.
Section 2.03 Voting Rights. Notwithstanding the fact that the
Collateral has been pledged to Secured Party, until such time as there has
occurred an Event of Default, Pledgor shall be entitled to exercise all its
rights attributable to the Collateral. Upon an Event of Default, Secured Party
shall have the right, at its discretion, to transfer to or register in the name
of Secured Party or any nominee of Secured Party any of the Collateral, and/or
to exercise any or all voting rights as to any or all of the Collateral until
such time as the Collateral has been sold, disposed of or otherwise foreclosed
upon in accordance with the terms of this Security Agreement. For such purposes
and effective upon Pledgor's default hereunder, Pledgor hereby names,
constitutes and appoints Secured Party as Pledgor's proxy in Pledgor's name,
place and stead to vote any and all of the securities, as such proxy may elect,
for and 'in the name, place and stead of Pledgor, as to all matters coming
before shareholders, such proxy to be irrevocable and deemed coupled with an
interest. The rights, powers and authority of said proxy shall remain in full
force and effect, and shall not be rescinded, revoked, terminated, amended or
otherwise modified, until all Obligations have been fully satisfied.
Section 2.04 Further Assurances. Pledgor agrees to execute such stock
powers, endorse such instruments, or execute such additional pledge agreements
or other documents as may be required by Secured Party in order effectively to
grant to Secured Party the security interest in (and pledge and assignment of)
the Collateral and to enforce and exercise Secured Party's rights regarding
same.
Section 2.05 Securities Laws. Pledgor hereby agrees to cooperate fully
with Secured Party in order to permit Secured Party to sell (after default), at
foreclosure or other private sale, the Collateral pledged hereunder.
Specifically, Pledgor agrees to fully comply with the securities laws of the
United States and of the State of Georgia and to take such action as may be
necessary to permit Secured Party to sell or otherwise transfer the securities
pledged hereunder in compliance with such laws after Pledgor's default
hereunder, but Pledgor shall have no obligation to expend any sum of money in
connection therewith nor does this Section 2.05 require Pledgor to register the
collateral with the U.S. Securities and Exchange Commission.
Section 2.06 Private Sales. Because of the Securities Act of 1933, as
amended or any other laws or regulations, there may be legal restrictions or
limitations affecting Secured Party in any attempts to dispose of certain
portions of the Collateral in the enforcement of its rights and remedies
hereunder. For these reasons, Secured Party is hereby authorized by Pledgor, but
not obligated, 'in the event of any default hereunder, to sell all or any part
of the Collateral at private sale, subject to investment letter or in any other
manner which will not require the Collateral, or any part thereof, to be
registered in accordance with the Securities Act of 1933, as amended, or the
rules and regulations promulgated thereunder, or any other law or regulation.
Secured Party is also hereby authorized by Pledgor, but not obligated, to take
such actions, give such notices, obtain such rulings and consents, and do such
other things as Secured Party may deem appropriate
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<PAGE> 126
in the event of a sale or disposition of any of the Collateral. Pledgor clearly
understands that Secured Party may in its discretion approach a restricted
number of potential purchasers and that a sale under such circumstances may
yield a lower price for the Collateral or any part or parts thereof than would
otherwise be obtainable if same were registered and sold in the open market, and
Pledgor agrees that such private sales shall constitute a commercially
reasonable method of disposing of the Collateral.
ARTICLE 3 - EVENTS OF DEFAULT
Pledgor shall be in default ("Event of Default") under this security
Agreement upon the happening of any of the following events or conditions:
Section 3.01 Payment of Obligations. Default in the payment of any
principal or interest on any of the Obligations when due, after notice and the
expiration of all grace and cure periods set forth in the Promissory Note.
ARTICLE 4 - REMEDIES
Section 4.01 Sale. In the event of the default in the payment of any of
the Obligations or any principal, interest or other amount payable thereunder,
when due, or upon the happening of any of the events of default specified
herein, and at any time thereafter, at the option of the holder thereof, any or
all of the Obligations shall become immediately due and payable, and Secured
Party shall have and may exercise with reference to the Collateral and
Obligations, any and all of the rights and remedies of a secured party under the
Uniform Commercial Code as then in effect in the State of Georgia, and as
otherwise granted herein or under any other applicable law (all of which rights
and remedies shall be cumulative), including without limitation, the right and
power to sell, at public or private sale or sales, or otherwise dispose of or
utilize the Collateral and any part or parts thereof in any manner authorized or
permitted under this Agreement or under the Uniform Commercial Code of Georgia
after default hereunder, and to apply the proceeds thereof toward payment of the
Obligations, in such order or manner as prescribed by the Promissory Note;
provided however, any foreclosure of the security interest in the Collateral
conducted pursuant to this Agreement or otherwise shall be in full satisfaction
of the Promissory Note, whereupon the Promissory Note shall be extinguished in
full and Secured Party shall have no right to pursue any deficiency claim
against Pledgor. Secured Party may also elect to hold the Collateral as treasury
stock or cancel the Collateral in full and final satisfaction of that portion of
the Obligations or any principal, interest, or any other amount payable
thereunder represented by the value of the Collateral determined as follows: one
hundred percent (100%) of the weighted (by trading volume) average per share
trading price of Secured Party common stock for the last five (5) trading days
immediately preceding the date the Collateral is actually released and delivered
to the Secured Party. Pledgor hereby waives (to the extent permitted by law) all
rights of redemption, stay and/or appraisal which the Pledgor now has or may at
any time in the future have under any rule of law or statute now existing or
hereafter enacted. The Pledgee and Pledgor agree that the exercise of any such
remedy by the Secured Party shall be conclusively deemed to conform to
commercially reasonable standards under the Uniform Commercial Code as in effect
in the State of Georgia.
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<PAGE> 127
Section 4.02 Pledgor's Compliance with Laws. Pledgor hereby agrees to
cooperate fully with Secured Party in order to permit Secured Party to sell, at
foreclosure or other private sale, the Collateral pledged hereunder.
Specifically, Pledgor agrees to fully comply with the securities laws of the
United States and of the State of Georgia and to take such action as may be
necessary to permit Secured Party to sell or otherwise transfer the securities
pledged hereunder in compliance with such laws.
ARTICLE 5 - MISCELLANEOUS
Section 5.01 Successors and Assigns. All rights of Secured Party
hereunder shall inure to the benefit of his administrators, successors and
assigns; and all obligations of Pledgor shall bind his heirs, executors,
administrators, successors and assigns.
Section 5.02 Remedies Cumulative. The rights and remedies of Secured
Party hereunder are cumulative, and the exercise of any one or more of the
remedies provided herein shall not be construed as a waiver of any of the other
remedies of Secured Party.
Section 5.03 Interpretation. Any provision found to be invalid under
the laws of the State of Georgia, or any other state having jurisdiction or
other applicable law, shall be invalid only with respect to the offending
provision. The laws of the State of Georgia shall apply to this Agreement and
its construction and interpretation without regard to principles of conflicts of
laws. Venue shall lie in Superior Court of Fulton County, Georgia, or the United
States District Court for the Northern District of Georgia, Atlanta Division.
The parties hereto acknowledge that such court has the jurisdiction to interpret
and enforce the provisions of this Agreement and the parties waive any and all
objections which they may have as to personal jurisdiction or venue in any of
the above courts.
Section 5.04 Notices. All notices, demands and requests which may be
given or which are required to be given by either party to the other shall be in
writing and shall be deemed effective when either: personally delivered to the
intended recipient; sent by certified or registered mail, return receipt
requested, addressed to the intended recipient at the address specified below;
delivered in person to the address set forth below for the party to which the
notice was given; deposited into the custody of a nationally recognized
overnight delivery service such as Federal Express Corporation, Emery or
Purolator, addressed to such party at the address specified below, or sent by
facsimile, telegram or telex, provided that receipt for such facsimile, telegram
or telex is verified by the sender and followed by a notice sent in accordance
with one of the other provisions set forth above. Notices shall be effective on
the date of delivery or receipt, or, if delivery is not accepted, on the earlier
of the date that delivery is refused or three (3) days after the date the notice
is mailed. For purposes of this Section, the addresses of the parties for all
notices are as set forth adjacent to their respective signatures hereto (unless
changes by similar notice in writing are given by the particular person whose
address is to be changed). Any party hereto may designate a different address by
written notice given to the other parties.
EXECUTED as of the date set forth hereinabove.
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Address: PLEDGOR:
- ---------------------- ----------------------------------------
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<PAGE> 129
SECURED PARTY:
HOMECOM COMMUNICATIONS, INC.
----------------------------------------
By:
-------------------------------------
Title:
----------------------------------
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<PAGE> 130
STOCK POWER
EFFECTIVE ONLY AFTER DEFAULT
FOR VALUE RECEIVED, _________________________________ hereby sells,
assigns and transfers unto HOMECOM COMMUNICATIONS, INC.
__________________________________________ (_______) shares of the Common Stock,
$.0001 par value per share, of HOMECOM COMMUNICATIONS, INC., a Delaware
corporation (the "Corporation"), standing in his name on the books of the
Corporation represented by Certificate No. _____ herewith, and does hereby
irrevocably constitute and appoint ____________________________________,
attorney to transfer the said stock on the Books of the Corporation with full
power of substitution in the premises.
This Stock Power is executed contemporaneous with and in furtherance of
that certain Security Agreement - Pledge of even date herewith executed by
__________________________as pledgor, and HOMECOM COMMUNICATIONS, INC., as
secured party, and shall only be valid to effect a transfer of the said Stock
covered hereby after Default has occurred in the payment of the Obligations all
in accordance with the terms of said Security Agreement - Pledge.
Executed effective for all purposes as of ______, 199___.
----------------------------------------
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<PAGE> 131
EXHIBIT "D"
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made as of the ______
day of ___________, 1998 (the "Effective Date"), between HOMECOM COMMUNICATIONS,
INC., a Georgia corporation ("HomeCom"), FIRST INSTITUTIONAL MARKETING, INC., an
Oklahoma corporation ("FIMI-Ok"), FIMI SECURITIES, INC., a Texas corporation
("FIMI Securities"), PREMIER FINANCIAL SERVICES, INC., a Texas corporation
("Premier") and ALL THINGS FINANCIAL, INC., a Florida corporation ("ATFI")
(FIMI-Ok, FIMI Securities, Premier and ATFI are sometimes collectively called
the "Company" or "Companies") and [Daniel A. Delity/David B. Frank/James Wm.
Ellsworth], a resident of Houston, Harris County, Texas (the "Employee").
W I T N E S S E T H:
WHEREAS, pursuant to the terms of that certain Merger Agreement and
related documents and agreements of even date herewith (the "Merger Agreement")
by and between the Employee, among others, and HomeCom, HomeCom and its
affiliates have acquired all of the issued and outstanding shares of the capital
stock of the Companies; and
WHEREAS, until the Effective Date (as defined in the Merger Agreement),
the Employee has been a senior executive officer of the Companies; and
WHEREAS, after giving effect to the Merger Agreement, the Companies
shall become wholly-owned subsidiaries of HomeCom; and
WHEREAS, HomeCom desires to retain the services of and employ the
Employee to continue in his role as a senior executive officer of the Companies,
and the Employee desires to provide such services upon the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, the parties hereto, each intending to be legally bound hereby,
agree as follows:
1. Employment. HomeCom and the Companies hereby employ the
Employee as their employee in the capacity of [President/Senior Vice
President/Vice President and Chief Financial Officer] of each of the Companies,
and the Employee hereby accepts such employment. During the term of employment
under this Agreement (the "Employment Term"), Employee shall at all times serve
as a member of the Board of Directors of each of the Companies. During the
Employment Term, the Employee shall perform such duties as shall reasonably be
required of an employee of HomeCom which are outlined on Exhibit "A" attached
hereto and incorporated herein by reference for all purposes. Employee agrees
not to take any action which would impair or undermine the terms and conditions
of the Merger Agreement and the related agreements.
<PAGE> 132
2. Performance. The Employee agrees to devote his entire business
efforts to the performance of his duties hereunder; provided, however, that the
Employee may engage in passive securities investment activities for his own
account so long as they do not interfere with the performance of his duties
hereunder. Employee agrees to devote his or her full time and energy to the
Companies' business and shall not during the term of employment work or perform
services in any advisory or other capacity for any other individual or entity.
3. Term of Employment. Unless otherwise terminated in accordance
with the terms hereof, the initial term of this Agreement (the "Employment
Term") shall be three (3) years commencing on the Effective Date, provided
however, that after the expiration of such initial three (3) year term, and
unless terminated in writing by Employee, prior to its initial or subsequent
date of expiration, this Agreement shall automatically renew for additional one
(1) year terms. Notwithstanding anything contained herein to the contrary,
Employer may terminate this Agreement at any time by written notice as further
described in Sections 14 and 15.
4. Basic Compensation. The basic minimum annual salary (the
"Salary") of the Employee for his employment services hereunder shall be
[Delity: $150,000.00; Frank and Ellsworth: $120,000.00] Thousand and No/100
Dollars per year, commencing on the Effective Date throughout the Employment
Term. The Salary shall be payable in equal bi-weekly installments. Employee's
salary shall be prorated on a daily basis for the years or months, as the case
may be, in which he commences or terminates his employment relationship
hereunder. The Employee shall receive an annual review to determine eligibility
to receive an annual raise in his Salary in each year of the Employment Term
together with performance bonuses based upon the performance of the Companies
during the previous annual period, subject to the sole determination of the
Compensation Committee of the HomeCom Board of Directors, in its sole
discretion.
5. Benefits. As an employee of HomeCom, Employee shall be
entitled to participate in all profit sharing plans, supplemental compensation
arrangements, stock option incentive plans, medical, dental and life insurance
programs or any other fringe benefits offered by HomeCom to its senior
management employees (the "Benefits"). The Salary received by the Employee
hereunder shall be in addition to the foregoing Benefits.
6. Expense Account and Vacations. HomeCom agrees to reimburse the
Employee for all expenses reasonably incurred by him on behalf of the Companies
in accordance with the prevailing practice and policy of HomeCom, which
prevailing practice and policy shall be disseminated to the Employee by HomeCom
contemporaneous with the execution of this Agreement. In addition, the Employee
shall be entitled to that number of days of paid vacation and paid sick leave as
is consistent with the prevailing practice and policy of HomeCom for other
senior management employees in the same or similar position as that held by the
Employee hereunder.
7. Customer Non-Solicitation. Employee agrees that for a period
of one (1) year immediately following termination of Employee's employment with
the Companies for any reason, including, without limitation, voluntary
resignation from employment by Employee ("Non-
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<PAGE> 133
Solicitation Period"), Employee shall not, on Employee's own behalf or on behalf
of any person, firm, partnership, association, corporation or business
organization, entity or enterprise, solicit, contact, call upon, communicate
with or attempt to communicate with any customer or immediate prospect of the
Companies, or any representative of any customer or immediate prospect of the
Companies with whom the Employee had Material Contact ("Material Contact") with
a view to sale or providing any product or service competitive or potentially
competitive with any product or service sold or provided or under development by
the Companies during the time of two (2) years immediately preceding cessation
of Employee's employment with the Companies, provided that the restrictions set
forth in this paragraph shall apply only to customers or prospects of the
Companies, or representatives of customers or prospects of the Companies, with
which Employee had substantial contact during such two (2) year period. The
actions prohibited by this paragraph shall not be engaged in by Employee
directly or indirectly, whether as director, officer, manager, salesperson,
agent, technical support, sales or service representative, developer, or
otherwise. As used herein, "Material Contact" means contact between Employee and
each customer or immediate prospect (A) with whom Employee dealt; (B) whose
dealings with the Companies were coordinated or supervised by Employee; (C)
about whom Employee obtained Confidential Information in the ordinary course of
business as a result of Employee's association with the company; or (D) who
receives services provided by the Companies, the sale or provision of which
results or resulted in compensation, commissions or earnings for Employee, in
each of cases (A) through (D) within two years prior to the date of Employee's
termination of employment.
8. Non-Competition. Employee agrees that during the term of
Employee's employment Employee shall not, on Employee's own behalf or on behalf
of any person, firm, partnership, association, corporation or business
organization, entity or enterprise, engage in any business involving the sale of
insurance and securities products through financial institutions and their
customers. Employee also agrees that during the term of the Non-Solicitation
Period, Employee shall not, in any place in which the Companies do business, on
Employee's own behalf of on behalf of any person, firm, partnership,
association, corporation or business organization, entity or enterprise, engage
in any business involving the sale of insurance and securities products through
financial institutions and their customers.
The actions prohibited by this paragraph shall be engaged in by
Employee directly or indirectly, whether as officer, director, manager,
salesperson, agent, technical support, sales or service representative,
developer, or otherwise. Employee acknowledges that the Companies provide
products and services to customers throughout the United States given the global
scope of the internet and that a more limited territorial restriction on the
non-competition provisions of this paragraph would not adequately protect the
legitimate interests of the Companies. Notwithstanding anything contained herein
to the contrary, nothing shall prevent the Employee from having a financial
interest in a publically-traded competitor of HomeCom if that interest is in the
form of ownership of less than five (5%) percent of the outstanding stock of
such company.
9. Employee Non-Solicitation. During the Non-Solicitation Period,
Employee agrees that Employee shall not call upon, solicit, recruit, or assist
others in calling upon, recruiting or
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<PAGE> 134
soliciting any person who is or was an employee of the Companies, who is or was
an employee of the Companies within 12 months of such solicitation or
recruitment for the purpose of having such person terminate his employment with
the Companies or work in any other corporation, association, entity, or
business.
10. Equitable Relief. The parties to this Agreement acknowledge
that a breach by Employee of any of the terms or conditions of this Agreement
will result in irrevocable harm to the Companies and that the remedies at law
for such breach may not adequately compensate the Companies for damages
suffered. Accordingly, Employee agrees that in the event of such breach, the
Companies shall be entitled to injunctive relief or such other equitable remedy
as a court of competent jurisdiction may provide. Nothing contained herein will
be construed to limit the Companies's right to any remedies at law or equity,
including the recovery of damages for breach of this Agreement.
11. No Defense. The existence of any claim, demand, action or
cause of action that Employee may have against the Companies, whether predicated
upon this Agreement or otherwise, shall not constitute a defense to the
enforcement by the Companies of any of the covenants contained in Sections, 7,
8, 9 10, 12, and 13 hereof (the "Non-Competition Sections"). For purposes of the
Non-Competition Sections, Companies shall include HomeCom Communications, Inc.,
Insurance Resource Center, Inc., First Institutional Marketing, Inc., Premier
Financial Services, Inc., FIMI Securities, Inc., All Things Financial, Inc. and
their subsidiaries and affiliates.
12. Confidential Information.
(a) The Companies may disclose to Employee certain Trade
Secrets and Confidential Information (defined below). Employee
acknowledges and agrees that the Trade Secrets and Confidential
Information are the sole and exclusive property of the Companies (or a
third party providing such information to the Companies) and that the
Companies or such third party owns all worldwide rights therein under
patent, copyright, trade secret, confidential information, or other
property right. Employee acknowledges and agrees that the disclosure of
the Trade Secrets and Confidential Information to Employee does not
confer upon Employee any license, interest or rights of any kind in or
to the Trade Secrets or Confidential Information. Employee may use the
Trade Secrets and Confidential Information solely for the benefit of
the Companies while Employee is employed or retained by the Companies.
Except in the performance of services for the Companies, Employee will
hold in confidence and not reproduce, distribute, transmit, reverse
engineer, decompile, disassemble, or transfer, directly or indirectly,
in any form, by any means, or for any purpose, the Trade Secrets or
Confidential Information or any portion thereof. Employee agrees to
return to the Companies, upon request by the Companies, the Trade
Secrets and Confidential Information and all materials relating
thereto.
(b) Employee's obligations under this Agreement with
regard to the Trade Secrets shall remain in effect for as long as such
information shall remain a trade secret
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<PAGE> 135
under applicable law. Employee acknowledges that its obligations with
regard to the Confidential Information shall remain in effect while
Employee is employed or retained by the Companies and for three (3)
years thereafter. As used herein, "Trade Secrets" means the trade
secrets of the Companies and its subsidiaries and affiliates as defined
in the Georgia Trade Secrets Act. As used herein, "Confidential
Information" means information of the Companies, other than Trade
Secrets, and its subsidiaries and affiliates, its licensors, vendors,
suppliers, customers or prospective licensors, vendors, suppliers or
customers, that is of value to its owner and is treated as
confidential, including, but not limited to, technical or non-technical
data, formulas, patterns, compilations, programs, devices, methods,
techniques, drawings, processes, financial data, financial plans,
product plans, or a list of actual or potential customers or suppliers,
future business plans, licensing strategies, advertising campaigns,
information regarding executives and employees, and the terms and
conditions of this Agreement.
(c) Employee acknowledges that existing or prospective
customers of the Companies may be companies which are publicly traded
and subject to various rules and regulations of the Securities and
Exchange Commission. Employee acknowledges that the Companies has a
policy that no one associated with the Companies may trade in
securities of any customer of the Companies or the Companies themselves
based on material, nonpublic information concerning the customer.
Additionally, the Companies expressly forbids the unauthorized
disclosure of any nonpublic information acquired by anyone associated
with the Companies relating to a customer of the Companies. Employee
shall notify the Companies prior to trading the securities of any
customer or Securities of the Companies.
(d) Nothing contained herein shall be deemed to waive any
of the Companies's rights or remedies under any applicable trade
secrets acts, including, but not limited to, the Georgia Trade Secrets
Act.
(e) Upon termination of employment for any reason,
Employee shall return immediately to the Companies all documents,
property, and other records of the Companies, and all copies thereof,
within Employee's possession, custody or control, including but not
limited to any materials containing any Trade Secrets or Confidential
Information (as defined below) or any portion thereof.
13. Ownership. For purposes of this Agreement, "Work Product"
shall mean the data, materials, documentation, computer programs, inventions
(whether or not patentable), and all works of authorship, including all
worldwide rights therein under patent, copyright, trade secret, confidential
information, or other property right, created or developed in whole or in part
by Employee, whether prior to the date of this Agreement or in the future while
employed by the Companies (whether developed during work hours or not) and which
either (i) relate to the present or anticipated business, research,
developments, tests, products, work or activities of the Companies or (ii)
result from or are suggested by any work Employee may do for the Companies. All
Work
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Product shall be considered work made for hire by the Employee and owned by the
Companies. If any of the Work Product may not, by operation of the law, be
considered work made for hire by Employee for the Companies, or if ownership of
all right, title, and interest of the intellectual property rights therein shall
not otherwise vest exclusively in the Companies, Employee hereby assigns to the
Companies, and upon the future creation thereof automatically assigns to the
Companies, without further consideration, the ownership of all Work Product. The
Companies shall have the right to obtain and hold in its own name copyrights,
registrations, and any other protection available in the Work Product. Employee
agrees to perform, during or after Employee's employment, such further acts as
may be necessary or desirable to transfer, perfect, and defend the Companies's
ownership of the Work Product that are reasonably requested by the Companies.
14. Termination Without Compensation.
(a) The Employment Term will terminate upon the
Employee's written notice of his non-renewal of this Agreement, or upon
the effective date specified in a letter of resignation from Employee
to the Board of Directors of HomeCom.
(b) The Employment Term may also be terminated by HomeCom
immediately upon prior written notice to the Employee upon the
occurrence of any of the following:
(i) the commission by the Employee of any deliberate and
premeditated act involving moral turpitude
detrimental to the economic interests of HomeCom or
one of the Companies; or
(ii) the conviction of the Employee of a felony.
(c) The Employment Term may also be terminated by HomeCom
upon thirty (30) days prior written notice to the Employee upon the
occurrence of any of the following:
(i) the willful damage of a material nature directly
caused by the Employee to HomeCom; or
(ii) Employee's gross negligence of a material nature in
connection with the performance of his duties.
(d) Upon termination of the Employee's employment under
subsections 14(a), (b), or (c) above, the parties hereto will be
relieved of any further obligations hereunder from and after the
effective date of such termination, except for any obligations set
forth in Sections 7, 8, 9, and 10.
15. Termination Without Cause. In the event the Employee's
employment hereunder is terminated for any reason other than those specified in
Section 14(a), (b), or (c) above, (a)
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HomeCom and the Companies shall pay to Employee, as severance compensation for
such termination, within ten (10) days after the date of such termination, in
the aggregate, the following sum:
(i) If such termination occurs during the first
twenty-four (24) months of the initial term of this Agreement, Employee
shall receive a lump sum amount equal to the balance of his Salary over
the remaining months in the initial three (3) year term of this
Agreement; or
(ii) If such termination occurs during the last twelve
(12) months of the initial term of this Agreement, or during any
renewal term thereafter, Employee shall receive a lump sum amount equal
to one (1) full years' Salary (according to Employee's most recent pay
rate); and
(b) the Employee's rights and interests in all other Benefits in which Employee
is then a participant (subject to the terms of such benefit plans), upon such
termination, shall immediately vest in full and be exercisable by Employee
without restriction.
16. Change in Control. In the event HomeCom shall enter into
discussions regarding a "change in control", as defined herein, of any of the
Companies, HomeCom shall promptly advise Employee in writing of pendency of such
discussions and discuss with Employee the material terms of any such "change of
control" prior to making any commitments, whether written or oral, regarding a
change in control. For purposes of this Section 13, a "change in control" of the
Companies shall mean:
(i) any transaction, whether by merger, consolidation, asset sale,
tender offer, reverse stock split or otherwise, which results in the
acquisition or beneficial ownership (as such term is defined under
rules and regulations promulgated under the Securities Exchange Act of
1934, as amended) by any person or entity or any group of persons or
entities acting in concert, of 50% or more of the outstanding shares of
Common Stock of a Companies; or
(ii) the replacement of a majority of the members of the Board of
Directors (as constituted on the date of this Agreement) of a
Companies, including Daniel A. Delity, David B. Frank and James Wm.
Ellsworth; or
(iii) the sale of all or substantially all of the assets of any
Companies.
17. Employee's Right to Terminate Upon Diminution of Title, Role
or Compensation. In the event of a material negative change in the Employee's
title, role, duties or compensation under this Agreement (as such title, role
duties and compensation is set forth herein or in Exhibit "A" hereto) ("Material
Negative Change"), Employee shall have sixty (60) days from the effective date
of such Material Negative Change to notify the Companies in writing of such
Material Negative Change stating in detail the basis for such Material Negative
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Change and to advise HomeCom of his intent to terminate this Agreement,
whereupon (a) HomeCom and the Companies shall have thirty (30) days to cure such
Material Negative Change. In the event that HomeCom is unable to cure such
Material Negative Change within thirty (30) days of such notice, HomeCom and the
Companies shall in the aggregate pay to Employee as severance compensation for
such termination, the following sum (such sum being payable in full to Employee
within ten (10) days after the date of such written notice):
(i) If such Material Negative Change occurs during the
first twenty-four (24) months of the initial term of this Agreement,
Employee shall receive a lump sum amount equal to the balance of his
Salary over the remaining months in the initial three (3) year term of
this Agreement; or
(ii) If such Material Negative Change occurs during the
last twelve (12) months of the initial term of this Agreement or during
any renewal term thereafter, Employee shall receive a lump sum amount
equal to one (1) full years' Salary (according to Employee's most
recent pay rate); and
(b) the Employee's rights and interests in all other Benefits in which Employee
is then a participant (subject to the terms of such benefit plans), upon such
termination, shall immediately vest in full and be exercisable by Employee
without restriction.
18. Death of the Employee. If the Employee dies during the
Employment Term, (a) this Agreement shall terminate, and (b) the Companies will
pay to the Employee's estate the Employee's Salary through the end of the
calendar month in which such death occurs. The HomeCom and Companies benefit
plans in which Employee was a participant prior to his death shall vest in full
upon his death and be exercisable by Employee's estate, subject to the terms of
such benefit plans.
19. Compliance with Securities Laws. Employee agrees to comply
with all applicable state and federal securities laws, rules, and regulations,
as may be in effect from time to time.
20. Governing Law. The terms of this Agreement shall be governed
by the laws of the State of Texas. Venue shall lie in Superior Court of Fulton
County, Georgia, or the United States District Court for the Northern District
of Georgia, Atlanta Division. The parties hereto acknowledge that such Court has
the jurisdiction to interpret and enforce the provisions of this Agreement and
the parties waive any and all objections which they may have as to personal
jurisdiction or venue in any of the above Courts.
21. Assignability. The Employee may not assign his interest in or
delegate his duties under this Agreement. The rights and obligations of HomeCom
hereunder may be assigned only by operation of law in connection with a merger
in which HomeCom is not the surviving corporation or in connection with the sale
of substantially all of the assets of HomeCom, and in the latter event such
assignment shall not relieve HomeCom of its obligations hereunder.
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22. Indemnification of Employee as a Director and Officer of the
Companies. HomeCom and each of the Companies hereby agree that they shall
jointly and severally indemnify Employee to the fullest extent permitted by
applicable law of, from and against all losses, costs, claims, judgments and
expenses, as and when incurred by Employee by reason of his being or having been
a director and/or an officer of HomeCom and the Companies; provided, however, no
such indemnification shall be available to Employee for matters resulting from
those matters referred to in Sections 14(b) or (c) above or arising from an
indemnity claim in connection with the Merger Agreement. The indemnification
provided for herein shall not be deemed exclusive of any other rights to which
Employee may be entitled under any by-law, agreement, insurance policy, vote of
shareholders or otherwise.
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23. Binding Effect. This Agreement shall be binding upon and inure
to the benefit of HomeCom, its successors and assigns.
24. Notices. All notices, demands and requests which may be given
or which are required to be given by either party to the other, and any exercise
of a right of termination provided by this Agreement, shall be in writing and
shall be deemed effective when either: (a) personally delivered to the intended
recipient; (2) sent by certified or registered mail, return receipt requested,
addressed to the intended recipient at the address specified below; (3)
delivered in person to the address set forth below for the party to which the
notice was given; (4) deposited into the custody of a nationally recognized
overnight delivery service such as Federal Express Corporation, Emery or
Purolator, addressed to such party at the address specified below; or (5) sent
by facsimile, telegram or telex, provided that receipt for such facsimile,
telegram or telex is verified by the sender and followed by a notice sent in
accordance with one of the other provisions set forth above. Notices shall be
effective on the date of delivery or receipt, of, if delivery is not accepted,
on the earlier of the date that delivery is refused or three (3) days after the
date the notice is mailed. For purposes of this Paragraph, the addresses of the
parties for all notices are as follows (unless changes by similar notice in
writing are given by the particular person whose address is to be changed):
If to the Employee, to _______________________________, Texas
770____;
If to HomeCom or any Companies, to Fourteen Piedmont Center,
Suite 100, 3535 Piedmont Road, Atlanta, GA 30305.
25. Entire Agreement; Modification. This Agreement constitutes the
entire agreement of the parties hereto with respect to the subject matter hereof
and may not be modified or amended in any way except in writing by the parties
hereto.
26. Waiver. No waiver by the Companies of any breach by the
Employee of this Agreement shall be construed to be a waiver as to succeeding
breaches.
27. Severability. In any provision or part of any provision of
this Agreement is held invalid or unenforceable by a court of competent
jurisdiction, such holding shall not affect the enforceability of any other
provisions or parts thereof, and all other provisions and parts thereof shall
continue in full force and effect.
28. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original but all of which together shall
constitute one and the same agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
or as of the date and year first above written.
HOMECOM:
HOMECOM COMMUNICATIONS, INC.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
COMPANIES:
FIRST INSTITUTIONAL MARKETING, INC.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
FIMI SECURITIES, INC.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
PREMIER FINANCIAL SERVICES, INC.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
ALL THINGS FINANCIAL, INC.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
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EMPLOYEE:
--------------------------------------------
[Daniel A. Delity]
[David B. Frank]
[James Wm. Ellsworth]
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<PAGE> 143
Exhibit __
Employment Agreement of
Daniel A. Delity
During the term of this Agreement, Mr. Delity shall serve as a Director and as
the President and Chief Executive Officer of Premier Financial Services, Inc.;
First Institutional Marketing Inc., an Oklahoma Corp; and All Things Financial
Inc.; a Florida Corporation. As President and CEO Mr. Delity will serve as the
most senior officer of each Corporation; exercising all of the powers granted
the President by the Articles of Incorporation, Bylaws and Board of Directors of
the Corporations. As President Mr. Delity will be responsible for and the
ultimate authority regarding all of the business and affairs of the
Corporations, subject to the ultimate authority of the Board of Directors as
authorized by applicable law.
During the term of this Agreement, Mr. Delity shall serve as a Director and as
the Executive Vice President of FIMI Securities, Inc. As Executive Vice
President (EVP) Mr. Delity will serve as the second most senior officer of the
Corporation; exercising all of the powers granted the Executive Vice President
by the Articles of Incorporation, Bylaws and Board of Directors of the
Corporations. In the event of a temporary disability of the President, during
the term of this Agreement, Mr. Delity will act in the stead of the President.
Mr. Delity's role as Executive Vice President will include such matters as are
assigned by the President of the Corporation, subject to the ultimate authority
of the Board of Directors as authorized by applicable law.
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<PAGE> 144
Exhibit __
Employment Agreement of
David B. Frank
During the term of this Agreement, Mr. Frank shall serve as a Director and as
the President and Chief Executive Officer of FIMI Securities, Inc. As President
and CEO, Mr. Frank will serve as the most senior officer of the Corporation;
exercising all of the powers granted the President by the Articles of
Incorporation, Bylaws and Board of Directors of the Corporation. As President,
Mr. Frank will be responsible for and the ultimate authority regarding all of
the business and affairs of the Corporation, subject to the ultimate authority
of the Board of Directors as authorized by applicable law. Mr. Frank will serve
as the General Securities Principal of the Corporation.
During the term of this Agreement, Mr. Frank shall serve as a Director and as
the Executive Vice President of Premier Financial Services, Inc., First
Institutional Marketing Inc., an Oklahoma Corp, and All Things Financial Inc. a
Florida Corporation. As Executive Vice President, Mr. Frank will serve as the
second most senior officer of the Corporation; exercising all of the powers
granted the Executive Vice President by the Articles of Incorporation, Bylaws
and Board of Directors of the Corporations. In the event of a temporary
disability of the President, during the term of this Agreement, Mr. Frank will
act in the stead of the President. Mr. Frank's role as Executive Vice President
will include such matters as are assigned by the President of the Corporation,
subject to the ultimate authority of the Board of Directors, as authorized by
applicable law.
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<PAGE> 145
Exhibit __
Employment Agreement of
James Wm. Ellsworth
During the term of this Agreement, Mr. Ellsworth shall serve as a Director and
as the Executive Vice President, Secretary and Treasurer of Premier Financial
Services, Inc.; First Institutional Marketing Inc., an Oklahoma Corp; All Things
Financial Inc., a Florida Corporation; and FIMI Securities, Inc. As Executive
Vice President, Secretary and Treasurer, Mr. Ellsworth will serve as the third
most senior officer of the Corporations; exercising all of the powers and
authority granted the Executive Vice President, Secretary and Treasurer by the
Articles of Incorporation, Bylaws and Board of Directors of the Corporations. In
the event of a temporary disability of any Senior Vice President, during the
term of this Agreement, Mr. Ellsworth will act in the stead of such executive.
Mr. Ellsworth's role as Executive Vice President will include such matters as
are assigned by the President of the Corporations, subject to the ultimate
authority of the Board of Directors, as authorized by applicable law. During the
term of this Agreement, Mr. Ellsworth will serve as the Financial and Operations
Principal of FIMI Securities, Inc.
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EXHIBIT "E"
NONCOMPETITION AGREEMENT
This Agreement is entered into this as of this _______ day of
________________________, 199___, by and between HomeCom Communications, Inc.
(the "Parent") and ________________ ("Selling Shareholder").
WHEREAS, Selling Shareholder has owned a significant percentage of the common
stock of, and managed, First Institutional Marketing, Inc. ("FIMI"), Premier
Financial Services, Inc. ("Premier"), FIMI Securities, Inc. ("FIMI Securities")
and All Things Financial, Inc. ("ATF") (collectively, the "FIMI Group") which
have been engaged in the business of selling insurance products and securities
directly and indirectly through commercial banking and other financial
institutions and their customers ("the Business").
WHEREAS, the Parent and its affiliates have this date entered into an agreement
and plan of merger to acquire all of the stock of FIMI Securities, and ATF from
the Selling Shareholder and the two other shareholders of the FIMI Group (the
"Acquisition Agreement") and to also acquire immediately following the
consummation of the foregoing merger, by way of option to purchase, all the
stock of FIMI and Premier;
WHEREAS, as a condition to the closing of such purchase, the Parent is requiring
that the Selling Shareholder be obligated to enter into this Noncompetition
Agreement; and
WHEREAS, Selling Shareholder has also been retained by Parent as an employee
pursuant to that certain employment agreement between the Parent and the Selling
Shareholder, dated of even date herewith (the "Employment Agreement").
NOW, THEREFORE, based on the above premises and in consideration of the mutual
covenants and agreements contained herein, in the Acquisition Agreement and
Employment Agreement, and other good and valuable consideration the sufficiency
of which is hereby acknowledged, the parties agree as follows:
<PAGE> 147
Section 1. Trade Secrets and Confidential Information.
1.1 The FIMI Group and the Parent have disclosed to Selling Shareholder
certain Trade Secrets and Confidential Information (defined below).
Selling Shareholder acknowledges and agrees that the Trade Secrets and
Confidential Information are the sole and exclusive property of Parent
(or a third party providing such information to Parent) and that the
FIMI Group or Parent or such third party owns all worldwide rights
therein under patent, copyright, trade secret, confidential
information, or other property right. Selling Shareholder acknowledges
and agrees that the disclosure of the Trade Secrets and Confidential
Information to Selling Shareholder does not confer upon Selling
Shareholder any license, interest or rights of any kind in or to the
Trade Secrets or Confidential Information. Selling Shareholder may use
the Trade Secrets and Confidential Information solely for the benefit
of Parent and the FIMI Group while Selling Shareholder is employed or
retained by Parent. Selling Shareholder will hold in confidence and not
reproduce, distribute, transmit, reverse engineer, decompile,
disassemble, or transfer, directly or indirectly, in any form, by any
means, or for any purpose, the Trade Secrets or Confidential
Information or any portion thereof. Selling Shareholder agrees to
return to Parent, upon request by Parent, the Trade Secrets and
Confidential Information and all materials relating thereto.
1.2 Selling Shareholder's obligations under this Agreement with regard
to the Trade Secrets shall remain in effect for as long as such
information shall remain a trade secret under applicable law. Selling
Shareholder acknowledges that its obligations with regard to the
Confidential Information shall remain in effect for three (3) years
from the date hereof. As used herein, "Trade Secrets" means the trade
secrets of the FIMI Group and Parent and its subsidiaries and
affiliates all as defined in the Georgia Trade Secrets Act. As used
herein, "Confidential Information" means information of the FIMI Group
and Parent and its subsidiaries and affiliates, its licensors,
suppliers, customers, or prospective licensors or customers, other than
Trade Secrets, that is of value to its owner and is treated as
confidential, including, but not limited to, technical or non-technical
data, formulas, patterns, compilations, programs, devices, methods,
techniques, drawings, processes, financial data, financial plans,
product plans, or a list of actual or potential customers or
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suppliers, future business plans, licensing strategies, advertising
campaigns, information regarding executives and employees, and the
terms and conditions of this Agreement.
1.3 Nothing contained herein shall be deemed to waive any of Parent's
rights or remedies under any applicable trade secrets acts, including,
but not limited to, the Georgia Trade Secrets Act.
Section 2. Customer Non-Solicitation. Selling Shareholder agrees that for
a period of three (3) years from the date hereof ("Non-Solicitation Period"),
Selling Shareholder shall not, on Selling Shareholder's own behalf or on behalf
of any person, firm, partnership, association, corporation or business
organization, entity or enterprise, solicit, contact, call upon, communicate
with or attempt to communicate with any customer or immediate prospect of the
FIMI Group or any representative of any customer or immediate prospect of the
FIMI Group ("Material Contact"), with a view to sale or providing of any
deliverable or service competitive or potentially competitive with any
deliverable or service sold or provided or under development by the FIMI Group
or Parent as of the date hereof. For the purposes of this agreement, "immediate
prospect" is defined as an entity with which the FIMI Group is engaged in
discussions that go beyond mere identification of the entity as a potential
customer. At a minimum, included within this definition are such events as
initial entity solicitation of the FIMI Group or initial FIMI Group solicitation
of the entity. The actions prohibited by this paragraph shall not be engaged in
by Selling Shareholder directly or indirectly, whether as manager, salesperson,
agent, technical support, sales or service representative, developer, or
otherwise.
Section 3. Non-Competition. Selling Shareholder agrees that during the
non-Solicitation Period, Selling Shareholder shall not, within the United
States, on Selling Shareholder's own behalf or on behalf of any person, firm,
partnership, association, corporation or business organization, entity or
enterprise, perform services substantially similar to the Business for any
company or other entity. The actions prohibited by this paragraph shall not be
engaged in by Selling Shareholder directly or indirectly, whether as manager,
salesperson, agent, technical support, sales or service representative,
developer, or otherwise. Selling Shareholder acknowledges that the FIMI Group
and Parent provides products and services to customers throughout the United
States given the global scope of the internet and that a more limited
territorial restriction on the non-competition provisions of this paragraph
would not adequately
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protect the legitimate interests of the FIMI Group and Parent.
Section 4. Selling Shareholder Non-Solicitation. During the
Non-Solicitation Period, Selling Shareholder agrees that Selling Shareholder
shall not call upon, solicit, recruit, or assist others in calling upon,
recruiting or soliciting any person who is or was an employee of the FIMI Group
or Parent who is or was an employee of the FIMI Group or Parent within twelve
months of such
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<PAGE> 150
solicitation or recruitment, for the purpose of having such person terminate his
employment with the FIMI Group or Parent or work in any other corporation,
association, entity or business.
Section 5. Equitable Relief; Profits. Selling Shareholder acknowledges
that the covenants contained in Sections 1, 2, 3 and 4 hereof are reasonable and
necessary to protect the legitimate interests of the Parent that the Parent
would not have entered into the Acquisition Agreement or the Employment
Agreement in the absence of such covenants, that any breach or threatened breach
of such covenants will result in irreparable injury to the FIMI Group and Parent
and that the remedy at law for such breach or threatened breach would be in
adequate. Accordingly, Selling Shareholder agrees that the Parent shall, in
addition to any other rights or remedies which either may have, be entitled to
seek such equitable and injunctive relief as may be available from any court of
competent jurisdiction to restrain Selling Shareholder from any breach or
threatened breach of such covenants. In addition, Selling Shareholder shall
account for and pay over to the Parent all compensation, profits, and other
benefits, after taxes, received by or benefiting Selling Shareholder or any
affiliate of Selling Shareholder resulting from any action or transaction
constituting a breach of Sections 1, 2, 3, and 4 hereof.
Section 6. Miscellaneous.
6.1 Complete Agreement; Modifications. This Agreement and any
documents referred to herein or executed contemporaneously herewith
constitute the parties' entire agreement with respect to the Selling
Shareholder's obligations regarding noncompetition, nonsolicitation,
and nondisclosure and non-use of Confidential Information and supersede
all agreements, representations, warranties, statements, promises, and
understandings, whether oral or written, with respect to the subject
matter hereof. This Agreement may not be amended, altered, or modified
except by a writing signed by the parties.
6.2 Remedies Not Exclusive. No remedy conferred by any of the
specific provisions of this Agreement is intended to be exclusive of
any other remedy, and each and every remedy will be cumulative and will
be in addition to every other remedy given hereunder or now or
hereafter existing at law or in equity or by statute or otherwise. The
election of any one or more remedies will not constitute a waiver of
the right to pursue other available remedies.
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<PAGE> 151
6.3 Notices. All notices under this Agreement will be in writing
and will be delivered by personal service, facsimile, telegram,
telecopy or certified mail (postage prepaid) to such address as may be
designated from time to time by the relevant party, and which will
initially be as set forth below. Any notice sent by certified mail will
be deemed to have been given three (3) days after the date on which it
is mailed. All other notices will be deemed given when received. No
objection may be made to the manner of delivery of any notice actually
received in writing by an authorized agent of a party. Notices will be
addressed as follows or to such other address as the party to whom the
same is directed will have specified in conformity with the foregoing:
6.4 Successors and Assigns. Except as provided herein to the
contrary, this Agreement will be binding upon and inure to the benefit
of the parties, their respective successors and permitted assigns. None
of the parties hereto may assign any of their rights or obligations
under this Agreement without the prior written consent of all other
parties hereto; provided, however, that the Parent may assign its
rights under this Agreement in connection with a merger or
consolidation involving the Parent a component entity of the Parent or
Parent or in connection with a sale of substantially all of the
Parent's assets, a component entity's assets, or Parent's assets (if
such sale includes the goodwill associated therewith), or a similar
business combination.
6.5 Governing Law: Jurisdiction. This Agreement has been
negotiated and entered into in the State of Texas and all questions
with respect to the Agreement and the rights and liabilities of the
parties will be governed by the laws of Texas. Any and all disputes
between the parties which may arise pursuant to this Agreement will be
heard and determined before an appropriate federal or state court
located in Fulton County, Georgia, or the United States District Court
for the Northern District of Georgia, Atlanta Division. The parties
hereto acknowledge that such court has the jurisdiction to interpret
and enforce the provisions of this Agreement and the parties waive any
and all objections which they may have as to personal jurisdiction or
venue in any of the above courts.
6.6 Waivers Strictly Construed. With regard to any power, remedy
or right provided herein or otherwise available to any party hereunder
(i) no waiver or extension of time will be effective unless expressly
contained in a writing signed by the waiving party; and (ii)
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<PAGE> 152
no alteration, modification or impairment will be implied by reason of
any previous waiver, extension of time, delay or omission in exercise,
or other indulgence.
6.7 Attorney's Fees. Should any litigation or arbitration be
commenced (including any proceedings in a bankruptcy court) between the
parties hereto or their representatives concerning any provision of
this Agreement or the rights and duties of any person or entity
hereunder, the party or parties prevailing in such proceeding will be
entitled to reasonable attorney's fees and expenses of counsel and
costs incurred by reason of such proceeding.
6.8 Representation. Selling Shareholder represents and warrants
that he is not a party to any contract, agreement or understanding that
would prohibit Selling Shareholder in any way from entering into and
fully performing this Agreement.
6.9 Headings. The headings in this Agreement are inserted only a
matter of convenience, and in no way define, limit, or extend or
interpret the scope of this Agreement or of any particular section.
6.10 Severability. This Agreement is intended to comply with all
applicable provisions of Texas law (as in effect at the time this
Agreement is sought to be enforced) so as to be consistent with Texas
law, and to the extent that any provision of this Agreement is
inconsistent with Texas law, this Agreement shall be read without
giving effect to that provision. The validity, legality or
enforceability of the remainder of this Agreement will not be affected
even if one or more of the provisions of this Agreement will be held to
be invalid, illegal or unenforceable in any respect. Further, if the
period of time, the extent of the ,geographic area, or the scope of the
prescribed activities covered by this Agreement should be deemed
unenforceable, then this Agreement shall be construed to cover the
maximum period of time, geographic area and scope of prescribed
activities (not to exceed the maximum time, geographic area or scope
set forth herein) as may be valid under applicable law.
6.11 Agreement Negotiated. The parties hereto are sophisticated and
have been represented by lawyers throughout this transaction who have
carefully negotiated the provisions hereof. As a consequence, the
parties do not believe that any laws or rules
-7-
<PAGE> 153
relating to the interpretation of contracts against the drafter of an
particular clause should be applied in this case and therefore waive
its effects.
6.12 Counterparts. This Agreement may be executed simultaneously in
two or more counter-parts, each of which will be deemed an original,
but all of which together will constitute one and the same instrument.
Section 7. No Defense. The existence of any claim, demand, action or
cause of action that Selling Shareholder may have against Parent, whether
predicated upon this Agreement or otherwise, shall not constitute a defense to
the enforcement by Parent of any of the covenants contained in Sections 1, 2, 3
and 4 hereof.
Section 8. Waiver. The waiver by one party of a breach of any provision
of this Agreement by the other party shall not operate or be construed as a
waiver of any subsequent breach of the same or any other provision by the other
party.
IN WITNESS WHEREOF, the parties hereto have caused this Noncompetition Agreement
to be duly executed, as of the day and year first above written.
------------------------------------------
, an individual
------------------
------------------------------------------
HOMECOM COMMUNICATIONS, INC.
By:
---------------------------------------
Its:
--------------------------------------
-8-
<PAGE> 154
EXHIBIT F
_____________________, 1998
HomeCom Communications, Inc.
FIMI Securities Acquisition Corp., Inc.
ATF Acquisition Corp., Inc.
Fourteen Piedmont Center, Suite 100
3535 Piedmont Road
Atlanta, Georgia 30305
Gentlemen:
This firm has acted as counsel to Daniel A. Delity, James Wm.
Ellsworth, and David B. Frank (the "Shareholders"), shareholders of Premier
Financial Services, Inc., a Texas corporation ("Premier"), First Institutional
Marketing, Inc., an Oklahoma corporation ("FIMI"), FIMI Securities, Inc., a
Texas corporation ("FIMI Securities"), and All Things Financial, Inc., a Florida
corporation ("ATF") (collectively, the "Corporations"), in connection with the
exchange of all of the issued and outstanding capital stock of FIMI Securities
and ATF for certain shares of the capital stock of HomeCom (the "Merger
Transaction"), pursuant to the terms of the Agreement and Plan of Merger by and
among the HomeCom, FIMI Securities Acquisition Corp., Inc. and ATF Acquisition
Corp., Inc. and the Shareholders dated November _____, 1998 (the "Transaction
Document"), and in connection with the grant by the Shareholders to HomeCom of
an option to acquire all of the shares of capital stock of Premier (the "Premier
Option Transaction") and FIMI (the "FIMI Option Transaction"), and certain other
documents executed by the parties contemporaneously therewith ("Ancillary
Transaction Documents"). The stock of each of the Corporations which are the
subject to the Merger Transaction, the Premier Option Transaction and the FIMI
Option Transaction are herein collectively called the "Stock." This Opinion
Letter is furnished to you pursuant to Section 7.1(vii) of the Transaction
Document. Unless otherwise defined herein, the capitalized terms used herein
shall have the meanings assigned to such terms in the Transaction Document. It
is our understanding that HomeCom is represented by Raymond L. Moss, Esq., an
attorney with the law firm of Sims Moss Kline & Davis, L.L.P., Atlanta, Georgia,
and that such attorney is duly authorized to practice law in the State of
Georgia and has served as counsel for HomeCom in connection with the transaction
evidenced by the Transaction Document and the Ancillary Transaction Documents.
In connection with our representation of the Shareholders, we have
assisted the Shareholders in connection with the preparation, execution and
delivery of the Transaction Document and the Ancillary Transaction Documents and
are familiar with the certain steps taken
<PAGE> 155
by the Shareholders in connection therewith. We participated in the preparation
of the Transaction Document and the Ancillary Transaction Documents.
We have made such inquiry of the Shareholders and have examined such
corporate and other records, documents, agreements and instruments, certificates
of officers of the Corporations and of public officials and have examined such
questions of law as we have deemed necessary for the purposes of this Opinion
Letter. In rendering our opinions, we have relied, as to all questions of fact
material to these opinions, upon certificates of public officials and officers
of the Corporations. We have assumed the genuineness of all signatures and the
authenticity of all documents submitted to us as originals and the conformity to
original documents of all documents submitted to us as copies, whether certified
or not.
This Opinion Letter is governed by, and should be interpreted in
accordance with, the Legal Opinion Accord ("Accord") of the ABA Section of
Business Law (1991). As a consequence, this Opinion Letter is subject to a
number of qualifications, exceptions, definitions, limitations on coverage and
other limitations, all as more particularly described in the Accord. This
Opinion Letter should be read in conjunction with the Accord. Regardless of the
states in which members of this firm are licensed to practice, the law covered
by the opinions expressed herein is limited to the Federal Law of the United
States and the laws of the State of Texas.
In addition, in rendering our opinions, we have reviewed and are
relying on the following documents:
(A) The Transaction Document;
(B) The Ancillary Transaction Documents listed on Exhibit "A"
attached hereto;
(C) The corporate minute books of FIMI, FIMI Securities, ATF and
Premier, to wit, their respective articles of incorporation, bylaws,
and the minutes of the board of directors and shareholders contained
therein;
(D) A Certificate dated as of the date hereof executed by the
Shareholders affirming certain factual matters related to each of FIMI,
FIMI Securities, ATF and Premier, and as to the Merger, the Premier
Option Transaction and the FIMI Option Transaction; and
(E) A Certificate from the Secretaries of State of Texas, Oklahoma
and Florida indicating that each of FIMI, FIMI Securities, ATF and
Premier are duly incorporated and validly existing.
The documents identified in clauses (A) through (E) above are collectively
herein referred to as the "Documents."
In rendering these opinions, we have assumed the following to be true:
<PAGE> 156
HomeCom Communications, Inc.
FIMI Securities Acquisition Corp., Inc.
ATF Acquisition Corp., Inc.
_____________________, 1998
Page 3
(1) The authenticity and completeness of all Documents
submitted to us as originals and the conformity to original documents
of all documents submitted to us as copies;
(2) Regarding Documents executed by parties, that such
parties (if they are corporations) have the corporate power to enter
into and perform all obligations under those Documents, the due
authorization by all requisite corporate action of the execution,
delivery, and performance of the Documents by such parties (if they are
corporations);
(3) Physical delivery of the Documents where delivery is
a prerequisite to their enforceability;
(4) The legal competency and capacity of all natural
persons; and
(5) That the law of the State of Georgia, which governs
certain of the Documents, is identical to the law of the State of
Texas, where we are solely licensed to practice law.
We also assume that the Certificates from public officials and the records upon
which they are based are accurate and complete.
Based on the foregoing, and in reliance on and subject to the
assumptions, qualifications, exceptions, and limitations set forth in the
letter, we are of the opinion that:
1. Assuming the authenticity of each of the corporate minute
books of the Corporations, and based upon the Certificate of the Shareholders,
Shareholders own all of the issued and outstanding Stock of the Corporations,
and upon the delivery thereof to HomeCom upon the consummation of the Merger
Transaction, the Premier Option Transaction and the FIMI Option Transaction,
HomeCom will acquire the title thereto.
<PAGE> 157
HomeCom Communications, Inc.
FIMI Securities Acquisition Corp., Inc.
ATF Acquisition Corp., Inc.
_____________________, 1998
Page 4
2. The Stock has been validly issued, is fully paid,
non-assessable and free of conflict with any preemptive rights of stockholders
under the articles of incorporation or bylaws of each of the Corporations, in
each case as amended to date or, to our knowledge, any other agreement by which
any Corporation is bound.
3. FIMI is a corporation organized and validly existing under the
laws of the State of Oklahoma. Assuming Oklahoma corporate law is identical to
that of Texas, FIMI has all requisite power and authority to own and operate its
business as presently conducted and to own and hold the assets and properties
used in connection therewith.
4. FIMI Securities is a corporation organized and validly
existing under the laws of the State of Texas. FIMI Securities has all requisite
power and authority to own and operate its business as presently conducted and
to own and hold the assets and properties used in connection therewith.
5. ATF is a corporation duly organized and validly existing under
the laws of the State of Florida. Assuming Florida corporate law is identical to
that of Texas, ATF has all requisite power and authority to own and operate its
business as presently conducted and to own and hold the assets and properties
used in connection therewith.
6. Premier is a corporation duly organized and validly existing
under the laws of the State of Texas. Premier has all requisite power and
authority to own and operate its business as presently conducted and to own and
hold the assets and properties used in connection therewith.
7. The Transaction Document and the Ancillary Transaction
Documents to which the Shareholders are parties have been duly executed and
delivered by the Shareholders and constitute the valid and binding obligations
of the Shareholders enforceable in accordance with their respective terms
(except as otherwise limited by bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors' rights).
8. To our knowledge, except for those matters disclosed in the
Transaction Document, the Ancillary Transaction Documents, or the schedules or
exhibits attached thereto, there is no litigation or legal proceeding pending or
threatened against any of the Corporations.
9. Except for the 499 shares of non-voting capital stock of First
Institutional Marketing of Ohio, Inc., an Ohio corporation, which are owned by
FIMI Securities, none of the
<PAGE> 158
HomeCom Communications, Inc.
FIMI Securities Acquisition Corp., Inc.
ATF Acquisition Corp., Inc.
_____________________, 1998
Page 5
Corporations own any shares of capital stock of, or controls, directly or
indirectly, any other corporation.
10. Based solely on the accuracy of the information contained in
the corporate minute book and stock ledger of FIMI Securities, and on the
Certificate of the Shareholders described above, FIMI Securities' authorized
capital stock consists of 1,000,000 shares of common stock, no par value per
share ("FIMI Securities Common Stock"), of which 930 shares are issued and
outstanding on the date hereof and all shares of FIMI Securities Common Stock
are being exchanged for HomeCom stock pursuant to the consummation of the
transactions evidenced by the Transaction Document. To the best of our knowledge
and except as contemplated by the Transaction Document, FIMI Securities has no
options, warrants or rights to purchase or acquire shares of its capital stock,
authorized, issued or outstanding. To the best of our knowledge, there are no
preemptive rights with respect to the issuance or sale of FIMI Securities'
capital stock, and no restrictions on transfer of the shares of FIMI Securities
Common Stock, other than those imposed by FIMI Securities' articles of
incorporation and by relevant federal and state securities laws.
11. Based solely on the accuracy of the information contained in
the corporate minute book and stock ledger of ATF, and on the Certificate of the
Shareholders described above, ATF's authorized capital stock consists of 10,000
shares of common stock, $1.00 par value per share ("ATF Common Stock"), of which
930 shares are issued and outstanding on the date hereof and all shares of ATF
Common Stock are being exchanged for HomeCom stock pursuant to the consummation
of the transactions evidenced by the Transaction Document. To the best of our
knowledge and except as contemplated by the Transaction Document, ATF has no
options, warrants or rights to purchase or acquire shares of its capital stock,
authorized, issued or outstanding. To the best of our knowledge, there are no
preemptive rights with respect to the issuance or sale of ATF capital stock, and
no restrictions on transfer of the shares of ATF Common Stock, other than those
imposed by ATF's articles of incorporation and by relevant federal and state
securities laws. The opinions stated in this paragraph are subject to the
assumption that Florida corporate law is identical to the corporate law of the
State of Texas.
12. Based solely on the accuracy of the information contained in
the corporate minute book and stock ledger of FIMI, and on the Certificate of
the Shareholders described above, FIMI's authorized capital stock consists of
10,000 shares of common stock, no par value per share ("FIMI Common Stock"), of
which 930 shares are issued and outstanding on the date hereof, and all shares
of FIMI Common Stock are subject to the FIMI Option Transaction in favor of
HomeCom.
<PAGE> 159
HomeCom Communications, Inc.
FIMI Securities Acquisition Corp., Inc.
ATF Acquisition Corp., Inc.
_____________________, 1998
Page 6
To the best of our knowledge and except as contemplated by the documents
evidencing the FIMI Option Transaction, FIMI has no options, warrants or rights
to purchase or acquire shares of its capital stock, authorized, issued or
outstanding. To the best of our knowledge, there are no preemptive rights with
respect to the issuance or sale of FIMI's capital stock, and no restrictions on
transfer of the shares of FIMI Common Stock, other than those imposed by FIMI's
articles of incorporation and by relevant federal and state securities laws. The
opinions stated in this paragraph are subject to the assumption that Oklahoma
corporate law is identical to the corporate law of the State of Texas.
13. Based solely on the accuracy of the information contained in
the corporate minute book and stock ledger of Premier, and on the Certificate of
the Shareholders described above, Premier's authorized capital stock consists of
100,000 shares of common stock, $1.00 par value per share ("Premier Common
Stock"), of which 930 shares are issued and outstanding on the date hereof and
all shares of Premier Common Stock are subject to the Premier Option Transaction
in favor of HomeCom. To the best of our knowledge and except as contemplated by
the documents evidencing the Premier Option Transaction, Premier has no options,
warrants or rights to purchase or acquire shares of its capital stock,
authorized, issued or outstanding. To the best of our knowledge, there are no
preemptive rights with respect to the issuance or sale of Premier capital stock,
and no restrictions on transfer of the shares of Premier Common Stock, other
than those imposed by Premier's articles of incorporation and by relevant
federal and state securities laws.
14. The execution, delivery and performance by each of Premier,
FIMI, FIMI Securities, and ATF of the Documents to which they are a party have
been duly authorized and approved by all respective necessary corporate action;
and the Documents to which they are a party constitute valid and binding
obligations of each of Premier, FIMI, FIMI Securities, and ATF, as the case may
be, and each is enforceable in accordance with their respective terms. Except
for any violations of applicable state insurance laws and regulations and
federal securities laws, the execution, delivery and performance of the
Documents to which any Corporation is a party will not violate any existing
provision of law and will not conflict with, or result in a breach of any of the
terms of, or constitute a default under the articles of incorporation or bylaws,
each as amended to date, of each of Premier, FIMI, FIMI Securities, and ATF, as
the case may be, or of any contract, agreement or any other instrument known to
us to which each of Premier, FIMI, FIMI Securities, and ATF is now a party or by
which it may be bound.
<PAGE> 160
HomeCom Communications, Inc.
FIMI Securities Acquisition Corp., Inc.
ATF Acquisition Corp., Inc.
_____________________, 1998
Page 7
15. Except for actions which may be in violation of applicable
state insurance laws and regulations and federal securities laws, no
authorization, consent or approval or other order of or filing with any
governmental agency or body or regulatory authority, is required for the valid
authorization, execution, delivery and performance by each of Premier, FIMI,
FIMI Securities, and ATF of the Documents to which a Corporation is a party.
The opinions expressed in this letter are qualified to the extent that
the validity, binding effect, or enforceability of the Documents may be limited
or affected by the Accord and by the following:
(1) Bankruptcy, insolvency, reorganization,
rearrangement, liquidation, conservatorship, moratorium, fraudulent
conveyance, equity of redemption, or other similar statutes, laws,
rules of law, or court decisions now or hereafter in effect affecting
the rights of creditors or the collection of debtors' obligations
generally;
(2) General principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law) and
public policy under applicable law, including among other things,
implied obligations of materiality, reasonableness, good faith, and
fair dealing, and equitable principles that may limit or prohibit the
specific enforceability of some remedies, covenants, or other
provisions of the Documents or that may limit or prohibit the
availability of specific performance, injunctive relief, or other
equitable remedies, regardless of whether such enforceability is
considered in a proceeding in equity or at law; and
(3) Procedural requirements to be complied with at the
time of enforcement, not otherwise reflected in the Documents, that may
restrict or condition rights and remedies otherwise therein stated to
be available.
This Opinion Letter is provided to you as a legal opinion and not as a
guarantee of the matters discussed herein. Our opinions are limited to the
matters expressly stated herein, and no other opinions may be implied or
inferred.
These opinions are rendered as of the date set forth above.
The opinions herein have been furnished to the addressees at HomeCom's
request and are solely for the benefit of the addressees in connection with the
Merger Transaction, the Premier
<PAGE> 161
HomeCom Communications, Inc.
FIMI Securities Acquisition Corp., Inc.
ATF Acquisition Corp., Inc.
_____________________, 1998
Page 8
Option Transaction and the FIMI Option Transaction, and may not be relied upon
by any other person or furnished to anyone else for any purpose whatsoever,
without the prior written consent of the undersigned.
This Opinion Letter is rendered as of the date hereof, and we undertake
no, and hereby disclaim any, obligation to advise you of any changes in, or any
new developments which might affect, any matters or opinions set forth herein
which occur after the date of this Opinion Letter, or to otherwise communication
with you with respect to the matters addressed herein.
No opinion is given or expressed, nor should any opinion be inferred or
implied as to: (i) the financial ability of a Shareholder to satisfy its
obligations under any Document; (ii) the truthfulness, completeness or accuracy
of any reports, plans, documents, financial statements, or other matters
furnished to HomeCom or its agents or representatives by the Shareholders or any
Corporation, or by any other party acting by, for or at the direction of a
Shareholder or a Corporation, and (iii) the truthfulness, completeness or
accuracy of any representation, warranty, certification or statement by
Shareholders in the Transaction Document or any other Document.
The use of the works "to our knowledge" or "known to this Firm" means
that during the course of our representation as described herein, no information
has come to the attention of the attorneys involved in the transactions
described herein that could give such attorneys actual knowledge of the
existence of the documents or facts so qualified. This firm has undertaken no
investigation to determine the existence of such documents or facts, and no
inference as to our knowledge thereof shall be drawn from the fact of our
representation of any party or otherwise.
We have not examined, and we do not opine, as to the law of any other
jurisdiction, whether applicable directly or through Texas law. We are qualified
to practice law only in the State of Texas and we do not purport to be experts
on or express any opinion herein concerning any law other than the laws of the
State of Texas and the federal law of the United States, and especially we
express no opinion concerning the law of the State of Georgia which governs all
of the Documents except for the Employment Agreements, the Non-Competition
Agreements, the documents evidencing the Premier Option Transaction and the FIMI
Option Transaction.
Very truly yours,
STUMPF FALGOUT CRADDOCK & MASSEY,
a professional corporation
<PAGE> 162
HomeCom Communications, Inc.
FIMI Securities Acquisition Corp., Inc.
ATF Acquisition Corp., Inc.
_____________________, 1998
Page 9
EXHIBIT "A"
1. Escrow Agreement between HomeCom, FIMI Securities Acquisition Corp.,
Inc. ("Securities Acq. Corp."), ATF Acquisition Corp., Inc. ("ATF Acq.
Corp."), and each of the Shareholders, dated of even date herewith;
2. Pledge and Security Agreement between the Shareholders, as pledgors,
and HomeCom, Securities Acq. Corp. and ATF Acq. Corp., as pledgees,
covering the shares of HomeCom stock placed in escrow by the
Shareholders pursuant to the Escrow Agreement in "A" above, as security
for the Shareholders' indemnification obligations under the Transaction
Document
3. Three (3) Promissory Notes between HomeCom and each of the
Shareholders, dated of even date herewith, evidencing the "Shelby Smith
Loans" as defined in the Documents;
4. Security Agreements - Pledge between HomeCom and each of the
Shareholders, dated of even date herewith to secure the promissory
notes in "C" above;
5. Employment Agreements between HomeCom and each of the Shareholders,
dated of even date herewith;
6. Non-Competition Agreements between HomeCom and each of the
Shareholders, dated of even date herewith;
7. Loan Agreement between FIMI Securities, as lender, and Premier, as
borrower, dated of even date herewith;
8. Promissory Note from Premier, payable to FIMI Securities, dated of even
date herewith;
9. Security Agreement between Premier, as debtor, and FIMI Securities, as
secured party, dated of even date herewith;
10. License Agreement from FIMI Securities in favor of Premier, dated of
even date herewith;
11. Stock Option Agreement and Irrevocable Proxies from the Shareholders in
favor of HomeCom, dated of even date herewith, covering all of the
Shareholders' stock in Premier;
<PAGE> 163
HomeCom Communications, Inc.
FIMI Securities Acquisition Corp., Inc.
ATF Acquisition Corp., Inc.
_____________________, 1998
Page 10
12. Loan Agreement between FIMI, as lender, and FIMI Securities, as
borrower, dated of even date herewith;
13. Promissory Note from FIMI payable to FIMI Securities, dated of even
date herewith;
14. Security Agreement from FIMI, as debtor, in favor of FIMI Securities,
as secured party, dated of even date herewith;
15. License Agreement from FIMI Securities in favor of FIMI, dated of even
date herewith;
16. Stock Option Agreement and Irrevocable Proxies from the Shareholders in
favor of HomeCom, dated of even date herewith, covering all of the
Shareholders' stock in FIMI;
<PAGE> 164
EXHIBIT "G-1"
LOAN AGREEMENT
This Agreement is made and entered into by and between FIMI SECURITIES,
INC. ("FIMI"), and PREMIER FINANCIAL SERVICES, INC. ("Premier"), hereinafter
collectively referred to as the "Parties".
FIMI AND PREMIER HEREBY AGREE AS FOLLOWS:
ARTICLE 1
RECITALS
1.1 Premier is a Texas corporation licensed as a life insurance and variable
contract insurance agent in Texas.
1.2 HomeCom Communications, Inc. has acquired an option to purchase the stock of
Premier, and FIMI wishes to provide funding for continual operations.
ARTICLE 2
TERMS OF LOAN
2.1 Pursuant to Section 7.1 of the Agreement and Plan of Merger, dated as of
_______________, 1998, the Parties agree to enter into a multiple advance loan
with open end credit up to an aggregate principal amount of ____________ Dollars
($___________.00), ("Principal Sum"), whereby FIMI, under the terms and
conditions of this Agreement, agrees to provide certain funds necessary for
Premier's operations, which in the aggregate does not exceed the Principal Sum
("Advance"), and Premier promises to repay such advances under the terms and
conditions of this Agreement and the Promissory Note.
2.2 Each Advance by Premier to FIMI shall be made pursuant to the terms and
conditions of the Promissory Note attached as Exhibit A, ("Promissory Note").
2.3 The minimum amount of any one Advance shall be _____________ and No/100
Dollars ($_______.00).
ARTICLE 3
SECURITY INTEREST
3.1 Premier hereby gives FIMI a security interest in any and all of Premier's
assets, including,
<PAGE> 165
but not limited to, receivables, which it currently owns or may own in the
future.
3.2 Premier hereby agrees that a copy of this agreement may be filed as a
security agreement or at FIMI's option, Premier will execute an UCC-1 Financing
Statement in order to secure the above interests for the benefit of FIMI.
ARTICLE 4
EFFECTIVE, MATURITY AND TERMINATION DATES
4.1 This Agreement shall be effective as of ______________________, and shall
continue in effect for one (1) year through December 31, 19__.
4.2 This Agreement shall automatically renew for a period of one (1) calendar
year, unless terminated under the terms and conditions of this Agreement.
4.3 This Agreement may be terminated by thirty (30) days prior written notice by
FIMI or ninety (90) days written notice by Premier. Termination of this
Agreement, however, will not release either Party from its obligations under the
terms of this agreement and/or any Promissory Note, which is then unpaid, in
whole or in part, as to either principal or interest.
ARTICLE 5
AUTHORITY TO CONTRACT
5.1 Premier is a business corporation duly organized in the State of Texas,
validly existing and in good standing under the laws thereof and has full power
and authority to enter into this Agreement and carry out its terms. The
undersigned officer of ________ has the authority to execute the Agreement on
behalf of Premier.
5.2 FIMI is a business corporation duly organized in the State of Texas, validly
existing and in good standing under the laws thereof and has full power and
authority to enter into this Agreement and carry out its terms. The undersigned
officer of ________ has the authority to execute the Agreement on behalf of
FIMI.
<PAGE> 166
ARTICLE 6
WARRANTIES BY PREMIER
6.1 Premier will provide FIMI with quarterly unaudited financial statements,
which shall include:
(A) a balance sheet;
(B) a profit and loss statement; and
(C) a listing and an aging of accounts receivable and accounts
payable.
6.2 Premier agrees not to pay any investor, shareholder, officer, or employee,
any principal or interest on any investment made in or to Premier, whether by
purchase of stock, sale of stock, or loan, made directly or indirectly, or to
incur any liability outside the normal course of business as a life insurance
and variable contract agent until such time as all Promissory Notes issued
pursuant to this Agreement have been paid in full as to both principal and
interest.
ARTICLE 7
DEFAULT
7.1 The Parties agree that failure to comply with any portion of the terms and
conditions of this Agreement or any Promissory Note is considered default. Where
Premier is in default, FIMI may deem itself unsecured and at anytime thereafter
declare all obligations secured hereby to be due and payable and shall have all
rights and remedies of a secured party as applicable under state law.
7.2 In the event that one or more default shall occur, and in the event that
thereafter a Promissory Note is placed in the hands of an attorney for
collection, or in the event that a Promissory Note is collected in whole or in
part through legal proceedings of any nature, then in any such case, there shall
be added to the unpaid principal balance of that Promissory Note, all costs of
collection, including but not limited to attorney's fees and all expenses
incurred in connection with the enforcement of any of the rights of FIMI
pursuant to its security interest, on account of such collection, whether or not
suit is filed.
3
<PAGE> 167
ARTICLE 8
WAIVER
8.1 FIMI reserves the right of waivers and amendments under this Agreement and
the Promissory Note. No delay on the part of FIMI in the exercise of any right,
power or remedy and no course of dealing with respect thereto shall operate as a
waiver. Nor shall any single or partial exercise of any right, power or remedy
preclude further exercise, or the exercise of any other right, power or remedy.
No provision of this Agreement or of the Promissory Note will be deemed a waiver
or amendment unless such action is in writing and signed by both Parties.
ARTICLE 9
MISCELLANEOUS PROVISIONS
9.1 The obligations and undertakings of the Parties to this Agreement shall be
performed in Harris County, Houston, Texas, and shall be governed by the laws of
the State of Georgia. Venue shall lie in Superior Court of Fulton County,
Georgia, or the United States District Court for the Northern District of
Georgia, Atlanta Division. The parties hereto acknowledge that such court has
the jurisdiction to interpret and enforce the provisions of this Agreement and
the parties waive any and all objections which they may have as to personal
jurisdiction or venue in any of the above courts.
9.2 This Agreement supersedes all previous loan agreements, if any, whether
written or oral, between the Parties.
9.3 No amendments to or modifications of this Agreement shall be valid unless
made in writing and executed by the Parties in the form of an amendment to this
Agreement.
9.4 This Agreement with the attached Promissory Note constitutes the entire
Agreement between the Parties.
9.5 Premier may not assign its rights or obligations under this Agreement in
whole or in part without the prior written consent of FIMI. FIMI may assign its
rights or obligations to one of its subsidiaries or affiliates upon notice to
Premier.
9.6 FIMI has the right to make or cause to be made reasonable entry upon and
inspection of property held as collateral under this Agreement during normal
business hours.
9.7 Each Party agrees to perform any further acts, and execute and deliver any
further documents, which may be reasonably necessary to carry out the provisions
of this Agreement.
9.8 All notices or other communications hereunder shall be in writing and shall
be deemed to have been duly given (i) on the date delivered personally or by
confirmed facsimile as set forth
4
<PAGE> 168
below; (ii) two (2) days after being sent by Express Mail or such other similar
service (i.e., Federal Express) and addressed as set forth below; or (iii) four
(4) days after being mailed by certified or registered mail, return receipt
requested, postage prepaid, and addressed as set forth below, as follows:
FIMI SECURITIES, INC.
Fourteen Piedmont Center, Suite 100
3535 Piedmont Road
Atlanta, Georgia 30305
Attn: Harvey Sax
Facsimile: (404) 237-3060
With a copy to: SIMS MOSS KLINE & DAVIS, LLP
400 Northpark Town Center, Suite 310
1000 Abernathy Road, N.E.
Atlanta, Georgia 30328
Attn: Raymond L. Moss, Esq.
Facsimile: (770) 481-7210
And
PREMIER FINANCIAL SERVICES, INC.
--------------------------------
--------------------------------
Attn:
--------------------------
Facsimile:
---------------------
With a copy to:
--------------------------------
--------------------------------
--------------------------------
Attn:
--------------------------
Facsimile:
---------------------
9.9 All caption headings are intended to be for purposes of reference only and
do not affect the substance of the articles or paragraphs to which they refer.
9.10 Whenever from the context it appears appropriate, each term stated in
either the singular or plural shall include the singular and plural, and any
term stated in either the masculine, the feminine or the neuter gender, shall
include the masculine, the feminine and the neuter gender.
5
<PAGE> 169
9.11 In the event that any of the provisions, or portions thereof, of this
Agreement are held to be illegal, invalid or unenforceable by any court of
competent jurisdiction, the validity and enforceability of the remaining
provisions, or portions thereof, shall not be affected by the illegal, invalid
or unenforceable provision or by its severance.
6
<PAGE> 170
EXECUTED this ______ day of ____________, 1998
FIMI SECURITIES, INC.
By:
--------------------------------
, President
----------------------
PREMIER FINANCIAL SERVICES, INC.
By:
--------------------------------
Daniel A. Delity, President
7
<PAGE> 171
EXHIBIT "G-2"
SECURITY AGREEMENT
- --------------------------------------------------------------------------------
ARTICLE 1
GENERAL RECITALS
1.1. IDENTIFICATION OF PARTIES: This is a pledge agreement between PREMIER
FINANCIAL SERVICES, INC., a Texas corporation, ("Debtor") and FIMI SECURITIES,
INC., a Texas corporation, ("Secured Party").
1.2. DEBT: Debtor is indebted to Secured Party, as evidenced by that
certain Promissory Note of______________, 1998 in the principal sum of
$__________, ("Promissory Note").
1.3. NATURE OF AGREEMENT: In connection with Section 7.1 of the Agreement
and Plan of Merger, dated as of November _______, 1998, Debtor and Secured Party
desire that Debtor grant to the Secured Party a security interest in the
Collateral described in Paragraph 2.2 of this Agreement as collateral for
Debtor's performance of the terms and conditions of the Promissory Note and
other obligations set forth in this Agreement.
THEREFORE, in consideration of the mutual covenants and conditions
contained in this Agreement, the Debtor and Secured Party agree as follows:
ARTICLE 2
PLEDGE
2.1. SECURITY INTEREST: Debtor creates and grants to the Secured Party a
security interest in the Collateral described in Paragraph 2.2 of this Agreement
to secure the payment and performance of the obligations of Debtor to the
Secured Party set forth in Paragraph 2.3 of this Agreement.
2.2. DESCRIPTION OF COLLATERAL: This Agreement creates a security interest
in favor of Secured Party in the cash, accounts receivables, currently existing
and hereinafter created.
2.3. OBLIGATIONS SECURED: The security interest created by this Agreement
secures the following:
<PAGE> 172
(a). Payment of the indebtedness evidenced by, and performance and
discharge of every covenant, condition, and agreement contained in the
Promissory Note, and any and all modifications, extensions, or renewals of the
Promissory Note.
(b). Performance and discharge of every obligation, covenant, and
agreement of Debtor contained in this Agreement.
2.4. WARRANTY AND REPRESENTATIVE OF DEBTOR: Debtor warrants and represents
that the Collateral is free and clear of any security interests, liens,
restrictions, or encumbrances, other than the security interest created by this
Agreement, and that Debtor has full right and power to transfer the Collateral
to the Secured Party free and clear of any interest described in this paragraph,
and to enter into and carry out this Agreement.
ARTICLE 3
DEFAULT
3.1. OCCURRENCE OF DEFAULT: As used in this Agreement, "Occurrence of
Default" shall be any or all the following:
(a). The failure of Debtor punctually and completely to observe, keep,
or perform any covenant, agreement, or condition required by this Agreement.
(b). The failure of Debtor punctually to pay the indebtedness
evidenced by the Promissory Note in accordance with its terms.
(c). Consent by Debtor to the appointment of a receiver or liquidator
of Debtor or any substantial portion of Debtor's assets.
(d). The seizure by a receiver, trustee, or other officer appointed by
any court, or by any sheriff, marshal, or other similar governmental officer,
under color of legal authority, or any substantial portion of the assets of
Debtor and holding possession of the assets for a period of thirty (30) days.
(e). The assumption of jurisdiction, custody, or control of any of the
assets of Debtor under the provisions of any presently existing or future law
providing for reorganization, dissolution, liquidation, or winding up of
corporations or other legal entities, if Debtor has not been restored to custody
and control of the assets within thirty (30) days after the date of the
assumption.
(f). If a final judgment for the payment of money shall be rendered
against Debtor and, within thirty (30) days after the entry of the judgment, it
has not been discharged or execution of the judgment has not been stayed pending
appeal, or if, within thirty (30) days after the expiration of any stay, the
judgment has not been discharged.
<PAGE> 173
3.2. RIGHTS OF SECURED PARTY UPON OCCURRENCE OF DEFAULT: On any Occurrence
of Default, the Secured Party may foreclose the security interest in either of
the following ways:
(a). Retention of Collateral: Provided that the Secured Party gives
notice to the Debtor, and the Debtor fails to object within twenty-one (21) days
of receipt of such notice, the Secured Party may retain in satisfaction of
Debtor's obligation that portion of the Collateral that has a "fair value," as
defined in Paragraph 3.3, equal to the amount of indebtedness that the Debtor
has failed to pay in accordance with the terms of the Promissory Note and this
Agreement.
(b). Sale of Collateral: Subject to the provisions of Section 9.504 of
the Texas Business and Commerce Code, the Secured Party may instruct the Escrow
Agent to offer the Collateral at a public or private sale after ten (10) days'
written notice to Debtor
3.3. FAIR VALUE OF COLLATERAL: As used in this Agreement, "fair value"
of the Collateral shall be the value determined by agreement of the parties or
their successor in interest or if no such mutual determination by independent
appraisal.
ARTICLE 4
RELEASE AND SUBSTITUTION OF COLLATERAL
4.1. RELEASE OF COLLATERAL: Debtor shall, upon each anniversary date of
this Agreement, be entitled to a release of Collateral to the extent of all
principal paid to Secured Party pursuant to the Promissory Note during the year
preceding the anniversary date of this Agreement.
ARTICLE 5
MISCELLANEOUS
5.1. NO WAIVER OF RIGHT OF REMEDIES: No failure or delay by Secured Party
in exercising any right, power, or privilege given by any provision of this
Agreement shall operate as a waiver of the provision. Additionally, no single or
partial exercise of any right, power, or privilege shall preclude any other or
further exercise of that or any other right, power, or privilege.
5.2. SEVERABILITY: Should any one or more of the provisions of this
Agreement be determined to illegal or unenforceable, all other provisions of
this Agreement shall be valid, binding, and effective as if the illegal or
unenforceable provisions had never been included in this Agreement.
-3-
<PAGE> 174
5.3 All notices or other communications hereunder shall be in writing and
shall be deemed to have been duly given (i) on the date delivered personally or
by confirmed facsimile as set forth below; (ii) two (2) days after being sent by
Express Mail or such other similar service (i.e., Federal Express) and addressed
as set forth below; or (iii) four (4) days after being mailed by certified or
registered mail, return receipt requested, postage prepaid, and addressed as set
forth below, as follows:
-4-
<PAGE> 175
If to Debtor: Premier Financial Services, Inc.
--------------------------------
--------------------------------
Attn:
--------------------------
Facsimile:
----------------------
With a copy to:
--------------------------------
--------------------------------
--------------------------------
Attn:
--------------------------
Facsimile:
----------------------
If to Secured Party: FIMI Securities, Inc.
Fourteen Piedmont Center, Suite 100
3535 Piedmont Road
Atlanta, Georgia 30305
Attn: Harvey Sax
Facsimile: (404) 237-3060
With a copy to: Sims Moss Kline & Davis, LLP
400 Northpark Town Center, Suite 310
1000 Abernathy Road, N.E.
Atlanta, Georgia 30328
Attn: Raymond L. Moss, Esq.
Facsimile: (770) 481-7210
5.4. ASSIGNMENT OF SECURED PARTY: This Agreement and the Security Interest
created by this Agreement shall be assignable by the Secured Party, and shall
inure to the benefit of Secured Party's heirs, executors, or administrators, and
shall be binding upon the Debtor and his or her heirs, executors,
administrators, legal representatives, successors, and assigns.
5.5. CHOICE OF LAW: It is the intention of the parties that the laws of
Georgia should govern the validity of this Agreement, the construction of its
terms, and the interpretation of the rights and duties of the parties. Venue
shall lie in Superior Court of Fulton County, Georgia, or the United States
District Court for the Northern District of Georgia, Atlanta Division. The
parties hereto acknowledge that such court has the jurisdiction to interpret and
enforce the provisions of this Agreement and the parties waive any and all
objections which they may have as to personal jurisdiction or venue in any of
the above courts.
5.6. PARAGRAPH HEADINGS: Paragraph and other headings contained in this
Agreement are for purposes of reference and convenience only and shall not
affect in any way the meaning of this Agreement or its interpretation.
-5-
<PAGE> 176
5.7. INTEGRATED AGREEMENT: This Agreement constitutes the entire Agreement
between the parties, and there are no agreements, understandings, restrictions,
warranties, or representations between the parties other than those set forth or
provided for in this Agreement.
DATED: , 1998
---------------------
SECURED PARTY:
FIMI SECURITIES, INC.
By:
----------------------------------
DEBTOR:
PREMIER FINANCIAL SERVICES, INC.
By:
----------------------------------
Daniel A. Delity, President
-6-
<PAGE> 177
EXHIBIT "G-3"
PROMISSORY NOTE
$___________________ Date: ________________
FOR VALUE RECEIVED, Premier Financial Services, Inc., a Texas
corporation (hereafter referred to as "Maker"), promises to pay to the order
FIMI Securities, Inc., a Texas corporation (hereafter referred to as "Payee";
Payee and any subsequent holder(s) hereof being hereinafter referred to
collectively as "Holder"), at the office of Payee at
________________________________, or at such other place as Holder may
designate to Maker in writing from time to time, the principal sum of
_____________ and No/100 Dollars ($_______________.00) or so much thereof as
may be disbursed hereunder, together with interest on so much thereof as is
from time to time outstanding and unpaid, from the date of each advance of
principal, at the rates hereinafter set forth, in lawful money of the United
States of America.
PRINCIPAL DUE ON DEMAND. The principal sum provided herein shall be
due and payable to Holder in accordance with the following schedule:
INTEREST. The interest provided herein shall be paid in the following
manner: From and after the date hereof (until maturity, whether by acceleration
or otherwise) interest on the outstanding principal indebtedness evidenced
hereby shall accrue at the rate of _______________ points (______) in excess of
"Prime Rate," as hereinafter defined, and shall be computed on the daily
outstanding principal balance hereunder on the basis of a 360-day year. For
purposes of this Note the term Prime Rate shall mean the interest rate
established by _______________________ ("Bank") from time to time in its sole
discretion as its prime-lending rate. The Prime Rate may not be the lowest rate
available from the Bank. Loans from the Bank may be priced at, above or below
the Prime Rate. The Prime Rate as of the date hereof is _____________ percent
(______%) on the basis of a 360-day year; accordingly, the interest rate herein
expressed in simple interest terms as of the date hereof is ___________ percent
(____%) per 360-day year. If at any time or from time to time the Prime Rate
increases or decreases, then the rate of interest hereunder shall be
correspondingly increased or decreased effective on the day on which any such
increase or decrease of the Prime Rate is publicly announced. In the event that
Bank, during the term hereof, shall abolish or abandon the practice of
publishing a prime rate, or should the same become unascertainable, Holder
shall designate a comparable reference rate, which shall be deemed to be the
Prime Rate hereunder. Interest shall be computed on a 360-day year simple
interest basis.
All accrued and unpaid interest at said rate shall be due and payable
monthly, commencing on the first day of the first month after the date hereof
and continuing on the same day of each month thereafter until the entire
principal balance hereof, together with all accrued but unpaid interest, has
been paid in full.
PREPAYMENT. This Note may be prepaid in whole or in part by Maker
without premium or penalty.
<PAGE> 178
EVENT OF DEFAULT. It is hereby expressly agreed that should any
default be made in the payment of principal or interest as stipulated above, or
should any default be made in the performance of any of the covenants or
conditions contained in the "Loan Documents," as hereinafter defined and in
such event, the principal indebtedness evidenced hereby, and any other sums
advanced hereunder or under the Loan Documents, or any of them, together with
all unpaid interest accrued thereon, shall, at the option of Holder and without
notice or demand to Maker, at once become due and payable and may be collected
forthwith, regardless of the stipulated date of maturity. Interest shall accrue
on the outstanding principal balance of this Note from the date of any default
hereunder and for so long as such default continues, regardless of whether or
not there has been a demand of the indebtedness evidenced hereby as set forth
herein, at a rate equal to _______ percent (_____%) per 360-day year in excess
of the otherwise applicable interest rate at the time of such default. Time is
of the essence of this Note.
USURY. All agreements between Maker and Holder, whether now existing
or hereafter arising and whether written or oral, are expressly amended so that
in no contingency or event whatsoever, whether by acceleration in the maturity
of this Note or otherwise, shall the amount paid, or agreed to be paid, to
Holder for the use, forbearance or detention of money to be loaned hereunder or
otherwise, exceed the maximum amount permissible under applicable law. If, from
any circumstances whatsoever, fulfillment of any provision of this Note or of
any other document evidencing, securing or pertaining to the indebtedness
evidenced hereby, and the time performance of such provision shall be due,
shall exceed any limit prescribed by law, then, ipso facto, the obligation to
be filled shall be reduced to the limit of validity, and if from any such
circumstances Holder shall ever receive as interest under this Note or any
other document evidencing, securing or pertaining to the indebtedness evidenced
hereby or otherwise an amount that would exceed the highest lawful rate, such
amount that would be excessive interest shall be applied to the reduction of
the principal amount owing under this Note or on account of any other
indebtedness of Maker to Holder hereof relating to this Note, and not to the
payment of interest, or if such excessive interest exceeds the unpaid balance
of principal of this Note and such other indebtedness, such excess shall be
refunded to Maker. In determining whether or not the interest paid or payable
with respect to any indebtedness of Maker to Holder, under any specific
contingency, exceeds the highest lawful rate, Maker and Holder shall, to the
maximum extent permitted by applicable law (a) characterize any non-principal
payment as an expense, fee or premium rather than as interest, (b) exclude
voluntary pre-payments and the effects thereof, (c) amortize, prorate, allocate
and spread the total amount of interest throughout the full term of such
indebtedness so that the actual rate of interest on account of such
indebtedness is uniform throughout the term thereof, and/or (d) allocate an
interest between portions of such indebtedness to the end that no such portion
should bear interest at a rate greater than that permitted by law. The terms
and provisions of this paragraph shall control and supersede every other
conflicting provision of all agreements between Maker and Holder.
ATTORNEY FEES. In the event either party sues to enforce any provision
of this Note, the prevailing party, in addition to any damages awarded, shall
be entitled to receive reasonable attorneys' fees and costs, including, but not
limited to, fees, costs and expenses of litigation, including appeals, incurred
by the Holder in enforcing the terms of the Note.
2
<PAGE> 179
CONSENT AND WAIVER. Presentment for payment, demand, protest and
notice of demand, protest and non-payment, notice of protest, notice of
dishonor, diligence of collection, and all other notices are hereby waived by
Maker. No failure to demand the debt evidenced hereby by reason of default
hereunder, acceptance of a past due installment, or indulgences granted from
time to time shall be construed (i) as a novation of this Note or as a
reinstatement of the indebtedness evidenced hereby or as a waiver of such right
to demand or of the right of Holder thereafter to insist upon strict compliance
with the terms of this Note, or (ii) to prevent the exercise of such right to
demand or any other right granted hereunder or by the laws of the State of
Texas; and Maker hereby expressly waives the benefit of any statute or rule of
law or equity now provided, or which may hereafter be provided, which would
produce a result contrary to or in conflict with the foregoing. No extension of
the time for the payment of this Note or any installment due hereunder, or
partial payment before or after maturity, made by agreement with any person now
or hereafter liable for the payment of this Note shall operate to release,
discharge, modify, change or affect the original liability of maker under this
Note, either in whole or in part, unless Holder agrees otherwise in writing.
This Note may not be changed orally, but only by an agreement in writing signed
by the party against whom enforcement of any waiver, change, modification or
discharge is sought.
LOANS TO BE EVIDENCED BY NOTE. This Note is to evidence loans now
being made by Payee to Maker and/or additional loans to Maker which may be made
from time to time by Payee in the future in accordance with any agreement
relating to the financing of future operations. All such loans, to the extent
not evidenced by other notes, shall be evidenced by this Note and shall be
subject to its terms. The principal sum evidenced by this Note may be reduced
from time to time by payments hereunder and may be increased from time to time
by additional loans; provided, however, that the principal sum evidenced by
this Note shall not exceed the principal sum shown above.
SECURITY. The indebtedness evidenced by this Note and the obligations
created hereby are secured by, among other things, a security interest in
Maker's accounts and other property, pursuant to certain agreements, Loan
Agreements, Security Agreements, assignments, and other documents (said
agreements and assignments, together with all other documents evidencing or
securing or in any way relating to the indebtedness evidenced hereby herein
referred to collectively as the "Loan Documents"), some of which Loan Documents
were or are to be filed for record on or about the date hereof in the
appropriate public records.
CONSENT TO ASSIGNMENT. Maker acknowledges that Holder may assign this
Note to one of its subsidiaries or affiliates. Maker hereby authorizes and
consents to each such assignment.
SET OFF. The Maker shall have no right of set off against the Holder
under this Note. The Holder, however, shall have the right, immediately and
without further action by it, to apply against this Note all money owed by the
Maker in any capacity to the Holder, whether or not then due.
3
<PAGE> 180
GOVERNING LAW. This Note is intended as a contract under and shall he
construed and enforceable in accordance with the laws of the State of Georgia.
Venue shall lie in Superior Court of Fulton County, Georgia, or the United
States District Court for the Northern District of Georgia, Atlanta Division.
The parties hereto acknowledge that such court has the jurisdiction to
interpret and enforce the provisions of this Agreement and the parties waive
any and all objections which they may have as to personal jurisdiction or venue
in any of the above courts.
SAVING CLAUSE. If from any circumstances whatsoever, fulfillment of
any provision of this Note or of any other instrument evidencing or securing
the indebtedness evidenced hereby at the time performance of such provision
shall be due, shall involve transcending the limit of validity presently
prescribed by any applicable usury statute or any other applicable law, with
regard to obligations of like character and amount, then, nunc pro tunc, the
obligation to be fulfilled shall be reduced to the limit of such validity, so
that in no event shall any exaction be possible under this Note or under any
other instrument evidencing or securing the indebtedness evidenced hereby that
is in excess of the current limit of such validity, but such obligation shall
be fulfilled to the limit of such validity.
BINDING EFFECT. As used herein, the terms "Maker" and "Holder" shall
be deemed to include their respective heirs, successors, legal representatives
and assigns, whether by voluntary action of the parties or by operation of law.
In the event that more than one person, firm or entity is a Maker hereunder,
then all references to "Maker" shall be deemed to refer equally to each of said
persons, firms, or entities, all of whom shall be jointly and severally liable
for all of the obligations of Maker hereunder.
BUSINESS PURPOSE. The Maker acknowledges that the loan evidenced by
this Note is made for a commercial purpose only and not for any personal or
family use.
HEADINGS. The headings of the paragraphs contained in this Note are
for convenience of reference only and do not form a part hereof and in no way
modify, interpret, or construe the meaning of the parties hereto.
MAKER: PREMIER FINANCIAL
SERVICES, INC.
Signed in the presence of: By:
-----------------------------
Daniel A. Delity, President
- -------------------------
4
<PAGE> 181
ENDORSEMENT
Payable to the order of _____________________, pursuant to the
Security Agreement dated as of _________________, 1998, between the undersigned
and _________________, as amended or restated and in effect from time to time.
5
<PAGE> 182
PAYEE: FIMI SECURITIES, INC.
Signed in the presence of: By:
-------------------------------
, President
-------------------
- ---------------------------
6
<PAGE> 183
EXHIBIT "H"
LICENSE AGREEMENT
===============================================================================
This License Agreement is by and between PREMIER FINANCIAL SERVICES,
INC., a Texas corporation licensed to act as a variable contract agent in the
State of Texas ("Licensee") and FIMI SECURITIES, INC., a Texas corporation
("Licensor").
RECITALS
WHEREAS, Licensor is the owner of proprietary data, which identifies,
inter alia, persons and entities that have purchased certain insurance and
insurance related products;
WHEREAS, Licensee is desirous of obtaining a non-exclusive license to
use said proprietary data for the purposes hereinafter set forth; and
WHEREAS, Licensor is desirous of granting such license to Licensee, as
set forth in this License Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
obligations hereinafter set forth and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
AGREEMENT
ARTICLE 1
Definitions
Each of the following terms shall, wherever found in this License
Agreement be used and understood in accordance with the corresponding
definitions below.
1.1 Book of Business shall mean proprietary data relating to purchasers of
life insurance and variable contracts and similar products, including the
Assets as defined in Section 2.1 of that certain Agreement and Plan of Merger,
dated of even date herewith.
1.2 Confidential Information shall mean the Book of Business and any and
all information of the Licensor made available and disclosed by it, directly or
indirectly, to Licensee pursuant to the provisions of this License Agreement
except
(a) information which at the time of disclosure is in the public
domain;
2
<PAGE> 184
(b) information which after disclosure is published or otherwise
becomes a part of the public domain through no fault of the
recipient (but only after it is published or otherwise
becomes part of the public domain);
(c) information which the recipient can show was in its
possession at the time of disclosure and was not acquired,
directly or indirectly, from the other party hereto; or
(d) information which was received by the recipient after the
time of disclosure hereunder from a third party who did not
acquire it, directly or indirectly, from the disclosing party
under an obligation of confidence.
1.3 Effective Date shall mean the ____ day of __________, 1998, which is
the day on which this License Agreement shall be effective.
ARTICLE 2
Grant of License
2.1 Licensor hereby grants to Licensee a non-assignable, non-transferable,
non-exclusive license, without the right to sublicense, to use the Book of
Business solely in connection with the solicitation of insurance products
subject to the terms and conditions herein.
ARTICLE 3
Consideration-Taxes
3.1 Licensee hereby agrees to pay Licensor an amount to be determined by
the parties at the end of each calendar quarter.
3.2 All sales and use taxes which may be levied by any taxing authority by
reason of the execution or performance of this License Agreement or any
payments hereunder shall be borne and paid by Licensee prior to determining the
amounts payable to Licensor hereunder.
ARTICLE 4
Confidentiality
4.1 Licensee acknowledges that Licensor's Book of Business constitutes
valuable assets and trade secrets of Licensor and agrees to hold in confidence
any Confidential Information disclosed
3
<PAGE> 185
by Licensor and not to disclose such Confidential Information to third parties
unless the prior written consent of Licensor is obtained. Except as provided in
Paragraph 4.2 of this Agreement, Licensee agrees not to reproduce, copy, or
duplicate or allow to be reproduced, copied, or duplicated any data or
information with respect to any Confidential Information; provided, however,
that nothing contained herein shall in any way restrict or impair Licensee's
right to use or disclose any information or data which is now, or at the time
of disclosure to Licensee by Licensor, in its possession or which is now or
later becomes generally available to the public through no fault of Licensee or
which hereafter becomes available to Licensee from a third party rightfully in
possession of same and having no direct or indirect obligation to Licensor with
respect to same.
4.2 The Book of Business provided by Licensor to Licensee under this
Agreement may be copies, in whole or in part, solely for Licensee's internal
use for back-up and archival purposes. The original and any copies of the Book
of Business, in whole or in part, shall be the property of Licensor and shall
be returned to Licensor upon expiration or earlier termination of this License
Agreement.
4.3 Licensee hereby acknowledges that Licensor retains the sole ownership,
management, and control of the Book of Business as against Licensee, and that
Licensee does not acquire any ownership rights in the Book of Business by
virtue of the license herein granted.
ARTICLE 5
Representations, Warranties and Covenants
5.1 Licensor has the right to license the Book of Business, subject to no
restrictions or encumbrances of any kind. Licensor further represents and
warrants that it has full and complete power and authority to enter into and
carry out its obligations under this License Agreement.
5.2 Licensor may edit proprietary data in such fashion, as Licensor deems
appropriate; without limitation of the foregoing, Licensor may delete names and
other information pertaining to customers prior to preparation and delivery of
the Book of Business to Licensee. Licensee acknowledges that the Book of
Business is satisfactory to it even though it may have been edited to exclude
portions of Licensor's proprietary data.
5.3 Licensee represents that it is authorized to solicit life insurance
business and variable contract from the public generally and can provide
services generally as a corporate life insurance agent and as a variable
contract agent as that term is defined in the Texas Insurance Code. Licensee
recognizes that Licensor is not performing and shall not be required to perform
any services as a life insurance or variable contract agent pursuant to this
License Agreement as such terms are defined in the Texas Insurance Code.
4
<PAGE> 186
5.4 Neither Licensee, nor its employees, agents or representatives will
represent that the products or services the Licensee provides have sponsorship,
approval, characteristics, uses or benefits which those products and services
do not have or in any other way misrepresent its products or services to
Licensor or its customers. None of Licensee, its employees, agents or
representatives will misrepresent Licensor or Licensor's products or services,
nor will they make any comments whatsoever concerning Licensor's financial
status, banking business or management to any customers, potential customers or
former customers of Licensor.
5.5 Licensee shall not prepare or publish any advertising or solicitation
material of any kind whatsoever containing any reference of any kind to
Licensor or any person or company affiliated with Licensor, or use or refer to
the name of Licensor or any affiliates of Licensor, in connection with the
solicitation or sale of life insurance or annuities unless the prior written
consent of Licensor is obtained.
ARTICLE 6
Indemnification
6.1 Indemnification of the Licensor by the Licensee. The Licensee agrees to
indemnify, defend and hold harmless the Licensor and its Affiliates, and any of
their respective directors, officers, employees and agents against any and all
losses, claims, damages, liabilities, actions, costs or expenses, joint or
several (including reasonable legal fees and expenses), judgments, and fines of
any nature whatsoever which any of them may suffer which arise out of, directly
or indirectly, or are based upon: (i) the negligence or fraud of the Licensee,
its Affiliates or any of their officers, directors, employees, or agents; (ii)
a breach of this License Agreement by the Licensee; or (iii) the violation by
the Licensee or any of its Affiliates of any applicable law, rule, regulation
or administrative order or any statements, letters or guidelines issued by any
insurance regulatory authority, including the state insurance department.
6.2 Indemnification of the Licensee by the Licensor. The Licensor agrees to
indemnify, defend and hold harmless the Licensee and its Affiliates, and any of
their respective directors, officers, employees and agents against any and all
losses, claims, damages, liabilities, actions, costs or expenses, joint or
several (including reasonable legal fees and expenses), judgments, and fines of
any nature whatsoever which any of them may suffer which arise out of, directly
or indirectly, or are based upon: (i) the negligence or fraud of the Licensor
or its Affiliates or any of their officers, directors, employees, or agents;
(ii) a breach of this License Agreement by the Licensor; or (iii) the violation
by the Licensor or any of its Affiliates of any applicable law, rule,
regulation or administrative order.
6.3 Cumulative Remedies. Notification and Survival. The indemnification
provided in Sections 6.1 and 6.2 above is cumulative of any other remedies or
rights the indemnified parties may have and is expressly conditioned upon timely
receipt by the indemnifying parties of written
5
<PAGE> 187
notice of a claim pursuant thereto within one hundred eighty (180) days
following the date the indemnified parties become aware of the same.
6.4 Right to Defend. The indemnifying parties shall have the duty to defend
the action, claim or proceeding alleged or brought against the indemnified
parties, and subject to reasonable approval of the indemnified parties, to
retain counsel of its choice. The indemnified parties shall not compromise or
settle, in any manner, any dispute or claim which is the subject of a claim
under Sections 6.1 and 6.2 above without the prior written approval of the
indemnifying parties, which approval shall not be unreasonably withheld.
6.5 Regulatory Action. Notwithstanding the foregoing, in the event of any
actions, investigations, claims or other legal action by any federal or state
bank regulatory authority relating to the duties, responsibilities or actions
of the parties hereto, the Licensor will bear all reasonable legal fees and
expenses associated therewith. In the event of any actions, investigations,
claims or other legal action by any state insurance regulatory authority, the
Licensee will bear all reasonable legal fees and expenses associated therewith.
Each party shall promptly notify the other of and reasonably cooperate with the
other in defending such action. Any and all losses, damages, fines or judgments
arising out of any such proceedings will be subject to indemnification as set
forth in sections 6.1 and 6.2 above, to the extent such sections are
applicable; and otherwise shall be borne by the party against whom they are
assessed.
ARTICLE 7
Default-Remedies
7.1 The occurrence of any of the following events or conditions shall
constitute an "Event of Default" hereunder by Licensee.
(a) The failure of Licensee to pay the license fees or any part
thereof or any other amounts payable hereunder when due and
such failure shall continue for a period of five (5) days
after written notice thereof has been given by Licensor; or
(b) The entry of a decree or order by a court having jurisdiction
adjudging Licensee to be bankrupt of insolvent or approving
as properly filed a petition seeking reorganization of
Licensee under the Bankruptcy Code, as amended from time to
time, or any other similar applicable federal or state law,
or a decree or order of a court having jurisdiction for the
appointment of a receiver or liquidator or a trustee or
assignee in bankruptcy or insolvency of Licensee or its
property or for the winding up or liquidation of its affairs;
or Licensee shall institute proceedings
6
<PAGE> 188
to be adjudicated a voluntary bankrupt or shall consent to
the filing of any such proceedings shall be instituted
against Licensee and the same shall not be vacated within
sixty (60) days after the same are commenced; or Licensee
shall make an assignment for the benefit of Licensee's
creditors or admit in writing Licensee's inability to pay the
debts of Licensee generally as they may become due; or
(c) Licensee shall fail to fulfill or perform, in whole or in
part, any of its obligations under this License Agreement
(other than the payment of license fees) and such failure or
non-performance shall continue for a period of ten (10) days
after written notice thereof has been given by Licensor; or
(d) Licensee shall breach any covenant contained in Article 4
hereof.
7.2 The occurrence of any of the following events or conditions shall
constitute an "Event of Default" hereunder by Licensor:
(a) The entry of a decree or order by a court having jurisdiction
adjudging Licensor to be bankrupt of insolvent or approving
as properly filed a petition seeking reorganization of
Licensor under the Bankruptcy Code, as amended from time to
time, or any other similar applicable federal or state law,
or a decree or order of a court having jurisdiction for the
appointment of a receiver or liquidator or a trustee or
assignee in bankruptcy or insolvency of Licensor or its
property or for the winding up or liquidation of its affairs;
or Licensor shall institute proceedings to be adjudicated a
voluntary bankrupt or shall consent to the filing of any such
proceedings shall be instituted against Licensor and the same
shall not be vacated within sixty (60) days after the same
are commenced; or Licensor shall make an assignment for the
benefit of Licensor's creditors or admit in writing
Licensor's inability to pay the debts of Licensor generally
as they may become due; or
(b) Licensor shall fail to fulfill or perform, in whole or in
part, any of its obligations under this License Agreement,
and such failure or non-performance shall continue for a
period of ten (10) days after written notice thereof has been
given by Licensee;
7.3 Upon the occurrence of any Event of Default set forth in paragraph 7.1
hereof, then at any time thereafter prior to the curing thereof, Licensor may
exercise any and all rights and remedies available to Licensor under this
License Agreement, at law or in equity, including, without limitation,
termination of this License Agreement. If Licensor elects to terminate this
License Agreement, it may treat the Default as an entire breach of this License
Agreement; and Licensee shall immediately become liable to Licensor for damages
equal to all unpaid license fees and other amounts earned or due through such
termination. Upon such termination, the provisions of Article 10 hereof shall
apply. All rights and remedies of Licensor shall be cumulative and not
exclusive.
7
<PAGE> 189
Licensor shall be entitled to simultaneously pursue multiple or alternative
remedies, at any time to abandon pursuit of any remedy, and at any time to
pursue additional remedies.
7.4 Upon the occurrence of any Event of Default set forth in paragraph 7.2
hereof, then at any time thereafter prior to the curing thereof, as its sole
and exclusive remedy, Licensee may terminate this License Agreement. Upon such
termination, the provisions of Article 10 hereof shall apply. Notwithstanding
any such termination, Licensee shall remain liable for any license fees and
other amounts accrued through the date of termination, but Licensee shall be
entitled to a return of a pro-rata portion of any prepaid license fees for the
unexpired term of this License Agreement. Licensee hereby waives any claims for
damages (including, without limitation, damages for lost profits, and all other
incidental and consequential damages of every kind whatsoever) for Default by
Licensor, Licensee's exclusive remedy in such event being termination of this
License Agreement; provided, however, that Licensee shall be entitled to a
return of a pro-rata portion of any prepaid license fees for the unexpired term
of this License Agreement.
8
<PAGE> 190
ARTICLE 8
Notices
8.1 All notices or other communications hereunder shall be in writing and
shall be deemed to have been duly given (i) on the date delivered personally or
by confirmed facsimile as set forth below; (ii) two (2) days after being sent
by Express Mail or such other similar service (i.e., Federal Express) and
addressed as set forth below; or (iii) four (4) days after being mailed by
certified or registered mail, return receipt requested, postage prepaid, and
addressed as set forth below, as follows:
If to Licensor: FIMI SECURITIES, INC.
Fourteen Piedmont Center, Suite 100
3535 Piedmont Road
Atlanta, Georgia 30305
Attn: Harvey Sax
Facsimile: (404) 237-3060
With a copy to: SIMS MOSS KLINE & DAVIS, LLP
400 Northpark Town Center, Suite 310
1000 Abernathy Road, N.E.
Atlanta, Georgia 30328
Attn: Raymond L. Moss, Esq.
Facsimile: (770) 481-7210
If to Licensee: PREMIER FINANCIAL SERVICES, INC.
--------------------------------
--------------------------------
Attn:
-------------------------
Facsimile:
--------------------
With a copy to:
--------------------------------
--------------------------------
Attn:
-------------------------
Facsimile:
--------------------
In addition, notice may be given at such other address as either party
hereto may specify by notice given in accordance with this Paragraph 8.1.
9
<PAGE> 191
ARTICLE 9
Assignment
9.1 This License Agreement is not assignable by Licensee.
9.2. Licensee acknowledges that Licensor may transfer or assign its interest
in the Book of Business to a subsidiary or affiliate of Licensor and in such
event the terms and conditions herein shall continue in full force and effect
from the date of such transfer or assignment, but that all future payments to
Licensor shall be made to such subsidiary or affiliate.
ARTICLE 10
Effective Date and Termination
10.1 Effective Date and Term. This Agreement shall become fully effective as
of the date first set forth above. This Agreement shall remain in full force
and effect for a period of one year from the effective date, unless terminated
pursuant to Sections 10.2 or 10.3 below. This Agreement shall be automatically
renewed for successive periods of one year each.
10.2 Termination for Cause. This Agreement may be immediately terminated by
written notice given by either the Licensee or the Licensor upon the occurrence
of one of the following:
(a) A breach by the other party of any material covenant,
condition or representation of this Agreement and the failure
to cure such breach, within ten (10) days for any monetary
breach, and thirty (30) days for a non-monetary breach after
receipt of written notice from the non-breaching party; or
(b) Any final determination by any court, administrative agency
or the issuance of a ruling by any governing body with
jurisdiction over the Licensee, the Licensor that this
Agreement is illegal as a matter of law and the parties
cannot in good faith negotiate an amendment to the Agreement
to bring it into compliance.
10.3 Termination without Cause. In addition to the rights set forth in
Section 10.1 and 10.2 above, this Agreement may be terminated by either the
Licensee or the Licensor, without regard to cause, upon ninety (90) days' prior
written notice to the other party.
10.4 Events Upon Termination or Expiration. In the event of expiration or
earlier termination for any reason of the license granted to Licensee by
Licensor under this Agreement, Licensee shall immediately discontinue use of
the Book of Business and shall immediately return to Licensor the original and
all copies of the Book of Business in the possession or under the control of
Licensee.
10
<PAGE> 192
Licensee's obligations under the preceding sentence of this paragraph 10.4 and
under paragraph 4.1 hereof, shall survive any expiration or termination of this
Agreement.
ARTICLE 11
Force Majeure
11.1 Neither party hereto shall be liable to the other party for failure or
delay in the performance of any duties or obligations hereunder due to strikes,
lockouts, acts of God, acts of war, fire, flood, explosions, embargo,
litigation or labor disputes, government or any other laws and regulations, or
any other cause beyond the control and without the fault of such party.
ARTICLE 12
Miscellaneous
12.1 Scope of Agreement. This License Agreement constitutes the entire
agreement between the parties pertaining to the subject matter hereof.
12.2 Construction. The parties acknowledge that each party and its counsel
have reviewed and revised this License Agreement and that the normal rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this License
Agreement or any amendments or exhibits hereto.
12.3 Headings. The subject headings of the paragraphs of this License
Agreement are included for purposes of convenience only, and shall not affect
the construction or interpretation of any of its provisions.
12.4 Counterparts. This License Agreement may be executed in one or more
counterparts, and all so executed shall constitute the one agreement, binding
on both parties hereto notwithstanding that both parties are not signatory to
the same counterpart.
12.5 Severability. If any part or parts of this License Agreement are found
to be illegal or unenforceable, the remainder shall be considered severable,
shall remain in full force and effect, and shall be enforceable.
12.6 Applicable Law. This License Agreement shall be construed, interpreted
and applied in accordance with the laws of the State of Georgia, and, to the
extent applicable, the laws of the United States of America. Venue shall lie in
Superior Court of Fulton County, Georgia, or the United States District Court
for the Northern District of Georgia, Atlanta Division. The parties hereto
acknowledge that such court has the jurisdiction to interpret and enforce the
provisions of
11
<PAGE> 193
this Agreement and the parties waive any and all objections which they may have
as to personal jurisdiction or venue in any of the above courts.
12
<PAGE> 194
IN WITNESS WHEREOF, the parties hereto have executed this License
Agreement by their duly authorized officers or representatives, as of the date
first set forth above.
LICENSOR:
FIMI SECURITIES, INC.
By:
-----------------------------------
LICENSEE:
PREMIER FINANCIAL SERVICES, INC.
By:
-----------------------------------
Daniel A. Delity, President
13
<PAGE> 195
EXHIBIT "I-1"
STOCK OPTION AGREEMENT
THIS AGREEMENT is effective as of ___________________, 1998, is
between HOMECOM COMMUNICATIONS, INC. and its designee ("Buyer"), DANIEL A.
DELITY, JAMES WM. ELLSWORTH and DAVID B. FRANK, each an individual
(collectively, "Seller").
ARTICLE 1. OPTION
1.1 For and in consideration of the sum of ___________ Dollars
($________.00), the receipt and sufficiency of which is hereby acknowledged,
each Seller hereby grants, pursuant to Section 7.1(a)(xxvii) of the Agreement
and Plan of Merger, dated as of ______________, 1998 to Buyer or its designee,
the option to purchase all, and not less than all, of the outstanding shares,
of any class or type, of PREMIER FINANCIAL SERVICES, INC. ("Corporation") a
Texas corporation (collectively "Stock"), which such Seller shall own now or
hereafter and in compliance with the terms of this Agreement.
ARTICLE 2. EXERCISE OF OPTION
2.1 This Option may be exercised at any time by Buyer prior to its
expiration against Seller. Provided, however, that this Option will be
automatically exercised on the first anniversary of the date of this Agreement
without any further act or deed by any party hereto; and upon such date Buyer
or its designee shall become the sole shareholder of the Corporation.
2.2 The Option shall be exercised by Buyer by written notice to
each Seller of intent to exercise, and such exercise shall become effective
three days after the mailing to the Seller by Certified Mail, Return Receipt
Requested, or by hand delivery of said notice to the address provided herein.
2.3 The closing of any purchase hereunder shall be within thirty
(30) days of the exercise of the Option. At closing, Buyer shall present and
deliver to each Seller the full purchase price of Seller's Stock in cash or
cashier's check.
ARTICLE 3. ACCELERATION OF OPTION3. ACCELERATION OF OPTION
3.1 This Option shall automatically be triggered in the following
events ("Triggering Event"):
2
<PAGE> 196
(a) the death of any Seller, but only with respect to the Stock
owned by such deceased Seller;
(b) the disability of any Seller for consecutive period of ninety
(90) days or more as determined by an independent physician,
but only with respect to the Stock of such disabled Seller;
(c) 180 days from the date hereof.
3.2 This Option shall be exercised automatically upon a Triggering
Event by written notice by Sellers or their heirs or legal representations of a
Triggering Event which shall become effective three (3) days after the mailing
to Buyer by certified mail, return receipt requested, or by hand delivery of
said notice to the address provided herein.
3.3 The closing of any purchase upon a Triggering Event shall be
made within one hundred eighty (180) days of the Triggering Event. At Closing,
Buyer shall present and deliver to each Seller or their heirs or legal
representations the full purchase price of Seller's stock in cash or cashier's
check.
ARTICLE 4. PURCHASE PRICE
4.1 The purchase price of each Seller's Stock shall be Ten and
No/100 Dollars ($10.00).
ARTICLE 5. ESCROW
5.1 Simultaneously with the execution of this Agreement, Sellers
will deliver to Buyer as Escrow Agent, all the Stock subject to this Option,
duly endorsed in blank, to be held in escrow as provided herein. Upon the
issuance, purchase or other acquisition of any additional Stock of the
Corporation, in any form, Seller will immediately deliver same to Buyer, duly
endorsed in blank, to hold in escrow as provided herein.
ARTICLE 6. STOCK RIGHTS AND RESTRICTIONS
6.1 This Agreement shall not effect Seller's right to collect
dividends on the Stock until the exercise of the Option hereunder at which time
all such rights shall pass to Buyer by exercise of the Option.
6.2 Each Seller has executed simultaneously herewith that certain
Irrevocable Proxy, a copy of which is attached hereto as Exhibit No. 1 and
incorporated herein fully by reference.
6.3 Upon exercise of this Option, Buyer or its designee or assigns
must be qualified to hold the Stock if and to the extent required by the Texas
Insurance Code. If Buyer cannot legally acquire the Stock directly, then Buyer
shall be obligated to appoint a designee or assignee who is able to lawfully
acquire the Stock and to cause such designee or assignee to acquire the stock
as provided herein.
3
<PAGE> 197
6.4 Buyer hereby acknowledges that immediately upon the
Corporation's receipt of payment of that certain Promissory Note between Seller
and consideration for the purchase of the assets of the Corporation by FIMI
Securities, Inc., the full amount of such consideration shall be distributed by
the Corporation to Seller.
ARTICLE 7. WARRANTIES OF SELLER
7.1 Each Seller represents, warrants and covenants:
(a) The Stock is now and will at all times during this Agreement
be free of all liens and encumbrances arising from any action or inaction of
such Seller. Seller is the sole owner of and has the complete and unencumbered
right to sell his Stock;
(b) The Stock of each Seller named herein collectively constitutes
one hundred percent (100%) of the issued and outstanding stock of the
Corporation on the date of this Agreement;
(c) Such Seller will not encumber or grant a lien against such
Seller's Stock at any time during the term of this Agreement;
(d) He has executed that certain Irrevocable Proxy;
(e) Buyer or its designee or assigns shall receive good and
marketable title to such Seller's Stock; provided, however, that no Seller is
representing or warranting that a market exists for the sale of the Stock;
(f) If, at the time of the exercise of this Option, any of the
Stock is subject to any encumbrance, Buyer shall be entitled, in addition to
any other rights and remedies, to have so much of the consideration for this
Option as shall be required for that purpose applied or reimbursed by Seller to
discharge such encumbrance and to pay any costs or expenses in connection
therewith. Seller will be entitled to receive only such balance of the
consideration for this Option as shall remain after the discharge of such
encumbrance.
(g) That he will take no action to amend, modify, restate, or
rescind the Company's Articles of Incorporation and By-Laws and shall operate
the business consistent with past business practices.
(h) Prior to the closing of any purchase of the Shares hereunder,
Seller shall have filed an election with the Internal Revenue Service to have
the corporation elect to be taxed as a "C" corporation.
4
<PAGE> 198
ARTICLE 8. CONSENT OF SPOUSE
8.1 The spouse of Seller is fully aware, fully understands and
fully consents to the terms hereof and its binding effect upon any community
interest she may have now or hereafter; and she further agrees, though the
marital relationship may terminate for any reason, that such termination shall
not have the effect of removing the Stock from the terms hereof; and she
acknowledges her consent and agreement by her signature hereon.
ARTICLE 9. TERM
9.1 This Option shall be for a period of one (1) year.
9.2 Notice of termination of this Agreement shall be effective
when a copy of the same shall have been delivered by Certified Mail, Return
Receipt Requested, or hand delivered to any Seller. 9.3 Notice of termination,
however, shall not terminate Buyer's right or duty to exercise this option or
Seller's right to compel Buyer to exercise this option prior to the actual
termination date.
ARTICLE 10. MISCELLANEOUS
10.1 Buyer may assign its rights, duties and benefits under this
Agreement to a party of Buyer's choice, provided that Buyer shall not be
released from its obligations under this Agreement in the event of default by
Buyer's assignee.
10.2 Buyer hereby acknowledges that sale of certain assets of the
Corporation to FIMI.
10.3 Each party hereto agrees to perform any further acts and
execute and deliver any further documents, which may be reasonably necessary to
carry out the provisions of this Agreement.
10.4 All notices or other communications hereunder shall be in
writing and shall be deemed to have been duly given (i) on the date delivered
personally or by confirmed facsimile as set forth below; (ii) two (2) days
after being sent by Express Mail or such other similar service (i.e., Federal
Express) and addressed as set forth below; or (iii) four (4) days after being
mailed by certified or registered mail, return receipt requested, postage
prepaid, and addressed as set forth below, as follows:
If to Seller:
--------------------------------
--------------------------------
--------------------------------
Attn:
-------------------------
Facsimile:
--------------------
With a copy to: LARRY FONTANA
--------------------------------
Attn:
-------------------------
Facsimile:
--------------------
5
<PAGE> 199
If to Buyer: HOMECOM COMMUNICATIONS, INC.
Fourteen Piedmont Center, Suite 100
3535 Piedmont Road
Atlanta, Georgia 30305
Attn: Harvey Sax
Facsimile: (404) 237-3060
With a copy to: SIMS MOSS KLINE & DAVIS, LLP
400 Northpark Town Center, Suite 310
1000 Abernathy Road, N.E.
Atlanta, Georgia 30328
Attn: Raymond L. Moss, Esq.
Facsimile: (770) 481-7210
10.5 In the event that any of the provisions, of this Agreement are
held to be unenforceable or invalid by any court of competent jurisdiction, the
validity and enforceability of the remaining provisions, or portions thereof,
shall not be affected thereby.
10.6 Whenever used herein, the singular number shall include the
plural, and the plural number shall include the singular.
10.7 This Agreement has been executed in and shall be governed by
the laws of the State of Georgia without regard to principles of conflicts of
laws and the duties and obligations of each party shall be fully performable in
Houston, Harris County, Texas. Venue shall lie in Superior Court of Fulton
County, Georgia, or the United States District Court for the Northern District
of Georgia, Atlanta Division. The parties hereto acknowledge that such court
has the jurisdiction to interpret and enforce the provisions of this Agreement
and the parties waive any and all objections which they may have as to personal
jurisdiction or venue in any of the above courts.
10.8 Subject to the restrictions against transfer or assignment as
herein contained, the provisions of this Agreement shall inure to the benefit
of and shall be binding on the assigns, successors in interest, personal
representatives, estates, heirs, and legatees of each of the parties hereto.
10.9 This Agreement may only be amended by the written consent of
all of the parties to this Agreement.
10.10 This Agreement contains the entire understanding between the
parties hereto concerning the subject matter contained herein. There are no
representations, agreements, arrangements, or understandings, oral or written,
between or among the parties hereto, relating to the subject matter of this
Agreement, which are not fully expressed herein.
10.11 This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
6
<PAGE> 200
HOMECOM COMMUNICATIONS, INC.
By:
--------------------------------
HARVEY SAX, PRESIDENT
-----------------------------------
DANIEL A. DELITY, INDIVIDUALLY
-----------------------------------
JAMES WM. ELLSWORTH, INDIVIDUALLY
------------------------------------
DAVID FRANK, INDIVIDUALLY
7
<PAGE> 201
CONSENT OF SPOUSES
, spouse of Daniel A. Delity, hereby consents to all
- ----------------------------
terms and conditions of the above Stock Option Agreement.
-----------------------------------
, spouse of James Wm. Ellsworth, hereby consents to all
- -------------------------
terms and conditions of the above Stock Option Agreement.
-----------------------------------
8
<PAGE> 202
EXHIBIT "I-2"
IRREVOCABLE PROXY
- -------------------------------------------------------------------------------
I, James Wm. Ellsworth, being the record owner of ______________
(________) shares of the common stock of PREMIER FINANCIAL SERVICES, INC.
("Premier"), do hereby appoint the President of HOMECOM COMMUNICATIONS, INC., a
corporation ("HomeCom"), as my proxy to attend all meetings of the shareholders
of Premier, with full power to vote and act for me in the same manner and
extent that I might were I personally present at said meetings.
My proxy shall have the full power to substitute another person as my
proxy and to revoke the appointment of any such substitute proxy.
This proxy is given in connection with and as partial consideration
under the Stock Option Agreement with HomeCom to purchase my shares and is
IRREVOCABLE.
Dated ________________, 1998.
-----------------------------------
James Wm. Ellsworth
<PAGE> 203
EXHIBIT "I-3"
IRREVOCABLE PROXY
- -------------------------------------------------------------------------------
I, Daniel A. Delity, being the record owner of ______________
(________) shares of the common stock of PREMIER FINANCIAL SERVICES, INC.
("Premier"), do hereby appoint the President of HOMECOM COMMUNICATIONS, INC., a
corporation ("HomeCom"), as my proxy to attend all meetings of the shareholders
of Premier, with full power to vote and act for me in the same manner and
extent that I might were I personally present at said meetings.
My proxy shall have the full power to substitute another person as my
proxy and to revoke the appointment of any such substitute proxy.
This proxy is given in connection with and as partial consideration
under the Stock Option Agreement with HomeCom to purchase my shares and is
IRREVOCABLE.
Dated ________________, 1998.
-----------------------------------
Daniel A. Delity
<PAGE> 204
EXHIBIT "I-4"
IRREVOCABLE PROXY
- -------------------------------------------------------------------------------
I, David B. Frank, being the record owner of ______________ (________)
shares of the common stock of PREMIER FINANCIAL SERVICES, INC. ("Premier"), do
hereby appoint the President of HOMECOM COMMUNICATIONS, INC., a corporation
("HomeCom"), as my proxy to attend all meetings of the shareholders of Premier,
with full power to vote and act for me in the same manner and extent that I
might were I personally present at said meetings.
My proxy shall have the full power to substitute another person as my
proxy and to revoke the appointment of any such substitute proxy.
This proxy is given in connection with and as partial consideration
under the Stock Option Agreement with HomeCom to purchase my shares and is
IRREVOCABLE.
Dated ________________, 1998.
-----------------------------------
David B. Frank
<PAGE> 205
EXHIBIT "J-1"
DANIEL A. DELITY
A. DELITY
5555 SAN FELIPE, FIFTH FLOOR
SAN FELIPE, FIFTH FLOOR
HOUSTON, TEXAS 77056
, TEXAS 77056
, 1998
------------------------
Harvey Sax
HomeCom Communications, Inc.
3535 Piedmont Road
Piedmont RoadAtlanta, Georgia 30305
Re: Agreement and Plan of Merger, dated November ______, 1998
(the "Merger Agreement")
Dear Mr. Sax:
In connection with Article VII, Section 7.1(a)(xxvix) of the Merger
Agreement, this will confirm that I agree to (i) vote all shares of HomeCom
Communications, Inc. ("HomeCom") owned by me in favor of re-electing Mr. Harvey
Sax, or his reasonable acceptable designee, to the Board of Directors of
HomeCom at the next shareholders meeting of HomeCom at which Mr. Sax can stand
for re-election and (ii) to nominate Mr. Sax for re-election to the extent that
he is a director of HomeCom.
Very truly yours,
Daniel A. Delity
<PAGE> 206
EXHIBIT "J-2"
James Wm. Ellsworth
Wm. Ellsworth
5555 San Felipe, Fifth Floor
San Felipe, Fifth Floor
Houston, Texas 77056
, 1998
----------------------
Harvey Sax
HomeCom Communications, Inc.
3535 Piedmont Road
Piedmont RoadAtlanta, Georgia 30305
Re: Agreement and Plan of Merger, dated November ______, 1998
(the "Merger Agreement")
Dear Mr. Sax:
In connection with Article VII, Section 7.1(a)(xxvix) of the Merger
Agreement, this will confirm that I agree to (i) vote all shares of HomeCom
Communications, Inc. ("HomeCom") owned by me in favor of re-electing Mr. Harvey
Sax, or his reasonable acceptable designee, to the Board of Directors of
HomeCom at the next shareholders meeting of HomeCom at which Mr. Sax can stand
for re-election and (ii) to nominate Mr. Sax for re-election to the extent that
he is a director of HomeCom.
Very truly yours,
James Wm. Ellsworth
<PAGE> 207
EXHIBIT "J-3"
David B. Frank
5555 San Felipe, Fifth Floor
Houston, Texas 77056
, 1998
------------------------
Harvey Sax
HomeCom Communications, Inc.
3535 Piedmont Road
Atlanta, Georgia 30305
Re: Agreement and Plan of Merger, dated November ______, 1998
(the "Merger Agreement")
Dear Mr. Sax:
In connection with Article VII, Section 7.1(a)(xxvix) of the Merger
Agreement, this will confirm that I agree to (i) vote all shares of HomeCom
Communications, Inc. ("HomeCom") owned by me in favor of re-electing Mr. Harvey
Sax, or his reasonable acceptable designee, to the Board of Directors of
HomeCom at the next shareholders meeting of HomeCom at which Mr. Sax can stand
for re-election and (ii) to nominate Mr. Sax for re-election to the extent that
he is a director of HomeCom.
Very truly yours,
David B. Frank
<PAGE> 208
EXHIBIT 2.1
EXHIBIT "K-1"
LOAN AGREEMENT
This Agreement is made and entered into by and between FIMI
SECURITIES, INC. ("FIMI"), and FIRST INSTITUTIONAL MARKETING, INC. ("First
Institutional"), hereinafter collectively referred to as the "Parties".
FIMI AND PREMIER HEREBY AGREE AS FOLLOWS:
ARTICLE 1
RECITALS
1.1 Premier is a Texas corporation licensed as a life insurance and variable
contract insurance agent in Texas.
1.2 HomeCom Communications, Inc. has acquired an option to purchase the stock
of Premier, and FIMI wishes to provide funding for continual operations.
ARTICLE 2
TERMS OF LOAN
2.1 Pursuant to Section 7.1 of the Agreement and Plan of Merger, dated as of
_______________, 1998, the Parties agree to enter into a multiple advance loan
with open end credit up to an aggregate principal amount of ____________
Dollars ($___________.00), ("Principal Sum"), whereby FIMI, under the terms and
conditions of this Agreement, agrees to provide certain funds necessary for
Premier's operations, which in the aggregate does not exceed the Principal Sum
("Advance"), and Premier promises to repay such advances under the terms and
conditions of this Agreement and the Promissory Note.
2.2 Each Advance by Premier to FIMI shall be made pursuant to the terms and
conditions of the Promissory Note attached as Exhibit A, ("Promissory Note").
2.3 The minimum amount of any one Advance shall be _____________ and No/100
Dollars ($_______.00).
<PAGE> 209
ARTICLE 3
SECURITY INTEREST
3.1 Premier hereby gives FIMI a security interest in any and all of Premier's
assets, including, but not limited to, receivables, which it currently owns or
may own in the future.
3.2 First Institutional hereby agrees that a copy of this agreement may be
filed as a security agreement or at FIMI's option, Premier will execute an
UCC-1 Financing Statement in order to secure the above interests for the
benefit of FIMI.
ARTICLE 4
EFFECTIVE, MATURITY AND TERMINATION DATES
4.1 This Agreement shall be effective as of ______________________, and shall
continue in effect for one (1) year through December 31, 19__.
4.2 This Agreement shall automatically renew for a period of one (1) calendar
year, unless terminated under the terms and conditions of this Agreement.
4.3 This Agreement may be terminated by thirty (30) days prior written notice
by FIMI or ninety (90) days written notice by Premier. Termination of this
Agreement, however, will not release either Party from its obligations under
the terms of this agreement and/or any Promissory Note, which is then unpaid,
in whole or in part, as to either principal or interest.
ARTICLE 5
AUTHORITY TO CONTRACT
5.1 FIMI is a business corporation duly organized in the State of Texas,
validly existing and in good standing under the laws thereof and has full power
and authority to enter into this Agreement and carry out its terms. The
undersigned officer of ________ has the authority to execute the Agreement on
behalf of FIMI.
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5.2 First Institutional is a business corporation duly organized in the State
of Texas, validly existing and in good standing under the laws thereof and has
full power and authority to enter into this Agreement and carry out its terms.
The undersigned officer of ________ has the authority to execute the Agreement
on behalf of First Institutional.
ARTICLE 6
WARRANTIES BY PREMIER
6.1 Premier will provide FIMI with quarterly unaudited financial statements,
which shall include:
(A) a balance sheet;
(B) a profit and loss statement; and
(C) a listing and an aging of accounts receivable and accounts payable.
6.2 Premier agrees not to pay any investor, shareholder, officer, or employee,
any principal or interest on any investment made in or to Premier, whether by
purchase of stock, sale of stock, or loan, made directly or indirectly, or to
incur any liability outside the normal course of business as a life insurance
and variable contract agent until such time as all Promissory Notes issued
pursuant to this Agreement have been paid in full as to both principal and
interest.
ARTICLE 7
DEFAULT
7.1 The Parties agree that failure to comply with any portion of the terms and
conditions of this Agreement or any Promissory Note is considered default.
Where Premier is in default, FIMI may deem itself unsecured and at anytime
thereafter declare all obligations secured hereby to be due and payable and
shall have all rights and remedies of a secured party as applicable under state
law.
7.2 In the event that one or more default shall occur, and in the event that
thereafter a Promissory Note is placed in the hands of an attorney for
collection, or in the event that a Promissory Note is collected in whole or in
part through legal proceedings of any nature, then in any such case, there
shall be added to the unpaid principal balance of that Promissory Note, all
costs of collection, including but not limited to attorney's fees and all
expenses incurred in connection with the enforcement of any of the rights of
FIMI pursuant to its security interest, on account of such collection, whether
or not suit is filed.
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ARTICLE 8
WAIVER
8.1 FIMI reserves the right of waivers and amendments under this Agreement and
the Promissory Note. No delay on the part of FIMI in the exercise of any right,
power or remedy and no course of dealing with respect thereto shall operate as
a waiver. Nor shall any single or partial exercise of any right, power or
remedy preclude further exercise, or the exercise of any other right, power or
remedy. No provision of this Agreement or of the Promissory Note will be deemed
a waiver or amendment unless such action is in writing and signed by both
Parties.
ARTICLE 9
MISCELLANEOUS PROVISIONS
9.1 The obligations and undertakings of the Parties to this Agreement shall be
performed in Harris County, Houston, Texas, and shall be governed by the laws
of the State of Georgia, without regard to principles of conflicts of laws.
Venue shall lie in Superior Court of Fulton County, Georgia or the United
States District Court for the Northern District of Georgia, Atlanta Division.
The parties hereto acknowledge that such court has the jurisdiction to
interpret and enforce the provisions of this Agreement and the parties waive
any and all objections which they may have as to personal jurisdiction or venue
in any of the above courts.
9.2 This Agreement supersedes all previous loan agreements, if any, whether
written or oral, between the Parties.
9.3 No amendments to or modifications of this Agreement shall be valid unless
made in writing and executed by the Parties in the form of an amendment to this
Agreement.
9.4 This Agreement with the attached Promissory Note constitutes the entire
Agreement between the Parties.
9.5 Premier may not assign its rights or obligations under this Agreement in
whole or in part without the prior written consent of FIMI. FIMI may assign its
rights or obligations to one of its subsidiaries or affiliates upon notice to
Premier.
9.6 FIMI has the right to make or cause to be made reasonable entry upon and
inspection of property held as collateral under this Agreement during normal
business hours.
9.7 Each Party agrees to perform any further acts, and execute and deliver any
further
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documents, which may be reasonably necessary to carry out the provisions of
this Agreement.
9.8 All notices or other communications hereunder shall be in writing and shall
be deemed to have been duly given (i) on the date delivered personally or by
confirmed facsimile as set forth below; (ii) two (2) days after being sent by
Express Mail or such other similar service (i.e., Federal Express) and
addressed as set forth below; or (iii) four (4) days after being mailed by
certified or registered mail, return receipt requested, postage prepaid, and
addressed as set forth below, as follows:
FIMI COMMUNICATIONS, INC.
Fourteen Piedmont Center, Suite 100
3535 Piedmont Road
Atlanta, Georgia 30305
Attn: Harvey Sax
Facsimile: (404) 237-3060
With a copy to: SIMS MOSS KLINE & DAVIS, LLP
400 Northpark Town Center, Suite 310
1000 Abernathy Road, N.E.
Atlanta, Georgia 30328
Attn: Raymond L. Moss, Esq.
Facsimile: (770) 481-7210
And
FIRST INSTITUTIONAL MARKETING, INC.
____________________________________
____________________________________
Attn: _____________________________
Facsimile: ________________________
With a copy to: ____________________________________
____________________________________
____________________________________
Attn: _____________________________
Facsimile: ________________________
9.9 All caption headings are intended to be for purposes of reference only and
do not affect the substance of the articles or paragraphs to which they refer.
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9.10 Whenever from the context it appears appropriate, each term stated in
either the singular or plural shall include the singular and plural, and any
term stated in either the masculine, the feminine or the neuter gender, shall
include the masculine, the feminine and the neuter gender.
9.11 In the event that any of the provisions, or portions thereof, of this
Agreement are held to be illegal, invalid or unenforceable by any court of
competent jurisdiction, the validity and enforceability of the remaining
provisions, or portions thereof, shall not be affected by the illegal, invalid
or unenforceable provision or by its severance.
EXECUTED this ______ day of ____________, 1998
FIMI SECURITIES, INC.
By: _________________________________
______________________, President
PREMIER FINANCIAL SERVICES, INC.
By: ________________________________
Daniel A. Delity, President
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EXHIBIT "K-2"
SECURITY AGREEMENT
ARTICLE 1
GENERAL RECITALS
1.1. IDENTIFICATION OF PARTIES: This is a pledge agreement between
FIRST INSTITUTIONAL MARKETING, INC., an Oklahoma corporation, ("Debtor") and
FIMI SECURITIES, INC., a Texas corporation, ("Secured Party").
1.2. DEBT: Debtor is indebted to Secured Party, as evidenced by that
certain Promissory Note of______________, 1998 in the principal sum of
$__________, ("Promissory Note").
1.3. NATURE OF AGREEMENT: In connection with Section 7.1 of the
Agreement and Plan of Merger, dated as of November ________,1998, Debtor and
Secured Party desire that Debtor grant to the Secured Party a security interest
in the Collateral described in Paragraph 2.2 of this Agreement as collateral
for Debtor's performance of the terms and conditions of the Promissory Note and
other obligations set forth in this Agreement.
THEREFORE, in consideration of the mutual covenants and conditions
contained in this Agreement, the Debtor and Secured Party agree as follows:
ARTICLE 2
PLEDGE
2.1. SECURITY INTEREST: Debtor creates and grants to the Secured Party
a security interest in the Collateral described in Paragraph 2.2 of this
Agreement to secure the payment and performance of the obligations of Debtor to
the Secured Party set forth in Paragraph 2.3 of this Agreement.
2.2. DESCRIPTION OF COLLATERAL: This Agreement creates a security
interest in favor of Secured Party in the cash, accounts receivables, currently
existing and hereinafter created.
2.3. OBLIGATIONS SECURED: The security interest created by this
Agreement secures the following:
(a). Payment of the indebtedness evidenced by, and performance
and discharge of every covenant, condition, and agreement contained in the
Promissory Note, and any and all modifications, extensions, or renewals of the
Promissory Note.
<PAGE> 215
(b). Performance and discharge of every obligation, covenant, and
agreement of Debtor contained in this Agreement.
2.4. WARRANTY AND REPRESENTATIVE OF DEBTOR: Debtor warrants and
represents that the Collateral is free and clear of any security interests,
liens, restrictions, or encumbrances, other than the security interest created
by this Agreement, and that Debtor has full right and power to transfer the
Collateral to the Secured Party free and clear of any interest described in
this paragraph, and to enter into and carry out this Agreement.
ARTICLE 3
DEFAULT
3.1. OCCURRENCE OF DEFAULT: As used in this Agreement, "Occurrence of
Default" shall be any or all the following:
(a). The failure of Debtor punctually and completely to observe,
keep, or perform any covenant, agreement, or condition required by this
Agreement.
(b). The failure of Debtor punctually to pay the indebtedness
evidenced by the Promissory Note in accordance with its terms.
(c). Consent by Debtor to the appointment of a receiver or
liquidator of Debtor or any substantial portion of Debtor's assets.
(d). The seizure by a receiver, trustee, or other officer
appointed by any court, or by any sheriff, marshal, or other similar
governmental officer, under color of legal authority, or any
substantial portion of the assets of Debtor and holding possession of
the assets for a period of thirty (30) days.
(e). The assumption of jurisdiction, custody, or control of any
of the assets of Debtor under the provisions of any presently existing
or future law providing for reorganization, dissolution, liquidation,
or winding up of corporations or other legal entities, if Debtor has
not been restored to custody and control of the assets within thirty
(30) days after the date of the assumption.
(f). If a final judgment for the payment of money shall be
rendered against Debtor and, within thirty (30) days after the entry of
the judgment, it has not been discharged or execution of the judgment
has not been stayed pending appeal, or if, within thirty (30) days
after the expiration of any stay, the judgment has not been discharged.
3.2. RIGHTS OF SECURED PARTY UPON OCCURRENCE OF DEFAULT: On any
Occurrence of Default, the Secured Party may foreclose the security interest in
either of the following ways:
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(a). Retention of Collateral: Provided that the Secured Party
gives notice to the Debtor, and the Debtor fails to object within twenty-one
(21) days of receipt of such notice, the Secured Party may retain in
satisfaction of Debtor's obligation that portion of the Collateral that has a
"fair value," as defined in Paragraph 3.3, equal to the amount of indebtedness
that the Debtor has failed to pay in accordance with the terms of the
Promissory Note and this Agreement.
(b). Sale of Collateral: Subject to the provisions of Section
9.504 of the Texas Business and Commerce Code, the Secured Party may instruct
the Escrow Agent to offer the Collateral at a public or private sale after ten
(10) days' written notice to Debtor
3.3. FAIR VALUE OF COLLATERAL: As used in this Agreement, "fair value"
of the Collateral shall be the value determined by agreement of the parties or
their successor in interest or if no such mutual determination by independent
appraisal.
ARTICLE 4
RELEASE AND SUBSTITUTION OF COLLATERAL
4.1. RELEASE OF COLLATERAL: Debtor shall, upon each anniversary date of
this Agreement, be entitled to a release of Collateral to the extent of all
principal paid to Secured Party pursuant to the Promissory Note during the year
preceding the anniversary date of this Agreement.
ARTICLE 5
MISCELLANEOUS
5.1. NO WAIVER OF RIGHT OF REMEDIES: No failure or delay by Secured
Party in exercising any right, power, or privilege given by any provision of
this Agreement shall operate as a waiver of the provision. Additionally, no
single or partial exercise of any right, power, or privilege shall preclude any
other or further exercise of that or any other right, power, or privilege.
5.2. SEVERABILITY: Should any one or more of the provisions of this
Agreement be determined to illegal or unenforceable, all other provisions of
this Agreement shall be valid, binding, and effective as if the illegal or
unenforceable provisions had never been included in this Agreement.
5.3 All notices or other communications hereunder shall be in writing
and shall be deemed to have been duly given (i) on the date delivered
personally or by confirmed facsimile as set forth below; (ii) two (2) days
after being sent by Express Mail or such other similar service (i.e., Federal
Express) and addressed as set forth below; or (iii) four (4) days after being
mailed by certified or registered mail, return receipt requested, postage
prepaid, and addressed as set forth below, as follows:
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If to Debtor: FIRST INSTITUTIONAL MARKETING, INC.
___________________________________
___________________________________
Attn: ____________________________
Facsimile: _______________________
With a copy to: ___________________________________
___________________________________
___________________________________
Attn: ____________________________
Facsimile: _______________________
If to Secured Party: FIMI Securities, Inc.
Fourteen Piedmont Center, Suite 100
3535 Piedmont Road
Atlanta, Georgia 30305
Attn: Harvey Sax
Facsimile: (404) 237-3060
With a copy to: Sims Moss Kline & Davis, LLP
400 Northpark Town Center, Suite 310
1000 Abernathy Road, N.E.
Atlanta, Georgia 30328
Attn: Raymond L. Moss, Esq.
Facsimile: (770) 481-7210
5.4. ASSIGNMENT OF SECURED PARTY: This Agreement and the Security
Interest created by this Agreement shall be assignable by the Secured Party,
and shall inure to the benefit of Secured Party's heirs, executors, or
administrators, and shall be binding upon the Debtor and his or her heirs,
executors, administrators, legal representatives, successors, and assigns.
5.5. CHOICE OF LAW: It is the intention of the parties that the laws of
Georgia should govern the validity of this Agreement, the construction of its
terms, and the interpretation of the rights and duties of the parties, without
regard to principles of conflicts of laws. Venue shall lie in Superior Court of
Fulton County, Georgia or the United States District Court for the Northern
District of Georgia, Atlanta Division. The parties hereto acknowledge that such
court has the jurisdiction to interpret and enforce the provisions of this
Agreement and the parties waive any and all objections which they may have as
to personal jurisdiction or venue in any of the above courts.
5.6. PARAGRAPH HEADINGS: Paragraph and other headings contained in this
Agreement are for purposes of reference and convenience only and shall not
affect in any way the meaning of this Agreement or its interpretation.
5.7. INTEGRATED AGREEMENT: This Agreement constitutes the entire
Agreement between the parties, and there are no agreements, understandings,
restrictions, warranties, or representations between the parties other than
those set forth or provided for in this Agreement.
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DATED:_____________________, 1998
SECURED PARTY:
FIMI SECURITIES, INC.
By: ____________________________
DEBTOR:
FIRST INSTITUTIONAL MARKETING, INC.
By: ____________________________
Daniel A. Delity, President
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EXHIBIT "K-3"
PROMISSORY NOTE
$_____________________ Date:_____________________
FOR VALUE RECEIVED, First Institutional Marketing, Inc., an Oklahoma
corporation (hereafter referred to as "Maker"), promises to pay to the order
FIMISecurities, Inc., a Texas corporation (hereafter referred to as "Payee";
Payee and any subsequent holder(s) hereof being hereinafter referred to
collectively as "Holder"), at the office of Payee at ________________________,
or at such other place as Holder may designate to Maker in writing from time to
time, the principal sum of __________ and No/100 Dollars ($_.00) or so much
thereof as may be disbursed hereunder, together with interest on so much thereof
as is from time to time outstanding and unpaid, from the date of each advance of
principal, at the rates hereinafter set forth, in lawful money of the United
States of America.
PRINCIPAL DUE ON DEMAND. The principal sum provided herein shall be due and
payable to Holder in accordance with the following schedule:
INTEREST. The interest provided herein shall be paid in the following manner:
From and after the date hereof (until maturity, whether by acceleration or
otherwise) interest on the outstanding principal indebtedness evidenced hereby
shall accrue at the rate of _____ points ( ) in excess of "Prime Rate," as
hereinafter defined, and shall be computed on the daily outstanding principal
balance hereunder on the basis of a 360-day year. For purposes of this Note the
term Prime Rate shall mean the interest rate established by ____________
("Bank") from time to time in its sole discretion as its prime-lending rate. The
Prime Rate may not be the lowest rate available from the Bank. Loans from the
Bank may be priced at, above or below the Prime Rate. The Prime Rate as of the
date hereof is _____ percent (___%) on the basis of a 360-day year; accordingly,
the interest rate herein expressed in simple interest terms as of the date
hereof is _____ percent (___%) per 360-day year. If at any time or from time to
time the Prime Rate increases or decreases, then the rate of interest hereunder
shall be correspondingly increased or decreased effective on the day on which
any such increase or decrease of the Prime Rate is publicly announced. In the
event that Bank, during the term hereof, shall abolish or abandon the practice
of publishing a prime rate, or should the same become unascertainable, Holder
shall designate a comparable reference rate, which shall be deemed to be the
Prime Rate hereunder. Interest shall be computed on a 360-day year simple
interest basis.
All accrued and unpaid interest at said rate shall be due and payable
monthly, commencing on the first day of the first month after the date hereof
and continuing on the same day of each month thereafter until the entire
principal balance hereof, together with all accrued but unpaid interest, has
but paid in full.
<PAGE> 220
PREPAYMENT. This Note may be prepaid in whole or in part by Maker without
premium or penalty.
EVENT OF DEFAULT. It is hereby expressly agreed that should any default be
made in the payment of principal or interest as stipulated above, or should any
default be made in the performance of any of the covenants or conditions
contained in the "Loan Documents," as hereinafter defined and in such event, the
principal indebtedness evidenced hereby, and any other sums advanced hereunder
or under the Loan Documents, or any of them, together with all unpaid interest
accrued thereon, shall, at the option of Holder and without notice or demand to
Maker, at once become due and payable and may be collected forthwith, regardless
of the stipulated date of maturity. Interest shall accrue on the outstanding
principal balance of this Note from the date of any default hereunder and for so
long as such default continues, regardless of whether or not there has been a
demand of the indebtedness evidenced hereby as set forth herein, at a rate equal
to ___ percent(___%) per 360-day year in excess of the otherwise applicable
interest rate at the time of such default. Time is of the essence of this Note.
USURY. All agreements between Maker and Holder, whether now existing or
hereafter arising and whether written or oral, are expressly amended so that in
no contingency or event whatsoever, whether by acceleration in the maturity of
this Note or otherwise, shall the amount paid, or agreed to be paid, to Holder
for the use, forbearance or detention of money to be loaned hereunder or
otherwise, exceed the maximum amount permissible under applicable law. If, from
any circumstances whatsoever, fulfillment of any provision of this Note or of
any other document evidencing, securing or pertaining to the indebtedness
evidenced hereby, and the time performance of such provision shall be due, shall
exceed any limit prescribed by law, then, ipso facto, the obligation to be
filled shall be reduced to the limit of validity, and if from any such
circumstances Holder shall ever receive as interest under this Note or any other
document evidencing, securing or pertaining to the indebtedness evidenced hereby
or otherwise an amount that would exceed the highest lawful rate, such amount
that would be excessive interest shall be applied to the reduction of the
principal amount owing under this Note or on account of any other indebtedness
of Maker to Holder hereof relating to this Note, and not to the payment of
interest, or if such excessive interest exceeds the unpaid balance of principal
of this Note and such other indebtedness, such excess shall be refunded to
Maker. In determining whether or not the interest paid or payable with respect
to any indebtedness of Maker to Holder, under any specific contingency, exceeds
the highest lawful rate, Maker and Holder shall, to the maximum extent permitted
by applicable law (a) characterize any non-principal payment as an expense, fee
or premium rather than as interest, (b) exclude voluntary pre-payments and the
effects thereof, (c) amortize, prorate, allocate and spread the total amount of
interest throughout the full term of such indebtedness so that the actual rate
of interest on account of such indebtedness is uniform throughout the term
thereof, and/or (d) allocate an interest between portions of such indebtedness
to the end that no such portion should bear interest at a rate greater than that
permitted by law. The terms and provisions of this paragraph shall control and
supersede every other conflicting provision of all agreements between Maker and
Holder.
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<PAGE> 221
ATTORNEY FEES. In the event either party sues to enforce any provision of
this Note, the prevailing party, in addition to any damages awarded, shall be
entitled to receive reasonable attorneys' fees and costs, including, but not
limited to, fees, costs and expenses of litigation, including appeals, incurred
by the Holder in enforcing the terms of the Note.
CONSENT AND WAIVER. Presentment for payment, demand, protest and notice of
demand, protest and non-payment, notice of protest, notice of dishonor,
diligence of collection, and all other notices are hereby waived by Maker. No
failure to demand the debt evidenced hereby by reason of default hereunder,
acceptance of a past due installment, or indulgences granted from time to time
shall be construed (i) as a novation of this Note or as a reinstatement of the
indebtedness evidenced hereby or as a waiver of such right to demand or of the
right of Holder thereafter to insist upon strict compliance with the terms of
this Note, or (ii) to prevent the exercise of such right to demand or any other
right granted hereunder or by the laws of the State of Texas; and Maker hereby
expressly waives the benefit of any statute or rule of law or equity now
provided, or which may hereafter be provided, which would produce a result
contrary to or in conflict with the foregoing. No extension of the time for the
payment of this Note or any installment due hereunder, or partial payment
before or after maturity, made by agreement with any person now or hereafter
liable for the payment of this Note shall operate to release, discharge,
modify, change or affect the original liability of maker under this Note,
either in whole or in part, unless Holder agrees otherwise in writing. This
Note may not be changed orally, but only by an agreement in writing signed by
the party against whom enforcement of any waiver, change, modification or
discharge is sought.
LOANS TO BE EVIDENCED BY NOTE. This Note is to evidence loans now being made
by Payee to Maker and/or additional loans to Maker which may be made from time
to time by Payee in the future in accordance with any agreement relating to the
financing of future operations. All such loans, to the extent not evidenced by
other notes, shall be evidenced by this Note and shall be subject to its terms.
The principal sum evidenced by this Note may be reduced from time to time by
payments hereunder and may be increased from time to time by additional loans;
provided, however, that the principal sum evidenced by this Note shall not
exceed the principal sum shown above.
SECURITY. The indebtedness evidenced by this Note and the obligations created
hereby are secured by, among other things, a security interest in Maker's
accounts and other property, pursuant to certain agreements, Loan Agreements,
Security Agreements, assignments, and other documents (said agreements and
assignments, together with all other documents evidencing or securing or in any
way relating to the indebtedness evidenced hereby herein referred to
collectively as the "Loan Documents"), some of which Loan Documents were or are
to be filed for record on or about the date hereof in the appropriate public
records.
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CONSENT TO ASSIGNMENT. Maker acknowledges that Holder may assign this Note to
one of its subsidiaries or affiliates. Maker hereby authorizes and consents to
each such assignment.
SET OFF. The Maker shall have no right of set off against the Holder under
this Note. The Holder, however, shall have the right, immediately and without
further action by it, to apply against this Note all money owed by the Maker in
any capacity to the Holder, whether or not then due.
GOVERNING LAW. This Note is intended as a contract under and shall he
construed and enforceable in accordance with the laws of the State of Georgia
without regard to principles of conflicts of laws. Venue shall lie in Superior
Court of Fulton County, Georgia or the United States District Court for the
Northern District of Georgia, Atlanta Division. The parties hereto acknowledge
that such court has the jurisdiction to interpret and enforce the provisions of
this Agreement and the parties waive any and all objections which they may have
as to personal jurisdiction or venue in any of the above courts.
SAVING CLAUSE. If from any circumstances whatsoever, fulfillment of any
provision of this Note or of any other instrument evidencing or securing the
indebtedness evidenced hereby at the time performance of such provision shall
be due, shall involve transcending the limit of validity presently prescribed
by any applicable usury statute or any other applicable law, with regard to
obligations of like character and amount, then, nunc pro tunc, the obligation
to be fulfilled shall be reduced to the limit of such validity, so that in no
event shall any exaction be possible under this Note or under any other
instrument evidencing or securing the indebtedness evidenced hereby that is in
excess of the current limit of such validity, but such obligation shall be
fulfilled to the limit of such validity.
BINDING EFFECT. As used herein, the terms "Maker" and "Holder" shall be deemed
to include their respective heirs, successors, legal representatives and
assigns, whether by voluntary action of the parties or by operation of law. In
the event that more than one person, firm or entity is a Maker hereunder, then
all references to "Maker" shall be deemed to refer equally to each of said
persons, firms, or entities, all of whom shall be jointly and severally liable
for all of the obligations of Maker hereunder.
BUSINESS PURPOSE. The Maker acknowledges that the loan evidenced by this Note
is made for a commercial purpose only and not for any personal or family use.
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<PAGE> 223
HEADINGS. The headings of the paragraphs contained in this Note are for
convenience of reference only and do not form a part hereof and in no way
modify, interpret, or construe the meaning of the parties hereto.
MAKER: FIRST INSTITUTIONAL
MARKETING, INC.
Signed in the presence of: By:
---------------------------------
-------------------------- Daniel A. Delity, President
ENDORSEMENT
Payable to the order of ______________, pursuant to the Security Agreement
dated as of ______________, 1998, between the undersigned and _____________, as
amended or restated and in effect from time to time.
PAYEE: FIMI SECURITIES, INC.
Signed in the presence of: By:_____________________________
__________________, President
__________________________
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EXHIBIT "L"
LICENSE AGREEMENT
This License Agreement is by and between FIRST INSTITUTIONAL MARKETING,
INC., an Oklahoma corporation licensed to act as a variable contract agent in
the State of Texas ("Licensee") and FIMI SECURITIES, INC., a Texas corporation
("Licensor").
RECITALS
WHEREAS, Licensor is the owner of proprietary data, which identifies,
inter alia, persons and entities that have purchased certain insurance and
insurance related products;
WHEREAS, Licensee is desirous of obtaining a non-exclusive license to
use said proprietary data for the purposes hereinafter set forth; and
WHEREAS, Licensor is desirous of granting such license to Licensee, as
set forth in this License Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
obligations hereinafter set forth and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
AGREEMENT
ARTICLE 1
Definitions
Each of the following terms shall, wherever found in this License
Agreement be used and understood in accordance with the corresponding
definitions below.
1.1 Book of Business shall mean proprietary data relating to purchasers of life
insurance and variable contracts and similar products including the Assets as
defined in Section 2.1 of that certain Agreement and Plan of Reorganization,
dated of even date herewith.
1.2 Confidential Information shall mean the Book of Business and any and all
information of the Licensor made available and disclosed by it, directly or
indirectly, to Licensee pursuant to the provisions of this License Agreement
except
<PAGE> 225
(a) information which at the time of disclosure is in the public
domain;
(b) information which after disclosure is published or otherwise
becomes a part of the public domain through no fault of the
recipient (but only after it is published or otherwise becomes
part of the public domain);
(c) information which the recipient can show was in its possession
at the time of disclosure and was not acquired, directly or
indirectly, from the other party hereto; or
(d) information which was received by the recipient after the time
of disclosure hereunder from a third party who did not acquire
it, directly or indirectly, from the disclosing party under an
obligation of confidence.
1.3 Effective Date shall mean the ____ day of __________, 1998, which is the
day on which this License Agreement shall be effective.
ARTICLE 2
Grant of License
2.1 Licensor hereby grants to Licensee a non-assignable, non-transferable,
non-exclusive license, without the right to sublicense, to use the Book of
Business solely in connection with the solicitation of insurance products
subject to the terms and conditions herein.
ARTICLE 3
Consideration-Taxes
3.1 Licensee hereby agrees to pay Licensor an amount to be determined by the
parties at the end of each calendar quarter.
3.2 All sales and use taxes which may be levied by any taxing authority by
reason of the execution or performance of this License Agreement or any
payments hereunder shall be borne and paid by Licensee prior to determining the
amounts payable to Licensor hereunder.
ARTICLE 4
Confidentiality
4.1 Licensee acknowledges that Licensor's Book of Business constitutes valuable
assets and trade secrets of Licensor and agrees to hold in confidence any
Confidential Information disclosed by Licensor and not to disclose such
Confidential Information to third parties unless the prior written
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consent of Licensor is obtained. Except as provided in Paragraph 4.2 of this
Agreement, Licensee agrees not to reproduce, copy, or duplicate or allow to be
reproduced, copied, or duplicated any data or information with respect to any
Confidential Information; provided, however, that nothing contained herein
shall in any way restrict or impair Licensee's right to use or disclose any
information or data which is now, or at the time of disclosure to Licensee by
Licensor, in its possession or which is now or later becomes generally
available to the public through no fault of Licensee or which hereafter becomes
available to Licensee from a third party rightfully in possession of same and
having no direct or indirect obligation to Licensor with respect to same.
4.2 The Book of Business provided by Licensor to Licensee under this Agreement
may be copies, in whole or in part, solely for Licensee's internal use for
back-up and archival purposes. The original and any copies of the Book of
Business, in whole or in part, shall be the property of Licensor and shall be
returned to Licensor upon expiration or earlier termination of this License
Agreement.
4.3 Licensee hereby acknowledges that Licensor retains the sole ownership,
management, and control of the Book of Business as against Licensee, and that
Licensee does not acquire any ownership rights in the Book of Business by
virtue of the license herein granted.
ARTICLE 5
Representations, Warranties and Covenants
5.1 Licensor has the right to license the Book of Business, subject to no
restrictions or encumbrances of any kind. Licensor further represents and
warrants that it has full and complete power and authority to enter into and
carry out its obligations under this License Agreement.
5.2 Licensor may edit proprietary data in such fashion, as Licensor deems
appropriate; without limitation of the foregoing, Licensor may delete names and
other information pertaining to customers prior to preparation and delivery of
the Book of Business to Licensee. Licensee acknowledges that the Book of
Business is satisfactory to it even though it may have been edited to exclude
portions of Licensor's proprietary data.
5.3 Licensee represents that it is authorized to solicit life insurance
business and variable contract from the public generally and can provide
services generally as a corporate life insurance agent and as a variable
contract agent as that term is defined in the Texas Insurance Code. Licensee
recognizes that Licensor is not performing and shall not be required to perform
any services as a life insurance or variable contract agent pursuant to this
License Agreement as such terms are defined in the Texas Insurance Code.
5.4 Neither Licensee, nor its employees, agents or representatives will
represent that the products
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or services the Licensee provides have sponsorship, approval, characteristics,
uses or benefits which those products and services do not have or in any other
way misrepresent its products or services to Licensor or its customers. None of
Licensee, its employees, agents or representatives will misrepresent Licensor
or Licensor's products or services, nor will they make any comments whatsoever
concerning Licensor's financial status, banking business or management to any
customers, potential customers or former customers of Licensor.
5.5 Licensee shall not prepare or publish any advertising or solicitation
material of any kind whatsoever containing any reference of any kind to
Licensor or any person or company affiliated with Licensor, or use or refer to
the name of Licensor or any affiliates of Licensor, in connection with the
solicitation or sale of life insurance or annuities unless the prior written
consent of Licensor is obtained.
ARTICLE 6
Indemnification
6.1 Indemnification of the Licensor by the Licensee. The Licensee agrees to
indemnify, defend and hold harmless the Licensor and its Affiliates, and any of
their respective directors, officers, employees and agents against any and all
losses, claims, damages, liabilities, actions, costs or expenses, joint or
several (including reasonable legal fees and expenses), judgments, and fines of
any nature whatsoever which any of them may suffer which arise out of, directly
or indirectly, or are based upon: (i) the negligence or fraud of the Licensee,
its Affiliates or any of their officers, directors, employees, or agents; (ii)
a breach of this License Agreement by the Licensee; or (iii) the violation by
the Licensee or any of its Affiliates of any applicable law, rule, regulation
or administrative order or any statements, letters or guidelines issued by any
insurance regulatory authority, including the state insurance department.
6.2 Indemnification of the Licensee by the Licensor. The Licensor agrees to
indemnify, defend and hold harmless the Licensee and its Affiliates, and any of
their respective directors, officers, employees and agents against any and all
losses, claims, damages, liabilities, actions, costs or expenses, joint or
several (including reasonable legal fees and expenses), judgments, and fines of
any nature whatsoever which any of them may suffer which arise out of, directly
or indirectly, or are based upon: (i) the negligence or fraud of the Licensor
or its Affiliates or any of their officers, directors, employees, or agents;
(ii) a breach of this License Agreement by the Licensor; or (iii) the violation
by the Licensor or any of its Affiliates of any applicable law, rule,
regulation or administrative order.
6.3 Cumulative Remedies. Notification and Survival. The indemnification
provided in Sections 6.1 and 6.2 above is cumulative of any other remedies or
rights the indemnified parties may have and is expressly conditioned upon
timely receipt by the indemnifying parties of written notice of a
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claim pursuant thereto within one hundred eighty (180) days following the date
the indemnified parties become aware of the same.
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6.4 Right to Defend. The indemnifying parties shall have the duty to defend the
action, claim or proceeding alleged or brought against the indemnified parties,
and subject to reasonable approval of the indemnified parties, to retain
counsel of its choice. The indemnified parties shall not compromise or settle,
in any manner, any dispute or claim which is the subject of a claim under
Sections 6.1 and 6.2 above without the prior written approval of the
indemnifying parties, which approval shall not be unreasonably withheld.
6.5 Regulatory Action. Notwithstanding the foregoing, in the event of any
actions, investigations, claims or other legal action by any federal or state
bank regulatory authority relating to the duties, responsibilities or actions
of the parties hereto, the Licensor will bear all reasonable legal fees and
expenses associated therewith. In the event of any actions, investigations,
claims or other legal action by any state insurance regulatory authority, the
Licensee will bear all reasonable legal fees and expenses associated therewith.
Each party shall promptly notify the other of and reasonably cooperate with the
other in defending such action. Any and all losses, damages, fines or judgments
arising out of any such proceedings will be subject to indemnification as set
forth in sections 6.1 and 6.2 above, to the extent such sections are
applicable; and otherwise shall be borne by the party against whom they are
assessed.
ARTICLE 7
Default-Remedies
7.1 The occurrence of any of the following events or conditions shall
constitute an "Event of Default" hereunder by Licensee.
(a) The failure of Licensee to pay the license fees or any part
thereof or any other amounts payable hereunder when due and such
failure shall continue for a period of five (5) days after
written notice thereof has been given by Licensor; or
(b) The entry of a decree or order by a court having jurisdiction
adjudging Licensee to be bankrupt of insolvent or approving as
properly filed a petition seeking reorganization of Licensee
under the Bankruptcy Code, as amended from time to time, or any
other similar applicable federal or state law, or a decree or
order of a court having jurisdiction for the appointment of a
receiver or liquidator or a trustee or assignee in bankruptcy or
insolvency of Licensee or its property or for the winding up or
liquidation of its affairs; or Licensee shall institute
proceedings to be adjudicated a voluntary bankrupt or shall
consent to the filing of any such proceedings shall be
instituted against Licensee and the same shall not be vacated
within sixty (60) days after the same are commenced; or Licensee
shall make an assignment for the benefit of Licensee's creditors
or admit in writing Licensee's inability to pay the debts of
Licensee generally as they may become due; or
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(c) Licensee shall fail to fulfill or perform, in whole or in part,
any of its obligations under this License Agreement (other than
the payment of license fees) and such failure or non-performance
shall continue for a period of ten (10) days after written
notice thereof has been given by Licensor; or
(d) Licensee shall breach any covenant contained in Article 4 hereof.
7.2 The occurrence of any of the following events or conditions shall
constitute an "Event of Default" hereunder by Licensor:
(a) The entry of a decree or order by a court having jurisdiction
adjudging Licensor to be bankrupt of insolvent or approving as
properly filed a petition seeking reorganization of Licensor
under the Bankruptcy Code, as amended from time to time, or any
other similar applicable federal or state law, or a decree or
order of a court having jurisdiction for the appointment of a
receiver or liquidator or a trustee or assignee in bankruptcy or
insolvency of Licensor or its property or for the winding up or
liquidation of its affairs; or Licensor shall institute
proceedings to be adjudicated a voluntary bankrupt or shall
consent to the filing of any such proceedings shall be
instituted against Licensor and the same shall not be vacated
within sixty (60) days after the same are commenced; or Licensor
shall make an assignment for the benefit of Licensor's creditors
or admit in writing Licensor's inability to pay the debts of
Licensor generally as they may become due; or
(b) Licensor shall fail to fulfill or perform, in whole or in part,
any of its obligations under this License Agreement, and such
failure or non-performance shall continue for a period of ten
(10) days after written notice thereof has been given by
Licensee;
7.3 Upon the occurrence of any Event of Default set forth in paragraph 7.1
hereof, then at any time thereafter prior to the curing thereof, Licensor may
exercise any and all rights and remedies available to Licensor under this
License Agreement, at law or in equity, including, without limitation,
termination of this License Agreement. If Licensor elects to terminate this
License Agreement, it may treat the Default as an entire breach of this License
Agreement; and Licensee shall immediately become liable to Licensor for damages
equal to all unpaid license fees and other amounts earned or due through such
termination. Upon such termination, the provisions of Article 10 hereof shall
apply. All rights and remedies of Licensor shall be cumulative and not
exclusive. Licensor shall be entitled to simultaneously pursue multiple or
alternative remedies, at any time to abandon pursuit of any remedy, and at any
time to pursue additional remedies.
7.4 Upon the occurrence of any Event of Default set forth in paragraph 7.2
hereof, then at any time thereafter prior to the curing thereof, as its sole
and exclusive remedy, Licensee may terminate this License Agreement. Upon such
termination, the provisions of Article 10 hereof shall apply.
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Notwithstanding any such termination, Licensee shall remain liable for any
license fees and other amounts accrued through the date of termination, but
Licensee shall be entitled to a return of a pro-rata portion of any prepaid
license fees for the unexpired term of this License Agreement. Licensee hereby
waives any claims for damages (including, without limitation, damages for lost
profits, and all other incidental and consequential damages of every kind
whatsoever) for Default by Licensor, Licensee's exclusive remedy in such event
being termination of this License Agreement; provided, however, that Licensee
shall be entitled to a return of a pro-rata portion of any prepaid license fees
for the unexpired term of this License Agreement.
ARTICLE 8
Notices
8.1 All notices or other communications hereunder shall be in writing and shall
be deemed to have been duly given (i) on the date delivered personally or by
confirmed facsimile as set forth below; (ii) two (2) days after being sent by
Express Mail or such other similar service (i.e., Federal Express) and
addressed as set forth below; or (iii) four (4) days after being mailed by
certified or registered mail, return receipt requested, postage prepaid, and
addressed as set forth below, as follows:
If to Licensor: FIMI SECURITIES, INC.
Fourteen Piedmont Center, Suite 100
3535 Piedmont Road
Atlanta, Georgia 30305
Attn: Harvey Sax
Facsimile: (404) 237-3060
With a copy to: SIMS MOSS KLINE & DAVIS, LLP
400 Northpark Town Center, Suite 310
1000 Abernathy Road, N.E.
Atlanta, Georgia 30328
Attn: Raymond L. Moss, Esq.
Facsimile: (770) 481-7210
If to Licensee: FIRST INSTITUTIONAL MARKETING, INC.
___________________________________
___________________________________
Attn: ____________________________
Facsimile: _______________________
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With a copy to: ___________________________________
___________________________________
___________________________________
Attn: ____________________________
Facsimile: _______________________
In addition, notice may be given at such other address as either party
hereto may specify by notice given in accordance with this Paragraph 8.1.
ARTICLE 9
Assignment
9.1 This License Agreement is not assignable by Licensee.
9.2. Licensee acknowledges that Licensor may transfer or assign its interest in
the Book of Business to a subsidiary or affiliate of Licensor and in such event
the terms and conditions herein shall continue in full force and effect from
the date of such transfer or assignment, but that all future payments to
Licensor shall be made to such subsidiary or affiliate.
ARTICLE 10
Effective Date and Termination
10.1 Effective Date and Term. This Agreement shall become fully effective as of
the date first set forth above. This Agreement shall remain in full force and
effect for a period of one year from the effective date, unless terminated
pursuant to Sections 10.2 or 10.3 below. This Agreement shall be automatically
renewed for successive periods of one year each.
10.2 Termination for Cause. This Agreement may be immediately terminated by
written notice given by either the Licensee or the Licensor upon the occurrence
of one of the following:
(a) A breach by the other party of any material covenant, condition
or representation of this Agreement and the failure to cure such
breach, within ten (10) days for any monetary breach, and thirty
(30) days for a non-monetary breach after receipt of written
notice from the non-breaching party; or
(b) Any final determination by any court, administrative agency or
the issuance of a ruling by any governing body with jurisdiction
over the Licensee, the Licensor that this Agreement is illegal
as a matter of law and the parties cannot in good faith
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negotiate an amendment to the Agreement to bring it into
compliance.
10.3 Termination without Cause. In addition to the rights set forth in Section
10.1 and 10.2 above, this Agreement may be terminated by either the Licensee or
the Licensor, without regard to cause, upon ninety (90) days' prior written
notice to the other party.
10.4 Events Upon Termination or Expiration. In the event of expiration or
earlier termination for any reason of the license granted to Licensee by
Licensor under this Agreement, Licensee shall immediately discontinue use of
the Book of Business and shall immediately return to Licensor the original and
all copies of the Book of Business in the possession or under the control of
Licensee. Licensee's obligations under the preceding sentence of this paragraph
10.4 and under paragraph 4.1 hereof, shall survive any expiration or
termination of this Agreement.
ARTICLE 11
Force Majeure
11.1 Neither party hereto shall be liable to the other party for failure or
delay in the performance of any duties or obligations hereunder due to strikes,
lockouts, acts of God, acts of war, fire, flood, explosions, embargo,
litigation or labor disputes, government or any other laws and regulations, or
any other cause beyond the control and without the fault of such party.
ARTICLE 12
Miscellaneous
12.1 Scope of Agreement. This License Agreement constitutes the entire
agreement between the parties pertaining to the subject matter hereof.
12.2 Construction. The parties acknowledge that each party and its counsel have
reviewed and revised this License Agreement and that the normal rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this License
Agreement or any amendments or exhibits hereto.
12.3 Headings. The subject headings of the paragraphs of this License Agreement
are included for purposes of convenience only, and shall not affect the
construction or interpretation of any of its provisions.
12.4 Counterparts. This License Agreement may be executed in one or more
counterparts, and all so executed shall constitute the one agreement, binding
on both parties hereto notwithstanding that both parties are not signatory to
the same counterpart.
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12.5 Severability. If any part or parts of this License Agreement are found to
be illegal or unenforceable, the remainder shall be considered severable, shall
remain in full force and effect, and shall be enforceable.
12.6 Applicable Law. This License Agreement shall be construed, interpreted and
applied in accordance with the laws of the State of Georgia, and, to the extent
applicable, the laws of the United States of America, without regard to
principles of conflicts of laws. Venue shall lie in Superior Court of Fulton
County, Georgia or the United States District Court for the Northern District
of Georgia, Atlanta Division. The parties hereto acknowledge that such court
has the jurisdiction to interpret and enforce the provisions of this Agreement
and the parties waive any and all objections which they may have as to personal
jurisdiction or venue in any of the above courts.
IN WITNESS WHEREOF, the parties hereto have executed this License Agreement
by their duly authorized officers or representatives, as of the date first set
forth above.
LICENSOR:
FIMI SECURITIES, INC.
By: _____________________________
LICENSEE:
FIRST INSTITUTIONAL MARKETING, INC.
By: _____________________________
Daniel A. Delity, President
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EXHIBIT "M-1"
STOCK OPTION AGREEMENT
THIS AGREEMENT is effective as of ___________________, 1998, is between
HOMECOM COMMUNICATIONS, INC. and its designee ("Buyer"), DANIEL A. DELITY,
JAMES WM. ELLSWORTH and DAVID B. FRANK, each an individual (collectively,
"Seller").
ARTICLE 1. OPTION
1.1 For and in consideration of the sum of ___________ Dollars
($________.00), the receipt and sufficiency of which is hereby acknowledged,
each Seller hereby grants, pursuant to Section 7.1(a)(xxvii) of the Agreement
and Plan of Merger, dated as of ______________, 1998 to Buyer or its designee,
the option to purchase all, and not less than all, of the outstanding shares,
of any class or type, of FIRST INSTITUTIONAL MARKETING, INC. ("Corporation") a
Texas corporation (collectively "Stock"), which such Seller shall own now or
hereafter and in compliance with the terms of this Agreement.
ARTICLE 2. EXERCISE OF OPTION
2.1 This Option may be exercised at any time by Buyer prior to its
expiration against Seller. Provided, however, that this Option will be
automatically exercised on the first anniversary of the date of this Agreement
without any further act or deed by any party hereto; and upon such date Buyer
or its designee shall become the sole shareholder of the Corporation.
2.2 The Option shall be exercised by Buyer by written notice to each
Seller of intent to exercise, and such exercise shall become effective three
days after the mailing to the Seller by Certified Mail, Return Receipt
Requested, or by hand delivery of said notice to the address provided herein.
2.3 The closing of any purchase hereunder shall be within thirty (30)
days of the exercise of the Option. At closing, Buyer shall present and deliver
to each Seller the full purchase price of Seller's Stock in cash or cashier's
check.
ARTICLE 3. ACCELERATION OF OPTION
3.1 This Option shall automatically be triggered in the following
events ("Triggering Event"):
(a) the death of any Seller, but only with respect to the Stock
owned by such deceased Seller;
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(b) the disability of any Seller for consecutive period of ninety
(90) days or more as determined by an independent physician,
but only with respect to the Stock of such disabled Seller;
(c) 180 days from the date hereof.
3.2 This Option shall be exercised automatically upon a Triggering
Event by written notice by Sellers or their heirs or legal representations of a
Triggering Event which shall become effective three (3) days after the mailing
to Buyer by certified mail, return receipt requested, or by hand delivery of
said notice to the address provided herein.
3.3 The closing of any purchase upon a Triggering Event shall be made
within one hundred eighty (180) days of the Triggering Event. At Closing, Buyer
shall present and deliver to each Seller or their heirs or legal
representations the full purchase price of Seller's stock in cash or cashier's
check.
ARTICLE 4. PURCHASE PRICE
4.1 The purchase price of each Seller's Stock shall be Ten and No/100
Dollars ($10.00).
ARTICLE 5. ESCROW
5.1 Simultaneously with the execution of this Agreement, Sellers will
deliver to Buyer as Escrow Agent, all the Stock subject to this Option, duly
endorsed in blank, to be held in escrow as provided herein. Upon the issuance,
purchase or other acquisition of any additional Stock of the Corporation, in
any form, Seller will immediately deliver same to Buyer, duly endorsed in
blank, to hold in escrow as provided herein.
ARTICLE 6. STOCK RIGHTS AND RESTRICTIONS
6.1 This Agreement shall not effect Seller's right to collect dividends
on the Stock until the exercise of the Option hereunder at which time all such
rights shall pass to Buyer by exercise of the Option.
6.2 Each Seller has executed simultaneously herewith that certain
Irrevocable Proxy, a copy of which is attached hereto as Exhibit No. 1 and
incorporated herein fully by reference.
6.3 Upon exercise of this Option, Buyer or its designee or assigns must
be qualified to hold the Stock if and to the extent required by the Texas
Insurance Code. If Buyer cannot legally acquire the Stock directly, then Buyer
shall be obligated to appoint a designee or assignee who is able to lawfully
acquire the Stock and to cause such designee or assignee to acquire the stock
as provided herein.
6.4 Buyer hereby acknowledges that immediately upon the Corporation's
receipt of payment of that certain Promissory Note between Seller and
consideration for the purchase of the
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assets of the Corporation by FIMI Securities, Inc., the full amount of such
consideration shall be distributed by the Corporation to Seller.
ARTICLE 7. WARRANTIES OF SELLER
7.1 Each Seller represents, warrants and covenants:
(a) The Stock is now and will at all times during this Agreement be
free of all liens and encumbrances arising from any action or inaction of such
Seller. Seller is the sole owner of and has the complete and unencumbered right
to sell his Stock;
(b) The Stock of each Seller named herein collectively constitutes one
hundred percent (100%) of the issued and outstanding stock of the Corporation
on the date of this Agreement;
(c) Such Seller will not encumber or grant a lien against such Seller's
Stock at any time during the term of this Agreement;
(d) He has executed that certain Irrevocable Proxy;
(e) Buyer or its designee or assigns shall receive good and marketable
title to such Seller's Stock; provided, however, that no Seller is representing
or warranting that a market exists for the sale of the Stock;
(f) If, at the time of the exercise of this Option, any of the Stock is
subject to any encumbrance, Buyer shall be entitled, in addition to any other
rights and remedies, to have so much of the consideration for this Option as
shall be required for that purpose applied or reimbursed by Seller to discharge
such encumbrance and to pay any costs or expenses in connection therewith.
Seller will be entitled to receive only such balance of the consideration for
this Option as shall remain after the discharge of such encumbrance.
(g) That he will take no action to amend, modify, restate, or rescind
the Company's Articles of Incorporation and By-Laws and shall operate the
business consistent with past business practices.
(h) Prior to the closing of any purchase of the Shares hereunder,
Seller shall have filed an election with the Internal Revenue Service to have
the corporation elect to be taxed as a "C" corporation.
ARTICLE 8. CONSENT OF SPOUSE
8.1 The spouse of Seller is fully aware, fully understands and fully
consents to the terms hereof and its binding effect upon any community interest
she may have now or hereafter; and she further agrees, though the marital
relationship may terminate for any reason, that such
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termination shall not have the effect of removing the Stock from the terms
hereof; and she acknowledges her consent and agreement by her signature hereon.
ARTICLE 9. TERM
9.1 This Option shall be for a period of one (1) year.
9.2 Notice of termination of this Agreement shall be effective when a
copy of the same shall have been delivered by Certified Mail, Return Receipt
Requested, or hand delivered to any Seller.
9.3 Notice of termination, however, shall not terminate Buyer's right
or duty to exercise this option or Seller's right to compel Buyer to exercise
this option prior to the actual termination date.
ARTICLE 10. MISCELLANEOUS
10.1 Buyer may assign its rights, duties and benefits under this
Agreement to a party of Buyer's choice, provided that Buyer shall not be
released from its obligations under this Agreement in the event of default by
Buyer's assignee.
10.2 Buyer hereby acknowledges that sale of certain assets of the
Corporation to FIMI.
10.3 Each party hereto agrees to perform any further acts and execute
and deliver any further documents, which may be reasonably necessary to carry
out the provisions of this Agreement.
10.4 All notices or other communications hereunder shall be in writing
and shall be deemed to have been duly given (i) on the date delivered
personally or by confirmed facsimile as set forth below; (ii) two (2) days
after being sent by Express Mail or such other similar service (i.e., Federal
Express) and addressed as set forth below; or (iii) four (4) days after being
mailed by certified or registered mail, return receipt requested, postage
prepaid, and addressed as set forth below, as follows:
If to Seller: __________________________
__________________________
Attn: ___________________
Facsimile: ______________
With a copy to: LARRY FONTANA
__________________________
__________________________
Attn: ___________________
Facsimile: ______________
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<PAGE> 239
If to Buyer: HOMECOM COMMUNICATIONS, INC.
Fourteen Piedmont Center, Suite 100
3535 Piedmont Road
Atlanta, Georgia 30305
Attn: Harvey Sax
Facsimile: (404) 237-3060
With a copy to: SIMS MOSS KLINE & DAVIS, LLP
400 Northpark Town Center, Suite 310
1000 Abernathy Road, N.E.
Atlanta, Georgia 30328
Attn: Raymond L. Moss, Esq.
Facsimile: (770) 481-7210
10.5 In the event that any of the provisions, of this Agreement are
held to be unenforceable or invalid by any court of competent jurisdiction, the
validity and enforceability of the remaining provisions, or portions thereof,
shall not be affected thereby.
10.6 Whenever used herein, the singular number shall include the
plural, and the plural number shall include the singular.
10.7 This Agreement has been executed in and shall be governed by the
laws of the State of Georgia without regard to principles of conflicts of laws
and the duties and obligations of each party shall be fully performable in
Houston, Harris County, Texas. Venue shall lie in Superior Court of Fulton
County, Georgia or the United States District Court for the Northern District
of Georgia, Atlanta Division. The parties hereto acknowledge that such court
has the jurisdiction to interpret and enforce the provisions of this Agreement
and the parties waive any and all objections which they may have as to personal
jurisdiction or venue in any of the above courts.
10.8 Subject to the restrictions against transfer or assignment as
herein contained, the provisions of this Agreement shall inure to the benefit
of and shall be binding on the assigns, successors in interest, personal
representatives, estates, heirs, and legatees of each of the parties hereto.
10.9 This Agreement may only be amended by the written consent of all
of the parties to this Agreement.
10.10 This Agreement contains the entire understanding between the
parties hereto concerning the subject matter contained herein. There are no
representations, agreements, arrangements, or understandings, oral or written,
between or among the parties hereto, relating to the subject matter of this
Agreement, which are not fully expressed herein.
10.11 This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
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FIRST INSTITUTIONAL MARKETING, INC.
By:________________________________
HARVEY SAX, PRESIDENT
___________________________________
DANIEL A. DELITY, INDIVIDUALLY
___________________________________
JAMES WM. ELLSWORTH, INDIVIDUALLY
___________________________________
DAVID FRANK, INDIVIDUALLY
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CONSENT OF SPOUSES
_______________________________________________________ , spouse of Daniel A.
Delity, hereby consents to all terms and conditions of the above Stock Option
Agreement.
___________________________________
_______________________________________________________ , spouse of James
Wm. Ellsworth, hereby consents to all terms and conditions of the above Stock
Option Agreement.
___________________________________
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EXHIBIT "M-2"
IRREVOCABLE PROXY
I, James Wm. Ellsworth, being the record owner of ______________
(________) shares of the common stock of FIRST INSTITUTIONAL MARKETING, INC.
("FIMI"), do hereby appoint the President of HOMECOM COMMUNICATIONS, INC., a
corporation ("HomeCom"), as my proxy to attend all meetings of the shareholders
of FIMI, with full power to vote and act for me in the same manner and extent
that I might were I personally present at said meetings.
My proxy shall have the full power to substitute another person as my
proxy and to revoke the appointment of any such substitute proxy.
This proxy is given in connection with and as partial consideration
under the Stock Option Agreement with HomeCom to purchase my shares and is
IRREVOCABLE.
Dated ________________, 1998.
___________________________________
James Wm. Ellsworth
<PAGE> 243
EXHIBIT "M-3"
IRREVOCABLE PROXY
I, Daniel A. Delity, being the record owner of ______________
(________) shares of the common stock of FIRST INSTITUTIONAL MARKETING, INC.
("FIMI"), do hereby appoint the President of HOMECOM COMMUNICATIONS, INC., a
corporation ("HomeCom"), as my proxy to attend all meetings of the shareholders
of FIMI, with full power to vote and act for me in the same manner and extent
that I might were I personally present at said meetings.
My proxy shall have the full power to substitute another person as my
proxy and to revoke the appointment of any such substitute proxy.
This proxy is given in connection with and as partial consideration
under the Stock Option Agreement with HomeCom to purchase my shares and is
IRREVOCABLE.
Dated ________________, 1998.
___________________________________
Daniel A. Delity
<PAGE> 244
RAYMOND L. MOSS
Direct Dial: (770) 481-7201
E-mail: [email protected]
EXHIBIT "N"
_____________________, 1998
Daniel A. Delity
_________________________
_________________________
_________________________
James Wm. Ellsworth
_________________________
_________________________
_________________________
David B. Frank
_________________________
_________________________
_________________________
Re: Merger of FIMI Securities, Inc., and All Things Financial, Inc. (the
"Targets") into Affiliates of HomeCom Communications, Inc. ("HomeCom")
Dear Messrs. Delity, Ellsworth, and Frank:
We have acted as counsel to HomeCom, a Delaware corporation, and FIMI
Securities Acquisition Corp., Inc., and ATF Acquisition Corp., Inc. ("HomeCom
Subs"), each a Delaware corporation ("RPL"), in connection with the Agreement
and Plan of Merger, dated as of November __________, 1998 (the "Agreement")
between you, the Targets, HomeCom, and the HomeCom Subs, regarding the merger of
the HomeCom Subs into the Targets (the "Merger") and certain other documents
executed by the parties and their affiliates contemporaneously therewith
("Ancillary Transaction Documents"). This opinion is furnished to you pursuant
to Section 7.1(b)(vii) of the Agreement. Unless otherwise defined herein, the
capitalization terms used herein shall have the meanings assigned to such terms
in the Agreement.
<PAGE> 245
In connection with our representation of HomeCom, the HomeCom Subs
(collectively the "Corporations") we have assisted the Corporations in
connection with the preparation, execution and delivery of the Agreement and the
Ancillary Transaction Documents and are familiar with the certain steps taken by
the Corporations in connection therewith. We participated in the preparation of
the Agreement and the Ancillary Transaction Documents.
We have made such inquiry of the officers of the Corporations and have
examined such corporate and other records, documents, agreements and
instruments, certificates of officers of the Corporations and of public
officials and have examined such questions of law as we have deemed necessary
for the purposes of this Opinion Letter. In rendering our opinions, we have
relied, as to all questions of fact material to these opinions, upon
certificates of public officials and officers of the Corporations. We have
assumed the genuineness of all signatures and the authenticity of all documents
submitted to us as originals and the conformity to original documents of all
documents submitted to us as copies, whether certified or not.
This Opinion Letter is governed by, and shall be interpreted in accordance
with the Legal Opinion Accord (the "Accord") of the ABA Section of Business law
(1991). As a consequence, it is subject to a number of qualifications,
exceptions, definitions, limitations on coverage and other limitations,
including the General Qualifications, all as more particularly described in the
Accord, and this Opinion Letter should be read in conjunction therewith. The law
covered by the opinions herein is limited to the law of the State of Georgia and
the general corporate law of the State of Delaware. To the extent that the
Ancillary Transaction Documents are governed by laws other than the state of
Georgia, we express no opinion with respect to such documents or agreements.
In addition, in rendering our opinions, we have reviewed and are relying on
the following documents:
(A) The Agreement;
(B) The Ancillary Transaction Documents listed on Exhibit "A" attached
hereto;
(C) The corporate book, including each of the Corporation's articles of
incorporation, bylaws, and the minutes of the board of directors and
shareholders contained therein;
(D) A Certificate dated _________________________, 199___ from
____________________________________________ affirming certain factual matters
related to each of the Corporations; and
(E) A Certificate from the Secretary of State of Delaware, indicating that
each of the Corporations is duly incorporated and validly existing as of
___________________, ________________________, ________________________, and
________________________, respectively.
The documents identified in clauses (A) through (E) above are collectively
herein referred to as the "Documents."
<PAGE> 246
In rendering these opinions, we have assumed the following to be true:
(1) The authenticity and completeness of all Documents submitted to us as
originals and the conformity to original documents of all documents submitted to
us as copies;
(2) Regarding Documents executed by parties, that such parties (if they
are corporations) have the corporate power to enter into and perform all
obligations under those Documents, the due authorization by all requisite
corporate action of the execution, delivery, and performance of the Documents by
such parties (if they are corporations);
(3) Physical delivery of the Documents where delivery is a prerequisite to
their enforceability; and
(4) The capacity of all natural persons.
We also assume that the Certificates from public officials and the records
upon which they are based are accurate and complete.
Based upon and subject to the foregoing, we are of the opinion that:
1. HomeCom is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. Each of the HomeCom Subs
is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware.
2. HomeCom and the HomeCom Subs have taken all necessary action to authorize
the execution, delivery, and performance of the Documents. HomeCom and the
HomeCom Subs have duly executed and delivered the Documents. HomeCom and
the HomeCom Subs have the corporate power to execute, perform, and deliver
the Documents.
3. The Documents are a valid and binding obligation of HomeCom and the HomeCom
Subs, enforceable against HomeCom and the HomeCom Subs in accordance with
its terms, except that we render no opinion as to enforceability of any
provision which may be in violation of laws governing insurance laws.
4. Assuming that each of the HomeCom Subs and the Targets comply with
applicable laws in the State of Delaware and Florida, then upon the filing
of the Certificate of Merger with the Secretary of State of Delaware and
Texas, the Merger shall become effective as of the time of delivery of the
Articles of Merger to the respective Secretary's of State (or at such later
time and date as said Articles shall specify, not to exceed sixty (60) days
from the date of delivery of said Articles to each Secretary of State.
5. The Documents do not result in a breach of or a default under the Articles
of Incorporation or By-laws of HomeCom or any of the HomeCom Subs, or any
order, writ, injunction, decree or any stockholder's agreement.
<PAGE> 247
6. The execution and delivery by HomeCom and each of the HomeCom Subs of, and
the performance of their respective agreements in, the Documents do not
violate applicable provisions of federal statutory law or regulation.
7. The Total Transaction Shares to be issued in connection with the Merger
have been duly authorized, are validly issued, and are fully paid and
non-assessable.
8. The Warrants have duly authorized and are validly issued and constitute a
valid and binding agreement, enforceable in accordance with their terms.
The opinions expressed in this letter are qualified to the extent that the
validity, binding effect, or enforceability of the Documents may be limited or
affected by the Accord and by the following:
(1) Bankruptcy, insolvency, reorganization, arrangement, moratorium,
fraudulent conveyance, equity of redemption, or other similar statutes, laws,
rules of law, or court decisions now or hereafter in effect affecting the rights
of creditors generally;
(2) General principles of equity and public policy under applicable law,
including among other things, implied obligations of materiality,
reasonableness, good faith, and fair dealing, and equitable principles that may
limit or prohibit the specific enforceability of some remedies, covenants, or
other provisions of the Documents or that may limit or prohibit the availability
of specific performance, injunctive relief, or other equitable remedies,
regardless of whether such enforceability is considered in a proceeding in
equity or at law; and
(3) Procedural requirements to be complied with at the time of enforcement,
not otherwise reflected in the Documents, that may restrict or condition rights
and remedies otherwise therein stated to be available.
This Opinion Letter is provided to you as a legal opinion and not as a
guarantee of the matters discussed herein. Our opinions are limited to the
matters expressly stated herein, and no other opinions may be implied or
inferred.
These opinions are rendered as of the date set forth above.
A copy of this Opinion Letter is being delivered to the addressees hereof
and their successors and assigns, and each of their respective legal counsel
only in connection with the Merger ("Addressees"), and the Addressees may rely
on this Opinion Letter as if it were addressed and had been delivered to
him/her/it on the date hereof. Subject to the foregoing, this Opinion Letter may
be relied upon by the Addressees only in connection with the Merger and may not
be used or relied on by the Addressees or by any other person for any purpose
whatsoever, except to the extent authorized in the Accord, without first
receiving our written consent in each such instance.
This Opinion Letter is rendered as of the date hereof, and we undertake no,
and hereby
<PAGE> 248
disclaim any, obligation to advise you of any changes in, or any new
developments that might affect, any matters or opinions set forth herein which
occur after the date of this Opinion Letter or to otherwise communicate with you
with respect to the matters addressed herein.
No opinion is given or expressed, nor should any opinion be inferred or
implied as to: (i) the financial ability of HomeCom to satisfy its obligations
under any Document, (ii) the truthfulness, completeness or accuracy of any
reports, plans, documents, financial statements, or other mattes furnished to
Seller or its agents or representatives by HomeCom or any Corporation, or by any
other party acting by, for, or at the direction of HomeCom or a Corporation, and
(iii) the truthfulness, completeness, or accuracy of any representation,
warranty, certification, or statement by HomeCom, the HomeCom Subs or any other
party.
The use of the words "to our knowledge" or "known to this Firm" means that
during the course of our representation as described herein, no information has
come to the attention of the attorneys involved in the transaction described
herein that could give such attorneys actual knowledge of the existence of the
documents or facts so qualified. This firm has undertaken no investigation to
determine the existence of such documents or facts, and no inference as to our
knowledge thereof shall be drawn from the fact or our representation of any
party or otherwise.
We have not examined, and we do not opine, as to the law of any other
jurisdiction, whether applicable directly or through Georgia law. We are
qualified to practice law in the States of Georgia and Delaware, and we do not
purport to be experts on or express any opinion herein concerning any law other
than the laws of the States of Georgia and Delaware and the federal law of the
United States, and especially we express no opinion concerning the law of the
State of Texas which governs the Ancillary Documents.
Except as to opinions herein based upon certificates, which are given as of
the date of such certificates, this opinion is given as of the date hereof, and
we undertake no obligation to update or supplement this opinion to reflect any
facts or circumstances which may hereinafter come to our attention or any
changes in laws which may hereinafter occur.
This opinion is delivered to you for your use only and it may not be
furnished, distributed, disclosed or relied upon by any other person in any
other context without our prior express written consent.
Very truly yours,
SIMS MOSS KLINE & DAVIS LLP
<PAGE> 249
EXHIBIT "A"
1. Escrow and Stock Pledge Agreements between HomeCom and each of the Sellers,
dated of even date herewith;
2. Promissory Notes between HomeCom and each of the Sellers, dated of even
date herewith;
3. Stock Pledge Agreements between HomeCom and each of the Sellers, dated of
even date herewith;
4. Employment Agreements between HomeCom and each of the Sellers, dated of
even date herewith; and
5. Non-Competition Agreements between HomeCom and each of the Sellers, dated
of even date herewith.
6. Loan Agreement, Security Agreement, and Note between HomeCom and Premier,
dated of even date herewith.
7. Licensing, Option Agreement, and Irrevocable Proxies between HomeCom and
Premier, dated of even date herewith.
8. Loan Agreement, Security Agreement, and Note between HomeCom and FIMI,
dated of even date herewith.
9. Licensing, Option Agreement, and Irrevocable Proxies between HomeCom and
FIMI, dated of even date herewith.
10. Agreement and Plan of Reorganization between Premier and FIMI Securities.
11. Agreement and Plan of Reorganization between FIMI and FIMI Securities.
<PAGE> 250
EXHIBIT "P"
HARVEY SAX
3535 PIEDMONT ROAD
ATLANTA, GEORGIA 30305
________________________, 1998
Daniel A. Delity
James Wm. Ellsworth
Davie B. Frank
5555 San Felipe, Fifth Floor
Houston, Texas 77056
Re: Agreement and Plan of Merger, dated _________________, 1998 (the
"Merger Agreement")
Dear Gentlemen:
In connection with Section 8.6 of the Merger Agreement, this will
confirm that I agree at the next annual shareholders' meeting of HomeCom
Communications, Inc. ("HomeCom") to vote all shares of HomeCom owned by me in
favor of electing Mr. Delity and Mr. Ellsworth, or their reasonable acceptable
designees, to the Board of Directors of HomeCom.
Very truly yours,
Harvey Sax
<PAGE> 251
EXHIBIT "Q"
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION is made this __ day of
_________________, 1998, between Premier Financial Services, Inc., a Texas
corporation ("SELLER") and FIMI Securities, Inc., a Texas corporation
("PURCHASER").
W I T N E S S E T H:
WHEREAS, Seller is engaged in the business of marketing certain
insurance and financial services products through financial institutions (the
"BUSINESS").
WHEREAS, Seller desires to sell and Purchaser desires to purchase all
of the tangible and intangible assets of Seller utilized in the conduct of the
Business except for certain assets, rights, interests or properties described in
the Excluded Assets Schedule attached hereto (the "EXCLUDED ASSETS").
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, Seller and Purchaser hereby agree as follows:
1. CLOSING. The Closing of the transactions contemplated under this Agreement
(the "CLOSING") shall take place at the offices of _______________ concurrent
with the Closing of the acquisition by HomeCom Communications, Inc. of the stock
of certain affiliates of the Seller. The time and date on which the Closing
occurs hereinafter is referred to as the "CLOSING DATE."
2. PURCHASE AND SALE.
2.1 PURCHASE AND SALE. Subject to the terms and conditions contained
herein, at the Closing, Seller shall sell, convey, transfer, assign and deliver
to Purchaser and Purchaser shall purchase and accept from Seller, all of
Seller's right, title and interest in and to all of the assets owned by Seller
and used or held for use in the Business, except for the Excluded Assets, with
such changes, deletions or additions occurring between the respective dates of
the Schedules and Exhibits attached hereto and the Closing Date consistent with
the terms and conditions of this Agreement (the "ASSETS"), including without
limitation all right, title and interest of Seller to the following:
(a) all fixtures, furnishings, furniture, office equipment and
supplies, vehicles, tools, machinery and equipment, and other tangible personal
property owned by Seller and used or held for use in the Business (the "PERSONAL
PROPERTY");
(b) all transferable contracts, agreements, arrangements
and/or commitments relating to the Business or the Assets (the "CONTRACTS");
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<PAGE> 252
(c) all accounts receivable of any nature whatsoever, relating
to the Business or the Assets, whether recorded or unrecorded (the accounts
receivable to be transferred to Purchaser are hereinafter called the "ACCOUNTS
RECEIVABLE");
(d) all customer and vendor lists relating to the Business,
all files and documents (including credit information) relating to customers and
vendors of the Business; and all production data, equipment maintenance data,
accounting records, inventory records, sales and sales promotional data,
advertising materials, cost and pricing information, business plans, reference
catalogs and any other data and records used in connection with the Business;
(e) all transferable governmental and other permits, licenses,
approvals, certificates of inspection, filings, franchises and other
authorizations used or held for use in the Business;
(f) all prepaid expenses and utility deposits relating to
the Business;
(g) all rights of Seller pursuant to any express or implied
warranties, representations or guarantees made by suppliers furnishing goods or
services to Seller;
(h) all other assets, rights, interests and properties of
Seller, used or held for use in the Business; provided, however, if such other
assets, rights, interests and properties are not described in the Schedules
hereto and are required to be so described, Purchaser shall have the option not
to accept them;
(i) all cash held by Seller, including all bank accounts,
certificates of deposit or other financial instruments and/or accounts
2.3 TRANSFER OF TITLE TO THE ASSETS. Seller shall sell, assign, convey,
transfer and deliver the Assets to Purchaser at the Closing by means of deeds,
bills of sale, assignments, endorsements, certificates and such other
instruments of transfer and conveyance as shall be necessary or appropriate to
vest good and indefeasible title to the Assets in Purchaser, free and clear of
any liens, charges and encumbrances.
2.4 C REORGANIZATION. The parties intend and agree that the
transactions contemplated herein will qualify as a "C Reorganization" as
provided in Internal Revenue Code ("CODE") Section 368(a)(1)(C) and the Treasury
Regulations and Internal Revenue Service ("IRS") rulings promulgated thereunder.
This agreement contains the operative provisions of the Plan of Reorganization.
Accordingly, under this Agreement, Seller will transfer substantially all of its
assets to Purchaser in exchange for the Purchaser Stock, in the form of the
stock of HomeCom Communications, Inc. , which will become the parent of the
Purchaser on the Closing Date, as more particularly detailed under the terms of
this Agreement, which will be followed by Seller's distribution of the Purchaser
Stock to Seller's shareholders in a complete liquidation of Seller. In
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<PAGE> 253
all respects, the terms and provisions of this Agreement will be interpreted in
such a manner that is consistent with the requirements for qualification as a C
Reorganization, to the extent that such interpretation does not change the
economics, the risk of loss, or the material structure of the transactions
contemplated hereby. Purchaser and Seller also agree to reasonably cooperate in
amending the terms and provisions of this Agreement to the extent the same may
be required to qualify the transactions contemplated herein as a C
Reorganization, subject to the foregoing limitations.
3. PAYMENT OF PURCHASE PRICE
3.1 PURCHASE PRICE.
(a) The purchase price to be paid by Purchaser for the Assets
(the "PURCHASE PRICE") shall be ______ shares of the stock of HomeCom
Communications, Inc. as defined as Parent Common Stock in the Agreement and Plan
of Merger by and among HomeCom Communications, Inc., FIMI Securities Acquisition
Corp., Inc., ATF Acquisition Corp., Inc. and Daniel A. Delity, James Wm.
Ellsworth, and David Frank dated ________, 1998 (the "PURCHASER STOCK").
(b) At the Closing, Purchaser shall cause HomeCom
Communications, Inc. to issue the Purchaser Stock in the name of Seller's
shareholders or a nominee for such shareholders as directed by Seller.
4. MISCELLANEOUS
4.1 HEADINGS. The headings and subheadings hereof are inserted for
convenience of reference only and shall not affect the interpretation of this
Agreement.
4.2 AMENDMENT. This Agreement may be amended only in a writing signed
by all parties hereto.
4.3 ENTIRE AGREEMENT. This Agreement (including the Schedules and
Exhibits hereto) constitute the entire agreement and supersede all prior
agreements and understandings, both written and oral, between the parties with
respect to the subject matter hereof.
4.4 GOVERNING LAW. This Agreement and the rights and obligations of the
parties hereunder shall be construed and enforced in accordance with and
governed by the laws of the state of Georgia without giving effect to the
principles of conflicts of law thereof. Venue shall lie in Superior Court of
Fulton County, Georgia or the United States District Court for the Northern
District of Georgia, Atlanta Division. The parties hereto acknowledge that such
court has the jurisdiction to interpret and enforce the provisions of this
Agreement and the parties waive any and all objections which they may have as to
personal jurisdiction or venue in any of the above courts.
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<PAGE> 254
IN WITNESS WHEREOF, the duly authorized officers or representatives of
the parties hereto have duly executed this Agreement on the date first written
above.
SELLER: PREMIER FINANCIAL SERVICES, INC.
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
PURCHASER: FIMI SECURITIES, INC.
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
<PAGE> 255
EXHIBIT "R"
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION is made this __ day of
_________________, 1998, between First Institutional Marketing, Inc., an
Oklahoma corporation ("SELLER") and FIMI Securities, Inc., a Texas corporation
("PURCHASER").
W I T N E S S E T H:
WHEREAS, Seller is engaged in the business of marketing certain
insurance and financial services products through financial institutions (the
"BUSINESS").
WHEREAS, Seller desires to sell and Purchaser desires to purchase all
of the tangible and intangible assets of Seller utilized in the conduct of the
Business except for certain assets, rights, interests or properties described in
the Excluded Assets Schedule attached hereto (the "EXCLUDED ASSETS").
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, Seller and Purchaser hereby agree as follows:
1. CLOSING. The Closing of the transactions contemplated under this Agreement
(the "CLOSING") shall take place at the offices of _______________ concurrent
with the Closing of the acquisition by HomeCom Communications, Inc. of the stock
of certain affiliates of the Seller. The time and date on which the Closing
occurs hereinafter is referred to as the "CLOSING DATE."
2. PURCHASE AND SALE.
2.1 PURCHASE AND SALE. Subject to the terms and conditions contained herein, at
the Closing, Seller shall sell, convey, transfer, assign and deliver to
Purchaser and Purchaser shall purchase and accept from Seller, all of Seller's
right, title and interest in and to all of the assets owned by Seller and used
or held for use in the Business, except for the Excluded Assets, with such
changes, deletions or additions occurring between the respective dates of the
Schedules and Exhibits attached hereto and the Closing Date consistent with the
terms and conditions of this Agreement (the "ASSETS"), including without
limitation all right, title and interest of Seller to the following:
(a) all fixtures, furnishings, furniture, office equipment and
supplies, vehicles, tools, machinery and equipment, and other tangible personal
property owned by Seller and used or held for use in the Business (the "PERSONAL
PROPERTY");
(b) all transferable contracts, agreements, arrangements
and/or commitments relating to the Business or the Assets (the "CONTRACTS");
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<PAGE> 256
(c) all accounts receivable of any nature whatsoever, relating
to the Business or the Assets, whether recorded or unrecorded (the accounts
receivable to be transferred to Purchaser are hereinafter called the "ACCOUNTS
RECEIVABLE");
(d) all customer and vendor lists relating to the Business,
all files and documents (including credit information) relating to customers and
vendors of the Business; and all production data, equipment maintenance data,
accounting records, inventory records, sales and sales promotional data,
advertising materials, cost and pricing information, business plans, reference
catalogs and any other data and records used in connection with the Business;
(e) all transferable governmental and other permits, licenses,
approvals, certificates of inspection, filings, franchises and other
authorizations used or held for use in the Business;
(f) all prepaid expenses and utility deposits relating to the
Business;
(g) all rights of Seller pursuant to any express or implied
warranties, representations or guarantees made by suppliers furnishing goods or
services to Seller;
(h) all other assets, rights, interests and properties of
Seller, used or held for use in the Business; provided, however, if such other
assets, rights, interests and properties are not described in the Schedules
hereto and are required to be so described, Purchaser shall have the option not
to accept them;
(i) all cash held by Seller, including all bank accounts,
certificates of deposit or other financial instruments and/or accounts
2.3 TRANSFER OF TITLE TO THE ASSETS. Seller shall sell, assign, convey,
transfer and deliver the Assets to Purchaser at the Closing by means of deeds,
bills of sale, assignments, endorsements, certificates and such other
instruments of transfer and conveyance as shall be necessary or appropriate to
vest good and indefeasible title to the Assets in Purchaser, free and clear of
any liens, charges and encumbrances.
2.4 C REORGANIZATION. The parties intend and agree that the
transactions contemplated herein will qualify as a "C Reorganization" as
provided in Internal Revenue Code ("CODE") Section 368(a)(1)(C) and the Treasury
Regulations and Internal Revenue Service ("IRS") rulings promulgated thereunder.
This agreement contains the operative provisions of the Plan of Reorganization.
Accordingly, under this Agreement, Seller will transfer substantially all of its
assets to Purchaser in exchange for the Purchaser Stock, in the form of the
stock of HomeCom Communications, Inc. , which will become the parent of the
Purchaser on the Closing Date, as more particularly detailed under the terms of
this Agreement, which will be followed by Seller's distribution of the Purchaser
Stock to Seller's shareholders in a complete liquidation of Seller. In
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<PAGE> 257
all respects, the terms and provisions of this Agreement will be interpreted in
such a manner that is consistent with the requirements for qualification as a C
Reorganization, to the extent that such interpretation does not change the
economics, the risk of loss, or the material structure of the transactions
contemplated hereby. Purchaser and Seller also agree to reasonably cooperate in
amending the terms and provisions of this Agreement to the extent the same may
be required to qualify the transactions contemplated herein as a C
Reorganization, subject to the foregoing limitations.
3. PAYMENT OF PURCHASE PRICE
3.1 PURCHASE PRICE.
(a) The purchase price to be paid by Purchaser for the Assets
(the "PURCHASE PRICE") shall be ______ shares of the stock of HomeCom
Communications, Inc. as defined as Parent Common Stock in the Agreement and Plan
of Merger by and among HomeCom Communications, Inc., FIMI Securities Acquisition
Corp., Inc., ATF Acquisition Corp., Inc. and Daniel A. Delity, James Wm.
Ellsworth, and David Frank dated ________, 1998 (the "PURCHASER STOCK").
(b) At the Closing, Purchaser shall cause HomeCom
Communications, Inc. to issue the Purchaser Stock in the name of Seller's
shareholders or a nominee for such shareholders as directed by Seller.
4. MISCELLANEOUS
4.1 HEADINGS. The headings and subheadings hereof are inserted for
convenience of reference only and shall not affect the interpretation of this
Agreement.
4.2 AMENDMENT. This Agreement may be amended only in a writing signed by
all parties hereto.
4.3 ENTIRE AGREEMENT. This Agreement (including the Schedules and Exhibits
hereto) constitute the entire agreement and supersede all prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof.
4.4 GOVERNING LAW. This Agreement and the rights and obligations of the
parties hereunder shall be construed and enforced in accordance with and
governed by the laws of the state of Georgia without giving effect to the
principles of conflicts of law thereof. Venue shall lie in Superior Court of
Fulton County, Georgia or the United States District Court for the Northern
District of Georgia, Atlanta Division. The parties hereto acknowledge that such
court has the jurisdiction to interpret and enforce the provisions of this
Agreement and the parties waive any and all objections which they may have as to
personal jurisdiction or venue in any of the above courts.
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<PAGE> 258
IN WITNESS WHEREOF, the duly authorized officers or representatives of the
parties hereto have duly executed this Agreement on the date first written
above.
SELLER: FIRST INSTITUTIONAL MARKETING, INC.
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
PURCHASER: FIMI SECURITIES, INC.
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
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