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As filed with the Securities and Exchange Commission on October 1, 1999
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
----------------------------
THE INTERCEPT GROUP, INC.
(Exact Name of Registrant as Specified in its Charter)
Georgia 58-2237359
(State or Other Jurisdiction of (I.R.S. Employer Identification Number)
Incorporation or Organization)
----------------------------
3150 Holcomb Bridge Road, Suite 200
Norcross, Georgia 30071
(770) 248-9600
(770) 242-6803 (facsimile)
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
----------------------------
John W. Collins
Chief Executive Officer
The InterCept Group, Inc.
3150 Holcomb Bridge Road, Suite 200
Norcross, Georgia 30071
(770) 248-9600
(770) 242-6803 (facsimile)
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent for Service)
----------------------------
Copies to:
James Walker IV, Esq.
Susan L. Spencer, Esq.
Jonathan R. Coe, Esq.
Nelson Mullins Riley & Scarborough, L.L.P.
First Union Plaza, Suite 1400
999 Peachtree Street, N.E.
Atlanta, Georgia 30309
(404) 817-6000
(404) 817-6050 (facsimile)
----------------------------
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to a dividend or interest reinvestment plans, please check the
following box: [ ]
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for any offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
================================================================================================================
Proposed Maximum Proposed Maximum
Title of Shares Amount To Be Aggregate Aggregate Amount Of
To Be Registered Registered Price Per Share(1) Offering Price(1) Registration Fee
<S> <C> <C> <C> <C>
Common stock, no par value ........ 638,014 $14.69 $9,372,426 $2,606
================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) under the Securities Act of 1933, as amended, based
on the average of the high and low sales prices as reported on the Nasdaq
National Market on September 24, 1999.
----------------------------
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
The information in this prospectus is not complete and may be changed. The
selling shareholders may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell securities, and the selling shareholders are
not soliciting offers to buy these securities, in any state where the offer or
sale is not permitted.
SUBJECT TO COMPLETION, DATED OCTOBER 1, 1999
PROSPECTUS
638,014 Shares
THE INTERCEPT GROUP, INC.
Common Stock
The shareholders of The InterCept Group, Inc. identified in this prospectus
may offer and sell these shares from time to time. See "Selling Shareholders."
The selling shareholders acquired the shares on either March 9, 1999 in
connection with our acquisition of Direct Access Interactive, Inc., or on May
28, 1999 in connection with our acquisition of L.E. Vickers & Associates, Inc.
and Data Equipment Services, Inc.
The selling shareholders will receive all of the net proceeds from the sale
of these shares and will pay all underwriting discounts and selling commissions,
if any, applicable to the sale of these shares. We will not receive any of the
proceeds from the sale of the shares.
Our common stock is quoted on the Nasdaq National Market under the symbol
"ICPT." On September 30, 1999, the last reported sale price of our common stock
was $18.50 per share.
____________________________
Investing in our common stock involves many risks. See "Risk Factors"
beginning on page 8 for a discussion of these risks.
____________________________
The Securities and Exchange Commission and state securities regulators have
not approved or disapproved of these securities or determined if this prospectus
is truthful or complete. Any representation to the contrary is a criminal
offense.
, 1999
<PAGE>
You should rely only on the information contained in this prospectus.
Neither we nor the selling shareholders have authorized anyone to provide you
with information different from that contained in this prospectus. The selling
shareholders are offering to sell, and seeking offers to buy, shares of
InterCept common stock only in jurisdictions where offers and sales are
permitted. The information contained in this prospectus is accurate only as of
the date of this prospectus, regardless of the time of delivery of this
prospectus or of any sale of the shares.
____________________________
TABLE OF CONTENTS
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<TABLE>
<CAPTION>
Page
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<S> <C>
Summary.................................................................................... 3
Available Information...................................................................... 6
Information Incorporated By Reference...................................................... 6
Forward Looking Statements................................................................. 7
Risk Factors............................................................................... 8
Use of Proceeds............................................................................ 18
Management's Discussion and Analysis of Financial Condition and
Results of Operations................................................................... 19
Selling Shareholders....................................................................... 29
Plan of Distribution....................................................................... 30
Legal Matters.............................................................................. 33
Experts.................................................................................... 33
</TABLE>
________________________
We were incorporated in Georgia on April 30, 1996. Our principal executive
offices are located at 3150 Holcomb Bridge Road, Suite 200, Norcross, Georgia
30071, and our telephone number is (770) 248-9600. Our corporate website address
is www.intercept.net. We are not incorporating the information on our website
into this prospectus, and we do not intend to make our website a part of this
prospectus.
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SUMMARY
This summary highlights information contained in documents that we have
incorporated by reference into this prospectus. You should carefully read and
consider all of the information included in this prospectus and in the documents
incorporated by reference in this prospectus before deciding to invest in shares
of our common stock. See "Available Information."
The InterCept Group
We are a single-source provider of a broad range of technologies, products
and services that work together to meet the electronic commerce and operating
needs of financial institutions. We focus on serving the needs of financial
institutions across the United States with assets of less than $500 million,
which we refer to as community financial institutions. Our products and
services include:
Electronic funds transfer transaction processing. Electronic funds
transfer, or EFT, transactions include ATM withdrawals, balance inquiries and
transfers and debit card transactions. We process a variety of EFT transactions
online through national and regional electronic networks, including CIRRUS(R),
PLUS(R), STAR/TM/ and PULSE/TM/. We also offer InterCept Switch/TM/, a growing
ATM network used by community financial institutions to offer their customers
access to ATMs owned by other community banks free of charge. This allows our
customers to provide ATM services that are competitive with larger ATM networks
run by regional and national financial institutions.
Core data processing systems and related services. We supply the software
systems and services needed to meet our customers' core data processing
requirements, including general ledger, loan and deposit operations, financial
accounting and reporting, and customer information file maintenance. Many of our
customers install our client/server software system, PC BancPAC/TM/, in-house to
perform these core data processing functions for themselves. Other customers
outsource their core processing needs to our service bureau operations, which
gives these customers access to our processing systems without the expense of
maintaining core processing operations in-house. We also provide item processing
services, such as statement preparation and encoding of checks, to many of our
core processing customers from our nine service centers located in five states.
Check imaging products and services. We offer check imaging products and
services on both an in-house and service bureau basis. Check imaging involves
creating computerized images of checks, deposit slips, and related paper
documents for electronic storage and retrieval. This process can help reduce the
labor and cost associated with traditional check sorting, document filing and
statement preparation. Our check imaging customers that desire to process their
own images in-house license and install our check imaging software. Other
customers outsource their check imaging to our service centers, which image the
items and electronically sort the images for easy retrieval.
Data communications management network and services. Financial
institutions rely on the ability to store, manipulate and transmit large amounts
of information electronically across various telecommunications and Internet
networks. We provide efficient, reliable and secure solutions for the data
communications needs of our customers and maintain nationwide data
communications coverage. We operate a frame relay network, which serves as the
principal conduit through which we deliver our EFT and other electronic commerce
products and services to our customers. We also provide various Internet
services, including managed firewall, web hosting and e-mail services to our
customers.
Internet banking services. Through our relationship with Netzee, Inc., a
company in which we own 49%, we offer integrated Internet and telephone banking
products and services as part of our
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strategy to provide comprehensive electronic commerce and operating capabilities
to our customers. For more information about our relationship with Netzee, see
"--Our Acquisitions" below and "Risk Factors--Risks Related to Our Ownership in
Netzee."
Community financial institutions often have limited resources and are under
significant pressure to control their operating costs. By using third-party
providers like us for their electronic commerce and operating needs, we believe
community financial institutions can reduce their overhead and gain access to
advanced technologies and services they otherwise might not be able to afford.
Once a community financial institution contracts for one or more of our
products or services, we strive to develop a relationship that enables us to
cross-market our other products and services to that customer. In addition to
using our own sales force to market our products and services, we have
established marketing alliances with other companies that have community
financial institutions as customers, including 10 of the 18 bankers' banks in
the United States. A bankers' bank is a bank that itself is owned by other
financial institutions and provides depository, loan and other banking services
exclusively to financial institutions. Our relationships with the bankers' banks
provide us access to over 4,700 financial institutions nationwide.
Our Strategies
Our goal is to become one of the largest providers of electronic commerce
and other operating technologies, products and services to community financial
institutions in the United States. To achieve this goal, we plan to continue our
growth by implementing the following key strategies:
. cross-market our products and services to our existing customer base in
order to maximize our recurring revenues;
. acquire businesses with similar or complementary products or services
that will enhance and expand our solutions, increase our market share or
expand our geographic presence;
. expand our sales force and our strategic marketing relationships;
. increase the use of our data communications management services to
optimize our frame relay network; and
. continue to expand and enhance the capabilities of our technologies,
products and services.
Our Recent Acquisitions
Direct Access and Vickers acquisitions
On March 9, 1999, we purchased Direct Access Interactive, Inc., a provider
of telephone and Internet banking services to financial institutions. In this
transaction, we issued 151,229 shares of our common stock to the five
shareholders of Direct Access.
On May 28, 1999, we purchased L.E. Vickers & Associates, Inc., a core data
processing, item capture and check imaging company, and Data Equipment Services,
Inc., a supplier of specialized equipment and maintenance services to financial
institutions. In this transaction, we issued 500,481 shares of our common stock
to the shareholders of these companies.
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Acquisition of SBS Corporation and SBS Data Services, Inc.
On August 6, 1999, we acquired SBS Corp. and SBS Data Services, Inc., two
affiliated Alabama corporations which provide Internet and telephone banking,
core data processing, check imaging and optical storage products and services to
community financial institutions. We issued approximately 192,000 shares of our
common stock to the SBS Data shareholders in connection with our acquisition of
that company and its core data processing operations. At the same time, Direct
Access Interactive, Inc., our Internet banking subsidiary, merged with SBS Corp.
and paid approximately $16.6 million in cash and issued 2,600,000 shares of
Direct Access common stock to the former shareholders of SBS Corp. Direct Access
also repaid approximately $4.9 million in debt owed by SBS Corp. After the
merger, Direct Access sold all of the assets of SBS Corp., other than its
Internet and telephone banking assets, to us in exchange for 450,000 shares of
Direct Access common stock owned by us.
To provide the funds for the SBS Corp. transaction, we borrowed
approximately $21.6 million under our line of credit with First Union National
Bank, and then loaned the funds to Direct Access. In connection with this loan,
we revised the terms of our credit facility with First Union to increase the
amount of funds available for borrowing from $20 million to $35 million and to
extend the term of the credit facility from April 28, 2001 to June 30, 2002.
Creation of Netzee, Inc.
We further expanded our Internet banking operations by creating a wholly-
owned subsidiary, Netzee, Inc., in August 1999, and in September 1999 we
combined it with:
. Direct Access, our Internet banking subsidiary;
. the Internet banking operations of The Bankers Bank and TIB The
Independent BankersBank;
. Call Me Bill, LLC, an electronic bill payment company; and
. Dyad Corporation, a developer of automated loan origination systems.
As a result of the issuance of shares of Netzee in connection with these
transactions, we currently own approximately 49% of Netzee. See "Risk Factors--
Risks Related to Our Ownership in Netzee." To enable Netzee to complete these
transactions, we loaned it approximately $7.3 million. This loan was in addition
to the $21.6 million we loaned Netzee, as the successor to Direct Access, in
connection with the SBS Corp. merger described above. All of our loans to Netzee
accrue interest at a fluctuating annual rate equal to the prime rate plus 2.0%,
which as of September 30, 1999 equaled 10.25%.
Three of our directors also serve as directors of Netzee and one of our
directors is the Chief Executive Officer of Netzee. In addition, we maintain a
strategic relationship with Netzee to cross-market each other's products and
services, which we believe will benefit both our businesses.
On September 14, 1999, Netzee filed a registration statement for its
initial public offering of common stock. Its ability to complete this offering
is subject to a number of risks. See "Risk Factors--Risks Related to Our
Ownership in Netzee" for a discussion of these risks. We cannot assure you that
Netzee's offering will close or, if it closes, that its shares will perform
favorably in the market.
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AVAILABLE INFORMATION
We are subject to the information requirements of the Securities Exchange
Act of 1934, which means we are required to file annual, quarterly and special
reports, proxy statements and other information with the SEC. Our SEC filings
are available to the public over the Internet at the SEC's website at
http://www.sec.gov. You may also read and copy any document we file with the SEC
at its Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549.
You may obtain information on the operation of the Public Reference Room by
calling the SEC at 1-800-SEC-0330.
INFORMATION INCORPORATED BY REFERENCE
We filed a registration statement on Form S-3 to register with the SEC the
shares of common stock to be offered and sold by this prospectus. This
prospectus is part of that registration statement. As allowed by the SEC's
rules, this prospectus does not contain all of the information you can find in
the registration statement or the exhibits to the registration statement. The
SEC allows us to "incorporate by reference" into this prospectus the information
we have filed with the SEC. The information incorporated by reference is an
important part of this prospectus and the information that we file subsequently
with the SEC will automatically update this prospectus. Absent unusual
circumstances, we will have no obligation to amend this prospectus, other than
filing subsequent information with the SEC. The historical and future
information that is incorporated by reference in this prospectus is considered
to be part of this prospectus and can be obtained at the locations described
above. We also incorporate by reference any filings we make with the SEC under
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the initial filing
of the registration statement until the earlier of (a) May 28, 2000, or (b) the
date the selling shareholders sell all of the shares. We incorporate by
reference the documents listed below:
1. Our Annual Report on Form 10-K for the fiscal year ended December 31,
1998.
2. Our Quarterly Reports on Form 10-Q for the quarters ended March 31,
1999 and June 30, 1999.
3. Amendment to Current Report on Form 8-K filed on January 13, 1999;
4. Our Current Reports on Form 8-K filed on:
- March 26, 1999;
- June 11, 1999, as amended on August 11, 1999;
- August 20, 1999, as amended on September 30, 1999; and
- September 17, 1999, as amended on September 30, 1999.
5. The description of our capital stock contained in our Registration
Statement on Form 8-A, as amended on October 1, 1999.
You may request a copy of these filings, at no cost, by writing or
telephoning us. Please make your request to:
The InterCept Group, Inc.
Attn: Scott R. Meyerhoff
Vice President-Finance, Chief Financial Officer & Secretary
3150 Holcomb Bridge Road, Suite 200
Norcross, GA 30071
(770) 248-9600
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FORWARD LOOKING STATEMENTS
We have made forward looking statements in this prospectus. These
statements are subject to risks and uncertainties, and we cannot guarantee you
that they will prove to be correct. Forward looking statements include
assumptions as to how we may perform in the future. When we use words like
"believe," "expect," "anticipate," "predict," "potential," "seek," "continue,"
"will," "may," "could," "intend," "plan," "estimate," "goal," "strive" and
similar expressions, we are making forward looking statements.
Forward looking statements in this prospectus include statements regarding
the following:
. our business strategies and goals;
. our future sources of revenues and potential for growth and
profitability;
. expansion and enhancement of our technologies, networks, products and
services;
. our relationship with Netzee;
. trends in activities and industry conditions;
. development and expansion of our sales and marketing efforts;
. our ability to integrate our previous and future acquisitions; and
. other statements which are not of historical fact made throughout this
prospectus, including in the "Summary," "Risk Factors," and
"Management's Discussion and Analysis of Financial Condition and Results
of Operations" sections.
For these kinds of statements we claim the protection of the safe harbor
for forward looking statements contained in the Private Securities Litigation
Reform Act of 1995. You should understand that the factors described in the
"Risk Factors" section and elsewhere in this prospectus could affect the future
results of our company and could cause those results to differ materially from
those expressed in our forward looking statements. We do not have a duty to
update any of the forward looking statements after the date of this prospectus
to conform those statements to actual results.
The unaudited pro forma financial information incorporated by reference
into this prospectus do not include any adjustments for potential savings or
other improvements and do not purport to represent what our combined results of
operations or financial position would actually have been. You should not rely
on the pro forma statements of operations as being representative of our future
results of operations.
We believe that the expectations reflected in our forward looking
statements are reasonable, but we cannot guarantee that we will actually achieve
these expectations. Projections or estimates of our future performance are
necessarily subject to a high degree of uncertainty and may vary materially from
actual results. In evaluating forward looking statements, you should consider
various factors, including the risks outlined under the "Risk Factors" section
beginning on the next page and "Management's Discussion and Analysis of
Financial Condition and Results of Operations," as well as our financial
statements, carefully. You should also consider the cautionary statements
contained in the reports we have filed with the SEC. These factors may cause our
actual results to differ materially from any forward looking statements.
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RISK FACTORS
You should carefully consider the risks described below before purchasing
our common stock. If any of these risks actually occur, our business, financial
condition and results of operations could be adversely affected. In that case,
the trading price of our common stock could decline, and you could lose part or
all of your investment in our common stock.
Risks Related to Our Operations
Our rapid growth could strain our managerial, operational and financial
resources, and our failure to manage our growth could cause our business to
suffer
Our recent internal growth and acquisitions have placed great demands on
our business, particularly our managerial, operational and financial personnel
and systems. For example, we have grown from 167 employees on June 1, 1998 to
415 employees on September 15, 1999. Of these employees, approximately 200
joined us as a result of acquisitions. During the same period, we also added
eight additional facilities in four states and significantly increased our
customer base. Additional internal growth and acquisitions may further strain
our resources. We cannot guarantee that our systems, procedures, controls and
existing facilities will be adequate to support the expansion of our operations,
while maintaining adequate levels of customer service and satisfaction. Our
future operating results will depend substantially on the ability of our
officers and key employees to manage changing business conditions and to
implement and improve our technical, administrative, financial control and
reporting systems. If we are unable to respond to and manage changing business
conditions as we expand, then the quality of our products and services, our
ability to retain customers and our operating results could be materially
adversely affected.
Our acquisitions could result in integration difficulties, unexpected expenses,
diversion of management's attention and other negative consequences
A key element of our growth strategy is to acquire similar or complementary
businesses, products and services. Since our initial public offering in June
1998, we have completed a number of acquisition transactions. We must integrate
the technologies, products, services, operations, systems and personnel of the
acquired businesses with our own and attempt to grow the acquired businesses as
part of our company. The integration of these businesses is a complex process
and places significant demands on our management, financial, technical and other
resources. The successful integration of these acquisitions is critical to our
future success and, if we are unsuccessful, our future financial and operating
performance could suffer. The risks and challenges associated with the
integration of acquired businesses include, but are not limited to:
. an inability to centralize and consolidate our financial, operational
and administrative functions with those of the businesses we acquire;
. the diversion of our management's attention from other business
concerns;
. an inability to retain and motivate key employees of an acquired
company;
. the entry into markets in which we have little or no direct prior
experience;
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. the costs necessary to complete integration may exceed our expectations
or outweigh some of the intended benefits of such transactions;
. an inability to maintain the customers or goodwill of an acquired
business; and
. the costs necessary to improve or replace the operating systems,
products and services of acquired businesses may exceed our
expectations.
We cannot guarantee that we will be able to successfully integrate our
acquisitions with our operations on schedule or at all. We also cannot guarantee
that our acquisitions will not result in large accounting charges or other
expenses or that they will result in cost savings or sufficient revenues or
earnings to justify our investment in, or our expenses related to, these
acquisitions.
Competition, market conditions and other factors may affect our ability to
acquire other businesses and may inhibit our growth
A significant part of our historic growth has been generated from
acquisitions. We anticipate that a large portion of our future growth will also
be accomplished through acquisitions. The success of this plan depends upon our
ability to identify suitable acquisition candidates, reach agreements to acquire
these companies and obtain necessary financing on acceptable terms. In pursuing
acquisition and investment opportunities, we may compete with other companies
with similar growth strategies. Some of these competitors may be larger and have
greater financial and other resources than we have. Due to this competition, we
may be unable to acquire businesses that could improve our growth or expand our
operations.
The acquisitions we have completed since our initial public offering have
been financed with our common stock, cash from our operations and our line of
credit with First Union National Bank. If our stock price declines as a result
of general market conditions or otherwise, the shareholders of businesses that
we seek to acquire may be unwilling to accept our common stock in exchange for
their business. In that case, in order to continue to complete acquisitions, we
would be required to use larger portions of our line of credit or cash from
operations, which could have a material impact on our financial performance and
results of operations. In addition, our credit facility with First Union
restricts our ability to complete acquisitions without First Union's consent. We
also must be in compliance with the financial covenants of the credit facility
in order to make these acquisitions. If we are unable to raise additional
capital or borrow funds, we may be unable to make acquisitions of businesses
that could be helpful to our business.
If we do not continue to expand our sales forces and our marketing
relationships, we may not be able to continue our growth
Our ability to expand our business will depend significantly on our ability
to expand our sales and marketing forces and our strategic marketing
relationships. In order to continue our growth, we must successfully cross-
market our products and services to existing customers and enter into agreements
with new customers. This requires us to locate and hire experienced sales and
marketing personnel and to establish and maintain key marketing relationships.
Competition for experienced sales and marketing personnel is intense, and we may
not be able to retain existing personnel or locate and attract additional
qualified personnel in the future. In addition, we have relationships with
various banking-related organizations for the marketing and endorsement of our
products and services. For example, we rely upon our agreements with bankers'
banks across the country to market our products and services to community
financial institutions. These relationships are important to our sales and
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marketing efforts and our geographic expansion. If we lose any of these
marketing relationships or are unable to enter into new ones, it could delay
growth in our customer base and revenues.
The loss of our Chief Executive Officer or President could have a material
adverse effect on our business
John W. Collins, our Chief Executive Officer, and Donny R. Jackson, our
President and Chief Operating Officer, have substantial experience with our
operations and our industry and have contributed significantly to our growth. We
maintain key man life insurance on both of these individuals, and each of them
works for us under the terms of an employment agreement. However, our customer
and marketing relationships would be impaired and our business may suffer if we
lose the services of one of these senior officers for any reason.
If we do not enhance our existing products and services and continue to develop
and introduce new products and services, technological changes may reduce the
demand for our solutions or render them obsolete
The electronic commerce industry, including EFT, data communications and
data processing, has experienced rapid technological change. The introduction of
new technologies and financial products and services can render existing
technologies, products and services obsolete in a short period of time. We
expect other vendors to continually introduce new products and services, as well
as enhancements to their existing products and services, which will compete with
our products and services. To be successful, we must anticipate evolving
industry trends, continue to apply advances in electronic commerce, enhance our
existing products and services, and develop or acquire new products and services
to meet the demands of our customers. We may not be successful in developing,
acquiring or marketing new or enhanced products or services that respond to
technological change or evolving customer needs. We may also incur substantial
costs in developing and employing new technologies. If we fail to develop and
provide new and enhanced products and services, or if these products and
services do not achieve market acceptance, we could lose customers and future
revenues.
If our processing centers or communications networks suffer a system failure or
interruption, we may face customer service issues and may be liable for any
damage suffered by our customers
Our operations depend on our ability to protect our processing centers,
network infrastructure and equipment. Damage to our systems or equipment or
those of third parties that we use may be caused by natural disasters, human
error, power and telecommunications failures, intentional acts of vandalism and
similar events. While we do have data and item processing centers in several
locations that serve as backups for each other, we only maintain a single data
communications switching facility and do not maintain a backup location for our
frame relay network hardware. Interruption in our processing or communications
services could delay transfers of our customers' data or damage or destroy the
data and result in or lead to lawsuits or loss of customers and may also harm
our reputation.
We depend on third parties for products and services necessary to our business,
and if we cannot obtain these products and services on favorable terms, or at
all, our business could suffer.
We rely on third parties for ATM and debit card productions, fiber optic
communications, and other products and services that are essential to our
business. If any of these third parties terminates or changes its relationship
with us, or if for any reason we are unable to obtain its products and services
on favorable terms, we may be unable to meet our customers' needs on a timely
basis. Similarly, if
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any of these third parties is permanently or temporarily unable to provide its
products and services to us as the result of natural disasters, technical
difficulties or otherwise, we may be unable to provide our products and services
to our customers. If we are unable to meet our customers' needs, our customer
relationships could be damaged and our business reputation harmed, both of which
could result in an adverse effect on our operating results.
If our new products and services contain errors or fail to achieve market
acceptance, we may lose customers and be subject to claims for damages
New products and services that we may offer from time to time may have
undetected errors or failures or could fail to achieve market acceptance.
Despite testing by us and our current and potential customers, if we discover
errors after we have introduced a new product or release to the marketplace, we
could experience, among other things:
. delayed or lost revenues while we correct the errors;
. a loss or delay in market acceptance; and
. additional and unexpected expenses to fund further product development.
Our agreements with our customers generally contain provisions designed to
limit our exposure to potential product liability claims, such as disclaimers of
warranties and limitations on liability for special, consequential and
incidental damages. It is possible, however, that these provisions may not be
effective because of existing or future federal, state or local laws or
ordinances, or unfavorable judicial decisions. Therefore, in the event our
products and services fail to function properly, we could be subject to product
liability claims which could have a material adverse effect on our business,
financial condition and results of operations, and could harm our business
reputation.
Because our business involves the electronic storage and transmission of data,
we could be adversely affected by security breaches and computer viruses
Our online transaction processing systems electronically store and transmit
sensitive business information of our customers. The difficulty of securely
storing confidential information electronically has been a significant issue in
conducting electronic commerce. We may be required to spend significant capital
and other resources to protect against the threat of security breaches, computer
viruses or to alleviate problems caused by breaches or viruses. To the extent
that our activities or the activities of our customers involve the storage and
transmission of confidential information, such as banking records or credit
information, security breaches and viruses could expose us to claims, litigation
or other possible liabilities. Our inability to prevent security breaches or
computer viruses could also cause customers to lose confidence in our systems
and terminate their agreements with us.
We may be unsuccessful in becoming a competitive local exchange or long distance
carrier which would harm our ability to control operating costs
As part of our business strategy to reduce our operating costs and enhance
services for our customers, we have sought authority from some state public
utility commissions to become both a competitive local exchange carrier, or
CLEC, and a long distance carrier, or IXC. Becoming a CLEC will allow us to
purchase all retail products and services offered by the Regional Bell Operating
Companies, or RBOCs, at wholesale prices. Similarly, becoming an IXC will allow
us to purchase at
11
<PAGE>
wholesale rates the long distance services of other carriers such as AT&T Corp.
or MCI WorldCom, Inc. We recently received preliminary approvals for
certification as a CLEC and IXC in Alabama and Florida and we are awaiting
certification in Georgia. We have not, however, negotiated an
interconnection/resale agreement with a RBOC or an IXC or completed the
interconnection agreement filing and approval process in any state, and there
can be no guarantee that we will be able to do so. We cannot assure you that we
will be able to become a CLEC or an IXC or develop that new portion of our
business. If we are successful in becoming a CLEC or an IXC, our ability to
succeed would be subject to a number of factors, including:
. our ability to market the new services to our customers;
. the willingness of our customers to use a non-traditional provider for
their telecommunications services;
. our ability to implement the necessary billing and collection systems
for these services;
. competition from RBOCs such as BellSouth, from IXCs such as AT&T Corp.
or MCI WorldCom, Inc., and from other CLECs; and
. our ability to obtain the services, equipment and facilities that we
need to serve as a CLEC or IXC.
If we are unsuccessful in becoming or operating as a CLEC or an IXC, our ability
to control our operating costs would be harmed and we would not receive the
benefits of the costs we have incurred in an effort to become both a CLEC and an
IXC.
As a CLEC or an IXC, we will become subject to significant government
regulation, which is subject to change
In addition to state CLEC certifications, we are also required to obtain
authorizations from the Federal Communications Commission and state public
utility commissions to offer telecommunications services as an IXC. We are also
required to file with those agencies tariffs describing the rates, terms and
conditions of our services and to comply with local license or permit
requirements relating to installation and operation of our network. We have
incurred significant costs in attempting to become a CLEC and IXC and expect to
incur significant costs in maintaining that status, if it is achieved. Any of
the following could have a material adverse effect on our operations as a CLEC
or an IXC:
. failure to maintain proper federal and state tariffs;
. failure to maintain proper state certifications;
. failure to comply with federal, state or local laws or regulations;
. failure to obtain and maintain required licenses and permits;
. changes in the laws applicable to CLECs or IXCs; and
. burdensome license or permit requirements.
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<PAGE>
Unanticipated impacts of our acquisitions and other market factors may lead to
fluctuations in our operating results that may negatively affect the trading
price of our common stock
Our operating results have varied in the past and may fluctuate
significantly in the future as a result of many factors. These factors include:
. the possible negative impact of implementing our growth and acquisition
strategies, including accounting charges and other expenses associated
with our acquisitions;
. loss of customers or strategic relationships;
. competition and pricing pressures; and
. increased operating expenses due to launches of new products and
services and sales and marketing efforts.
Many factors that affect our operating results are outside of our control.
Because of these factors, it is likely that in some future period our financial
results will fall below the expectations of securities analysts or investors. In
such event, the trading price of our common stock would likely decline, perhaps
significantly.
Our limited combined operating history makes it difficult to evaluate our
business
We were incorporated in May 1996 and have made a number of acquisitions
since our incorporation. The historical and pro forma financial information
included or incorporated by reference in this prospectus is based in part on the
separate pre-acquisition financial reports of the companies we have acquired. As
a result, your evaluation of us is based on a limited combined operating
history. Our historical results of operations and pro forma financial
information may not give you an accurate indication of our future results of
operations or prospects.
Georgia law, as well as our articles of incorporation, bylaws and some of our
employment agreements contain provisions that could discourage a third party
from attempting to acquire your shares at a premium to the market price
Some provisions of our articles of incorporation, our bylaws and Georgia
law make it more difficult for a third party to acquire control of our company,
even if a change in control would be beneficial to our shareholders. Several of
our executive officers have entered into employment agreements with us that
contain change in control provisions. These provisions may discourage or
prevent a tender offer, proxy contest or other attempted takeover. In addition,
we have in the past and may in the future create and issue new classes of
preferred stock that have greater rights than our common stock. These superior
rights may include greater voting rights, entitlement to dividends and
preferential treatment in the event of a change of control, liquidation,
consolidation or other circumstances.
Risks Related to Our Ownership in Netzee
Because we have a minority interest in Netzee and Netzee is expected to continue
to have significant losses, our future financial performance may be adversely
affected
We have recently completed a series of transactions that removed Internet
and telephone banking products and services from our operations. Our historical
financial results therefore include results of operations that we no longer
have. These operations are now conducted by Netzee, a company in which we own
about 49%. Although we will no longer include Netzee's operations in our
financial results on a combined basis, we will continue to record the operating
income and losses of Netzee in a single line item on our statement of
operations. Because we have agreed to fund Netzee's operations until it
completes its anticipated initial public offering, all of Netzee's losses will
be included in our statement of operations. When the funding is complete, we
will record only our relative percentage of those losses. In addition, Netzee
has a history of losses and may never become profitable. The impact of Netzee's
results of operations on our financial condition, including our shareholders'
equity, is uncertain and we cannot guarantee we will benefit from our ownership
in Netzee.
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If Netzee does not become profitable, it may not be able to repay the loans we
have made to it
In connection with the business combinations involving Netzee, we loaned it
over $28 million. In addition, we continue to make loans to Netzee to fund its
operations. As of September 30, 1999, the total amount outstanding on our loans
to Netzee was $29.5 million. We borrowed these funds under our credit facility
with First Union and have pledged substantially all of our assets to secure this
loan. Netzee has a history of losses and may never become profitable. As a
result, Netzee may be unable to repay our loans, which would harm the value of
our investment in Netzee and our shareholders' equity.
Netzee is contemplating an initial public offering of its common stock, which
will materially impact the value of our ownership of Netzee in several ways
Netzee has filed a registration statement with the SEC for its initial
public offering of common stock. Its ability to complete this offering is
subject to a number of risks, including the approval of the offering by the SEC
and other regulatory authorities. We cannot assure you that Netzee's offering
will close or, if it closes, that its shares will perform favorably in the
market. Netzee plans to use a portion of the proceeds from its initial public
offering to repay the loans we have made to it. If Netzee does not consummate
the offering or receive net proceeds in the amount anticipated, it may be unable
to repay the loans and, furthermore, we may have to loan it additional amounts
to fund its operations, which would harm the value of our investment in Netzee
and our shareholders' equity.
If Netzee does complete its initial public offering, the value of our
minority interest in Netzee will be determined based on the fair market value of
Netzee's common stock as determined on the Nasdaq National Market. We believe
that Netzee will be valued similarly to other companies with Internet-based
businesses, and the market values of these companies generally have fluctuated
significantly. Therefore, the value of our interest in Netzee and our
shareholders' equity could fluctuate significantly.
Our relationship with Netzee presents potential conflicts of interest, which may
result in decisions which favor Netzee over our other shareholders
Because we and Netzee are both engaged in the sale of electronic commerce
products and services to community financial institutions, numerous potential
conflicts of interest exist between our companies. We will compete with each
other when offering some products and services to potential customers. Our
bylaws contain provisions addressing potential conflicts of interest between us
and Netzee and the allocation of transactions that, absent such allocation,
could constitute corporate opportunities of both companies. Under these
provisions, Netzee may take advantage of a corporate opportunity rather than
presenting that opportunity to us, absent a clear indication that the
opportunity was directed to us rather than to Netzee. In addition, we plan to
use and market Netzee's Internet and telephone banking products and services as
part of our electronic commerce solutions, and any failure or refusal by Netzee
to provide these products and services could negatively impact our business.
Our existing and future agreements and relationships with Netzee have not
resulted and will not necessarily result from arms-length negotiations. We own
approximately 49% of Netzee's voting common stock. Our Chairman and two of our
other directors are directors and significant shareholders of Netzee. In
addition, Glenn W. Sturm, one of our directors, serves as Chief Executive
Officer of Netzee. When the interests of Netzee diverge from our interests,
Netzee's officers and directors may exercise their influence in Netzee's best
interests. Therefore, our agreements and relationships with Netzee may be less
favorable to us than those that we could obtain from unaffiliated third parties.
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<PAGE>
Moreover, many of the transactions between us and Netzee do not lend themselves
to precise allocations of costs and benefits. Thus, the value of these
transactions will be left to the discretion of the parties, who are subject to
potentially conflicting interests.
Other than the provisions of our bylaws relating to corporate
opportunities, there is no mechanism in place to resolve these conflicts of
interest, except that it is our policy that transactions with affiliated parties
be approved by a majority of our disinterested directors. Nevertheless, due to
the extensive relationships between Netzee and us, we may make decisions that
potentially favor Netzee or its affiliates at the expense of our shareholders.
Furthermore, Georgia law may prohibit you from successfully challenging these
decisions, if the decision received the affirmative vote of a majority, but not
less than two, of our disinterested directors who received full disclosure of
the existence and nature of the conflict.
Risks Related to Our Industry
Because many of our competitors have significantly greater resources than we do,
we may be unable to gain significant market share
Because our business includes a variety of products and services, we
generally face different competitors within each area of our business. Our
principal EFT competitors include regional ATM networks, regional and local
banks that perform processing functions, non-bank processors and other
independent electronic commerce and data communications organizations. In our
core banking and data processing business, we compete with several companies who
have national operations and significant assets. In each of these areas, our
competitors have longer operating histories, greater name recognition, and
substantially greater resources than we do. If we compete with them for the same
geographic market, their financial strength could prevent us from capturing
market share in those areas. In addition, the competitive pricing pressures that
would result from an increase in competition from these companies could have a
material adverse effect on our business, financial condition and results of
operations. Some of our competitors have established cooperative relationships
among themselves or with third parties to increase their ability to address
customer needs. Accordingly, new competitors or alliances among competitors may
emerge and rapidly acquire significant market share.
We cannot guarantee that we will be able to compete successfully with
existing or new competitors. If we fail to adapt to emerging market demands or
to compete successfully with existing and new competitors, our business,
financial condition and results of operations would be materially adversely
affected.
Because our industry relies on computers and other electronic devices, problems
related to the year 2000 date change could disrupt or damage our business
operations
Our industry depends significantly on a number of computer software
programs, internal operating systems and connections to other networks. Many
installed computer software and network processing systems currently accept only
two-digit entries in the date code field and may need to be upgraded or replaced
in order to accurately record and process information and transactions on and
after January 1, 2000, an issue commonly referred to as the year 2000 problem.
If any of these programs, systems or connections do not properly process dates
after December 31, 1999, significant system failures or errors could cause
damage or destruction to customer data and result in a material adverse effect
on our and our customers' business, financial condition and results of
operations. For our internal accounting and operating systems and network
communications, we use software and other
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<PAGE>
products provided by third parties. If these products are affected by the year
2000 problem, our ability to provide services to our customers may be materially
adversely affected.
Other companies interact electronically with us and our customers, and we
must coordinate our EFT, data communications and enterprise software processing
with such companies. We interface and exchange information with customers,
financial institutions' network processors and other participants in the
electronic commerce process. If these third parties do not successfully address
the year 2000 problem in their operations, and if we or our customers cannot
successfully transfer their processing operations to another provider that is
year 2000 compliant, our processing operations may be impeded, hindered or
delayed. We believe that many financial institutions and third party vendors and
network processors are in various stages of analyzing their software and network
applications for year 2000 compliance. It is difficult to estimate the potential
expenses involved or delays that may result as these institutions transition
their operations to resolve the year 2000 issue. The failure or delay of third
parties in addressing the year 2000 issue or the costs involved in such process
may have a material adverse effect on our business, financial condition and
operating results.
If business and consumer concerns about the year 2000 problem cause a general
economic slowdown in the latter part of 1999 or cause a reduction in financial
transactions, our business and the price of our common stock may suffer
It is difficult for us to predict what impact year 2000 issues will have on
our business and on the general economy. However, we believe that a general
business slowdown may occur during the fourth quarter of 1999 due to concerns
about year 2000 issues. These fears could result in reduced business for the
banking and financial services industry and could also negatively impact the
stock markets in general during the latter part of 1999. If this occurs, our
stock price will likely be negatively impacted.
The banking industry is highly regulated, and banking regulations could
negatively impact our business
Our banking customers are subject to the supervision of several state and
federal government regulatory agencies. If bank regulations change, or if new
regulations are adopted to regulate the products and services offered by or used
by community financial institutions, our business, financial condition and
results of operations could be materially adversely affected.
Community financial institutions are subject to industry consolidation and we
may lose customers with little notice
We market our products and services primarily to community financial
institutions. Due to merger and acquisition activity in the banking industry,
there is a risk that an existing customer may be acquired by or merged with
another financial institution. Any such purchase or merger may result in a lost
customer for us, because the acquiring financial institution may not use our
products and services. Many large financial institutions perform their own
transaction processing, data communications management, and enterprise software
services and do not use third party providers like us. Although we have included
financial penalties in most of our contracts for early termination of the
contract without cause, these financial penalties would be insufficient to
replace the monthly service fee revenues that we would receive if the financial
institution had continued as a customer.
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We are subject to government and private regulation and an increase in
regulatory requirements or tax burdens could place a strain on our business
Various federal and state regulatory agencies examine our data processing
operations from time to time. These agencies can make findings or
recommendations regarding various aspects of our operations, and we generally
must follow such recommendations to continue our data processing operations. If
we fail to comply with these regulations, our operations and our processing
revenues could be negatively impacted.
Our ATM network operations are subject to federal regulations governing
consumers' rights. Fees charged by ATM owners are currently regulated in several
states, and legislation regulating ATM fees has been proposed in several other
states. Additional legislation may be proposed and enacted in the future or
existing consumer protection laws may be expanded to apply to ATM fees. If the
number of ATMs decreases, then our EFT revenues may decline. Furthermore, we are
subject to the regulations and policies of various ATM and debit card
associations and networks. If we lose our privileges to provide transaction
processing services across these networks, our revenues from ATM and debit card
transaction processing will decrease significantly.
As a transaction processing company, we may be subject to state taxation of
certain portions of the fees charged for our services. Application of this tax
is an emerging issue in the industry, and the states have not yet adopted
uniform guidelines implementing these regulations. If we are required to bear
all or a portion of these costs, and are unable to pass these costs through to
our customers, our financial condition and results of operations would be
adversely affected.
If we face a claim of intellectual property infringement by a third party or
fail to protect our intellectual property rights, we could be liable for
significant damages or could lose our intellectual property rights
We attempt to protect our software, documentation and other written
materials under trade secret and copyright laws, confidentiality procedures and
contractual provisions, which afford only limited protection. Despite our
efforts to protect our proprietary rights, unauthorized parties may attempt to
copy aspects of our products or to obtain and use information that we regard as
proprietary. We cannot guarantee that our means of protecting our proprietary
rights will be adequate or that our competitors will not independently develop
similar technology. We do not believe that any of our products infringe the
proprietary rights of third parties. We cannot guarantee, however, that third
parties will not make infringement claims, and we have agreed to indemnify many
of our customers against such claims. We anticipate that the number of
infringement claims will increase as the number of electronic commerce products
and services increase and the functionality of products in different industry
segments overlaps. Any such claims, whether with or without merit, could be
time-consuming, result in costly litigation, and may not be resolved on terms
favorable to us.
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<PAGE>
Risks Related to this Offering
A few people control a large portion of our stock and may vote their shares in
ways contrary to your interests
Our executive officers and directors beneficially own approximately 31.4%
of our outstanding common stock as of the date of this prospectus. The sale of
the shares by the selling shareholders will not decrease the percentage of our
common stock owned by our executive officers and directors. As a result, they
can exercise control over our company and have the power to influence the
election of a majority of the directors, the appointment of management and the
approval of actions requiring a majority vote of our shareholders. Their
interests may conflict with your interest as a shareholder, and they could use
their power to delay or prevent a change in control, even if a majority of the
other shareholders desired a change.
Future sales of shares of our common stock will dilute your ownership and may
negatively affect our stock price
To carry out our growth strategies, we plan to acquire other businesses and
products using a combination of our stock and cash, and we may also sell
additional shares of our stock to raise money for expanding our operations. We
may issue more shares of stock, both common and preferred, in future
acquisitions or in sales of our stock, which would dilute your ownership
interest in our company.
If our shareholders sell substantial amounts of our common stock, including
shares issuable upon the exercise of outstanding options and shares registered
in this offering, the market price of our common stock could fall. These sales
also might make it more difficult for us to sell equity securities in the future
at a time and price that we deem appropriate. As of September 30, 1999, we had
10,115,972 shares of common stock outstanding and options outstanding to acquire
an additional 1,514,715 shares of common stock. Approximately 7,272,097 shares,
including the shares being sold by the selling shareholders, will be freely
tradable by persons who are not affiliates of our company.
We cannot predict every event and circumstance which may impact our business
and, therefore, the risks and uncertainties discussed above may not be the only
ones you should consider
The risks and uncertainties discussed above are in addition to those that
apply to most businesses generally. In addition, as we continue to grow our
business, we may encounter other risks which we are not aware of at this time.
These additional risks may cause serious damage to our business in the future,
the impact of which we cannot estimate at this time.
USE OF PROCEEDS
The selling shareholders will receive all of the proceeds from the sale of
shares offered by this prospectus. We will not receive any of the proceeds.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion in conjunction with the
consolidated financial statements and the related notes and other financial
information included and incorporated by reference into this prospectus.
Overview
We derive revenues primarily from the following sources:
. electronic funds transfer, or EFT, processing services;
. core data processing systems, support, maintenance and related services;
. check imaging systems, support and related services;
. data communications management; and
. ancillary products and services, including maintenance and technical
support services, sales of banking related equipment and complementary
products.
We derive EFT revenues principally from processing ATM and debit card
transactions. We receive a base fee for providing our ATM processing services
and an additional fee for each ATM serviced. Once the number of transactions
exceeds established levels, typically between 2,000 and 3,000 transactions per
month, we charge additional fees for the extra transactions processed. For debit
card transactions, we generally receive a portion of the interchange fees
charged by our financial institution customers, and we charge a monthly fee if
our customers do not meet a certain minimum dollar amount of transactions for a
particular month. Most charges due under our EFT service agreements are paid
monthly.
On a service bureau basis, we generate core data processing revenues from
service and processing fees based on the volume of transactions processed. These
revenues are recognized as the services are performed. We also generate core
data processing revenues by licensing PC BancPAC, our proprietary Windows NT
based client/server software system, on an in-house basis. We recognize revenues
for licensing of PC BancPAC in accordance with Statement of Position 97-2 on
"Software Revenue Recognition" issued by the American Institute of Certified
Public Accountants. We recognize software license fees when we have signed a
non-cancelable license agreement, shipped the product and satisfied all
significant obligations to the customer.
We license on an in-house basis Renaissance software, our proprietary check
imaging software that we acquired through SBS Corp. in August 1999. We
generate revenues from upfront license fees and recurring annual maintenance
fees charged for this system. Revenues from licensing of Renaissance are
recognized in accordance with Statement of Position 97-2, as discussed above. We
also provide check imaging in a service bureau environment. On a service bureau
basis, we generate revenues based on the volume of items processed. This revenue
is recognized as we provide the service.
We generate our data communications management service revenues principally
from network management and data traffic across our frame relay network and from
equipment configuration, installation and sales. We charge a flat monthly fee
for providing telecommunications connectivity and network management as well as
an initial installation charge.
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Our ancillary products and services generate revenues primarily from our
maintenance and technical support services as well as sales of equipment. We
recognize maintenance and technical support service revenues as the service
period elapses. We recognize equipment sales revenues at the time of shipment.
In June 1998, we completed an initial public offering of our common stock.
Since that time, we have completed a number of acquisitions. We originally
accounted for our acquisition of Direct Access in March 1999 as a pooling of
interest. As a result of the Netzee transactions described in "Summary," we have
changed the accounting for this transaction to a purchase. Therefore, all of our
acquisitions since our initial public offering have been accounted for as
purchase transactions and are reflected as such in the accompanying financial
statements. For information about our acquisitions prior to our initial public
offering, see our other SEC filings and the notes to our consolidated financial
statements.
We base our expenses to a significant extent on our expectations of future
revenues. Most of our expenses are fixed in the short term, and we may not be
able to quickly reduce spending if our revenues are lower than we expect. In an
attempt to enhance our long term competitive position, we may also make
decisions regarding pricing, marketing, services and technology that could have
an adverse near-term effect on our financial condition and operating results.
Due to the foregoing factors and other risks discussed elsewhere in this
prospectus, including in "Risk Factors," we believe that quarter to quarter
comparisons of our operating results are not a good indication of our future
performance. It is likely that our operating results will fall below the
expectations of securities analysts or investors in some future quarter. In such
event, the trading price of our common stock would likely decline, perhaps
significantly.
Results of Operations
The following table sets forth the percentage of revenues represented by
certain items in the consolidated statements of operations for the indicated
periods.
<TABLE>
<CAPTION>
Six months ended
Years ended December 31, June 30,
---------------------------------------- -------------------------
1996 1997 1998 1998 1999
------------- ------------ ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Revenues ............................................... 100.0% 100.0% 100.0% 100.0% 100.0%
Costs of services ...................................... 54.2 44.0 41.6 41.6 38.6
Selling, general and administrative expenses ........... 47.2 43.4 38.8 39.6 38.0
Depreciation and amortization .......................... 2.4 5.7 4.7 4.6 5.9
Loss on impairment of intangibles ...................... 0 3.1 0 0 0
Writeoff of purchased research and development
costs ................................................. 5.6 0 0 0 0
----- ----- ----- ----- -----
Total operating expenses ............................... 109.4 96.2 85.1 85.9 82.5
----- ----- ----- ----- -----
Operating income (loss) ................................ (9.4) 3.8 14.9 14.2 17.5
Other income (expense), net ............................ (1.9) (2.8) (0.6) (2.3) 0.3
----- ----- ----- ----- -----
Income (loss) before minority interest and
provision for Income taxes ........................... (11.3) 1.0 14.3 11.9 17.8
Provision (benefit) for income taxes ................... (1.6) 2.9 5.4 4.7 6.8
Minority interest in (income) loss of consolidated
Subsidiary ........................................... (0.1) 0.2 (0.3) (0.4) (0.3)
----- ----- ----- ----- -----
Net (loss) income ...................................... (9.8)% (1.7)% 8.6% 6.8% 10.7%
===== ===== ===== ===== =====
</TABLE>
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Six months ended June 30, 1999 compared to six months ended June 30, 1998
Revenues. Revenues increased 44.6%, or $5.8 million, to $18.7 million for
the six months ended June 30, 1999 from $12.9 million for the six months ended
June 30, 1998. The $5.8 million increase was primarily attributable to (a) $2.5
million generated by an increase in core data processing including check
imaging, (b) $2.0 million generated by an increase in EFT processing, (c)
$640,000 generated by an increase in data communications management and (d)
other increases of $660,000 generated by ancillary products and services.
Costs of services. Costs of services increased 34.0%, or $1.8 million, to
$7.2 million for the six months ended June 30, 1999 from $5.4 million for the
six months ended June 30, 1998. The $1.8 million increase was primarily
attributable to (a) $700,000 generated by our core data processing services, (b)
$440,000 generated by additional data communications sales, (c) $200,000
generated by an increase in EFT processing services and (d) $460,000 generated
by ancillary products and services. Costs of services as a percentage of sales
decreased from 41.6% for the six months ended June 30, 1998 to 38.6% for the six
months ended June 30, 1999, primarily due to additional higher margin EFT
revenues and synergies from our acquisitions.
Selling, general and administrative expenses. Selling, general and
administrative expenses increased 38.7%, or $2.0 million, to $7.1 million for
the six months ended June 30, 1999 from $5.1 million for the six months ended
June 30, 1998. The increase was primarily attributable to $1.1 million to
support our continued internal growth, including personnel costs, and $870,000
related to our acquisitions. Selling, general and administrative expenses as a
percentage of sales decreased from 39.6% for the six months ended June 30, 1998
to 38.0% for the six months ended June 30, 1999.
Depreciation and amortization. Depreciation and amortization increased
85.1%, or $510,000, to $1.1 million for the six months ended June 30, 1999 from
$600,000 for the six months ended June 30, 1998. The increase was primarily
attributable to additional property, plant and equipment obtained through
acquisitions as well as internal growth, and amortization of intangible assets
related to our acquisitions, partially offset by a decrease in amortization of
other intangibles.
Operating income (loss). For the reasons stated above, operating income
increased $1.5 million to $3.3 million for the six months ended June 30, 1999
from $1.8 million for the same period in 1998.
Other income (expense). Other income (expense) increased $350,000, to
income of $60,000 for the six months ended June 30, 1999 from an expense of
$290,000 for the six months ended June 30, 1998. The increase was primarily due
to the reduction of long term debt with proceeds from our initial public
offering in June 1998 which, in turn, reduced interest expense.
Provision (benefit) for income taxes. Provision for income taxes
increased $670,000 to $1.3 million for the six months ended June 30, 1999 from
$610,000 for the six months ended June 30, 1998. The increase was attributable
to increased profits and an increase in nondeductible amortization.
Minority interest in (income) loss of consolidated subsidiary. Minority
interest in income increased to $60,000 for the six months ended June 30, 1999
from $50,000 for the six months ended June 30, 1998. The increase was
attributable to profits in the operations of a subsidiary in which we own a 66%
interest, which had been a consolidated subsidiary in which we owned a 33%
interest during the prior period.
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Year ended December 31, 1998 compared to year ended December 31, 1997
Revenues. Revenues increased 24.1%, or $5.6 million, to $28.9 million for
the year ended December 31, 1998 from $23.3 million for the year ended December
31, 1997. The $5.6 million increase was primarily related to (a) $2.5 million
generated by an increase in EFT processing, (b) $1.3 million generated by
additional core data processing, (c) $650,000 generated by an increase in data
communications management, and (d) other increases of $1.2 million generated by
ancillary products and services, including $380,000 generated by an increase in
merchant portfolio management revenues.
Costs of services. Costs of services increased 17.7%, or $1.8 million, to
$12.0 million for the year ended December 31, 1998 from $10.2 million for the
year ended December 31, 1997. The $1.8 million increase was primarily
attributable to (a) $1.0 million in costs generated by an increase in core data
processing sales, (b) an increase of $710,000 related to equipment sales and
maintenance services and (c) other costs of $90,000.
Selling, general and administrative expenses. Selling, general and
administrative expenses increased 11.1%, or $1.1 million, to $11.2 million for
the year ended December 31, 1998 from $10.1 million for the year ended December
31, 1997. The $1.1 million increase was primarily due to additional personnel
costs incurred to support our growth.
Depreciation and amortization. Depreciation and amortization remained
constant at approximately $1.3 million for the years ended December 31, 1998 and
1997. An increase of $440,000 in depreciation expense related to fixed asset
additions was offset by reduced amortization due to fully amortized contracts
related to acquisitions which occurred in 1996 and 1997.
Loss on impairment of intangibles. There was no loss on impairment of
intangibles for the year ended December 31, 1998. The 1997 loss was due to (a)
the write off of $540,000 of goodwill assumed in our acquisition of a merchant
banking company in December 1996 and (b) the write off of $190,000 in purchased
software assumed in our acquisition of a core processing company in December
1996. These writeoffs were due to permanent impairment in the related long term
assets.
Operating income (loss). For the reasons stated above, operating income
increased $3.4 million to $4.3 million for the year ended December 31, 1998 from
$880,000 for the year ended December 31, 1997. Exclusive of the nonrecurring
loss on impairment of intangibles in 1997, operating income would have been $1.6
million in 1997.
Other income (expense). Other expense decreased $470,000 to $180,000 for
the year ended December 31, 1998 from $650,000 for the year ended December 31,
1997. The decrease was due primarily to a decrease in interest expense resulting
from the payment of long term debt with the proceeds from our initial public
offering which was completed in June 1998.
Provision (benefit) for income taxes. Provision for income taxes increased
$900,000 to $1.6 million for the year ended December 31, 1998 from $670,000 for
the year ended December 31, 1997. The increase was primarily due to increased
profits partially offset by a reduction in nondeductible amortization.
Minority interest in (income) loss of consolidated subsidiary. Minority
interest in income increased $130,000 to $90,000 for the year ended December 31,
1998 from a loss of $40,000 for the year ended December 31, 1997. The increase
was primarily due to profits in the operations of a
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consolidated subsidiary in which we owned 33%, partially offset by our
acquisition of an additional 33% ownership interest in that company in August
1998.
Year ended December 31, 1997 compared to year ended December 31, 1996
Revenues. Revenues increased 60.3%, or $8.7 million, to $23.3 million for
the year ended December 31, 1997 from $14.5 million for the year ended December
31, 1996. The $8.7 million increase was primarily attributable to (a) $4.0
million generated by our acquired core data processing operations as these
operations were included for the full year in 1997 as compared to one month in
1996, (b) $1.3 million generated by an increase in EFT processing, (c) $1.3
million generated by PC BancPAC and related core data processing operations
which we acquired on December 31, 1996, (d) $1.2 million generated by equipment
sales and maintenance fees as these operations were included for a full year in
1997 and (e) $930,000 generated by additional data communications management.
Costs of services. Costs of services increased 30.0%, or $2.3 million, to
$10.2 million for the year ended December 31, 1997 from $7.9 million for the
year ended December 31, 1996. The $2.3 million increase was primarily due to (a)
an increase of $1.1 million related to the core processing operations as these
operations were included for the full year in 1997 as compared to one month in
1996, (b) an increase of $570,000 related to data communications sales, (c) an
increase of $310,000 related to PC BancPAC and related core processing services
which were included for the full year in 1997 and (d) $320,000 related to
additional equipment sales and maintenance. Costs of services as a percentage of
sales decreased to 44.0% from 54.2% in 1996, primarily due to additional higher
margin EFT revenues.
Selling, general and administrative expenses. Selling, general and
administrative expenses increased 47.5%, or $3.3 million, to $10.1 million for
the year ended December 31, 1997 from $6.8 million for the year ended December
31, 1996. The $3.3 million increase was primarily attributable to (a) $1.3
million related to acquired core data processing operations as these operations
were included in 1997 as compared to one month in 1996, (b) $980,000 related to
PC BancPAC and related core processing operations which we acquired in December
31, 1996, of which approximately $500,000 was related to research and
development activities, (c) $840,000 related to equipment and maintenance
services as a full year of these operations was included in 1997, (d) $520,000
related to merchant portfolio management services as a full year of these
operations was included in 1997 as compared to one month in 1996, (e) $1.3
million related to additional personnel and facilities to support our growth and
(f) other expenses of $120,000 partially offset by a $1.8 million nonrecurring
charge in 1996 related to a deferred compensation agreement with an officer.
Depreciation and amortization. Depreciation and amortization increased
$970,000 to $1.3 million for the year ended December 31, 1997 from $350,000 for
the year ended December 31, 1996. This increase was primarily due to (a) the
amortization of $620,000 of goodwill and contracts related to our purchase of a
core processing company in 1996 which was included for a full year in 1997 as
opposed to one month in 1996, (b) amortization of $90,000 of goodwill and
contracts related to our purchase of equipment and maintenance services, the
operations of which were included for a full year in 1997, (c) an increase in
depreciation expense of $160,000 related primarily to acquisitions and (d) other
net increases of $100,000.
Loss on impairment of intangibles. Loss on impairment of intangibles
totaled $730,000 for the year ended December 31, 1997. This was primarily due to
(a) the write off of $540,000 of goodwill assumed in our acquisition of a
merchant portfolio management company in 1996 and (b) the write off
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<PAGE>
of $190,000 in purchased software assumed in our acquisition of a core
processing company in 1996. These writeoffs were due to permanent impairment in
the related long term assets.
Writeoff of purchased research and development costs. The $810,000 in
writeoff of purchased research and development costs in 1996 was due to
allocation of a component of the purchase price of PC BancPAC and related core
processing operations to incomplete research and development costs at the time
of purchase as the development of certain projects had not yet reached
technological feasibility and the technology had no alternative use and required
substantial additional development.
Operating income (loss). For the foregoing reasons, operating income
increased $2.2 million to $880,000 for the year ended December 31, 1997 from an
operating loss of $1.4 million for the year ended December 31, 1996. Exclusive
of the nonrecurring loss on impairment of intangibles, operating income would
have been $1.6 million in 1997.
Other income (expense). Other expense increased $370,000 to $650,000 for
the year ended December 31, 1997 from $280,000 for the year ended December 31,
1996. This increase was primarily due to interest on new debt to fund our
acquisitions during 1996 which was recorded for a full year in 1997.
Provision (benefit) for income taxes. Provision for income taxes increased
$900,000 to $670,000 for the year ended December 31, 1997 from a benefit of
$230,000 for the year ended December 31, 1996. The increase was primarily due to
increased pre-tax income partially offset by deductible losses in 1996 primarily
related to a deferred compensation agreement with an officer.
Minority interest in (income) loss of consolidated subsidiary. Minority
interest in income decreased $50,000 to a loss of $40,000 for the year ended
December 31, 1997 from income of $10,000 for the year ended December 31, 1996.
The decrease was primarily due to losses in the operations of a consolidated
subsidiary in which we owned a 33% interest.
Liquidity and Capital Resources
Net cash provided by operating activities was $2.7 million for the year
ended December 31, 1998 and $2.1 million for the year ended December 31, 1997.
The increase in net cash provided by operating activities in 1998 as compared to
1997 was attributable primarily to an increase in net income partially offset by
an increase in accounts receivable and other assets. Net cash provided by
operating activities was $1.8 million for the six months ended June 30, 1999
compared to $2.1 million for the six months ended June 30, 1998. This decrease
in net cash was attributable primarily to increases in accounts receivable,
inventory, prepaid expenses and other assets, partially offset by an increase in
net income.
Net cash used in investing activities was $8.4 million for the year ended
December 31, 1998 and $630,000 for the year ended December 31, 1997. The
increase in net cash used in investing activities in 1998 as compared to 1997
was attributable to increased capital expenditures and acquisitions during 1998.
Net cash used in investing activities was $3.0 million for the six months ended
June 30, 1999 and $2.7 million for the six months ended June 30, 1998. The
increase in net cash used in investing activities was primarily due to our
acquisitions and an increase in capital expenditures.
Net cash provided by financing activities was $6.9 million for the year
ended December 31, 1998 and net cash used in financing activities was $860,000
for the year ended December 31, 1997. The increase for 1998 as compared to 1997
was due to an increase in cash from the completion of our
24
<PAGE>
initial public offering, partially offset by the paydown of $5.2 million of long
term debt and $1.8 million of deferred compensation. Net cash provided by
financing activities was $450,000 for the six months ended June 30, 1999 and
$5.6 million for the six months ended June 30, 1998. The decrease in cash
provided by financing activities was primarily due to completion of our initial
public offering in the second quarter of 1998.
In June 1998, we completed our initial public offering of common stock.
Proceeds from our public offering after deducting expenses related to the
offering were approximately $14.4 million, including proceeds from the
underwriters' over-allotment option which was exercised in July 1998. Proceeds
of the initial public offering were used to pay down debt, pay obligations owed
to a former officer, enhance and expand our frame relay network, redeem shares
of preferred stock and for general working capital needs, including
acquisitions.
During 1998, we entered into a credit facility with First Union National
Bank. Under this facility, as amended, we may borrow up to $35.0 million for
working capital and to fund acquisitions and pay expenses related to
acquisitions. The First Union credit facility contains provisions which require
us to maintain certain financial ratios and minimum net worth amounts and which
restrict our ability to incur additional debt, make certain capital
expenditures, enter into agreements for mergers, acquisitions or the sale of
substantial assets and pay dividends. The First Union credit facility matures on
June 30, 2002. Interest is payable monthly and outstanding principal amounts
accrue interest, at our option, at an annual rate equal to either (a) a floating
rate equal to the lender's prime rate minus one quarter of one percent or (b) a
fixed rate based upon the 30-day LIBOR rate plus applicable margins. On
September 30, 1999, the interest rate under this facility was approximately
7.5%.
In connection with the acquisition of SBS Corp. and SBS Data, we borrowed
$21.6 million from First Union and loaned that amount to Netzee to pay a portion
of the purchase price for SBS Corp. and to pay some outstanding liabilities of
SBS Corp. On September 1, 1999, we borrowed approximately $7.3 million
additional proceeds from the First Union credit facility and loaned that amount
to Netzee to pay a portion of the purchase price for acquisitions of other
companies. Netzee has executed and delivered promissory notes to us for these
loans, which accrue interest at a fluctuating annual rate equal to the prime
rate plus 2.0%, which as of September 30, 1999 equaled 10.25%.
While there can be no assurance, we believe that funds currently on hand,
funds to be provided by operations, and funds available for working capital
purposes under the First Union credit facility will be sufficient to meet our
anticipated capital expenditure and liquidity requirements for at least the next
12 months. We intend to grow, in part, through strategic acquisitions and will
make additional expenditures to negotiate and consummate acquisition
transactions and integrate the acquired companies. No assurance can be made with
respect to the actual timing and amount of the expenditures and acquisitions. In
addition, no assurance can be given that we will complete any acquisitions on
terms favorable to us, if at all, or that additional sources of financing will
not be required during these time periods or thereafter.
Possible Effects of the Year 2000
Our business and relationships with our customers depend significantly on a
number of computer software programs, internal operating systems and connections
to other regional and national telecommunications and processing networks. If
any of these software programs, systems or networks are not programmed to
recognize and properly process dates after December 31, 1999, significant system
failures or errors may result. These matters are commonly referred to as the
year 2000 issue and they could have a material adverse effect on our operations
and those of our customers.
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Our compliance program
We have conducted a review of our internal accounting and operating
programs and systems and currently believe that these programs and systems and
the network connections we maintain are adequately programmed to address the
year 2000 issue or can be modified or replaced to address the year 2000 issue
without incurring costs or delays which would have a material adverse effect on
our financial condition.
We have successfully converted all of our non-year 2000 compliant service
bureau processing customers to our PC BancPAC software, which we believe is year
2000 compliant. We have incurred costs of approximately $175,000 related to the
conversions.
We currently provide core data processing and check imaging services
through eleven centers located in Georgia, Florida, Tennessee, Arkansas and
Colorado. We have completed the upgrade of the equipment at each of these
locations to be year 2000 compliant. The total cost to make the equipment year
2000 compliant was approximately $75,000. In the event that the upgraded
equipment does not function properly, we believe that we can purchase equipment
that will allow processing to continue. It is difficult to estimate the
potential expense involved or delays which may result from a failure of the
upgraded equipment at our service bureau processing centers.
EFT processing is dependent upon coordinating the operations of other
ATM networks and our systems. In regard to our EFT operations and ATM network,
we believe the internal coding required for our products to be year 2000
complaint has been completed. We have completed the testing and certification of
our connections to other ATM networks, and we believe these connections are year
2000 compliant. If the other ATM networks do not successfully address year 2000
issues in their operations and if we are unable to route the transactions over
another network or another provider that has year 2000 compliant systems, our
operations may be affected. It is difficult to estimate the cost of our efforts
to certify these operations as the majority of expenditures relate to existing
programmers and support staff required to review the financial institutions
networks and equipment. It is difficult to estimate the potential expenses
involved or delays which may result from a failure or delay of these
institutions and third parties in resolving their year 2000 issues.
In regard to our data communications operations, we have completed a review
of our internal equipment as well as third party products and systems used in
our operations. It is our belief that our data communications equipment and
services, which are primarily provided by companies such as Motorola, BellSouth,
MCI WorldCom and Qwest Communications, are year 2000 compliant. If these
companies do not successfully address year 2000 issues in their operations and
if we are unable to successfully transfer our business operations to another
provider that has year 2000 compliant systems, our data communications
operations may be interrupted, hindered or delayed, which would have a material
adverse effect on our business, financial condition and results of operations.
Third party compliance
Other companies interact electronically with us and our customers, and we
must coordinate our EFT processing, ATM network, data communications and
enterprise software processing with these other companies and our customers. We
have completed a preliminary assessment of third party products and systems used
in our business. We believe that many financial institutions and third party
vendors and network processors, including our customers, vendors and processors,
are still in the process of analyzing their software and network applications to
address year 2000 issues. These other companies may not be successful in
identifying or resolving year 2000 issues in their operations, and our business
could suffer greatly if our customers' and vendors' operations are halted or
diminished even temporarily to address or correct these issues. It is difficult
to estimate the potential expenses involved or delays which may result from the
failure of these institutions and third parties to resolve their year 2000
issues in a timely manner. We cannot assure you that such expenses, failures or
delays will not have a material adverse effect on our business, financial
condition or results of operations.
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SBS acquisition
We recently acquired SBS Data Services and the non-Internet and telephone
banking assets of SBS Corporation, affiliated corporations which provide core
data processing, check imaging equipment sales and services and optical storage
products to community financial institutions. SBS Data and SBS Corp. have
completed a year 2000 compliance review of their products and systems and have
made all necessary upgrades to be year 2000 compliant. We are incorporating the
SBS products and systems into our continuing year 2000 testing and compliance
program.
Contingency plans
Although we have not found any material year 2000 issues with our products,
services or operating systems, or those of third parties with whom we do
business, we have developed contingency plans for handling any year 2000
problems that may occur. Our contingency plans include:
. accelerated replacement of affected equipment or software;
. the emergency allocation of personnel and resources to analyze,
assess and direct remediation efforts;
. the use of backup systems, including those that do not rely on
computers; and
. alternative sources of power and communications.
It is difficult to estimate the potential expenses involved or delays which
may result if we are required to implement our contingency plans to address year
2000 issues.
Effects of Accounting Standards
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which establishes accounting and reporting
standards requiring that every derivative instrument, including certain
derivative instruments embedded in other contracts, be recorded in the balance
sheet as either an asset or liability measured at its fair value. SFAS No. 133
requires that changes in the derivative's fair value be recognized currently in
earnings unless specific hedge accounting criteria are met. Special accounting
for qualifying hedges allows a derivative's gains and losses to offset related
results on the hedged item in the income statement, and requires that a company
must formally document, designate, and assess the effectiveness of transactions
that receive hedge accounting. SFAS No. 133 is effective for fiscal years
beginning after June 15, 2000. The adoption of SFAS No. 133 will not have a
material impact on our financial statements.
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Quantitative and Qualitative Disclosure About Market Risk
We do not use derivative financial instruments in our operations or
investments and do not have significant operations subject to fluctuations in
foreign currency exchange rates. Borrowings under the First Union credit
facility accrue interest at a fluctuating rate based either upon the lender's
prime rate or LIBOR. Prior to August 6, 1999, we had less than $1.0 million
outstanding under the First Union facility and, therefore, were not subject to
significant risks from interest rate fluctuations. As of September 30, 1999, we
had $30.3 million outstanding under this facility, which significantly increases
our risks from interest rate fluctuations. Changes in interest rates which
dramatically increase the interest rate on the credit facility would make it
more costly to borrow under that facility and may impede our acquisition and
growth strategies if we determine that the costs associated with borrowing funds
are too high to implement these strategies.
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SELLING SHAREHOLDERS
On March 9, 1999, we purchased Direct Access Interactive, Inc., a provider
of telephone and Internet banking services to financial institutions. In this
transaction, we issued 151,229 shares of our common stock to the five
shareholders of Direct Access. Of these shares, 13,696 shares were placed in
escrow to satisfy indemnity obligations of the Direct Access shareholders to
InterCept. These shares held in escrow will not be included in this offering. If
we do not make a claim against the escrow, all of the shares will be released
from escrow on March 9, 2000 and may be sold at that time by the shareholders
under Rule 144 of the Securities Act. None of the former shareholders of Direct
Access are officers or directors of InterCept.
On May 28, 1999, we purchased L.E. Vickers & Associates, Inc., a core data
processing, item capture and check imaging company, and Data Equipment Services,
Inc., a supplier of specialized equipment and maintenance services to financial
institutions. In this transaction, we issued 481,232 shares of our common stock
to Larry E. Vickers, the sole shareholder of L.E. Vickers & Associates, and
19,249 shares of our common stock to Mr. Vickers wife, Brenda J. Vickers, the
sole shareholder of Data Equipment Services. Of these shares, 25,024 shares
were placed in escrow to satisfy any indemnity obligations of the Vickers to
InterCept. The shares held in escrow are included in this offering and the
proceeds from any shares sold will continue to be held in escrow. If not sold
prior to May 28, 2000, and if we do not make a claim against the escrow, the
shares will be released from escrow on that date and may be sold at that time
under Rule 144. Mr. and Mrs. Vickers are not officers or directors of InterCept.
The following table sets forth information regarding the beneficial
ownership of our common stock held by each selling shareholder as of September
30, 1999, and as adjusted to reflect the sale of common stock offered by each
selling shareholder. The information in the table is based on information from
the named persons regarding their ownership of our common stock. Unless
otherwise indicated, each of the selling shareholders has sole voting power and
investment power over the shares beneficially owned. As of September 30, 1999,
there were 10,115,972 shares of common stock outstanding.
<TABLE>
<CAPTION>
Ownership Ownership
before after
the offering the offering
-------------------------- Number of -----------------
Name of Shareholder Shares % shares offered Shares
------------------- ------ --- -------------- ------
<S> <C> <C> <C> <C>
Janice Brown 240 * 216 24
Jack Caldwell 83,148 * 76,258 6,890
Janet Hollingsworth 3,424 * 3,082 342
Kevin Jones 64,349 * 57,915 6,434
Brenda A. Vickers (1) 19,249 * 19,249 0
Larry E. Vickers (1) 481,232 4.8 481,232 0
Steve White (2) 698 * 62 636
The Vickers Foundation (3) -- -- -- --
</TABLE>
* Less than 1% of the outstanding common stock.
(1) Each of Mr. and Mrs. Vickers are deemed to beneficially own the shares held
by the other. Therefore, each of them may be deemed to own and be offering
500,481 shares, which is the total shares owned by them.
(2) Mr. White owns 630 shares jointly with his spouse.
(3) Mr. Vickers has indicated to us that he plans to gift up to 15,000 shares
to The Vickers Foundation, for which he serves as trustee. If such event
occurs, the foundation will become a selling shareholder and will be able
to sell those shares under this prospectus.
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PLAN OF DISTRIBUTION
We are registering the shares offered under this prospectus on behalf of
the selling shareholders and their pledgees, donees, transferees and successors
in interest. We will not receive any proceeds from the sale of the shares. The
selling shareholders and their pledgees, donees, transferees or successors in
interest may sell or distribute these shares from time to time. These sales may
be made directly or through brokers or dealers or underwriters who may act
solely as agents, or who may acquire shares as principals. Sales may be made at
market prices prevailing at the time of sale, at prices related to the
prevailing market prices, at negotiated prices or at fixed prices, which may be
changed. The selling shareholders have the right to accept or reject, in whole
or in part, any proposed purchase of these shares, whether the purchase is to be
made directly or through agents.
The shares may be sold in one or more of the following types of
transactions, or in any combination of the following types of transactions:
(a) a cross or block trade, including a transaction in which the broker or
dealer so engaged will attempt to sell the shares as agent but may
position and resell a portion of the block as principal to facilitate
the transaction;
(b) purchases by a broker or dealer or underwriter as principal and resale
by such broker or dealer or underwriter for its account under this
prospectus;
(c) an exchange distribution in accordance with the rules of such
exchange;
(d) ordinary brokerage transactions and transactions in which the broker
solicits purchasers;
(e) in transactions "at the market" to or through market makers of our
common stock or into an existing market for the common stock;
(f) in other ways not involving market makers or established trading
markets, including direct sales of the shares to purchasers or sales
of the shares effected through agents;
(g) through transactions in options, swaps or other derivatives which may
or may not be listed on an exchange;
(h) in privately negotiated transactions; or
(i) in transactions to cover short sales.
In effecting sales, brokers or dealers engaged by the selling shareholders may
arrange for other brokers or dealers to participate in the resales. In
addition, any securities covered by this prospectus which qualify for sale
pursuant to Rule 144 may be sold under Rule 144 rather than pursuant to this
prospectus. Under Rule 144, a shareholder may sell shares held more than one
year, provided the shareholder meets various manner of sale, notice and other
requirements set forth in Rule 144.
From time to time after the date of this prospectus, the selling
shareholders may pledge or grant a security interest in some or all of the
shares offered under this prospectus. If a selling shareholder defaults in
performance of the obligations secured by these shares, the pledgees or secured
parties may offer and sell the shares from time to time by this prospectus. The
selling shareholders also may transfer and donate these shares in other
circumstances. The number of shares beneficially owned by the selling
shareholders will decrease as and when the selling shareholders transfer or
donate these shares or default in performing any obligations secured by these
shares. The plan of distribution for
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shares offered and sold under this prospectus will otherwise remain unchanged,
except that the transferees, donees, pledgees, secured parties or other
successors in interest will be selling shareholders for purposes of this
prospectus.
In connection with distributions of the shares or otherwise, the selling
shareholders may enter into hedging transactions with brokers or dealers. In
connection with such transactions, brokers or dealers may engage in short sales
of the shares registered hereunder in the course of hedging the positions they
assume, including positions assumed in connection with distributions of these
shares by such brokers or dealers. The selling shareholders may also sell shares
short and redeliver the shares to close out such short positions. The selling
shareholders may also enter into option or other transactions with brokers or
dealers which require the delivery to the brokers or dealers of the shares
registered hereunder, which the brokers or dealers may resell or otherwise
transfer under this prospectus. The selling shareholders may also loan or pledge
the shares to brokers or dealers and the brokers or dealers may sell the shares
so loaned or, upon a default, the brokers or dealers may effect sales of the
pledged shares under this prospectus.
The selling shareholders have advised us that they have not entered into
any agreements, understandings or arrangements with any underwriters, brokers or
dealers regarding the sale of these shares, nor is there an underwriter or
coordinating broker or dealer acting in connection with the proposed sale of
these shares. However, the selling shareholders may use brokers, dealers,
underwriters or agents to sell these shares, who may receive compensation in the
form of commissions, discounts or concessions. This compensation may be paid by
the selling shareholders or the purchasers of the shares for whom such persons
may act as agent, or to whom they may sell as principal, or both. The
compensation as to a particular person may be less than or in excess of
customary commissions.
Because the selling shareholders and such brokers or dealers and any other
participating brokers or dealers may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales, they will be
subject to the prospectus delivery requirements of the Securities Act. In
addition, any commission, discount, concession or profit they realize with
respect to the resale of these shares while acting as principals may be deemed
to be underwriting discounts or commissions under the Securities Act. Neither
we nor the selling shareholders can presently estimate the amount of such
compensation. The aggregate proceeds to the selling shareholders from the sale
of the shares will be the purchase price of the common stock sold less the
aggregate agents' commissions, if any, and other expenses of issuance and
distribution not paid by us.
If the selling shareholders sell these shares in an underwritten offering,
the underwriters may acquire these shares for their own account and resell the
shares from time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices determined
at the time of sale. In such event, we will set forth in a supplement to this
prospectus the names of the underwriters and the terms of the transactions,
including any underwriting discounts, concessions or commissions and other items
constituting compensation of the underwriters and brokers or dealers. The
underwriters from time to time may change any public offering price and any
discounts, concessions or commissions allowed or reallowed or paid to brokers or
dealers. Unless otherwise set forth in a supplement, the obligations of the
underwriters to purchase the shares will be subject to certain conditions, and
the underwriters will be obligated to purchase all of the shares specified in
the supplement if they purchase any of the shares.
If the selling shareholders notify us that they have entered into any
material arrangement with a broker or dealer for the sale of these shares
through a block trade, special offering, exchange
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distribution or secondary distribution or a purchase by a broker or dealer, we
will file a supplement to this prospectus, if required, disclosing:
(a) the name of each selling shareholder and of the participating broker
or dealer(s);
(b) the number of shares involved;
(c) the price at which such shares were sold;
(d) the commissions paid or discounts or concessions allowed to such
broker or dealer(s), where applicable;
(e) that such broker or dealer(s) did not conduct any investigation to
verify the information set out or incorporated by reference in this
prospectus; and
(f) other facts material to the transaction.
In addition, we will file a supplement to this prospectus if we are notified
that a donee or pledgee that is not already identified as a selling
shareholder intends to sell more than 500 shares.
We have advised the selling shareholders that during such time as they may
be engaged in a distribution of these shares, they are required to comply with
Regulation M under the Exchange Act. With certain exceptions, Regulation M
prohibits the selling shareholders, any affiliated purchasers and other persons
who participate in such a distribution from bidding for or purchasing, or
attempting to induce any person to bid for or purchase, any security which is
the subject of the distribution until the entire distribution is complete.
We have agreed to bear certain expenses of registration of the common stock
under the federal and state securities laws and of any offering and sale
hereunder not including commissions of dealers or agents, fees attributable to
the sale of the shares and some other expenses. We have agreed to indemnify the
selling shareholders, and we may agree to indemnify any agent, dealer or broker
that participates in transactions involving sales of these shares, against
certain liabilities, including some potential liabilities under the Securities
Act. The selling shareholders may agree to indemnify any broker or dealer or
agent that participates in transactions involving sales of the shares against
certain liabilities, including liabilities arising under the Securities Act.
The registration statement for this offering was filed under the terms of
a registration rights agreement with Larry and Brenda Vickers and is subject to
the terms of that agreement. That agreement provides that in the event that we
determine that the registration of the shares will interfere with any material
financing, acquisition or other corporation transaction by us, we may terminate
or withdraw the registration statement covering these shares with the approval
of Mr. Vickers. If we do so and Mr. and Mrs. Vickers hold shares with a market
value of at least $500,000, they can require us to register the remaining shares
held by them unless we include the shares in another offering. This offering
will terminate on the earlier of (a) May 28, 2000 or (b) the date on which the
selling shareholders have sold all of the shares offered hereby.
There can be no assurance that the selling shareholders will sell any or
all of the shares of common stock offered by them under this prospectus. It is
possible that a significant number of these shares could be sold at the same
time. Such sales, or the perception that such sales could occur, may adversely
affect prevailing market prices for our common stock.
32
<PAGE>
LEGAL MATTERS
The validity of the shares of common stock offered under this prospectus
has been passed upon for InterCept by Nelson Mullins Riley & Scarborough,
L.L.P., Atlanta, Georgia. Glenn W. Sturm, a partner of Nelson Mullins, is one of
our directors. Members and employees of Nelson Mullins, including Mr. Sturm,
beneficially own an aggregate of 425,002 shares of our common stock.
EXPERTS
The audited financial statements incorporated by reference in this
prospectus and elsewhere in the registration statement, to the extent and for
the periods indicated in their reports, have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their reports with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in giving said reports.
The audited financial statements of SBS Data Services, Inc. as of December
31, 1997 and 1998, incorporated by reference in this prospectus and elsewhere in
this registration statement have been audited by Hardman, Guess, Frost &
Cummings, P.C., independent public accountants, as stated in their reports and
are included in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
The financial statements of Item Processing of America, Inc. incorporated
by reference in this Prospectus have been audited by BDO Seidman, LLP,
independent certified public accountants, to the extent and for the periods set
forth in their report incorporated herein by reference, and are included in
reliance upon such report given upon the authority of said firm as experts in
auditing and accounting.
33
<PAGE>
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the expenses in connection with the offering
described in the registration statement. All amounts are estimates except the
SEC Registration Fee:
SEC Registration Fee .................... $ 2,606
Printing and Engraving Expenses ........ 15,000
Legal Fees and Expenses ................. 50,000
Accounting Fees and Expenses ............ 30,000
Miscellaneous Expenses .................. 2,394
--------
Total................................ $100,000
The selling shareholders will not pay any of these expenses.
Item 15. Indemnification of Directors and Officers.
The Georgia Business Corporation Code permits a corporation to eliminate or
limit the personal liability of a director to the corporation or its
shareholders for monetary damages for any breach of duty of care or other duty
as a director, provided that no provision shall eliminate or limit the liability
of a director for:
. an appropriation, in violation of his duties, of any business
opportunity of the corporation,
. acts or omissions which involve intentional misconduct or a knowing
violation of law,
. unlawful corporate distributions, or
. any transaction from which the director received an improper personal
benefit.
The Georgia Code permits a corporation to indemnify officers to the same
extent as directors. Our amended and restated articles of incorporation
exonerate our directors from monetary liability to the extent described above,
and our amended and restated bylaws provide the same limitation of liability to
our officers.
In addition to the rights provided by law, our amended and restated
articles of incorporation and our amended and restated bylaws provide broad
indemnification rights to our directors and the officers, employees and agents
designated by our directors, with respect to various civil and criminal
liabilities and losses which may be incurred by the director, officer, agent or
employee under any pending or threatened litigation or other proceedings, except
that such indemnification does not apply in the same situations described above
with respect to the exculpation from liability of our directors. We are also
obligated to reimburse directors and other parties for expenses, including legal
fees, court costs and expert witness fees, incurred by the person in defending
against any liabilities and losses, as long as the person in good faith believes
that he or she acted in accordance with the applicable standard of conduct with
respect to the underlying accusations giving rise to such liabilities or losses
and agrees to repay to us any advances made if it is ultimately determined that
the person is not entitled to indemnification by us. Any amendment or other
modification to the applicable law, our articles of incorporation or our bylaws
which limits or otherwise adversely affects the rights to indemnification
currently provided therein shall apply only to proceedings based upon actions
and events occurring after
II-1
<PAGE>
such amendment and, in the case of amendments to our articles or bylaws,
delivery of notice thereof to the indemnified parties.
We have entered into separate indemnification agreements with each of our
directors and certain of our officers, whereby we agreed, among other things, to
provide for indemnification and advancement of expenses in a manner and subject
to terms and conditions similar to those set forth in the articles of
incorporation and the bylaws. These agreements may not be invalidated by action
of the shareholders. In addition, we hold an insurance policy covering directors
and officers under which the insurer agrees to pay, subject to certain
exclusions, for any claim made against our directors and officers for a wrongful
act that they may become legally obligated to pay or for which we are required
to indemnify the directors or officers.
We believe that the above protections are necessary in order to attract and
retain qualified persons as directors and officers.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to our directors, officers and controlling persons
pursuant to the foregoing provisions, or otherwise, we have been advised that in
the opinion of the SEC this indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against these liabilities (other than our
payment of expenses incurred or paid by one of our directors, officers or
controlling persons in the successful defense of any action, suit or proceeding)
is asserted by the director, officer or controlling person in connection with
the securities being registered, we will, unless in the opinion of our counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by us is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
Item 16. Exhibits.
(a) Exhibits
Exhibit No. Description
- ----------- -----------
2.1 Acquisition and Merger Agreement dated May 28, 1999 by and
between The InterCept Group, Inc., L.E. Vickers & Associates,
Inc., Data Equipment Services, Inc., and the shareholders of L.E.
Vickers & Associates, Inc. and Data Equipment Services, Inc.
(incorporated by reference to Exhibit 2.1 to InterCept's Current
Report on Form 8-K filed on June 11, 1999).**
2.2 Acquisition and Merger Agreement dated March 9, 1999 by and among
The InterCept Group, Inc., DAI Acquisition Corp., Direct Access
Interactive, Inc., and the shareholders of Direct Access
Interactive.**
4.1 Amended and Restated Articles of Incorporation, as deemed filed
with the Secretary of State of Georgia on April 29, 1998
(incorporated by reference to the exhibits to Intercept's
Registration Statement on Form 8-A (as amended on October 1,
1999)).
4.2 Amended and Restated Bylaws (incorporated by reference to the
exhibits to Intercept's Registration Statement on Form 8-A (as
amended on October 1, 1999)).
4.3 Amendment to Amended and Restated Bylaws (incorporated by
reference to the exhibits to Intercept's Registration Statement
on Form 8-A (as amended on October 1, 1999)).
4.4 Specimen Common Stock Certificate (incorporated by reference to
the exhibits to Intercept's Registration Statement on Form S-1
(No. 333-47197) as declared effective by the Securities and
Exchange Commission on June 9, 1998).
II-2
<PAGE>
4.5 Registration Rights Agreement dated as of March 9, 1999, between
The InterCept Group, Inc. and the shareholders of Direct Access
Interactive, Inc.
4.6 Registration Rights Agreement dated as of May 28, 1999, between
The InterCept Group, Inc. and Larry E. Vickers and Brenda J.
Vickers.
4.7 Agreement to Register Shares dated as of September 30, 1999, by
and between InterCept and Jack Caldwell, Kevin Jones, Janet
Hollingsworth, Steve White and Janice Brown.
5.1 Opinion of Nelson Mullins Riley & Scarborough, L.L.P.+
23.1 Consent of Nelson Mullins Riley & Scarborough, L.L.P. (included
in Exhibit 5.1 hereto).
23.2 Consent of Arthur Andersen LLP.
23.3 Consent of BDO Seidman, LLP.
23.4 Consent of Hardman, Guess, Frost & Cummings, P.C.
24.1 Power of Attorney (contained on the signature pages hereto).
** Pursuant to Item 601(b)(2) of Regulation S-K, InterCept agrees to furnish
supplementally a copy of any omitted schedule or exhibit to the Securities
and Exchange Commission upon request.
+ To be filed by amendment.
Item 17. Undertakings.
A. The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than 20
percent change in the maximum aggregate offering price,
set forth in the "Calculation of Registration Fee" table
in the effective registration statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
provided, however, that paragraphs (i) and (ii) above do not
apply if the information required to be included in a post-
effective amendment by those paragraphs is contained in periodic
reports filed with or furnished to the SEC by the registrant
pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference into the
registration statement.
II-3
<PAGE>
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof; and
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of this offering.
B. To deliver or cause to be delivered with the prospectus, to each
person to whom the prospectus is sent or given, the latest annual
report to security holders that is incorporated by reference in the
prospectus and furnished pursuant to and meeting the requirements of
Rule 14a-3 or Rule 14c-3 under the Exchange Act; and, where interim
financial information required to be presented by Article 3 of
Regulation S-X is not set forth in the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by
reference in the prospectus to provide such interim financial
information.
C. The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each
filing of the registrant's annual report pursuant to Section 13(a) or
15(d) of the Securities Exchange Act of 1934 that is incorporated by
reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
D. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of InterCept pursuant to the foregoing provisions,
or otherwise, InterCept has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by InterCept of expenses
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, InterCept
will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by
the final adjudication of such issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Atlanta, State of Georgia, on this 1st day of
October, 1999.
THE INTERCEPT GROUP, INC.
By: /s/ John W. Collins
------------------------------------------
John W. Collins
Chairman and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS that each of the undersigned officers
and directors of The InterCept Group, Inc., a Georgia corporation, for himself
and not for one another, does hereby constitute and appoint John W. Collins,
Donny R. Jackson and Scott R. Meyerhoff, and each of them, his true and lawful
attorney-in-fact and agent with full power of substitution, for him and in his
name, place and stead, in any and all capacities, to sign his name to any and
all amendments, including post-effective amendments, to this registration
statement, and to sign any registration statement for the same offering covered
by this registration statement that is to be effective upon filing pursuant to
Section 462(b) of the Securities Act of 1933, and all post-effective amendments
thereto, and to cause the same (together with all Exhibits thereto and all
documents in connection therewith) to be filed with the Securities and Exchange
Commission, granting unto said attorneys and each of them full power and
authority to do and perform each and every act and thing necessary and proper to
be done in and about the premises, as fully to all intents and purposes as the
undersigned could do if personally present, and each of the undersigned for
himself hereby ratifies and confirms all that said attorneys-in-fact and agents
or any one of them, or his or their substitute or substitutes, shall lawfully do
or cause to be done by virtue hereof.
II-5
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities listed and on the dates indicated.
<TABLE>
<CAPTION>
Signatures Title Date
---------- ----- ----
<S> <C> <C>
/s/ John W. Collins Chairman of the Board, Chief Executive October 1, 1999
- ------------------------------------- Officer and Director (Principal
John W. Collins Executive Officer)
/s/ Donny R. Jackson President, Chief Operating Officer and October 1, 1999
- ------------------------------------- Director
Donny R. Jackson
/s/ Scott R. Meyerhoff Vice President--Finance, Chief Financial October 1, 1999
- ------------------------------------- Officer and Secretary (Principal
Scott R. Meyerhoff Financial and Accounting Officer)
/s/ Jon R. Burke Director October 1, 1999
- -------------------------------------
Jon R. Burke
/s/ Boone A. Knox Director October 1, 1999
- -------------------------------------
Boone A. Knox
/s/ Glenn W. Sturm Director October 1, 1999
- -------------------------------------
Glenn W. Sturm
</TABLE>
II-6
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
2.1 Acquisition and Merger Agreement dated May 28, 1999 by and
between The InterCept Group, Inc., L.E. Vickers & Associates,
Inc., Data Equipment Services, Inc., and the shareholders of L.E.
Vickers & Associates, Inc. and Data Equipment Services, Inc.
(incorporated by reference to Exhibit 2.1 to InterCept's Current
Report on Form 8-K filed on June 11, 1999).**
2.2 Acquisition and Merger Agreement dated March 9, 1999 by and among
The InterCept Group, Inc., DAI Acquisition Corp., Direct Access
Interactive, Inc., and the shareholders of Direct Access
Interactive.**
4.1 Amended and Restated Articles of Incorporation, as deemed filed
with the Secretary of State of Georgia on April 29, 1998
(incorporated by reference to the exhibits to Intercept's
Registration Statement on Form 8-A (as amended on October 1,
1999)).
4.2 Amended and Restated Bylaws (incorporated by reference to the
exhibits to Intercept's Registration Statement on Form 8-A (as
amended on October 1, 1999)).
4.3 Amendment to Amended and Restated Bylaws (incorporated by
reference to the exhibits to Intercept's Registration Statement
on Form 8-A (as amended on October 1, 1999)).
4.4 Specimen Common Stock Certificate (incorporated by reference to
the exhibits to Intercept's Registration Statement on Form S-1
(No. 333-47197) as declared effective by the Securities and
Exchange Commission on June 9, 1998).
4.5 Registration Rights Agreement dated as of March 9, 1999, between
The InterCept Group, Inc. and the shareholders of Direct Access
Interactive, Inc.
4.6 Registration Rights Agreement dated as of May 28, 1999, between
The InterCept Group, Inc. and Larry E. Vickers and Brenda J.
Vickers.
4.7 Agreement to Register Shares dated as of September 30, 1999, by
and between InterCept and Jack Caldwell, Kevin Jones, Janet
Hollingsworth, Steve White and Janice Brown.
5.1 Opinion of Nelson Mullins Riley & Scarborough, L.L.P.+
23.1 Consent of Nelson Mullins Riley & Scarborough, L.L.P. (included
in Exhibit 5.1 hereto).
23.2 Consent of Arthur Andersen LLP.
23.3 Consent of BDO Seidman, LLP.
23.4 Consent of Hardman, Guess, Frost & Cummings, P.C.
24.1 Power of Attorney (contained on the signature pages hereto).
- ---------
** Pursuant to Item 601(b)(2) of Regulation S-K, InterCept agrees to furnish
supplementally a copy of any omitted schedule or exhibit to the Securities
and Exchange Commission upon request.
+ To be filed by amendment.
<PAGE>
EXHIBIT 2.2
ACQUISITION AND MERGER AGREEMENT
BY AND AMONG
THE INTERCEPT GROUP, INC.,
a Georgia corporation,
DAI ACQUISITION CORP.,
a Georgia corporation,
AND
DIRECT ACCESS INTERACTIVE, INC.,
a Tennessee corporation,
AND
JACK CALDWELL, KEVIN JONES, JANET HOLLINGSWORTH,
STEVE WHITE AND JANICE BROWN,
shareholders of Direct Access Interactive, Inc.
DATED MARCH 9, 1999
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
----
<S> <C>
ARTICLE 1 THE MERGER.......................................................................... 1
Section 1.1. Merger Transaction..................................................... 1
Section 1.2. Effective Time of the Merger........................................... 2
Section 1.3. Terms and Conditions; Conversion of Shares............................. 2
ARTICLE 2 PURCHASE PRICE; EXCHANGE OF SHARES.................................................. 2
Section 2.1. Purchase Price; Payment for Shares..................................... 2
Section 2.2 Rights of Former Company Shareholders.................................. 3
Section 2.3. Establishment of Escrow................................................ 3
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SHAREHOLDERS.................. 4
Section 3.1. Authorization; Organization............................................ 4
Section 3.2. Capitalization; Structure.............................................. 5
Section 3.3. Financial Statements................................................... 5
Section 3.4. Undisclosed Liabilities................................................ 6
Section 3.5. Properties............................................................. 7
Section 3.6. Litigation 7
Section 3.7. Intellectual Property.................................................. 8
Section 3.8. Adequacy of Technical Documentation.................................... 9
Section 3.9. Third-Party Components in Software..................................... 9
Section 3.10. Third-Party Interests or Marketing Rights in Software.................. 9
Section 3.11. Licenses............................................................... 9
Section 3.12. Compliance with Laws................................................... 9
Section 3.13. Insurance.............................................................. 10
Section 3.14. Material Contracts..................................................... 10
Section 3.15. Brokers, Finders, etc.................................................. 11
Section 3.16. Taxes 11
Section 3.17. Pension and Employee Benefit Plans..................................... 12
Section 3.18. Labor and Employment Matters........................................... 14
Section 3.19. Environmental Matters.................................................. 15
Section 3.20. Agreements Affecting Competition....................................... 15
Section 3.21. Transactions with Related Parties...................................... 16
Section 3.22. Major Vendors and Customers............................................ 16
Section 3.23. Absence of Certain Commercial Practices................................ 16
Section 3.24. Accounts Receivable.................................................... 16
Section 3.25. Disclosure............................................................. 17
Section 3.26. Year 2000.............................................................. 17
Section 3.27. Shareholders' Additional Representations............................... 17
</TABLE>
<PAGE>
<TABLE>
<S> <C>
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF BUYER AND INTERCEPT............................... 18
ARTICLE 5 INTENTIONALLY OMITTED............................................................... 19
ARTICLE 6 COVENANTS AND AGREEMENTS OF THE PARTIES............................................. 19
Section 6.1. Shareholder Approved by Unanimous Consent.............................. 19
Section 6.2. Affiliates 19
Section 6.3. Pooling of Interests................................................... 20
Section 6.4. Employee Benefit Plans................................................. 20
Section 6.5. Agreements regarding Employee Benefits................................. 20
ARTICLE 7 CONDITIONS PRECEDENT TO BUYER'S AND INTERCEPT'S OBLIGATIONS......................... 21
Section 7.1. Accuracy of Representations............................................ 21
Section 7.2. Performance of Company and Shareholders................................ 21
Section 7.3. Material Changes....................................................... 21
Section 7.4. Absence of Litigation.................................................. 21
Section 7.5. Certificates of the Company and Shareholders........................... 22
Section 7.6. Corporate Approval..................................................... 22
Section 7.7. Approvals.............................................................. 22
Section 7.8. Employment Agreements.................................................. 22
Section 7.9. Opinion of Counsel..................................................... 22
Section 7.10. Pooling................................................................ 22
Section 7.11. Escrow Agreement....................................................... 22
Section 7.12. Cancellation Agreements................................................ 22
Section 7.13. Registration Rights Agreement.......................................... 22
Section 7.14. Nonsolicitation and Confidentiality Agreement.......................... 23
ARTICLE 8 CONDITIONS PRECEDENT TO THE COMPANY'S AND THE SHAREHOLDER'S OBLIGATIONS............. 23
Section 8.1. Accuracy of Representations............................................ 23
Section 8.2. Performance of Buyer................................................... 23
Section 8.3. Absence of Litigation.................................................. 23
Section 8.4. Certificates of the Buyer.............................................. 23
Section 8.5. Corporate Approval..................................................... 23
Section 8.6. Third Party Approvals.................................................. 23
Section 8.7. Employment Agreements.................................................. 24
</TABLE>
-ii-
<PAGE>
<TABLE>
<S> <C>
ARTICLE 9 CLOSING............................................................................. 24
Section 9.1. Time and Place of Closing.............................................. 24
Section 9.2. Deliveries by the Company.............................................. 24
Section 9.3. Deliveries by Buyer.................................................... 25
Section 9.4. Post Closing Deliveries and Power of Attorney.......................... 25
ARTICLE 10 SURVIVAL; INDEMNIFICATION.......................................................... 25
Section 10.1. Survival............................................................... 25
Section 10.2. Indemnification........................................................ 25
Section 10.3. Procedure for Third-Party Claims....................................... 27
ARTICLE 11 OTHER AGREEMENTS....................................................... 28
Section 11.1. Effective Date......................................................... 28
Section 11.2. Arbitration............................................................ 28
ARTICLE 12 MISCELLANEOUS.......................................................... 28
Section 12.1. Integration; Severability.............................................. 28
Section 12.2. Intentionally Omitted.................................................. 28
Section 12.3. Expenses............................................................... 28
Section 12.4. Notices 29
Section 12.5. Public Announcements................................................... 30
Section 12.6. Invalidity of any Part................................................. 30
Section 12.7. Remedies............................................................... 30
Section 12.8. Assistance of Counsel.................................................. 31
Section 12.9. Governing Law and Jurisdiction......................................... 31
Section 12.10. Assignment; Amendments; Binding Agreement.............................. 31
Section 12.11. Counterparts; Facsimiles............................................... 31
</TABLE>
-iii-
<PAGE>
ACQUISITION AND MERGER AGREEMENT
--------------------------------
THIS ACQUISITION AND MERGER AGREEMENT ("Agreement") is dated as of March 9,
1999, by and among The InterCept Group, Inc., a Georgia corporation
("InterCept"), DAI Acquisition Corp., a Georgia corporation and wholly-owned
subsidiary of InterCept ("Buyer"), Direct Access Interactive, Inc., a Tennessee
corporation (the "Company"), and Jack Caldwell ("Caldwell"), Kevin Jones
("Jones"), Janet Hollingsworth ("Hollingsworth"), Steve White ("White") and
Janice Brown ("Brown"), each of whom is a resident of the State of Tennessee
(Caldwell, Jones, Hollingsworth, White and Brown, each a "Shareholder" and,
collectively, the "Shareholders").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Shareholders own 100% of the outstanding capital stock of the
Company; and
WHEREAS, subject to the terms and conditions of this Agreement, the
Shareholders, the Company, InterCept and Buyer desire and deem it in their
respective best interests that the Company be merged with and into Buyer (the
"Merger"); and
WHEREAS, the Company's issued and outstanding capital stock currently
consists of 2,000,000 shares of Common Stock, no par value (the "Company Common
Stock"); and
WHEREAS, the Shareholders own all of the outstanding shares of Company
Common Stock which constitutes all of the outstanding shares of the Company's
capital stock; and
WHEREAS, the Company's Board of Directors has recommended approval of the
Merger by the Company's shareholders and such shareholders have adopted as of
the date hereof the Merger and other transactions contemplated hereby by
unanimous written consent.
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the parties hereto agree as follows:
ARTICLE 1
THE MERGER
----------
Section 1.1. Merger Transaction. Subject to the terms and conditions
------------------
hereof, the parties hereto agree that the Company shall be merged with and into
Buyer in accordance with the applicable provisions of the Georgia Business
Corporation Act (the "GBCA") and the Tennessee Business Corporation Act (the
"TBCA"), and the separate existence of the Company shall thereupon cease. Buyer
shall be the surviving corporation in the Merger (the "Surviving Corporation")
and shall be a wholly-owned subsidiary of InterCept. Subject to the terms and
conditions hereof, the parties hereto shall take all actions necessary in
accordance with applicable
-1-
<PAGE>
law and their respective Articles of Incorporation and Bylaws to cause the
Merger to be consummated.
Section 1.2. Effective Time of the Merger. The Merger shall become
----------------------------
effective on the date and time (the "Effective Time") that the Articles of
Merger (the "Articles of Merger") in the form attached hereto as Exhibit 1.2
-----------
become effective with the Secretary of State of Georgia in accordance with the
applicable provisions of the GBCA and the Secretary of State of Tennessee in
accordance with applicable provisions of the TBCA.
Section 1.3. Terms and Conditions; Conversion of Shares. The effect of the
------------------------------------------
Merger on the Articles of Incorporation, Bylaws, directors and officers of the
Surviving Corporation, and the manner and basis of converting the shares of
capital stock of Buyer and the Company into stock, shall be as set forth in the
Plan of Merger executed by the Buyer and the Company and attached hereto as
Exhibit 1.3.
- -----------
ARTICLE 2
PURCHASE PRICE; EXCHANGE OF SHARES
----------------------------------
Section 2.1 Purchase Price; Payment for Shares. Subject to the
----------------------------------
provisions of this Article 2, at the Effective Time, by virtue of the Merger and
without any action on the part of the holders thereof, the shares of the
constituent corporations shall be converted as follows:
(a) Each share of common stock, no par value, of InterCept
("InterCept Common Stock") issued and outstanding immediately prior to the
Effective Time shall remain issued and outstanding from and after the Effective
Time.
(b) Each share of common stock, no par value, of Buyer ("Buyer Common
Stock") issued and outstanding immediately prior to the Effective Time shall
remain issued and outstanding from and after the Effective Time.
(c) Each share of Company Common Stock issued and outstanding at the
Effective Time shall be converted into only the right to receive .06849 validly
issued, fully paid, non-assessable shares of InterCept Common Stock (the
"Exchange Ratio"). No fractional shares of InterCept Common Stock will be
issued, and fractional shares to which each Shareholder would otherwise be
entitled will be disregarded. The Shareholders acknowledge and agree that the
allocation of InterCept Common Stock issued pursuant to the effectiveness of the
Merger shall be set forth on Schedule 2.1(c), subject to the provisions of the
---------------
Section 2.3 hereof and the Escrow Agreement.
(d) (i) The principal amount of $100,000 of the promissory note held
by Jack Caldwell dated June 6, 1998 (the Caldwell Note), related to the transfer
of that certain debt assumed by the Company on November 1, 1996, shall be
converted pursuant to the Exchange Ratio into only the right to receive 10,958
validly issued, fully paid, non-assessable shares of InterCept Common Stock; and
(ii) the principal amount of $30,000 payable to Caldwell from the
-2-
<PAGE>
inception of the Company shall be converted pursuant to the Exchange Ratio into
only the right to receive 3,287 validly issued, fully paid, non-assessable
shares of InterCept Common Stock.
(e) The Company has no shares held in treasury. All shares of Company
Common Stock held in the treasury of the Company, if any, immediately prior to
the Effective time shall be canceled and extinguished without any conversion
thereof and no stock or cash shall be delivered or deliverable in exchange
therefor.
Section 2.2 Rights of Former Company Shareholders. (a) At the Effective
-------------------------------------
Time, the stock transfer books of the Company shall be closed as to holders of
the Company Common Stock immediately prior to the Effective Time, and no
transfer of the Company Common Stock by any such holder shall thereafter be made
or recognized. Until surrendered for exchange in accordance with the provisions
of Section 2.2(b) of this Agreement, each certificate theretofore representing
shares of the Company Common Stock shall from and after the Effective Time
represent for all purposes only the right to receive the consideration provided
in Section 2.1 and 2.3 of this Agreement in exchange therefor.
(b) At the Closing or immediately after the Effective Time, each
holder of shares of Company Common Stock issued and outstanding at the Effective
Time shall surrender the certificate or certificates representing such shares to
InterCept or Buyer and shall promptly upon surrender thereof receive in exchange
therefor the consideration provided in Section 2.1 of this Agreement (less the
Escrow Shares delivered to the Escrow Agent pursuant to Section 2.3 hereof).
InterCept and Buyer shall not be obligated to deliver the consideration to which
any former holder of the Company Common Stock is entitled as a result of the
Merger until such holder surrenders such holder's certificate or certificates
representing the shares of Company Common Stock for exchange as provided in this
Section 2.2(b). The certificate or certificates of the Company Common Stock so
surrendered shall be duly endorsed as the Buyer or InterCept may require.
(c) At the Closing or immediately after the Effective Time Jack
Caldwell, upon his cancellation and delivery of the Caldwell Note to InterCept
or Buyer, shall promptly receive in exchange therefor the consideration provided
in Section 2.1 of this Agreement.
Section 2.3. Establishment of Escrow. (a) Ten percent (10%) of the
-----------------------
aggregate Merger consideration to be paid pursuant to Section 2.1(c) by
InterCept and Buyer shall be delivered at Closing to First Union National Bank
(the "Escrow Agent"), which shall hold such shares (the "Escrow Shares") in
escrow (the "Escrow") pursuant to the terms of the Escrow Agreement in the form
of Exhibit 2.3(a) (the "Escrow Agreement").
--------------
(b) Prior to the Effective Time on the Closing Date, InterCept, the
Escrow Agent, and the Shareholder Representative (as defined in the Escrow
Agreement) shall enter into the Escrow Agreement in order to establish terms and
conditions regarding the use of Escrow Shares to satisfy indemnification
pursuant to Article 10 of this Agreement. Approval of this Agreement by the
Shareholders whether at a meeting or by unanimous written consent
-3-
<PAGE>
shall constitute approval of the establishment of the Escrow contemplated by the
Escrow Agreement and the appointment of the Escrow Agent and the Shareholder
Representative. At the Effective Time, InterCept shall deliver to the Escrow
Agent that number of Escrow Shares in accordance with the provisions of Sections
2.1 and 2.3 of this Agreement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
AND THE SHAREHOLDERS
--------------------
The Company and the Shareholders, jointly and severally, hereby represent
and warrant to Buyer and InterCept as follows:
Section 3.1. Authorization; Organization.
---------------------------
(a) The Company is a corporation duly organized and validly existing
and in good standing under the laws of the State of Tennessee and has all
requisite corporate power and authority to own, lease or operate its properties
and assets and to carry on its business as now being conducted. The Company is
duly qualified to transact business and is in good standing in each jurisdiction
in which the nature of property owned or leased by it or the conduct of its
business requires it to be so qualified, except where the failure to do so would
not have a material adverse effect on its business, operations, properties,
assets or condition, financial or otherwise (a "Material Adverse Effect").
(b) The Company has full corporate power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to consummate
the Merger and the other transactions provided for herein and in the Articles of
Merger, the Plan of Merger, and all other documents and agreements executed in
connection herewith and therewith (collectively, the "Merger Documents"). The
Board of Directors of the Company and the Shareholders have unanimously approved
the execution, delivery and performance of this Agreement and the consummation
of the transactions provided for herein.
(c) This Agreement has been duly and voluntarily executed and
delivered by each of the Shareholders and the Company and constitutes the legal,
valid and binding obligations of each of them, enforceable in accordance with
its terms.
(d) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not conflict with or
result in a violation, breach, default, right to accelerate or increase in
obligations under the Company's Articles of Incorporation or Bylaws, any law or
statute or any order, judgment or decree by which the Company is bound by name
or any license, lease or other agreement to which the Company is a party or by
which its assets and business may be affected.
(e) The Company's Articles of Incorporation, Bylaws and stock book
and, in all material respects, its minute books are complete and correct and
contain all amendments
-4-
<PAGE>
thereto to date, a record of all corporate proceedings of the Company, and a
record of all stock issuances and transfers of the Company.
(f) The Company has no subsidiaries and never has had any
subsidiaries, and the Company does not conduct and never has conducted any
business under any trade name or other fictitious name.
(g) The Company is not a party to any joint venture or other similar
agreement or arrangement that involves any sharing of profits of the Company or
its assets or is similar to or competitive with the business.
(h) The Shareholders are the sole record and beneficial owners of the
Company Common Stock, and, except as set forth on Schedule 3.1(h), such Company
---------------
Common Stock is free and clear of all mortgages, liens, pledges, security
interests, charges, proxies, claims, restrictions, options and encumbrances of
any nature whatsoever (collectively, "Liens"). The Shareholders each have the
full legal right, power and authority to vote the shares of Common Stock held by
them. The Shareholders have not transferred or assigned any right, power or
authority with respect to the Shareholder Shares to any other person or entity.
Section 3.2. Capitalization; Structure.
-------------------------
(a) The authorized capital stock of the Company consists of (i)
10,000,000 authorized shares of Common Stock, of which 2,000,000 shares are
issued and outstanding. All of the outstanding shares of Common Stock have been
duly and validly authorized and issued, and are all fully paid and
nonassessable. No shares of the Company's capital stock have been issued in
violation of any preemptive rights, any rights of first refusal or any similar
restrictions. There are no: (i) outstanding options (including phantom options),
warrants or other rights (including preemptive rights) of any kind relating to
the sale, issuance or voting of any shares of capital stock of the Company; (ii)
securities convertible into, exchangeable for or evidencing the right to
purchase any such shares; or (iii) contracts, commitments, agreements,
understandings or arrangements of any kind relating to the issuance, transfer or
voting of such shares, any such convertible or exchangeable securities or any
such options, warrants or rights.
(b) All transactions whereby the Company repurchased, redeemed,
canceled or reacquired shares of its capital stock and the solicitation of
shareholder consents in connection with this Agreement have been effected in
compliance with all applicable corporate and securities laws, and documentation
prepared by or on behalf of the Company in connection therewith did not include
any untrue statement of any material fact or omit to state any material fact
necessary to make the statements made therein correct and complete.
Section 3.3. Financial Statements. Attached hereto as Exhibit 3.3(a) is a
-------------------- --------------
true and complete copy of the compiled financial statements of the Company at
and for the periods ending December 31, 1998 and December 31, 1997
(collectively, the "Financial Statements").
-5-
<PAGE>
The Financial Statements:
(a) have been prepared from, and are in accordance with, the books and
records of the Company;
(b) fairly present the financial position, results of operations and
cash flows of the Company as of and for the periods set forth therein; and
(c) have been prepared on a cash basis throughout the indicated
periods.
Section 3.4. Undisclosed Liabilities.
-----------------------
(a) Other than as shown on Schedule 3.4(a), the Company has no
---------------
material liabilities or obligations of any nature, known or unknown (whether
accrued, absolute, contingent or otherwise).
(b) Since the Company's inception, the Company has conducted its
business only in the normal course and has not:
(i) suffered any physical damage, destruction or casualty loss
(whether or not such loss or damage shall have been covered by insurance)
which adversely affects the properties, business or prospects of the
Company, or suffered any deterioration in the operating condition of any
physical assets of the Company, normal wear and tear excepted;
(ii) incurred, created, assumed or guaranteed any liability or
obligation of any nature (whether absolute, accrued, contingent or
otherwise), except in the ordinary course of business;
(iii) increased, or made any change in any assumptions underlying
the method of calculating, any bad debt, contingency or other reserves;
(iv) made any change in the method of valuing assets included in
the Financial Statements;
(v) made any change in any method of accounting or keeping its
books of account or accounting practices or systems of internal accounting
controls;
(vi) paid, discharged or satisfied any liability or obligation
(whether absolute, accrued, contingent or otherwise), other than by
payment, discharge or satisfaction in the ordinary course of business;
(vii) permitted or allowed any of its assets (real, personal or
mixed, tangible or intangible) to be subjected to any Lien;
-6-
<PAGE>
(viii) written down the value of any inventory or written off as
uncollectible any notes or accounts receivable, except for write-downs and
write-offs in the ordinary course of business;
(ix) canceled or waived any claims or rights, or sold,
transferred, distributed or otherwise disposed of any assets or properties,
except in the ordinary course of business;
(x) declared or paid any dividend or distribution on or in
respect of the Common Stock, or directly or indirectly redeemed, purchased,
or otherwise acquired any shares of its capital stock, any securities
convertible into or exchangeable for its capital stock, or any options,
warrants or other rights to purchase any of the foregoing, or authorized
the issuance of, or issued, sold or committed to sell (or granted any
options or rights to purchase) any additional shares of its capital stock,
or sold, issued or incurred any indebtedness;
(xi) experienced any strike, walkout, similar labor trouble or
other similar event; or
(xii) increased the salaries or other remuneration payable or to
become payable to, or made any advance (excluding advances for ordinary
business expenses) or loan to, any officer, director, employee or
shareholder (except normal merit increases made in the ordinary course of
business and consistent with past practice), or established, made any
increase in, or any addition to, other benefits (including, without
limitation, any Employee Plans, as defined in Section 3.17 below) to which
any of them may be entitled, or made any payments to any Employee Plan,
except payments in the ordinary course of business and consistent with past
practice, or entered into any agreement, arrangement or transaction with
any such person not in the ordinary course of business, or failed to make
any required payment under any Employee Plan.
Section 3.5. Properties. The Company has good and marketable title to, or
----------
holds by valid and existing lease or license, free and clear of all Liens, each
piece of real and personal property used in its business as now conducted,
except in any of the foregoing cases for such imperfections of title or Liens as
(a) are set forth in Schedule 3.5 hereof, (b) are reflected or reserved against
------------
in the Financial Statements, or (c) arise out of taxes or general or special
assessments which are not yet due and payable or are not in default and payable
without penalty or interest. The real and personal property owned, leased or
licensed by the Company constitutes all real or personal property that is
material to and necessary for the operation of its business as currently
conducted.
Section 3.6. Litigation. There are no suits, claims, investigations or
----------
proceedings pending or, to the knowledge of each Shareholder, threatened against
the Company, its officers or directors in their capacities as officers or
directors, any Shareholder or any other person or
-7-
<PAGE>
entity for whom the Shareholders or the Company may be vicariously liable at law
or in equity. The Shareholders are not subject to, and the Company is not
operating under or subject to, any order, writ, injunction or decree of any
court or governmental authority in which any of them is named.
Section 3.7. Intellectual Property. The Company conducts an active
---------------------
business using proprietary application software products and systems and
provides internet banking and integrated voice response (telephone banking)
services utilizing such products and systems (the "Software Programs"), and in
connection therewith the Company has developed certain related technical
documentation and user reference manuals (the "Documentation"). The Software
Programs and the Documentation are collectively referred to as the "Software."
The Software Programs and Documentation are listed in Schedule 3.7 hereto.
------------
(a) Ownership. Except as set forth in Section 3.9, the Company owns
---------
all patents, trademarks, service marks, trade names and copyrights (including
registrations, licenses and applications pertaining thereto) and all other
proprietary information used by the Company in the conduct of its business,
including, without limitation, the Software. Schedule 3.7(a) sets forth all
--------------
patents, trademarks, service marks, trade names and copyrights owned or used by
the Company and all applications therefor and registrations thereof.
(b) Procedures for Copyright Protection. Schedule 3.7(b) sets forth
----------------------------------- ---------------
the form and placement of the proprietary legends and copyright notices
displayed in or on the Software, including screen displays. In no instance has
the eligibility of the Software for protection under copyright law been
forfeited to the public domain.
(c) Procedures for Trade Secret Protection. The Company has never
--------------------------------------
disclosed its source code to a third party other than the consultants identified
in Schedule 3.7(c), each of which has executed a nondisclosure agreement in
---------------
favor of the Company, and discloses its source code to employees only on a need-
to-know basis in connection with the performance of their duties to the Company.
The source code and system documentation comprising the Software have at all
times been maintained by the Company in confidence, and the Company has not
taken (nor has it failed to take) any action which would result in such source
code and system documentation not being protectable as a trade secret under
applicable law.
(d) Ownership of Software. All persons who have contributed to or
---------------------
participated in the conception and development of the Software on behalf of the
Company have been full-time employees of the Company hired to prepare such works
within the scope of employment. As a consequence, the Company has all ownership
interests in the Software.
(e) Absence of Claims. Except as set forth in Schedule 3.7(e), no
----------------- ---------------
claims have been asserted by any person to rights in the Software, and no valid
basis for any such claim exists. The use of the Software by the Company and its
licensees does not infringe on the rights of any person (whether arising under
copyright, trade secret, patent, unfair competition
-8-
<PAGE>
or other state or federal laws which protect intellectual property rights). The
use by the Company of the patents, trademarks, service marks, trade names and
copyrights identified in Schedule 3.7(a) does not infringe the rights of any
---------------
person, and no claim has been asserted that the use by the Company of any of the
foregoing infringes the rights of any person. No claim has been asserted by any
person to the effect that any current or former employee of the Company has
violated the provisions of any noncompete or nondisclosure agreement with such
person, or has disclosed any proprietary information of such person to the
Company or any third party.
Section 3.8. Adequacy of Technical Documentation. The Software includes
-----------------------------------
the source code, system documentation, statements of principles of operation,
and schematics for all Software Programs, as well as any pertinent commentary or
explanation that may be reasonably necessary to render such materials
understandable and usable by a trained computer programmer. The Software also
includes any program (including compilers), workbenches, tools, and higher level
language used for the development, maintenance and implementation of a Software
Program.
Section 3.9. Third-Party Components in Software. The Company has validly
----------------------------------
obtained the right and license to use, copy, modify and distribute any third-
party programming and materials contained in the Software pursuant to the
contracts identified in Schedule 3.9, subject to no further license fee, royalty
------------
or other payment obligations, other than software maintenance payments
customarily associated therewith. The Software contains no other programming or
materials in which any third party may claim superior, joint or common
ownership, including any right or license. The Software does not contain
derivative works of any programming or materials not owned in their entirety by
the Company.
Section 3.10. Third-Party Interests or Marketing Rights in Software. The
-----------------------------------------------------
Company has not granted, transferred, or assigned any right or interest in the
Software to any person, except pursuant to the contracts identified in Schedule
--------
3.10. There are no contracts, agreements, licenses, commitments or arrangements
- ----
in effect with respect to the marketing, distribution, licensing or promotion of
the Software by any independent salesperson, distributor, sublicensor or other
remarketer or sales organization, except as set forth in Schedule 3.10.
-------------
Section 3.11. Licenses. The Company has all government licenses, consents,
--------
permits, franchises, approvals and other governmental authorizations
("Licenses") required for its business as currently conducted. No proceeding is
pending or threatened seeking the revocation or suspension of any License.
Section 3.12. Compliance with Laws. The Company's business has been
--------------------
operated and maintained in all material respects in compliance with all
statutes, laws, regulations, ordinances, rules, judgments, orders or decrees
applicable thereto. There is not outstanding and, to the Shareholders' best
knowledge, there are no threatened orders, writs, injunctions, or decrees of any
court, governmental agency, or arbitration tribunal against Company affecting,
-9-
<PAGE>
involving, or relating to its business or assets. The Company is not in
violation of any applicable federal, state, or local law, regulation, ordinance,
zoning requirement, governmental restriction, order, judgment, or decree
affecting, involving, or relating to its business or assets except where
noncompliance has no Material Adverse Effect on the Company (including under
ownership by InterCept) or the Company's assets, and neither the Company nor any
Shareholder has received any notices of any allegation of any such violation.
The foregoing shall be deemed to include laws and regulations relating to the
patent, copyright, and trademark laws, state trade secret and unfair competition
laws of the U.S. and foreign jurisdictions, environmental laws and to all other
applicable laws, including equal opportunity, wage and hour, and other
employment matters, and antitrust and trade regulation laws.
Section 3.13. Insurance. Schedule 3.13 lists all policies of casualty,
--------- -------------
liability, workers' compensation, life and other forms of insurance by which the
Company is currently insured or has been insured since inception of the Company
and includes for each policy in effect the period through which premiums have
been paid. All of the policies indicated as in force in Schedule 3.13 are in
-------------
full force and effect and no notice of cancellation has been received with
respect thereto and are sufficient for compliance in all material respects with
all requirements of law and all agreements to which the Company is a party.
Section 3.14. Material Contracts. Schedule 3.14 lists the following
------------------ -------------
agreements (including, without limitation, leases, purchase contracts and
commitments) to which the Company is a party or by which the Company or any of
its properties is bound:
(a) all contracts which involve future obligations on the part of the
Company in an aggregate amount during any 12 month period exceeding $10,000 in
the case of purchase orders and commitments or $5,000 in the case of any other
type of contract;
(b) all joint ventures, sales agency, sales representative or
distributorship, broker, franchise, license or similar contracts;
(c) all real estate leases;
(d) all notes, bonds, mortgages, security agreements, guarantees and
other agreements and instruments for or relating to any lending by the Company
in any amount (exclusive of advances to employees for expenses in the ordinary
course of business) or any borrowing of $5,000 or more;
(e) all powers of attorney, guarantees, suretyships or similar
agreements given by the Company; and
(f) all other written material agreements to which any Shareholder is
a party or to which the Shareholder's Company Common Stock may be or become
subject.
-10-
<PAGE>
Each contract set forth in Schedule 3.14 is valid, binding and
enforceable in accordance with its terms, and neither the Company nor any other
party to any such contract is in material breach or material default of the
express written terms of such contracts.
Section 3.15. Brokers, Finders, etc. Neither the Shareholders nor the
---------------------
Company have employed any broker, finder, consultant or other intermediary in
connection with the transactions contemplated by this Agreement who might be
entitled to a fee or commission in connection with such transactions.
Section 3.16. Taxes.
-----
(a) Filing of Tax Returns. Except as set forth on Schedule 3.16(a),
--------------------- ----------------
the Company has timely filed with the appropriate taxing authorities all returns
(including, without limitation, information returns and other material
information) in respect of Taxes (as hereinafter defined) required to be filed
through the date hereof. All such returns and other information filed are
complete and accurate in all material respects.
(b) Payment of Taxes. All Taxes that are due and payable by the
----------------
Company (whether or not shown on any return) before the date hereof have been
paid. To the extent required by GAAP, an adequate reserve has been established
on the Financial Statements for all unpaid Taxes payable by the Company with
respect to all periods through the date of such Financial Statements, and the
Company is not required under GAAP to reserve for any liability for Taxes in
excess of the reserves so established. No portion of the reserve established on
the Financial Statements for Taxes reflects any contingent liability or other
potential liability for Taxes that are due and payable, or that may become due
and payable in the future, as a result of an audit, amended return or otherwise.
(c) Audit History. Except as set forth in Schedule 3.16(c):
------------- ----------------
(i) no deficiencies for Taxes have been claimed, proposed or
assessed by any taxing or other governmental authority against the Company
which have not been paid or otherwise finally settled and resolved;
(ii) the Company has not waived the statute of limitations in
respect of any Tax or agreed to any extension of time with respect to the
assessment of any Tax; and
(iii) the Company is not currently under audit with respect to
Taxes by any governmental authority, and no such authority in a
jurisdiction where the Company does not file Tax returns or pay Taxes has
claimed that the Company is required to file Tax returns or otherwise is
subject to taxation.
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<PAGE>
(d) Withholding Taxes. The Company has withheld and paid all Taxes
-----------------
required to have been withheld and paid in connection with amounts paid or owing
to any employee, independent contractor, creditor, shareholder or other third
party.
(e) Tax Sharing or Allocation Agreements. The Company is not a party
------------------------------------
to or bound by any Tax indemnity, Tax sharing or Tax allocation agreement.
(f) Prior Affiliated Groups. The Company has never been a member of
-----------------------
an affiliated group of corporations, within the meaning of Section 1504 of the
Code (as hereinafter defined).
(g) Taxes. For purposes of this Agreement, "Taxes" shall mean all
-----
federal, state, local, foreign and other taxes, assessments, or other
governmental charges, including, without limitation, income, estimated income,
business, occupation, franchise, property, sales, gross receipts, excise,
employment, or withholding taxes, including interest, penalties and additions in
connection therewith.
Section 3.17. Pension and Employee Benefit Plans.
----------------------------------
(a) For purposes of this Agreement, the terms set forth below shall
have the following meanings:
(i) "Code": The Internal Revenue Code of 1986, as amended,
----
together with the regulations promulgated thereunder;
(ii) "Employee Plans": All plans, programs, arrangements,
--------------
practices or contracts pursuant to which the Company provides or is
obligated to provide or has within the last six years been obligated to
provide, directly or indirectly, benefits or compensation to or on behalf
of employees or former employees of the Company, whether formal or
informal, whether or not written, whether or not terminated, including but
not limited to the following:
(A) Executive Arrangements -- any bonus, incentive
compensation, stock option, deferred compensation, commission,
severance, golden parachute or other executive compensation plan,
employment contract, arrangement or practice;
(B) ERISA plans -- any Pension Plan or Welfare Plan, as
defined in Section 3 of ERISA, including but not limited to any multi-
employer plan, defined benefit pension plan, profit sharing plan,
savings or thrift plan, stock bonus plan, employee stock ownership
plan, or any plan, fund, program, arrangement or practice providing
for medical hospitalization, accident, sickness, disability, severance
pay or life insurance benefits; and
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<PAGE>
(C) Other Employee Fringe Benefits -- any stock purchase,
vacation, scholarship, day care, prepaid legal services, severance
pay, or fringe benefit plan, program, arrangement, contract, or
practice;
(iii) "ERISA": The Employee Retirement Income Security Act of
-----
1974, as amended, and the rulings and regulations thereunder; and
(iv) "ERISA Affiliate": A corporation that is or was a member
---------------
of a controlled group of corporations with the Company or a trade or
business that is under common control with the Company or which together
with the Company is treated as a single employer, in each case within the
meaning of Section 414 of the Code.
(b) Schedule 3.17 lists or describes all Employee Plans maintained or
-------------
contributed to by the Company pursuant to which the Company provides benefits or
compensation to or on behalf of employees or former employees of the Company.
The Company has no ERISA Affiliates.
(c) Each Employee Plan (and related trust or funding vehicle, if any)
has at all times been administered and maintained in accordance with its terms
and the applicable law including, without limitation, the filing of Forms 5500
and all other applicable reports.
(d) To the extent any Employee Plan is subject to approval by any
governmental agency, such Employee Plan has received such approval and such
approval is current.
(e) The Company is not subject to, and no facts exist which could
subject the Company to, any liability whatsoever which is directly or indirectly
related to any Employee Plan, including, but not limited to, liability for
benefits payments or related claims (other than the ordinary claims by
participants or beneficiaries which have been made for benefits called for under
the terms of such Employee Plans), any liability for any Tax or related penalty
under the Code, or liability for any damages or penalties arising under Title I
or Title IV of ERISA.
(f) No Employee Plan has engaged in or been a party to any
"prohibited transaction" (as defined in ERISA or the Code), and the Company has
not incurred, and does not reasonably expect to incur, any liability under
Chapter 43 of the Code or Section 502 of ERISA with respect to any Employee
Plan.
(g) No ERISA Welfare Plan provides benefits to former employees of
the Company, other than continuation coverage required by Section 4980B of the
Code and Section 601 of ERISA.
(h) There are no pending or threatened claims, suits or other
proceedings with respect to any Employee Plan other than the ordinary claims by
participants or
-13-
<PAGE>
beneficiaries which have been made for benefits called for under the terms of
such Employee Plans and which will be paid under such Employee Plans in the
ordinary course.
(i) There is no requirement that the Buyer or InterCept make any
further contributions to any Employee Plan after the date of this Agreement, and
each Employee Plan which provides benefits to or on behalf of employees or
former employees of the Company may be terminated by the Buyer or InterCept in
its sole discretion without liability of any kind or description whatsoever to
Buyer, InterCept or any other person, entity or governmental agency.
(j) The Company is not a party to or obligated under any agreement,
plan, contract or other arrangements that will result, separately or in the
aggregate, in the payment of any "excess parachute payment" within the meaning
of Section 28OG of the Code.
Section 3.18. Labor and Employment Matters. Except to the extent set forth
----------------------------
in Schedule 3.18:
-------------
(a) the Company is not a party to any collective bargaining
agreements;
(b) the Company is in compliance in all material respects with all
applicable laws respecting employment and employment practices, terms and
conditions of employment, wages and hours, occupational safety and health and is
not engaged in any unfair labor or unfair employment practices;
(c) there is no unfair labor practice, charge or complaint or any
other matter against or involving the Company pending or, to the knowledge of
the Shareholders, threatened before the National Labor Relations Board or any
court of law;
(d) there is no labor strike, dispute, slowdown or stoppage actually
pending or, to the knowledge of the Shareholders, threatened against the
Company, and the Company has not experienced any organized work stoppage,
organizational drive or other labor difficulty since its inception;
(e) there are no charges, investigations, administrative proceedings
or formal complaints of discrimination (including discrimination based upon sex,
age, marital status, race, national origin, sexual preference, handicap or
veteran status) pending or, to the knowledge of the Shareholders, threatened
before the Equal Employment Opportunity Commission or any federal, state or
local agency or court against the Company, and to the knowledge of the
Shareholders, no basis for any such claim exists; and
(f) there are no citations, investigations, administrative
proceedings or formal complaints of violations of local, state or federal
occupational safety and health laws pending, or to the knowledge of the
Shareholders, threatened before the Occupational Safety
-14-
<PAGE>
and Health Review Commission or any federal, state or local agency or court
against the Company.
(g) Schedule 3.18(g) lists all employment, consulting, loan-out,
----------------
retainer or other contracts or agreements involving any person employed by the
Company as an employee or independent contractor to which the Company is a party
or by which it is bound. The Company is not and no other party to any such
agreement or contract is in default with respect to any material term or
condition thereof (including the making of contributions and recording services
therefor), nor has any event occurred which through the passage of time or the
giving of notice, or both, would constitute a default thereunder or would cause
the acceleration of any obligation of any party thereto.
(h) Schedule 3.18(h) lists the names and current compensation levels
----------------
of all employees and consultants of the Company.
Section 3.19. Environmental Matters.
---------------------
(a) The operations of the Company comply, and have complied, in all
respects with all applicable environmental laws.
(b) The Company has obtained all environmental, health and safety
permits, approvals, licenses and other authorizations necessary for the
operation of the Company's business, all of which are valid and in good standing
and are not subject to any modification or revocation proceeding, and the
Company is in compliance in all respects with all terms and conditions thereof.
(c) The Company has not received any written notice of any pending or
threatened investigation, proceeding or claim to the effect that it is or may be
liable to any person, or responsible or potentially responsible for the costs of
any remedial or removal action or other cleanup costs, as a result of
noncompliance with any applicable environmental laws or arising out of the
presence, generation, storage or disposal of hazardous waste, including
liability under the Comprehensive Environmental Response, Compensation and
Liability Act, as amended, or any state superfund law, and there is no past or
present action, activity, condition or circumstance that could be expected to
give rise to any such liability on the part of the Company to any person, or for
any such cleanup costs.
Section 3.20. Agreements Affecting Competition. The Company is neither a
--------------------------------
party to nor bound by any agreement which presently restricts or precludes the
Company or any present or future affiliate of the Company from conducting any
business anywhere in the world, or upon the occurrence of any event, the giving
of notice or the passage of time, by its terms would have such an effect.
-15-
<PAGE>
Section 3.21. Transactions with Related Parties. Except a set forth on
---------------------------------
Schedule 3.21, in connection with customary transactions in the ordinary course
- -------------
of business, no officer, director or shareholder of the Company or any relative
or affiliate thereof:
(a) owes money to the Company;
(b) has any claim against the Company;
(c) has any interest in any property or assets used by the Company in
its business;
(d) has any benefits which are contingent on the transactions
contemplated by this Agreement, other than as stated herein;
(e) has any agreement with the Company that is not terminable by the
Company without penalty or notice;
(f) has any agreement providing severance benefits or other benefits
(which are conditioned upon a change of control) after the termination of
employment of such employee regardless of the reason for such termination of
employment; or
(g) has any agreement or plan, any of the benefits of which will be
increased, vested or accelerated by the occurrence of any of the transactions
contemplated by this Agreement.
Section 3.22. Major Vendors and Customers. Schedule 3.22 sets forth a
--------------------------- -------------
list of each licensor, developer, remarketer, distributor and supplier of
property or services to, and each licensee, end-user or customer of, the
Company, to whom the Company paid or billed in the aggregate in excess of $5,000
during calendar year 1997 or 1998.
Section 3.23. Absence of Certain Commercial Practices. Since the Company's
---------------------------------------
inception, neither the Company, any of its directors, officers, agents,
affiliates or employees, nor any other person acting on behalf of the Company or
any shareholder, has (a) given or agreed to give any gift or similar benefit
having a value of $1,000 or more to any customer, supplier or governmental
employee or official or any other person, for the purpose of directly or
indirectly furthering the business of the Company, (b) used any corporate funds
for contributions, payments, gifts or entertainment, or made any expenditures
relating to political activities to government officials or others in violation
of any applicable laws, or (c) received any unlawful contributions, payments,
gifts or expenditures in connection with the business of the Company.
Section 3.24. Accounts Receivable. Schedule 3.24 is a complete and
------------------- -------------
accurate schedule of the accounts receivable of the Company as of March 1, 1999,
as reflected in the balance sheet as of that date, included in the Financial
Statements, together with an accurate
-16-
<PAGE>
aging of these accounts. These accounts receivable, and all accounts receivable
of the Company created after that date, arose from valid transactions in the
ordinary course of business and will be good and collectible at the recorded
amounts thereof. No portion of the accounts receivable is subject to
counterclaim or setoff.
Section 3.25. Disclosure. No representation, warranty, or statement made
----------
by the Company or any Shareholder in this Agreement or in any document or
certificate furnished or to be furnished to Buyer and InterCept pursuant to this
Agreement contains or will contain any untrue statement or omits or will omit to
state any fact necessary to make the statements contained herein or therein not
misleading. All facts known or reasonably available to the Company and all
Shareholders that are material to the financial condition, operation, or
prospects of the Company's business and assets have been disclosed to Buyer and
InterCept.
Section 3.26. Year 2000. The Software is designed to be used after
---------
February 28, 1999, and during, and after the calendar year 2000 AD, and the
Software will operate during each such time period without error relating to
date data, specifically including any error relating to, or the product of, date
data which represents or references different centuries or more than one century
or any leap year (the "Year 2000 issue"). The Company's internal systems and
software and the network connections it maintains are adequately programmed to
address the Year 2000 issue. Copies of any certificates or warranties made by
or given to the Company regarding the Year 2000 issue are attached to this
Agreement as Schedule 3.26.
-------------
Section 3.27. Shareholders' Additional Representations. To induce the
----------------------------------------
Buyer and InterCept to enter into this Agreement, each Shareholder represents
and warrants to the Buyer and InterCept as follows:
(a) Such Shareholder has the right, power, capacity and authority to
execute, deliver and perform this Agreement and to consummate the transactions
contemplated hereby; this Agreement has been duly and validly executed and
delivered by such Shareholder and is entered into voluntarily without promise or
benefit other than as set forth herein; and this Agreement constitutes such
Shareholder's legal, valid and binding obligation, enforceable in accordance
with its terms.
(b) Such Shareholder owns, of record and beneficially, valid title to
his respective Shareholder Shares, and such shares are free and clear of all
Liens, Claims (as defined below) and encumbrances. Other than the Company Common
Stock owned by each Shareholder, such Shareholder does not own, beneficially or
of record, or have any right to acquire, now or in the future, any shares of
Common Stock or other securities of any kind of the Company. The execution,
delivery and performance of this Agreement by such Shareholder will not conflict
with or result in a breach of any agreement, instrument, order, injunction,
decree, statute, rule or regulation applicable to such Shareholder or any of its
material assets. The execution, delivery and performance of this Agreement by
such Shareholder does not require the consent or approval of any third party or
governmental agency or authority which has not been obtained (and a copy of
which is attached hereto).
-17-
<PAGE>
(c) Each Shareholder represents and warrants that the Company
generally has good relationships with its customers and that such Shareholder
has no reason to believe that any of those customers would not be agreeable to
consider entering into item or data processing contracts with Buyer or its
affiliates.
(d) Each Shareholder hereby represents and warrants that he or she is
not aware as of the date hereof of any claim (as defined by Section 101 of the
United States Bankruptcy Code, as amended), debts, demands, actions, causes of
action, suits, accounts, damages and liabilities of any name and nature that
such Shareholder may have, or which such Shareholder is aware may arise in the
future against InterCept, Buyer or any of their subsidiaries, officers,
directors, employees, shareholders, attorneys, agents, successors, assigns,
representatives or affiliates.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER AND INTERCEPT
-----------------------------------------------------
The Buyer and InterCept hereby represent and warrant to the Company and the
Shareholders as follows:
(a) Corporate Existence. Buyer is a corporation duly organized,
-------------------
validly existing and in good standing under the laws of the State of Georgia.
InterCept is a corporation duly organized, validly existing and in good standing
under the laws of the State of Georgia.
(b) Corporate Power and Authorization. Buyer and InterCept have the
---------------------------------
corporate power, authority and legal right to execute, deliver and perform this
Agreement. The execution, delivery and performance of this Agreement by Buyer
and InterCept have been duly authorized by all necessary corporate action. This
Agreement has been duly executed and delivered by Buyer and InterCept and
constitutes the legal, valid and binding obligation of Buyer and InterCept
enforceable against them in accordance with its terms.
(c) Validity of Contemplated Transactions, etc. The execution,
------------------------------------------
delivery and performance of this Agreement by Buyer and InterCept does not and
will not violate, conflict with or result in the breach of any term, condition
or provision of, or require the consent of any other party to, (a) any existing
law, ordinance, or governmental rule or regulation to which Buyer or InterCept
is subject, (b) any judgment, order, writ, injunction, decree or award of any
court, arbitrator or governmental or regulatory official, body or authority
which is applicable to Buyer or InterCept, (c) the charter documents or By-Laws
of, or any securities issued by, Buyer or InterCept, or (d) any mortgage,
indenture, agreement, contract, commitment, lease, plan or other instrument,
document or understanding, oral or written, to which Buyer or InterCept is a
party or by which either is otherwise bound. Except as aforesaid, no
authorization, approval or consent of, and no registration or filing with, any
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<PAGE>
governmental or regulatory official, body or authority is required in connection
with the execution, delivery and performance of this Agreement by Buyer or
InterCept.
(d) Broker's or Finder's Fees. Neither InterCept nor Buyer has
-------------------------
authorized any person to act as broker, finder, or in any other similar capacity
in connection with the transactions contemplated by this Agreement.
ARTICLE 5
INTENTIONALLY OMITTED
ARTICLE 6
COVENANTS AND AGREEMENTS OF THE PARTIES
---------------------------------------
Section 6.1 Shareholder Approved by Unanimous Consent. By signing this
-----------------------------------------
Agreement, each Shareholder agrees that he or she is evidencing his or her
approval in all respects to the transactions contemplated by this Agreement.
Each Shareholder will use his or her best efforts to obtain unanimous approval
of the Merger and shall not take any action to encourage any shareholder of the
Company to vote its shares against the Merger or to assert dissenter's rights.
The Company will furnish to each Shareholder a notice of his rights to dissent
from the Merger under the TBCA and to demand an appraisal of his shares of
Company Common Stock and shall provide InterCept with a copy of such notice
prior to the Closing Date. Each of the Shareholders (i) hereby waives his or
her dissenters' appraisal and other rights, if any, to object to the Merger and
the transaction contemplated by this Agreement under the TBCA.
Section 6.2. Affiliates. On the Closing Date, the Company shall deliver
----------
to InterCept copies of letter agreements, each substantially in the form of
Exhibit 6.2, executed by all directors, executive officers, the Shareholders and
- -----------
by any other person who is an "affiliate" of the Company for purposes of Rule
145 under the Securities Act of 1933 (the "1933 Act") providing that such person
will not sell, pledge, transfer or otherwise dispose of any shares of Company
Common Stock held by such "affiliate" and the shares of InterCept Common Stock
to be received by such "affiliate" in the Merger: (i) in the case of shares of
InterCept Common Stock only, except in compliance with the applicable provisions
of the 1933 Act and the rules and regulations thereunder; and (ii) during the
periods during which any such sale, pledge, transfer or other disposition would,
under GAAP or the rules, regulations or interpretations of the SEC, disqualify
the Merger for pooling-of-interest accounting treatment, except as permitted by
Staff Accounting Bulletin No. 76 issued by the Securities and Exchange
Commission (the "SEC"). The certificates of InterCept Common Stock issued to
"affiliates" of the Company will bear an appropriate legend reflecting the
foregoing and InterCept shall be entitled to issue stop orders to the transfer
agent for InterCept Common Stock consistent with the terms of such letters. The
parties understand that such periods in general encompass the period commencing
30 days prior to the Merger and ending at the time of the publication of
financial results covering at least 30 days of combined operations of InterCept
and the Company within the meaning of Section 201.01 of the SEC's Codification
of Financial Reporting Policies.
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<PAGE>
Section 6.3. Pooling of Interests. Each party shall use all commercially
reasonable efforts and shall in good faith attempt to cause the Merger to
qualify for pooling-of-interests accounting treatment. Each party represents and
warrants that its past transactions status conform to the conditions set forth
in Exhibit 6.3 hereto and covenants that it has no planned transactions that
-----------
contrary to any of the conditions set forth in Exhibit 6.3.
-----------
Section 6.4. Employee Benefit Plans
Notwithstanding anything in this Agreement to the contrary, the Company and
the Shareholders do hereby agree and covenant that, (i) as of the Closing, the
Company shall sponsor no Benefit Plan or Applicable Benefit Plan (defined
hereinafter); and (ii) as of the Closing, the Company shall not have any
liability, or responsibility to act or omit to act in any regard, in relation to
any Benefit Plan or Applicable Benefit Plan. Shareholders shall indemnify the
Company (or Buyer as its successor) for the payment of all costs of coverage,
administrative, and other fees, costs, expenses and other charges incurred by
Buyer or by InterCept related to each and every "group health plan" (within the
meaning of Internal Revenue Code of 1986, as amended ("Code"), section
4980B(g)(2)) relating to the Company with respect to coverage required under the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, for or with
respect to employees (and their applicable dependents) of the Company, including
those whose employment terminated or is terminated, for any reason or no reason,
at any time on or before the Closing. Intercept, Buyer and their respective
legal counsel shall be entitled to obtain any and all documents and other
information (whether written or unwritten), from any and all persons and
entities, relating to one or more of the Applicable Benefit Plans. For purposes
of this Section 6.4, the phrase "Benefit Plan" shall include, without
limitation, (i) each pension, retirement, profit-sharing, cash or deferred,
deferred compensation, stock option, phantom stock, stock appreciation rights,
employee stock ownership, severance pay, vacation, paid time off, education-
reimbursement, bonus, incentive, and other or similar plan, program or other
arrangement, (ii) each cafeteria, Section 125, medical, vision, dental,
disability, death benefit, life insurance, health and/or accident plan, program
or other arrangement, (iii) each written or unwritten employee or other or
similar program, arrangement, agreement or understanding, whether arrived at
through collective bargaining or otherwise, and (iv) each other employee benefit
plan, voluntary employees' beneficiary association, fringe benefit plan, and
other or similar plan, program or other arrangement, agreement or understanding,
including, without limitation, each "employee benefit plan," as that term is
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended. The phrases "Applicable Benefit Plan" and "Applicable Benefit Plans"
shall include, without limitation, (i) each and every Benefit Plan which, at any
time up to the Closing, was sponsored by, was contributed to or required to be
contributed to by, or was otherwise connected with, the Company.
Section 6.5. Agreements regarding Employee Benefits. Immediately following
the Effective Time, InterCept or one of its subsidiaries (the "InterCept
Companies") shall provide to those persons who were employees of the Company at
the Effective Time
-20-
<PAGE>
employee benefits under employee benefit plans of the InterCept Companies on
terms and conditions which are comparable to those currently provided by the
InterCept Companies to their similarly situated employees. Company employees
will be given credit for employment with the Company, for purposes of
eligibility only, related to participation under Intercept's 401(k) Plan.
Coverage of Company employees under the InterCept health plan will not be
limited by pre-existing conditions to any greater extent than is applicable to
the Company's employees under the Company health plan immediately prior to the
Effective Time. Nothing contained herein shall be construed to entitle any
person not a party hereto to any third party benefit or other rights with
respect to Company employees or their dependents.
ARTICLE 7
CONDITIONS PRECEDENT TO BUYER'S AND INTERCEPT'S OBLIGATIONS
-----------------------------------------------------------
The obligations of Buyer and InterCept to consummate the transactions
contemplated by this Agreement are subject to the satisfaction, at or before the
Closing, of all the conditions set forth below (with the effectiveness of all
agreements listed below being expressly conditioned upon consummation of the
Merger. The Buyer and InterCept may waive any or all of these conditions in
whole or in part without prior notice; provided, however, that except to the
-------- -------
extent, if any, that such waiver constitutes an election of remedies under
Georgia law, no such waiver of a condition shall constitute a waiver by the
Buyer or InterCept of any of their other rights or remedies, at law or in
equity, if the Company or the Shareholders shall be in default of any of their
representations, warranties or covenants under this Agreement.
Section 7.1. Accuracy of Representations. The representations and
---------------------------
warranties of the Company and the Shareholders in this Agreement or any Schedule
hereto or in any written statement delivered by them at the Closing to the Buyer
or InterCept under this Agreement shall be true in all material respects as of
the date hereof.
Section 7.2. Performance of Company and Shareholders. The Company and the
---------------------------------------
Shareholders shall have performed, satisfied and complied with all covenants,
agreements and conditions required by this Agreement to be performed or complied
with by them on or before the Closing Date.
Section 7.3. Material Changes. During the period from December 31, 1998 to
----------------
the Closing Date, there shall not have been any material adverse change in the
financial condition or the results of operations of the Company, and the Company
shall not have sustained any material loss or damage to its assets, whether or
not insured, that materially affects its ability to conduct a material part of
its business.
Section 7.4. Absence of Litigation. No action, suit or proceeding before
---------------------
any court, governmental body or authority, other than routine regulatory and tax
inspections, audits and reviews, pertaining to the transactions contemplated by
this Agreement or its consummation, shall have been instituted or threatened.
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<PAGE>
Section 7.5. Certificates of the Company and Shareholders. The Buyer and
--------------------------------------------
InterCept shall have received certificates, dated the Closing Date, signed by
the Company and the Shareholders, certifying that the conditions specified in
Sections 7.1, 7.2, 7.3 and 7.4 have been fulfilled.
Section 7.6. Corporate Approval. The execution and delivery of this
------------------
Agreement by the Company, and the performance of its covenants and obligations
hereunder, shall have been duly authorized by the Company's Board of Directors
and its shareholders, and the Buyer and InterCept shall have received copies of
all resolutions or consents pertaining to those authorizations, certified by the
Secretary of the Company.
Section 7.7. Approvals. This Agreement and the transactions contemplated
---------
hereby shall have received all approvals, consents, authorizations and waivers
from governmental and regulatory agencies and other third parties (including
lenders and lessors) required to consummate the transactions contemplated
hereby, which, either individually or in the aggregate, if not obtained would
have a Material Adverse Effect.
Section 7.8. Employment Agreements. At or prior to Closing, Caldwell and
---------------------
Hollingsworth shall have entered into employment agreements substantially in the
form attached hereto as Exhibit 7.8, the effectiveness of which shall be
-----------
expressly contingent upon the occurrence of Closing.
Section 7.9. Opinion of Counsel. InterCept shall have received an
------------------
opinion of Phillips, Howard and Grubb, counsel to the Company, dated the Closing
Date, in form and substance reasonably satisfactory to the Company, covering the
matters set forth on Exhibit 7.9.
-----------
Section 7.10. Pooling. Management of InterCept and Buyer shall have
-------
reasonably satisfied itself on or prior to Closing that the Merger will qualify
for pooling-of-interests accounting treatment.
Section 7.11. Escrow Agreement. The Shareholders shall have executed
----------------
and delivered the Escrow Agreement in the form attached hereto as Exhibit
-------
2.3(a).
- ------
Section 7.12. Cancellation Agreements. At Closing, Caldwell shall
-----------------------
deliver to InterCept any and all documents, agreements and certificates
evidencing (i) the cancellation of the note in referenced in Section 2.1(d)(i),
and (ii) the cancellation of the principal amount of $30,000 due to Caldwell
from the inception of the Company referenced in Section 2.1(d)(ii).
Section 7.13. Registration Rights Agreement. The Company shall have
-----------------------------
executed and delivered a Registration Rights Agreement in favor of the
Shareholders providing for "piggyback" registration rights only in the form
attached hereto as Exhibit 7.13.
------------
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<PAGE>
Section 7.14. Nonsolicitation and Confidentiality Agreements. At or prior
----------------------------------------------
to Closing, Jones and Jarra Keskessa shall have entered into a nonsolicitation
and confidentiality agreement substantially in the form attached hereto as
Exhibit 7.14, the effectiveness of which shall be expressly contingent upon the
- ------------
occurrence of Closing.
ARTICLE 8
CONDITIONS PRECEDENT TO THE COMPANY'S AND
-----------------------------------------
THE SHAREHOLDER'S OBLIGATIONS
-----------------------------
The obligations of the Company and the Shareholders to consummate the
transactions contemplated by this Agreement are subject to the satisfaction, at
or before the Closing, of all the conditions set forth below. The Company and
the Shareholders may waive any or all of these conditions in whole or in part
without prior notice; provided, however, that no such waiver of a condition
-------- -------
shall constitute a waiver by the Company or the Shareholders of any of their
other rights or remedies, at law or at equity, if the Buyer or InterCept shall
be in default of any of their representations, warranties or covenants under
this Agreement.
Section 8.1. Accuracy of Representations. The representations and
---------------------------
warranties by the Buyer and InterCept in this Agreement or in any written
statement delivered to the Company under this Agreement shall be true in all
material respects as of the date hereof and on and as of the Closing Date as
though made at that time.
Section 8.2. Performance of Buyer and InterCept. The Buyer and InterCept
----------------------------------
shall have performed, satisfied and complied with all covenants, agreements and
conditions required by this Agreement to be performed or complied with by it on
or before the Closing Date.
Section 8.3. Absence of Litigation. No action, suit or proceeding before
---------------------
any court, governmental body or authority, other than routine regulatory and tax
inspections, audits and reviews, pertaining to the transactions contemplated by
this Agreement or its consummation, shall have been instituted or threatened.
Section 8.4. Certificates of the Buyer. The Company shall have received a
-------------------------
certificates, dated the Closing Date, signed by the Buyer's and InterCept's
president or vice president and secretary or assistant secretary, certifying
that the conditions specified in Sections 8.1, 8.2 and 8.3 have been fulfilled.
Section 8.5. Corporate Approval. The execution and delivery of this
------------------
Agreement by the Buyer and InterCept and the performance of their respective
covenants and obligations hereunder, shall have been duly authorized by the
Board of Directors of Buyer and InterCept and the sole shareholder of Buyer. The
Shareholders and the Company shall have received copies of all resolutions
pertaining to these authorizations, certified by their respective corporate
secretaries.
Section 8.6. Third Party Approvals. This Agreement and the transactions
---------------------
contemplated hereby shall have received all approvals, consents, authorizations
and waivers from
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<PAGE>
governmental and regulatory agencies required to consummate the transactions,
which, either individually or in the aggregate, if not obtained would have a
Material Adverse Effect on the financial condition, results of operation or
business of the Company.
Section 8.7. Employment Agreements. At or prior to Closing, Caldwell and
---------------------
Hollingsworth and Buyer shall have entered into employment agreements
substantially in the form attached hereto as Exhibit 7.8, the effectiveness of
---
which shall be expressly contingent upon the occurrence of Closing.
ARTICLE 9
CLOSING
-------
Section 9.1. Time and Place of Closing. The closing ("Closing") of the
-------------------------
transactions contemplated hereunder shall take place as soon as practicable on
execution and delivery of this Agreement on such date as the parties shall
agree, but in no event later than March 9, 1999 ("Closing Date"), and effective
as of the Effective Time. The Closing shall take place at the offices of Nelson
Mullins Riley & Scarborough, L.L.P., 999 Peachtree Street, Suite 1400, Atlanta,
Georgia 30309 at 10:00 a.m., Atlanta Time, on the Closing Date.
Section 9.2. Deliveries by the Company. At the Closing, the Company and
-------------------------
the Shareholders shall deliver to Buyer and InterCept:
(a) stock certificates evidencing all of the shares of Company Common
Stock, canceled or duly endorsed in blank or with stock powers endorsed in
blank;
(b) Articles of Incorporation of the Company, certified by the
Secretary of State of the State of Tennessee, and a true and correct copy of the
Bylaws of the Company, certified as of the Closing Date by the Secretary of the
Company;
(c) good standing certificates relating to the Company from the State
of Tennessee and each other jurisdiction in which the Company is qualified to
conduct business;
(d) the corporate seal and all stock ledgers and minute books of the
Company in existence as of the Closing, accompanied by a certificate of the
Secretary of the Company certifying that the stock ledgers and minutes books
are, to the best of his information and belief, true, correct and complete as of
the Closing Date;
(e) the Merger Documents, including the Articles of Merger and Plan of
Merger, duly executed by the Company;
(f) a Secretary's Certificate attesting to the incumbency of the
officers of the Company executing this Agreement and the other certificates and
agreements delivered by the Company at the Closing; and
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<PAGE>
(g) the documents and instruments referred to in Article 7 hereof.
Section 9.3. Deliveries by Buyer and InterCept. At the Closing, Buyer and
---------------------------------
InterCept shall deliver to the Company:
(a) a Secretary's Certificate attesting to the incumbency of the
officers of Buyer and InterCept executing this Agreement and the other
certificates and agreements delivered by Buyer and InterCept at the Closing;
(b) resolutions of the Board of Directors of Buyer and the acquisition
committee of the Board of Directors of InterCept authorizing the execution and
delivery of this Agreement and the performance of the transactions contemplated
hereby, certified by the respective Secretary of Buyer and InterCept;
(c) the Merger Documents, including the Articles of Merger and Plan of
Merger, duly executed by Buyer and InterCept, as applicable; and
(d) the documents and instruments referred to in Article 8 hereof.
Section 9.4. Post Closing Deliveries and Power of Attorney. The
---------------------------------------------
Shareholders, InterCept and Buyer agree that, from time to time after the
Closing, each of them will execute and deliver such further instruments of
conveyance and transfer and take such other action as may be necessary to carry
out the purposes and intent of this Agreement.
ARTICLE 10
SURVIVAL; INDEMNIFICATION
-------------------------
Section 10.1. Survival. The respective representations and warranties
--------
contained in this Agreement will survive execution and delivery of this
Agreement and Closing and shall remain in full force and shall not be affected
by any investigations by the parties prior to the Effective Time subject to the
limitations set forth herein.
Section 10.2. Indemnification.
---------------
(a) Indemnification by Shareholders. Subject to the terms of this
-------------------------------
Article 10, the Shareholders hereby severally, but not jointly, covenant and
agree to indemnify, defend, save and hold harmless Buyer, InterCept and the
Company and their respective officers, directors, employees, agents, affiliates
or any of their respective successors, assigns or personal representatives
(collectively, the "Buyer Indemnified Parties"), from and against any demands,
claims, actions, losses, damages, deficiencies, liabilities, costs and expenses
(including, without limitation, reasonable attorneys' and accountants' fees and
expenses), together with interest and penalties, if any, awarded by court order
or otherwise agreed to (collectively, "Indemnifiable Damages"), suffered by the
Buyer Indemnified Parties which arise out of or result from:
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<PAGE>
(i) any misrepresentation in or breach of any of the
representations, warranties or covenants made by the Shareholders in this
Agreement;
(ii) any misrepresentation in a document, certificate or
affidavit delivered by or on behalf of the Shareholders in connection with
this Agreement;
(iii) the continued existence after the execution of this
Agreement of any Lien violation of this Agreement;
(iv) any guaranty or other material liability of the Company not
otherwise disclosed hereunder or in any Schedule hereto; or
(v) any claim alleging misconduct of, by or under the control
of the Company or any Shareholder with respect to actions taken related to
the Company which is criminal or of a grossly negligent character that is
attributable to events occurring prior to the execution of this Agreement.
(b) Indemnification by Buyer and InterCept. Subject to the terms of
--------------------------------------
this Article 10, Buyer and InterCept hereby covenant and agree to indemnify,
defend, save and hold harmless the Shareholders and their respective successors,
representatives, trustees and permitted assigns from and against any
Indemnifiable Damages suffered by them which arise out of or result from:
(i) any misrepresentation in or breach of any of the
representations, warranties or covenants made by Buyer or InterCept in this
Agreement;
(ii) any misrepresentation in a document, certificate or
affidavit delivered by or on behalf of Buyer or InterCept in connection
with this Agreement; or
(iii) any claim alleging misconduct of, by or under the control
of the InterCept, the Buyer or any individual acting in a representative
capacity on behalf of InterCept and/or Buyer, which is criminal or of a
grossly negligent character that is attributable to events occurring prior
to the execution of this Agreement.
(c) Limitations on Amount. None of InterCept, Buyer or the
---------------------
Shareholders will have liability (for indemnification or otherwise) with respect
to the matters described in clause 10.2(a) or 10.2(b) or for any other matter
unless and until the total of all damages with respect to such matters exceeds
$25,000. However, this provision in Section 10.3(c) will not apply to any breach
of any of the representations and warranties of the Company, the Shareholders,
InterCept or the Buyer where said party had knowledge at any time prior to the
date on which such representation or warranty is made that the representation or
warranty was not accurate. Further, the provisions of this Section 10.3(c) will
not apply to an intentional breach by either the Buyer, InterCept or the
Shareholders of any covenant or obligation.
-26-
<PAGE>
Section 10.3. Procedure for Third-Party Claims.
--------------------------------
(a) Promptly after obtaining knowledge of any claim or demand which
has given rise to, or could reasonably give rise to, a claim for indemnification
hereunder, the party seeking indemnification shall give written notice of such
claim ("Notice of Claim") to the other party in accordance with the terms of the
Escrow Agreement. The Notice of Claim shall set forth a brief description of the
facts giving rise to such claim and the amount (or a reasonable estimate) of the
liability, loss, damage or expense suffered, or which may be suffered, by the
party seeking indemnification, and shall be accompanied by all documentation in
the case of a third-party claim against the indemnified party.
(b) Upon receiving the Notice of Claim, the indemnifying party shall
resist, settle or otherwise dispose of such claim in such manner as it shall
deem appropriate, including the employment of counsel, and shall be responsible
for the payment of all settlements, judgments, costs and expenses, including the
reasonable fees and expenses of any counsel retained. The indemnified party
shall have the right to employ separate counsel in any such action and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the indemnified party's expense unless:
(i) the employment has been specifically authorized by the
indemnifying party in writing;
(ii) the indemnifying party has improperly failed to assume the
defense and employ counsel; or
(iii) the named parties to any action (including any impleaded
parties) include the Buyer, InterCept and/or the Company and the Shareholders,
and the indemnified party has been advised by such counsel that representation
of Buyer, InterCept and/or the Company and Shareholders by the same counsel
would be inappropriate under applicable standards of professional conduct due to
actual or potential differing interests between them (in which case, if the
indemnified party notifies the indemnifying party in writing that the
indemnified party elects to employ separate counsel at the expense of the
indemnifying party, the indemnifying party shall have neither the right nor the
obligation to assume the defense of such action on behalf of the indemnified
party).
(c) The party seeking indemnification shall comply with the foregoing
procedure for each claim arising hereunder, whether or not the amount of such
claims exceeds any minimum amount. All Notices of Claim for general
contingencies must be delivered within the time frame permitted by the Escrow
Agreement for the party making such claim(s) to collect from the Escrow Fund, as
defined in the Escrow Agreement. The indemnified party shall cooperate with the
indemnifying party in defending any such claim and provide any books, records,
information or testimony requested, which is in the hands of or under the
-27-
<PAGE>
control of the indemnified party or obtainable by the indemnified party without
unreasonable expense.
ARTICLE 11
OTHER AGREEMENTS
----------------
Section 11.1. Effective Date. Notwithstanding the actual date of
--------------
execution and delivery of this Agreement, the parties agree that, for all
purposes (including legal, tax and accounting), this Agreement shall be deemed
dated and effective as of March 9, 1999.
Section 11.2. Arbitration. Any dispute, controversy or claim arising
-----------
out of or relating to this Agreement or any other related Merger Documents,
agreements, certificates or other writing, or the breach, termination,
construction, validity or enforceability hereof or thereof, shall be settled by
binding arbitration held in Atlanta, Georgia in accordance with the rules of the
American Arbitration Association in force at the time. Termination or
limitation of the Buyer's or InterCept's rights in any of its software,
products, or any associated intellectual property rights or documents may not be
awarded under any circumstances. The right to demand arbitration and to receive
damages and obtain other available remedies as provided hereunder shall be the
exclusive remedy in the event an arbitration demand is made, except that the
Buyer and/or InterCept shall be entitled to obtain equitable relief, such as
injunctive relief, from any court of competent jurisdiction to protect its
rights in any of its software products or any associated intellectual property
rights or documents while such proceeding is pending, and, further except that
the Shareholders, the Company, InterCept, Buyer, or any one or combination
thereof, shall be entitled to seek judicial remedies to enforce any award made
pursuant to such arbitration.
ARTICLE 12
MISCELLANEOUS
-------------
Section 12.1. Integration; Severability. This Agreement represents the
-------------------------
entire understanding of the Company, Buyer, InterCept and the Shareholders with
respect to the subject matter hereof and there are no other written or oral
agreements or understandings between the parties with respect thereto. If for
any reason any term, provision or portion thereof of this Agreement is held to
be unenforceable, invalid or illegal, such provision or portion thereof shall be
deemed modified to the minimum extent necessary to make such provision
consistent with the applicable law and the remaining portions and provisions of
this Agreement shall continue in full force and effect thereafter.
Section 12.2. Intentionally Omitted.
---------------------
Section 12.3. Expenses. All legal, accounting and other costs and
--------
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such costs and
expenses.
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<PAGE>
Section 12.4. Notices. All notices hereunder shall be sufficiently given
-------
for all purposes hereunder if in writing and delivered personally, sent by
documented overnight delivery service, or to the extent receipt is confirmed,
telecopy, telefax or other electronic transmission service to the appropriate
address or number as follows:
To the Shareholders:
Jack Caldwell
1579 Coleherne Cove
Collierville, TN 38017
Kevin Jones
668 Rozelle
Memphis, TN 38104
Janet Hollingsworth
8785 Dexter
Cordova, TN 38018
Steve White
286 Bellhaven Street
Memphis, TN 38117
Janice Brown
161 Richbriar
Memphis, TN 38120
with a copy to:
Mimi Phillips, Esq.
Phillips, Howard & Grubb
Suite 800 - 22 North Front Street
Memphis, Tennessee 38103
To the Company:
Direct Access Interactive, Inc.
752 Walnut Knoll Lane
Suite 101
Cordova, Tennessee 38018
Attn: President
Facsimile: (901) 751-3648
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<PAGE>
To Buyer:
DAI Acquisition Corp.
c/o The InterCept Group, Inc.
3150 Holcomb Bridge Road, Suite 200
Norcross, Georgia 30071
Attn: Donny R. Jackson, President and Chief Operating Officer
Facsimile: (770) 248-9600
To InterCept:
The InterCept Group, Inc.
3150 Holcomb Bridge Road, Suite 200
Norcross, Georgia 30071
Attn: John W. Collins, Chairman and Chief Executive Officer
Facsimile: (770) 248-9600
With a copy to:
Susan L. Spencer, Esq.
Nelson Mullins Riley & Scarborough, L.L.P.
First Union Plaza - Suite 1400
999 Peachtree Street, N.E.
Atlanta, Georgia 30309
Facsimile: (404) 817-6151
Section 12.5. Public Announcements. No Shareholder shall make any
--------------------
public announcement or other public disclosure regarding this Agreement or its
terms without the consent of the Buyer or InterCept except to the extent that
such disclosure is required by applicable law. Notwithstanding the foregoing,
the parties may communicate with their respective employees, customers,
suppliers, creditors, shareholders and relevant governmental agencies as may be
necessary and appropriate in connection with the implementation and consummation
of the terms of this Agreement.
Section 12.6. Invalidity of any Part. In any provision or part of this
----------------------
Agreement shall for any reason be held invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provisions of this Agreement and shall be construed as if such invalid,
illegal or unenforceable provision or part thereof had never been contained
herein, but only to the extent of its invalidity, illegality, or
unenforceability.
Section 12.7. Remedies. Each of the parties acknowledges that money
--------
damages would not be a sufficient remedy for any breach of this Agreement and
that irreparable harm would result if this Agreement were not specifically
enforced. Therefore, the rights and
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<PAGE>
obligations of the parties under this Agreement shall be enforceable by a decree
of specific performance issued by any court of competent jurisdiction, and
appropriate injunctive relief may be applied for and granted in connection
therewith. A party's right to specific performance shall be in addition to all
other legal or equitable remedies available to such party.
Section 12.8. Assistance of Counsel. Each party hereto acknowledges
---------------------
that they have had the assistance of counsel in negotiating and preparing the
terms of this Agreement; therefore, this Agreement shall be construed without
regard to any presumption or other rule requiring construction against the party
causing the Agreement to be drafted.
Section 12.9. Governing Law and Jurisdiction. This Agreement shall be
------------------------------
interpreted and enforced construed in accordance with the laws of the State of
Georgia (excluding conflict of laws principles). The Shareholders consent to
the exclusive jurisdiction and venue of the courts of any county in the State of
Georgia and the United States District Court for any District of Georgia in any
action or judicial proceeding brought to enforce, construe or interpret this
Agreement or any other documents or agreements contemplated hereby. The
Shareholders agree that any forum other than the State of Georgia is an
inconvenient forum and that a suit (or non-compulsory counterclaim) brought by
any Shareholder against Buyer or InterCept or any of their affiliates (including
the Releasees) in a court of any state other than the State of Georgia should be
forthwith dismissed or transferred to a court located in the State of Georgia.
Section 12.10. Assignment; Amendments; Binding Agreement. The
-----------------------------------------
Shareholders may not assign any of their rights or responsibilities hereunder
without the prior written consent of the Buyer or InterCept; any attempted
assignment without such prior written consent of the Buyer or InterCept shall be
null and void. No amendment or modification of this Agreement shall be binding
unless the same shall be in writing and executed by the parties hereto. This
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their successors, representatives, receivers, trustees and permitted
assigns.
Section 12.11. Counterparts; Facsimiles. This Agreement may be executed
------------------------
in two or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument. To the maximum
extent permitted by law or by any applicable governmental authority, any
document may be signed and transmitted by facsimile with the same validity as if
it were an ink-signed document.
[Signatures Appear on Next Page]
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<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf and as applicable its corporate seal to be hereunto
affixed and attested by officers thereunto as of the date and year first above
written.
ATTEST: DAI Acquisition Corp.
By: /s/ Scott R. Meyerhoff By: /s/ Donny R. Jackson
--------------------------- --------------------------
Its: Secretary Name: Donny R. Jackson
--------------------------- Title: President
ATTEST: The InterCept Group, Inc.
By: /s/ Scott R. Meyerhoff
--------------------------- By: /s/ Donny R. Jackson
Its: Secretary --------------------------
--------------------------- Name: Donny R. Jackson
Title: President and Chief
Operating Officer
ATTEST: Direct Access Interactive, Inc.
By: /s/ Kevin Jones By: /s/ Jack Caldwell
--------------------------- --------------------------
Its: President Name: Jack Caldwell
--------------------------- Title: Chairman and
Chief Executive Officer
Shareholders
State of Georgia /s/ Jack Caldwell
----------------------- ------------------------------
Jack Caldwell
County of Fulton
----------------------
The foregoing instrument was acknowledged before me this 9/th/ day of March,
1999, by Jack Caldwell. Witness my hand and official seal.
/s/ Sharon Jessie
- -------------------------------
Notary Public
My commission expires:10/24/99
--------
[Affix Notarial Seal]
-32-
<PAGE>
State of Georgia /s/ Kevin Jones
------------------------- ------------------------------
Kevin Jones
County of Fulton
------------------------
The foregoing instrument was acknowledged before me this 9/th/ day of March,
1999, by Kevin Jones. Witness my hand and official seal.
/s/ Sharon Jessie
- ---------------------------------
Notary Public
My commission expires: 10/24/99
-----------
[Affix Notarial Seal]
State of Tennessee /s/ Janet Hollingsworth
------------------------- ------------------------------
Janet Hollingsworth
County of Shelby
------------------------
The foregoing instrument was acknowledged before me this 8/th/ day of March,
1999, by Janet Hollingsworth. Witness my hand and official seal.
/s/ Sharon D. Brown
- ---------------------------------
Notary Public
My commission expires: 1/25/2000
-----------
[Affix Notarial Seal]
State of Tennessee /s/ Steve White
------------------------- ------------------------------
County of Shelby Steve White
------------------------
The foregoing instrument was acknowledged before me this 8/th/ day of March,
1999, by Steve White. Witness my hand and official seal.
/s/ Sharon D. Brown
- ---------------------------------
Notary Public
My commission expires: 1/25/2000
-----------
[Affix Notarial Seal]
-33-
<PAGE>
State of Tennessee /s/ Janice Brown
-------------------------- ------------------------------
County of Shelby Janice Brown
-------------------------
The foregoing instrument was acknowledged before me this 8/th/ day of March,
1999, by Janice Brown. Witness my hand and official seal.
/s/ Sharon D. Brown
- ----------------------------------
Notary Public
My commission expires: 1/25/2000
------------
[Affix Notarial Seal]
-34-
<PAGE>
EXHIBIT 4.5
REGISTRATION RIGHTS AGREEMENT
-----------------------------
This Registration Rights Agreement (the "Agreement") is made and entered into as
of March 9, 1999 between The InterCept Group, Inc., a Georgia corporation
("Company") and Jack Caldwell, Kevin Jones, Janet Hollingsworth, Steve White and
Janice Brown (collectively, "Holders").
W I T N E S S E T H:
WHEREAS, Company has entered into an Acquisition and Merger Agreement,
dated March 9, 1999 (the "Agreement") among itself, DAI Acquisition Corp., a
Georgia Corporation, Direct Access Interactive, Inc., a Tennessee corporation
("Direct Access") and the Holders; and
WHEREAS, as of the date hereof the Agreement has been approved by the
Holders which constitute all of the stockholders of Direct Access.
NOW THEREFORE, for and in consideration of the premises, the parties
hereto, intending to be legally bound, hereby agree as follows:
1. Certain Definitions. As used in this Agreement, the following terms
-------------------
shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange Commission or any other
----------
federal agency at the time administering the Securities Act.
"Common Stock" shall mean the voting common stock, without par value per
------------
share, of the Company.
The terms "register", "registered" and "registration" refer to a
-------- ---------- ------------
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
"Registrable Securities" means shares of Common Stock issued to the Holders
----------------------
upon and at the time of consummation of the merger pursuant to the Agreement,
excluding in all cases, however, any Registrable Securities sold by a person in
a transaction, including a transaction pursuant to a registration statement
under Section 2 or a transaction pursuant to Rule 144 of the Securities Act, in
which such person's rights under Section 2 are not transferred.
"Securities Act" shall mean the Securities Act of 1933, as amended, or any
--------------
similar federal statute promulgated in replacement thereof, and the rules and
regulations of the Commission thereunder, all as the same shall be in effect at
the time.
<PAGE>
2. Piggyback Registration.
----------------------
(a) If at any time after thirty (30) days of post merger combined
operating results of Company and Direct Access have been published as
contemplated by ASR 135, the Company shall determine to register for sale for
cash any of its Common Stock, for its own account, other than a registration
relating solely to employee benefit plans or securities issued or issuable to
employees or consultants (including a registration on Form S-8), a registration
relating solely to a Commission Rule 145 transaction, a registration on Form S-4
in connection with a merger, acquisition, divestiture, reorganization or similar
event or a registration on any registration form which does not include
substantially the same information as would be required to be included in a
registration statement covering the sale of Registrable Securities, the Company
promptly will give to each Holder written notice thereof and shall use its
reasonable best efforts to include in such registration (and any related
qualification under blue sky laws or other compliance), and in any underwriting
involved therein, all the Registrable Securities specified in a written request
or requests, made within ten (10) days after receipt of such written notice from
the Company, by any Holder or Holders. However, the Company may, without the
consent of the Holders, withdraw such registration statement prior to its
becoming effective if the Company has abandoned its proposal to register the
securities proposed to be registered thereby.
(b) Underwriting. If the registration of which the Company gives notice is
------------
for a registered public offering involving an underwriting, the Company shall so
advise the Holders as a part of the written notice given pursuant to Section
2(a). In such event the right of any Holder to registration pursuant to Section
2(a) shall be conditioned upon such Holder's participation in such underwriting
and the inclusion of such Holder's Registrable Securities in the underwriting to
the extent provided herein. All Holders proposing to distribute their securities
through such underwriting shall (together with the Company and any other
shareholders of the Company distributing their securities through such
underwriting) enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting by the Company.
Notwithstanding any other provision of this Section 2(b), if the underwriter or
the Company determines that marketing factors require a limitation of the number
of shares to be underwritten, the underwriter may exclude some or all
Registrable Securities from such registration and underwriting. The Company
shall so advise all Holders (except those Holders who have indicated to the
Company their decision not to distribute any of their Registrable Securities
through such underwriting), and the number of shares of Registrable Securities
that may be included in the registration and underwriting, if any, shall be
allocated among such Holders as follows: the number of shares that may be
included in the registration and underwriting shall be allocated first to the
Company and then to all selling shareholders, including the Holders, who have
requested to sell in the registration on a pro rata basis according to the
number of shares requested to be included.
(c) No Registrable Securities excluded from the underwriting by reason of
the underwriter's marketing limitation shall be included in such registration.
If any Holder disapproves of the terms of any such underwriting, such person may
elect to withdraw therefrom by written notice to the Company and the
underwriter.
2
<PAGE>
3. Registration Procedures. In the case of each registration,
-----------------------
qualification or compliance effected by the Company pursuant to Section 2, the
Company will keep each Holder advised in writing as to the initiation of each
registration, qualification and compliance and as to the completion thereof. At
its expense, the Company will use its reasonable best efforts to:
(a) Keep such registration, qualification or compliance effective for a
period of ninety (90) days or until the Holder or Holders have completed the
distribution described in the registration statement relating thereto, whichever
first occurs; and
(b) Furnish such number of prospectuses and other documents incident
thereto as a Holder from time to time may reasonably request.
4. Rule 144(k). Notwithstanding anything to the contrary contained
-----------
herein, no Holder shall have rights to a registration under Section 2 after the
time that such Holder could sell all of its Registrable Securities pursuant to
Rule 144(k) promulgated under the Securities Act or any successor rule thereto.
5. Registration Expenses. The Company shall pay all expenses in
---------------------
connection with any registration, including, without limitation, all
registration, filing and NASD fees, printing expenses, all fees and expenses of
complying with securities or blue sky laws, the fees and disbursements of one
counsel for the Holders and the fees and disbursements of counsel for the
Company and of its independent accountants; provided that, in any registration,
each party shall pay for its own underwriting discounts and commissions and
transfer taxes.
6. Assignment of Rights. No Holder may assign its rights under this
--------------------
Agreement to any party without the prior written consent of the Company, and any
attempted transfer in violation of this Section 6 shall be null and void;
provided, however, that a Holder may assign its rights under this Agreement
- -------- -------
without such prior written consent to a transferee or assignee that controls, is
controlled by or is under common control with such Holder.
7. Information by Holder. The Holder or Holders of Registrable Securities
---------------------
included in any registration shall furnish to the Company such information
regarding such Holder or Holders and the distribution proposed by such Holder or
Holders as the Company may request in writing.
8. "Market Stand-off" Agreement. Each Holder agrees not to sell or
---------------------------
otherwise transfer or dispose of any Common Stock (or other securities) of the
Company held by it during the 180 day period following the effective date of any
public offering if so requested by the Company and underwriters of Common Stock
(or other securities) of the Company. The Company may impose stop-transfer
instructions with respect to the shares (or securities) subject to the foregoing
restriction until the end of such period.
9. Indemnification.
---------------
(a) In the event of the offer and sale of Registrable Securities held by
Holders under the Securities Act, the Company shall, and hereby does, indemnify
and hold harmless each Holder, its directors, officers and partners and each
other Person, if any, who controls such
3
<PAGE>
Holder within the meaning of Section 15 of the Securities Act, against any
losses, claims, damages or liabilities, joint or several, to which the Holder or
any such director or officer or controlling person may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions or proceedings, whether commenced or threatened, in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any registration statement
under which such shares were registered under the Securities Act, any
preliminary prospectus, final prospectus or summary prospectus contained
therein, or any amendment or supplement thereto, or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein in light of the circumstances in which
they were made not misleading, and the Company shall reimburse the Holder, and
each such director, officer, partner and controlling person for any legal or any
other expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability, action or proceeding;
provided that the Company shall not be liable in any such case to the extent
that any such loss, claim, damage, liability (or action or proceeding in respect
thereof) or expense arises out of or is based upon an untrue statement or
alleged untrue statement in or omission or alleged omission from such
registration statement, any such preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement in reliance upon and in conformity
with written information furnished to the Company through an instrument duly
executed by or on behalf of such Holder specifically stating that it is for use
in the preparation thereof. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the Company, or any such
director, officer, partner or controlling person and shall survive the transfer
of such shares by the Holder.
(b) The Company may require, as a condition to including any Registrable
Securities to be offered by a Holder in any registration statement filed
pursuant to this Section 9, that the Company shall have received an agreement
from such Holder to be bound by the terms of this Section 9, including an
undertaking reasonably satisfactory to it from such Holder, to indemnify and
hold the Company, its directors and officers and each other Person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act,
against any losses, claims, damages or liabilities, joint or several, to which
the Company or any such director or officer or controlling person may become
subject under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement in or omission or alleged omission from
such registration statement, any preliminary prospectus, final prospectus or
summary prospectus contained therein, or any amendment or supplement thereto, if
such statement or alleged statement or omission or alleged omission was made in
reliance upon and in conformity with written information about such Holder as a
Holder of the Company furnished to the Company through an instrument duly
executed by such Holder specifically stating that it is for use in the
preparation of such registration statement, preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement; provided, however, that
-------- -------
such indemnity agreement found in this Section 9(b) shall in no event exceed the
gross proceeds from the offering received by such Holder. Such indemnity shall
remain in full force and effect, regardless of any investigation made by or on
behalf of the Company or any such director, officer or controlling person and
shall survive the transfer by any Holder of such shares.
4
<PAGE>
(c) Promptly after receipt by an indemnified party of notice of the
commencement of any action or proceeding involving a claim referred to in
Section 9(a) or (b) (including any governmental action), such indemnified party
shall, if a claim in respect thereof is to be made against an indemnifying
party, give written notice to the indemnifying party of the commencement of such
action; provided that the failure of any indemnified party to give notice as
provided herein shall not relieve the indemnifying party of its obligations
under 9(a) or (b), except to the extent that the indemnifying party is actually
prejudiced by such failure to give notice. In case any such action is brought
against an indemnified party, unless in such indemnified party's reasonable
judgment a conflict of interest between such indemnified and indemnifying
parties may exist or the indemnified party may have defenses not available to
the indemnifying party in respect of such claim, the indemnifying party shall be
entitled to participate in and to assume the defense thereof, with counsel
reasonably satisfactory to such indemnified party and, after notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party shall not be liable to such indemnified
party for any legal or other expenses subsequently incurred by the latter in
connection with the defense thereof other than reasonable costs of
investigation. Neither an indemnified nor an indemnifying party shall be liable
for any settlement of any action or proceeding effected without its consent. No
indemnifying party shall, without the consent of the indemnified party, consent
to entry of any judgment or enter into any settlement which does not include as
an unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect of such claim or
litigation.
(d) The indemnification required by Section 9(a) and (b) shall be made by
periodic payments of the amount thereof during the course of the investigation
or defense, as and when bills are received or expenses, losses, damages or
liabilities are incurred.
(e) If the indemnification provided for in this Section 9 is held by a
court of competent jurisdiction to be unavailable to an indemnified party with
respect to any loss, liability, claim, damage or expense referred to herein, the
indemnifying party, in lieu of indemnifying such indemnified party hereunder,
shall contribute to the amount paid or payable by such indemnified party as a
result of such loss, liability, claim, damage or expense as is appropriate to
reflect the relative benefits received by the indemnified party on the one hand,
and the indemnifying party on the other from the offering of the Common Stock,
as well as other relevant equitable considerations.
10. Miscellaneous
-------------
(a) Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of Georgia applicable to contracts between
Georgia residents entered into and to be performed entirely within the State of
Georgia.
(b) Successors and Assigns. Except as otherwise provided herein, the
----------------------
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.
(c) Entire Agreement. This Agreement constitutes the full and entire
----------------
understanding and agreement between the parties with regard to the subjects
hereof.
5
<PAGE>
(d) Notices, etc. All notices and other communications required or
------------
permitted hereunder shall be in writing and shall be effective three (3) days
after mailed by first-class mail, postage prepaid, or otherwise delivered by
hand or by messenger, addressed (a) if to any Holder of Registrable Securities,
at such address as such Holder shall have furnished the Company in writing, or
(b) if to the Company, at such address as the Company shall have furnished to
each Holder in writing.
(e) Delays or Omissions. No delay or omission to exercise any right, power
-------------------
or remedy accruing to any Holder of any Registrable Securities, upon any breach
or default of the Company under this Agreement, shall impair any such right,
power or remedy of such Holder nor shall it be construed to be a waiver of any
such breach or default, or an acquiescence therein, or of or in any similar
breach or default thereunder occurring; nor shall any waiver of any single
breach or default be deemed a waiver of any other breach or default theretofore
or thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any Holder of any breach or default under this
Agreement, or any waiver on the part of any Holder of any provisions or
conditions of this Agreement, must be in writing and shall be effective only to
the extent specifically set forth in such writing. All remedies, either under
this Agreement, or by law or otherwise afforded to any holder, shall be
cumulative and not alternative.
(f) Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which may be executed by less than all of the Purchasers,
each of which shall be enforceable against the parties actually executing such
counterparts, and all of which together shall constitute one instrument.
(g) Severability. In the case any provision of this Agreement shall be
------------
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
(h) Amendments. The provisions of this Agreement may be amended at any
----------
time and from time to time, and particular provisions of this Agreement may be
waived, with and only with an agreement or consent in writing signed by the
Company and by the Holders of a majority of the number of shares of Registrable
Securities outstanding as of the date of such amendment or waiver; provided,
--------
however, that without obtaining the consent of any other party to this
- -------
Agreement, the Company may amend this Agreement to add hereto as parties any
person or entity who beneficially owns securities of the Company, such Amendment
to be effected by obtaining the signature of each such party and the Company to
a counterpart to this Agreement.
6
<PAGE>
This Registration Rights Agreement is hereby executed as of the date first
above written.
Company
The InterCept Group, Inc.
By: /s/ Donny R. Jackson
-------------------------------
President
Holders
/s/ Jack Caldwell
----------------------------------
Jack Caldwell
/s/ Kevin Jones
----------------------------------
Kevin Jones
/s/ Janet Hollingsworth
----------------------------------
Janet Hollingsworth
/s/ Steve White
----------------------------------
Steve White
/s/ Janice Brown
----------------------------------
Janice Brown
7
<PAGE>
EXHIBIT 4.6
REGISTRATION RIGHTS AGREEMENT
-----------------------------
This Registration Rights Agreement (the "Agreement") is made and entered
into as of May 28, 1999 between The InterCept Group, Inc., a Georgia corporation
("Company") and Larry E. Vickers and Brenda J. Vickers (collectively,
"Holders").
W I T N E S S E T H:
WHEREAS, Company has entered into an Acquisition and Merger Agreement,
dated May 28, 1999 (the "Merger Agreement") among itself, LEV Acquisition Corp.,
a Georgia corporation, L. E. Vickers & Associates, Inc., a Tennessee corporation
("Vickers"), Data Equipment Services, Inc., a Tennessee corporation ("Data"),
(Vickers and Data are collectively referred to herein as the "Targets") and the
Holders; and
WHEREAS, as of the date hereof the Merger Agreement has been approved by
the Holders which constitute all of the stockholders of the Targets.
NOW THEREFORE, for and in consideration of the premises, the parties
hereto, intending to be legally bound, hereby agree as follows:
1. Certain Definitions. As used in this Agreement, the following terms
-------------------
shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange Commission or any other
----------
federal agency at the time administering the Securities Act.
"Common Stock" shall mean the voting common stock, without par value per
------------
share, of Company.
"Estimated Offering Price" means an estimate of the gross proceeds, before
------------------------
underwriting discounts and commissions, reasonably obtainable from the sale of
Registrable Stock in an Underwritten Public Offering, as determined by either
the Board of Directors of the Company or an underwriter of national reputation
reasonably acceptable to the Company, based upon the highest closing price or
bid price, as the case may be, during the 30-day period preceding the applicable
date of determination in the principal trading market for the Common Stock, or,
if there shall be no active trading market for the Common Stock, based on all
other relevant considerations.
The terms "register", "registered" and "registration" refer to a
-------- ---------- ------------
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
"Registrable Securities" means shares of Common Stock issued to the Holders
----------------------
upon and at the time of consideration of the merger pursuant to the Agreement,
any Registrable Securities
<PAGE>
sold by a Holder in a transaction, including a transaction pursuant to a
registration statement under Sections 2 or 3 or a transaction pursuant to Rule
144 of the Securities Act.
"Securities Act" shall mean the Securities Act of 1933, as amended, or any
--------------
similar federal statute promulgated in replacement thereof, and the rules and
regulations of the Commission thereunder, all as the same shall be in effect at
the time.
"Underwritten Public Offering" means a public offering of Common Stock for
----------------------------
cash which is offered and sold in a registered transaction on a firm commitment
underwritten basis through one or more underwriters, all pursuant to an
underwriting agreement between the Company, any selling shareholders and such
underwriters.
2. Registration.
------------
(a) Subject to the conditions of this Agreement, as soon as reasonably
practicable after the date upon which (1) at least thirty (30) days of the post-
merger combined operating results of the Company and the Targets are published
as contemplated by ASR 135 and, in any event, no later than August 16, 1999 and
(2) the Company is eligible to file a registration statement on Form S-3
covering the resale of the Registrable Securities by the Holders, the Company
shall file a registration statement on Form S-3 covering the resale of the
Registrable Securities held by the Holders in accordance with the terms of this
Agreement. Subject to the conditions of this Agreement, the Company shall use
all commercially reasonable efforts (1) to file with the Commission a
registration statement on Form S-3 covering the resale of the Registrable
Securities by the Holders and (2) to effect all such registrations,
qualifications, and compliances as would permit or facilitate the resale of the
Registrable Securities then outstanding.
(b) The right of each Holder to registration pursuant to Section 2(a) shall
be conditioned upon such Holder's participation and cooperation in the offering.
If the Holders agree to participate in an Underwritten Public Offering under
Section 2(a) the Company shall provide notice to the Holders of the name of the
underwriter to be employed if an Underwritten Public Offering, if then
determined.
(c) The Company shall be entitled to include in any registration statement
referred to in this Section 2 shares of Common Stock to be sold by the Company
for its own account or other then existing shareholders for their own account.
(d) The Company shall be entitled to postpone for a reasonable period of
time (but, except as otherwise provided in this Agreement, not exceeding one
hundred eighty (180) days) the filing of any registration statement otherwise
required to be prepared and filed by it pursuant to this Section 2, if and only
if, Larry E. Vickers, on behalf of the Holders, consents in writing to a
postponement after being advised in writing by the Company that the Company has
determined, in good faith and in the exercise of reasonable judgment, that such
action would materially delay or interfere with any material financing,
acquisition, corporate reorganization or other transaction involving the Company
then pending or contemplated. Mr. Vickers agrees to promptly execute and
deliver a confidentiality agreement in form and
2
<PAGE>
substance reasonably acceptable to the Company in connection with any
disclosures the Company is required to make under this paragraph.
(e) If either a limitation under Section 2(c) or a postponement under
Section 2(d) occurs, the Holders shall have the piggyback registration rights
set forth in Section 3.
(f) If a registration statement pursuant to this Section 2 does not become
effective within twelve (12) months after the initial filing thereof as a result
of any reason other than a material adverse development in the business or
condition (financial or other) of the Company or other acts or matters within
the control of the Company, or if such registration statement is abandoned or
withdrawn at the request of the Holders, then, unless the Holders, promptly upon
receipt of a request therefor, supported by an invoice setting forth the
expenses in reasonable detail, reimburse the Company for the registration
expenses in respect of such registration statement, the Company shall be deemed
to have satisfied its obligation pursuant to this Section 2.
(g) Notwithstanding anything in this Agreement to the contrary, the
Company shall not be obligated to take any action to effect any registration,
qualification or compliance pursuant to Section 2 in any particular jurisdiction
in which the Company would be required to execute a general consent to service
of process or to register as a dealer or to cause any officer or employee of the
Company to register as a salesman in effecting such registration, qualification
or compliance.
3. Piggyback Registration.
----------------------
If (1) registration by the Holders of their Registrable Securities has
been delayed pursuant to Section 2(d), (2) thirty (30) days of post merger
combined operating results of Company and Direct Access have been published as
contemplated by ASR 135, and (3) the Company shall determine to register for
sale for cash any of its Common Stock, for its own account, other than a
registration relating solely to employee benefit plans or securities issued or
issuable to employees or consultants (including a registration on Form S-8), a
registration relating solely to a Commission Rule 145 transaction, a
registration on Form S-4 in connection with a merger, acquisition, divestiture,
reorganization or similar event or a registration on any registration form which
does not include substantially the same information as would be required to be
included in a registration statement covering the sale of Registrable
Securities, then the Company promptly will give to each Holder written notice
----
thereof and shall use its commercially reasonable efforts in good faith to
include in such registration (and any related qualification under blue sky laws
or other compliance), and in any underwriting involved therein, all the
Registrable Securities specified in a written request or requests, made within
ten (10) days after receipt of such written notice from the Company, by any
Holder or Holders. However, the Company may, without the consent of the
Holders, withdraw such registration statement prior to its becoming effective if
the Company has abandoned its proposal to register the securities proposed to be
registered thereby.
3
<PAGE>
4. Underwritten Public Offerings. If the registration being effected
-----------------------------
under this Agreement is for an Underwritten Public Offering, the Company shall
so advise the Holders. In such event the right of any Holder to registration
shall be conditioned upon such Holder's participation in such underwriting and
the inclusion of such Holder's Registrable Securities in the underwriting to the
extent provided herein. All Holders proposing to distribute their securities
through any Underwritten Public Offering shall (together with the Company and
any other shareholders of the Company distributing their securities through such
underwriting) enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting by the Company.
Notwithstanding any other provision of this Section 4, if the underwriter or the
Company determines that marketing factors require a limitation of the number of
shares to be underwritten, the underwriter may exclude some or all Registrable
Securities from such registration and underwriting. The Company shall so advise
all Holders (except those Holders who have indicated to the Company their
decision not to distribute any of their Registrable Securities through such
underwriting), and the number of shares of Registrable Securities that may be
included in the registration and underwriting, if any, shall be allocated among
such Holders as follows: the number of shares that may be included in the
registration and underwriting shall be allocated first to the Company and then
to all selling shareholders, including the Holders, who have requested to sell
in the registration on a pro rata basis according to the number of shares
requested to be included. No Registrable Securities excluded from the
underwriting by reason of the underwriter's marketing limitation shall be
included in such registration. If any Holder disapproves of the terms of any
such underwriting, such person may elect to withdraw therefrom by written notice
to the Company and the underwriter.
5. Registration Procedures.
-----------------------
(a) In the case of each registration, qualification or compliance effected
by the Company pursuant to Sections 2 or 3, the Company will keep each Holder
advised in writing as to the initiation of each registration, qualification and
compliance and as to the completion thereof. At its expense, the Company in good
faith will use its commercially reasonable efforts to, subject to the provisions
of paragraph 5(b) below:
(1) Keep such registration, qualification or compliance effective for
a period of twelve (12) months from the Effective Time or until the Holder or
Holders have completed the distribution described in the registration statement
relating thereto, whichever first occurs;
(2) Furnish such number of prospectuses and other documents incident
thereto as a Holder from time to time may reasonably request;
(3) Notify the Holders, at any time when a prospectus relating
thereto is required to be delivered under the Securities Act of the happening of
any event as a result of which the prospectus forming a part of such
registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state any material fact required to be stated therein,
or necessary to make the statements therein not misleading in light of the
circumstances under which they were made insofar as it relates to the Company.
4
<PAGE>
(4) Cause the shares of Company Common Stock to be issued upon
consummation of the Merger to be listed for trading on the NASDAQ National
Market.
(b) If the Company determines, in good faith and in the exercise of its
reasonable judgment, that a registration statement effected pursuant to this
Agreement interferes with any material financing, acquisition, corporate
reorganization or other transaction involving the Company then pending or
contemplated, it shall notify the Holders in writing of such transaction and the
resulting need to terminate or withdrawal the registration statement. Mr.
Vickers agrees to promptly execute and deliver a confidentiality agreement in
form and substance reasonably acceptable to the Company in connection with any
disclosures the Company is required to make under this paragraph. Larry E.
Vickers, on behalf of the Holders, shall either consent to such withdrawal or
termination of the registration statement or indicate the Holders' objection to
such withdrawal or termination within three (3) business days of the Company's
delivery of such notice to him. In the event Mr. Vickers fails to make a
written response to the notice provided by the Company within such three (3)
business day period, it shall be presumed that the Company may withdrawal or
terminate such registration statement without liability to the Holders except as
provided in paragraph 5(c) below with respect to demand registration rights.
(c) If the Company withdraws or terminates a registration statement
covering Registrable Securities of the Holders, then, unless Registrable
Securities of the Holders are included in another offering of shares of Common
Stock or have been registered and sold pursuant to this Agreement within the
preceding sixty (60) days, upon notice from the Holders requesting the
registration on Form S-3 of Registrable Securities collectively having an
Estimated Offering Price of at least $500,000 (the "Request Notice"), the
Company agrees to use its good faith reasonable efforts to prepare and file a
registration statement on Form S-3 covering the remaining Registrable Securities
of the Holders within ten (10) business days after such Request Notice is first
received.
6. Rule 144. Notwithstanding anything to the contrary contained herein,
--------
no Holder shall have rights to a registration under this Agreement after the
time that such Holder could sell all of its Registrable Securities pursuant to
Rule 144 promulgated under the Securities Act or any successor rule thereto.
7. Registration Expenses. The Company shall pay the expenses in
---------------------
connection with any registration involving shares of Common Stock, including,
without limitation, all registration, filing and NASD fees, printing expenses,
all fees and expenses of complying with securities or blue sky laws, and the
fees and disbursements of counsel for the Company and of its independent
accountants. In any registration, each party shall pay for its own underwriting
discounts and commissions and transfer taxes.
8. Assignment of Rights. No Holder may assign its rights under this
--------------------
Agreement to any party without the prior written consent of the Company, and any
attempted transfer in violation of this Section 8 shall be null and void.
5
<PAGE>
9. Information by Holder. The Holder or Holders of Registrable
---------------------
Securities included in any registration shall furnish to the Company such
information regarding such Holder or Holders and the distribution proposed by
such Holder or Holders as the Company may request in writing.
10. "Market Stand-off" Agreement. If at least 50% of the Registrable
---------------------------
Securities requested by the Holders to be included in a registration under this
Agreement are so included and sold, then each Holder agrees that until May 28,
2000 Holder will not sell or otherwise transfer or dispose of any other Common
Stock (or other securities) of the Company held by such Holder during the 120-
day period following the effective date of any public offering if so requested
by the Company or the underwriters of Common Stock (or other securities) of the
Company. The Company may impose stop-transfer instructions with respect to the
shares (or securities) subject to the foregoing restriction until the end of
such period.
11. Indemnification.
---------------
(a) In the event of the offer and sale of Registrable Securities held by
Holders under the Securities Act, the Company shall, and hereby does, indemnify
and hold harmless each Holder, its directors, officers and partners and each
other Person, if any, who controls such Holder within the meaning of Section 15
of the Securities Act, against any losses, claims, damages or liabilities, joint
or several, to which the Holder or any such director or officer or controlling
person may become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
any registration statement under which such shares were registered under the
Securities Act, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, or any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein in light of the
circumstances in which they were made not misleading, and the Company shall
reimburse the Holder, and each such director, officer, partner and controlling
person for any legal or any other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability, action or proceeding; provided that the Company shall not be liable
in any such case to the extent that any such loss, claim, damage, liability (or
action or proceeding in respect thereof) or expense arises out of or is based
upon an untrue statement or alleged untrue statement in or omission or alleged
omission from such registration statement, any such preliminary prospectus,
final prospectus, summary prospectus, amendment or supplement in reliance upon
and in conformity with written information furnished to the Company through an
instrument duly executed by or on behalf of such Holder specifically stating
that it is for use in the preparation thereof. Such indemnity shall remain in
full force and effect regardless of any investigation made by or on behalf of
the Company, or any such director, officer, partner or controlling person and
shall survive the transfer of such shares by the Holder.
(b) The Company may require, as a condition to including any Registrable
Securities to be offered by a Holder in any registration statement filed
pursuant to this Section 11, that the Company shall have received an
agreement from such Holder to be bound by the terms of this
6
<PAGE>
Section 11, including an undertaking reasonably satisfactory to it from such
Holder, to indemnify and hold the Company, its directors and officers and each
other Person, if any, who controls the Company within the meaning of Section 15
of the Securities Act, against any losses, claims, damages or liabilities, joint
or several, to which the Company or any such director or officer or controlling
person may become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement in or omission or alleged omission
from such registration statement, any preliminary prospectus, final prospectus
or summary prospectus contained therein, or any amendment or supplement thereto,
if such statement or alleged statement or omission or alleged omission was made
in reliance upon and in conformity with written information about such Holder as
a Holder of the Company furnished to the Company through an instrument duly
executed by such Holder specifically stating that it is for use in the
preparation of such registration statement, preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement; provided, however, that
-------- -------
such indemnity agreement found in this Section 11(b) shall in no event exceed
the gross proceeds from the offering received by such Holder. Such indemnity
shall remain in full force and effect, regardless of any investigation made by
or on behalf of the Company or any such director, officer or controlling person
and shall survive the transfer by any Holder of such shares.
(c) Promptly after receipt by an indemnified party of notice of the
commencement of any action or proceeding involving a claim referred to in
Section 11(a) or (b) (including any governmental action), such indemnified party
shall, if a claim in respect thereof is to be made against an indemnifying
party, give written notice to the indemnifying party of the commencement of such
action; provided that the failure of any indemnified party to give notice as
provided herein shall not relieve the indemnifying party of its obligations
under Section 11(a) or (b), except to the extent that the indemnifying party is
actually prejudiced by such failure to give notice. In case any such action is
brought against an indemnified party, unless in such indemnified party's
reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist or the indemnified party may have defenses not
available to the indemnifying party in respect of such claim, the indemnifying
party shall be entitled to participate in and to assume the defense thereof,
with counsel reasonably satisfactory to such indemnified party and, after notice
from the indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party shall not be liable to such
indemnified party for any legal or other expenses subsequently incurred by the
latter in connection with the defense thereof other than reasonable costs of
investigation. Neither an indemnified nor an indemnifying party shall be liable
for any settlement of any action or proceeding effected without its consent. No
indemnifying party shall, without the consent of the indemnified party, consent
to entry of any judgment or enter into any settlement which does not include as
an unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect of such claim or
litigation.
(d) The indemnification required by Section 11(a) and (b) shall be made by
periodic payments of the amount thereof during the course of the investigation
or defense, as and when bills are received or expenses, losses, damages or
liabilities are incurred.
7
<PAGE>
(e) If the indemnification provided for in this Section 11 is held by a
court of competent jurisdiction to be unavailable to an indemnified party with
respect to any loss, liability, claim, damage or expense referred to herein, the
indemnifying party, in lieu of indemnifying such indemnified party hereunder,
shall contribute to the amount paid or payable by such indemnified party as a
result of such loss, liability, claim, damage or expense as is appropriate to
reflect the relative benefits received by the indemnified party on the one hand,
and the indemnifying party on the other from the offering of the Common Stock,
as well as other relevant equitable considerations.
12. Miscellaneous
-------------
(a) Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of Georgia applicable to contracts between
Georgia residents entered into and to be performed entirely within the State of
Georgia.
(b) Successors and Assigns. Except as otherwise provided herein, the
----------------------
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.
(c) Entire Agreement. This Agreement constitutes the full and entire
----------------
understanding and agreement between the parties with regard to the subjects
hereof.
(d) Notices, etc. All notices and other communications required or
-------------
permitted hereunder shall be in writing and shall be delivered in accordance
with the notice provisions of the Merger Agreement
(e) Delays or Omissions. No delay or omission to exercise any right,
-------------------
power or remedy accruing to any Holder of any Registrable Securities, upon any
breach or default of the Company under this Agreement, shall impair any such
right, power or remedy of such Holder nor shall it be construed to be a waiver
of any such breach or default, or an acquiescence therein, or of or in any
similar breach or default thereunder occurring; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring. Any waiver, permit, consent or approval of
any kind or character on the part of any Holder of any breach or default under
this Agreement, or any waiver on the part of any Holder of any provisions or
conditions of this Agreement, must be in writing and shall be effective only to
the extent specifically set forth in such writing. All remedies, either under
this Agreement, or by law or otherwise afforded to any holder, shall be
cumulative and not alternative.
(f) Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which may be executed by less than all of the Purchasers,
each of which shall be enforceable against the parties actually executing such
counterparts, and all of which together shall constitute one instrument.
(g) Severability. In the case any provision of this Agreement shall be
------------
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
8
<PAGE>
(h) Amendments. The provisions of this Agreement may be amended at any
----------
time and from time to time, and particular provisions of this Agreement may be
waived, with and only with an agreement or consent in writing signed by the
Company and by the Holders of a majority of the number of shares of Registrable
Securities outstanding as of the date of such amendment or waiver; provided,
--------
however, that without obtaining the consent of any other party to this
- -------
Agreement, the Company may amend this Agreement to add hereto as parties any
person or entity who beneficially owns securities of the Company, such Amendment
to be effected by obtaining the signature of each such party and the Company to
a counterpart to this Agreement.
This Registration Rights Agreement is hereby executed as of the date first
above written.
"Company"
The InterCept Group, Inc.
By: /s/ Donny R. Jackson
-----------------------------
"Holders"
/s/ Larry E. Vickers
--------------------------------
Larry E. Vickers
/s/ Brenda J. Vickers
--------------------------------
Brenda J. Vickers
9
<PAGE>
EXHIBIT 4.7
AGREEMENT TO REGISTER SHARES
----------------------------
This Agreement to Register Shares (the "Agreement") dated as of September
30, 1999 is by and between The InterCept Group, Inc., a Georgia corporation
("InterCept") and Jack Caldwell, Kevin Jones, Janet Hollingsworth, Steve White
and Janice Brown (collectively, the "Shareholders").
WHEREAS, the Shareholders own a total of 151,229 shares of InterCept common
stock;
WHEREAS, InterCept will file a registration statement on Form S-3 to
register for resale the shares of InterCept common stock owned by certain of its
other shareholders (the "Resale S-3");
WHEREAS, the Shareholders desire to have the shares of common stock owned
by them included on such registration statement;
NOW, THEREFORE, for and in consideration of the premises, covenants and
agreements set forth herein, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. InterCept agrees to use all commercially reasonable efforts to register
the shares of common stock held by the Shareholders pursuant to the Resale S-3.
InterCept may, without the consent of the Shareholders and for any reason,
withdraw such Resale S-3 prior to its becoming effective or otherwise terminate
the offering of securities contemplated thereby. In the event that InterCept
withdraws or terminates the registration in order to file a registration
statement for an offering of shares by InterCept for its own account, the
Shareholders shall have piggyback registration rights pursuant to that certain
Registration Rights Agreement dated March 9, 1999 by and between InterCept and
the Shareholders (the "March Agreement").
2. Registration Procedures. InterCept will use reasonable efforts to
-----------------------
advise each Shareholder as to the initiation of the registration, qualification
and compliance and as to the completion thereof. At its expense, InterCept will
use its reasonable best efforts to furnish such number of prospectuses and other
documents incident thereto as a Shareholder from time to time may reasonably
request.
3. Registration Expenses. InterCept shall pay all expenses in connection
---------------------
with any registration, including, without limitation, all registration, filing
and NASD fees, printing expenses, all fees and expenses of complying with
securities or blue sky laws, and the fees and disbursements of counsel for
InterCept and of its independent accountants. The Shareholders shall pay for
their own underwriting discounts and commissions and transfer taxes and the fees
and disbursements of their counsel.
<PAGE>
4. Each Shareholder agrees and acknowledges that:
(a) InterCept is not obligated to effect the registration of the shares
held by the Shareholders on the Resale S-3.
(b) InterCept may withdraw or terminate the registration at any time for
any reason or for no reason at all and, if such event occurs, InterCept shall
have no further obligation to the shareholders to register the shares of common
stock held by them, except pursuant to the March Agreement.
(c) The shares of common stock held by such Shareholder were acquired
pursuant to the Acquisition and Merger Agreement dated March 9, 1999 by and
between InterCept and the Shareholders.
(d) Such Shareholder has not entered into any agreements, understandings or
arrangements with any underwriters or broker-dealers regarding the sale of these
shares, nor is there an underwriter or coordinating broker acting in connection
with the proposed sale of these shares.
(e) During the time the Shareholders are engaged in a distribution of the
shares to be registered, they are required to comply with Regulation M under the
Securities Exchange Act of 1934, including the provisions contained therein that
prohibit the Shareholders, any affiliated purchasers and other persons who
participate in such a distribution from bidding for or purchasing, or attempting
to induce any person to bid for or purchase, any security which is the subject
of the distribution until the entire distribution is complete.
(f) Each Shareholder will notify InterCept and its counsel of any of the
following by the Shareholder:
(i) any transfer of shares by the Shareholder to any pledgee or donee;
and
(ii) any material arrangement with a broker or dealer for the sale of
the shares through a block trade, special offering, exchange distribution
or secondary distribution or a purchase by a broker or dealer, along with
any information required to be disclosed by InterCept in a prospectus
supplement.
5. Assignment of Rights. No Shareholder may assign his or her rights
--------------------
under this Agreement to any party without the prior written consent of
InterCept, and any attempted transfer in violation of this Section 5 shall be
null and void.
2
<PAGE>
6. Information by Shareholder. Each Shareholder shall furnish to
--------------------------
InterCept such information regarding such Shareholder and the distribution
proposed by such Shareholder as InterCept may request in writing.
7. "Market Stand-off" Agreement. Each Shareholder agrees not to sell or
----------------------------
otherwise transfer or dispose of any common stock (or other securities) of
InterCept held by it during the 180 day period following the effective date of
any public offering if so requested by InterCept and underwriters of common
stock (or other securities) of InterCept. InterCept may impose stop-transfer
instructions with respect to the shares (or securities) subject to the foregoing
restriction until the end of such period.
8. Indemnification.
---------------
(a) InterCept shall, and hereby does, indemnify and hold harmless each
Shareholder against any losses, claims, damages or liabilities, joint or
several, to which the Shareholder may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement of any
material fact contained in the Resale S-3, any preliminary prospectus, final
prospectus or summary prospectus contained therein, or any amendment or
supplement thereto, or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein in light of the circumstances in which they were made not misleading,
and InterCept shall reimburse the Shareholders for any legal or any other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability, action or proceeding;
provided that InterCept shall not be liable in any such case to the extent that
any such loss, claim, damage, liability (or action or proceeding in respect
thereof) or expense arises out of or is based upon an untrue statement or
alleged untrue statement in or omission or alleged omission from such
registration statement, any such preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement in reliance upon and in conformity
with written information furnished to InterCept through an instrument duly
executed by or on behalf of such Shareholder specifically stating that it is for
use in the preparation thereof. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of InterCept and
shall survive the transfer of such shares by the Shareholder.
(b) Each Shareholder shall indemnify and hold harmless InterCept, its
directors and officers and each other person or entity, if any, who controls
InterCept within the meaning of Section 15 of the Securities Act, against any
losses, claims, damages or liabilities, joint or several, to which InterCept or
any such director or officer or controlling person may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions or proceedings, whether commenced or threatened, in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement in or omission or alleged omission from the Resale S-3, any
preliminary prospectus, final prospectus or summary prospectus contained
therein, or any amendment or supplement thereto, if such statement or alleged
statement or omission or alleged omission was made in reliance upon and in
conformity with written information about such Shareholder furnished to
InterCept through
3
<PAGE>
an instrument duly executed by such Shareholder specifically stating that it is
for use in the preparation of such registration statement, preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement;
provided, however, that such indemnity agreement found in this Section 8(b)
- -------- -------
shall in no event exceed the gross proceeds from the offering received by such
Shareholder. Such indemnity shall remain in full force and effect, regardless of
any investigation made by or on behalf of InterCept or any such director,
officer or controlling person and shall survive the transfer by any Shareholder
of such shares.
(c) Promptly after receipt by an indemnified party of notice of the
commencement of any action or proceeding involving a claim referred to in
Section 8(a) or (b) (including any governmental action), such indemnified party
shall, if a claim in respect thereof is to be made against an indemnifying
party, give written notice to the indemnifying party of the commencement of such
action; provided that the failure of any indemnified party to give notice as
provided herein shall not relieve the indemnifying party of its obligations
under Section 8(a) or (b), except to the extent that the indemnifying party is
actually prejudiced by such failure to give notice. In case any such action is
brought against an indemnified party, unless in such indemnified party's
reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist or the indemnified party may have defenses not
available to the indemnifying party in respect of such claim, the indemnifying
party shall be entitled to participate in and to assume the defense thereof,
with counsel reasonably satisfactory to such indemnified party and, after notice
from the indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party shall not be liable to such
indemnified party for any legal or other expenses subsequently incurred by the
latter in connection with the defense thereof other than reasonable costs of
investigation. Neither an indemnified nor an indemnifying party shall be liable
for any settlement of any action or proceeding effected without its consent. No
indemnifying party shall, without the consent of the indemnified party, consent
to entry of any judgment or enter into any settlement which does not include as
an unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect of such claim or
litigation.
(d) The indemnification required by Section 8(a) and (b) shall be made by
periodic payments of the amount thereof during the course of the investigation
or defense, as and when bills are received or expenses, losses, damages or
liabilities are incurred.
(e) If the indemnification provided for in this Section 8 is held by a
court of competent jurisdiction to be unavailable to an indemnified party with
respect to any loss, liability, claim, damage or expense referred to herein, the
indemnifying party, in lieu of indemnifying such indemnified party hereunder,
shall contribute to the amount paid or payable by such indemnified party as a
result of such loss, liability, claim, damage or expense as is appropriate to
reflect the relative benefits received by the indemnified party on the one hand,
and the indemnifying party on the other from the offering of the common stock,
as well as other relevant equitable considerations.
4
<PAGE>
9. Miscellaneous
-------------
(a) Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of Georgia applicable to contracts between
Georgia residents entered into and to be performed entirely within the State of
Georgia.
(b) Successors and Assigns. Except as otherwise provided herein, the
----------------------
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.
(c) Entire Agreement. This Agreement constitutes the full and entire
----------------
understanding and agreement between the parties with regard to the subjects
hereof.
(d) Notices, etc. All notices and other communications required or
------------
permitted hereunder shall be in writing and shall be effective three (3) days
after mailed by first-class mail, postage prepaid, or otherwise delivered by
hand or by messenger, addressed (a) if to any Shareholder, at such address as
such Shareholder shall have furnished InterCept in writing, or (b) if to
InterCept, at such address as InterCept shall have furnished to each Shareholder
in writing.
(e) Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which may be executed by less than all of the
Shareholders, each of which shall be enforceable against the parties actually
executing such counterparts, and all of which together shall constitute one
instrument.
(f) Severability. In the case any provision of this Agreement shall be
------------
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
(g) Amendments. The provisions of this Agreement may be amended at any
----------
time and from time to time, and particular provisions of this Agreement may be
waived, with and only with an agreement or consent in writing signed by
InterCept and by the Shareholders; provided, however, that without obtaining the
-------- -------
consent of any other party to this Agreement, InterCept may amend this Agreement
to add hereto as parties any person or entity who beneficially owns securities
of InterCept, such Amendment to be effected by obtaining the signature of each
such party and InterCept to a counterpart to this Agreement.
5
<PAGE>
This Agreement to Register Shares is hereby executed as of the date first
above written.
The InterCept Group, Inc.
By: /s/ John W. Collins
-----------------------------
John W. Collins
Chairman and Chief Executive Officer
"Shareholders"
/s/ Jack Caldwell
--------------------------------
Jack Caldwell
/s/ Kevin Jones
--------------------------------
Kevin Jones
/s/ Janet Hollingsworth
--------------------------------
Janet Hollingsworth
/s/ Steve White
--------------------------------
Steve White
/s/ Janice Brown
--------------------------------
Janice Brown
6
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our reports dated September 3, 1999
for Dyad Corporation and Subsidiaries, The Internet Banking Division of the
Bankers Bank, the Internet Banking Division of the Independent BankersBank, and
our report dated September 6, 1999 for SBS Corporation included in The InterCept
Group Inc.'s Form 8-K/A's filed on September 30, 1999, our report dated February
19, 1999 for The InterCept Group, Inc. included in The InterCept Group, Inc.'s
Form 10-K for the year ended December 31, 1998, our report dated June 30, 1999
for L.E. Vickers & Associates and Data Equipment Services included in The
InterCept Group, Inc.'s Form 8-K/A dated August 11, 1999 and to all references
to our Firm included in or made a part of this registration statement.
/s/ ARTHUR ANDERSEN LLP
Atlanta, Georgia
October 1, 1999
<PAGE>
Exhibit 23.3
CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
The Intercept Group, Inc.
Norcross, Georgia
We hereby consent to the incorporation by reference in the Prospectus
constituting a part of this Registration Statement of our report dated January
22, 1998, relating to the financial statements of Item Processing of America,
Inc. appearing in The Intercept Group, Inc.'s Report on Form 8-K/A dated January
13, 1999.
We also consent to the reference to us under the caption "Experts" in the
Prospectus.
/s/ BDO Seidman, LLP
Miami, Florida
October 1, 1999
<PAGE>
Exhibit 23.4
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3 to be filed on October 1, 1999) and related
Prospectus of The InterCept Group for the registration of shares of its common
stock and to the incorporation by reference therein of our report dated January
27, 1999, with respect to the financial statements of SBS Data Services, Inc.
included in the Current Report on Form 8-K/A filed September 30, 1999, both
filed with the Securities and Exchange Commission.
/s/ Hardman, Guess, Frost & Cummings, P.C.
Birmingham, Alabama
September 29, 1999
