<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999
COMMISSION FILE NUMBER 000-20702
ARGENT CAPITAL CORPORATION
(NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)
NEVADA 88-0383765
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
1801 WEST END AVENUE,
SUITE 1110, NASHVILLE, TN 37203
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE: (615) 345-6200
SECURITIES REGISTERED UNDER SECTION 12(b) OF THE EXCHANGE ACT:
NONE
SECURITIES REGISTERED UNDER SECTION 12(g) OF THE EXCHANGE ACT:
COMMON STOCK, $.001 PAR VALUE
(TITLE OF CLASS)
Check whether the issuer: (I) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the Company was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
Number of shares of the issuer's sole class of common equity,
outstanding as of the latest practicable date: 8,282,702 (April 16, 1999).
<PAGE> 2
PART I. FINANCIAL STATEMENTS
(UNAUDITED)
ARGENT CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 1999 AND DECEMBER 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 27,151 $ 5,453
Prepaid expenses -- 5,000
----------- -----------
Total current assets 27,151 10,453
SOFTWARE DEVELOPMENT 152,395 79,000
PROPERTY AND EQUIPMENT 645,910 634,648
Less accumulated depreciation (481,270) (478,329)
Total property and equipment, net 164,640 156,319
----------- -----------
Investment in NetVoucher, Inc. 356,210 --
Total assets of continuing operations $ 700,397 $ 245,772
=========== ===========
LIABILITIES & SHAREHOLDERS' EQUITY
CURRENT LIABILITIES $ 26,389 $ --
NET LIABILITIES RELATED TO DISCONTINUED OPERATIONS 347,407 108,405
COMMITMENTS AND CONTINGENCIES (Note 8)
SHAREHOLDERS' EQUITY
Common stock, $.001 par value, authorized
100,000,000 shares issued 4,496,000 shares 4,496 2,589
Additional paid-in capital 2,133,083 1,454,197
Treasury stock, 13,333 shares (63,281) (63,281)
Notes receivable (1,839) (1,839)
Retained earnings (deficit) (1,745,857) (1,254,299)
----------- -----------
Total shareholders' equity 326,602 137,367
------- -------
Total liabilities and shareholders' equity $ 700,397 $ 245,772
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE> 3
ARGENT CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(UNAUDITED)
<TABLE>
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
REVENUES:
Interest income $ 30 $ --
Other income (expense) 555
---------- ----------
TOTAL REVENUE 585
---------- ----------
GENERAL AND ADMINISTRATIVE EXPENSES 311,254 --
LOSS FROM CONTINUING OPERATIONS (310,669) --
DISCONTINUED OPERATIONS:
Loss from discontinued operations (254,217) (587,891)
Gain from disposal of discontinued operations 73,329 --
---------- ----------
Net loss from discontinued operations (180,889) (587,891)
---------- ----------
NET LOSS $ (491,558) $ (587,891)
========== ==========
Loss per share (Basic and diluted):
Loss from continuing operations $ (0.09) $ --
---------- ----------
Loss from discontinued operations (0.08) (0.50)
Gain from disposal of discontinued operations 0.02 --
---------- ----------
Net Loss from discontinued operations (0.06) (0.50)
---------- ----------
Net loss per share $ (0.15) $ (0.50)
========== ==========
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE> 4
ARGENT CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For The Three Months Ended March 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Loss from continuing operations $ (310,669) $ --
Adjustments to reconcile loss from continuing operations to net
cash provided by operating activities of continuing operations:
Depreciation and amortization 2,941 --
Increase (decrease) in cash resulting from changes in operating
accounts, net of acquisitions:
Prepaid expenses 5,000 --
Increase (decrease) in liabilities:
Accounts payable and accrued expenses 26,389
------------ ------------
Net cash used by operating activities of continuing operations (276,339) --
Income (loss) from discontinued operations (254,217) (587,891)
Gain (Loss) on disposal of discontinued operations 73,329
Adjustments to reconcile income (loss) from discontinued operations to net cash
provided by (used in) operating activities of discontinued operations:
Depreciation and amortization 157,447 51,025
Increase (decrease) in cash resulting from changes in operating
accounts, net of acquisitions:
Mortgage loans purchased for sale -- (21,331,953)
Proceeds from sale of mortgage loans 4,783,854 21,134,861
Accounts receivable 26,991 34,345
Income tax receivable 509,530 (10,000)
Prepaid expenses 30,240 (113,809)
Other assets 25,005 4,393
Accounts payable and accrued liabilities (19,261) 121,370
Income taxes payable -- --
Deferred taxes -- --
Valuation allowance on mortgage loans (535,000) 228,000
Other deferred liabilities -- --
------------ ------------
Net cash provided by (used in) operating activities of discontinued
operations 4,797,918 (469,659)
------------ ------------
Net cash provided by (used in) operating activities 4,521,579 (469,659)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (470,362) (3,746)
------------ ------------
Net cash used in investing activities of continuing operations (470,362) (3,746)
------------ ------------
Cash acquired from acquisitions, net of cash paid -- 928,526
Proceeds from sale of fixed assets 64,712 --
Collection of Notes receivable -- 72,521
------------ ------------
Net cash provided by investing activities of discontinued operations 64,712 1,001,047
------------ ------------
Net cash provided by investing activities (405,650) 997,301
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of common stock 680,793 --
------------ ------------
Net cash provided by financing activities of continuing operations 680,793 --
------------ ------------
Payments of notes payable --
Net increase (decrease) in warehouse financing facility (4,547,029) 425,917
------------ ------------
Net cash provided by (used in) financing activities of discontinued
operations (4,547,029) 425,917
------------ ------------
Net cash provided by (used in) financing activities (3,866,236) 425,917
------------ ------------
NET DECREASE IN CASH 249,693 953,559
CASH AT BEGINNING OF PERIOD 87,668 407,147
------------ ------------
CASH AT END OF PERIOD $ 337,361 $ 1,360,706
============ ============
CASH - DISCONTINUED OPERATIONS $ 310,215 $ 1,360,706
CASH - CONTINUING OPERATIONS 27,146
------------ ------------
TOTAL CASH, END OF PERIOD $ 337,361 $ 1,360,706
============ ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ -- $ 231,993
============ ============
Income taxes $ -- $ --
============ ============
DETAIL OF BUSINESSES ACQUIRED IN PURCHASE BUSINESS
COMBINATIONS:
On February 27, 1998, the company acquired Argent Mortgage Corporation.
A summary of the transaction is as follows:
Fair market value of stock issued $ 300,587
Fair value of tangible and identifiable assets acquired (1,156,172)
Fair value of liabilities assumed 98,635
------------
Excess of identifiable assets acquired over cost (negative goodwill) $ (756,950)
============
</TABLE>
<PAGE> 5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying consolidated financial statements at March 31, 1999 include the
accounts of Argent Capital Corporation ("ACC"), a corporation organized in the
State of Nevada, and its majority-owned subsidiaries (collectively, the
"Company"). The subsidiaries include Argent Mortgage Corporation (previously
known as Clearview Capital Corporation), Argent Financial Services, Inc.
("AFS"), Sullivan and Mock Corporation of Nevada ("Sullivan and Mock") and
Sunport Medical Corporation (USA). All significant inter-company accounts and
transactions have been eliminated in consolidation.
Prior to February 27, 1998, the Company operated as Sunport Medical Corporation,
a company organized in British Columbia. On February 27, 1998, pursuant to a
Stock Purchase Agreement, ACC and Clearview Capital Corporation ("CCC")
completed a reverse merger whereby ACC acquired CCC. Immediately after the
merger, CCC changed its name to Argent Mortgage Corporation. In the merger,
shareholders of CCC received approximately 75% of the total issued and
outstanding common stock of ACC. Since the former CCC shareholders received a
substantial majority of the shares of common stock of ACC, the transaction was
treated as a purchase of ACC by CCC for accounting purposes. As a result, the
historical financial statements of ACC for the periods prior to the merger are
those of CCC, rather than those of ACC. The purchase price was allocated as
included in the accompanying Statement of Cash Flows.
The percentage interest of CHC in the Company's common stock outstanding has
been reduced to approximately 18% pursuant to adjustments provided for in the
Stock Purchase Agreement due to changes in the financial condition of Argent
Mortgage Corporation after the closing, and the issuance of additional common
stock.
On August 31, 1998, the Company acquired all of the outstanding stock of
Sullivan and Mock for approximately $402,000 in cash. Sullivan and Mock was a
mortgage banking company doing business in Nevada.
<PAGE> 6
GOING CONCERN
The accompanying financial statements have been prepared on a going concern
basis, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. As shown in the financial
statements, during the year ended December 31, 1998, the Company incurred a loss
of $2,671,831 and, as of that date, the Company's deficit was $1,426,716. During
the three months ended March 31, 1999 the Company lost $491,558. These factors
among others may indicate that the Company will be unable to continue as a going
concern for a reasonable period of time.
The financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts or the amounts and
classification of liabilities that might be necessary should the Company be
unable to continue as a going concern. As described in Note 2, the Company has
discontinued primarily all of its previous operations as of December 31, 1998.
The Company's continuation as a going concern is dependent upon its ability to
generate sufficient cash flow to meet its obligations on a timely basis, to
comply with terms and covenants of its financing agreements, to obtain
additional financing or refinancing as may be required, and ultimately to attain
successful operations. Management is continuing its efforts to obtain additional
funds so that the Company can meet its obligations and sustain operations from
sources that are described in Note 10 to the financial statements.
USE OF ESTIMATES
The Company prepares financial statements in conformity with generally accepted
accounting principles that require management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements, and
the reported amounts of revenues and expenses during the accounting period.
Actual results could differ from those estimates.
FAIR VALUE DISCLOSURES
The carrying value of the Company's financial instruments related to continuing
operations approximate their fair value.
<PAGE> 7
SALE OF MORTGAGE LOANS
Gains and losses resulting from sales of mortgage loans are recognized at
settlement date, based on the difference between the selling price and the
carrying value of the related loans sold. Nonrefundable fees and direct costs
associated with the purchase of mortgage loans are deferred and recognized when
the loans are sold. The Company sells all loans on a servicing released basis.
LONG-LIVED ASSETS
The Company accounts for the impairment and disposition of long-lived assets in
accordance with Statement of Financial Accounting Standards ("SFAS") No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of." In accordance with SFAS No. 121, long-lived assets are reviewed
for events or changes in circumstances, which indicate that their carrying value
may not be recoverable.
COMPREHENSIVE INCOME
The Company has adopted SFAS No. 130, "Reporting Comprehensive Income". The
Company reports no difference between comprehensive income and net income.
NEW ACCOUNTING PRONOUNCEMENTS
In June, 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities," which is
effective for fiscal periods beginning after June 15, 1999. This statement
establishes standards for derivative instruments, including certain derivative
instruments imbedded in other contracts, and for hedging activities. The Company
is currently evaluating the effect this standard may have on the Company's
financial condition, results of operations and cash flows.
RECLASSIFICATIONS
Certain prior year amounts have been reclassified to conform to the 1999
presentation. These changes had no impact on previously reported results of
operations or shareholders' equity.
NOTE 2. DISCONTINUED OPERATIONS
During the fourth quarter of 1998, the Company determined that the mortgage
banking business no longer fit its strategic plan and, as such, decided to
discontinue its mortgage banking activities. The mortgage banking business is
reported as a discontinued operation for all periods presented. The consolidated
balance sheet,
<PAGE> 8
consolidated statements of operations and cash flows and related notes to the
consolidated financial statements have been restated to conform to the
discontinued operations presentation.
The following details all of the assets and liabilities related to discontinued
operations at March 31, 1999 and December 31, 1998:
<TABLE>
<CAPTION>
1999 1998
---------- -----------
<S> <C> <C>
ASSETS
Cash $ 312,220 $ 82,215
Accounts receivable 9,500 36,492
Mortgage loans held for sale 4,248,854
Prepaid expenses 30,240
Income taxes receivable 571,858
Furniture, fixtures, and equipment 322,416
Less: accumulated depreciation (124,758)
----------
Total furniture and equipment, net 197,658
Other assets 46,895 75,050
--------- ----------
Total assets $ 369,615 $5,242,367
========= ==========
LIABILITIES
Accounts payable $ 701,843 $ 726,235
Warehouse financing facilities 4,547,030
Deferred income tax liability 62,328
Other deferred credits 15,179 15,179
--------- ----------
Total liabilities 717,022 5,350,772
--------- ----------
NET LIABILITIES RELATED TO DISCONTINUED
OPERATIONS $(347,407) $ (108,406)
========= ==========
</TABLE>
<PAGE> 9
CLOSURE OF SULLIVAN & MOCK AND ARGENT MORTGAGE CORPORATION
In conjunction with the discontinuance of the mortgage banking business,
Sullivan & Mock was closed as of February 15, 1999. The goodwill related to the
acquisition of Sullivan & Mock was charged to discontinued operations as of
December 31, 1998. The Company ceased doing business in Argent Mortgage
Corporation effective December 31, 1998. The negative goodwill related to the
merger of Argent Mortgage and the Company was credited to discontinued
operations as of December 31, 1998.
TERMINATION OF LEASES
As of March 31, 1999, the Company terminated the leases on its Huntington Beach,
California location. The termination agreement required the Company to pay rents
due through March 31, 1999. The landlord waived all obligations under the leases
subsequent to the effective date of the termination.
SETTLEMENT OF WAREHOUSE FINANCING FACILITIES
On or about March 5, 1999, the Company entered into a settlement agreements with
certain warehouse lenders which had financed its mortgage lending business
during 1998. Under the settlement agreements, the Company paid $325,000 in cash
and transferred ownership interest in mortgage loans totaling approximately
$3,186,000 as payment for the balance due of approximately $3,105,000 plus
accrued interest under the facilities.
NOTE 3. SALE OF NOTES RECEIVABLE
As of November 18, 1998, the Company consummated the sale of notes receivable to
a third party for total cash consideration of $250,000, of which $75,000 was for
the purchase of a $100,000 note due from a retail mortgage company and $175,000
for the purchase of a $495,907 note secured by real estate.
NOTE 4. WAREHOUSE FINANCING FACILITIES
In October 1997, the Company obtained a $15,000,000 revolving warehouse-
financing facility under which the Company may borrow, repay, and reborrow
funds. Interest under the facility was charged at a floating rate of LIBOR plus
2%. The agreement required payment of a warehousing fee in advance, as well as
requiring Argent Mortgage Corporation to maintain a certain minimum level of
tangible net worth. Borrowings under the facility were covered by a security
interest in certain mortgage loans towards which the advances were made. This
warehouse financing facility was due on July 31, 1998, but was subject to
continuing renewals under an indefinite series of available 3-month extensions.
The facility required that payment be due from the receipt of 100% of the funds
from the sale of the underlying collateral mortgage loans.
<PAGE> 10
The Company breached certain covenants under this line and no additional
advances were made in 1999 under this facility. As the loans that were pledged
under this agreement were sold the facility was liquidated pursuant to a
settlement agreement dated March 5, 1999 as discussed in Note 2.
In June 1998, the Company obtained a new borrowing facility from another
warehouse lender. The interest rate on this facility ranged from 2-4% over
prime, depending upon the security position of the collateral mortgages
warehoused. This facility was also settled on March 5, 1999 as discussed in
Note 2.
In conjunction with the acquisition of Sullivan & Mock, the Company assumed a
warehouse facility. This facility was paid off prior to December 31, 1998.
NOTE 5. COMMON STOCK
STOCK-BASED COMPENSATION
During the year ended December 31, 1997, the Company adopted SFAS No. 123,
"Accounting for Stock-Based Compensation" ("SFAS 123"). The new standard defines
a fair value method of accounting for stock options and similar equity
instruments. Under the fair value method, compensation cost is measured at the
grant date based on the fair value of the award and is recognized over the
service period, which is usually the vesting period. Pursuant to the new
standard, companies are encouraged, but not required, to adopt the fair value
method of accounting for employee stock-based transactions. Companies are also
permitted to continue to account for such transactions under Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees ("APB
25"), but would be required to disclose pro forma net income and, if presented,
earnings per share as if the company had applied the new method of accounting.
The accounting requirements of the new method are effective for all employee
awards granted after the beginning of the fiscal year of adoption, whereas the
disclosure requirements apply to all awards granted subsequent to October 1,
1994. The Company will continue to recognize and measure compensation for its
stock option plan in accordance with the existing provisions of APB 25.
STOCK OPTIONS:
The Company has issued stock options at fair value to certain directors and
employees; such stock options vest upon issuance and expire five years from
issuance. The transactions for the year ended December 31, 1998 and the quarter
ended March 31, 1999 are summarized as follows and have been adjusted for the
Company's 30 to 1 reverse split that was effective February 27, 1998:
<PAGE> 11
<TABLE>
<CAPTION>
Weighted
Shares Subject Average
Outstanding At to Option Exercise Price
-------------- -------------- --------------
<S> <C> <C>
12/31/98 55,000 $4.50
3/31/99 55,000 $4.50
</TABLE>
At March 31, 1999, 55,000 options were exercisable and the weighted average
remaining contractual life was 25 months.
ISSUANCE OF COMMON STOCK:
On November 15, 1998, an officer of the Company was issued 183,911 common shares
at a nominal price pursuant to an employment agreement dated April 15, 1998. The
Company recorded $172,417 as compensation expense, representing the difference
between the fair value of stock and the proceeds from the officer.
WARRANTS:
On October 30, 1998, warrants were issued to two directors in conjunction with
the issuance of 280,000 shares of common stock. The warrants grant the right to
purchase, in the aggregate, 280,000 shares of common stock of the Company for
$.25 per share. The weighted average remaining contractual life of the warrants
was 30 months as of March 31, 1999. The fair value of the warrants was
considered costs of raising capital and was recorded as additional paid-in
capital.
During the first quarter of 1999 warrants to purchase 140,000 shares of common
stock of the Company were exercised. In addition warrants to purchase 1,736,664
were issued to four directors in conjunction with the issuance of 1,736,664
shares of common stock. The warrants outstanding at March 31, 1999 grant the
right to purchase, in the aggregate, 1,876,664 shares of common stock of the
Company for $.25 per share. The weighted average remaining contractual life of
the warrants was 34.7 months as of March 31, 1999. The fair value of the
warrants was considered costs of raising capital, and recorded as additional
paid-in capital.
COMPENSATION COST:
During the year ended December 31, 1997, the Company adopted SFAS No. 123.
However, as permitted by the standard, the Company has elected to continue
following the guidance of APB 25 for measurement and recognition of stock-based
transactions with employees. No compensation cost has been recognized for the
Company's option plans. The effects of determining compensation cost based on
the fair value on the grant date for these options, consistent with the method
of SFAS No. 123, would yield an immaterial difference in the financial
statements.
<PAGE> 12
NOTE 6. NET LOSS PER SHARE
A reconciliation of the numerators and denominators used in basic and diluted
net income (loss) per share is as follows for the three-months ended
March 31, 1999 and 1998:
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Loss from continuing operations $ (310,669) $ --
Loss from discontinued operations (254,217) (587,891)
Gain on disposal of discontinued operations 73,329 --
---------- ----------
Net Loss from discontinued operations (180,889) (587,891)
---------- ----------
Net Loss $ (491,558) $ (587,891)
========== ==========
Weighted average number of common shares:
Basic 3,199,163 1,179,567
Effect of dilutive securities:
Stock options -- --
Warrants -- --
---------- ----------
Diluted 3,199,163 1,179,567
========== ==========
Net Loss per share:
Loss from continuing operations $ (0.9) $ --
---------- ----------
Loss from discontinued operations (0.8) (.50)
Income from disposal of discontinued Operations 0.2 --
---------- ----------
Net Loss from discontinued Operations (0.6) (.50)
---------- ----------
Net Loss per share:
Basic $ (.15) $ (.50)
Effect of dilutive securities:
Stock options -- --
Warrants -- --
----------- ----------
Diluted $ (.15) $ (.50)
=========== ==========
</TABLE>
All stock options and warrants outstanding as of March 31, 1999, were considered
anti-dilutive; therefore, basic and weighted average number of common shares
equals diluted weighted average number of shares at March 31, 1999 and 1998.
<PAGE> 13
NOTE 7. INCOME TAX
Deferred tax assets and liabilities are determined based on the difference
between financial and tax reporting bases of assets and liabilities. These
differences result in taxable or deductible amounts in future years.
The provision for income taxes related to continuing operations consists of the
following:
<TABLE>
<CAPTION>
1998
----
<S> <C>
Current
Federal $0
State 0
--
0
Deferred
Federal 0
State 0
0
--
$0
==
</TABLE>
The provision differs from the amount computed by applying the federal statutory
rate to income (losses) from continuing operations before taxes as follows:
<TABLE>
<S> <C>
Federal Statutory Rate (35.0)%
State Taxes Net (5.7)
State Valuation Allowance 3.4
State Net Operating Loss Limitations 2.3
Other
- Meals and Entertainment .1
- Valuation Allowance - Federal 34.9
----
0.0%
</TABLE>
Deferred tax assets (liabilities) were comprised of the following at December
31, 1998:
<TABLE>
<S> <C>
Deferred tax assets:
Net operating loss $ 87,796
Organization/start-up costs 21,385
---------
109,181
Deferred tax liabilities:
Depreciation (3,700)
---------
Net deferred tax asset before
valuation allowance 105,481
Less valuation allowance (105,481)
---------
Net deferred tax (liability) asset $ 0
=========
</TABLE>
Valuation allowances have been placed against deferred tax assets due to
uncertainties as to the ultimate realization of the asset.
NOTE 8. COMMITMENTS AND CONTINGENCIES
The Company filed a lawsuit against Clearview Holdings Corporation, S.A. ("CHC")
on February 4, 1999, seeking to rescind the acquisition of Argent Mortgage
Corporation based upon fraud by CHC. The Company alleges, among other things,
that CHC knowingly made certain false representations concerning the financial
condition, assets, and records of Argent Mortgage Corporation. The Company is
seeking rescission of the purchase and cancellation of the 1,493,631 shares of
the Company acquired by CHC as consideration for the sale of Argent Mortgage
Corporation to the Company. On February 20, 1999, the Company served the
complaint on CHC. CHC has not yet answered the Complaint. If the Company is
successful in rescinding the transaction, the shares of Argent Mortgage
Corporation, the legal successor to Clearview Capital Corporation, would be
ordered returned to CHC and the shares of the Company now held by CHC would be
ordered cancelled or ordered for return to be cancelled.
Management of the Company believes that the ultimate outcome of this matter will
not have a material adverse effect on the financial position, results of
operations, or cash flows of the Company.
<PAGE> 14
NOTE 9. MANAGEMENT'S PLANS
Management is currently evaluating and implementing several steps to improve the
liquidity and operations of the Company. These steps include:
- - Seeking additional financing either in the form of debt or equity.
- - The acquisition of businesses that will immediately generate cash flow.
- - Entering into strategic alliances with banking and insurance companies.
- - Launching its debt management program through a vast marketing network.
The Company's ongoing operations have been funded in the main by Directors of
the Company. During the three months ended March 31, 1999, the Directors
contributed approximately $500,000 in capital and another $225,000 has been
contributed subsequent to March 31, 1999.
NetVoucher, Inc., which was acquired April 12, 1999, has started sales of
merchant sites in four cities. Once satisfactory results are achieved in these
cities, the rollout will continue nationwide.
AFS will begin recruitment of independent sales agents during May 1999 and will
begin offering several insurance and income protection products during this
period. Revenues from the sale of the Argent Quest for Success product are
expected to commence during the latter half of 1999.
NOTE 10. SUBSEQUENT EVENT
PURCHASE OF NET VOUCHER, INC.
On April 12, 1999, the Company acquired NetVoucher, Inc. ("NetVoucher"); an
Alabama corporation engaged in the development of internet commerce software and
merchandising programs, via a merger of NetVoucher with and into Argent Security
Corporation ("ASC"), formally an inactive wholly-owned Nevada subsidiary of the
Company. The transaction was carried out pursuant to a stock purchase agreement
dated March 12, 1999, by the Company and the shareholders of NetVoucher (the
"NetVoucher Agreement").
The consideration paid to the shareholders of NetVoucher was (i) 2,000,000
newly-issued, unregistered common shares of the Company, (ii) ten-year options
to purchase up to 1,000,000 additional shares at an exercise price of $.25 per
share, and (iii) ten-year options to purchase up to 1,000,000 shares at an
exercise price of $25.00 per share, with each such exercise price, and the
number of shares subject to acquisition under the options, to be adjusted for
any future stock split or similar transaction of the Company. Also, the Company
granted to two former senior executive officers and directors of NetVoucher and
their assignees, ten-year options to purchase up to 1,000,000 shares of the
Company's common stock at an exercise price of $.25 per share. In addition to
the foregoing consideration, within 60 days following the second anniversary of
the closing date, the Company will pay to the former Class A shareholders of
NetVoucher, consideration in the amount of 30% of the value of the NetVoucher
business at that time, as determined by a business valuation expert to be agreed
upon. At the option of the Company, this consideration may be all cash or a
combination of cash and stock composed of at least 50% cash.
The NetVoucher Agreement further requires the Company to file a registration
statement with the Securities and Exchange Commission for a registered public
offering as soon as practicable after the closing date, which shall include the
shares of the Company issued to the former shareholders of NetVoucher. The
Agreement also provides that the Company must take no action which would result
in the equity ownership represented by the shares and the options issued in the
transaction to be reduced below 23.55% equity ownership of the Company. Further,
two former senior officers and directors of NetVoucher, or persons designated by
them and acceptable to the Company, are expected to be appointed to the Board of
Directors of the Company.
<PAGE> 15
ITEM 2. PLAN OF OPERATION
The Company conducts its business through two recently established subsidiaries,
Argent Financial Services, Inc. and NetVoucher, Inc.
PURCHASE OF NET VOUCHER, INC.
On April 12, 1999, the Company acquired NetVoucher, Inc. ("NetVoucher"), an
Alabama corporation engaged in the development of internet commerce software and
merchandising programs, via a merger of NetVoucher with and into Argent Security
Corporation ("ASC"), formerly an inactive, wholly-owned Nevada subsidiary of the
Company. The transaction was carried out pursuant to a stock purchase agreement
dated March 12, 1999, by the Company and the shareholders of NetVoucher (the
"NetVoucher Agreement").
The consideration paid pro-rata to the former shareholders of NetVoucher was (i)
2,000,000 newly-issued, unregistered common shares of the Company, (ii) ten-year
options to purchase up to 1,000,000 additional shares at an exercise price of
$.25 per share, and (iii) ten-year options to purchase up to 1,000,000 shares at
an exercise price of $25.00 per share, with each such exercise price, and the
number of shares subject to acquisition under the options, to be adjusted for
any future stock split or similar transaction of the Company. As part of the
consideration for the transaction, the Company also granted to two former senior
executive officers and directors of NetVoucher and their assignees, additional
ten-year options to purchase up to 1,000,000 shares of the Company's common
stock at an exercise price of $ .25 per share. In addition to the foregoing
consideration, within 60 days following the second anniversary of the closing
date, the Company is required to pay to the former Class A shareholders of
NetVoucher consideration in the amount of 30% of the value of the NetVoucher
business at that time, as determined by a business valuation expert to be agreed
upon. At the option of the Company, this consideration may be all cash, or a
combination of cash and stock of the Company composed of at least 50% cash.
The NetVoucher Agreement requires the Company to file a Registration Statement
with the Securities and Exchange Commission with respect to the 2,000,000 shares
issued in connection with the purchase of NetVoucher, as soon as practicable
after the closing date, provided, however, that such registration is in
conjunction with a public offering by the Company of newly-issued common stock
or other securities and that other holders of unregistered securities are also
permitted to register their securities at such time. The NetVoucher Agreement
additionally requires the Company to appoint to its Board of Directors two
individuals to be chosen by former controlling shareholders of NetVoucher, Inc.
and reasonably acceptable to the Company, and to exercise its best efforts to
cause the election of a third such individual to its Board of Directors at the
Company's next annual meeting of shareholders.
NETVOUCHER PLAN OF OPERATION
NetVoucher has developed a proprietary internet advertising product
(e-Advertising) that provides local merchants a web presence and allows such
merchants to build advertising strategies to reach potential customers through a
website location on the internet. Each local merchant that subscribes to the
service will have a web page, along with banner ads and other specialty ad
promotions designed to attract customers through the NetVoucher system. It is
expected that merchants will pay NetVoucher monthly advertising fees and,
potentially, fees for special advertising services and other fees based on
customer traffic produced for the merchants through the NetVoucher system.
The NetVoucher internet advertising system (the "NetVoucher System") is actually
comprised of several related, software and internet-based products and services
providing for interactive marketing and advertising by merchants, to and with
consumers. These were developed by Optimize, Inc. ("Optimize"), a former
shareholder of NetVoucher, which transferred to NetVoucher all equipment,
personnel, rights to the software and related intellectual property rights,
including trademarks and copyrights, which collectively comprise the NetVoucher
System. The elements of the NetVoucher System, which have been substantially
developed to date and which are being tested, include the following: (1)
NetVoucher and e-Advertising (which are internet-based advertising products to
be sold to merchants); (2) NetVoucher Plus (an enhancement to
<PAGE> 16
NetVoucher and e-Advertising); (3) e-point (an internet software product which
tracks customer sales; and (4) other elements, including a merchant kit,
advertising strategies manuals and an internet software training product.
NetVoucher either has obtained, or is in the application process for, trademark
and service mark protection for all of these products and services, and may seek
patent, trademark and other intellectual property right protection for other
elements as well.
Consumers will be offered enrollment, without fees, as users of the NetVoucher
System. By logging on to the system, consumers will have access to promotions
offered by merchant members. NetVoucher expects that the benefits afforded
consumers through enrollment will facilitate strong development of the consumer
and merchant subscriber base, but is unable to make definitive projections at
this time.
NetVoucher began testing the system in Birmingham, Alabama during March, 1999,
and management expects to begin rolling out the system nationwide in May, 1999.
The business plan calls for a presence in every major city in the United States.
NetVoucher has contracted national and regional marketing directors, and area
coordinators in a number of regions of the United States to begin the national
roll-out. The budget and the timetable for the national roll out are still under
development, and the national roll out will depend to some degree on the
availability of sufficient funds to make the system operational nationwide. To
date, NetVoucher has begun offering merchant sites in four cities.
NetVoucher is expected to be marketed through a nationwide independent sales
force. The Company's business plan calls for approximately 9,000 salespersons to
be recruited by independent sales managers throughout the United States.
Approximately 400 City Directors ("CD's") will be responsible for creating the
local merchant websites as sales occur. A merchant kit including various
advertising and promotional media will be provided to each merchant to display
the NetVoucher logo and encourage local membership. Merchant Kits inventory will
be held by CD's and fulfilled from Birmingham, Alabama.
Pro forma estimates for NetVoucher indicate a total operating cash requirement
of approximately $350,000 during the second quarter of 1999. The Company's cash
flow projections indicate that cash flow from operations will be positive in the
third and fourth quarters of 1999. However, the cash flow projections are
necessarily based on incomplete information and certain assumptions, which are
subject to change and revisions regardless of the effectiveness of management in
pursuing its plans.
The success of the NetVoucher System will depend upon the full functionality of
the software, the presence or absence of competing products and services in the
marketplace, and acceptance of the system by merchants and consumers. All these
factors have some degree of uncertainty, particularly since the field of
internet advertising and marketing is in its infancy. There may be competing
products in use or under development of which the Company is unaware and the
technology is subject to rapid change and innovation. Due to these factors,
management is unable to make specific cash flow, profitability, cost or revenue
projections at the present time.
<PAGE> 17
In order to bring the NetVoucher System up to full functionality and security,
the Company expects to invest approximately $450,000 in capital additions,
comprised primarily of computer hardware and software.
The number of employees required to fully staff NetVoucher for national
operations throughout the U.S. is expected to be approximately 40, including
8-10 in accounting and 20-30 in sales and marketing in support and maintenance
of new and existing websites. These employees will be added over the course of
the next twelve months, as sales volumes reach anticipated levels.
The Company has entered into a Management Information Systems Contract, dated as
of February 18, 1999 (the "MIS Contract") with Optimize, which provides that
Optimize will render comprehensive systems support service to the Company in
connection with the planning, design, development, installation, support,
operation, maintenance and integration of software, systems and related computer
services necessary for the NetVoucher system. Among other things, the MIS
Contract provides that Optimize will establish and support and maintain a
back-office system support center which will integrate the NetVoucher software
and hardware with various necessary computer hardware and software elements,
including central computers, routers, network operating systems, commercial
software and ancillary communications tools necessary to enable the NetVoucher
System to perform as an integrated merchandising system. Optimize will also
assist the Company in setting up a financial processing system (which will
include payment of trade accounts, payment of commissions, cash receipts
processing, order processing, inventory management, fixed asset management and
local regulatory compliance) as part of the NetVoucher System, as well as
operating a call center (which will provide call-in support for the NetVoucher
System), a fulfillment center (which will deliver merchant kits and stage
computer packages for sales persons) and will perform other marketing functions.
Optimize will also perform such repairs, refinements, corrections and updating
of the NetVoucher software as necessary for the NetVoucher System to perform its
intended purposes, as well as work with the Company to discover, design, develop
and program new features and enhancements that relate to the NetVoucher System.
ARGENT FINANCIAL SERVICES
Argent Financial Services, Inc. ("AFS"), a wholly-owned subsidiary of the
Company, was formed in June, 1998. As further described below, AFS will market
the Company's proprietary, state-of-the-art software system, Argent Quest For
Success. Management intends to launch the operations of AFS by the end of May,
1999, commencing with the recruitment of independent sales agents to offer
several insurance and income protection products. The Company and AFS have
recently been in active discussions with a major insurance company located in
the Southeastern U.S. with a view to offering its products through such a
network of independent, affiliated sales agents. The business plan calls for
over 15,000 independent agents, and the addition of up to 60 employees in 1999.
<PAGE> 18
Management plans to launch Argent Quest for Success through AFS during the
latter half of 1999. AQS is a multi-media advanced consumer education and
success implementation software with eight specialized "modules." These modules
address wealth building, debt elimination, insurance needs, estate planning,
home mortgages, basic budgeting, tax savings and dream achievement. AFS also
intends to offer consumers on-line based products and services, such as internet
shopping, banking, stock trading, and other internet tools.
AFS will market its financial products through a multi-level marketing
organization operating nationally. Consumers will be introduced to AQS by
licensed insurance agents and financial planners in the comfort of their home.
The agents will access the AQS proposal system via the internet utilizing laptop
computers. The AQS system will demonstrate the effects of repositioning the
homeowners' equity for accelerated growth in conjunction with various financial
products. Products to be sold through the AQS system are being developed by
third parties, including insurance company strategic partners of AFS.
It is anticipated that AFS will have a negative cash flow from operations during
the next six months and perhaps longer. Management's cash flow projections are
necessarily based on incomplete information and upon certain assumptions, which
are subject to change and revisions regardless of the effectiveness of
management in pursuing its implementation goals. Cash required to fund
operations during the first three quarters is projected to be in excess of $1
million. Funding is expected to be provided by investors and by strategic
partners, such as providers of various financial products to be sold through
AFS, but AFS and the Company do not presently have any binding commitments for
funding.
Products are being developed by third parties under AFS' direction and by
insurance company strategic partners. Agreements have also been entered into to
market products developed by outside third parties. AFS is also in discussions
with potential strategic partners that would provide various banking products
to AFS clients.
<PAGE> 19
AFS expects to expend approximately $400,000 for furniture and computer
equipment to support its operations. In addition, computer software acquisitions
will approximate $100,000 during 1999. To the extent financing is available,
these purchases will be financed.
The business plan calls for the addition of over 60 employees during 1999. The
majority of the additions will be staff required to support the national
marketing organization.
LIQUIDITY AND FINANCIAL RESOURCES
Although the Company raised over $500,000 in capital during the first quarter of
1999, and an additional amount of approximately $400,000 to date during the
second quarter of 1999, it believes that cash from continuing operations and
borrowings, if any, will not be sufficient to fund the strategic plans described
herein. Management is actively seeking additional investors to infuse new
capital. The majority of the new capital raised in 1999 has been contributed by
the Directors of the Company, and substantial portions thereof have represented
salary foregone by such officers in exchange for newly issued equity securities
of the Company. There can be no assurance that the Directors will continue to
contribute additional capital or that executive officers will continue to forgo
salary.
FINANCIAL POSITION
Cash from continuing operations and borrowings are not expected to be sufficient
to fund continuing operations. The proceeds from the capital contributions were
used to fund continuing operations and to advance funds to Optimize in
anticipation of the acquisition of NetVoucher, Inc.
RESULTS OF OPERATIONS
The loss for 1999 is primarily the loss from discontinued operations net of gain
from the disposal of those operations. The loss from continuing operations is
primarily general and administrative costs associated with the start up of
continuing operations.
YEAR 2000 COMPLIANCE
As a financial services company, the Company is dependent on computer systems
and applications to conduct its business. The Company is in a start up phase for
its continuing operations. All hardware and software acquired for the new
business is Year 2000 compliant. In addition, all major vendors have provided
verification that their systems are or will be Year 2000 compliant by December
31, 1999. Software being developed for the new business is being written to be
Year 2000 compliant.
<PAGE> 20
The total cost associated with Year 2000 compliance is not expected to be
material to the Company's financial condition or results of operations. Since
all of the Company's computer systems and applications are new or in the process
of development there are no separate identifiable costs associated with Year
2000 compliance.
The Company does not anticipate any material disruptions of its operations as a
result of any failure by the Company to be compliant. However, there can be no
assurance that there will not be a delay in, or costs associated with the Year
2000 issue. The Company relies, directly and indirectly, on other businesses
such as third party service providers, creditors, financial organizations and
governmental entities. Even if the Company's computer systems are not materially
adversely affected by the year 2000 issue, the Company's business and operations
could be materially adversely affected by disruptions in the operations of the
enterprises with which the Company interacts. The Company believes it is and
will remain Year 2000 compliant. Contingency plans will be developed as
required.
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is party to certain legal proceedings incidental to its business.
Management believes that the outcome of such proceedings, in the aggregate, will
not have a material adverse effect on the Company's business or financial
condition. Set forth below is a summary description of a pending lawsuit
involving the Company.
Argent Capital Corporation v. Clearview Holding Corporation S.A. -- Orange
County Superior Court, Case No. 805225. This case arises from the consummation
of the reverse merger by which the Company acquired Clearview Capital
Corporation (now known as "Argent Mortgage Corporation") from Clearview Holdings
Corporation, S.A. ("CHC"). This suit, filed on February 4, 1999, seeks to
rescind the acquisition of Argent Mortgage Corporation based upon fraud by CHC
in connection with the Stock Purchase Agreement, dated December 19, 1997,
pursuant to which the Company acquired Argent Mortgage Corporation . The Company
alleges, among other things, that CHC knowingly made certain false
representations concerning the financial condition, assets and records of Argent
Mortgage Corporation. The Company is seeking rescission of the purchase and
cancellation of the 1,493,631 shares of the Company acquired by CHC as
consideration for the sale of Argent Mortgage Corporation to the Company. On
February 20, 1999, the Company served the complaint on CHC by serving Mr. Pieter
G. K. Oosthuizen, a former director and a current beneficial shareholder of the
Company. Mr. Oosthuizen has
<PAGE> 21
represented himself to be in control of Nuova Arca Investments, Ltd., the
corporation which, he has represented, owns 100 per cent of the shares of CHC.
CHC has not yet answered the Complaint.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
(a) Not applicable.
(b) Not applicable.
(c) As more particularly described in Part I., Item 2., above and in
Company's Form 8-K, filed on April 28, 1999, and its Form 10-KSB, filed May 3,
1999, both of which are incorporated by reference herein, effective April 12,
1999, the Company issued to the former shareholders of NetVoucher, Inc. certain
shares of its Common Stock and options to purchase additional shares of its
Common Stock.
Other Issuances
- ---------------
In the first quarter of 1999 and in April, 1999, the Company directly sold and
issued shares of its Common Stock ("Shares") to parties which were otherwise
unaffiliated with the Company at the time (except as indicated elsewhere herein
or in prior filings with the Commission), and additionally sold and issued to
certain directors and members of management investment units composed of Shares
and warrants for the purchase of additional Shares as of the dates, and for the
consideration specified, in the Table of Share Issuances attached as Exhibit 99
to this Form 10-QSB. As indicated in said Exhibit, the investment units sold to
certain members of management and directors were issued for consideration
comprised of cash or services rendered.
Each investment unit was comprised of one Share of the Company's restricted
(currently non-tradeable) Common Stock and one warrant to purchase an additional
Share of restricted Common Stock at any time or from time to time during a
three-year period following the respective issuance dates of the warrants. The
purchase price of the restricted Shares subject to acquisition under the
warrants is $.25 per Share, and any number of restricted Shares up to the number
granted in the respective warrants may be purchased during the warrants'
validity. The directors of the Company approved the issuance of these restricted
Shares and warrants at that prices indicated to provide necessary working
capital for the Company at the time, and, with respect to the issuances to
officers and directors, in order to retain these critical personnel.
All securities issued were sold pursuant to the exemption from registration
provided by Section 4(2) of the Securities Act of 1933, as amended, based upon
the execution of stock purchase agreements in conformity with the requirements
for the use of such exemption. No underwriters were used and there were no
underwriting discounts or commissions.
The funds received from these issuances are being used for working capital and
as general operating funds of the Company and its subsidiaries.
<PAGE> 22
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
(1) Financial Statements included in Part I of this
Report, Item 1 of this Report:
Consolidated Balance Sheets, dated March 31, 1999 and
December 31, 1998
Consolidated Statements of Operations, dated March 31,
1999 and March 31, 1998.
<PAGE> 23
Consolidated Statements of Cash Flow, dated March 31,
1999 and March 31, 1998
Notes to Consolidated Financial Statements
2) Material Contracts
(a) Stock Purchase Agreement, attached as
Exhibit 10(a)
(b) MIS Contract, attached as Exhibit 10(b)
3) Financial Data Schedule, attached as Exhibit 27.
4) Table of Share Issuances, attached as Exhibit 99.
(b) Reports on Form 8-K
No report on Form 8-K was filed during the quarter ended
March 31, 1999. The following reports on Form 8-K have been
filed by the registrant since March 31, 1999.
(i) Form 8-K filed and dated April 28, 1999, reporting the
merger of NetVoucher, Inc. into Argent Security
Corporation, a wholly-owned subsidiary of the
registrant.
(ii) Form 8-K filed and dated May 17, 1999, reporting the
resignation of Deloitte & Touche, LLP, as independent
auditor to the registrant.
No financial statements were filed with such reports.
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
REGISTRANT
ARGENT CAPITAL CORPORATION
May 21, 1999 By /s/ CHRISTOPHER MILLAR
------------------------------------
President
and Chief Executive Officer
By /s/ ROY L. PAINTER
------------------------------------
Chief Operating Officer
Chief Financial Officer
<PAGE> 1
EXHIBIT 10(a)
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement ("Agreement") is made as of March 12,
1999, by ARGENT CAPITAL CORPORATION, a Nevada corporation ("Buyer"), and
OPTIMIZE, INC., an Alabama corporation, and those individuals listed in Part 3.1
of the Disclosure Letter, as same may be supplemented prior to the Closing Date
("Sellers").
RECITALS
Sellers desire to sell, and Buyer desires to purchase, all of the
issued and outstanding shares (the "Shares") of capital stock of NetVoucher,
Inc., an Alabama corporation which has been formed to develop and market the
"NetVoucher" line of products and services (the "Company")in a transaction
intended to qualify as a tax free reorganization under IRC Section 368(a)(1)(A),
for the consideration and on the terms set forth in this Agreement.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
1. DEFINITIONS
For purposes of this Agreement, the following terms have the
meanings specified or referred to in this Section 1:
"APPLICABLE CONTRACT" - any contract (a) under which the
Company has or may acquire any rights, (b) under which the Company has or may
become subject to any obligation or liability, or (c) by which the Company or
any of the assets owned or used by it is or may become bound.
"BALANCE SHEET" - as defined in Section 3.4.
"BEST EFFORTS" - the efforts that a prudent Person desirous of
achieving a result would use in similar circumstances to ensure that such result
is achieved as expeditiously as possible; provided, however, that an obligation
to use Best Efforts under this Agreement does not require the Person subject to
that obligation to take actions that would result in a materially adverse change
in the benefits to such Person of this Agreement and the Contemplated
Transactions.
"BREACH" - a "Breach" of a representation, warranty, covenant,
obligation, or other provision of this Agreement or any instrument delivered
pursuant to this Agreement will be deemed to have occurred if there is or has
been (a) any inaccuracy in or breach of, or any failure to perform or comply
with, such representation, warranty, covenant, obligation, or other provision,
or (b) any claim (by any Person) or other occurrence or circumstance that is or
was inconsistent with such representation, warranty,
<PAGE> 2
covenant, obligation, or other provision, and the term "Breach" means any such
inaccuracy, breach, failure, claim, occurrence, or circumstance.
"BUYER" - as defined in the first paragraph of this Agreement.
"BUYER'S RELEASE" - as defined in Section 2.4.
"BUYER'S STOCK" - as defined in Section 2.2(a).
"CLOSING" - as defined in Section 2.3.
"CLOSING DATE" - the date and time as of which the Closing
actually takes place.
"COMPANY"- as defined in the Recitals of this Agreement.
"CONSENT" - any approval, consent, ratification, waiver, or
other authorization (including any Governmental Authorization).
"CONTEMPLATED TRANSACTIONS" - all of the transactions
contemplated by this Agreement, including:
(a) the sale of the Shares by Sellers to Buyer (in the
context of a statutory merger);
(b) the performance by Buyer and Sellers of their
respective covenants and obligations under this Agreement; and
(c) Buyer's acquisition and ownership of the Shares and
assets and exercise of control over the Company.
"CONTRACT" - any agreement, contract, obligation, promise, or
undertaking (whether written or oral and whether express or implied) that is
legally binding.
"DAMAGES" - as defined in Section 10.2
"DISCLOSURE LETTER" - the disclosure letter delivered by
Sellers to Buyer concurrently with the execution and delivery of this Agreement.
"ENCUMBRANCE" - any charge, claim, community property
interest, condition, equitable interest, lien, option, pledge, security
interest, right of first refusal, or restriction of any kind, including any
restriction on use, voting, transfer, receipt of income, or exercise of any
other attribute of ownership.
2
<PAGE> 3
"ERISA" - the Employee Retirement Income Security Act of 1974
or any successor law, and regulations and rules issued pursuant to that Act or
any successor law.
"FACILITIES" - any real property, leaseholds, or other
interests currently or formerly owned or operated by the Company and any
buildings, plants, structures, or equipment currently owned or operated by the
Company.
"FUTURE BUY-OUT" - as defined in Section 2.2(c).
"GAAP" - generally accepted United States accounting
principles, applied on a basis consistent with the basis on which the Balance
Sheet and the other financial statements referred to in Section 3.4 were
prepared.
"GOVERNMENTAL AUTHORIZATION" - any approval, consent, license,
permit, waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement.
"GOVERNMENTAL BODY" - any:
(a) nation, state, county, city, town, village, district,
or other jurisdiction of any nature;
(b) federal, state, local, municipal, foreign, or other
government;
(c) governmental or quasi-governmental authority of any
nature (including any governmental agency, branch, department, office, or entity
and any court or other tribunal);
(d) multi-national organization or body; or
(e) body exercising, or entitled to exercise, any
administrative, executive, judicial, legislative, policy, regulatory, or taxing
authority or power of any nature.
"INDEMNIFIED PERSONS" - as defined in Section 10.2.
"INTELLECTUAL PROPERTY ASSETS" - as defined in Section 3.19.
"IRC" - the Internal Revenue Code of 1986 or any successor
law, and regulations issued by the IRS pursuant to the Internal Revenue Code or
any successor law.
"IRS" - the United States Internal Revenue Service or any
successor agency, and, to the extent relevant, the United States Department of
the Treasury.
3
<PAGE> 4
"KNOWLEDGE" - an individual will be deemed to have "Knowledge"
of a particular fact or other matter if such individual is actually aware of
such fact or other matter, after conducting a reasonable inquiry.
"LEGAL REQUIREMENT" - any federal, state, local, municipal,
foreign, international, multinational, or other administrative order,
constitution, law, ordinance, principle of common law, regulation, statute, or
treaty.
"OCCUPATIONAL SAFETY AND HEALTH LAW" - any Legal Requirement
designed to provide safe and healthful working conditions and to reduce
occupational safety and health hazards, and any program, whether governmental or
private (including those promulgated or sponsored by industry associations and
insurance companies), designed to provide safe and healthful working conditions.
"OPTIMIZE" - Optimize, Inc., an Alabama corporation which is
the largest stockholder of the Company.
"ORDER" - any award, decision, injunction, judgment, order,
ruling subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.
"ORDINARY COURSE OF BUSINESS" - an action taken by a Person
will be deemed to have been taken in the "Ordinary Course of Business" only if:
(a) such action is consistent with the past
practices of such Person and is taken in the ordinary course of the normal
day-to-day operations of such Person;
(b) such action is not required to be authorized
by the board of directors of such Person (or by any Person or group of Persons
exercising similar authority); and
(c) such action is similar in nature and
magnitude to actions customarily taken, without any authorization by the board
of directors (or by any Person or group of Persons exercising similar
authority), in the ordinary course of the normal day-to-day operations of other
Persons that are in the same line of business as such Person.
"ORGANIZATIONAL DOCUMENTS"
(a) the articles or certificate of incorporation
and the bylaws of a corporation;
(b) the partnership agreement and any statement
of partnership of a general partnership;
4
<PAGE> 5
(c) the limited partnership agreement and the
certificate of limited partnership of a limited partnership;
(d) any charter or similar document adopted or
filed in connection with the creation, formation, or organization of a Person;
and
(e) any amendment to any of the foregoing.
"PERSON" - any individual, corporation (including any
non-profit corporation), general or limited partnership, limited liability
company, joint venture, estate, trust, association, organization, labor union,
or other entity or Governmental body.
"PLAN" - as defined in Section 3.12.
"PROCEEDING" - any action, arbitration, audit, hearing,
investigation, litigation, or suit (whether civil, criminal, administrative,
investigative, or informal) commenced, brought, conducted, or heard by or
before, or otherwise involving, any Governmental Body or arbitrator.
"RELATED PERSON" - with respect to a particular individual:
(a) each other member of such individual's
Family;
(b) any Person that is directly or indirectly
controlled by such individual or one or more members of such individual's
Family;
(c) any Person in which such individual or
members of such individual's Family hold (individually or in the aggregate) a
Material Interest; and
(d) any Person with respect to which such
individual or one or more members of such individual's Family serves as a
director, officer, partner, executor, or trustee (or in a similar capacity).
With respect to a specified Person other than an
individual:
(a) any Person that directly or indirectly
controls, is directly or indirectly controlled by, or is directly or indirectly
under common control with such specified Person:
(b) any Person that holds a Material Interest in
such specified Person;
(c) each Person that serves as a director,
officer, partner, executor, or trustee of such specified Person (or in a similar
capacity);
5
<PAGE> 6
(d) any Person in which such specified Person
holds a Material Interest;
(e) any Person with respect to which such
specified Person serves as a general partner or a trustee (or in a similar
capacity); and
(f) any Related Person of any individual
described in clause (b) or (c).
For purposes of this definition, (a) the "Family" of an
individual includes (i) the individual, (ii) the individual's spouse [and former
spouses], (iii) any other natural person who is related to the individual or the
individual's spouse within the second degree, and (iv) any other natural person
who resides with such individual, and (b) "Material Interest" means direct or
indirect beneficial ownership (as defined in Rule 13D-3 under the Securities
Exchange Act of 1934) of voting securities or other voting interests
representing at least ten percent (10%) of the outstanding voting power of a
Person or equity securities or other equity interests representing at least ten
percent (10%) of the outstanding equity securities or equity interests in a
Person.
"REPRESENTATIVE" - with respect to a particular Person, any
director, officer, employee, agent, consultant, advisor, or other representative
of such Person, including legal counsel, accountants, and financial advisors.
"SECURITIES ACT" - the Securities Act of 1933 or any successor
law, and regulations and rules issued pursuant to that Act or any successor law.
"SELLERS" - as defined in the first paragraph of this
Agreement.
"SELLERS' RELEASE" - as defined in Section 2.4.
"SHARES" - as defined in the Recitals of this Agreement.
"TAX" - any tax (including any income tax, capital gains tax,
value-added tax, sales tax, property tax, gift tax, or estate tax), levy,
assessment, tariff, duty (including any customs duty), deficiency, or other fee,
and any related charge or amount (including any fine, penalty, interest, or
addition to tax), imposed, assessed, or collected by or under the authority of
any Governmental Body or payable pursuant to any tax-sharing agreement or any
other Contract relating to the sharing or payment of any such tax, levy,
assessment, tariff, duty, deficiency, or fee.
"TAX RETURN" - any return (including any information return),
report, statement, schedule, notice, form, or other document or information
filed with or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment, collection,
or payment of any Tax or in connection with the administration, implementation,
or enforcement of or compliance with any Legal Requirement relating to any Tax.
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<PAGE> 7
"TEN YEAR OPTIONS" - as defined in Section 2.2(b).
"THREATENED" - a claim, Proceeding, dispute, action, or other
matter will be deemed to have been "Threatened" if any demand or
statement has been made (orally or in writing) or any notice has been
given (orally or in writing), or if any other event has occurred or any
other circumstances exist, that would lead a prudent Person to conclude
that such a claim, Proceeding, dispute, action, or other matter is
likely to be asserted, commenced, taken, or otherwise pursued in the
future.
2. SALE AND TRANSFER OF SHARES; CLOSING
2.1 SHARES
Subject to the terms and conditions of this Agreement, at the
Closing, Sellers will sell and transfer the Shares to Buyer, and Buyer will
purchase the Shares from Sellers, in the form of a statutory merger under the
laws of the State of Nevada, whereby the Company will be merged into Buyer, or a
new, wholly owned subsidiary of Buyer, in Buyer's discretion.
2.2 PURCHASE PRICE
The purchase price (the "Purchase Price") for the Shares will
be the total consideration to be paid to Sellers, consisting of the following:
(a) At the Closing, 2,000,000 shares of the
$.001 par value, common stock of Buyer (the "Buyer's Stock");
(b) At the Closing, transferable and divisible
options, allowing Sellers the opportunity, at any time (without the necessity of
Buyer's Consent) within ten years of the Closing Date, to purchase (i) 1,000,000
shares of Buyer's Stock at a purchase price of $.25 per share, and (ii)
1,000,000 shares of Buyer's Stock at a purchase price of $25.00 per share
(collectively, the "Ten Year Options", which shall be adjusted on the same basis
as any stock splits of the Buyer's Stock which become effective after the date
of this Agreement or the Closing Date, whichever is earlier)[1]; and
(c) Within sixty (60) days of the second
anniversary of the Closing Date, thirty percent (30%) of the value of the
Company as of the second anniversary of the Closing Date (the "Future Buy-Out").
The Future Buy-Out will be payable only to the holders of the Company's Class A
Common Stock. Procedures for determining such value, and the method of payment
therefor, are contained in Section 11.9 of this Agreement.
7
[Note 1: An amendment provided for the issuance of 1,000,000 additional Ten
Year Options to certain of the Sellers, which are exercisable at $.25 per
share.]
<PAGE> 8
2.3 CLOSING
Consummation of the purchase and sale (the "Closing") provided
for in this Agreement will take place at the officers of Sellers' counsel at
Birmingham, Alabama, at 10:00 a.m. (local time) on or before May 15, 1999, or at
such other time and place as the parties may agree. Subject to the provisions of
Section 9, failure to consummate the purchase and sale provided for in this
Agreement on the date and time and at the place determined pursuant to this
Section 2.3 will not result in the termination of this Agreement and will not
relieve any party of any obligation under this Agreement.
2.4 CLOSING OBLIGATIONS
At the Closing:
(a) Sellers will deliver to Buyer:
(i) certificates representing the
Shares, duly endorsed (or accompanied by duly executed stock powers), for
transfer to Buyer;
(ii) a release in the form of Exhibit
2.4(a)(ii) executed by Sellers ("Sellers' Release");
(iii) the Management Information Systems
contract in the form of Exhibit 2.4(a)(iii), executed by Sellers (the "MIS
Contract");
(iv) Agreement and Plan of Merger,
whereby the Company will be merged into either Buyer or a new, wholly owned
subsidiary of Buyer, reflecting the terms hereof, duly authorized and properly
executed on behalf of the Company;
(v) a certified resolution of the Board
of Directors of the Company authorizing the execution and delivery of the
Sellers' Closing Documents and the performance of its obligations under this
Agreement and the Sellers' Closing Documents; and
(vi) a certificate executed by Optimize
representing and warranting to Buyer that each of Optimize's representations and
warranties in this Agreement was accurate in all respects as of the date of this
Agreement and is accurate in all respects as of the Closing Date as if made on
the Closing Date (giving full effect to any supplements to the Disclosure Letter
that were delivered by Optimize to Buyer prior to the Closing Date in accordance
with Section 5.5).
(b) Buyer will deliver to Sellers:
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<PAGE> 9
(i) certificate(s) representing
2,000,000 shares of the Buyer's Stock, apportioned among the Sellers in
accordance with their ownership of the Company as outlined in Part 3.1 of the
Disclosure Letter;
(ii) a release in the form of Exhibit
2.4(b)(ii), executed by Buyer ("Buyer's Release");
(iii) the Ten Year Options in the form of
Exhibit 2.4(b)(iii), executed by Buyer, apportioned among the Sellers in
accordance with their ownership of the Company as outlined in Part 3.1 of the
Disclosure Letter;
(iv) the MIS Contract, executed by
Buyer;
(v) Agreement and Plan of Merger, as
referenced in Section 2.4(a)(iv) above, duly authorized and properly executed on
behalf of Buyer, and which are to be filed at Closing by Buyer with the
Secretary of State of the State of Nevada;
(vi) a certified resolution of the Board
of Directors of Buyer authorizing the execution and delivery of the Buyer's
Closing Documents and the performance of its obligations under this Agreement
and the Buyer's Closing Documents; and
(vii) a certificate executed by Buyer
representing and warranting to Sellers that each of Buyer's representations and
warranties in this Agreement was accurate in all respects as of the date of this
Agreement and is accurate in all respects as of the Closing Date as if made on
the Closing Date.
3. REPRESENTATIONS AND WARRANTIES OF SELLER
Optimize represents and warrants to Buyer as follows:
3.1 ORGANIZATION AND GOOD STANDING
(a) Part 3.1 of the Disclosure Letter contains a
complete and accurate list for the Company of its name, its jurisdiction of
incorporation, and its capitalization (including the identity of each
stockholder, the class(es) of stock owned by such stockholder and the number of
shares of each such class of stock held by each). The Company is a corporation
duly organized, validly existing, and in good standing under the laws of its
jurisdiction of incorporation, with full corporate power and authority to
conduct its business as it is now being conducted, to own or use the properties
and assets that it purports to own or use, and to perform all its obligations
under Applicable Contracts.
(b) Optimize has delivered to Buyer true and
correct copies of the Organizational Documents of the Company, as currently in
effect.
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<PAGE> 10
3.2 AUTHORITY; NO CONFLICT
(a) This Agreement constitutes the legal, valid,
and binding obligation of Sellers, enforceable against Sellers in accordance
with its terms. Upon the execution and delivery by Sellers of the Sellers'
Release and MIS Contract (collectively, the "Sellers' Closing Documents"), the
Sellers' Closing Documents will constitute the legal, valid, and binding
obligations of Sellers, enforceable against Sellers in accordance with their
respective terms. Sellers have the absolute and unrestricted right, power,
authority, and capacity to execute and deliver this Agreement and the Sellers'
Closing Documents and to perform its obligations under this Agreement and the
Sellers' Closing Documents.
(b) Except as set forth in part 3.2 of the
Disclosure Letter, neither the execution and delivery of this Agreement nor the
consummation or performance of any of the Contemplated Transactions will,
directly or indirectly (with or without notice or lapse of time):
(i) contravene, conflict with, or
result in a violation of (A) any provision of the Organizational Documents of
the Company, or (B) any resolution adopted by the board of directors or
stockholders of the Company;
(ii) contravene, conflict with, or
result in a violation of, or give any Governmental Body or other Person the
right to challenge any of the Contemplated Transactions or to exercise any
remedy or obtain any relief under, any Legal Requirement or any Order to which
the Company or Sellers, or any of the assets owned or used by the Company, may
be subject;
(iii) contravene, conflict with, or
result in a violation of any of the terms or requirements of, or give any
Governmental Body the right to revoke, withdraw, suspend, cancel, terminate, or
modify, any Governmental Authorization that is held by the Company or that
otherwise relates to the business of, or any of the assets owned or used by the
Company;
(iv) cause Buyer or the Company to
become subject to, or to become liable for the payment of, any Tax;
(v) cause any of the assets owned by
the Company to be reassessed or revalued by any taxing authority or other
Governmental Body;
(vi) contravene, conflict with, or
result in a violation or breach of any provision of, or give any Person the
right to declare a default or exercise any remedy under, or to accelerate the
maturity or performance of, or to cancel, terminate, or modify, any Applicable
Contract; or
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<PAGE> 11
(vii) result in the imposition or
creation of any Encumbrance upon or with respect to any of the assets owned or
used by the Company.
Except as set forth in Part 3.2 of the Disclosure Letter,
neither the Sellers nor the Company is or will be required to give any notice to
or obtain any Consent from any Person in connection with the execution and
delivery of this Agreement or the consummation or performance of any of the
Contemplated Transactions.
(c) Sellers are acquiring the Buyer's Stock and
Ten Year Options for their own account and not with a view to their distribution
within the meaning of Section 2(11) of the Securities Act.
3.3 CAPITALIZATION
The authorized equity securities of the Company
consist of 1,000 shares of common stock (907-1/2 being Class A Common Stock and
92-1/2 being Class B Common Stock) par value $1.00 per share, of which those
shares designated as being owned by the Sellers on Part 3.1 of the Disclosure
Letter are issued and outstanding and constitute the Shares. Additional shares
may be designated as issued and outstanding by delivery of a supplement to the
Disclosure Letter to Buyer prior to the Closing. Sellers are and will be on the
Closing Date the record and beneficial owner and holder of the Shares, free and
clear of all Encumbrances. No legend or other reference to any purported
encumbrance appears upon any certificate representing equity securities of the
Company. All of the outstanding equity securities of the Company have been duly
authorized and validly issued and are fully paid and nonassessable. There are no
contracts relating to the issuance, sale, or transfer of any equity securities
or other securities of the Company. None of the outstanding equity securities or
other securities of the Company was issued in violation of the Securities Act or
any other Legal Requirement. The Company does not own nor does it have any
Contract to acquire, any equity securities or other securities of any Person or
any direct or indirect equity or ownership interest in any other business.
3.4 FINANCIAL STATEMENTS
Sellers will deliver to Buyer: (a) unaudited balance
sheet of the Company as of February 28, 1999 including the notes thereto (the
"Balance Sheet"). The Balance Sheet and notes will fairly present the financial
condition of the Company as of February 28, 1999, all in accordance with GAAP.
3.5 BOOKS AND RECORDS
The books of account, minute books, stock record
books, and other records of the Company, all of which
have been made available to Buyer, are complete and correct and have been
maintained in accordance with sound business practices, including the
maintenance of an adequate system of internal controls. The minute books of the
Company contain accurate and complete records of all meetings held of, and
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<PAGE> 12
corporate action taken by, the stockholders, the Board of Directors, and
committees of the Board of Directors of the Company, and no meeting of any such
stockholders, Board of Directors, or committee has been held for which minutes
have not been prepared and are not contained in such minute books. At the
Closing, all of those books and records will be in the possession of the
Company.
3.6 TITLE TO PROPERTIES; ENCUMBRANCES
Part 3.6 of the Disclosure Letter contains a complete
and accurate list of all real property, leaseholds, or other interests therein
owned by the Company. The Company owns all the properties and assets (whether
real, personal, or mixed and whether tangible or intangible) that it purports to
own, including all of the properties and assets reflected in the Balance Sheet
(except for assets held under capitalized leases disclosed or not required to
the disclosed in Part 3.6 of the Disclosure Letter and personal property sold
since the date of the Balance Sheet in the Ordinary Course of Business), and all
of the properties and assets purchased or otherwise acquired by the Company
since the date of the Balance Sheet (except for personal property acquired and
sold since the date of the Balance Sheet in the Ordinary Course of business and
consistent with past practice). All material properties and assets reflected in
the Balance Sheet are free and clear of all Encumbrances except, with respect to
all such properties and assets, (a) mortgages or security interests shown on the
Balance Sheet as securing specified liabilities or obligations, with respect to
which no default ( or event that, with notice or lapse of time or both, would
constitute a default) exists, (b) mortgages or security interests incurred in
connection with the purchase of property or assets after the date of the Balance
Sheet (such mortgages and security interests being limited to the property or
assets so acquired), with respect to which no default (or event that, with
notice or lapse of time or both, would constitute a default) exists, and (c)
liens for current taxes not yet due.
3.7 CONDITION AND SUFFICIENCY OF ASSETS
The equipment of the Company is in good operating
condition and repair, and is adequate for the uses to which it is being put, and
none of such equipment is in need of maintenance or repairs except for ordinary,
routine maintenance and repairs that are not material in nature or cost.
3.8 INVENTORY
All inventory of the Company, whether or not
reflected in the Balance Sheet, consists of a quality and quantity usable and
salable in the Ordinary Course of Business, except for obsolete items and items
of below-standard quality.
3.9 NO UNDISCLOSED LIABILITIES
Except as set forth in part 3.9 of the Disclosure
Letter, to the best of Sellers' knowledge, the Company has no material
liabilities or obligations of any nature (whether known or unknown and whether
absolute, accrued, contingent, or
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<PAGE> 13
otherwise) except for liabilities or obligations reflected or reserved against
in the Balance Sheet and current liabilities incurred in the Ordinary Course of
Business since the date thereof.
3.10 TAXES
(a) The Company has filed or caused to be filed
all Tax Returns that are or were required to be filed by it. Part 3.10 of the
Disclosure Letter contains a complete and accurate list of all such Tax Returns
(relating to income or franchise taxes). The Company has paid, or made provision
for the payment of, all Taxes that have or may have become due pursuant to those
Tax Returns or otherwise, or pursuant to any assessment received by Sellers or
the Company.
(b) All Tax Returns filed by the Company are
true, correct, and complete.
3.11 NO MATERIAL ADVERSE CHANGE
Since the date of the Balance Sheet, there has not
been any material adverse change in the business, operations, properties,
prospects, assets, or condition of the Company.
3.12 EMPLOYEE BENEFITS
The Company has no Employee Benefit Plans.
3.13 COMPLIANCE WITH LEGAL REQUIREMENTS;
GOVERNMENTAL AUTHORIZATIONS
(a) Except as set forth in Part 3.13 of the
Disclosure Letter:
(i) the Company is, and at all times
has been, in full compliance with each Legal Requirement that is or was
applicable to it or to the conduct or operation of its business or the ownership
or use of any of its assets;
(ii) no event has occurred or
circumstance exists that (with or without notice or lapse of time) (A) may
constitute or result in a violation by the Company of, or a failure on the part
of the Company to comply with, any Legal Requirement, or (B) may give rise to
any obligation on the part of the Company to undertake, or to bear all or any
portion of the cost of, any remedial action of any nature; and
(iii) the Company has not received any
notice or other communication (whether oral or written) from any Governmental
Body or any other person regarding (A) any actual, alleged, possible, or
potential violation of, or failure to comply with, any Legal Requirement, or (B)
any actual, alleged, possible, or potential
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<PAGE> 14
obligation on the part of the Company to undertake, or to bear all or any
portion of the cost of, any remedial action of any nature.
(b) Part 3.13 of the Disclosure Letter contains
a complete and accurate list of each Governmental Authorization that is held by
the Company or that otherwise relates to the business of, or to any of the
assets owned or used by, the Company. Each Governmental Authorization listed or
required to be listed in Part 3.13 of the Disclosure Letter is valid and in full
force and effect.
(i) the Company is in full compliance
with all of the terms and requirements of each Governmental Authorization
identified or required to be identified in Part 3.13 of the Disclosure Letter;
(ii) no event has occurred or
circumstance exists that may (with or without notice or lapse of time) (A)
constitute or result directly or indirectly in a violation of or a failure to
comply with any term or requirement of any Governmental Authorization listed or
required to be listed in Part 3.13 of the Disclosure letter, or (B) result
directly or indirectly in the revocation, withdrawal, suspension, cancellation,
or termination of, or any modification to, any Governmental Authorization listed
or required to be listed in Part 3.13 of the Disclosure Letter; and
(iii) the Company has not received any
notice or other communication (whether oral or written) from any Governmental
Body or any other Person regarding (A) any actual, alleged, possible, or
potential violation of or failure to comply with any term or requirement of any
Governmental Authorization, or (B) any actual, proposed, possible, or potential
revocation, withdrawal, suspension, cancellation, termination of, or
modification to any Governmental Authorization.
The Governmental Authorizations listed in part 3.13
of the Disclosure Letter collectively constitute all of the Governmental
Authorizations necessary to permit the Company to lawfully conduct and operate
its business in the manner it currently conducts and operates such business and
to permit the Company to own and use its assets in the manner in which it
currently owns and uses such assets.
3.14 LEGAL PROCEEDINGS; ORDERS
(a) There is no pending Proceeding:
(i) that has been commenced by or
against the Company or that otherwise relates to or may affect the business of,
or any of the assets owned or used by, the Company; or
(ii) that challenges, or that may have
the effect of preventing, delaying, making illegal, or otherwise interfering
with, any of the Contemplated Transactions.
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<PAGE> 15
To the Knowledge of Sellers and the Company, (1) no such
Proceeding has been threatened, and (2) no event has occurred or circumstance
exists that may give rise to or serve as a basis for the commencement of any
such Proceeding.
(b) There is no Order to which the Company or
any of the assets owned or used by the Company is subject; and to the Knowledge
of Sellers and the Company, no officer, director, agent, or employee of the
Company is subject to any Order that prohibits such officer, director, agent, or
employee from engaging in or continuing any conduct, activity, or practice
relating to the business of the Company.
3.15 ABSENCE OF CERTAIN CHANGES AND EVENTS
Since the date of the Balance Sheet, the Company has conducted
its business only in the Ordinary Course of Business and there has not been any:
(a) change in the Company's authorized or issued
capital stock; grant of any stock option or right to purchase shares of capital
stock of the Company; issuance of any security convertible into such capital
stock; grant of any registration rights; purchase, redemption, retirement, or
other acquisition by the Company of any shares of any such capital stock; or
declaration or payment of any dividend or other distribution or payment in
respect of shares of capital stock;
(b) amendment to the Organizational Documents of
the Company;
(c) payment or increase by the Company of any
bonuses, salaries, or other compensation to any stockholder, director, officer,
or (except in the Ordinary Course of business) employee or entry into any
employment, severance, or similar Contract with any director, officer, or
employee;
(d) adoption of any profit sharing, bonus,
deferred compensation, savings, insurance, pension, retirement, or other
employee benefit plan for or with any employees of the Company;
(e) damage to or destruction or loss of any
asset or property of the Company, whether or not covered by insurance,
materially and adversely affecting the properties, assets, business, financial
condition, or prospects of the Company, taken as a whole;
(f) entry into, termination of, or receipt or
notice of termination or (i) any license, distributorship, dealer, sales
representative, joint venture, credit, or similar agreement, or (ii) any
Contract or transaction involving a total remaining commitment by or to the
Company of at least $10,000.00;
(g) sale (other than sales of inventory in the
Ordinary Course of Business), lease, or other disposition of any asset or
property of the Company or
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<PAGE> 16
mortgage, pledge, or imposition of any lien or other encumbrance on any material
asset or property of the Company, including the sale, lease, or other
disposition of any of the Intellectual Property Assets;
(h) cancellation or waiver of any claims or
rights with a value to the Company in excess of $10,000.00;
(i) material change in the accounting methods
used by the Company; or (j) agreement, whether oral or written, by the Company
to do any of the foregoing.
3.16 CONTRACTS; NO DEFAULTS
(a) Except as set forth in part 3.16(a) of the
Disclosure Letter:
(i) the Sellers have not acquired any
rights under, and the Sellers have not become subject to any obligation or
liability under, any Contract that relates to the business of, or any of the
assets owned or used by, the Company; and
(ii) to the Knowledge of Sellers, no
officer, director, agent, employee, consultant, or contractor of the Company is
bound by any Contract that purports to limit the ability of such officer,
director, agent, employee, consultant, or contractor to (A) engage in or
continue any conduct, activity, or practice relating to the business of the
Company, or (B) assign to the Company or to any other Person any rights to any
invention, improvement, or discovery.
(b) Except as set forth in Part 3.16(b) of the
Disclosure Letter:
(i) the Company is in full compliance
with all applicable terms and requirements of each Contract under which the
Company has or had any obligation or liability or by which the Company or any of
the assets owned or used by the Company is or was bound;
(ii) each other Person that has or had
any obligation or liability under any Contract under which the Company has or
had any rights is in full compliance with all applicable terms and requirements
of such Contract;
(iii) no event has occurred or
circumstance exists that (with or without notice or lapse of time) may
contravene, conflict with, or result in a violation or breach of, or give the
Company or other Person the right to declare a default or exercise any remedy
under, or to accelerate the maturity or performance of, or to cancel, terminate,
or modify, any Applicable Contract; and
(iv) the Company has not given to or
received from any other Person, any notice or other communication (whether oral
or written) regarding any
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<PAGE> 17
actual, alleged, possible, or potential violation or breach of, or default
under, any Contract.
(c) There are no renegotiations of, attempts to
renegotiate, or outstanding rights to renegotiate any material amounts paid or
payable to the Company under current or completed Contracts with any Person and,
to the Knowledge of Sellers, no such Person has made written demand for such
renegotiation.
(d) The Contracts relating to the sale, design,
manufacture, or provision of products or services by the Company have been
entered into in the Ordinary Course of Business and have been entered into
without the commission of any act alone or in concert with any other Person, or
any consideration having been paid or promised, that is or would be in violation
of any Legal Requirement.
3.17 EMPLOYEES
(a) Part 3.17 of the Disclosure Letter contains
a complete and accurate list of the following information for each employee or
director of the Company, including each employee on leave of absence or layoff
status; name; job title; and current compensation paid or payable.
(b) No employee or director of the Company is a
party to, or is otherwise bound by, any agreement or arrangement, including any
confidentiality, noncompetition, or proprietary rights agreement, between such
employee or director and any other Person ("Proprietary Rights Agreement") that
in any way adversely affects or will affect (i) the performance of his duties as
an employee or director of the Company, or (ii) the ability of the Company to
conduct its business, including any Proprietary Rights Agreement with Sellers or
the Company by any such employee or director. To Sellers' Knowledge, no
director, officer, or other key employee of the Company intends to terminate his
employment with the Company.
3.18 LABOR RELATIONS; COMPLIANCE
The Company has never been a party to any collective
bargaining or other labor Contract. There has not been, there is not presently
pending or existing, and to Sellers' Knowledge, there is not Threatened, (a) any
strike, slowdown, picketing, work stoppage, or employee grievance process, (b)
any Proceeding against or affecting the Company relating to the alleged
violation of any Legal Requirement pertaining to labor relations or employment
matters, including any charge or complaint filed by an employee or union with
the National Labor Relations Board, the Equal Employment Opportunity Commission,
or any comparable Governmental Body, organizational activity, or other labor
employment dispute against or affecting the Company or its premises, or (c) any
application for certification of a collective bargaining agent. To Sellers'
Knowledge, the Company has complied in all respects with all Legal Requirements
relating to employment, equal employment opportunity, nondiscrimination,
immigration, wages, hours, benefits, collective bargaining, the payment of
social security
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and similar taxes, occupational safety and health, and plant closing. The
Company is not liable for the payment of any compensation, damages, taxes,
fines, penalties, or other amounts, however designated, for failure to comply
with any of the foregoing Legal Requirements.
3.19 INTELLECTUAL PROPERTY
(a) Intellectual Property Assets - The term
"Intellectual Property Assets" includes:
(i) the name NetVoucher, all fictional
business names, trading names, registered and unregistered trademarks, service
marks, and applications (collectively, "Marks");
(ii) all patents, patent applications,
and inventions and discoveries that may be patentable (collectively, "Patents");
(iii) all copyrights in both published
works and unpublished works (collectively, "Copyrights");
(iv) all rights in mask works
(collectively, "Rights in Mask Works"); and
(v) all know-how, trade secrets,
confidential information, customer lists, software, technical information, data,
process technology, plans, drawings, and blue prints (collectively, "Trade
Secrets"), owned, used, or licensed by the Company as licensee or licensor.
(b) Agreements- Part 3.19(b) of the Disclosure
Letter contains a complete and accurate list and summary description, including
any royalties paid or received by the Company, of all Contracts relating to the
Intellectual Property Assets to which the Company is a party or by which the
Company is bound, except for any license implied by the sale of a product and
perpetual, paid-up licenses for commonly available software programs with a
value of less than $1,000.00 under which the Company is the licensee. There are
no outstanding and, to Sellers' Knowledge, no Threatened disputes or
disagreements with respect to any such agreement.
(c) Know-How Necessary for the Business
(i) The Intellectual Property Assets
are all those necessary for the operation of the Company's business as it is
currently conducted. The Company is the owner of all right, title, and interest
in and to each of the Intellectual Property Assets, free and clear of all liens,
security interests, charges, encumbrances, equities, and other adverse claims,
and has the right to use without payment to a third party all of the
Intellectual Property Assets.
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(ii) Except as set forth in Part.
3.19(c) of the Disclosure Letter, all former and current employees of the
Company have executed a written Contract with the Sellers or the Company that
assign to the Sellers or the Company all rights to any inventions, improvements,
discoveries, or information relating to the business of the Company. No employee
of the Company has entered into any contract that restricts or limits in any way
the scope or type of work in which the employee may be engaged or requires the
employee to transfer, assign, or disclose information concerning his work to
anyone other than the Sellers or the Company.
(d) Trademarks
(i) Part 3.19(d) of Disclosure Letter
contains a complete and accurate list and summary description of all Marks. The
Company is the owner of all right, title, and interest in and to each of the
Marks, free and clear of all liens, security interests, charges, encumbrances,
equities, and other adverse claims.
(ii) All Marks that have been registered
with the United States Patent and Trademark Office are currently in compliance
with all formal legal requirements (including the timely post-registration
filing of affidavits of use and incontestability and renewal applications), are
valid and enforceable, and are not subject to any maintenance fees or taxes or
actions falling due within ninety days after the Closing Date.
(iii) No Mark has been or is now involved
in any opposition, invalidation, or cancellation and, to Sellers' Knowledge, no
such action is threatened with the respect to any of the Marks.
(iv) To Sellers' Knowledge, there is no
potentially interfering trademark or trademark application of any third party.
(v) To Sellers' Knowledge, no Mark is
infringed or has been challenged or threatened in any way, and none of the Marks
used by the Company infringes or is alleged to infringe any trade name,
trademark, or service mark of any third party.
(vi) All products and materials
containing a Mark bear the proper federal registration notice where permitted by
law.
(e) Copyrights
(i) Part 3.19(f) of the Disclosure
Letter contains a complete and accurate list and summary description of all
Copyrights. The Company is the owner of all right, title, and interest in and to
each of the Copyrights, free and clear of all liens, security interests,
charges, encumbrances, equities, and other adverse claims.
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(ii) To Sellers' Knowledge, no Copyright
is infringed or has been challenged or threatened in any way, and none of the
subject matter of any of the Copyrights infringes or is alleged to infringe any
copyright of any third party or is a derivative work based on the work of a
third party.
(iii) All work encompassed by the
Copyrights have been marked with the proper copyright notice.
(f) Trade Secrets
(i) With respect to each Trade Secret,
the documentation relating to such Trade Secret is current, accurate, and
sufficient in detail and content to identify and explain it and to allow its
full and proper use without reliance on the knowledge or memory of any
individual.
(ii) Sellers and the Company have taken
all reasonable precautions to protect the secrecy, confidentiality, and value of
the Company's Trade Secrets.
(iii) The Company has good title and an
absolute (but not necessarily exclusive) right to use the Trade Secrets. The
Trade Secrets are not part of public knowledge or literature, and, to Sellers'
Knowledge, have not been used, divulged, or appropriated either for the benefit
of any Person (other than the Company) or to the detriment of the Company. No
Trade Secret is subject to any adverse claim or has been challenged or
threatened in any way.
3.20 CERTAIN PAYMENTS
Neither the Company nor any director, officer, agent,
or employee of the Company, or to Sellers' Knowledge, any other Person
associated with or acting for or on behalf of the Company, has directly or
indirectly (a) made any contribution, gift, bribe, rebate, payoff, influence
payment, kick-back, or other payment to any Person, private or public,
regardless of form, whether in money, property, or services (i) to obtain
favorable treatment in securing business, (ii) to pay for favorable treatment
for business secured, (iii) to obtain special concessions or for special
concessions already obtained, for or in respect of the Company or any Affiliate
of the Company, or (iv) in violation of any Legal Requirement, (b) established
or maintained any fund or asset that has not been recorded in the books and
records of the Company.
3.21 DISCLOSURE
(a) To Sellers' knowledge, no representation or
warranty of Sellers in this Agreement and no statement in the Disclosure Letter
omits to state a material fact necessary to make the statements herein or
therein, in light of the circumstances in which they were made, not misleading.
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3.22 RELATIONSHIPS WITH RELATED PERSONS
Neither the Sellers nor any Related Person of Sellers
or of the Company has any interest in any property (whether real, personal, or
mixed and whether tangible or intangible), used in or pertaining to the
Company's business. Except as set forth in part 3.22 of the Disclosure letter,
neither the Sellers nor any Related Person of Sellers or of the Company is a
party to any Contract with, or has any claim or right against, the Company.
3.23 BROKERS OR FINDERS
Sellers have incurred no obligation or liability,
contingent or otherwise, for brokerage or finders' fees or agents' commissions
or other similar payment in connection with this Agreement.
4. REPRESENTATIONS AND WARRANTIES OF BUYER
4.1 ORGANIZATION AND GOOD STANDING
Buyer is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Nevada.
4.2 BUYER'S CAPITALIZATION AND STOCK
Buyer's Stock is, and will be at the Closing Date,
the only class of capital stock of Buyer issued and outstanding. The Buyer's
Stock to be issued to Sellers at Closing, combined with the Ten Year Options (as
if exercised at Closing) will represent no less than 23.55% of all of the then
issued and outstanding shares of the Buyer's Stock, (combined with all shares of
Buyer's Stock subject to issuance upon exercise of any and all options or
warrants then outstanding and exercisable, on a fully diluted basis.) Buyer
agrees that it will take no action subsequent to closing, without Optimize's
prior written consent, to cause Sellers' equity interest in Buyer (as outlined
above) to be reduced below such 23.55% level[2]. Sellers acknowledge that
there is a suit to rescind the issuance of stock to Clearview Holding
Corporation, S.A., and that such stock is not accounted for in this
representation and warranty. Buyer agrees that in the event such stock is still
outstanding six (6) months from the Closing Date, it will issue additional
Buyer's Stock to the Sellers sufficient in number to make the representations
and warranties contained in this Section 4.2, accurate in all respects as
of such date.
4.3 AUTHORITY; NO CONFLICT
(a) This Agreement constitutes the legal, valid,
and binding obligation of Buyer, enforceable against Buyer in accordance with
its terms. Upon the execution and delivery by Buyer of the 2,000,000 shares of
Buyer's Stock, the Ten Year Options and MIS Contract (collectively, the "Buyer's
Closing Documents"), the Buyer's Closing Documents will constitute the legal,
valid, and binding obligations of Buyer,
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[Note 2: This sentence was subsequently deleted by an amendment.]
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enforceable against Buyer in accordance with their respective terms. Buyer has
the absolute and unrestricted right, power, and authority to execute and deliver
this Agreement and the Buyer's Closing Documents and to perform its obligations
under this Agreement and the Buyer's Closing Documents.
(b) Neither the execution and delivery of this
Agreement by Buyer nor the consummation or performance of any of the
Contemplated Transactions by Buyer will give any Person the right to prevent,
delay, or otherwise interfere with any of the Contemplated Transactions pursuant
to:
(i) any provision of buyer's
Organizational documents;
(ii) any resolution adopted by the board
of directors or the stockholders of Buyer;
(iii) any Legal Requirement or order to
which Buyer may be subject; or
(iv) any Contract to which Buyer is a
party or by which Buyer may be bound.
Except as set forth in Schedule 4.3, Buyer is not and
will not be required to obtain any Consent from any Person in connection with
the execution and delivery of this Agreement or the consummation or performance
of any of the Contemplated Transactions.
4.4 INVESTMENT INTENT
Buyer is acquiring the Shares for its own account and
not with a view to their distribution within the meaning of Section 2(11) of the
Securities Act. Buyer confirms that Sellers have made available to Buyer and its
representatives and agents the opportunity to ask questions of the officers and
management employees of the Sellers and the Company and to acquire such
additional information about the business and financial condition of the Sellers
and the Company as Buyer has requested, and all such information has been
received.
4.5 CERTAIN PROCEEDINGS
There is no pending Proceeding that has been
commenced against Buyer that challenges, or may have the effect of preventing,
delaying, making illegal, or otherwise interfering with, any of the Contemplated
Transactions. To Buyer's Knowledge, no such Proceeding has been Threatened.
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4.6 BROKERS OR FINDERS
Buyer and its officers and agents have incurred no
obligation or liabilities, contingent or otherwise, for brokerage or finders'
fees or agents' commissions or other similar payment in connection with this
Agreement and will indemnify and hold Seller harmless from any such payment
alleged to be due by or through Buyer as a result of the action of Buyer or its
officers or agents.
5. COVENANTS OF SELLERS PRIOR TO CLOSING DATE
5.1 ACCESS AND INVESTIGATION
Between the date of this Agreement and the Closing
Date, Sellers will, and will cause the Company and its Representatives to, (a)
afford Buyer and its Representatives and prospective lenders and their
Representatives (collectively, "Buyer's Advisors") full and free access to the
Company's personnel, properties, contracts, books and records, and other
documents and data, (b) furnish Buyer and Buyer's Advisors with copies of all
such contracts, books and records, and other existing documents and data as
Buyer may reasonably request, and (c) furnish Buyer and Buyer's Advisors with
such additional financial, operating and other data and information as Buyer may
reasonably request.
5.2 OPERATION OF THE BUSINESS OF THE COMPANY
Between the date of this Agreement and the Closing
Date, Sellers will, and will cause the Company to:
(a) conduct the business of the Company only in
the Ordinary Course of Business, and pursuant to the MIS Contract;
(b) use its Best Efforts to preserve intact the
current business organization of the Company, keep available the services of the
current officers, employees, and agents of the Company, and maintain the
relations and good will with suppliers, customers, landlords, creditors,
employees, agents, and others having business relationships with the Company;
(c) confer with Buyer concerning operational
matters of a material nature; and
(d) otherwise report periodically to Buyer
concerning the status of the business, operations, and finances of the Company.
5.3 NEGATIVE COVENANT
Except as otherwise expressly permitted by this
Agreement, between the date of this Agreement and the Closing Date, Sellers will
not, and will cause
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the Company not to, without the prior consent of Buyer, take any affirmative
action, or fail to take any reasonable action within their or its control, as a
result of which any of the changes or events listed in Section 3.16 is likely to
occur.
5.4 REQUIRED APPROVALS
As promptly as practicable after the date of this
Agreement, Sellers will, and will cause the Company to,
(a) cooperate with Buyer with respect to all filings that Buyer elects to make
or is required by Legal Requirements to make in connection with the Contemplated
Transactions, and (b) cooperate with Buyer in obtaining all consents identified
in Schedule 4.3.
5.5 NOTIFICATION
Between the date of this Agreement and the Closing
Date, the Sellers will promptly notify Buyer in writing if the Sellers or the
Company becomes aware of any fact or condition that causes or constitutes a
Breach of any of Sellers' representations and warranties as of the date of this
Agreement, or if the Sellers or the Company becomes aware of the occurrence
after the date of this Agreement of any fact or condition that would (except as
expressly contemplated by this Agreement) cause or constitute a Breach of any
such representation or warranty had such representation or warranty been made as
of the time of occurrence or discovery of such fact or condition. Should any
such fact or condition require any change in the Disclosure Letter if the
Disclosure Letter were dated the date of the occurrence or discovery of any such
fact or condition, Sellers will promptly deliver to Buyer a supplement to the
Disclosure Letter specifying such change. During the same period, the Sellers
will promptly notify Buyer of the occurrence of any Breach of any covenant of
Sellers in this Section 5 or of the occurrence of any event that may make the
satisfaction of the conditions in Section 7 impossible or unlikely.
5.6 PAYMENT OF INDEBTEDNESS BY RELATED PERSONS
Except as expressly provided in this Agreement,
Sellers will cause all indebtedness owed to the Company by either Sellers or any
Related Person of Sellers to be paid in full prior to Closing.
5.7 NO NEGOTIATION
Until such time, if any, as this Agreement is
terminated pursuant to Section 9, Sellers will not, and will cause the Company
and each of their Representatives not to, directly or indirectly solicit,
initiate, or encourage any inquiries or proposals from, discuss or negotiate
with, provide any non-public information to, or consider the merits of any
unsolicited inquiries or proposals from, any Person (other than Buyer) relating
to any transaction involving the sale of the business or assets (other than in
the Ordinary Course of Business) of the Company, or any of the capital stock of
the Company, or any
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merger, consolidation, business combination, or similar transaction involving
the Company.
5.8 BEST EFFORTS
Between the date of this Agreement and the Closing
Date, Sellers will use its Best Efforts to cause the conditions in Sections 7
and 8 to be satisfied.
6. COVENANTS OF BUYER PRIOR TO CLOSING DATE
6.1 APPROVALS OF GOVERNMENTAL BODIES
As promptly as practicable after the date of this
Agreement, Buyer will, and will cause each of its Related Persons to, make all
filings required by Legal Requirements to be made by them to consummate the
contemplated Transactions. Between the date of this Agreement and the Closing
Date, Buyer will, and will cause each Related Person to cooperate with Sellers
in obtaining all consents identified in part 3.2 of the Disclosure Letter;
provided that this Agreement will not require Buyer to dispose of or make any
change in any portion of its business or to incur any other burden to obtain a
Governmental Authorization.
6.2 BEST EFFORTS
Except as set forth in the proviso to Section 6.1,
between the date of this Agreement and the Closing Date, Buyer will use its Best
Efforts to cause the conditions in Sections 7 and 8 to be satisfied.
7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
Buyer's obligation to purchase the Shares and to take the
other actions required to be taken by Buyer at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by Buyer, in whole or in part):
7.1 ACCURACY OF REPRESENTATIONS
All of Sellers' representations and warranties in
this Agreement (considered collectively), and each of these representations and
warranties (considered individually), must have been accurate in all material
respects as of the date of this Agreement, and must be accurate in all material
respects as of the Closing Date as if made on the Closing Date, without giving
effect to any supplement to the Disclosure Letter; provided, however, Buyer
shall have approved or waived any disclosure contained within a supplement to
the Disclosure Letter.
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7.2 SELLERS' PERFORMANCE
(a) All of the covenants and obligations that
Sellers are required to perform or to comply with pursuant to this Agreement at
or prior to the Closing (considered collectively), and each of these covenants
and obligations (considered individually), must have been duly performed and
complied with in all material respects.
(b) Each document required to be delivered
pursuant to Section 2.4 must have been delivered.
7.3 CONSENTS
Each of the Consents identified in Part 3.2 of the
Disclosure Letter, and each Consent identified in Schedule 4.3, must have been
obtained and must be in full force and effect.
7.4 ADDITIONAL DOCUMENTS
Each of the following documents must have been delivered to
Buyer:
(a) an opinion of Mark E. Hoffman, Esquire,
dated the Closing Date, in the form of Exhibit 7.4(a);
(b) such other documents as Buyer may reasonably
request for the purpose of (i) enabling its counsel to provide the opinion
referred to in Section 8.4(a), (ii) evidencing the accuracy of any of Sellers'
representations and warranties, (iii) evidencing the performance by the Sellers
of, or the compliance by Sellers with, any covenant or obligation required to be
performed or complied with by Sellers, (iv) evidencing the satisfaction of any
condition referred to in this Section 7, or (v) otherwise facilitating the
consummation or performance of any of the Contemplated Transactions.
7.5 NO PROCEEDINGS
Since the date of this Agreement, there must not have
been commenced or threatened against buyer, or against any Person affiliated
with Buyer, any Proceeding (a) involving any challenge to, or seeking damages or
other relief in connection with, any of the Contemplated Transactions, or (b)
that may have the effect of preventing, delaying, making illegal, or otherwise
interfering with any of the Contemplated Transactions.
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7.6 NO CLAIM REGARDING STOCK OWNERSHIP OR SALE PROCEEDS
There must not have been made or Threatened by any
Person any claims asserting that such Person (a) is the holder or the beneficial
owner of, or has the right to acquire or to obtain beneficial ownership of, any
stock of, or any other voting, equity, or ownership interest in, the Company, or
(b) is entitled to all or any portion of the Purchase Price payable for the
Shares.
7.7 NO PROHIBITION
Neither the consummation nor the performance of any
of the Contemplated Transactions will, directly or indirectly (with or without
notice or lapse of time), materially contravene, or conflict with, or result in
a material violation of, or cause Buyer or any Person affiliated with Buyer to
suffer any material adverse consequence under, (a) any applicable Legal
Requirement or Order, or (b) any Legal Requirement or Order that has been
published, introduced, or otherwise formally proposed by or before any
Governmental Body.
8. CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO CLOSE
Sellers' obligation to sell the Shares and to take the other
actions required to be taken by Sellers at the Closing is subject to
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by Sellers, in whole or in part):
8.1 ACCURACY OF REPRESENTATIONS
All of Buyer's representations and warranties in this
Agreement (considered collectively), and each of these representations and
warranties (considered individually), must have been accurate in all material
respects as of the date of this Agreement and must be accurate in all material
respects as of the Closing Date as if made on the Closing Date.
8.2 BUYER'S PERFORMANCE
(a) All of the covenants and obligations that
Buyer is required to perform or to comply with pursuant to this Agreement or the
MIS Contract at or prior to the Closing (considered collectively), and each of
these covenants and obligations (considered individually), must have been
performed and complied with in all material respects.
(b) Buyer must have delivered each of the
documents required to be delivered by Buyer pursuant to Section 2.4.
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8.3 CONSENTS
Each of the Consents identified in Part 3.2 of the
Disclosure Letter must have been obtained and must be
in full force and effect.
8.4 ADDITIONAL DOCUMENTS
Buyer must have caused the following documents to be delivered
to Sellers:
(a) an opinion of Tisdale & Nicholson, LLP,
dated the Closing Date, in the form of Exhibit 8.4(a); and
(b) such other documents as Sellers may
reasonably request for the purpose of (i) enabling their counsel to provide the
opinion referred to in section 7.4(a), (ii) evidencing the accuracy of any
representation or warranty of Buyer, (iii) evidencing the performance by Buyer
of, or the compliance by Buyer with, any covenant or obligation required to be
performed or complied with by Buyer, (iv) evidencing the satisfaction of any
condition referred to in this Section 8, or (v) otherwise facilitating the
consummation of any of the Contemplated Transactions.
8.5 NO INJUNCTION
There must not be in effect any Legal Requirements or
any injunction or other Order that (a) prohibits the sale of the Shares by
Sellers to Buyer, and (b) has been adopted or issued, or has otherwise become
effective, since the date of this Agreement.
8.6 RESOLUTION OF LITIGATION
That certain lawsuit entitled Royangrove Limited v.
Nuova Arca (Investments) Limited and Argent Capital Corporation, pending in the
U.S. District Court, Central District of California, must have been resolved in
such a manner as is satisfactory to Seller, in its sole discretion.
8.7 ELECTION TO BOARD OF DIRECTORS
Buyer must have appointed two of Optimize's nominees
to Buyer's Board of Directors contemporaneously with the Closing. Furthermore,
Buyer agrees to use its best efforts to cause to be elected an additional
Optimize nominee to its Board of directors at its first annual meeting of
shareholders held subsequent to the Closing Date.
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9. TERMINATION
9.1 TERMINATION EVENTS
This Agreement may, by notice given prior to or at
the Closing, be terminated:
(a) by either Buyer or Sellers if a material
Breach of any provision of this Agreement has been committed by the other party
and such Breach has not been waived;
(b)(i) by Buyer if any of the conditions in Section
7 has not been satisfied as of the Closing Date or if satisfaction of such a
condition is or becomes impossible (other than through the failure of Buyer to
comply with its obligations under this Agreement) and Buyer has not waived such
condition on or before the Closing Date; or (ii) by Sellers, if any of the
conditions in Section 8 has not been satisfied of the Closing Date or if
satisfaction of such a condition is or becomes impossible (other than through
the failure of Sellers to comply with their obligations under this Agreement)
and Sellers have not waived such condition on or before the Closing Date;
(c) by mutual consent of Buyer and Sellers; or
(d) by either Buyer or Sellers if the Closing
has not occurred (other than through the failure to any party seeking to
terminate this Agreement to comply fully with its obligations under this
Agreement) on or before May 15, 1999, or such later date as the parties may
agree upon.
9.2 EFFECT OF TERMINATION
Each party's right of termination under Section 9.1
is in addition to any other rights it may have under this Agreement or
otherwise, and the exercise of a right of termination will not be an election of
remedies. If this Agreement is terminated pursuant to Section 9.1, all further
obligations of the parties under this agreement will terminate, except that the
obligations in Sections 11.1 and 11.3 will survive; provided, however, that if
this Agreement is terminated by a party because of the Breach of the Agreement
by the other party or because one or more of the conditions to the terminating
party's obligations under this agreement is not satisfied as a result of the
other party's failure to comply with its obligations under this Agreement, the
terminating party's right to pursue all legal remedies will survive such
termination unimpaired.
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10. INDEMNIFICATION; REMEDIES
10.1 SURVIVAL
All representations, warranties, covenants, and
obligations in this Agreement, the Disclosure Letter, the supplements to the
Disclosure Letter, the certificates delivered pursuant to Section 2.4(a)(vi) and
Section 2.4(b)(vii), and any other certificate or document delivered pursuant to
this Agreement will survive the Closing. The waiver of any condition based on
the accuracy of any representation or warranty, or on the performance of or
compliance with any covenant or obligation, will not affect the right to
indemnification, payment of Damages, or other remedy based on such
representations, warranties, covenants, and obligations.
10.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLERS
Optimize will indemnify and hold harmless Buyer, the
Company, and their respective representatives, stockholders, controlling
persons, and Affiliates (collectively, the "Indemnified Persons") for, and will
pay to the Indemnified Persons the amount of, any loss, liability, claim, damage
(including incidental and consequential damages), expense (including costs of
investigation and defense and reasonable attorneys' fees) or diminution of
value, including a third-party claim (collectively, "Damages"), arising,
directly or indirectly, from or in connection with:
(a) any Breach of any representation or warranty
made by Optimize in this Agreement, the Disclosure Letter, the supplements to
the Disclosure Letter, or any other certificate or document delivered by
Optimize pursuant to this Agreement;
(b) any Breach of any representation or warranty
made by Optimize in this Agreement as if such representation or warranty were
made on and as of the Closing Date, other than any such Breach that is disclosed
in a supplement to the Disclosure Letter and is expressly identified in the
certificate delivered pursuant to Section 2.4(a)(vi) as having caused the
condition specified in Section 7.1 not to be satisfied.
(c) any Breach by Optimize of any covenant or
obligation of such Sellers in this Agreement;
(d) any product shipped or manufactured by, or
any services provided by, or the operations of the Company prior to the Closing
Date; or
(e) any claim by any Person for brokerage or
finder's fees or commissions or similar payments based upon any agreement or
understanding alleged to
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have been made by any such Person with either Sellers or the Company (or any
Person acting on their behalf) in connection with any of the Contemplated
Transactions.
The remedies provided in this Section 10.2 will not be
exclusive of or limit any other remedies that may be available to Buyer or the
other Indemnified Persons.
10.3 INDEMNIFICATION AND PAYMENT OF DAMAGES BY BUYER
Buyer will indemnify and hold harmless Sellers, and
will pay to Sellers the amount of any Damages arising, directly or indirectly,
from or in connection with (a) any Breach of any representation or warranty made
by Buyer in this Agreement or in any certificate delivered by Buyer pursuant to
this Agreement, (b) any Breach by Buyer of any covenant or obligation of Buyer
in this Agreement, or (c) any claim by any Person for brokerage or finder's fees
or commissions or similar payments based upon any agreement or understanding
alleged to have been made by such Person with Buyer (or any Person acting on its
behalf) in connection with any of the Contemplated Transactions.
10.4 TIME LIMITATIONS
If the Closing occurs, Sellers will have no liability
(for indemnification or otherwise) with respect to any representation or
warranty, or covenant or obligation to be performed and complied with prior to
the Closing Date, unless on or before the second anniversary of the Closing Date
Buyer notifies Sellers of a claim specifying the factual basis of that claim in
reasonable detail to the extent then known by Buyer; or a claim for
indemnification or reimbursement not based upon any representation or warranty
or any covenant or obligation to be performed and complied with prior to the
Closing Date, may be made at any time. If the Closing occurs, Buyer will have no
liability (for indemnification or otherwise) with respect to any representation
or warranty, or covenant or obligation to be performed and complied with prior
to the Closing Date, unless on or before the second anniversary of the Closing
Date Sellers notify Buyer of a claim specifying the factual basis of that claim
in reasonable detail to the extent then known by Sellers.
10.5 LIMITATIONS ON AMOUNT - SELLERS
Sellers will have no liability (for indemnification
or otherwise) with respect to the matters described in clause (a), clause (b)
or, to the extent relating to any failure to perform or comply prior to the
Closing Date, clause (c) of Section 10.2 until the total of all Damages with
respect to such matters exceeds $50,000.00, and then only for the amount by
which such Damages exceed $50,000.00. Sellers will have no liability (for
indemnification or otherwise) with respect to the matters described in clause
(d) of Section 10.2 until the total of all Damages with respect to such matters
exceeds $25,000.00, and then only for the amount by which such Damages exceed
$25,000.00.
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However, this Section 10.5 will not apply to any Breach of any of Optimize's
representations and warranties of which Optimize had Knowledge at any time prior
to the date on which such representation and warranty is made or any intentional
Breach by Optimize of any covenant or obligation, and Optimize will be liable
for all Damages with respect to such Breaches.
10.6 LIMITATIONS ON AMOUNT - BUYER
Buyer will have no liability (for indemnification or
otherwise) with respect to the matters described in clause (a) or (b) of Section
10.4 until the total of all Damages with respect to such matters exceeds
$50,000.00, and then only for the amount by which such Damages exceed
$50,000.00. However, this Section 10.6 will not apply to any Breach of any of
Buyer's representations and warranties of which Buyer had Knowledge at any time
prior to the date on which such representation and warranty is made or any
intentional Breach by Buyer of any covenant or obligation, and Buyer will be
liable for all Damages with respect to such Breaches.
10.7 PROCEDURE FOR INDEMNIFICATION - THIRD PARTY CLAIMS
(a) Promptly after receipt by an indemnified
party under Section 10.2, 10.4, or (to the extent provided in the last sentence
of Section 10.3) Section 10.3 of notice of the commencement of any Proceeding
against it, such indemnified party will, if a claim is to be made against an
indemnifying party under such Section, give notice to the indemnifying party of
the commencement of such claim, but the failure to notify the indemnifying party
will not relieve the indemnifying party of any liability that it may have to any
indemnified party, except to the extent that the indemnifying party demonstrates
that the defense of such action is prejudiced by the indemnifying party's
failure to give such notice.
(b) If any Proceeding referred to in Section
10.7 is brought against an indemnified party and it gives notice to the
indemnifying party of the commencement of such Proceeding, the indemnifying
party will be entitled to participate in such Proceeding and, to the extent that
it wishes (unless (i) the indemnifying party is also a party to such Proceeding
and the indemnified party determines in good faith that joint representation
would be inappropriate, or (ii) the indemnifying party fails to provide
reasonable assurance to the indemnified party of its financial capacity to
defend such Proceeding and provide indemnification with respect to such
Proceeding), to assume the defense of such Proceeding with counsel satisfactory
to the indemnified party and, after notice from the indemnifying party to the
indemnified party of its election to assume the defense of such proceeding, the
indemnifying party will not, as long as it diligently conducts such defense, and
does so without reserving any rights against the indemnified party, be liable to
the indemnified party under this Section 10 for any fees of other counsel or any
other expenses with respect to the defense of such Proceeding, in each case
subsequently incurred by the indemnified party in connection with the defense of
such Proceeding, other than reasonable costs of investigation. If the
indemnifying party
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assumes the defense of a Proceeding; (i) no compromise or settlement of such
claims may be effected by the indemnifying party without the indemnified party's
consent unless (A) there is no finding or admission of any violation of Legal
Requirements or any violation of the rights of any Person and no effect on any
other claims that may be made against the indemnified party, and (B) the sole
relief provided is monetary damages that are paid in full by the indemnifying
party; and (ii) the indemnified party will have no liability with respect to any
compromise or settlement of such claims effected without its consent. If notice
is given to an indemnifying party of the commencement of any Proceeding and the
indemnifying party does not, within ten days after the indemnified party's
notice is given, give notice to the indemnified party of its election to assume
the defense of such Proceeding, the indemnifying party will be bound by any
determination made in such Proceeding or any compromise or settlement effected
by the indemnified party.
(c) Notwithstanding the foregoing, if an
indemnified party determines in good faith that there is a reasonable
probability that a Proceeding may adversely affect it or its affiliates other
than as a result of monetary damages for which it would be entitled to
indemnification under this Agreement, the indemnified party may, by notice to
the indemnifying party, assume the exclusive right to defend, compromise, or
settle such Proceeding, but the indemnifying party will not be bound by any
determination of a Proceeding so defended or any compromise or settlement
effected without its consent (which may not be unreasonably withheld).
(d) Sellers hereby consent to the non-exclusive
jurisdiction of any court in which a Proceeding is brought against any
Indemnified Person for purposes of any claim that an Indemnified Person may have
under this Agreement with respect to such Proceeding or the matters alleged
therein, and agree that process may be served on Sellers with respect to such a
claim anywhere in the world.
10.8 PROCEDURE FOR INDEMNIFICATION - OTHER CLAIMS
A claim for indemnification for any matter not
involving a third-party claim may be asserted by notice to the party from whom
indemnification is sought.
11. GENERAL PROVISIONS
11.1 EXPENSES
Except as otherwise expressly provided in this
Agreement, each party to this Agreement will bear its
respective expenses incurred in connection with the preparation, execution, and
performance of this Agreement and the Contemplated Transactions, including all
fees and expenses of agents, representatives, counsel, and accountants. Sellers
will cause the Company not to incur any out-of-pocket expenses in connection
with this Agreement. In the event of termination of this Agreement, the
obligation of each party to pay its own expenses will be subject to any rights
of such party arising from a breach of this Agreement by another party.
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11.2 PUBLIC ANNOUNCEMENTS
Any public announcement or similar publicity with
respect to this Agreement or the Contemplated Transactions will be issued, if at
all, at such time and in such manner as Buyer and Sellers mutually determine.
Unless consented to by Buyer in advance or required by Legal Requirements, prior
to the Closing Sellers shall, and shall cause the Company to, keep this
Agreement strictly confidential and may not make any disclosure of this
Agreement to any Person. Sellers and Buyer will consult with each other
concerning the means by which the Company employees, customers, and suppliers
and others having dealings with the Company will be informed of the Contemplated
Transactions, and Buyer will have the right to be present for any such
communication.
11.3 CONFIDENTIALITY
Between the date of this Agreement and the Closing
Date, Buyer and Sellers will maintain in confidence, and will cause the
directors, officers, employees, agents, and advisors of Buyer and the Company to
maintain in confidence, and not use to the detriment of another party or the
Company any written, oral, or other information obtained in confidence from
another party or the Company in connection with this Agreement or the
Contemplated Transactions, unless (a) such information is already known to such
party or to others not bound by a duty of confidentiality or such information
becomes publicly available through no fault of such party, (b) the use of such
information is necessary or appropriate in making any filing or obtaining any
consent or approval required for the consummation of the Contemplated
Transactions, or (c) the furnishing or use of such information is required by or
necessary or appropriate in connection with legal proceedings.
If the Contemplated Transactions are not consummated,
each party will return or destroy as much of such written information as the
other party may reasonably request.
11.4 NOTICES
All notices, consents, waivers, and other
communications under this Agreement must be in writing and will
be deemed to have been duly given when (a) delivered by hand (with written
confirmation of receipt, (b) sent by telecopier (with written confirmation of
receipt), provided that a copy is mailed by registered mail, return receipt
requested, or (c) when received by the addressee, if sent by a nationally
recognized overnight delivery service (receipt requested), in each case to the
appropriate
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addresses and telecopier numbers set forth below (or to such other addresses and
telecopier numbers as a party may designate by notice to the other parties):
Sellers: Optimize, Inc.
One Independence Plaza, Suite 710
Birmingham, AL 35209
Attention: James L. Thompson II
Facsimile No.: 205-879-3757
with a copy to: Mark E. Hoffman, Esquire
1300 20th Street South, Suite 302
Birmingham, AL 35205
Facsimile No.: 205-933-1117
Buyer: Argent Capital Corporation
1801 West End Avenue, Suite 1110
Nashville, TN 37203
Attention: Christopher Millar
Facsimile No.: 615-345-6201
with a copy to: Sandor X. Mayuga, Esquire
2049 Century Place East, Suite 755
Los Angeles, CA 90067
Facsimile No.: 310-286-2351
11.5 JURISDICTION; SERVICE OF PROCESS
Any action or proceeding seeking to enforce any
provision of, or based on any right arising out of, this Agreement may be
brought against any of the parties in the courts of the State of Alabama, County
of Jefferson, or, if it has or can acquire jurisdiction, in the United States
District Court for the Northern District of Alabama, Southern Division, and each
of the parties consents to the jurisdiction of such courts (and of the
appropriate appellate courts in any such action or proceedings and waives any
objection to venue laid therein. Process in any action or proceeding referred to
the in preceding sentence may be served on any party anywhere in the world.
11.6 FURTHER ASSURANCES
The parties agree (a) to furnish upon request to each
other such further information, (b) to execute and deliver to each other such
other documents, and (c) to do such other acts and things, all as the other
party may reasonably request for the purpose of carrying out the intent of this
Agreement and the documents referred to in this Agreement.
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11.7 WAIVER
The rights and remedies of the parties of this
Agreement are cumulative and not alternative. Neither the failure nor any delay
by any party in exercising any right, power, or privilege under this Agreement
or the documents referred to in this Agreement will operate as a waiver of such
right, power, or privilege, and no single or partial exercise of any such right,
power or privilege will preclude any other or further exercise of such right,
power, or privilege or the exercise of any other right, power or privilege. To
the maximum extent permitted by applicable law, (a) no claim or right arising
out of this Agreement or the documents referred to in this Agreement can be
discharged by one part, in whole or in party, by a waiver of renunciation of the
claim or right unless in writing signed by the other party; (b) no waiver that
may be given by a party will be applicable except in the specific instance for
which it is given; and (c) no notice to or demand on one party will be deemed to
be a waiver of any obligation of such party or of the right of the party giving
such notice or demand to take further action without notice or demand as
provided in this Agreement or the documents referred to in this Agreement.
11.8 REGISTRATION
(a) Buyer shall, at its expense, prepare and
file as soon as practicable after the Closing Date a registration statement
under the Securities Act covering the 2,000,000 shares of the Buyer's Stock
issued as a part of the Purchase Price (the "Unregistered Buyer's Common Stock")
and shall use its best efforts to cause such registration statement to become
effective as promptly as possible after the filing of the registration
statement. With respect to such registration, Sellers acknowledge and agree: (i)
that such registration of Unregistered Buyer's Common Stock shall be in
conjunction with a public offering by Buyer of newly-issued common stock or
other securities, and (ii) that Buyer may also register and offer to the public
previously unregistered securities then-currently held by holders of Buyer's
unregistered securities, whether or not such holders may require Buyer to
register their securities pursuant to agreement or otherwise.
(b) Buyer may terminate such registration
statement at the earlier of the time when all of the Unregistered Buyer's Common
Stock has been sold or two years after the Closing Date.
(c) Buyer will:
(i) use its best efforts to cause such
registration statement to become and remain effective until all of the
Unregistered Buyer's Common Stock has been sold but no longer than two years
after the Closing Date;
(ii) prepare and file with the SEC such
amendments to such registration statement as may be necessary to keep such
registration statement effective;
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(iii) furnish to the holders of the
Unregistered Buyer's Common Stock such reasonable number of copies of the
registration statement, preliminary prospectus, final prospectus and such other
documents as such holders may reasonably request in order to facilitate the
offering of the Buyer's Stock;
(iv) notify the holders of the
Unregistered Buyer's Common Stock promptly after it shall receive notice
thereof, of the time when such registration statement has become effective or a
supplement to any prospectus forming a part of such registration statement has
been filed;
(v) notify the holders of the
Unregistered Buyer's Common Stock promptly of any request by the SEC for the
amending or supplementing of such registration statement or prospectus or for
additional information; and
(vi) advise the holders of the
Unregistered Buyer's Common Stock, promptly after it shall receive notice or
obtain knowledge thereof, of the issuance of any stop order by the SEC
suspending the effectiveness of such registration statement or the initiation or
threatening of any proceeding for that purpose and promptly use all reasonable
efforts to prevent the issuance of any stop order or to obtain its withdrawal if
such stop order should be issued.
(d) With respect to such registration, Buyer
shall bear all fees, costs and expenses, including all registration fees,
printing expenses, fees and disbursements of counsel and accountants for Buyer
and all internal expenses of Buyer.
(e) With respect to the registration of the
Unregistered Buyer's Common Stock:
(i) Buyer will indemnify and hold
harmless the Sellers and any underwriter (as defined in the 1933 Act) for such
Sellers from and against any and all loss, damage, liability, cost and expense
to which the Sellers or any such underwriter may become subject under the
Securities Act or otherwise, insofar as such losses, damages, liabilities, costs
or expenses are caused by any untrue statement or alleged untrue statement of
any material fact contained in such registration statement, any prospectus
contained therein or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances in which they were made, not misleading; provided
however, that Buyer will not be liable in any such case to the extent that any
such loss, damage, liability, cost or expense arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission so
made in conformity with information furnished by any Seller or such underwriter;
(ii) The Sellers and any underwriter for
the Sellers shall indemnify and hold harmless Buyer to the same extent as
provided in paragraph (i) of this
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subsection (e) to the extent that any such loss, damage, liability, cost or
expense to which Buyer may become subject is caused by or arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in conformity with information furnished by any Sellers or
such underwriter; and
(iii) Promptly after receipt by an
indemnified party pursuant to the provisions of paragraph (i) and (ii) of this
subsection (e) of notice of the commencement of any action involving the subject
matter of the foregoing indemnity provisions, such indemnified party will, if a
claim thereof is to be made against the indemnifying party pursuant to the
provisions of said paragraph (i) and (ii), promptly notify the indemnifying
party of the commencement thereof; but the omission to so notify the
indemnifying party will not relieve it from any liability which it may have to
any indemnified party otherwise than hereunder. In case such action is brought
against any indemnified party and it notifies the indemnifying party of the
commencement thereof, the indemnifying party shall have the right to participate
in, and, to the extent that it may wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with counsel
satisfactory to such indemnified party; provided, however, if the defendants in
any action include both the indemnified party and the indemnifying party and
there is a conflict of interest which would prevent counsel for the indemnifying
party from also representing the indemnified party, the indemnified party or
parties shall have the right to select separate counsel to participate in the
defense of such action on behalf of such indemnified party or parties. After
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party will not be liable to such
indemnified party pursuant to the provisions of said paragraph (i) and (ii) for
any legal or other expense subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation, unless (1) the indemnified party shall have employed counsel in
accordance with the proviso of the preceding sentence, (2) the indemnifying
party shall not have employed counsel satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after the notice of the
commencement of the action, or (3) the indemnifying party has authorized the
employment of counsel for the indemnified party at the expense of the
indemnifying party.
(f) Sellers, severally and not jointly,
represent and warrant that:
(i) He/it is acquiring the Unregistered
Buyer's Stock for his own account, for investment purposes and not with a view
to, or for sale in connection with, any distribution of such Unregistered
Buyer's Stock or any part thereof.
(ii) He/it is an investor experienced in
the evaluation of businesses similar to Buyer; is able to fend for himself in
the transactions contemplated by this Agreement; has such knowledge and
experience in financial, business and investment matters as to be capable of
evaluating risks of this investment; has the ability to bear the economic risks
of this investment; and has been afforded prior to the Closing Date the
opportunity to ask questions of, and to receive answers from, the Buyer and to
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obtain any additional information, to the extent Buyer has such information or
could have acquired it without unreasonable effort or expense, all as necessary
for the Investor to make an informed investment decision with respect to the
purchase of the Unregistered Buyer's Stock.
(iii) He/it understands that any
Unregistered Buyer's Stock to be sold and issued hereunder is unregistered and
may be required to be held indefinitely unless they are subsequently registered
under the Securities Act, or an exemption from such registration is available;
that except as provided in this Section 11.8, Buyer is under no obligation to
file a registration statement with the Securities and Exchange Commission
("Commission") with respect to the Unregistered Buyer's Stock; and that rule 144
promulgated under the Securities Act ("Rule 144"), which provides for certain
limited sales of unregistered securities, is not presently available with
respect to the Unregistered Buyer's Stock.
(g) Sellers agree that they will not offer,
sell, pledge, hypothecate, or otherwise dispose of the Unregistered Buyer's
Stock unless such offer, sale, pledge, hypothecation or other disposition is (i)
registered under the Securities Act, or (ii) in compliance with an opinion of
counsel to such Sellers, delivered to Buyer and reasonably acceptable to Buyer,
to the effect that such offer, sale, pledge, hypothecation or other disposition
thereof does not violate the Securities Act.. Sellers understand that they must
bear the economic risk of the investment represented by the purchase of
Unregistered Buyer's Stock for an indefinite period.
(h) The certificate(s) representing the
Unregistered Buyer's Stock shall bear a legend stating in substance:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMEMDED, AND MAY NOT BE OFFERED,
SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL
REGISTERED UNDER SAID ACT OR, IN THE OPINION OF COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER,
PLEDGE OR HYPOTHECATION DOES NOT VIOLATE THE PROVISIONS THEREOF.
Upon request of a holder of Unregistered Buyer's Stock, Buyer
shall remove the legend set forth above from the certificates evidencing such
Unregistered Buyer's Stock, or issue to such holder new certificates therefor
free of such legend, if with such request Buyer shall have received an opinion
of counsel selected by the holder and reasonably satisfactory to Buyer, in form
and substance reasonably satisfactory to Buyer, to the effect that such
Unregistered Buyer's Stock is not required by the Securities Act to continue to
bear the legend.
Sellers agree that Buyer may provide for appropriate transfer
instructions to implement the provisions of the foregoing paragraphs (g) and
(h).
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(i) Sellers represent and warrant that they have
not retained, or otherwise authorized to act, any intermediary in connection
with the transaction contemplated by this Agreement and agree to indemnify and
hold harmless Buyer from liability for any compensation to any intermediary
retained or otherwise authorized to act by them or on their behalf and the fees
and expenses of defending against such liability or alleged liability.
11.9 FUTURE BUY-OUT PROCEDURES
Buyer agrees to maintain and account for the
"NetVoucher" product and related assets being acquired from Sellers in this
transaction in either a distinct operating entity or division of Buyer (the
"NetVoucher Company").
Buyer shall, at its expense, retain a nationally
recognized business valuation expert, such as an accounting firm or investment
bank (the specific firm to be hired being subject to the prior written approval
of Optimize, which approval shall not be unreasonably withheld) to value the
NetVoucher Company as of the second anniversary of the Closing Date (the "Future
Value"). The valuation of the NetVoucher Company shall be on a "stand alone" or
""spin-off" basis, and Optimize and Buyer shall, in good faith and in the
exercise of their reasonable discretion, mutually agree on the selection of the
valuation methodology recommended by the valuation expert. Buyer shall, on the
sixtieth day subsequent to the second anniversary of the Closing Date, pay to
those Sellers owning the Class A Common Stock of the Company (as of the Closing
Date), thirty percent (30%) of the Future Value in the form of cash, registered
common stock of Buyer or a Buyer affiliate, or a combination thereof; provided,
however, no less than fifty percent (50%) of the amount to be paid to such
Sellers shall be paid in the form of cash. For purposes of determining the value
of registered stock to be issued to such Sellers as partial payment hereunder,
if any, the value shall be the average closing price of such stock for the
thirty day period immediately preceding the second anniversary of the Closing
Date. In the event Buyer sells the NetVoucher Company prior to the second
anniversary of the Closing Date, Buyer shall pay to the Sellers owning the Class
A Common Stock of the Company (as of the Closing Date), thirty percent (30%) of
the gross sales proceeds received by Buyer in connection with such sale, whether
in the form of cash, stock, royalties, future considerations or otherwise.
11.10 ENTIRE AGREEMENT AND MODIFICATION
This Agreement supersedes all prior agreements
between the parties with respect to its subject matter (including the Memorandum
of Agreement between Buyer and Sellers dated February 18, 1999) and constitutes
(along with the documents referred to in this Agreement) a complete and
exclusive statement of the terms of the Agreement between the parties with
respect to its subject matter. This Agreement may not be amended except by a
written agreement executed by the party to be charged with the amendment.
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11.11 DISCLOSURE LETTER
(a) The disclosures in the Disclosure Letter,
and those in any supplement thereto, must relate only to the representations and
warranties in the Section of the Agreement to which they expressly relate and
not to any other representation or warranty in this Agreement.
(b) In the event of any inconsistency between
the statements in the body of this Agreement and those in the Disclosure Letter
(other than an exception expressly set forth as such in the Disclosure Letter
with respect to a specifically identified representation or warranty), the
statements in the body of this Agreement will control.
11.12 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY
RIGHTS
Neither party may assign any of its rights under this
Agreement without the prior consent of the other parties. Subject to the
preceding sentence, this Agreement will apply to, be binding in all respects
upon, and insure to the benefit of the successors and permitted assigns of the
parties. Nothing expressed or referred to in this Agreement will be construed to
give any Person other than the parties to this Agreement any legal or equitable
right, remedy, or claim under or with respect to this Agreement or any provision
of this Agreement. This Agreement and all of its provisions and conditions are
for the sole and exclusive benefit of the parties to this Agreement and their
successors and assigns.
11.13 SEVERABILITY
If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
11.14 SECTION HEADINGS, CONSTRUCTION
The headings of Sections in this Agreement are
provided for convenience only and will not affect its construction or
interpretation. All references to "Section" or "Sections" refer to the
corresponding Section or Section of this Agreement. All words used in this
Agreement will be construed to be of such gender or number as the circumstances
require. Unless otherwise expressly provided, the wording "including" does not
limit the preceding words or terms.
11.15 TIME OF ESSENCE
With regard to all dates and time periods set forth
or referred to in this Agreement, time is of the essence.
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11.16 GOVERNING LAW
This Agreement will be governed by the laws of the
State of Alabama without regard to conflicts of laws principles.
11.17 COUNTERPARTS
This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
BUYER: ARGENT CAPITAL SELLERS: OPTIMIZE, INC.
CORPORATION
By: /s/ CHRISTOPHER A. MILLAR By: /s/ JAMES L. THOMPSON II
----------------------------- -----------------------------
Its President and CEO Its President and CEO
/s/ P. MICHEAL DAVIDSON
------------------------
P. Micheal Davidson
/s/ JAMES L. THOMPSON II
------------------------
James L. Thompson II
/s/ ROBERT NEEDHAM
------------------------
Robert Needham
/s/ MARK E. HOFFMAN
------------------------
Mark E. Hoffman
[Additional Sellers]
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EXHIBIT 10(b)
EXHIBIT 2.4(a)(iii) TO STOCK PURCHASE AGREEMENT
Management Information Systems (MIS) Contract
This Management Information Systems (MIS) Contract ("Contract") is made
as of February 18th, 1999, by ARGENT CAPITAL CORPORATION, a Nevada corporation
(either "Argent" or "Client"), and OPTIMIZE, INC., an Alabama corporation
("Vendor").
RECITALS
Client desires support of Vendor for the Management of Information
Systems for the "NETVOUCHER" Product(s), Service(s), and Back Office Systems.
Client desires Vendor to be its Information Technology (IT) partner and thus
bestows upon Vendor the rights, privileges, and decision making authority of an
IT Officer for its corporation including the planning, design, development,
installation, support, and operation of software, systems, and related computer
services. Mutual concurrence shall be required with respect to acquisition of
capital items.
CONTRACT
The parties, intending to be legally bound, agree as follows:
1. DEFINITIONS
For the purposes of this contract, the following terms have meaning
specified or referred to in this Section 1:
NetVoucher(sm) - an Internet e-Advertising(sm) system that is sold to
merchants for the purpose of advertising their local presence on the
Internet.
NetVoucher Plus(sm) - an advanced Internet software product that is
sold to members for the purpose of increased e-Advertising(sm) presence
on the Internet.
e-point$(sm) - an Internet software product that is sold to mall
merchants for the purpose of advertising their local presence on the
Internet and tracking customer sales for the purpose of rewarding their
loyalty.
e-Advertising(sm) - an Internet software advertising concept that is
sold to merchants for the purpose of advertising their local presence
on the Internet.
NetTrooper(sm) - an Internet software training product that is included
in the merchant kits for the purpose of educating their customers.
Go Local Not Global - an advertising strategy developed for
NetVoucher(sm) software product(s) and Service(s).
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Domain Name - the name reference for an Internet Web Address that are
registered through the Internic and owned by the registering party.
NetVoucher.com - the NetVoucher(sm) Domain name reference for the
production computer site that houses the merchants and vouchers and
members.
NetVoucher.net - a Domain name reference that could be used as a
competing Internet Web Site.
WebVoucher.net - a Domain name reference that could be used as a
competing Internet Web Site.
WebVoucher.com - a name reference that could be used as a competing
Internet Web Site.
Merchant Kit - a marketing aid produced to assist merchants in the
promotion of NetVoucher(sm) that includes member brochures, merchant
brochures, a rack, a window decal, a banner, a box, and NetTrooper(sm)
CD's.
CD - a Compact Disc (CD) used to store data or programs.
System - a program or process or combination of both for the purpose of
accomplishing a task or function in a structured and efficient manner.
Back Office - the processes that take place to support the sales and
marketing of product and services including payroll, order entry,
inventory, financial production, commission payments, shipping and
receiving, human resources, planning, project management, and other
related functions.
Invoice Default - the failure of the client to pay an invoice in the
allotted time period in full as described in conditions on the Invoice.
Interface - a connection between two or more software programs. The
connection can be in real time or batch.
E-Mail - the ability to sent correspondence across an Intranet or
Internet network from one party to one or more parties electronically.
E-Mail Address - the mailbox address of the recipient of correspondence
that is sent across an Intranet or Internet network from one party to
one or more parties electronically.
Spam - junk or unsolicited E-Mail.
2
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2. SUPPORT OF NETVOUCHER PRODUCT
2.1 PRODUCTS
Vendor has designed, applied for a servicemark and copyrighted its
Internet based software application under the servicemark (sm) name of
"NetVoucher", "NetVoucher Plus" and "e-point$", which are Internet
software products and services sold to Client by virtue of and in
connection with that certain Stock Purchase Agreement dated as of
March 12, 1999, and which are to be supported by Vendor.
2.2 PAYMENTS
Vendor shall support Client for a period of ten years from February 18,
1999 until February 18, 2009 for a support fee paid in two phases.
Phase one will be a ninety-day period beginning on February 18, 1999
and continuing until May 14, 1999. During this period, Client will pay
to Vendor all of Vendor's costs and expenses, including, but not
limited to, equipment, hardware and software purchases, labor, general
administrative and overhead, and otherwise, associated with
"NetVoucher" and the services to be performed by Vendor hereunder, plus
a thirty-five percent (35%) mark-up (the "Base Support Fee"). Phase two
will begin on May 15, 1999 and Client will pay to Vendor, on a monthly
basis, ten percent (10%) of the gross revenues derived by Argent (or
any of its subsidiaries or other affiliated companies) in connection
with the NetVoucher products and services, including, but not limited
to, initial sales, virtual web site fees, quick key, specialty and
banner ads, direct e-mail, recurring revenues relating to all of the
above, or otherwise. "Gross Revenues" as defined herein shall mean
revenues from any and all sources, without deduction for any cost or
expense for any reason whatsoever; provided, however, there shall be
allowed a deduction for any "gross revenue" taxes imposed on Argent by
any taxing authority prior to calculating such ten percent (10%). This
phase two payment schedule shall remain in effect through February 18,
2009. Regardless of whether or not this Agreement is terminated
subsequent to May 14, 2001 (per Section 8), and whether or not Vendor
continues to support Client thereafter, Client shall be unconditionally
obligated to continue to pay to Vendor ten percent (10%) of the "Gross
Revenues" derived by Argent (or any of its subsidiaries or other
affiliated companies) in connection with the NetVoucher products and
services.
2.3 MAINTENANCE
Vendor will support the NetVoucher(sm), NetVoucher Plus(sm), and
e-point$(sm) software products and services to the extent that they
perform as represented to merchants and members and repair, correct, or
change software as needed to perpetuate the products and services into
the future without major software or service re-write. NetVoucher(sm)
and NetVoucher Plus(sm) are completed and are functioning products and
services. e-point$(sm) is not completed and is in development now with
an estimated completion of May 30th, 1999.
Support of products and services are for existing features and do not
represent any enhancements or changes in the software. To the extent
that software programming is done to "fix", or repair, or make good the
existing products and services, Vendor will accommodate without
additional payment.
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2.4 NEW FEATURES
Vendor will work with Client to discover, design, develop, and program
new features and enhancements that relate to the products and services
of NetVoucher, Inc. These new features and enhancements will be charged
to NetVoucher, Inc. on a monthly basis plus thirty-five percent,
separately and in addition to the payment outlined in Section 2.2.
2.5 PRODUCT INTERFACE
Vendor will support the NetVoucher(sm), NetVoucher Plus(sm), and
e-point$(sm) software interface(s) to the extent that they perform as
represented to merchants and members and repair, correct, or change
software as needed to perpetuate the products and services into the
future without major software or service re-write.
The NetVoucher(sm), NetVoucher Plus(sm), and e-point$(sm) E-Mail
interface is in development and will be completed by March 31st, 1999.
The NetVoucher(sm) and NetVoucher Plus(sm) Proposal, Demonstration, and
Authorization System is completed and working as designed. This product
interfaces with the Financial Holding Database and the Web Content
Holding Database. It contains merchant Web site content and merchant
financial information that is staged onto these temporary databases to
be reviewed and approved by the Vendor.
The NetVoucher(sm) and NetVoucher Plus(sm) merchant Web site content
interface is complete and working as designed. This interface stages
merchant Web site content onto a temporary database to be reviewed and
approved by the Vendor.
The NetVoucher(sm) and NetVoucher Plus(sm) merchant Web site financial
interface is complete and working as designed. This interface stages
merchant Web financial content onto a temporary database to be reviewed
and approved by the Vendor.
The E-Mail mining software product, Extractor Pro, has been purchased.
This product allows Vendor to collect E-Mail addresses and to bulk mail
a promotional advertisement about NetVoucher(sm), NetVoucher Plus(sm),
and e-point$(sm). This promotional is a one time E-Mail to these
addresses in order to comply with the anti Spam laws of most states.
Prospective members will sign up manually and no interface is intended.
2.6 REPORTS
Reports will be available for merchants to review activity in their
site. Additional reports will be produced for internal review of the
performance of products and services.
Demographic information will be available in reports too. This
information will be merged with site analysis where applicable.
3. SUPPORT OF BACK OFFICE SOFTWARE PRODUCTS AND SERVICES
3.1 PRODUCTS
Vendor has designed or has in design, developed or has in development,
and programmed or has in programming software programs and interfaces
that support the Internet based
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<PAGE> 5
software applications NetVoucher(sm), NetVoucher Plus(sm), and
e-point$(sm). Vendor has also purchased commercially sold software
products and services that support the Internet based software
applications NetVoucher(sm), NetVoucher Plus(sm), and e-point$(sm).
3.2 SUPPORT OF COMMERCIAL SOFTWARE
Vendor shall support Client for a period of ten years from February 18,
1999 until February 18, 2009. Any commercial software support fees will
be passed on to Client in addition to payment as described in Section
2.2 for the duration of the contract. The cost of any and all
commercial software will be passed on to Client in addition to payment
as described in Section 2.2 for the duration of the contract. Client
will be a third party beneficiary of any manufacturer warranties. These
products may or may not consist of the following commercial products;
Great Plains Dynamics CS+ SQL, 2021 Interactive Commission System,
Authorize.Net Bank and Credit Card Processing, Citrix MetaFrame,
Microsoft NT, HP-UX UNIX, and Microsoft Windows.
3.3 MAINTENANCE
In consideration of the payments outlined in Section 2.2. (and at no
additional charge to Argent), Vendor will support the commercial
software products and services to the extent that they perform as
represented by the manufacturer and to the extent that the manufacturer
will repair, correct, or change software as needed to perpetuate their
products and services into the future without major software or service
re-write.
3.4 NEW FEATURES
Vendor will work with Client to discover, design, develop, and program
new features and enhancements that relate to the products and services
that support the back office systems and processes of NetVoucher, Inc.
These new features and enhancements will be charged to Client on a
monthly basis plus thirty-five percent.
Support of products and services are for existing features and do not
represent any enhancements or changes in the software. To the extent
that software programming is done to "fix", or repair, or make good the
existing products and services, Vendor will accommodate without
additional payment.
3.5 COMMERCIAL PRODUCT INTERFACES
Vendor will support the commercial software interface(s) to the extent
that they perform as advertised and repair, correct, or change software
as needed to perpetuate the products and services into the future
without major software or service re-write.
Support of products and services are for existing features and do not
represent any enhancements or changes in the software. To the extent
that software programming is done to "fix", or repair, or make good the
existing products and services, Vendor will accommodate without
additional payment.
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Planned and under development back office interfaces are; 2021
Commission system to Dynamics Financials, Authorize.Net Bank and Credit
Card Processing System to Dynamics Financials, Financial Hold Database
to Dynamics Financials for Order Entry, Call Center Software to
Dynamics Financials, and Fulfillment Center Software to Dynamics
Financials.
3.6 SOFTWARE AND SYSTEM DELIVERY
The total integration of commercial software, Internet software
applications NetVoucher(sm), NetVoucher Plus(sm), and e-point$(sm),
product support software interfaces, and back office support interfaces
are expected to take a minimum of six months to complete. This will
affect sales of NetVoucher(sm), NetVoucher Plus(sm), and e-point$(sm)
in the back office, requiring the hiring of staff to perform manual
operations until these interfaces are completed. This should not affect
merchant sales of NetVoucher(sm), NetVoucher Plus(sm), and e-point$(sm)
or the signing up of members into the NetVoucher(sm), NetVoucher
Plus(sm), and e-point$(sm) database.
Each of these software products and interfaces must undergo rigorous
testing and performance evaluations prior to the production release.
Vendor will plan for the scheduled and timed introduction of each piece
of software as it relates to the most critical path of performance and
cost.
4. SUPPORT OF BACK OFFICE HARDWARE AND COMMUNICATIONS
4.1 SYSTEM
The system is a collection of computers, routers, Hub's cabling,
wiring, firmware, network operating systems (NOS), operating systems
(OS), application software, and communications access. It also includes
processes, interfaces, and procedures.
4.2 HARDWARE AND NOS
Vendor will purchase equipment considered necessary for housing,
storing, operating, and executing the commercial software, Internet
software applications NetVoucher(sm), NetVoucher Plus(sm), and
e-point$(sm), product support software interfaces, and back office
support interfaces. This will involve frequent monitoring to provide a
system that is tuned to perform at the optimum level for transaction
volumes incurred. Satisfactory transaction response is interpreted to
be what is acceptable in the industry based upon the technology that is
available at the time of equipment purchase and not what equipment is
available at the time of transaction measurement.
Vendor hardware purchases will include multiple hardware brand names
and will spread operating systems across two prevalent NOS and one
specialized NOS: Microsoft NT, HP-UX UNIX, and Citrix MetaFrame
respectively.
4.3 COMMUNICATIONS
Vendor has planned and designed a communications grid to support
multiple points of connectivity and requirements of access to the
system. This communications subsystem is described in the attached
Exhibit "A". The Internet access is depicted with T-3 redundant access.
This is the anticipated long term design configuration and may not be
physically
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installed until communications subsystem monitoring indicates a need
for additional capacity and redundancy.
4.4 SUPPORT OF THE SYSTEM
Vendor shall support Client for a period of ten years from February 18,
1999 until February 18, 2009. Any system purchases will be passed on to
Client in addition to payment as described in Section 2.2 for the
duration of the contract. The cost of any and all commercial
maintenance fees will be passed on to Client in addition to payment as
described in Section 2.2 for the duration of the contract. Regardless
of Vendor's support participation level subsequent to May 14, 2001,
Client shall remain responsible for the payment to Vendor of ten
percent (10%) of the "Gross Revenues" (as defined in Section 2.2.)
derived by Argent (or any of its subsidiaries or other affiliated
companies) in connection with the NetVoucher products and services for
the remainder of the entire ten (10) year period. Client acknowledges
this as being an integral component of the consideration being paid and
to be paid to Vendor in conjunction with the transfer of the
"NetVoucher" product to Client and Vendor's agreement to support same
until at least May 14, 2001.
5. SUPPORT OF NON-SYSTEM FUNCTIONS
5.1 FINANCIAL
Vendor will perform financial processing for NetVoucher, Inc. as part
of the payment plan as described in Section 2.2. Financial processing
will include payment of trade accounts, payment of commissions, cash
receipts processing, order processing, inventory management, fixed
asset management, and local regulatory compliance.
Vendor will assist Client in setting up financial processing that will
produce monthly Profit & Loss Statements, Balance Sheets, Cash Flows,
and Statements of Stockholders' Equity for Argent Capital and Argent
Financial as part of the payment plan as described in Section 2.2.
Consolidated Statements will be included.
5.2 CALL CENTER
Vendor will manage a call center as part of the support for product and
services. The Call Center will function on limited basis, 7:00 am till
7:00 pm, Central time, until such traffic volumes mandate an increase
in the hours of coverage. Payment for Call Center services will be in
the payment plan as described in Section 2.2.
5.3 FULFILMENT CENTER
Vendor will maintain fulfillment center management as part of the
support for product and services. The Fulfillment Center will function
to deliver merchant kits and stage computer packages for the sales
people. Payment for Call Center services will be in the payment plan as
described in Section 2.2. Each salesperson will be responsible for
purchasing their own computer package independent of Client or Vendor.
5.4 EMPLOYEES
Vendor will hire and train or outsource employees for Client in order
to service, maintain, and perform the system functions described
herein. Client, through Vendors management,
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<PAGE> 8
will pay employees of NetVoucher, Inc. After the Phase I (initial
ninety (90) day period) is completed, Client shall be directly
responsible for payroll and other costs associated with such employees.
Vendor shall remain responsible for payroll and other costs associated
with management and software development (technical) personnel
necessary for Vendor to perform its services hereunder.
6. PART PERFORMANCE DOES NOT PRECLUDE LATER DEMAND FOR FULL PERFORMANCE
The failure of the parties to insist on full performance of any part of
this Agreement or the waiver by either party of any breach under this
Agreement shall not prevent a subsequent enforcement of such term nor
be deemed a waiver of any subsequent breach of said term, nor prevent
demand of full performance of said part of this Agreement from the
other party at a later date.
7. INDEMNIFICATION/DEFAULT
Client and Vendor agree to indemnify and hold each other harmless with
respect to any claim, loss, liability, damage or judgment suffered by
them, including attorneys fees and court costs, or costs of Alternative
Dispute Resolution, which results from any action or inaction by the
other in contravention hereof, or as a result of the manner in which
the other performs its duties hereunder (a "Default").
In the event of any litigation against Vendor or Client by any
regulatory agency or any other other proceedings challenging any
product or service or advertising prepared on behalf of Vendor, the
parties agree to cooperate and assist each other in the preparation of
the defense.
8. TERMINATION
Either party, from February 18, 1999 to May 14, 2001, may terminate
this Agreement only upon the Default of the other party; provided,
however, any alleged Default shall be specified in writing, and sent to
the other party, which shall have thirty (30) days within which to cure
such Default. After May 14, 2001, either party may terminate this
Agreement, with or without cause, upon thirty (30) days written notice
to the other party. In the event of termination, Client shall remain
unconditionally obligated to pay to Vendor the ten percent (10%) of
Gross Revenues referenced in Section 2.2, through February 18, 2009.
9. ARBITRATION
Any controversy or claims arising out of this Agreement shall be
settled by binding arbitration in Jefferson County, Alabama, in
accordance with such private arbitration or alternative dispute
resolution rules as the parties may agree or in the absence of such
agreement, the Commercial Arbitration Rules of the American Arbitration
Association as in effect on the date of delivery of the demand for
arbitration. The arbitration of issues as provided herein, including
the determination of damages, if any, shall be the exclusive method of
dispute resolution and the decision of the majority of arbitrators
shall be conclusive and final. Unless other wise agreed, there shall be
three arbitrators, one chosen by Buyer, one by the majority in interest
of the Sellers, and a third by the two arbitrators so chosen. The cost
of the arbitration shall be borne equally by Buyer, on one hand, and
the Sellers, on the other, with the cost to be borne
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<PAGE> 9
by Sellers to be allocated pro-rata among them in accordance with
Disclosure Schedule 2.1. Buyer shall not absorb any part of such cost
not duly paid by the Sellers.
10. NOTICE
Any notice required by this Agreement or given in connection with it,
shall be in writing and shall be given to the appropriate party by
personal delivery or by authorized mail; postage prepaid, or recognized
overnight delivery services.
If to CLIENT
Attention: Chris Millar, President
Argent Capital Corporation
1801 West End Avenue
Suite 1110
Nashville, TN 37203
If to VENDOR
Attention: James L. Thompson II, President
OPTIMIZE, INC.
One Independence Plaza, Suite 710
Birmingham, AL 35209
11. HEADINGS
Headings used in this Agreement are provided for convenience only and
shall not be used to construe meaning or intent.
12. ENTIRE UNDERSTANDING/BINDING EFFECT
This Agreement supersedes all previous Agreements by and between the
parties with respect to its subject matter, and contains the complete
and entire Agreement and understanding between the parties and no
representations, inducements, promises or Agreements, written or oral,
not embodied herein, with respect to its subject matter, shall be of
any force or effect between the parties.
Should any part of this Agreement, for any reason, be declared invalid,
such invalidity shall not affect the validity of any remaining portion
hereof, and the remaining portion hereof shall remain in force and
effect as if this Agreement had been executed with the invalid portion
thereof eliminated, and it is hereby declared the intention of the
parties hereto that they would have executed the remaining portion of
the Agreement without including therein any such part, parts or portion
which may for any reason be hereafter declared invalid.
This Agreement shall be assignable only with the written consent of the
other party. Subject to the foregoing, this Agreement will be binding
upon and inure to the benefit of the parties hereto, their successors
in interest (whether by merger, consolidation, sale, or otherwise) and
assigns.
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13. CHOICE OF LAW
This Agreement, when duly executed by and between the parties, becomes
effective as of the day and year first set forth above, and shall be
construed and enforced in accordance with the laws of the State of
Alabama. In the event it becomes necessary for Vendor to institute any
action at law, in equity, or in arbitration against Client to secure or
to protect its rights under this Agreement, or because of Client's
breach hereof, Vendor shall be entitled to recover not only its damages
incurred, but also attorneys fees, together with such court costs and
other expenses it incurs.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written.
VENDOR (OPTIMIZE, INC.)
By: JAMES L. THOMPSON II
---------------------------------
ITS President and CEO
---------------------------------
Authorized Officer
CLIENT (ARGENT CAPITAL CORPORATION)
By: CHRISTOPHER A. MILLAR
---------------------------------
ITS: President and CEO
---------------------------------
Authorized Officer
10
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<EXCHANGE-RATE> 1
<CASH> 27,151
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 27,151
<PP&E> 645,910
<DEPRECIATION> 481,270
<TOTAL-ASSETS> 700,397
<CURRENT-LIABILITIES> 26,389
<BONDS> 0
0
0
<COMMON> 4,496
<OTHER-SE> 322,106
<TOTAL-LIABILITY-AND-EQUITY> 700,397
<SALES> 0
<TOTAL-REVENUES> 585
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (310,669)
<INCOME-TAX> 0
<INCOME-CONTINUING> (310,669)
<DISCONTINUED> (180,889)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (491,558)
<EPS-PRIMARY> (.15)
<EPS-DILUTED> (.15)
</TABLE>
<PAGE> 1
EXHIBIT 99
1999 ACC SHARE, OPTION AND WARRANT ISSUANCES
<TABLE>
<CAPTION>
No. of Shares(S),
Options(O) Nature of Total Amount of
ISSUEE and Warrants(W) Issuance Date Consideration Consideration
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Christopher A. Millar 559,000 (S&W) 2/15/99 Cash and Services $139,750
500,000 (S&W) 3/12/99 Cash and Services $125,000
202,664 (S&W) 3/12/99 Cash and Services $50,666
Dennis R. Gutzman 500,000 (S&W) 3/12/99 Cash $125,000
140,000 (S) 2/15/99 Cash $35,000
Samuel B. Watson 400,000 (S&W) 3/15/99 Cash and Services $100,000
400,000 (S&W) 4/6/99 Cash and Services $100,000
Roy L. Painter 75,000 (S&W) 3/12/99 Services $18,750
Ameri-Tech
Financial, LLC 200,000 (S) 4/15/99 Cash $50,000
Royangrove, Limited 30,000 (S) 3/12/99 Other Note 2
Net Voucher, Inc.
Shareholders 2,000,000 (S) 4/12/99 Other Note 3
3,000,000 (0) 4/12/99 Other Note 3
Monica Kennison 500,000 (S) 4/15/99 Cash $125,000
Life Planning Group 200,000 (S) 4/15/99 Cash $50,000
</TABLE>
Note 1: Each reference to S&W denotes an issuance of equal numbers of shares
and 3-year purchase warrants.
Note 2: These shares were issued in settlement of litigation between the
Company and the issuee.
Note 3: Reference should be made to the Financial Statements and notes thereto
in Part I, Item 1, with respect to the valuation of the consideration for these
issuances.
