SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
Billserv, Inc.
(Name of Registrant as Specified in its Charter)
---------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|_| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1. Title of each class of securities to which transaction applies:
2. Aggregate number of securities to which transaction applies:
3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
4. Proposed maximum aggregate value of transaction:
5. Total fee paid:
|X| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:
2. Form, Schedule or Registration Statement No.:
3. Filing Party:
4. Date Filed:
1
BILLSERV, INC.
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
July 14, 2003
A special meeting of stockholders of Billserv, Inc. (the "Company") will be held
at the principal offices of the Company located at 211 North Loop 1604 East,
Suite 200, San Antonio, Texas, 78232, on Monday, July 14, 2003, at 9:30 a.m.,
C.D.T., (the "Special Meeting") for the following purposes:
1. To elect one Director to serve until the next Annual Meeting of
stockholders and until his successor is duly elected and qualified.
2. To approve the sale of substantially all assets of the Company.
3. To grant authority to the Directors to change the name of the
Company.
4. To ratify the appointment of the independent auditors of the
Company.
5. To transact any other business that properly comes before the
meeting.
Stockholders of record at the close of business on June 13, 2003 are entitled to
notice of, and to vote at, the Special Meeting or any adjournment thereof (the
"Record Date").
If you cannot attend the Special Meeting in person, please date and execute the
accompanying Proxy and return it promptly to the Company. If you attend the
Special Meeting, you may revoke your Proxy and vote in person if you desire to
do so, but attendance at the Special Meeting does not of itself serve to revoke
your Proxy.
MICHAEL R. LONG
Chief Executive Officer
2
GENERAL INFORMATION
Q. Who is soliciting my proxy?
A. The Board of Directors of Billserv, Inc.
Q. Where and when is the Special Meeting?
A. 9:30 a.m. C.D.T., Monday, July 14, 2003, at the principal offices of the
Company located at 211 North Loop 1604 East, Suite 200, San Antonio,
Texas, 78232.
Q. What am I voting on?
A. Management of the Company is seeking the authorization of the stockholders
to elect one Director to the Board of Directors of the Company, sell
substantially all of the assets of the Company to Saro, Inc., a wholly
owned subsidiary of CyberStarts, Inc. (the "Asset Purchase Transaction"),
change the name of the Company, and ratify the appointment of the
Company's independent auditors.
Q. Why should the Company sell the assets?
A. The Board of Directors of the Company has thoroughly considered the
advantages and disadvantages of the Asset Purchase Transaction at this
time. As described in greater detail in this Proxy Statement, the Board
believes that it is in the best interests of the stockholders and this
Company to convert the assets of the Company into cash and redeploy that
cash in connection with the Company's redefined business plan. See below
the discussion on "Use of Proceeds; Plans for Future Operations After the
Proposal Sale."
Q. How do I know if the Company is receiving fair value for the assets?
A. Based on a variety of factors including (i) the Company's overall goals
and future business plans, (ii) the current financial condition and future
prospects for the Company, and (iii) the survey of limited proposed
alternatives to the transaction, the Board believes that the consideration
to be received from Saro, Inc. for the assets is fair.
Q. Will any of the money received from the transaction be distributed to the
Company's stockholders?
A. No. The Company intends to use most of the consideration received in the
Asset Purchase Transaction to discharge the Company's debts with its
creditors, as described below. The remaining consideration from the Asset
Purchase Transaction will be used to fund the continuing and redefined
operations of the Company after the Asset Purchase Transaction. See below
the discussion on "Use of Proceeds; Plans for Future Operations After the
Proposal Sale."
Q. Will stockholders have appraisal rights?
A. No. Stockholders of the Company will not have appraisal rights as a result
of the Asset Purchase Transaction.
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Q. What should stockholders do now?
A. Stockholders should mail their signed and dated proxy card in the enclosed
envelope, as soon as possible, so that their shares will be represented at
the Special Meeting.
Q. Can stockholders change their vote after they have mailed a signed proxy
card?
A. Yes. Stockholders can change their vote in one of three ways at any time
before their proxies are used. First, stockholders can revoke their
proxies by written notice. Second, stockholders can complete new,
later-dated proxy cards. Third, stockholders can attend the stockholders'
meeting and vote in person.
Q. Whom should stockholders call with questions?
Stockholders who have questions about the materials in this Proxy
Statement should call Michael R. Long, the Company's Chief Executive
Officer, at (210) 402-5005.
4
Disclosure Regarding Forward-Looking Statements
This Proxy Statement contains forward-looking statements including statements
containing the words "believes," "anticipates," "expects," "intends" and words
of similar import. These statements involve known and unknown risks and
uncertainties that may cause the Company's actual results or outcomes to be
materially different from those anticipated and discussed herein. Important
factors that the Company believes might cause such differences include: (1)
concentration of the Company's assets into one industry segment; (2) the nature
of the Company's business (as defined herein); (3) the impact of changing
economic conditions; (4) the actions of competitors, including pricing and new
product introductions; and (5) those specific risks that are discussed in the
cautionary statements accompanying the forward-looking statements in this Proxy
Statement and in the Risk Factors detailed in the Company's previous filings
with the Securities and Exchange Commission (the "Commission"). In assessing
forward-looking statements contained herein, stockholders are urged to read
carefully all cautionary statements contained in this Proxy Statement and in
those other filings with the Commission.
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BILLSERV, INC.
PROXY STATEMENT INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation of Proxies
by and on behalf of the Board of Directors of the Company for use at the Special
Meeting of Stockholders to be held on July 14, 2003 (the "Special Meeting") or
any adjournment thereof. This Proxy Statement, the Notice of the Special Meeting
and the accompanying Proxy are being mailed to stockholders on or about June 19,
2003.
The Company's principal executive offices are located at 211 North Loop 1604
East, Suite 200, San Antonio, Texas, 78232.
As to all matters that may come before the Special Meeting, each stockholder
will be entitled to one vote for each share of Common Stock of the Company held
by him or her at the close of business on the Record Date. The holders of a
majority of the shares of Common Stock of the Company presented in person or by
proxy and entitled to vote will constitute a quorum at the Special Meeting.
Abstentions and broker non-votes (broker non-votes are proxies containing no
voting instructions or voting instructions as to some proposals but not to
others, that are returned to the Company by a broker who is the record owner of
the Common Stock, but is holding the Common Stock for the account of a
beneficial owner) will be counted for purposes of determining the presence of a
quorum. As of the Record Date, there were 20,722,656 shares of Common Stock of
the Company issued and outstanding.
The purpose of the Special Meeting is to (a) elect one individual to serve as a
Class II Director of the Board of Directors whose term will expire at the 2006
Annual Meeting of the Stockholders of the Company, (b) approve the Asset
Purchase Transaction, (c) approve changing the name of the Company from
Billserv, Inc. to Payment Data Systems, Inc., and (c) ratify the appointment of
Ernst & Young LLP as the independent auditors of the Company for the year ending
December 31, 2003. The Company is not aware at this time of any other matters
that will come before the Special Meeting. The nominee for Director of the
Company and appointment of the independent auditor will be approved upon
receiving 10% of the votes having voting power and cast at the Special Meeting.
The Asset Purchase Transaction and the Company name change will be approved upon
receiving the vote of a majority of the issued and outstanding Common Stock of
the Company authorized to vote on such matters.
All shares of Common Stock represented by properly executed Proxies that are
returned and not revoked will be voted in accordance with the instructions, if
any, given therein. Broker non-votes and Proxies signed and returned to the
Company containing no instructions or partial instructions will be counted for
purposes of deciding quorum for the Special Meeting and any such proposal in the
Proxy that does not provide the proxy holder with voting instructions will be
counted as a vote FOR such proposal. A stockholder may revoke any such Proxy at
any time before it is exercised by either giving written notice of such
revocation to the Secretary of the Company or submitting a later-dated Proxy to
the Company prior to the Special Meeting. A stockholder attending the Special
Meeting may revoke his or her Proxy and vote in person if he or she desires to
do so, but attendance at the Special Meeting will not of itself revoke the
Proxy.
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NOTE: IF YOU DO NOT SIGN AND RETURN YOUR PROXY TO THE COMPANY, YOU WILL HAVE, IN
EFFECT, VOTED AGAINST THE ASSET PURCHASE TRANSACTION. STOCKHOLDERS ARE
ENCOURAGED TO VOTE, SIGN, AND RETURN THEIR PROXIES TO THE COMPANY. IF FEWER THAN
A MAJORITY OF ALL SHARES OF COMMON STOCK OF THE COMPANY DO NOT VOTE FOR THE
ASSET PURCHASE TRANSACTION, THE PROPOSAL RELATING TO THE ASSET PURCHASE
TRANSACTION WILL FAIL.
VOTING SECURITIES
Securities Outstanding
On the Record Date there were 20,722,656 shares of the Common Stock of the
Company issued, outstanding and entitled to vote. The Company has no other
voting securities outstanding. Each stockholder of record is entitled to one
vote per share of Common Stock held on all matters submitted to a vote of
stockholders.
Security Ownership of Principal Stockholders and Management
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock as of June 13, 2003 of each person known to the
Company to beneficially own more than five percent of the Common Stock.
--------------------------
Common Stock
----------------------------------------------------------------------------------------------
Number of
Shares
Beneficially Percent of
Name and Address of Beneficial Owner Owned (1) Class (1)
----------------------------------------------------------------------------------------------
CheckFree Investment Corporation 3,168,242 15.3%
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock as of June 13, 2003 of (i) each Director or
Director nominee of the Company; (ii) each executive officer of the Company; and
(iii) all Directors, Director nominees and executive officers of the Company as
a group:
--------------------------------------
---------------------------------------------- Number of Shares Percent of
Name of Beneficial Owner Beneficially Owned (1) Class (1)
------------------------------------------------------------------------------------
Michael R. Long 900,002 4.3%
Louis A. Hoch 936,368 4.5%
Terri A. Hunter 89,833 0.4%
Anthony L. Diamond 68,168 0.3%
Marshall N. Millard 216,131 1.0%
Peter Kirby 13,267 0.1%
Group, 6 persons 2,223,819 10.7%
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The information in this table is based on information supplied by Directors,
Director nominees, and executive officers of the Company on Form 3, 4 or 5 and
on any Schedule 13G filed with the Securities and Exchange Commission. A person
is deemed to be the beneficial owner of shares if such person, either alone or
with others, has the power to vote or to dispose of such shares. Shares
beneficially owned by a person include shares of which the person has the right
to acquire beneficial ownership within 60 days, including under stock options
that were exercisable on June 6, 2003 or that become exercisable within 60 days
after June 6, 2003. Also, the percentages calculated above are based upon issued
and outstanding shares as of June 6, 2003. Unless otherwise indicated in the
footnotes below, the persons and entities named in this table have sole voting
and dispositive power with respect to all shares beneficially owned, subject to
community property laws where applicable.
PROPOSAL 1
ELECTION OF DIRECTORS
The Board of Directors of the Company has currently set the number of Directors
constituting the whole board at seven. As established by the Company's Bylaws,
these Directors are divided into three classes serving staggered three-year
terms. The Directors were re-classified in 2001 as a result of the increased
number of Directors serving on the Board. As of June 13, 2003, Michael R. Long,
Louis A. Hoch, Terri A. Hunter, and Peter G. Kirby are the only members of the
Board of Directors of the Company. Richard B. Bergman, Mitchell D. Hovendick,
and E. Scott Crist resigned their positions on the Board of Directors in early
2003, each citing the Company's decision not to renew director and officer
liability insurance as their reason for resignation. Mr. Hovendick was appointed
to the Board of Directors in 2002 upon the resignation of Roger R. Hemminghaus
from the Board of Directors. Louis A. Hoch is the only nominee for election to
the Board of Directors of the Company. Mr. Hoch's term on the Board of
Directors, if elected thereto, will expire on the 2006 Annual Meeting of the
Stockholders of the Company. If Mr. Hoch is elected, three vacancies will remain
on the Board of Directors.
The individuals named as proxies will vote the enclosed Proxy for the election
of the nominee unless you direct them to withhold your vote. If the nominee
becomes unable to serve as a Director before the Special Meeting (or decides not
to serve), the individuals named as proxies may vote for a substitute or may
reduce the number of members of the Board. Cumulative voting is not prohibited
pursuant to Section 78.360 of the Nevada Revised Statutes.
Below are the names and ages of the Directors and the nominee for Director, the
years they became Directors, their principal occupations or employment for at
least the past five years and certain of their other directorships, if any.
Class II Director Nominee for Election to a Three-Year Term Ending with the 2006
Annual Meeting of the Stockholders of the Company
Louis A. Hoch. Age 37. A Director since 1998. Mr. Hoch has more than 14 years of
management experience in large systems development. Mr. Hoch joined the Company
as President and Chief Operating Officer in November 1998. Before joining the
Company, Mr. Hoch's background has been primarily in the telecommunications
industry. Most recently, from
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April to November 1998, Mr. Hoch was the Subject Matter Expert for Call Centers
in Telecom, at Andersen Consulting. His leadership in the call center industry
was acknowledged by Andersen Consulting when it classified his processes and
technology architecture to be one of their guidelines for best practices in call
center development. While employed at U. S. Long Distance, Inc. and its spin-off
company, Billing Concepts, Inc., from June 1991 to April 1998, Mr. Hoch
successfully built large billing systems that were proven flexible enough to
sustain exponential growth in record volumes, and call centers that integrated
the latest in technology and processes. During his tenure at Billing Concepts,
Mr. Hoch held successive positions; as a Tech Support Representative, Program
Analyst, Program Manager, MIS Manager, and finally, Director of Information
Technology. Mr. Hoch holds a B.B.A. in Computer Information Systems and an
M.B.A. in International Business Management, both from Our Lady of the Lake
University. He is certified as a Computer Professional (CCP) by the Institute
for Certification of Computing Professionals (ICCP). Mr. Hoch currently serves
as a director on the advisory board for Our Lady of the Lake University Business
School, and is also an executive lecturer in the school's weekend MBA program.
Mr. Hoch is a member of the board of directors of Billserv Australia and Office
e-procure, Inc., which provides branded office supply eCommerce sites for
businesses.
Class I Director with a Three-Year Term Ending with the 2004 Annual Meeting of
the Stockholders of the Company
Michael R. Long. Age 58. A Director since 1998. Mr. Long became a Director and
Chairman and Chief Executive Officer of the Company in November 1998. Mr. Long
has over 29 years of senior executive management and systems development
experience in six publicly traded companies, and has successfully operated his
own systems consulting business. Mr. Long has held positions at U.S. Long
Distance Corp., as Vice President of Management Information Systems from
December 1993 to August 1996; Billing Concepts, Inc., as Vice President of
Information Technologies from August 1996 to June 1997, and Andersen Consulting
as Business Development Director, Financial Services, from October 1997 to
November 1998.
Class III Directors with a Three-Year Term Ending with the 2005 Annual Meeting
of the Stockholders of the Company
Terri A. Hunter. Age 40. A Director since 2001. Ms. Hunter joined the Company in
April 2000 as its Chief Financial Officer. She possesses over eighteen years of
analytical and management experience in finance, accounting, and investor
relations for public companies. Most recently, from October 1999 to May 2000,
Ms. Hunter was Vice President, Finance and Investor Relations, for Clear Channel
Communications, Inc., a global leader in the out-of-home advertising industry
with radio, television, and outdoor displays in 37 countries around the world.
Ms. Hunter was also employed with U.S. Long Distance, Inc. and its spin-off
company, Billing Concepts, Inc., from February 1993 to October 1999, where she
lead their financial planning and analysis functions, as well as investor
relations. In addition, Ms. Hunter has held various finance and accounting roles
with Electronic Data Systems and Cullen/Frost Bankers since her graduation in
May 1985 from the University of Texas at Austin. She also serves on the Board of
Directors for the San Antonio chapter of the National Investor Relations
Institute.
9
Peter G. Kirby. Age 62. A Director since 2001. Mr. Kirby is a tenured professor
of management at Our Lady of the Lake University in San Antonio, Texas, where he
has served for the past twelve years.
Directors that Resigned During 2002 and 2003
Richard B. Bergman Age 62. A Director since 2001. Mr. Bergman has served as a
Director and Partner of Bergman, Igel, Kaplan & Associates, a business
consulting firm located in New York, Washington, D.C. and Florida, since 2000.
From 1999 to 2000, he served as a consultant for Glass America, an auto glass
and commercial glazing company in Chicago, Illinois. From 1989 to 1999, he was a
business consultant to numerous companies in various industries.
Roger R. Hemminghaus. Age 65. A Director since 1999. Mr. Hemminghaus was named
Chairman Emeritus of Ultramar Diamond Shamrock January 1, 2000. In December 1996
he became Chairman and Chief Executive Officer of Ultramar Diamond Shamrock
Corp. following the merger of Diamond Shamrock, Inc. and Ultramar Corporation.
Prior to the merger, Mr. Hemminghaus was Chairman, Chief Executive Officer and
President of Diamond Shamrock, Inc. After serving four years as a naval officer
involved in nuclear power development, Hemminghaus started his career in the
refining and marketing industry in 1962 as an engineer for Exxon, USA. Before
joining a predecessor company to Diamond Shamrock in 1984, Mr. Hemminghaus held
various management positions in the areas of refining, distribution, petroleum
products and natural gas. Hemminghaus is on the board of directors of CTS
Corporation, Luby's, Inc., Southwest Research Institute, Tandy Brands
Accessories, Inc. and Xcel Energy, Inc. He is a past Chairman of the Federal
Reserve Bank of Dallas and former Chairman of the National Petrochemicals and
Refiners Association. Hemminghaus is the Chairman of the Board of Regents of
Texas Lutheran University.
E. Scott Crist. Age 37. A Director since 1999. Mr. Crist is Managing Director of
Crist Ventures and a general partner of Venture Bridge LP, an early-stage
venture capital fund. He is Chairman of the Board of Office e-Procure, Inc., an
office supply procurement company utilizing Web-based procurement technologies.
He is also the former CEO and founder of Telscape International, Inc., (NASDAQ)
an integrated communications company focused on emerging markets. Mr. Crist was
formerly President and CEO for Matrix, a telecommunications company that ranked
#7 on the INC. MAGAZINE list of the 500 fastest growing private companies in the
U.S in 1995. Mr. Crist was named an ENTREPRENEUR OF THE YEAR by CNN/
NASDAQ/Ernst & Young in 1999. He is on the Board of several early-stage
technology companies. Mr. Crist has an M.B.A. from the Kellogg School at
Northwestern University and a B.S. in Electrical Engineering from NC State
University. He is on the faculty at Rice University's Graduate Business School.
Mitchell D. Hovendick. A Director since 2002. Mr. Hovendick is vice president of
EnCap Investments, a large institutional oil and gas fund. Prior to joining
EnCap Investments, Mr. Hovendick spent sixteen years with Phillips Petroleum
Company as a petroleum engineer. Mr. Hovendick earned an MBA with a
concentration in finance from Rice University's Jones Graduate School of
Business and a bachelor's degree in chemical engineering from Texas A&M
University, graduating with honors from both schools. Mr. Hovendick is a member
of the Independent
10
Petroleum Association of America, the Houston Producers Forum, and a registered
professional engineer.
Recommendation of Board of Directors
The Board of Directors of the Company recommends a vote FOR the nominee for
election to the Board of Directors.
COMPENSATION OF DIRECTORS
Mr. Long, Mr. Hoch, and Ms. Hunter receive no compensation for serving on the
Board of Directors of the Company due to their status as officers of the
Company.
In 2002, the Company provided as compensation to Mr. Crist, Mr. Hemminghaus, Mr.
Kirby, and Mr. Bergman, as non-employee Directors of the Company, a total of
$8,010 for participation in Board meetings and reimbursement for certain
out-of-pocket expenses associated therewith.
COMMITTEES OF THE BOARD OF DIRECTORS AND MEETINGS
The Audit Committee
The Audit Committee is comprised of independent directors and it operates under
a written charter adopted by the Board of Directors. The composition of the
Audit Committee, the attributes of its members and the responsibilities of the
Committee, as reflected in its charter, are intended to be in accordance with
applicable requirements for corporate audit committees. The Committee reviews
and assesses the adequacy of its charter on an annual basis.
As set forth in more detail in its charter, the Audit Committee's purpose is to
assist the Board of Directors in its general oversight of the Company's
financial reporting, internal control and audit functions. Management is
responsible for the preparation, presentation and integrity of the Company's
financial statements, accounting and financial reporting principles and internal
controls and procedures designed to ensure compliance with accounting standards,
applicable laws and regulations. Ernst & Young LLP, the Company's independent
auditing firm, is responsible for performing an independent audit of the
consolidated financial statements in accordance with generally accepted auditing
standards.
The Audit Committee members are not professional accountants or auditors, and
their functions are not intended to duplicate or to certify the activities of
management and the independent auditor, nor can the Audit Committee certify that
the independent auditor is "independent" under applicable rules. The Audit
Committee serves a board-level oversight role, in which it provides advice,
counsel and direction to management and the auditors on the basis of the
information it receives, discussions with management and the auditors and the
experience of the Audit Committee's members in business, financial and
accounting matters.
Among other matters, the Audit Committee monitors the activities and performance
of the Company's internal and external auditors, including the audit scope,
external audit fees, auditor
11
independence matters and the extent to which the independent auditor may be
retained to perform non-audit services. The Audit Committee and the Board of
Directors have ultimate authority and responsibility to select, evaluate and,
when appropriate, replace the Company's independent auditor. The Audit Committee
also reviews the results of the internal and external audit work with regard to
the adequacy and appropriateness of the Company's financial, accounting and
internal controls. Management and independent auditor presentations to and
discussions with the Audit Committee also cover various topics and events that
may have significant financial impact or are the subject of discussions between
management and the independent auditor. In addition, the Audit Committee
generally oversees the Company's internal compliance programs.
The Audit Committee met four times in relation to the year ended December 31,
2002.
In overseeing the preparation of the Company's financial statements, the Audit
Committee has had access to the Company's management to review and discuss all
financial statements prior to their issuance and to discuss significant
accounting issues. Management advised the Audit Committee that all financial
statements were prepared in accordance with generally accepted accounting
principles. The Audit Committee has not met with the Company's independent
auditor with regard to the audited financial statements of the Company for the
year ended December 31, 2002.
For the year ended December 31, 2002, the Audit Committee did receive the
independent auditor's letter and written disclosures required by the
Independence Standards Board Standard No. 1 (Independence Discussions with Audit
Committees).
For the year ended December 31, 2002, the members of the Audit Committee were
Mr. Crist, Mr. Kirby, Mr. Bergman, and Mr. Hovendick. As of June 13, 2003, only
Mr. Kirby remains on the Audit Committee (see "Directors that Resigned During
2002 and 2003" above).
Compensation Committee Report on Executive Compensation
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act or the Securities Exchange Act of
1934, as amended (the "Exchange Act"), that might incorporate future filings,
including this Proxy Statement, in whole or in part, this Compensation Committee
Report on Executive Compensation and the Performance Graph on page 29 shall not
be incorporated by reference into any such filings.
General. The Company's Board of Directors has established a Compensation
Committee with authority to set all forms of compensation of the Company's
executive officers, except the grant of stock options and restricted shares. The
full Board retains authority to administer stock options and restricted shares
under the terms of the Amended and Restated Stock Incentive Plan (including any
successor plan) and makes the determination of persons to whom options and
restricted shares may be granted.
Compensation Philosophy. The Board's compensation philosophy is to reward
executive officers for the achievement of short and long-term corporate and
individual performance, as measured by the attainment of specific goals for the
creation of long-term shareholder value. Also, to ensure that the Company is
strategically and competitively positioned for the future, the Compensation
12
Committee has the discretion to attribute significant weight to other factors in
determining executive compensation, such as maintaining competitiveness,
expanding markets, pursuing growth opportunities and achieving other long-range
business and operating objectives. The level of compensation should also allow
the Company to attract, motivate, and retain talented executive officers who
contribute to the long-term success of the Company. The compensation of the
chief executive officer and other executive officers of the Company is comprised
of cash compensation and long-term incentive compensation in the form of base
salary and stock options.
Total Compensation for Executives. For 2002, the Company's total compensation
for executive officers consisted of the following components: base salary and
stock options. In setting 2002 compensation, the Compensation Committee
considered the specific factors discussed below:
Base Salary. In setting the executive officers base salaries for 2002, the
Compensation Committee considers the performance of the executive officers'
respective business units, as well as individual performance. Base salaries are
targeted to approximate the average base salaries paid to executives of similar
companies for each position. To ensure that each executive is paid
appropriately, the Compensation Committee considers the executive's level of
responsibility, prior experience, overall knowledge, contribution to business
results, executive pay for similar positions in other companies, and executive
pay within the Company.
Option Plans. In addition to the foregoing, executive officers of the
Company may be compensated through awards of options to purchase Common Stock of
the Company.
Chief Executive Officer Compensation
Mr. Long's annual base salary for 2002 was $190,000. He received a total stock
option award of 340,000 options granted on December 13, 2002 and December 31,
2002.
Compensation Committee Interlocks and Insider Participation
For the year ended December 31, 2002, the members of the Compensation Committee
were Mr. Crist, Mr. Kirby, Mr. Bergman, and Mr. Hovendick. To carry out its
responsibilities, the Compensation Committee met one time during 2002. As of
June 13, 2003, only Mr. Kirby remains on the Compensation Committee.
Mr. Hoch serves as an advisory director to Office e-Procure, Inc., an office
supply procurement company utilizing Web-based procurement technologies. Mr.
Crist is Chairman of the Board of Office e-Procure, Inc.
The Entire Board
During 2002, the entire Board of Directors of the Company met twelve times for
regular and special meetings. During this period, each Director attended all
meetings of the Board of Directors and any committee on which he or she served.
The Board also acted by unanimous written consent on several occasions.
13
PROPOSAL 2
APPROVAL OF ASSET SALE
General
On May 19, 2003 the Company and Saro, Inc. (the "Purchaser"), a wholly owned
subsidiary of CyberStarts, Inc., executed an asset purchase agreement (the
"Agreement") whereby the Purchaser would purchase substantially all of the
assets of the Company (the "Purchased Assets") and assume certain liabilities of
the Company (the "Assumed Liabilities") (collectively, the "Asset Purchase
Transaction"). The Company is expected to receive approximately $4,800,000 from
the Purchaser as consideration for the sale of the assets of which $4,050,000
will be paid in cash at Closing (less a $105,000 escrow), $150,000 will be paid
as an earnout (see "Purchase Price" below), and $600,000 will be paid in the
form of a note (see "Purchase Price" below) or an earnout (see "Purchase Price"
below), depending on the sale of the JV (see "Purchase Price" below).
Notwithstanding the Closing of the Asset Purchase Transaction, the Company will
remain liable for certain indemnity obligations and retained liabilities, as
discussed below.
The Company
Billserv, Inc. provides Electronic Bill Presentment and Payment ("EBPP") and
related services to companies that generate recurring paper-based bills. EBPP is
the process of sending bills to consumers securely through the Internet and
processing Internet payment of bills utilizing an electronic transfer of funds.
The Company's service offerings are supported by its systems infrastructure that
integrates certain proprietary components with third-party hardware and software
platforms to offer the Company's customers a scalable, branded and secure EBPP
process. The Company currently markets its services through a direct sales force
and through organizations that resell the Company's services to their customers
and prospects.
Saro, Inc.
Saro, Inc. ("Saro," or the "Purchaser") is a wholly owned subsidiary of
CyberStarts, Inc., a financial services technology holding company
("CyberStarts"). The Purchaser's address is 1900 Emery Street NW, Second Floor,
Atlanta, GA 30318, and its telephone number is (404) 267-5000. CyberStarts is a
technology holding company with a competency in launching and running e-finance
businesses. CyberStarts has four majority-owned operating units within the
following three market segments: collections, claims, and business-to-business
payments. CyberStarts also has a ventures unit to house its non-majority owned
investments.
Use of Proceeds; Plans for Future Operations After the Proposed Sale
The net proceeds to the Company from the Asset Purchase Transaction are expected
to be approximately $4,800,000 (see "Purchase Price" below). From the net
proceeds, the Company will pay approximately $3,800,000 to discharge its secured
and certain unsecured debt obligations, and $105,000 will be placed in an escrow
account to secure any payment of indemnity obligations of the Company to the
Purchaser. The remaining proceeds (which includes the $150,000 earnout and the
$600,000 payable as a note or an earnout as described below), net of closing
costs, is intended for redeployment and investment in a new company formed by
senior
14
management, known as Payment Data Systems, Inc. ("PDS"). PDS is a startup
enterprise in the business of 1) processing ACH (Automated Clearing House)
transactions such as Accounts Receivable Conversion, also known as Check
Truncation, and related transactions such as Point of Sale or Point of Purchase,
and Returned Check Re-presentment, 2) processing credit card transactions on
behalf of billers or retailers as an Independent Sales Organization or ISO, and
3) creating and supporting WEB transactions (recurring and one-time payments),
Customer Service Representative payment transactions, and consumer self-service
telephone ("IVR") based payment transactions (the "New Business"). The New
Business is intended to provide a unique integrated payments solution ("IPS") to
a rapidly expanding electronic payments industry. Initially, the New Business
will be delivered via an outsource solution, but will ultimately include an
in-house software offering. On June 2, 2003, PDS and Purchaser entered into an
agreement whereby the Company (as a successor to PDS), through its New Business,
will be Purchaser's preferred credit card payment processing provider for a
period of two years (with an automatic renewal clause) ("Preferred Provider
Agreement"). Further, in accordance with the Company's New Business, the Company
anticipates seeking strategic alliances, mergers, and acquisitions of other
entities that would permit the Company to achieve synergies and economies of
scale in the New Business ("Growth Strategies"). Currently, the Company is in
discussions with various business entities regarding implementation of the
Growth Strategies.
Net proceeds from the sale of the assets will not be distributed to the
stockholders; however, following the consummation of the Asset Purchase
Transaction, the stockholders of the Company will retain their equity interest
in the Company. The Company is also negotiating with senior management
concerning appropriate compensation for contributions relating to the New
Business. The Company will seek an independent valuation of such contributions
before awarding any compensation.
Background of the Proposed Sale
Since its inception, the Company has experienced a material shortfall from
anticipated revenues, leading to a significant decrease in its cash position and
a deficit in working capital. At March 31, 2003, the Company's principal source
of liquidity consisted of $167,000 of cash and cash equivalents. The Company
defaulted under its convertible debt agreement during the fourth quarter of 2002
and was unsuccessful in its attempt to raise additional capital. Consequently,
the Board of Directors believed that the Company's available cash along with its
anticipated revenues would be insufficient to meet its anticipated cash needs
for the foreseeable future. Accordingly, the Company reduced expenditures for
operating requirements, including a reduction of 36 employees in its workforce
in November 2002.
Due to the aforementioned, by February 2003, the Company began aggressively
pursuing strategic alternatives, including investment in or sale of the Company
or its primary assets. The Company contacted Stifel, Nicolaus & Co. ("Broker"),
an investment banking company that specializes in the sale of small and
medium-sized technology businesses.
On February 26, 2003, the Company entered into an agreement with Broker who was
to contact potential investors and purchasers that might have an interest in
investing in or acquiring the Company. No retainer was paid to Broker by the
Company.
15
During February 2003, Broker conducted due diligence on the Company, assembled a
comprehensive list of potential investors and purchasers of the Company or its
assets, which list was compiled from Broker's knowledge of the Company's
industry, past Billserv contacts, and Broker's databases.
On approximately March 5, 2003, Broker sent 141 executive summaries of the
Company's business to potential investors and strategic purchasers. The
executive summaries outlined the Company, its business and assets, and its
current market and financial position.
Of the 141 executive summaries delivered to potential investors and strategic
purchasers, only 37 such potential investors and purchasers requested a
descriptive memorandum from Broker. The descriptive memorandums contained
investment highlights of the Company, a description of the Company's business,
benefits that could result from strategic combinations, financial information of
the Company, and a list of key personnel of the Company. All potential investors
and purchasers receiving a descriptive memorandum were required to execute
confidentiality agreements with the Company. Broker continued to maintain
personal contact with all potential investors and purchasers during this phase
of the sales process.
On approximately March 14, 2003, Broker received an indication of interest from
CyberStarts and two other potential purchasers. No potential investors indicated
an interest in the Company. Each indication of interest expressed a preliminary
value the potential purchaser placed on the Company, its method of payment, and
whether the prospective purchaser was interested in a stock or asset
transaction. CyberStarts' indication of interest was the most favorable to the
Company.
Of the three indications of interest, only CyberStarts made a final bid on the
assets of the Company. On April 16, 2003, the Company and CyberStarts signed a
letter of intent for CyberStarts to acquire certain assets of the Company. On
May 19, 2003, the Company and Saro, CyberStarts' wholly owned subsidiary,
executed the Agreement.
The Company's Reasons for the Proposed Sale; Recommendation of the Board of
Directors
As described above, the decision of the Company's Board of Directors to enter
into the Agreement followed months of exploring and analyzing the advantages and
disadvantages of maintaining the Company as an on-going entity, liquidating the
Company, or selling certain assets and then redeploying retained assets in a
different market by way of a debt-free corporation. In making its recommendation
to the stockholders of the Company, the Board of Directors considered a number
of factors, including those noted immediately below that were determined by the
Board of Directors to favor a decision to consummate the Asset Purchase
Transaction:
(i) the current financial condition and future prospects for the
Company;
(ii) management's expectations regarding probable trends in this
industry;
16
(iii) the price and terms of the Asset Purchase Transaction, as reflected
in the Agreement;
(iv) the sale of additional equity or convertible debt securities would
have resulted in additional dilution to the Company's stockholders,
and debt financing, if available, would most likely have involved
restrictive covenants restricting the Company's operations or
finances; and
(v) the fact that no firm offers to acquire the assets involving cash
consideration exceeding that of the Purchaser had been received by
the Company.
The Company's Board of Directors also considered the following potentially
negative factors in its deliberations concerning the Asset Purchase Transaction:
(i) the electronic presentment and payment processing service line
represents the Company's primary business, and upon sale, the
Company must seek other revenue generating opportunities; and
(ii) the significant costs involved in connection with consummating the
Asset Purchase Transaction (especially in light of the need to
obtain a shareholder vote), the substantial management time and
effort required to effectuate the sale and the potential disruption
to the Company's operations.
The Company's Board of Directors did not believe that the negative factors were
sufficient, either individually or collectively, to outweigh potential
advantages of the Asset Purchase Transaction.
Interest of Certain Persons in the Proposed Sale
The Asset Purchase Transaction is not conditioned upon any employment
arrangements between the Purchaser and the current executive officers of the
Company. However, the Asset Purchase Transaction is conditioned on Mr. Long, Mr.
Hoch, and Ms. Hunter executing non-compete agreements prohibiting them from
competing in the presentment services business for a period of two years. In
consideration for entering into non-compete agreements, Mr. Long, Mr. Hoch, and
Ms. Hunter are being compensated in the form of 250,000 stock options in
CyberStarts, the parent company of the Purchaser. Mr. Long and Mr. Hoch are each
receiving 100,000 options; Ms. Hunter is receiving 50,000 options.
17
Regulatory Approvals
Consummation of the Asset Purchase Transaction does not require any regulatory
approvals other than the federal filings required under applicable U. S.
securities laws in connection with this Proxy Statement.
Material Federal Income Tax Consequences
THIS SECTION IS A SUMMARY OF THE MATERIAL FEDERAL INCOME TAX CONSEQUENCES TO THE
COMPANY AND THE STOCKHOLDERS OF THE COMPANY FROM THE ASSET PURCHASE TRANSACTION.
EXCEPT WHERE SPECIFICALLY NOTED, THIS SUMMARY DOES NOT APPLY TO STATE OR LOCAL
TAXES. THE SUMMARY IS BASED UPON THE INTERNAL REVENUE CODE OF 1986, AS AMENDED,
JUDICIAL DECISIONS, UNITED STATES TREASURY DEPARTMENT REGULATIONS PROMULGATED
THEREUNDER, ADMINISTRATIVE RULINGS OF THE UNITED STATES TREASURY DEPARTMENT, AND
OTHER INTERPRETATIONS THEREOF, ANY OF WHICH COULD BE CHANGED AT ANY TIME. NO
RULING HAS BEEN OR WILL BE REQUESTED FROM THE INTERNAL REVENUE SERVICE WITH
RESPECT TO ANY CONSEQUENCES RESULTING FROM THE PROPOSED SALE.
The Proposed Sale will not have any federal income tax consequences to the
Company's stockholders because no distributions of sale proceeds will be made to
the stockholders.
Upon consummation of the Asset Purchase Transaction, the Company will recognize
taxable income in an amount equal to the excess of (i) the sum of the cash sale
proceeds of the Purchased Assets and the Assumed Liabilities, over (ii) the sum
of the Company's tax bases in the Purchased Assets and the Company's expenses of
the Asset Purchase Transaction. The Company estimates that it will not have any
federal tax liabilities in fiscal year 2003 relating to the Asset Purchase
Transaction.
Accounting Treatment
For financial reporting purposes, the Asset Purchase Transaction will be
recorded as a sale of the segment of the Company's business and reported as a
discontinued operation.
Expenses and Other Fees
Each party will bear its own expenses in respect of the Asset Purchase
Transaction, whether or not consummated.
Summary of the Asset Purchase Agreement
The following is a brief summary of certain provisions of the Agreement.
THIS DESCRIPTION IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE COMPLETE TEXT
OF THE AGREEMENT, A COPY OF WHICH IS ATTACHED TO THIS
18
PROXY STATEMENT AS APPENDIX "A" AND IS INCORPORATED HEREIN BY REFERENCE
(INFORMATION IN CERTAIN SCHEDULES TO THE AGREEMENT COULD NOT BE ATTACHED. SUCH
INFORMATION WILL BE FURNISHED WITHOUT CHARGE WITHIN ONE BUSINESS DAY OF ITS
REQUEST TO ANY STOCKHOLDER OF THE COMPANY WHOSE PROXY IS SOLICITED BY THIS PROXY
STATEMENT, UPON THE WRITTEN OR ORAL REQUEST OF ANY SUCH PERSON TO MR. MICHAEL R.
LONG, CHIEF EXECUTIVE OFFICER, BILLSERV, INC., 211 NORTH LOOP 1604 EAST, SUITE
200, SAN ANTONIO, TEXAS 78232, (210) 402-5005. THE TERMS NOT OTHERWISE DEFINED
IN THIS SUMMARY OR ELSEWHERE IN THIS PROXY STATEMENT HAVE THE MEANING SET FORTH
IN THE AGREEMENT. ALL STOCKHOLDERS ARE URGED TO CAREFULLY READ THE AGREEMENT IN
ITS ENTIRETY.
Purchase and Sale of Assets; Assumption of Liabilities. Pursuant to the terms
and conditions set forth in the Agreement, at Closing, the Company will sell,
assign, transfer, convey and deliver to Purchaser, all of the Company's right,
title and interest in and to certain assets of the Company, free and clear of
all encumbrances except for certain permitted encumbrances. As defined in the
Agreement, the term "Assets" means collectively, all right, title and interest
in and to all assets, properties, rights and claims owned or primarily employed
or held for the use in the conduct of the business by the Company, including the
following Assets: business (goodwill), inventory, assumed contracts,
intellectual property, tangible assets, business records, prepaid expenses,
permits, accounts receivable earned by Purchaser after the Closing, intangibles,
investments, cash, telephone, fax numbers, websites, and the Company's stock
ownership in Billserv Australia PTY Limited (the "JV") (except as described
below). The Company will retain its interest in the stock ownership of Bills.com
and all assets listed on Schedule H of the Agreement (as well as the JV if the
JV is not sold under the Agreement, as discussed below).
The terms and conditions of the Agreement also provide for the assumption of
certain liabilities by Purchaser. This includes any liability arising after the
Closing with respect to the Assumed Liabilities, other than any liability
arising from tort, infringement or violation of law by the Company and any
liability arising from any performance, payment, breach or default of any
assumed contract to the extent such act occurred prior to the Closing.
Purchase Price. The aggregate consideration for the Asset Purchase Transaction
is approximately $4,800,000 plus the assumption of the Assumed Liabilities. At
Closing, Purchaser will pay the Company $4,050,000 less the escrow amount of
$105,000 (the "Cash Payment"). The Cash Payment will be consumed by the amount
necessary to discharge the Company's secured and certain unsecured creditors. At
Closing, Purchaser shall issue the Company a note (the "JV Note") for the
remaining $600,000 (the "JV Purchase Price"). The JV Note will be a non-interest
bearing, one-year note, which is fully secured by the Assets (the "JV Security
Agreement"). Pursuant to the JV Note, the JV Purchase Price will be payable to
Seller via wire transfer in four equal quarterly installments of $150,000 each
(the "JV Quarterly Payments"), with the first JV Quarterly Payment due at
Closing. In addition to the Purchase Price, the Company may earn an additional
payment from Purchaser of $150,000 (the "Earnout") based on Gross Revenues (as
defined by GAAP) associated with the Business calculated for a one (1) year
period, beginning the first day of the first full month following Closing
("Annual Period"). If at the end of
19
the Annual Period, the aggregate of Gross Revenues for the total of the twelve
months in the Annual Period are equal to or exceed $5,000,000, then the Earnout
shall be $150,000. NOTE: The sale of the JV is contingent. In the event title to
the JV does not pass to Purchaser at Closing due to circumstances outside the
reasonable control of the Company, the Company and Purchaser will negotiate a
mutually agreeable earnout provision whereby the Company is compensated based
upon the financial performance of the Business over a period not to exceed
one-year from a point at or reasonably after the Closing, which earnout payment
will not exceed $600,000 in total.
The Closing. The consummation of the Asset Purchase Transaction will take place
at a closing to be held at the offices of the Company not later than five days
following the satisfaction of all conditions of the Agreement.
Representation and Warranties. The Agreement contains various representations
and warranties of the Company including, among others, representations and
warranties related to: (i) corporate organization and similar corporate matters;
(ii) authorization and enforceability; (iii) subsidiaries; (iv) consent and
approval; (v) title to and condition of assets; (vi) litigation and claims
pending; (vii) compliance with laws and regulations; (viii) financial statements
and SEC reports; (ix) absence of certain changes or events since April 1, 2003;
(xi) title to intellectual properties; (xii) contracts and agreements; (xiii)
insurance; (xiv) brokers; (xv) accounts receivable; (xvi) warranty obligations;
(xvii) business records; (xviii) taxes; (xix) compliance with laws; (xx)
solvency; (xxi) employment matters; and (xxii) accuracy to material facts.
The Agreement contains various representations and warranties of Purchaser
including, among others: (i) representations and warranties related to corporate
organizations and similar corporate matters; (ii) authorization and
enforceability; (iii) no violation of existing agreements; (iv) compliance with
other instruments and laws; (v) litigation; (vi) brokers; and (vii) disclosure.
Pre-closing Covenants of the Company. In addition to those representations and
warranties listed above, the Company has also agreed to the following covenants
pending closing: (i) the Company will promptly notify purchaser of any event of
subsequent date that would render any representation or warranty listed above
untrue or inaccurate in any material respect; and (ii) the Company will also
notify Purchaser of any material adverse change in assets or the assumed
liabilities, intellectual property or the financial condition of the Company's
business. The Company has also agreed to conduct the business in the ordinary
course consistent with past practices and will use reasonable commercial efforts
to retain, protect and preserve the assets and intellectual property of the
business, including the Company's relationship with its consultants, independent
contractors, licensers, suppliers, vendors, representatives, distributors, and
other customers all in the ordinary course of business. Furthermore, until
Closing, the Company will allow representatives of Purchaser reasonable access
upon reasonable notice to business records and facilities relating to the
Assets. The Company shall use reasonable commercial efforts to obtain any and
all consents necessary for the effective assignment of all the contracts to be
assumed by Purchaser. The Company will also use reasonable commercial efforts to
satisfy or cause to be satisfied all of the conditions precedent to Closing the
Agreement. The Company has agreed that it will not directly or indirectly nor
will it authorize or permit any affiliate or representative to solicit,
initiate, encourage, induce or facilitate the making, submission or announcement
of any acquisition proposal or take any actions that could reasonably be
expected
20
to lead to an acquisition proposal. The Company shall not furnish any
information regarding the Company to any person in connection with or in
response to an acquisition proposal or an inquiry or indication of interest that
could lead to an acquisition proposal or engage in discussions or negotiations
with any person with respect to any acquisition proposal. The Company shall not
approve, endorse or recommend any acquisition proposal or enter into any letter
or similar document or contract contemplating or otherwise relating to any
acquisition, except with regard to a Superior Proposal. The Company will
promptly prepare and file a proxy statement with the SEC and conduct a
stockholders' meeting with regard to the Asset Purchase Transaction. The Company
will satisfy secured and certain unsecured debts at or reasonably after Closing.
Mutual Covenants. Both the Company and Purchaser have agreed to (i) take all
action and do all things necessary in order to consummate and make effective the
proposed sale; (ii) continue the enforceability and effect of the
confidentiality agreement entered into by the parties; (iii) make all necessary
filings with respect to the Asset Purchase Transaction in the Securities Act,
the Exchange Act and applicable blue sky or similar securities laws; (iv) make
pre-merger notification or other appropriate fillings with federal state or
local government bodies or applicable foreign government agencies; (iv) obtain
all consents waivers approvals and authorization orders required in connection
with the authorization execution of the Agreement; (v) to cooperate and provide
information necessary to the preparation of all documents, agreements, tax
returns, and other instruments prior to the Closing; and (vi) use their
respective reasonable commercial efforts to carry out the communications plan to
their respective customers, suppliers, employees, investors and strategic
partners concerning the purchase.
Conditions To Closing. The respective obligation of each parties to the
Agreement to effect the transaction to be performed by each party at Closing are
subject to satisfaction of the following conditions: (i) no order shall have
been entered and not vacated by a court or administrative agency of competent
jurisdiction which enjoins or strains the acquisition; (ii) all permits,
authorizations, approvals and orders shall have been attained and be in full
force in effect at the date of Closing; and (iii) there shall be no litigation
pending or threatened by any governmental entity in which an injunction is or
may be sought against the transaction or acquisition or in which the relief
sought against any party to the Agreement as a result of the Agreement and in
which in good faith and judgment of the board of directors of either party such
adverse party has the probability of prevailing and such relief would have a
material adverse effect on such party. Further, (i) the Agreement and
transaction contemplated thereby shall be approved by the stockholders of the
Company; (ii) the Company shall discharge its debt to Laurus Master Fund, Ltd.;
(iii) all of Purchaser's representations and warranties shall be true and
correct; (iv) Purchaser shall have complied with all terms and conditions in the
Agreement; (v) Purchaser shall have delivered the purchase price consideration;
(vi) Purchaser shall have delivered the compliance certificates, secretary
certificates and all other documents and Ancillary Agreements required under the
Agreement; (vii) all representation and warranties of the Company shall be true
and correct in all material respects; (viii) any and all required consents from
third parties with regard to the Assumed Contracts shall be obtained; (ix) the
secured creditors of the Company shall be paid; (x) there shall be no Material
Adverse Change to the Company; (xi) the Company shall have executed and
delivered any and all Ancillary Agreements and transfer documents; (xii) the
Company shall have delivered to Purchaser all necessary financial statements;
(xiii) the Company
21
and Purchaser shall have executed the Transition Services Agreement; and (xiv)
the Company shall deliver to Purchaser all other closing deliverables including
an opinion of counsel.
Post Closing Matters. The Company shall execute all necessary documents to
convey and assign the Assets purchased under the Agreement, pay its pro rata
share of certain Tax liabilities, enter into a non-compete agreement with
Purchaser with regard to a two-year moratorium on entering the presentment
service business, and obtain the discharge of certain unsecured creditors.
Purchaser will execute all documents necessary to confirm assumption of the
Assumed Liabilities, maintain for six months the Business Records of the Assets
sold, and pay its pro rata share of certain Tax liabilities.
Termination. The Agreement may be terminated prior to Closing either before or
after approval of the stockholders of the Company (A) by mutual written consent
of both parties, (B) by either party if (i) the Closing shall not have occurred
by July 15, 2003; (ii) if a government entity and a court of competent
jurisdiction has a final and non-appealable order, decree or ruling permanently
restraining or enjoining the transaction; and (iii) if the stockholders of the
Company vote against the Closing of the Asset Purchase Transaction, (C) by
Purchaser if (i) a triggering event occurs; or (ii) the Company materially
breaches the Agreement, or (D) by the Company if Purchaser materially breaches
the Agreement. If a party materially breaches the Agreement, the other party is
entitled to a termination fee of $250,000. In the event the Company executes a
Superior Proposal, the Company will be liable to Purchaser in the amount of
$250,000 at such time as the Company closes and funds the Superior Proposal.
Survival of Representations and Warranties. The representation and warranties
made by the parties to the Agreement shall survive the Closing of the Agreement
and continue in full force and effect until six months after the Closing.
Indemnification. For a period of six months following Closing, the Company has
agreed to indemnify, defend and hold harmless Purchaser and its shareholders,
officers, directors, employees, attorneys, all subsidiaries and affiliates of
Purchaser, and their respective officers, directors, employees, and attorneys of
such entities from, against, for and in respect of any and all losses asserted
against, relating to, imposed upon, or incurred by Purchaser or any of the
aforementioned by reason of, resulting from, based upon or rising out of the
following: (i) the breach of the Agreement; (ii) any oral contract which the
Company is a party to and which is not disclosed to Purchaser; and (iii) any
Excluded Liability, except to the extent resulting from the Purchaser. For a
period of six months following Closing, Purchaser has agreed to indemnify,
defend and hold harmless the Company and its shareholders, officers, directors,
employees, attorneys, all subsidiaries and affiliates of the Company, and their
respective officers, directors, employees, and attorneys of such entities from,
against, for and in respect of any and all losses asserted against, relating to,
imposed upon, or incurred by the Company or any of the aforementioned by reason
of, resulting from, based upon or rising out of the following: (i) the breach of
the Agreement; or (ii) any Assumed Liability, except to the extent resulting
from the Company. The parties' indemnity obligations are subject to a $37,500
floor and a cap up to the Purchase Price plus the Earnout (or earnouts) paid to
the Company under the Agreement.
22
Escrow Fund. At the Closing, $105,000 shall be deposited with Wachovia Bank.
Such deposit will constitute the escrow fund and to will be governed by the
terms of the escrow agreement attached as Exhibit A to the Agreement.
Transition Services Agreement. The parties have entered into a Transition
Services Agreement (attached to this Proxy Statement as Appendix "B") dictating
that certain employees of the Company will receive employment opportunities with
Purchaser after the Closing, providing for certain informational services to be
performed by the Company for the Purchaser prior to Closing, conditioning the
Closing upon the Purchaser's renegotiation of the Company's office space lease
and the Company's transfer to Purchaser of certain agreements, and providing for
certain post-Closing services to be performed by Purchaser for the Company.
Recommendation of the Board of Directors
The Board of Directors of the Company believes that the Asset Purchase
Transaction is in the best interests of the Company and its stockholders.
Accordingly, the Board of Directors has approved the Asset Purchase Transaction
and recommends that the Company's stockholders vote FOR the approval of the
Asset Purchase Transaction.
PROPOSAL 3
CHANGE OF COMPANY NAME
Upon the stockholder approval of the Asset Purchase Transaction, the Company
will no longer have ownership of the name "Billserv, Inc." The Board of
Directors of the Company, therefore, proposes to change the Company's name to
Payment Data Systems, Inc. ("PDS"), which name the Board believes best reflects
the proposed business of the Company after the Asset Purchase Transaction. If
stockholders approve this proposal, the Board of Directors will hold the
authority to so change the name of the Company, subject to successful
negotiations of compensation arrangements with senior management relating to
their contribution of business associated with PDS. Pursuant thereto, the Board
proposes to amend Article One of its Amended and Restated Articles of
Incorporation as follows: "The name of the corporation is: Payment Data Systems,
Inc."
Recommendation of the Board of Directors
The Board of Directors of the Company believes that the proposed change of the
name of the Company to Payment Data Systems, Inc. is in the best interests of
the Company and its stockholders. Accordingly, the Board recommends a vote FOR
the approval of the proposed name change.
23
PROPOSAL 4
RATIFICATION OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS
The Board of Directors of the Company, upon recommendation of its Audit
Committee, appointed Ernst & Young LLP as independent auditors to examine the
Company's consolidated financial statements for the fiscal year ending December
31, 2003 and to render other professional services as required.
The Company is submitting the appointment of Ernst & Young LLP to stockholders
to obtain your ratification. Representatives of Ernst & Young LLP will be
present at the Special Meeting, will have the opportunity to make a statement if
they desire to do so, and are expected to be available to respond to questions.
Recommendation of the Board of Directors
The Board of Directors of the Company believes that ratification of Ernst &
Young LLP as the Company's independent auditors for the fiscal year ended
December 31, 2003 is in the best interests of the Company and its stockholders.
Accordingly, the Board recommends a vote FOR the ratification of Ernst & Young
LLP as the Company's independent auditors for the fiscal year ended December 31,
2003.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under U.S. securities laws, directors, certain executive officers and persons
holding more than 10% of the Company's Common Stock must report their initial
ownership of the Common Stock, and any changes in that ownership, to the
Securities and Exchange Commission. The Securities and Exchange Commission has
designated specific due dates for these reports. Based solely on its review of
copies of the reports filed with the Securities and Exchange Commission and
written representations of its directors and executive officers, the Company
believes all persons subject to reporting timely filed the required reports in
2002.
24
MANAGEMENT
Executive Officers
The following table sets forth, for each executive officer of the Company, such
person's name, age and position with the Company and its principal subsidiaries.
Each such executive officer serves at the pleasure of the Board of Directors.
--------------------------------------------------------------------------------------------
Name Position Age
--------------------------------------------------------------------------------------------
Michael R. Long Chairman and CEO 58
Louis A. Hoch President and COO 37
Terri A. Hunter Executive Vice President and CFO 40
Anthony L. Diamond Senior Vice President and CMO 43
Marshall N. Millard Secretary, Senior Vice President and General Counsel 41
Description of Executive Officers
Michael R. Long. See biography of Mr. Long on page 9.
Louis A. Hoch. See biography of Mr. Hoch on page 8.
Terri A. Hunter. See biography of Ms. Hunter on page 9.
Anthony L. Diamond. Age 43. Senior Vice President and Chief Marketing Officer.
Mr. Diamond joined the Company in June 2000. He brought to Billserv, Inc. over
17 years of sales and marketing leadership from varied industries. Throughout
his career, he has specialized in assessing corporate challenges, creating high
performance operations and successfully launching new products. In 1995, upon
leaving Azrock Industries as its Director of Marketing, Mr. Diamond founded
Diamond, Werkenthien & Associates, a sales and marketing consulting firm with
domestic and international clients. In June 1998, he sold his interest and
joined a client company, Paris Technologies as Vice President of Marketing,
where he built the channel strategy and introduced a new database technology to
mid-size businesses throughout North America, Europe and Australia. In September
1999, Mr. Diamond became Vice President, Sales and Marketing at FAS, Inc., a
leading provider of monitoring and Internet-based reporting on construction
lending projects to major lenders nationwide. Mr. Diamond holds a degree in
Advertising from the University of Texas at Austin.
Marshall N. Millard. Age 41. Senior Vice President, General Counsel. Mr. Millard
joined the Company in November 1998. He has more than fifteen years of
experience providing legal counsel to publicly and privately held companies.
From 1993 to 1998, he held corporate counsel positions at U.S. Long Distance,
Inc. and its spin-off company, Billing Concepts, Inc. He is licensed to practice
law in the Supreme Court and all lower courts in the State of Texas, the federal
court for the Western District of Texas, and the Fifth Circuit Court of Appeals.
25
Compensation of Executive Officers
The following table sets forth the compensation earned during each of the years
ended December 31, 2002, 2001 and 2000 to the Company's chief executive officer
and each other executive officer of the Company (the "named executive
officers").
-------------------------------------------------------------
Long Term All Other
Annual Compensation (1) Compensation Awards Compensation
-------------------------------------------------------------------------------------------------------------
Securities
Restricted Underlying
Name and Principal Position Year Salary ($) Bonus ($) Stock ($) Options (#) ($)(2)
-------------------------------------------------------------------------------------------------------------
Michael R. Long ...................... 2002 $190,000 -- -- 340,000 $ 11,130
Chairman and CEO 2001 $190,000 -- -- 325,000 $ 11,074
2000 $188,046 -- -- 165,000 $ 11,275
Louis A. Hoch ........................ 2002 $175,000 -- -- 340,000 $ 1,950
President and COO 2001 $175,000 -- -- 250,000 $ 1,596
2000 $164,231 -- -- 90,000 $ 513
Terri A. Hunter ...................... 2002 $145,000 -- -- 350,000 $ 1,560
Executive Vice President 2001 $145,000 -- -- 150,000 $ 1,368
and CFO 2000 $ 94,885 -- -- 125,000 $ 223
Anthony L. Diamond ................... 2002 $145,000 -- -- 275,000 $ 1,885
Senior Vice President 2001 $145,000 -- -- 100,000 $ 1,653
and CMO 2000 $ 60,367 -- -- 125,000 $ 193
Marshall N. Millard .................. 2002 $120,000 -- -- 130,000 $ 1,560
Secretary, Senior Vice 2001 $120,000 -- -- 30,000 $ 1,368
President and General Counsel 2000 $113,846 -- -- 50,000 $ 356
(1) Each of the named executives has entered into employment agreements
expiring on December 31, 2003, which provide for annual salary and bonuses
at the discretion of the Board of Directors, as well as health benefits.
Ms. Hunter and Mr. Diamond joined the Company in April 2000 and June 2000,
respectively. In 2003, each of the named officers is to receive salary
compensation as follows: Mr. Long, $190,000; Mr. Hoch, $175,000; Mr.
Diamond, $145,000; Ms. Hunter, $145,000; and Mr. Millard, $120,000.
(2) Reflects premiums paid for term life insurance coverage.
26
Option Grants
The following table provides information regarding the grant of stock options
during fiscal year 2002 to the named executive officers.
Potential Realizable
Value
Number % of Total at Assumed Annual
of Options Exercise Rates of Stock
Securities Granted to Or Price Appreciation for
Underlying Employees in Base Option Term (1)
Options Fiscal Price Expiration -----------------------
Name Granted 2002 ($/Share) Date 5% ($) 10% ($)
---- ------- ---- --------- ---- ------ -------
Michael R. Long 15,000 0.6% 0.26 12/13/12 -- $498
325,000 12.4% 0.18 12/31/12 $16,162 $36,790
Louis A. Hoch 15,000 0.6% 0.26 12/13/12 -- $498
325,000 12.4% 0.18 12/31/12 $16,162 $36,790
Terri A. Hunter 75,000 2.9% 0.26 12/13/12 -- $2,490
275,000 10.5% 0.18 12/31/12 $13,676 $31,130
Anthony L. Diamond 75,000 2.9% 0.26 12/13/12 -- $2,490
200,000 7.6% 0.18 12/31/12 $9,946 $22,640
Marshall N. Millard 30,000 1.1% 0.26 12/13/12 -- $996
100,000 3.8% 0.18 12/31/12 $4,973 $11,320
(1) The potential realizable value is calculated based on the term of the
option and is calculated by assuming that the fair market value of common
stock on the date of the grant as determined by the Board appreciates at
the indicated annual rate compounded annually for the entire term of the
option and that the option is exercised and the common stock received
therefore is sold on the last day of the term of the option for the
appreciated price. The 5% and 10% rates of appreciation are derived from
the rules of the SEC and do not reflect our estimate of future stock price
appreciation. The actual value realized may be greater or less than the
potential realizable values set forth in the table.
Option Exercises and Year-End Values
The following table sets forth certain information with respect to the exercise
of options during the year ended December 31, 2002 by the named executive
officers and the value of unexercised options held by the named executive
officers as of December 31, 2002.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values
------------------------------------------------------------------------------------
Shares Value of Unexercised
Acquired Value Number of Unexercised In-the-Money Options at
On Exercise Realized Options at Fiscal Year-End (#) Fiscal Year-End ($) (1)
---------------------------------------------------------------------------------------------------------------
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
---------------------------------------------------------------------------------------------------------------
Michael R. Long -- -- 308,335 606,665 0 0
Louis A. Hoch -- -- 233,334 531,666 0 0
Terri A. Hunter -- -- 83,334 466,666 0 0
Anthony L. Diamond -- -- 66,668 358,332 0 0
Marshall N. Millard -- -- 63,335 156,665 0 0
(1) Calculated using the year-end per share price of $0.18.
27
Employment Contracts and Change in Control Arrangement
The Company has entered into employment agreements with its five executive
officers. These agreements expired December 31, 2002, but automatically renewed
for successive 1-year terms. The employment agreements provide for an annual
salary, bonuses at the discretion of the Board of Directors, and health
benefits. In 2003, each of the named officers are to receive salary compensation
as follows: Mr. Long, $190,000; Mr. Hoch, $175,000; Ms. Hunter, $145,000; Mr.
Diamond, $145,000; and Mr. Millard, $120,000. Since November 2002, the
aforementioned officers (less Mr. Diamond and Mr. Millard) have deferred their
salary compensation in the following amounts: Mr. Long, $62,115; Mr. Hoch,
$20,192; and Ms. Hunter, $22,308.
The Company's agreements with its executive officers provide for change in
control protection for each executive. The Company may terminate any such
agreement not later than thirty (30) days after a change of control. In such
event, the executive would be entitled to deferred compensation. Deferred
compensation is calculated as the greater of (A) the base salary payments the
executive would have received had his or her employment continued for the
remaining term of the agreement (including yearly increases calculated at the
maximum increase for the prior two years); or (B) an amount equal to 2.95 times
the highest annual compensation earned by the executive in the past two years.
In addition, the executive would be entitled to all of the benefits otherwise
provided in the agreement (such as automobile expenses) during a certain period
of time defined in the agreement as the greater of the remaining term of the
agreement or one year. The executive may also be entitled to an amount equal to
the pro rata portion of the bonus compensation for the year in which the
executive's employment is terminated determined on the basis of the number of
days elapsed in such year prior to such termination. Upon termination of
employment, each employee is prohibited from competing with the Company for a
period of two (2) years. Mr. Long and Mr. Hoch will waive their rights to any
deferred compensation discussed in this paragraph in the event the stockholders
approve the Asset Purchase Transaction.
28
STOCK PERFORMANCE GRAPH
[GRAPHIC OMITTED]
[The following was represented as a line chart in the printed material.]
--------------------------------------------------------------------------------
BASE 1999 2000 2001 2002
--------------------------------------------------------------------------------
Billserv, Inc. 100 282 93 39 6
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NASDAQ Composite 100 186 113 89 61
--------------------------------------------------------------------------------
NASDAQ Computer 100 205 114 86 55
--------------------------------------------------------------------------------
SPECIAL MEETING ADVANCE NOTICE REQUIREMENTS
A stockholder may recommend a nominee to become a Director of the Company by
giving the Chief Executive Officer of the Company (at the address set forth
above) a written notice setting forth certain information, including: (1) the
name, age, and business and residence addresses of the person intended to be
nominated, (2) a representation that the nominating stockholder is in fact a
holder of record of Common Stock of the Company entitled to vote at the meeting
and that he or she intends to be present at the meeting to nominate the person
specified, (3) a description of all arrangements between the nominating
stockholder, the nominee and other persons concerning the nomination, (4) any
other information about the nominee that must be disclosed in proxy
solicitations under Rule 14(a) of the Securities Exchange Act of 1934, and (5)
the nominee's written consent to serve, if elected. Such nominations must be
made pursuant to the same advance notice requirements for stockholder proposals.
29
The Company's 2004 Annual Meeting of Stockholders is currently scheduled for May
2004. Copies of the Company's Bylaws are available upon written request made to
the Chief Executive Officer of the Company at the above address. The
requirements described above do not supersede the requirements or conditions
established by the Securities and Exchange Commission for stockholder proposals
to be included in the Company's proxy materials for a meeting of stockholders.
The Chairman of the meeting may refuse to bring before a meeting any business
not brought in compliance with applicable law and the Company's Bylaws.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
General
The accounting firm of Ernst & Young LLP has acted as independent accountants to
audit the financial statements of the Company and its consolidated subsidiaries
since 1998. Representatives of Ernst & Young LLP are expected to be present at
the Special Meeting and be available to respond to appropriate questions. Such
representatives will have the opportunity to make a statement if they desire to
do so.
Audit Fees
Ernst & Young LLP billed the Company a total of $88,320 for professional
services in connection with the audit of the 2002 financial statements.
Financial Information Review Fees
Ernst & Young LLP billed the Company $4,000 during 2002 for professional
services in connection with the review and evaluation of financial information
systems and related controls for purposes of obtaining a SAS 70 certification.
All other Fees
Ernst & Young LLP billed the Company a total of $8,500 for other services
rendered during 2002. Substantially all of these fees related to tax planning
and tax return preparation services. The Audit Committee of the Board does not
consider the provision of the services described above by Ernst & Young LLP to
be incompatible with the maintenance of Ernst & Young LLP's independence.
FINANCIAL STATEMENTS
The Company's audited financial statements for the fiscal year ended December
31, 2002 and Management's Discussion and Analysis of Financial Condition and
Results of Operations are incorporated herein by reference to the Company's 2002
Annual Report on Form 10-K as filed with the Securities and Exchange Commission,
which is being mailed to stockholders with this Proxy Statement.
30
PROPOSALS BY STOCKHOLDERS
In accordance with rules established by the Securities Exchange Commission, any
stockholder proposal submitted pursuant to Rule 14a-8 intended for inclusion in
the proxy statement and form of proxy for next year's Annual Meeting of
Stockholders must be received by the Company no later than December 31, 2003.
Proposals should be submitted to Michael R. Long, the Company's Chief Executive
Officer, at 211 North Loop 1604 East, Suite 200, San Antonio, Texas 78232. To be
included in the proxy statement, the proposal must comply with the requirements
as to form and substance established by the Securities Exchange Commission and
must be a proper subject for stockholder action under Nevada law.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors of the Company
does not know of any business that will be presented for consideration at the
Special Meeting other than that specified herein and in the Notice of Special
Meeting of Stockholders. If other matters are presented, it is the intention of
the persons designated as proxies to vote in accordance with their judgment on
such matters.
SOLICITATION
The Company has retained the services of Georgeson Shareholder Communications to
aid the Company in the solicitation of Proxies from shareholders via telephonic
communications and other reasonable means. In addition to the solicitation of
Proxies by the use of the mails, certain officers and associates (who will
receive no compensation therefor in addition to their regular salaries) may be
used to solicit Proxies personally and by telephone or fax. Further, banks,
brokers and other custodians, nominees and fiduciaries will be requested to
forward copies of the Proxy materials to their principals and to request
authority for the execution of Proxies. The Company will reimburse such persons
for their expenses in so doing. Fees and expenses to be incurred by the Company
in this connection are estimated not to exceed $20,000. The total expense of
this solicitation will be borne by the Company and will include reimbursement
paid to brokerage firms and others for their expenses in forwarding solicitation
materials. This Proxy Statement and the accompanying form of Proxy are being
mailed to stockholders on or about June 19, 2003.
31
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER
31, 2002, INCLUDING THE FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
THERETO, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, WILL BE FURNISHED
WITHOUT CHARGE TO ANY STOCKHOLDER OF THE COMPANY WHOSE PROXY IS SOLICITED BY
THIS PROXY STATEMENT, UPON THE WRITTEN REQUEST OF ANY SUCH PERSON ADDRESSED TO
MR. MICHAEL R. LONG, CHIEF EXECUTIVE OFFICER, BILLSERV, INC., 211 NORTH LOOP
1604 EAST, SUITE 200, SAN ANTONIO, TEXAS 78232. SUCH A REQUEST FROM A BENEFICIAL
OWNER OF THE COMPANY'S COMMON STOCK MUST CONTAIN A GOOD FAITH REPRESENTATION BY
SUCH PERSON THAT, AS OF THE RECORD DATE, HE OR SHE WAS A BENEFICIAL OWNER OF THE
COMPANY'S COMMON STOCK.
Please SIGN and RETURN the enclosed Proxy promptly.
By Order of the Board of Directors:
MICHAEL R. LONG
Chief Executive Officer
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY
32
APPENDIX "A"
================================================================================
ASSET PURCHASE AGREEMENT
between
Saro, Inc.,
a Delaware corporation
and
Billserv, Inc.,
a Nevada corporation
-------------------------------
Dated as of May __, 2003
-------------------------------
================================================================================
1
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is entered into as of
___________ ___, 2003 by and among Saro, Inc., a Delaware corporation, or its
designee ("Purchaser") and Billserv, Inc., a Nevada corporation ("Seller").
RECITALS
A. Seller is engaged in the business of providing electronic bill
presentment and payment solutions (excluding the Excluded Assets, as defined
below, the "Business"); and Purchaser is interested in purchasing, and Seller is
interested in selling, the Business; and
B. The parties hereto desire that Seller sell, assign, transfer and convey
to Purchaser, and that Purchaser purchase from Seller, the Assets (as defined
below) in exchange for cash and assumption of the Assumed Liabilities (as
defined below), all according to the terms and subject to the conditions set
forth in this Agreement (the "Transaction").
NOW, THEREFORE, in consideration of the representations, warranties and
covenants herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall have the meanings set
forth or referenced below:
1.1 "Accounts Receivable" shall mean the accounts receivable or amounts
owing or payable to Seller in connection with or relating to the business of the
Seller, as determined in accordance with GAAP. All such Accounts Receivable,
including an aging report, are set forth on Schedule A. Such Schedule A shall be
updated two (2) days prior to the Closing as it relates to Acquired Accounts
Receivable (as defined below).
1.2 "Acquisition Proposal" shall mean any offer, proposal, inquiry or
indication of interest (other than an offer, proposal, inquiry or indication of
interest by Purchaser) contemplating or otherwise relating to any Acquisition.
1.3 "Acquisition" shall mean any transaction or series of transactions
involving:
(a) any merger, consolidation, share exchange, business combination,
issuance of securities, Acquisition of securities, tender offer, exchange offer
or other similar transaction
2
(i) in which the Seller is a constituent corporation, (ii) in which a Person or
"group" (as defined in the Exchange Act and the rules promulgated thereunder) of
Persons directly or indirectly acquires beneficial or record ownership of
securities representing more than 20% of the outstanding securities of any class
of voting securities of Seller, or (iii) in which Seller issues securities
representing more than 20% of the outstanding securities of any class of voting
securities of Seller;
(b) any sale, lease, exchange, transfer, license, acquisition or
disposition of any business or businesses or assets that constitute or account
for 10% or more of the consolidated net revenues, net income or assets of
Seller; or
(c) any liquidation or dissolution of Seller.
1.4 "Affiliate" shall mean a Person that directly or indirectly, through
one or more intermediaries, is controlled by, or is under common control with
another Person.
1.5 "Ancillary Agreements" shall have the meaning set forth in Section 4.3
hereof.
1.6 "Assets" shall have the meaning set forth in Section 2.2 hereof.
1.7 "Assumed Contracts" shall mean only those Contracts listed on Schedule
B, as such schedule may be updated through the Closing Date to include Contracts
entered into in the ordinary course of business and subject to review and
approval of Purchaser.
1.8 "Assumed Liabilities" shall have the meaning set forth in Section 2.4
hereof.
1.9 "Business" shall have the meaning set forth in Recital A.
1.10 "Business Financial Statements" shall have the meaning set forth in
Section 4.9(a).
1.11 "Business Records" shall mean any and all books, records, files,
drawings, documentation, data or information that have been or now are used in
or with respect to, in connection with or otherwise relating to the Business,
the Assets or the Assumed Liabilities.
1.12 "Cash Payment" shall have the meaning set forth in Section 2.6(a)
hereof.
1.13 "Closing" shall have the meaning set forth in Section 3.1 hereof.
1.14 "Closing Date" shall have the meaning set forth in Section 3.1
hereof.
1.15 "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
1.16 "Confidentiality Agreement" shall mean the mutual letter of intent,
dated April 14, 2003 by and between Purchaser and Seller.
3
1.17 "Contracts" shall mean any agreement, contract, lease, consensual
obligation, promise or undertaking (whether written or oral and whether express
or implied), whether or not legally binding, which relates to the Business or
the Assets.
1.18 "Encumbrances" shall mean any and all restrictions on or conditions
to transfer or assignment, claims, liabilities, liens, pledges, mortgages,
restrictions, and encumbrances of any kind, whether accrued, absolute,
contingent or otherwise affecting the Assets.
1.19 "Equipment Leases" shall mean leases related to any of the Tangible
Assets.
1.20 "Excluded Assets" shall mean certain assets of Seller as defined in
Section 2.3 hereof.
1.21 "Excluded Liabilities" shall have the meaning set forth in Section
2.5 hereof.
1.22 "GAAP" shall mean generally accepted accounting principles, as in
effect in the United States from time to time, as supplemented by Regulation S-X
as promulgated by the United States Securities and Exchange Commission, as in
effect from time to time, consistently applied.
1.23 "Governmental Entity" shall mean any court, or any federal, state,
municipal, provincial or other governmental authority, department, commission,
board, service, agency, political subdivision or other instrumentality.
1.24 "Handling" or "Handled" shall mean used, generated, manufactured,
processed, contained, transferred, recycled, stored, treated, loaded,
transported, removed or Released.
1.25 "Indemnifiable Losses" shall have the meaning set forth in Section
12.2(a) hereof.
1.26 "Purchase Price" shall have the meaning set forth in Section 2.6(a)
hereof.
1.27 "Intangibles" shall mean guarantees, rights, warranties, defenses and
claims, choses in action, causes of action, demands, rights of recovery, suits,
covenants not to compete and other rights in favor of Seller relating to the
Assets, the Assumed Liabilities or the Business.
1.28 "Knowledge" or "Known" shall mean the current actual Knowledge, after
reasonable inquiry, of any of the officers, directors or employees of a Person.
1.29 "Laws or Decrees" shall mean all applicable federal, state,
provincial and local laws, ordinances, rules, statutes, regulations and all
orders, writs, injunctions, awards, judgments or decrees.
4
1.30 "Liability" shall mean any direct or indirect liability,
indebtedness, obligation, guarantee or endorsement, whether known or unknown,
whether accrued or unaccrued, whether absolute or contingent, whether due or to
become due, or whether liquidated or unliquidated.
1.31 "Losses" shall mean any loss, demand, action, cause of action,
assessment, damage, Liability, cost or expense, including without limitation,
interest, penalties and reasonable attorneys' and other professional fees and
expenses incurred in the investigation, prosecution, defense or settlement
thereof, but excluding special or consequential damages (including without
limitation loss of profits or revenues) related to any such loss, demand,
action, cause of action, assessment, damage, liability, cost or expense, other
than special or consequential damages actually awarded to a third party and paid
or payable to such third party by a party hereto.
1.32 "Material Adverse Change" shall mean any material adverse change in
the Business, operations, properties, Assets, Intellectual Property, financial
condition, Assumed Liabilities, results of operations or prospects, whether or
not occurring in the ordinary course of business.
1.33 "Material Adverse Effect" shall mean any material adverse effect on
the Business, operations, properties, the Assets, financial condition, the
Assumed Liabilities, results of operations or prospects, whether or not
occurring in the ordinary course of business.
1.34 "Permits" shall mean any and all licenses, permits, authorizations,
certificates, franchises, variances, waivers, consents and other approvals from
any Governmental Entity relating to the Business, the Assets or the Assumed
Liabilities.
1.35 "Permitted Encumbrances" shall mean (a) liens for current taxes which
are not past due, and (b) recorded easements, covenants, rights-of-way or other
similar restrictions and imperfections of record on title to real property.
1.36 "Person" shall mean an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization or a Governmental Entity.
1.37 "Prepaid Expenses" shall mean all prepaid expenses, advances,
deposits, and rights to volume and other rebates due from suppliers, as well as
performance bonds, including those listed on Schedule C.
1.38 "Required Seller Stockholder Vote" shall have the meaning set forth
in Section 4.3.
1.39 "Proxy Statement" shall mean the proxy statement/prospectus to be
sent to Seller's stockholders in connection with the Seller Stockholder's
Meeting.
1.40 "Seller Board Recommendation" shall have the meaning set forth in
Section 6.8(b).
5
1.41 "Seller SEC Documents" shall have the meaning set forth in Section
4.10(c).
1.42 "Seller Stockholders Meeting" shall have the meaning set forth in
Section 6.8(a).
1.43 "Seller Triggering Event" shall be deemed to have occurred if, except
as permitted in Section 6.6: (i) the board of directors of Seller shall have
failed to recommend that Seller's stockholders vote to approve this Agreement,
or shall have withdrawn or modified in a manner adverse to Purchaser, as
reasonably determined by Purchaser, the Seller Board Recommendation (as defined
above), or shall have taken any other action which is reasonably determined by
Purchaser to suggest that the Board of Directors of Seller might not support the
Acquisition or might not believe that the Acquisition is in the best interests
of Seller's stockholders; (ii) Seller shall have failed to include in the Proxy
Statement the Seller Board Recommendation or a statement to the effect that the
board of directors of Seller has determined and believes that the Acquisition is
in the best interests of Seller's stockholders; (iii) the board of directors of
Seller fails to reaffirm the Seller Board Recommendation, or fails to reaffirm
its determination that the Acquisition is in the best interests of Seller's
stockholders, within five business days after Purchaser requests in writing that
such recommendation or determination be reaffirmed; (iv) the board of directors
of Seller shall have approved, endorsed or recommended any Acquisition Proposal;
(v) Seller shall have entered into any letter of intent or similar document or
any Contract relating to any Acquisition Proposal; (vi) Seller shall have failed
to hold the Seller Stockholders' Meeting as promptly as practicable; (vii) a
tender or exchange offer relating to securities of Seller shall have been
commenced and Seller shall not have sent to its securityholders, within ten
business days after the commencement of such tender or exchange offer, a
statement disclosing that Seller recommends rejection of such tender or exchange
offer; (viii) an Acquisition Proposal is publicly announced, and Seller fails to
issue a press release announcing its opposition to such Acquisition Proposal
within ten business days after such Acquisition Proposal is announced.
1.44 "Software Programs" shall mean software programs, including any
available (a) source code (in all forms), object code, program descriptions,
databases, interfaces, modifications, updates, previous versions, and (b)
documentation relating to the foregoing, and (c) disks, tapes and other tangible
embodiments of the foregoing.
1.45 "Superior Proposal" shall mean an unsolicited, bona fide written
offer made by a third party to purchase the outstanding Seller common stock or
the Assets and Assumed Liabilities of the Business on terms that the board of
directors of Seller determines, in its reasonable judgment, based upon a written
opinion of an independent financial advisor of nationally recognized reputation,
to be more favorable to the Seller's stockholders than the terms of this
Agreement; provided, however, that any such offer shall not be deemed to be a
"Superior Proposal" if any financing required to consummate the transaction
contemplated by such offer is not committed and is not reasonably capable of
being obtained by such third party.
6
1.46 "Tangible Assets" shall mean all tangible assets, equipment and other
fixed assets, including all computer hardware, service tools, aids, manuals,
schematics, diagnostics, machinery and office furnishings, owned, employed or
held for use in the conduct of the Business, including the Tangible Assets
listed on Schedule D, but excluding the Excluded Assets.
1.47 "Tax" shall mean any federal, provincial, territorial, local, or
foreign income, profits, gross receipts, capital gains taxes, license, payroll,
employment, excise, severance, stamp, occupation, premium, windfall profits,
environmental, customs duties, capital stock, franchise, profits, withholding,
social security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, business license, occupation,
value added, goods and service, alternative or add-on minimum, estimated, or
other tax or governmental charge of any kind whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not, relating to the Assets or
the Business.
1.48 "Tax Return" shall mean any return, declaration, report, estimates,
claim for refund, or information return or statement relating to Taxes,
including any schedule or attachment thereto, and including any amendment
thereof, covering or relating to the Assets or the Business.
1.49 "Transaction" shall have the meaning set forth in Recital B.
1.50 "Unrecorded Liabilities" shall mean liabilities of the Business
unrecorded on the Business Financial Statements and determined by Purchaser and
Seller to be payable in connection with the Business, including the licensee
fees due for Software Programs used in the Business, as set forth on Schedule E,
as such schedule may be updated through Closing.
ARTICLE II
PURCHASE AND SALE OF ASSETS;
ASSUMPTION OF LIABILITIES
2.1 Purchase and Sale of Assets and Assumption of Assumed Liabilities.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, effective as of the Closing Date:
(i) Seller agrees to sell, assign, transfer, convey and
deliver to Purchaser, and Purchaser agrees to purchase from Seller, all of
Seller's right, title and interest in and to the Assets, free and clear of all
Encumbrances except Permitted Encumbrances;
(ii) Seller agrees to assign to Purchaser, and Purchaser
agrees to assume from Seller, the Assumed Liabilities; and
7
(iii) Seller agrees to assign to Purchaser, and Purchaser
shall assume from Seller, all of Seller's rights and obligations under the
Assumed Contracts. Notwithstanding any provision to the contrary in this
Agreement, Seller has disclosed to Purchaser, pursuant to Schedule DD herein,
all Assumed Contracts not assignable by Seller as of the date of this Agreement.
Seller agrees to update Schedule DD five (5) days before Closing or as otherwise
agreed to by the parties. The non-assignment of any of the Assumed Contracts
listed in Schedule DD shall not entitle Purchaser to the Termination Fee (as
described below).
(b) In connection with the Transaction, on the Closing Date, Seller
shall take (and shall cause its Affiliates to take) any and all actions
required, necessary, and/or reasonably requested by Purchaser, to transfer good
and marketable title to all of the Assets free and clear of all Encumbrances
(except Permitted Encumbrances) to Purchaser. Seller shall deliver possession of
all of the Assets to Purchaser on the Closing Date at the location of the Assets
on the Closing Date. Seller shall further deliver to Purchaser proper
assignments, bills of sale, conveyances and other instruments of sale and/or
transfer in forms reasonably satisfactory to Purchaser in order to convey to
Purchaser good and marketable title to all Assets, free and clear of all
Encumbrances (except Permitted Encumbrances), as well as such other instruments
of sale and/or transfer as counsel to Purchaser may reasonably request (whether
at or after the Closing Date) to evidence and effect the Transaction
contemplated herein. Seller agrees that, to the extent any Assets are owned or
held by any Affiliate of Seller, as set forth on Schedule F, Seller shall also
cause good and marketable title to such Assets to be transferred and assigned to
Purchaser free and clear of all Encumbrances (except Permitted Encumbrances) on
the Closing Date.
2.2 Assets As used in this Agreement, the term "Assets" means,
collectively, all right, title and interest in and to all of the assets,
properties, rights and claims owned or employed or held for use in the conduct
of the Business and otherwise owned or licensed by the Seller as of the date
hereof, including the following, but excluding the Excluded Assets:
(a) Business. The Business as a going concern, including without
limitation, all of its goodwill;
(b) Inventory. All inventory;
(c) Assumed Contracts. All rights and benefits of Seller in
existence on the Closing Date or arising from and after the Closing Date under
the Assumed Contracts;
(d) Intellectual Property. All Intellectual Property (as defined
below) owned, employed in or held for use in the Business;
(e) Tangible Assets. All Tangible Assets;
(f) Business Records. All Business Records;
(g) Prepaid Expenses. All Prepaid Expenses;
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(h) Permits. All Permits to the extent transferable by Seller;
(i) Accounts Receivable. Those certain Accounts Receivable of the
Business for which the right to payment attaches on or after the Closing Date
including those for services to be performed after the Closing Date although
each party shall have the right to receive payment for work that it has
performed or performs (the "Acquired Accounts Receivable");
(j) Intangibles. All Intangibles;
(m) Telephone and Fax Numbers; Websites. Except as provided in
Schedule G, the telephone and fax numbers and websites set forth on Schedule G,
along with the InterNIC registrations thereof, and all rights to listings or
keyword associations in any Internet search engines or directories associated
with the domain names, and all web pages created or acquired prior to and
existing as of the date hereof associated with, or located at or under, such
websites, including support files and related materials, information and data,
text, photographs, graphics, HTML or similar code, software (including source
code), applets, scripts, programs, databases, templates, forms, image maps,
documentation, site content, audio files, video files, log files, customer data,
user data, advertising data and materials, any content, manuscripts, graphics,
photographs, editorial materials, art work, files, illustrations, works in
progress, computer files, compact discs, banner ads, buttons, trade secrets,
copyrights, literary rights, rights to license and distribute the copyrights and
literary rights, know-how, look and feel, and all other intellectual property
rights therein, articles and other materials.
(n) Stock Ownership: All of Seller's stock ownership in Billserv
Australia PTY Limited ("Billserv Australia"), subject to the pre-emption rights
of Salmat Document Management Solutions PTY Limited ("Salmat") and other related
terms in the Shareholder Agreement of Billserv Australia by and between Salmat
and Seller (formerly, billserv.com, Inc.) dated May 8, 2001 (the "Salmat JV
Agreement"). Seller agrees to pay Purchaser, for a period of eighteen (18)
months (the "JV Supplemental Payment Term") beginning on the JV Supplement
Payment Start Date (as defined below), $10,000.00 per month as a supplement to
Purchaser for assuming all of Seller's Liabilities with respect to Billserv
Australia (the "JV Supplement Payment"); provided, however, that the JV
Supplement Payment will be reduced pro rata by $5,000.00 for every customer
contract obtained by Billserv Australia subsequent to the date of this Agreement
until the JV Supplement Payment is $0.00 (all of which is termed the "JV
Supplement Payment Obligation"). The first JV Supplement Payment will accrue in
the first month after Closing and be due and owing on the later of: 1) September
30, 2003 or ninety (90) days following the Closing Date ("JV Supplement Payment
Start Date"). In the event Seller obtains the right of Purchaser to receive one
hundred percent (100%) of the developmental revenue of Billserv Australia
associated with developmental fees earned from Billserv Australia customers
whether now existing or existing in the future (instead of the fifty percent
(50%) of such developmental revenues associated with Seller's stock ownership in
Billserv Australia), Seller will earn a dollar-for-dollar credit on one-half of
such developmental revenues earned during the JV Supplemental Payment Term (the
"Developmental Revenue Credit"), which will be applied to
9
the potential $60,000 in total JV Supplemental Payments due Purchaser from
Seller ("Potential $60,000 Payment"), if any, during months 13 through 18 of the
JV Supplemental Payment Term (the "Last 6 Months of the JV Term"). The
Developmental Revenue Credit will not exceed $60,000.00. If any JV Supplemental
Payments are necessary during the Last 6 Months of the JV Term, then, if at any
time during the Last 6 Months of the JV Term, the Developmental Revenue Credit
equals or exceeds $60,000, or if at the end of the Last 6 Months of the JV Term,
the Developmental Revenue Credit plus the sum of any JV Supplemental Payments
made to Purchaser during the Last 6 Months of the JV Term exceeds $60,000,
Purchaser will return to Seller not later than 10 days after such date, via wire
transfer, the total of any JV Supplemental Payments that when aggregated with
the Developmental Revenue Credit exceed $60,000. Seller assumes the JV
Supplement Payment Obligation hereunder only if and to the extent that Salmat
does not otherwise agree with Purchaser to assume the JV Supplement Payment
Obligation. Unless otherwise agreed to between the parties, in the event title
to Seller's stock ownership in Billserv Australia does not pass to Purchaser at
Closing, Seller and Purchaser will negotiate a mutually agreeable earn-out
provision whereby Seller is compensated based upon the financial performance of
the Business over a period not to exceed one-year from a point at or reasonably
after the Closing, which earn-out payment will not exceed $600,000.00 in total.
2.3 Excluded Assets. Notwithstanding anything herein to the contrary,
Seller shall retain all of its right, title and interest in and to, and
Purchaser shall not acquire 1) any interest of Seller in the stock ownership of
Bills.Com, Inc., a Delaware corporation, and 2) any assets which are
specifically identified on Schedule H (the "Excluded Assets").
2.4 Assumption of Liabilities
(a) Subject to and upon the terms and conditions of this Agreement,
effective as of the Closing Date, Purchaser agrees to assume from Seller and to
pay, perform and discharge according to their terms only the following
Liabilities of Seller (the "Assumed Liabilities"):
(i) Liabilities arising from and after the Closing Date under
the Assumed Contracts other than Liabilities arising from any tort, breach,
infringement or violation of law by Seller that occurred (or arose from facts
occurring) prior to the Closing Date.
(b) Nothing herein shall be deemed to deprive Purchaser or any
Affiliate of Purchaser of any defenses, set-offs or counterclaims which Seller
may have had or which Purchaser or any Affiliate of Purchaser shall have (to the
extent relating to the Assumed Liabilities) to any of the Assumed Liabilities
(the "Defenses and Claims"). Effective as of the Closing, Seller agrees to
assign, transfer and convey to Purchaser all Defenses and Claims and agrees to
cooperate with Purchaser to maintain, secure, perfect and enforce such Defenses
and Claims.
2.5 Liabilities Not Assumed Except as expressly set forth in Section 2.4
above, Purchaser shall not assume or become liable or obligated in any way, and
Seller shall retain and
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remain solely liable for and obligated to discharge and indemnify and hold
Purchaser harmless for, all debts, expenses, accounts payable, contracts,
agreements, commitments, obligations, claims, suits and other liabilities of
Seller of any nature whatsoever, whether or not related to the Business or the
Assets, whether known or unknown, accrued or not accrued, fixed or contingent,
current or arising hereafter, including, without limitation, any of the
following (collectively referred to herein as "Excluded Liabilities"):
(i) Any Liability arising out of or as a result of any legal or
equitable action or judicial or administrative proceeding initiated at any time
to the extent arising out of facts occurring prior to the Closing Date;
(ii) Any liability of the Seller for unpaid Taxes (with respect to
the Business, the Assets, or Seller's employees or otherwise), any liability of
the Seller for Taxes arising in connection with the consummation of the
Acquisition (including any income Taxes) arising because the Seller is
transferring the Assets or any liability of the Seller for the unpaid Taxes of
any Person other than the Seller, or a transferee or successor of Seller, by
contract or otherwise;
(iii) Any liabilities related to or arising from any breach or
default by Seller or its Affiliates, whether before or after the Closing Date,
of any Contract or related to or arising from any tort, infringement or
violation of Laws or Decrees by Seller, in each case to the extent occurring or
arising from facts occurring on or prior to the Closing Date;
(iv) Any liability of Seller or any of Seller's Affiliates incurred
in connection with or under this Agreement (including, without limitation, with
respect to any of Seller's or its Affiliates' representations, warranties,
agreements, covenants or indemnities hereunder) relating to the execution or
performance of this Agreement and the transactions contemplated herein;
(v) Any Liability of Seller under any of Seller's Employee Plans
with respect to any obligation of Seller to contribute or to make payments to or
provide benefits on behalf of Seller's employees;
(vi) Any fees or expenses incurred by Seller or any of Seller's
Affiliates or hereunder with respect to Seller's or any of its Affiliates'
engagement of its counsel, or any investment banker, appraiser or accounting
firm engaged to perform services hereunder; (vii) any outstanding obligations of
Seller for borrowed money due and owing to banks or other lenders, other than
obligations under the Assumed Contracts to the extent assumed; or
(viii) any Liability of Seller not related to the Business including
the Liabilities set forth on Schedule I.
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2.6 Purchase Price. The aggregate consideration for the Business and the
Assets shall be $4,800,000 (the "Purchase Price"), plus the assumption of the
Assumed Liabilities. At Closing, Purchaser shall pay Seller $ 4,050,000 less the
escrow amount of $105,000 (the "Cash Payment"). The Cash Payment shall be paid
to Seller in the following manner: 1) that portion of the Cash Payment necessary
to satisfy the Material Unsecured Creditors (as defined in Section 6.11) will be
delivered via wire transfer to LJT (as defined in Section 6.11), 2) that portion
of the Cash Payment necessary to satisfy the Secured Creditors (as defined in
Section 9.3(d)) will be delivered via wire transfer to LJT (as defined in
Section 9.3(d), and 3) the remainder of the Cash Payment will be delivered to
Seller via wire transfer. At Closing, Purchaser shall issue Seller a note (the
"JV Note") for the remaining $600,000 (the "JV Purchase Price"). The JV Note
will be a non-interest bearing, one-year note, which is fully secured by the
Assets (the "JV Security Agreement"). Pursuant to the JV Note, the JV Purchase
Price will be payable to Seller via wire transfer in four equal quarterly
installments of $150,000 each (the "JV Quarterly Payments"), with the first JV
Quarterly Payment due at Closing.
(a) Earnout. In addition to the Purchase Price, Seller may earn an
additional payment from Purchaser of $150,000 (the "Earnout") based on Gross
Revenues (as defined by GAAP) associated with the Business calculated for a one
(1) year period, beginning the first day of the first full month following
Closing ("Annual Period"). If at the end of the Annual Period, the aggregate of
Gross Revenues for the total of the twelve months in the Annual Period are equal
to or exceed $5,000,000 then the Earnout shall be $150,000. If Seller earns the
Earnout, Purchaser shall make the Earnout available to Seller via wire transfer
within ten (10) business days following the end of the Annual Period. Not more
than once during each six (6) month period of the Annual Period, Seller retains
the right to audit Purchaser's books and records related to the Business and
reasonably after such period if there is a dispute between the parties related
to the Earnout. Seller will select the auditor subject to Purchaser's approval,
which approval will not be unreasonably withheld. In the event, however, that
the Business is sold by Purchaser or materially changes during the Annual
Period, Seller will be entitled to the Earnout, via wire transfer as stated
above, within fifteen days of such sale or material change.
2.7 Allocation. Seller and Purchaser shall cooperate in the preparation of
a joint schedule (the "Allocation Schedule") allocating the purchase price
(including the Assumed Liabilities) among the Assets. If Seller and Purchaser
are able to agree upon the Allocation Schedule within 30 days following the
Closing Date, Seller shall file IRS Form 8594, and all federal, state, local and
foreign tax returns, in accordance with the Allocation Schedule. If Purchaser
and Seller are unable to complete the Allocation Schedule within 30 days
following the Closing Date, each of Seller and Purchaser may file IRS Form 8594
and any federal, state, local and foreign tax returns, allocating the aggregate
consideration (including the Assumed Liabilities) among the Assets in the manner
each believes appropriate, provided such allocation is reasonable and in
accordance with Section 1060 of the Internal Revenue Code of 1986, as amended,
and the regulations thereunder.
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ARTICLE III
THE CLOSING
3.1 The Closing. The consummation of the Acquisition will take place at a
closing to be held at the offices of Seller (the "Closing") on the date five (5)
business days after all conditions (other than the respective delivery
obligations of the parties) hereto have been satisfied or waived, or at such
other time or date as may be agreed to by the parties to this Agreement (the
"Closing Date").
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Except as otherwise set forth in the Schedules provided to Purchaser under
this Article IV, the following representations and warranties are made by Seller
as set forth below:
4.1 Organization. Seller is a corporation duly organized, validly existing
and in good standing under the laws of Nevada and any other jurisdictions in
which it is qualified to do business as a foreign corporation, 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. Seller is duly qualified to do business as a foreign corporation and is in
good standing under the laws of each state or other jurisdiction in which either
the ownership or use of the properties owned or used by it, or the nature of the
activities conducted by it, requires such qualification, except in states which
the failure to qualify, in the aggregate, would not have a Material Adverse
Effect.
4.2 Subsidiaries. Other than as set forth in Schedule K, Seller owns no
equity interest, directly or indirectly, in any corporation, partnership,
limited liability company, joint venture, business, trust or other entity,
whether or not incorporated.
4.3 Authorization. This Agreement and each instrument, agreement and
document contemplated to be entered into by Seller hereunder (collectively, the
"Ancillary Agreements") to which Seller is or will be a party have been, or upon
their execution and delivery hereunder will have been, duly and validly executed
and delivered by Seller, constitute, or will constitute, valid and binding
agreements of Seller enforceable against Seller in accordance with their
respective terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally or by general equitable principles or the exercise of judicial
discretion in accordance with such principles. Seller has all requisite power
and authority to execute and deliver this Agreement and, at the time of the
Closing, will have all requisite power and authority to carry out the
transactions contemplated in this Agreement and the Ancillary Agreements to
which it is or will be a party. All requisite corporate action on the part of
Seller has been taken to authorize the execution and delivery of this
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Agreement and the Ancillary Agreements to which Seller is or will be a party
subject only to the approval of the Transaction and this Agreement by Seller's
stockholders as contemplated by Section 6.8. The affirmative vote of the holders
of a majority of the shares of Seller's Common Stock outstanding on the record
date for the stockholders meeting called pursuant to Section 6.8 (the "Required
Seller Stockholder Vote") is the only vote of the holders of any of Seller's
capital stock necessary under Nevada Law to approve this Agreement and the
transactions contemplated hereby. A majority of the Board of Directors of Seller
has (i) approved this Agreement and the Transaction, (ii) determined that in its
opinion the Transaction and this Agreement is in the best interests of the
stockholders of Seller and is on terms that are fair to such stockholders and
(iii) recommended that the stockholders of Seller approve this Agreement.
4.4 No Conflicts; Consents. The execution and the delivery of this
Agreement and the Ancillary Agreements to which Seller is or will be a party by
Seller, do not, and the consummation of the transactions contemplated herein and
therein and compliance with the provisions hereof and thereof will not, conflict
with, result in a breach of, constitute a default (with or without notice or
lapse of time, or both) under or violation of, or result in the creation of any
lien, charge or Encumbrance on any of the Assets pursuant to, (a) any provision
of the Certificate of Incorporation or Bylaws of Seller, (b) any Law or Decree
or (c) any provision of any agreement, instrument or understanding to which
Seller is a party or by which Seller or any of its properties or assets is bound
or affected, nor will such actions give to any other Person or entity any
interests or rights of any kind, including rights of termination, acceleration
or cancellation, in or with respect to the Business, any of the Assets, the
Assumed Liabilities or the Assumed Contracts. Except as set forth in the
immediately preceding sentence, no consent of any third party or any
Governmental Entity is required to be obtained on the part of Seller to permit
the consummation of the transactions contemplated in this Agreement or the
Ancillary Agreements to which Seller is or will be a party.
4.5 Title to Assets and Sufficiency of Assets. Seller owns good and
marketable title to all of the Assets, free and clear of all Encumbrances except
for Permitted Encumbrances. At the Closing, Seller will sell, convey, assign,
transfer and deliver to Purchaser good, valid and marketable title and all
Seller's respective right and interest in and to all of the Assets, free and
clear of any Encumbrances, except for Permitted Encumbrances. The Assets (a)
constitute all of the assets, tangible and intangible, of any nature whatsoever,
necessary to operate the Business in the manner presently and historically
operated by Seller and (b) include all of the operating assets of Seller
relating to the Business.
4.6 Tangible Assets. Schedule D sets forth a complete and accurate list of
the tangible assets used in the Business, which description identifies, to the
extent available, original Acquisition date and cost of such items. Except as
set forth in Schedule L, each Tangible Asset is, and as of the Closing Date will
be, in good operating condition and good repair, ordinary wear and tear
excepted, will be free from all defect and damage, and are usable in the
ordinary course of business. Schedule D also sets forth by category the location
of the Tangible Assets as of the Closing Date.
14
4.7 Description of Leased Real Property. Schedule M contains a correct
legal description, street address and tax parcel identification number of all
tracts, parcels and subdivided lots in which Seller has a leasehold interest and
an accurate description (by location, name of lessor, date of Lease and term
expiry date) of all real property leases.
4.8 Litigation and Claims. There are no claims, actions, suits,
proceedings or, to Seller's Knowledge, investigations, pending before any
Governmental Entity, or to Seller's Knowledge, threatened or reasonably
expected, against Seller (a) relating to the Business, the Assets, the Assumed
Liabilities or the Intellectual Property, (b) which questions or challenges the
validity of this Agreement or any of the Ancillary Agreements to which either
Seller is or will be a party, or any of the transactions contemplated herein or
therein or (c) which might be reasonably expected to have a Material Adverse
Effect. Seller is not a party to or subject to any decree, order or arbitration
award (or agreement entered into in any administrative, judicial or arbitration
proceeding with any Governmental Entity) with respect to or affecting the
Business, or any of the Assets, the Assumed Liabilities or the Intellectual
Property.
4.9 Compliance with Laws and Regulations; Governmental Licenses, Etc.
Seller is in compliance with all applicable Laws or Decrees with respect to or
affecting the Business or the Assets, the Assumed Liabilities or the
Intellectual Property, including, without limitation, Laws or Decrees relating
to anticompetitive or unfair pricing or trade practices, false advertising,
consumer protection, export or import controls, government contracting,
occupational health and safety, equal employment opportunities, fair employment
practices, and sex, race, religious and age discrimination, except for such
failure to comply as which would not result in a Material Adverse Effect. Seller
is not subject to any order, injunction or decree issued by any Governmental
Entity which could impair the ability of Seller to consummate the transactions
contemplated herein or which could adversely affect Purchaser's conduct of the
Business or its use and enjoyment of the Assets or the Intellectual Property
from and after the Closing Date. Seller possesses all Permits which are required
in order for Seller to operate the Business as presently conducted, and is in
compliance with all such Permits. Schedule N to this Agreement contains a
complete list of such Permits held by Seller relating to the Business, the date
of expiration and whether each such Permit is transferable. Neither the sale and
transfer of the Assets pursuant to this Agreement, nor Purchaser's possession
and use thereof from and after the Closing Date because of such sale and
transfer will: (a) violate any law pertaining to bulk sales or transfers or to
the effectiveness of bulk sales or transfers as against creditors of Seller or
(b) result in the imposition of any liability upon Purchaser for appraisal
rights or other liability owing to any shareholder of Seller.
4.10 Financial Statements, SEC Reports.
(a) Seller has delivered to Purchaser copies of Seller's audited
balance sheets pertaining to the Business as of December 31, 2002 and statements
of income and cash flows pertaining to the Business for the years then ended
(collectively, the "Business Financial Statements"). The Business Financial
Statements have been prepared in accordance with GAAP,
15
and present fairly the financial position of the Business as of their respective
dates and the results of operations and changes in financial position of the
Business for the periods indicated.
(b) There is no debt, liability, or obligation of any nature,
whether accrued, absolute, contingent, or otherwise, and whether due or to
become due, that is not reflected or reserved against in the Business Financial
Statements except for those that have been incurred after 2002, which were
incurred in the ordinary course of business. The Business Financial Statements
have been prepared in accordance with GAAP and reflect all costs and expenses
incurred in the operation of the Business as of the date thereon. The Business
Financial Statements reflect and will reflect the consistent application of such
accounting principles throughout the periods involved, except as disclosed in
the notes to such financial statements.
(c) Seller has made available to Purchaser or its counsel through
EDGAR a true and complete copy of each statement, report, registration statement
(with the prospectus in the form filed pursuant to Rule 424(b) of the Securities
Act), definitive proxy statement, and other filing filed with the SEC by Seller
since January 1, 1999, and, within two (2) days of filing, Seller will have made
available to Purchaser or its counsel through EDGAR true and complete copies of
any additional documents filed with the SEC by Seller prior to the Closing Date
(collectively, the "Seller SEC Documents"). In addition, Seller has made
available to Purchaser all exhibits to the Seller SEC Documents filed prior to
the date hereof which are (i) requested by Purchaser and (ii) are not available
in complete form through EDGAR ("Requested Confidential Exhibits") and will
promptly make available to Purchaser all Requested Confidential Exhibits to any
additional Seller SEC Documents filed prior to the Closing Date. All documents
required to be filed as exhibits to the Seller SEC Documents have been so filed,
and all material contracts so filed as exhibits are in full force and effect,
except those which have expired in accordance with their terms, and neither
Seller nor any of its subsidiaries is in default thereunder. As of their
respective filing dates, none of the Seller SEC Documents contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements made therein, in light of the
circumstances in which they were made, not misleading, except to the extent
corrected by a subsequently filed Seller SEC Document prior to the date hereof.
The financial statements of Seller, including the notes thereto, included in the
Seller SEC Documents (the "Seller Financial Statements"), complied as to form in
all material respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto as of their
respective dates, and have been prepared in accordance with generally accepted
accounting principles applied on a basis consistent throughout the periods
indicated and consistent with each other (except as may be indicated in the
notes thereto or, in the case of unaudited statements included in Quarterly
Reports on Form 10-Qs, as permitted by Form 10-Q of the SEC). The Seller
Financial Statements fairly present the consolidated financial condition and
operating results of Seller and its subsidiaries at the dates and during the
periods indicated therein (subject, in the case of unaudited statements, to
normal, recurring year-end adjustments). There has been no change in Seller
accounting policies since January 1, 1999, except as described in the notes to
the Seller Financial Statements.
16
(d) Seller has delivered to Purchaser copies of Seller's unaudited
balance sheets pertaining to the Business as of end of the first calendar
quarter of 2003 and statements of income and cash flows pertaining to the
Business for such quarter (collectively, the "Quarterly Financial Statements").
The Quarterly Financial Statements have been prepared in accordance with GAAP,
and present fairly the financial position of the Business as of their respective
dates and the results of operations and changes in financial position of the
Business for the periods indicated, except to the extent that the unaudited
Quarterly Financial Statements do not contain all footnotes and other
information required by GAAP.
4.11 Absence of Certain Changes or Events. Since April 1, 2003, Seller has
conducted the Business in the ordinary and usual course consistent with past
practices and, without limiting the generality of the foregoing, has not:
(a) suffered any Material Adverse Change;
(b) suffered any damage, destruction or loss, whether or not covered
by insurance, having a Material Adverse Change;
(c) effected any acquisition, sale or transfer of any material asset
of Seller or any of its subsidiaries other than in the ordinary course of
business and consistent with past practice;
(d) effected any change in accounting methods or practices
(including any change in depreciation or amortization policies or rates) by
Seller or any revaluation by Seller of any of its or any of its subsidiaries'
assets;
(e) declared, set aside, or paid a dividend or other distribution
with respect to the shares of Seller or directly or indirectly redeemed,
purchased or otherwise acquired any of its shares of capital stock, or paid any
fee or other amounts for services or otherwise to any Person, other than to
Employees, owning more than 1% of the outstanding voting securities of the
Seller;
(f) entered into any Contract, other than in the ordinary course of
business or amended or terminated, or defaulted, any material Contract to which
Seller is a party or by which it is bound;
(g) granted any increase in the compensation payable or to become
payable by Seller to any Seller employees employed in the Business, except those
occurring in the ordinary course of business, consistent with Seller's past
practices;
(h) granted any exclusive license with respect the Intellectual
Property;
(i) incurred any Liabilities relating to the Business except in the
ordinary course of business and consistent with past practice;
17
(j) permitted or allowed any of the Assets to be subjected to any
Encumbrance of any kind (other than a Permitted Encumbrance) other than in the
ordinary course of business consistent with past practices;
(k) waived any rights under or terminated any Contract relating to
the Business;
(l) with respect to the Business or the Assumed Contracts incurred
any contingent liability as guarantor or otherwise with respect to the
obligations of others other than in the ordinary course, consistent with past
practices; or
(m) agreed to take any action described in this Section 4.11 or
outside of its ordinary course of business or which would constitute a breach of
any of the representations or warranties of Seller contained in this Agreement.
4.12 Intellectual Property.
(a) For purposes of this Agreement, "Intellectual Property" means:
(i) all issued patents, reissued or reexamined patents,
revivals of patents, utility models, certificates of invention, registrations of
patents and extensions thereof, regardless of country or formal name
(collectively, "Issued Patents");
(ii) all published or unpublished nonprovisional and
provisional patent applications, reexamination proceedings, invention
disclosures and records of invention (collectively "Patent Applications" and,
with the Issued Patents, the "Patents");
(iii) all copyrights, copyrightable works, semiconductor
topography and mask work rights, including all rights of authorship, use,
publication, reproduction, distribution, performance transformation, moral
rights and rights of ownership of copyrightable works, semiconductor topography
works and mask works, and all rights to register and obtain renewals and
extensions of registrations, together with all other interests accruing by
reason of international copyright, semiconductor topography and mask work
conventions (collectively, "Copyrights");
(iv) trademarks, registered trademarks, applications for
registration of trademarks, service marks, registered service marks,
applications for registration of service marks, trade names, registered trade
names and applications for registrations of trade names (collectively,
"Trademarks");
(v) all technology, ideas, inventions, designs, proprietary
information, manufacturing and operating specifications, know-how, formulae,
trade secrets, technical data, computer programs, hardware, software and
processes; and
18
(vi) all other intangible assets, properties and rights
(whether or not appropriate steps have been taken to protect, under applicable
law, such other intangible assets, properties or rights).
(b) Except as set forth in Schedule O, Seller and its subsidiaries
own and have good and marketable title to, or possess legally enforceable and
transferable rights to use, all Intellectual Property used or currently proposed
to be used in the Business as currently conducted or as proposed to be conducted
by Seller and its subsidiaries. The Intellectual Property owned by and licensed
to Seller collectively constitute all of the Intellectual Property necessary to
enable Seller to conduct the Business as the Business is currently being, and
has historically been, conducted. No current or former officer, director,
stockholder, employee, consultant or independent contractor of Seller has any
right, claim or interest in or with respect to any Intellectual Property used in
the Business. Seller has not entered into any work-for-hire agreements with
employees or contractors, except as set forth in Schedule P. There is no
unauthorized use, disclosure or misappropriation of any Intellectual Property
used in the Business by any employee or, to Seller's knowledge, former employee
of Seller or any of its subsidiaries or, to Seller's knowledge, by any other
third party. There are no royalties, fees or other payments payable by Seller to
any Person under any written or oral contract or understanding by reason of the
ownership, use, sale or disposition of Intellectual Property used in the
Business.
(c) With respect to each item of Intellectual Property used in the
Business (except "off the shelf" or other software widely available through
regular commercial distribution channels at a cost not exceeding $7,500 on
standard terms and conditions, as modified for Seller's operations) ("Seller
Intellectual Property") Schedule Q lists all Patents and Patent Applications and
all registered Trademarks, and trademark applications and all registered
Copyrights, including the jurisdictions in which each such Intellectual Property
has been issued or registered or in which any such application for such issuance
and registration has been filed.
(d) Schedule R contains an accurate list as of the date of this
Agreement of all licenses, sublicenses and other agreements to which Seller or
its Subsidiaries are a party and pursuant to which Seller or its Subsidiaries
are authorized to use any Intellectual Property owned by any third party,
excluding "off the shelf" or other software at a cost not exceeding $7,500 and
widely available through regular commercial distribution channels on standard
terms and conditions ("Third Party Intellectual Property").
(e) There is no unauthorized use, disclosure, infringement or
misappropriation of any Seller Intellectual Property, including any Third Party
Intellectual Property by any third party, including any employee or former
employee of Seller or any of its subsidiaries. Neither Seller nor any of its
subsidiaries has entered into any agreement to indemnify any other person
against any charge of infringement of any Intellectual Property. There are no
royalties, fees or other payments payable by Seller to any Person by reason of
the ownership, use, sale or disposition of Intellectual Property.
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(f) Seller is not in breach of any license, sublicense or other
agreement relating to the Seller Intellectual Property or Third Party
Intellectual Property. Neither the execution, delivery or performance of this
Agreement or any ancillary agreement contemplated hereby nor the consummation of
the Acquisition will contravene, conflict with or result in an infringement on
the Purchaser's right to own or use any Seller Intellectual Property, including
any Third Party Intellectual Property.
(g) All Patents, registered Trademarks, registered service marks and
registered Copyrights held by Seller are valid and subsisting. All maintenance
and annual fees have been fully paid and all fees paid during prosecution and
after issuance of any patent comprising or relating to such item have been paid
in the correct entity status amounts. Seller is not infringing, misappropriating
or making unlawful use of, or received any notice or other communication (in
writing or otherwise) of any actual, alleged, possible or potential
infringement, misappropriation or unlawful use of any proprietary asset owned or
used by any third party. There is no proceeding pending or threatened to the
knowledge of Seller, nor has any claim or demand been made, which challenges the
legality, validity, enforceability or ownership of any item of Seller
Intellectual Property or Third Party Intellectual Property or alleges a claim of
infringement of any Patents, Trademarks, service marks, Copyrights or violation
of any trade secret or other proprietary right of any third party. Seller has
not brought a proceeding alleging infringement of Seller Intellectual Property
or breach of any license or agreement involving Intellectual Property against
any third party.
(h) All current officers of Seller have executed and delivered to
Seller an agreement (containing no exceptions or exclusions from the scope of
its coverage) regarding the protection of proprietary information and the
assignment to Seller of any Intellectual Property arising from services
performed for Seller by such persons, the form of which has been supplied to
Purchaser. To Seller's knowledge, no employee or independent contractor of
Seller is in violation of any term of any patent disclosure agreement or
employment contract or any other contract or agreement relating to the
relationship of any such employee or independent contractor with Seller. No
current or former officer, director, stockholder, employee, consultant or
independent contractor has any right, claim or interest in or with respect to
any Seller Intellectual Property.
(i) Seller has taken all commercially reasonable and customary
measures and precautions necessary to protect and maintain the confidentiality
of all Seller Intellectual Property (except such Seller Intellectual Property
whose value would be unimpaired by public disclosure) and otherwise to maintain
and protect the full value of all Intellectual Property it owns or uses. All
use, disclosure or appropriation of Intellectual Property not otherwise
protected by patents, patent applications or copyright ("Confidential
Information"), owned by Seller and provided to a third party, has been pursuant
to the terms of a written agreement between Seller and such third party. All
use, disclosure or appropriation of Confidential Information not owned by Seller
has been pursuant to the terms of a written agreement between Seller and the
owner of such Confidential Information, or is otherwise lawful.
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(j) No product liability claims have been communicated in writing to
or, to Seller's knowledge, threatened against Seller.
(k) A complete list of Seller's proprietary software ("Seller
Software"), together with a brief description of each, is set forth in Schedule
S. Seller Software conforms in all material respects with any specification,
documentation, performance standard, representation or statement provided with
respect thereto by or on behalf of Seller.
(l) Seller is not subject to any proceeding or outstanding decree,
order, judgment, or stipulation restricting in any manner the use, transfer, or
licensing thereof by Seller, or which may affect the validity, use or
enforceability of such Seller Intellectual Property. Seller is not subject to
any agreement which restricts in any material respect the use, transfer, or
licensing by Seller of the Seller Intellectual Property.
4.13 Contracts and Arrangements.
(a) Schedule B hereto contains a true and accurate list of all
Contracts, pursuant to which Seller enjoys any right or benefit or undertakes
any obligation related to the Business, the Intellectual Property, the Assumed
Liabilities or the Assets. Except for the Contracts, Seller is not a party to or
otherwise bound by the terms of any contract, agreement or obligation, written
or oral, affecting the Business, the Assets, Intellectual Property, or the
Assumed Liabilities. Each of the Assumed Contracts is (assuming due
authorization and execution by the other party or parties hereto) valid, binding
and in full force and effect and enforceable by Seller in accordance with its
terms, except as enforcement may be limited by general equitable principles and
the exercise of judicial discretion in accordance with such principles. Neither
Seller, nor, to Seller's Knowledge, any other party, is in default under any
Assumed Contract, and there are no existing disputes or claims of default
relating thereto, or any facts or conditions Known to Seller which, if
continued, will result in a default or claim of default thereunder, which
default could reasonably be expected to have a Material Adverse Effect. No
Assumed Contract contains any liquidated damages, penalty or similar provision.
There is no Assumed Contract which Seller can reasonably foresee will result in
any material loss upon the performance thereof by Purchaser from and after the
Closing Date. To Seller's Knowledge, no party to any Contract has notified
Seller that it intends to cancel, withdraw, modify or amend such Contract.
Except as set forth on Schedule T, there are no renegotiations of, attempts to
renegotiate or outstanding rights to renegotiate any material amounts paid or
payable to Seller under Assumed Contracts with any Person having the contractual
or statutory right to demand or require such renegotiation and no such Person
has made written demand for such renegotiation. Except as set forth on Schedule
U attached hereto, no consents are necessary for the effective assignment to and
assumption by Purchaser of any of the Assumed Contracts.
(b) Other than as set forth on Schedule V, to Seller's Knowledge,
there are no unresolved claims between Seller and any of the principal
licensors, vendors, suppliers, distributors, representatives or customers of the
Business, no event which could reasonably be
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expected to result in (i) a material breach of an Assumed Contract, (ii) a
request for a material accommodation or concession in connection with the sale
of services, distributors, representatives or customers or (iii) a significant
impairment of the relationships of any Business with its principal licensors,
vendors, suppliers, distributors, representatives, or customers and none of such
persons has advised Seller of its intention to cease doing business with Seller
or with the Purchaser following the Closing Date, whether as a result of the
transactions contemplated hereunder or otherwise.
(c) Each accepted and unfilled order entered into by Seller for the
provisions of services by Seller, and each agreement, contract or commitment for
the purchase of supplies included in the Contracts was made in the ordinary
course of the Business.
4.14 Insurance. Seller has delivered to Purchaser (i) accurate and
complete copies of all policies of insurance (and correspondence relating to
coverage thereunder) to which Seller is a party or under which Seller is or has
been covered at any time since, a list of which is included in Schedule W.
Schedule W describes all obligations of Seller to provide insurance coverage to
third parties (for example, under leases or service agreements) and identifies
the policy under which such coverage is provided. Seller maintains insurance
policies relating to the Business providing the coverages described on Schedule
W. All of such policies are in full force and effect, and Seller is not in
default with respect to any material provision of any of such policies. There is
no material claim pending under any of such policies or bonds as to which
coverage has been questioned, denied or disputed by the underwriters of such
policies or bonds. Seller has not received notice from any issuer of any such
policies of its intention to cancel, terminate or refuse to renew any policy
issued by it. All of such policies of insurance to which Seller is a party or
that provide coverage to Seller: (A) are valid, outstanding and enforceable; (B)
are issued by an insurer that is financially sound and reputable; and (C) are
sufficient for compliance with all Laws or Decrease and Contracts.
4.15 Brokers. Except for Stifel, Nicolaus & Co., whose fees, as set forth
on Schedule X, are to be paid by Seller, Seller has not incurred any obligation
or liability, contingent or otherwise, for brokerage or finders' fees or agents'
commissions or other similar payments in connection with this Agreement or the
transactions contemplated herein.
4.16 Accounts Receivable. Schedule Y sets forth all Acquired Accounts
Receivable, with a corresponding aging report. Subject to any reserves set forth
in the Business Financial Statements, the Acquired Accounts Receivable shown on
the Business Financial Statements are valid and genuine, have arisen solely out
of bona fide sales and deliveries of goods, performance of services, and other
business transactions in the ordinary course of business consistent with past
practices in each case with persons other than Affiliates, are not subject to
any prior assignment, lien or security interest and are not subject to valid
defenses, set-offs or counter claims, except as set forth in Schedule Y. The
Acquired Accounts Receivable will be collected in accordance with their terms at
their recorded amounts, subject only to the reserve for doubtful accounts set
forth on the Business Financial Statements.
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4.17 Warranties and Service Payment Obligations. Schedule Z sets forth (a)
copies of all forms of warranties or warranty agreements or service level
agreements or obligations now in effect with respect to any of the services
provided, or to be provided, by Seller in connection therewith, (b) a complete
and accurate list of all agreements pursuant to which Seller is obligated to
provide warranty services or support services or service level services, and (c)
a complete and accurate list of all other agreements of Seller which are either
included in the Assumed Contracts or relate to any services, and pursuant to
which Seller is obligated to make any other accommodation for such purchaser or
distributor, including, without limitation, any warranties or service level
agreements. All services have been, or are being, made pursuant to foregoing
warranties or service level agreements set forth in Schedule Z, or the terms of
a Contract set forth in Schedule Z, and no other warranty, express or implied,
has been made or extended by Seller with respect to the services provided by
Seller in relation thereto.
4.18 Business Records. The Business Records to be delivered to Purchaser
are complete, true and accurate in all material respects and accurately reflect
all actions and transactions referred to in such Business Records.
4.19 Taxes. As used in this Agreement, the terms "Tax" and, collectively,
"Taxes" mean any and all federal, state and local taxes of any country,
assessments and other governmental charges, duties, impositions and liabilities,
including taxes based upon or measured by gross receipts, income, profits,
sales, use and occupation, and value added, ad valorem, stamp transfer,
franchise, withholding, payroll, recapture, employment, excise and property
taxes, together with all interest, penalties and additions imposed with respect
to such amounts and any obligations under any agreements or arrangements with
any other person with respect to such amounts and including any liability for
taxes of a predecessor entity.
(a) Seller has prepared and timely filed all returns, estimates,
information statements, and reports required to be filed with any taxing
authority ("Returns") relating to any and all Taxes concerning or attributable
to Seller or its operations with respect to Taxes for any period ending on or
before the Closing Date and such Returns are true and correct in all material
respects and have been completed in accordance with applicable law, except for
any extensions described on Schedule AA.
(b) Seller, as of the Closing Date: (i) will have paid all Taxes
shown to be payable on such Returns covered by Section 4.17 and (ii) will have
withheld with respect to its employees all Taxes required to be withheld.
(c) There is no Tax deficiency outstanding or assessed or, to
Seller's knowledge, proposed against Seller that is not reflected as a liability
on the Seller Balance Sheet nor has Seller executed any agreements or waivers
extending any statute of limitations on or extending the period for the
assessment or collection of any Tax.
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(d) Seller is not a party to any tax-sharing agreement or similar
arrangement with any other party, and Seller has not assumed to pay any Tax
obligations of, or with respect to any transaction relating to, any other person
or agreed to indemnify any other person with respect to any Tax.
(e) Seller's Returns have never been audited by a government or
taxing authority, nor is any such audit in process or pending, and Seller has
not been notified of any request for such an audit or other examination.
(f) Seller has never been a member of an affiliated group of
corporations filing a consolidated federal income tax return.
(g) Seller has made available to Purchaser copies of all Returns
filed for all periods since January 1, 2000.
4.20 Compliance With Laws. Each of Seller and its subsidiaries has
complied with, is not in violation of and has not received any notices of
violation with respect to, any federal state, local or foreign statute, law or
regulation with respect to the conduct of its business, or the ownership or
operation of its business, except for such violations or failures to comply as
do not and could not be reasonably expected to have a Material Adverse Effect.
4.21 Solvency. Seller represents that based on the Business Financial
Statements and Quarterly Financial Statements provided to Purchaser, excluding
any and all contingent, disputed, and unliquidated liabilities of Seller, Seller
is not now insolvent and will not be rendered insolvent by any of the
transactions contemplated herein. As used in this section, "insolvent" means the
sum of Seller's debts and other liabilities, excluding any and all contingent,
disputed, and unliquidated liabilities of Seller, exceeds the fair value of
Seller's assets.
4.22 Employee Claims. There are no liabilities, claims, actions, suits,
proceedings or, to Seller's Knowledge, investigations, pending before any
Governmental Entity, or to Seller's Knowledge, threatened or reasonably
expected, against Seller relating to or rising out of the employment of any
current or past employee of Seller, except as set forth in Schedule GG.
4.23 Accuracy of Material Facts; Copies of Materials. No representation,
warranty or covenant of Seller contained in this Agreement or in any
certificate, schedule or exhibit delivered pursuant to this Agreement contains
any untrue statement of a material fact or omits to state any material fact
necessary in order to make the statements contained herein and therein, taken as
a whole, not misleading in light of the circumstances under which such
statements were made. Seller has delivered to Purchaser complete and accurate
copies of each contract, agreement, license, lease and similar document (or, if
oral, summaries of same) referred to in any schedule hereto or included in the
Assets or the Assumed Contracts, or the Assumed Liabilities.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Except as otherwise set forth in the Purchaser Disclosure Schedule
provided to Seller, a copy of which is attached as Schedule BB, Purchaser hereby
represents and warrants to Seller that:
5.1 Organization and Good Standing. Purchaser is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware and has full power and authority to carry on its businesses as now
conducted. Purchaser is duly qualified or licensed to do business as a foreign
corporation in each state of the United States in which it is required to be so
qualified or licensed except in such states in which failure to be so qualified
or licensed would not have a material adverse effect on Purchaser.
5.2 Power, Authorization and Validity. Purchaser has the right, power,
legal capacity and authority to enter into and perform its respective
obligations under this Agreement and the other Ancillary Agreements to which it
is or will be a party. The execution and delivery of this Agreement and the
other Ancillary Agreements to which Purchaser is or will be a party have been
duly and validly approved and authorized by the board of directors of Purchaser.
No authorization or approval, corporate, governmental or otherwise, is necessary
in order to enable Purchaser to enter into and to perform the terms of this
Agreement or the other Ancillary Agreements on its part to be performed, except
for (i) filings under applicable securities laws, and (ii) the termination of
any waiting period under any other applicable Law or Decree. This Agreement is
and the other Ancillary Agreements, when executed and delivered by Purchaser
shall be, the valid and binding obligation of Purchaser, enforceable in
accordance with their respective terms, subject to (i) laws of general
application relating to bankruptcy, insolvency, and the relief of debtors and
(ii) rules of law governing specific performance, injunctive relief and other
equitable remedies.
5.3 No Violation of Existing Agreements. Neither the execution and
delivery of this Agreement or any of the Ancillary Agreements to which Purchaser
is or will be a party, nor the consummation of the transactions contemplated
herein or therein will conflict with, or result in a material breach or
violation of, or constitute a default (with or without notice, lapse of time or
both) or give any party any right to terminate, accelerate or cancel any
provision of Purchaser's respective charter documents as currently in effect,
any material instrument, contract or understanding to which Purchaser is a party
or by which Purchaser is bound, or by which Purchaser or any of their respective
properties are bound, or any federal, state or local judgment, writ, decree,
order, statute, rule or regulation applicable to Purchaser. Neither the
execution and delivery of this Agreement (or any of the Ancillary Agreements to
which Purchaser is or will be a party), nor the consummation of the transactions
contemplated herein or therein, will have a material adverse effect on the
respective operations, assets, or financial condition of Purchaser.
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5.4 Compliance With Other Instruments and Laws. Purchaser is not in
violation of (a) any provisions of its respective charter documents as currently
in effect or (b) any applicable Law or Decree in any material respect.
5.5 Litigation. There is no suit, action, proceeding, claim or, to
Purchaser's Knowledge, investigation, pending or, to Purchaser's Knowledge,
threatened against Purchaser before any Governmental Entity which questions or
challenges the validity of this Agreement (or any of the Ancillary Agreements to
which Purchaser is or will be a party), or any of the transactions contemplated
herein or therein.
5.6 Brokers. Purchaser has not incurred any obligation or liability,
contingent or otherwise, for brokerage or finders' fees or agents' commissions
or other similar payment in connection with the purchase of the Assets.
5.7 Disclosure. No representation, warranty or covenant of Purchaser
contained in this Agreement or in any certificate, schedule or exhibit to this
Agreement, contains any untrue statement of a material fact or omits to state
any material fact necessary in order to make the statements contained herein and
therein, taken as a whole, not misleading in light of the circumstances in which
such statements were made.
ARTICLE VI
PRE-CLOSING COVENANTS OF SELLER
6.1 Advice of Changes. Seller will promptly notify Purchaser in writing of
(a) any event occurring subsequent to the date of this Agreement that would
render any representation or warranty of Seller contained in this Agreement, if
made on or as of the date of that event or the Closing Date, untrue or
inaccurate in any material respect and (b) any Material Adverse Change.
6.2 Conduct of Business. During the period on and from the date of this
Agreement through and including the Closing Date, Seller will conduct the
Business in the ordinary course consistent with past practices, protect and
preserve the Assets and the Intellectual Property, and maintain and preserve
intact Seller's relationships with its consultants, independent contractors,
licensors, suppliers, vendors, representatives, distributors and other customers
and all others with whom it deals, all in accordance with the ordinary course of
business. Further, Seller shall confer with Purchaser prior to implementing
operational decisions of a material nature. During the period on and from the
date of this Agreement through and including the Closing Date, Seller will not
without the prior written consent of Purchaser:
(a) mortgage, pledge, subject to a lien, or grant a security
interest in, or suffer to exist or otherwise encumber, any of the Assets;
26
(b) sell, dispose of or license any of the Assets to any Person,
except inventory in the ordinary course of business consistent with past
practices;
(c) fail to maintain the Tangible Assets in good working condition
and repair according to the standards it has maintained up to the date of this
Agreement, subject only to ordinary wear and tear;
(d) except as set forth on Schedule CC, fail to pay and discharge
any trade payables relating to the Assets or the Business, including all
insurance, promptly as they become due;
(e) enter into any agreement or arrangement to pay any bonus,
increased salary, or special remuneration to any Seller employee employed in the
Business or consultant (other than amounts not in excess of normal payments made
on a regular basis and amounts paid to Seller employees who, at the time of such
agreement or arrangement, have not been extended an offer to become employees of
Purchaser);
(f) change accounting methods relating to or affecting the Assets,
the Assumed Liabilities or the Business;
(g) amend, terminate or waive any rights under any Contract, except
in the ordinary course of the Business;
(h) waive or release any right or claim relating to any Assets,
except in the ordinary course of business consistent with past practices;
(i) enter into any agreements or other obligations or commitments
(excluding purchases of new materials) relating to the Business, except
agreements or purchase orders (A) involving the payment by Seller, as
applicable, of less than Ten Thousand Dollars ($10,000.00) individually, or
Twenty Thousand Dollars ($20,000.00) in the aggregate, and (B) which are on
commercially reasonable terms in the ordinary course of business, consistent
with past practices of Seller with respect to the Business;
(j) fail to comply in any material respect with any Law or Decree
applicable to the Business;
(k) take any action to terminate or modify, or permit the lapse of
termination of, the present insurance policies and coverages of Seller relating
to or applicable to Seller, the Business or the Assets;
(l) incur, with respect to the Business or the Assets, any
Liabilities other than Liabilities incurred in the ordinary course of business
consistent with past practices;
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(m) pay any dividend or distribution on account the Seller's
securities or otherwise pay any amount to any Person that owns more than 1% of
the voting securities of Seller, except for the following payments made in the
ordinary course of business for (1) salary, (2) reimbursements for ordinary and
reasonable business expenses or (3) compensation due and payable under
employment agreements disclosed to Purchaser;
(n) fail to maintain all Business Records in the ordinary course of
business; or
(o) agree to do any of the things described in the preceding clauses
of this Section 6.2.
6.3 Access to Information. Until the Closing, Seller will allow Purchaser
and its agents free access upon reasonable notice and during normal working
hours to the Business Records and Facilities relating to the Assets, all aspects
of the Business and its financial and legal affairs and the financial condition
of the Seller. Until the Closing, Seller shall cause its respective accountants
to cooperate with Purchaser and its agents in making available all financial
information requested, including without limitation the right to examine all
working papers pertaining to all Business Financial Statements prepared or
audited by such accountants.
6.4 Obtaining Necessary Consents and Addition of Purchaser as Party to
Certain Contracts. All of the Assumed Contracts are assignable by Seller to
Purchaser, except as set forth on Schedule DD. Seller shall use its reasonable
commercial efforts to obtain any and all consents necessary for the effective
assignment to and assumption by Purchaser of the Assumed Contracts, which
consents are set forth on Schedule EE hereto. All such consents shall be in
writing and executed counterparts thereof shall be delivered promptly to
Purchaser, as applicable. Seller shall not agree to any modification of any
Assumed Contract in the course of obtaining any such consent. To the extent
permitted by applicable law, in the event consents to the assignment of such
Assumed Contracts are not obtained by Seller as of the Closing, and Purchaser
agrees to close the Acquisition, such Assumed Contracts shall be held, as and
from the Closing Date, by Seller in trust for Purchaser, and the covenants and
obligations thereunder shall be performed by Purchaser in Seller's respective
name and all benefits and obligations existing thereunder shall be for
Purchaser's account provided that such performance by Purchaser shall be
contingent on the passing of all benefits of such Assumed Contracts to
Purchaser. Seller shall take or cause to be taken such actions in its name or
otherwise as Purchaser may reasonably request so as to provide Purchaser with
the benefits of the Assumed Contracts and to effect collection of money or other
consideration to become due and payable under the Assumed Contracts, and Seller
shall promptly pay over to Purchaser all money or other consideration received
by it in respect to all Assumed Contracts. The compliance of Seller with this
provision shall not excuse Seller from any breach of the representations,
warranties and covenants of Seller resulting from such non-assignment.
6.5 Satisfaction of Conditions Precedent. Seller will use its reasonable
commercial efforts to satisfy or cause to be satisfied all the conditions
precedent to the Closing hereunder, and to cause the transactions contemplated
herein to be consummated, and, without limiting the
28
generality of the foregoing, to obtain all consents and authorizations of third
parties and to make all filings with, and give all notices to, third parties,
which may be necessary or reasonably required on its part in order to effect the
transactions contemplated herein.
6.6 No Solicitation
(a) Seller shall not directly or indirectly, and shall not authorize
or permit any Affiliate or any Representative of the Seller directly or
indirectly to, (i) solicit, initiate, encourage, induce or facilitate the
making, submission or announcement of any Acquisition Proposal or take any
action that could reasonably be expected to lead to an Acquisition Proposal,
(ii) furnish any information regarding Seller to any Person in connection with
or in response to an Acquisition Proposal or an inquiry or indication of
interest that could lead to an Acquisition Proposal, (iii) engage in discussions
or negotiations with any Person with respect to any Acquisition Proposal, (iv)
approve, endorse or recommend any Acquisition Proposal or (v) enter into any
letter of intent or similar document or any Contract contemplating or otherwise
relating to any Acquisition; provided, however, that prior to the adoption of
this Agreement by the Required Seller Stockholder Vote, this Section 6.6(a)
shall not prohibit Seller from furnishing nonpublic information regarding Seller
to, or entering into discussions with, any Person in response to a Superior
Proposal that is submitted to Seller by such Person (and not withdrawn) if (1)
the board of directors of Seller concludes in good faith, after having taken
into account the written advice of its outside legal counsel, that such action
is required in order for the board of directors of Seller to comply with its
fiduciary obligations to Seller's stockholders under applicable law, (2) at
least two business days prior to furnishing any such nonpublic information to,
or entering into discussions with, such Person, Seller gives Purchaser written
notice of the identity of such Person and Seller's intention to furnish
nonpublic information to, or enter into discussions with, such Person, and
Seller receives from such Person an executed confidentiality agreement
containing customary limitations on the use and disclosure of all nonpublic
written and oral information furnished to such Person by or on behalf of Seller,
and (3) at least two business days prior to furnishing any such nonpublic
information to such Person, Seller furnishes such nonpublic information to
Purchaser (to the extent such nonpublic information has not been previously
furnished by Seller to Purchaser).
(b) Seller shall promptly (and in no event later than 24 hours after
receipt of any Acquisition Proposal, any inquiry or indication of interest that
could lead to an Acquisition Proposal or any request for nonpublic information)
advise Purchaser orally and in writing of any Acquisition Proposal, any inquiry
or indication of interest that could lead to an Acquisition Proposal or any
request for nonpublic information relating to Seller (including the identity of
the Person making or submitting such Acquisition Proposal, inquiry, indication
of interest or request, and the terms thereof) that is made or submitted by any
Person prior to Closing. Seller shall keep Purchaser fully informed with respect
to the status of any such Acquisition Proposal, inquiry, indication of interest
or request and any modification or proposed modification thereto.
(c) Seller shall immediately cease and cause to be terminated any
existing
29
discussions with any person that relate to any Acquisition Proposal, except to
the extent permitted by Section 6.6(a) above.
6.7 Proxy Statement. As promptly as practicable after the date of this
Agreement, Seller shall diligently prepare and cause to be filed with the SEC
the Proxy Statement. Seller shall use best efforts to cause the Proxy Statement
to comply with the rules and regulations promulgated by the SEC and to respond
promptly to any comments of the SEC or its staff. As promptly as practicable
after receipt thereof, Seller shall provide Purchaser copies of all written
comments and advise Purchaser of any oral comments with respect to the Proxy
Statement received from the SEC's staff. Seller shall use best efforts to cause
the Proxy Statement to be mailed to Seller's stockholders as promptly as
practicable. Purchaser shall promptly furnish to Seller all information
concerning Purchaser that may be required or reasonably requested in connection
with any action contemplated by this Agreement. If any event relating to Seller
occurs, or if Seller becomes aware of any information, that should be disclosed
in an amendment or supplement to the Proxy Statement, then Seller shall promptly
inform Purchaser thereof and shall file such amendment or supplement with the
SEC and, if appropriate, mail such amendment or supplement to the stockholders
of Seller. Seller shall cooperate and provide Purchaser with a reasonable
opportunity to review and comment on the Proxy Statement and all proposed
amendments and supplements to the Proxy Statement prior to filing the same with
the SEC, and will provide Purchaser with a true and complete copy of all such
filings made with the SEC.
6.8 Stockholders' Meeting.
(a) Seller shall duly take all action necessary under all applicable
legal requirements to call, give notice of and hold a meeting of the holders of
Seller Common Stock to vote on a proposal to approve this Agreement and the
Acquisition (the "Seller Stockholders' Meeting"). The Seller Stockholders'
Meeting shall be held (on a date selected by Seller in consultation with
Purchaser) as promptly as practicable. Seller shall ensure that all proxies
solicited in connection with Seller Stockholders' Meeting are solicited in
compliance with all applicable legal requirements.
(b) Subject to Section 6.7: (i) the Proxy Statement shall include a
statement to the effect that a majority of the Board of Directors of Seller
recommends that Seller's stockholders vote to approve this Agreement and the
Acquisition at the Seller Stockholders' Meeting (the majority recommendation of
Seller's board of directors that Seller's stockholders vote to adopt this
Agreement being referred to as the "Seller Board Recommendation"); and (ii) the
Seller Board Recommendation shall not be withdrawn or modified in a manner
adverse to Purchaser, and no resolution by the board of directors of Seller or
any committee thereof to withdraw or modify Seller Board Recommendation in a
manner adverse to Purchaser shall be adopted or proposed.
(c) Notwithstanding anything to the contrary contained in Section
6.8, at any time prior to the adoption of this Agreement by the Required Seller
Stockholder Vote, the Seller
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Board Recommendation may be withdrawn or modified in a manner adverse to
Purchaser if: (i) a proposal to acquire (by merger or otherwise) all of the
outstanding shares of Seller common stock or purchase of the Assets and Assumed
Liabilities is made to Seller and is not withdrawn; (ii) Seller provides
Purchaser with at least five business days prior notice of any meeting of
Seller's board of directors at which such board of directors will consider and
determine whether such offer is a Superior Proposal; (iii) Seller's board of
directors determines in good faith (based upon a written opinion of an
independent financial advisor of nationally recognized reputation) that such
offer constitutes a Superior Proposal; and (iv) Seller's board of directors
determines in good faith, after having taken into account the written advice of
Seller's outside legal counsel, that, in light of such Superior Proposal, the
withdrawal or modification of the Seller Board Recommendation is required in
order for Seller's board of directors to comply with its fiduciary obligations
to Seller's stockholders under applicable law.
(d) Seller's obligation to call, give notice of and hold the Seller
Stockholders' Meeting in accordance with Section 6.8 shall not be limited or
otherwise affected by the commencement, disclosure, announcement or submission
of any Superior Proposal or other Acquisition Proposal, or by any withdrawal or
modification of the Seller Board Recommendation.
(e) Notwithstanding anything to the contrary contained in this
Agreement, if the Seller Board Recommendation shall be withdrawn or modified in
a manner adverse to Purchaser, then, at the request of Purchaser:
(i) Seller shall call, give notice of and hold the Seller
Stockholders' Meeting on a date and at a time and place determined by Purchaser;
(ii) Seller shall set a record date for persons entitled to
notice of, and to vote at, the Seller Stockholders' Meeting on a date determined
by Purchaser;
(iii) Seller shall cause its transfer agent to make a
stockholder list and other stock transfer records relating to Seller available
to Purchaser;
(iv) Seller shall render such other reasonable assistance to
Purchaser in the solicitation of proxies by Purchaser in favor of the adoption
of this Agreement as Purchaser shall request.
6.9 Bulk Sales. Seller and Purchaser hereby waive compliance with
applicable bulk transfer or similar laws, if any, and Seller hereby indemnifies
and holds harmless Purchaser from any liabilities and obligations arising from
claims made by third parties under applicable bulk transfer, fraudulent transfer
law, or similar laws, if any, applicable to the transactions contemplated in
this Agreement.
6.10 Collection of Accounts Receivable. To the extent Seller receives any
payment after the Closing Date from a customer on account of an Acquired Account
Receivable, Seller shall
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hold such payment in trust for the benefit of Purchaser, promptly notify
Purchaser and remit such funds to Purchaser.
6.11 Satisfaction of Material and Other Unsecured Liabilities.
(a) Upon execution of this Agreement, Seller will set forth in
Schedule HH, a list of Seller's creditors holding the unsecured liabilities
("Material Unsecured Creditors"). Five (5) days before Closing, Seller will
deliver to Purchaser an updated and then current list of the Material Unsecured
Creditors. At Closing, Seller will obtain the discharge, whether by payment,
release, compromise and settlement, or accord and satisfaction, ("Settlement")
of those Material Unsecured Creditors holding the unsecured Liabilities set
forth in Schedule HH (the "Material Unsecured Liabilities"). At Closing, that
portion of the Cash Payment necessary for the Settlement of the Material
Unsecured Liabilities ("MUL Payment") will be transferred by Purchaser to
Loeffler Jonas & Tuggey LLP ("LJT"), counsel for Seller. At Closing, or
reasonably thereafter, LJT will distribute to each of the Material Unsecured
Creditors that portion of the MUL Payment required for Settlement as provided in
Schedule II (each a "Settlement Payment"). Each Settlement Payment will be made
according to the payment method provided to LJT by the applicable Material
Unsecured Creditor.
(b) At Closing, or reasonably thereafter, Seller will obtain the
Settlement of those creditors of Seller ("Other Unsecured Creditors") holding
the unsecured Liabilities set forth in Schedule II (the "Other Unsecured
Liabilities"). Seller agrees to update Schedule II Five (5) days before Closing
to accurately reflect the Settlement of the Other Unsecured Liabilities at
Closing.
6.12 Notice to Vendors. Purchaser shall, as soon as practicable following
the Closing Date, send to each vendor under an Assumed Contract a written notice
of the assignment to Purchaser of Seller's obligation under such Assumed
Contract, which notice shall request such vendor's agreement to look solely to
Purchaser for payment or performance of such Assumed Contract and to release
Seller from all obligations thereunder. This Section 6.12 does not relieve
Seller of its obligations to obtain all necessary third party consents and
licenses pursuant to the Transition Services Agreement between the parties.
ARTICLE VII
PRE-CLOSING COVENANTS OF PURCHASER
7.1 Advice of Changes. Purchaser will promptly notify Seller in writing of
any event occurring subsequent to the date of this Agreement that would render
any representation or warranty of Purchaser contained in this Agreement, if made
on or as of the date of that event or the Closing Date, untrue or inaccurate in
any material respect.
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7.2 Satisfaction of Conditions Precedent Purchaser will use its reasonable
commercial efforts to satisfy or cause to be satisfied all the conditions
precedent to the Closing hereunder, and to cause the transactions contemplated
herein to be consummated, and, without limiting the generality of the foregoing,
to obtain all consents and authorizations of third parties and to make all
filings with, and give all notices to, third parties which may be necessary or
reasonably required on its part in order to effect the transactions contemplated
herein.
ARTICLE VIII
MUTUAL COVENANTS
8.1 Confidentiality and Publicity. The parties acknowledge that the
Confidentiality Agreement is binding upon the parties hereto and in full force
and effect, except to the extent that the provisions hereof supersede provisions
to similar effect contained in the Confidentiality Agreement. The terms of the
Confidentiality Agreement (exclusive of such superseded provisions) are
incorporated in this Agreement by this reference.
8.2 Regulatory Filings; Consents; Reasonable Efforts. Subject to the terms
and conditions of this Agreement, Purchaser shall use its respective reasonable
commercial efforts to (a) make all necessary filings with respect to the
Acquisition and this Agreement under the Securities Act, the Exchange Act and
applicable blue sky or similar securities laws and obtain required approvals and
clearances with respect thereto and supply all additional information requested
in connection therewith, (b) make presale notification or other appropriate
filings with federal, state, provincial or local governmental bodies or
applicable foreign governmental agencies and obtain required approvals and
clearances with respect thereto and supply all additional information requested
in connection therewith, (c) obtain all consents, waivers, approvals,
authorizations and orders required in connection with the authorization,
execution and delivery of this Agreement and the Ancillary Agreements and the
consummation of the Acquisition and (d) take, or cause to be taken, all
appropriate action, and do, or cause to be done, all things necessary, proper or
advisable to consummate and make effective the transactions contemplated in this
Agreement as promptly as practicable.
8.3 Governmental Filings. As promptly as practicable after the execution
of this Agreement, Purchaser shall make any and all required governmental
filings required with respect to the transactions contemplated in this Agreement
and the Ancillary Agreements, and shall use reasonable commercial efforts to
respond promptly to all inquiries or requests for additional information or
documentation from any Governmental Entity.
8.4 Further Assurances. Prior to and following the Closing, each party to
this Agreement agrees to cooperate fully with the other party and to execute
such further instruments, documents and agreements, and to give such further
written assurances, as may be reasonably requested by any other party to better
evidence and reflect the transactions described herein and the Ancillary
Agreements and contemplated herein and therein and to carry into effect the
intent
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and purposes of this Agreement. Prior to and after the Closing Date, Seller
shall reasonably cooperate with Purchaser in attempting to obtain the agreement
of parties to the Contracts necessary for Purchaser's enjoyment of the Assets or
the Intellectual Property or Purchaser's conduct of the Business following the
Closing Date to extend the benefits and obligations of such Contracts to
Purchaser.
8.5 Communications Plan. Purchaser and Seller shall use their respective
reasonable commercial efforts to carry out the communications plan as agreed to
among the parties as of the date of this Agreement with respect to
communications to their respective customers, suppliers, employees, investors
and strategic partners concerning the transactions contemplated hereby.
ARTICLE IX
CONDITIONS TO CLOSING
9.1 Conditions to Each Party's Obligations. The respective obligations of
each party to this Agreement to effect the transactions to be performed by such
party at the Closing are subject to the satisfaction at or prior to the Closing
of the following conditions:
(a) No Orders. No order shall have been entered, and not vacated, by
a court or administrative agency of competent jurisdiction, in any action or
proceeding which enjoins, restrains or prohibits the Acquisition or the
consummation of any other transaction contemplated herein.
(b) Permits, Authorizations and Approvals. All permits,
authorizations, approvals and orders required to be obtained under all
applicable Laws or Decrees in connection with the transactions contemplated
herein, including but not limited to any applicable consent or termination of
any applicable waiting period under any Law shall have been obtained and shall
be in full force and effect at the Closing Date.
(c) No Litigation. There shall be no litigation pending or
threatened by any Governmental Entity in which (i) an injunction is or may be
sought against the transactions contemplated herein or (ii) relief is or may be
sought against any party hereto as a result of this Agreement and in which, in
the good faith judgment of the board of directors of either Purchaser or Seller
(relying on the advice of their respective legal counsel), such Governmental
Entity has the probability of prevailing and such relief would have a material
adverse effect upon such party.
(d) Stockholder Approval. This Agreement and the transactions
contemplated hereby shall be approved by the shareholders of Seller by the
requisite vote under applicable law and the Seller's Certificate of
Incorporation.
(e) All amounts payable to Laurus Master Fund, Ltd. shall be paid at
Closing from the proceeds of the Initial Purchase Price.
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9.2 Conditions to Obligations of Seller. The obligations of Seller to
effect the transactions to be performed by it at the Closing are, at the option
of Seller, subject to the satisfaction at or prior to the Closing of the
following additional conditions:
(a) Representations and Warranties. All of the representations and
warranties of Purchaser set forth in ARTICLE V hereof shall be true and correct
in all material respects on and as of the Closing Date with the same force and
effect as if such representations and warranties had been made at the Closing,
and Purchaser shall have delivered to Seller a certificate (the "Purchaser
Compliance Certificate") to such effect dated as of the Closing Date and signed
by the President of Purchaser.
(b) Performance. All of the terms, covenants and conditions of this
Agreement to be complied with and performed by Purchaser at or prior to the
Closing shall have been duly complied with and performed in all material
respects, and Purchaser shall have delivered to Seller the Purchaser Compliance
Certificate to such effect.
(c) Purchase Price Consideration. Purchaser shall have delivered the
Cash Payment, the JV Note, and the JV Security Agreement in accordance with
Section 2.6 hereof.
(d) Ancillary Agreements. Purchaser shall have executed and
delivered to Seller each of the Ancillary Agreements, each in the forms
confirmed as acceptable to all parties pursuant hereto.
(e) Purchaser's Closing Deliverables. At the Closing, Purchaser will
deliver to Seller the following items:
(i) the Cash Payment, the JV Note, and the JV Security
Agreement;
(ii) the Purchaser Compliance Certificate in accordance with
Sections 9.2(a) and 9.2(b) hereof;
(iii) copies of each of the Ancillary Agreements executed by
Purchaser;
(iv) a certificate, signed by the Secretary of Purchaser
certifying as to and accuracy of, and attaching copies of, Purchaser's
respective charter documents and all board of directors resolutions adopted in
connection with the Acquisition, of Purchaser; and
(v) all other documents required to be delivered to Seller
under this Agreement.
9.3 Conditions to Obligations of Purchaser. The obligations of Purchaser
to effect the transactions to be performed by it at the Closing are, at the
option of Purchaser, subject to the satisfaction at or prior to the Closing of
the following additional conditions:
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(a) Representations and Warranties. All the representations and
warranties of Seller set forth in ARTICLE IV hereof shall be true and correct in
all material respects on and as of the Closing Date with the same force and
effect as if such representations and warranties had been made at the Closing,
and Seller shall have delivered to Purchaser a certificate (the "Seller
Compliance Certificate") to such effect dated as of the Closing Date and signed
by the President of Seller.
(b) Performance. All of the terms, covenants and conditions of this
Agreement to be complied with and performed by Seller at or prior to the Closing
shall have been duly complied with and performed in all material respects, and
Seller shall have delivered to Purchaser the Seller Compliance Certificate to
such effect.
(c) Required Consents. Any and all required consents from third
parties to the Assumed Contracts and other instruments required to allow the
consummation of the Acquisition and the other transactions contemplated herein.
(d) At Closing, that portion of the Cash Payment necessary to pay in
full Seller's secured creditors listed on Schedule KK (the "Secured Creditors")
will be transferred by Purchaser to LJT, counsel for Seller. At Closing, or
reasonably thereafter, LJT will distribute to each of the Secured Creditors that
portion of the Cash Payment required to pay such Secured Creditors in full and
obtain releases on any and all liens on the Assets held by such Secured
Creditors. Seller will provide Purchaser with written or otherwise valid
evidence that all outstanding liens on the Assets have been fully released.
(e) Material Adverse Change. There shall have been no Material
Adverse Change.
(f) Ancillary Agreements. Seller shall have executed and delivered
to Purchaser each of the Ancillary Agreements to which it is a party, each in
the forms attached hereto as Exhibits A through I.
(g) Transfer Documents. All documentation pursuant to which the
transactions contemplated herein are to be accomplished, including bills of
sale, assignments and other documents or instruments of transfer, shall have
been presented to Purchaser and its counsel for review and shall have been
consistent with this Agreement and reasonably satisfactory in form and substance
to Purchaser and its counsel prior to the consummation of such transactions. All
of the Assets, including the Assumed Contracts, shall have been transferred or
assigned from Seller to Purchaser free and clear of all Encumbrances (except
Permitted Encumbrances), and Purchaser and their counsel shall have received
evidences of such transfers reasonably satisfactory to them.
(h) Financial Statements. Seller shall have delivered to Purchaser
the Business Financial Statements and the Quarterly Financial Statements, all
prepared in accordance with GAAP.
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(i) Opinion of Counsel. Seller's counsel shall have delivered an
opinion of counsel to Purchaser as to the matters set forth in Exhibit J in form
and substance satisfactory to Purchaser and its counsel.
(j) Transition Services Agreement. Seller and Purchaser shall
execute the Transition Services Agreement provided in Exhibit D.
(k) Key Employees. Unless otherwise provided in the executed
Transition Services Agreement, those employees set forth in the Transition
Services Agreement shall have agreed to employment with Buyer under similar
terms as employed by Seller or shall have been replaced by Seller in accordance
with the Transition Services Agreement.
(l) Seller's Closing Deliverables. At the Closing, Seller will
deliver to Purchaser the following items:
(i) a bill of sale, intellectual property assignments,
assignments and assumptions of contracts and such other good and sufficient
instruments of conveyance, assignment and transfer, in form and substance
reasonably satisfactory to counsel to Purchaser, as shall be legally sufficient
to vest in Purchaser good and marketable title to the Assets (including the
Assumed Contracts);
(ii) all Business Records;
(iii) the Seller Compliance Certificate in accordance with
Sections 9.3(a) and 9.3(b) hereof;
(iv) all required consents from third parties to the Contracts
in accordance with Section 9.3(c) hereof;
(v) the executed opinion of counsel to Seller in accordance
with Section 9.3 hereof;
(vi) executed copies of each of the Ancillary Agreements;
(vii) the Business Financial Statements and Quarterly
Financial Statements all prepared in accordance with GAAP and Section 9.3(h)
hereto;
(viii) a certificate, signed by the Secretary of Seller,
certifying as to the truth and accuracy of, and attaching copies of, Seller's
charter documents and board of directors and shareholder resolutions adopted in
connection with the Transaction;
(x) the assignments of the Assumed Contracts; and
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(xii) all other documents required to be delivered to
Purchaser under the provisions of this Agreement.
ARTICLE X
POST-CLOSING MATTERS
10.1 Further Assurances of Seller. Seller shall, from time to time, at the
request of Purchaser, and without further consideration, execute and deliver
such instruments of transfer, conveyance and assignment in addition to those
delivered pursuant to Article IV hereof, and take such other actions, as may be
reasonably necessary to assign, transfer, convey and vest in Purchaser, and to
put Purchaser in possession of, the Assets, including but not limited to
obtaining any and all required consents of third parties which Seller has not
obtained as of the Closing Date. Seller shall use its reasonable commercial
efforts to obtain for Purchaser any and all consents of third parties, as
required under Section 6.4 which Seller has not obtained as of the Closing Date.
10.2 Further Assurances of Purchaser. Purchaser shall, from time to time
at the request of Seller, and without further consideration, execute and deliver
such instruments of assumption, and take such other action, as may be reasonably
necessary to effectively confirm the assumption by Purchaser of the Assumed
Liabilities.
10.3 Access to Business Records. From and after the Closing Date,
Purchaser shall use ordinary care to maintain the Business Records acquired by
it pursuant hereto and, damage by fire or other casualty or accident excepted,
shall not for a period of six (6) months after the Closing Date destroy or
dispose of any such Business Records unless it shall first have notified Seller
of its intention to do so and shall have afforded Seller an opportunity to take
possession thereof. Seller shall have the right to retain a copy of the Business
Records. Similarly, from and after the Closing Date, Seller shall use ordinary
care to maintain Seller's copy of the Business Records and of any records
relating to the Business not transferred to Purchaser and, damage by fire or
other casualty or accident excepted, shall not for a period of six (6) months
after the Closing Date destroy or dispose of any such records unless it shall
first have notified Purchaser of its intention to do so and shall have afforded
Purchaser an opportunity to take possession thereof. From and after the Closing
Date, each party shall afford the other access to all preclosing Business
Records and other information acquired or retained by it pursuant hereto,
including data processing information, upon reasonable notice during ordinary
business hours for all reasonable business purposes, and each party shall permit
the other party to make copies of any such records and retain possession of such
copies. Each of Purchaser and Seller shall use reasonable care to maintain the
confidentiality of the Business Records in the possession of such party pursuant
to the terms and subject to the conditions set forth in the Confidentiality
Agreement.
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10.4 Tax Liability.
(a) Except as set forth herein, Seller shall pay all Taxes arising
from or relating to the transactions contemplated in this Agreement, except any
sales tax liability attributable to Purchaser (the "Transaction Taxes"). If a
resale certificate, resale purchase exemption certificate, production machinery
and equipment exemption certificate or other certificate or document of
exemption is required to reduce or eliminate the Transaction Taxes, Purchaser
will promptly furnish such certificate or document to Seller or Purchaser will
cooperate with Seller to allow Seller to obtain such reduction or exemption from
Transaction Taxes.
(b) All ad valorem, property (whether real or personal) and similar
taxes ("Property Taxes") with respect to the Assets for any tax period in which
the Closing Date occurs shall be prorated between the Buyer and the Seller, with
the Seller economically responsible for the Property Taxes for the portion of
the tax year prior to and including the Closing Date. Seller shall be
responsible for the preparation and filing of any tax returns or reports related
to the Assets that are required to be filed on or before the Closing Date.
Seller shall be responsible for all taxes imposed on or with respect to the
Assets that are attributable to any whole or partial taxable period ending on or
before the Closing Date. Purchaser shall be responsible for all taxes imposed on
or with respect to the Assets that are attributable to any whole or partial
taxable period ending after the Closing Date. Purchaser, with the cooperation of
Seller, shall be responsible for the preparation and filing of all other tax
returns or reports related to the Assets.
10.5 Restrictive Covenants. Seller and certain Seller personnel agree to
enter into a two-year non-compete agreement with Purchaser with regard to the
Assets and Business purchased by Purchaser in this Transaction as set forth in
Exhibits E through H.
10.6 Just in Time Solutions and Talisma.Seller will obtain from each of
Avolent, Inc. (pursuant to the Software License Agreement between Seller and
Just in Time Solutions, Inc. entered into May 17, 2000) and Talisma, Inc., a
discharge (whether by payment, release, compromise and settlement, or accord and
satisfaction) from any and all unsecured Liabilities of Seller owed to such
creditors. Seller agrees to indemnify, defend and hold harmless the Purchaser
Group (as defined below) from, against, for and in respect of any and all Losses
asserted against, relating to, imposed upon or incurred by Purchaser and/or any
other member of the Purchaser Group by reason of, resulting from, based upon or
arising out of the Seller's unsecured Liabilities provided in this Section 10.6.
ARTICLE XI
TERMINATION OF AGREEMENT
11.1 Termination. This Agreement may be terminated prior to the Closing
(whether before or after approval of this Agreement by Seller's stockholders:
39
(a) by mutual written consent of Purchaser and Seller;
(b) by either Purchaser or Seller if the Closing shall not have
occurred by July 15, 2003, unless: 1) the failure to consummate the transactions
contemplated herein is attributable to a failure on the part of the party
seeking to terminate this Agreement to perform any material obligation required
to be performed by such party at or prior to the Closing or 2) the approval of
this Agreement by Seller's stockholders is delayed by action or inaction of the
SEC provided that: i) Seller shall prepare and cause to be filed with the SEC
the Proxy Statement, within fifteen (15) business days following the execution
of this Agreement; and ii) that Seller use best efforts to comply with all rules
and regulations of the SEC to obtain any and all other approvals necessary to
approve this Agreement and the Acquisition;
(c) by either Purchaser or Seller if a court of competent
jurisdiction or other Governmental Entity shall have issued a final and
nonappealable order, decree or ruling, or shall have taken any other action,
having the effect of permanently restraining, enjoining or otherwise prohibiting
the transactions contemplated herein;
(d) by either Purchaser or Seller if (i) Seller Stockholders'
Meeting (including any adjournments and postponements thereof) shall have been
held and completed and Seller's stockholders shall have taken a final vote on a
proposal to adopt this Agreement, and (ii) this Agreement shall not have been
adopted at such meeting by the Required Seller Stockholder Vote (and shall not
have been adopted at any adjournment or postponement thereof); provided,
however, that a party shall not be permitted to terminate this Agreement
pursuant to this Section 11.1(d) if the failure to obtain such stockholder
approval is attributable to a failure on the part of such party to perform any
material obligation required to be performed by such party at or prior to the
Closing Date;
(e) by Purchaser (at any time prior to the adoption of this
Agreement by the Required Seller Stockholder Vote) if a Seller Triggering Event
shall have occurred;
(f) by Purchaser if (i) any of Seller's representations and
warranties contained in this Agreement shall be inaccurate as of the date of
this Agreement, or shall have become inaccurate as of a date subsequent to the
date of this Agreement (as if made on such subsequent date), such that the
condition set forth in Section 9.3(a) would not be satisfied (it being
understood that, for purposes of determining the accuracy of such
representations and warranties as of the date of this Agreement or at any
subsequent date, (A) all "Material Adverse Effect" qualifications and other
materiality qualifications, and any similar qualifications, contained in such
representations and warranties shall be disregarded and (B) any update of or
modification to Seller's Schedules made or purported to have been made after the
date of this Agreement shall be disregarded), or (ii) any of Seller's covenants
contained in this Agreement shall have been breached such that the condition set
forth in Section 9.3(b) would not be satisfied; provided, however, that if an
inaccuracy in Seller's representations and warranties or a breach of a covenant
by Seller is curable by Seller and Seller is continuing to exercise all
reasonable efforts to cure such
40
inaccuracy or breach, then Purchaser may not terminate this Agreement under this
Section 11.1(f) on account of such inaccuracy or breach;
(g) by Seller if (i) any of Purchaser's representations and
warranties contained in this Agreement shall be inaccurate as of the date of
this Agreement, or shall have become inaccurate as of a date subsequent to the
date of this Agreement (as if made on such subsequent date), such that the
condition set forth in Section 9.2(a) would not be satisfied (it being
understood that, for purposes of determining the accuracy of such
representations and warranties as of the date of this Agreement or at any
subsequent date, (A) all "Material Adverse Effect" qualifications and other
materiality qualifications, and any similar qualifications, contained in such
representations and warranties shall be disregarded and (B) any update of or
modification to the Purchaser Disclosure Schedule made or purported to have been
made after the date of this Agreement shall be disregarded), or (ii) if any of
Purchaser's covenants contained in this Agreement shall have been breached such
that the condition set forth in Section 9.2(b) would not be satisfied; provided,
however, that if an inaccuracy in Purchaser's representations and warranties or
a breach of a covenant by Purchaser is curable by Purchaser and Purchaser is
continuing to exercise all reasonable efforts to cure such inaccuracy or breach,
then Seller may not terminate this Agreement under this Section 11.1(g) on
account of such inaccuracy or breach; or
(h) by Purchaser if, since the date of this Agreement, there shall
have occurred any Material Adverse Effect, or there shall have occurred any
event or circumstance that, in combination with any other events or
circumstances, could reasonably be expected to have a Material Adverse Effect.
11.2 Effect of Termination. In the event of the termination of this
Agreement as provided in Section 11.1, this Agreement shall be of no further
force or effect; provided, however, that (i) this Section 11.2, Section 11.3 and
13.1 shall survive the termination of this Agreement and shall remain in full
force and effect, and (ii) the termination of this Agreement shall not relieve
any party from any liability for any willful breach of any representation,
warranty or covenant contained in this Agreement.
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11.3 Expenses; Termination Fees.
(a) All fees and expenses incurred in connection with this Agreement
and the transactions contemplated by this Agreement shall be paid by the party
incurring such expenses, whether or not the Transaction is consummated.
(b) Termination Fees. Purchaser shall be entitled to $250,000 in
cash from Seller, as an agreed upon termination fee and not as a penalty, in the
event that Seller enters into a legally binding Superior Proposal pursuant to
Section 1.45, payable on demand, immediately after funding of the Superior
Proposal.
(c) In the event that this Agreement is terminated pursuant to a
material breach under the terms herein, then the non-breaching Party shall be
entitled to the Termination Fee.
ARTICLE XII
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
12.1 Survival of Representations and Warranties. (a) The representations
and warranties made by Seller or Purchaser herein, or in any certificate,
schedule or exhibit delivered pursuant hereto, shall in no manner be limited by
any investigation of the subject matter thereof made by or on behalf of either
party or by the waiver or satisfaction of any condition to closing and shall
survive the Closing and continue in full force and until six (6) months from the
Closing Date (the "Expiration Date").
(b) The obligations of Seller to indemnify members of the Purchaser
Group (as defined below) for any Indemnifiable Losses is subject to the
condition that Seller shall have received an Indemnification Claim for all
Indemnifiable Losses for which indemnity is sought on or before the Expiration
Date.
12.2 Indemnification by Seller.
(a) Subject to the terms and conditions of this ARTICLE XII, Seller
agrees to indemnify, defend and hold harmless Purchaser, its shareholders,
officers, directors, employees, attorneys, all subsidiaries and affiliates of
Purchaser, and the respective officers, directors, employees and attorneys of
such entities (all such persons and entities being collectively referred to as
the "Purchaser Group") from, against, for and in respect of any and all Losses
asserted against, relating to, imposed upon or incurred by Purchaser and/or any
other member of the Purchaser Group by reason of, resulting from, based upon or
arising out of any of the following (collectively, "Indemnifiable Losses"):
(i) the breach of this Agreement; or
42
(ii) any Losses arising out of any oral contract to which
Seller is a party and which is not disclosed to
Purchaser in writing on or prior to the date of this
Agreement;
(iii) any Excluded Liability; except to the extent the Losses
attributable to such Excluded Liabilities result from
the action or inaction of Purchaser resulting in a
breach hereunder.
(b) Subject to Section 12.2, Seller shall not be required to
indemnify Purchaser and/or any other member of the Purchaser Group for any
Indemnifiable Losses under Section 12.2(a) until the aggregate amount of all
Indemnifiable Losses under all individual Indemnification Claims shall exceed
$37,500 (the "Seller's Indemnification Floor"); provided, however, that if the
aggregate amount of Indemnifiable Losses in respect of such Indemnification
Claims shall exceed the Seller's Indemnification Floor, Seller shall indemnify
Purchaser for all Indemnifiable Losses in respect of such Indemnification
Claims, subject to the further limitations set forth in this Section 12.
Notwithstanding anything to the contrary, the aggregate amount for which Seller
may be liable under this Agreement, at law or in equity shall not exceed the
total Purchase Price plus the Earnout paid to Seller.
(c) Notwithstanding anything to the contrary, Purchaser's sole and
exclusive remedy against Seller for a breach of this Agreement shall be the
indemnification provisions of this Section 12; provided, however, that nothing
contained in this Section 12 shall limit in any manner any remedy at law or in
equity to which Purchaser or any other member of the Purchaser Group shall be
entitled against Seller as a result of willful fraud or intentional
misrepresentation by Seller.
(d) The obligations of Seller to indemnify members of the Purchaser
Group for any Purchaser Indemnifiable Losses is subject to the condition that
Seller shall have received an indemnification claim for all Purchaser
Indemnifiable Losses for which indemnity is sought on or before the Expiration
Date.
12.3 Escrow Fund. At the Closing, $105,000 shall be deposited with
Wachovia Bank, as escrow agent (the "Escrow Agent"), such deposit to constitute
the Escrow Fund for a period of six (6) months and to be governed by the terms
set forth herein and in the Escrow Agreement attached hereto as Exhibit C.
12.4 Escrow Period; Release From Escrow.
(a) The escrow required hereunder shall terminate on the Expiration
Date; provided, however, that a portion of the Escrow Fund, which, in the
reasonable judgment of Purchaser, subject to the objection of Seller, is
necessary to satisfy any unsatisfied claims specified in any Officer's
Certificate theretofore delivered to the Escrow Agent prior to termination of
the Escrow Period with respect to facts and circumstances existing prior to
expiration of the Escrow Period, shall remain in the Escrow Fund until such
claims have been resolved.
43
(b) Within three (3) business days after the Expiration Date (the
"Release Date"), the Escrow Agent shall release from escrow to Seller the Escrow
Fund less the dollar amount equal to (A) any portion of the Escrow Fund
delivered to Purchaser in accordance with Section 12.5 in satisfaction of
indemnification claims by indemnitee and (B) any portion of the Escrow Fund
subject to delivery to indemnitee in accordance with Section 12.4 with respect
to any pending but unresolved indemnification claims of indemnitee. Any portion
of the Escrow Fund held as a result of clause (B) shall be released to Seller or
released to Purchaser (as appropriate) promptly upon resolution of each specific
indemnification claim involved.
(c) The Escrow Agent is hereby granted the power to effect any
transfer of the Escrow Fund contemplated by this Agreement.
12.5 Claims Upon Escrow Fund. Upon receipt by the Escrow Agent on or
before the Release Date of a certificate signed by any officer of Purchaser (an
"Officer's Certificate") stating that with respect to the indemnification
obligations of the Seller set forth in Section 12.2, Damages exist and
specifying in reasonable detail the individual items of such Damages included in
the amount so stated, the date each such item was paid, or properly accrued or
arose, and the nature of the misrepresentation, breach of warranty, covenant or
claim to which such item is related, the Escrow Agent shall, subject to the
provisions of this Section 12, deliver to Purchaser out of the Escrow Fund, as
promptly as practicable, cash held in the Escrow Fund having a value equal to
such Damages.
12.6 Objections to Claims.
(a) At the time of delivery of any Officer's Certificate to the
Escrow Agent, a duplicate copy of such Officer's Certificate shall be delivered
to Seller and for a period of thirty (30) days after such delivery, the Escrow
Agent shall make no delivery of the Escrow Fund hereof unless the Escrow Agent
shall have received written authorization from Seller to make such delivery.
After the expiration of such thirty (30) day period, the Escrow Agent shall make
delivery of the portion of the Escrow Fund or other property in the Escrow Fund
in accordance with Section 12.5 hereof, provided that no such payment or
delivery may be made if Seller shall object in a written statement to the claim
made in the Officer's Certificate, and such statement shall have been delivered
to the Escrow Agent and Purchaser prior to the expiration of such thirty (30)
day period.
(b) In case Seller shall so object in writing to any claim or claims
by Purchaser made in any Officer's Certificate, Purchaser shall have thirty (30)
days to respond in a written statement to the objection of Seller. If after such
thirty (30) day period there remains a dispute as to any claims, Seller and
Purchaser shall attempt in good faith for sixty (60) days to agree upon the
rights of the respective parties with respect to each of such claims. If Seller
and Purchaser should so agree, a memorandum setting forth such agreement shall
be prepared and signed by both parties and shall be furnished to the Escrow
Agent. The Escrow Agent shall be entitled to
44
rely on any such memorandum and shall distribute the cash from the Escrow Fund
in accordance with the terms thereof.
12.7 Third-Party Claims. In the event Purchaser becomes aware of a
third-party claim which Purchaser believes may result in a demand against the
Escrow Fund, Purchaser shall notify Seller of such claim, and Seller shall be
entitled, at its expense, to participate in any defense of such claim with the
consent of Purchaser which shall not be unreasonably withheld. Purchaser shall
have the right to settle any such claim, with the consent of Seller. In the
event that Seller has consented to any such settlement, Seller shall have no
power or authority to object under Section 12.6 or any other provision of this
Section 12.7 to the amount of any claim by Purchaser against the Escrow Fund for
indemnity with respect to such settlement.
12.8 Indemnification by Purchaser.
(a) Subject to the terms and conditions of this ARTICLE XII,
Purchaser agrees to indemnify, defend and hold harmless Seller, its
shareholders, officers, directors, employees, attorneys, all subsidiaries and
affiliates of Seller, and the respective officers, directors, employees and
attorneys of such entities (all such persons and entities being collectively
referred to as the "Seller Group") from, against, for and in respect of any and
all Losses asserted against, relating to, imposed upon or incurred by Seller
and/or any other member of the Seller Group by reason of, resulting from, based
upon or arising out of any of the following (collectively, "Seller Indemnifiable
Losses"):
(i) the breach of this Agreement, or
(ii) any Assumed Liability, except to the extent the Losses
attributable to such Assumed Liabilities result from the
action or inaction of Seller resulting in a breach
hereunder;
(b) Subject to Section 12.8, Purchaser shall not be required to
indemnify Seller and/or any other member of the Seller Group for any Seller
Indemnifiable Losses under Section 12.9(a) until the aggregate amount of all
Seller Indemnifiable Losses under all individual indemnification claims shall
exceed $37,500 (the "Purchaser's Indemnification Floor"); provided, however,
that if the aggregate amount of Seller Indemnifiable Losses in respect of such
indemnification claims shall exceed the Purchaser's Indemnification Floor,
Purchaser shall indemnify Seller for all Seller Indemnifiable Losses in respect
of such indemnification claims, subject to the further limitations set forth in
this Section 12. Notwithstanding anything to the contrary, the aggregate amount
for which Purchaser may be liable under this Agreement, at law or in equity,
shall not exceed the total Purchase Price plus the Earnout paid to Seller under
this Agreement.
(c) Notwithstanding anything to the contrary, Seller's sole and
exclusive remedy against Purchaser for a breach of this Agreement shall be the
indemnification provisions of
45
this Section 12 and the Termination Fee described in Section 11.3, as
applicable; provided, however, that nothing contained in this Section 12 shall
limit in any manner any remedy at law or in equity to which Seller or any other
member of the Seller Group shall be entitled against Purchaser as a result of
willful fraud or intentional misrepresentation by Purchaser.
(d) The obligations of Purchaser to indemnify members of the Seller
Group for any Seller Indemnifiable Losses is subject to the condition that
Purchaser shall have received an indemnification claim for all Seller
Indemnifiable Losses for which indemnity is sought on or before the Expiration
Date.
GENERAL
13.1 Governing Law; Jurisdiction; Venue. The internal laws of the State of
Delaware shall govern the validity of this Agreement, the construction of its
terms, and the interpretation and enforcement of the rights and duties of the
parties hereto. Any action to enforce, or which arises out of or in any way
relates to, any of the provisions of this Agreement, (or any of the Ancillary
Agreements) (an "Action") shall be brought and prosecuted exclusively in the
United States District Court in the state of the party not instituting the
Action (or, in the event such court does not have jurisdiction, the courts of
the state of the party not instituting the Action located in such district), and
the parties hereto hereby consent to the jurisdiction of such court or courts
and to service of process by registered mail, return receipt requested, or by
any other manner provided by the law of the state of the party not instituting
the Action and the rules of such courts.
13.2 Assignment; Binding upon Successors and Assigns. None of the parties
hereto may assign any of its rights or obligations hereunder without the prior
written consent of the other party, which consent shall not be unreasonably
withheld; provided, however, that Purchaser may assign its rights under this
Agreement (a) to any majority-owned subsidiary of Purchaser, provided that
Purchaser guarantees the obligations of such subsidiary hereunder or (b) to any
successor of Purchaser through any merger or consolidation, or purchase of all
or substantially all of Purchaser's stock or all or substantially all of
Purchaser's assets. This Agreement will be binding upon and inure to the benefit
of the parties hereto and their respective permitted successors and assigns.
13.3 Severability. If any provision of this Agreement, or the application
thereof, shall for any reason and to any extent be held to be invalid or
unenforceable, the remainder of this Agreement and the application of such
provision to other persons or circumstances shall be interpreted so as best to
reasonably effect the intent of the parties hereto. The parties further agree to
replace such invalid or unenforceable provision of this Agreement with a valid
and enforceable provision which will achieve, to the extent possible, the
economic, business and other purposes of the invalid or unenforceable provision.
46
13.4 Entire Agreement. This Agreement, the exhibits and schedules hereto,
the certificates referenced herein, the exhibits thereto, and the
Confidentiality Agreement constitute the entire understanding and agreement of
the parties hereto with respect to the subject matter hereof and thereof and
supersede all prior and contemporaneous agreements or understandings,
inducements or conditions, express or implied, written or oral, between the
parties with respect hereto and thereto including, without limitation, that
certain letter of intent between the parties dated April 14, 2003.
13.5 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same instrument.
13.6 Other Remedies. Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a party shall be deemed cumulative with
and not exclusive of any other remedy conferred hereby or by law on such party,
and the exercise of any one remedy shall not preclude the exercise of any other.
13.7 Amendment and Waivers. Any term or provision of this Agreement may be
amended, and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or prospectively)
only by a writing signed by the party to be bound thereby. The waiver by a party
of any breach hereof for default in payment of any amount due hereunder or
default in the performance hereof shall not be deemed to constitute a waiver of
any other default or any succeeding breach or default.
13.8 Waiver. Each party hereto may, by written notice to the others: (a)
waive any of the conditions to its obligations hereunder or extend the time for
the performance of any of the obligations or actions of the others, (b) waive
any inaccuracies in the representations of the others contained in this
Agreement or in any documents delivered pursuant to this Agreement, (c) waive
compliance with any of the covenants of the others contained in this Agreement
or (d) waive or modify performance of any of the obligations of the others. No
action taken pursuant to this Agreement, including without limitation any
investigation by or on behalf of any party, shall be deemed to constitute a
waiver by the party taking such action of compliance with any representation,
warranty, condition or agreement contained herein. Waiver of the breach of any
one or more provisions of this Agreement shall not be deemed or construed to be
a waiver of other breaches or subsequent breaches of the same provisions.
13.9 Notices. All notices and other communications hereunder will be in
writing and will be deemed given (a) upon receipt if delivered personally (or if
mailed by registered or certified mail), (b) the day after dispatch if sent by
overnight courier, (c) upon dispatch if transmitted by telecopier or other means
of facsimile transmission (and confirmed by a copy delivered in accordance with
clause (a) or (b)), properly addressed to the parties at the following
addresses:
47
Seller: Billserv, Inc.
211 North Loop 1604 East
Suite 200
San Antonio, TX 78232
Attn: Michael Long & Terri Hunter
with a copy to: Loeffler Jonas & Tuggey LLP
755 E. Mulberry
Suite 200
San Antonio, TX 78212
Attn: Tim Tuggey, Esq.
Purchaser: Saro, Inc.
Attention: General Counsel
1900 Emery Street NW
Second Floor
Atlanta, GA 30318
with a copy to: Greenberg Traurig
The Forum
3290 Northside Parkway, N.W.
Suite 400
Atlanta, GA 30327
Attn: Michael Ring, Esq.
Either party may change its address for such communications by giving
notice thereof to the other party in conformity with this Section.
13.10 Construction and Interpretation of Agreement.
(a) This Agreement has been negotiated by the parties hereto and
their respective attorneys, and the language hereof shall not be construed for
or against either party by reason of its having drafted such language.
(b) The titles and headings herein are for reference purposes only
and shall not in any manner limit the construction of this Agreement, which
shall be considered as a whole.
(c) As used in this Agreement, any reference to any state of facts,
event, change or effect being "material" with respect to any entity means a
state of facts that is material to the current condition (financial or
otherwise), properties, assets, liabilities, business or operations of such
entity. Whenever the term "enforceable in accordance with its terms" or like
expression is used in this Agreement, it is understood that excepted therefrom
are any limitations
48
on enforceability under applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application affecting the enforcement of
creditor's rights.
13.11 No Joint Venture. Nothing contained in this Agreement shall be
deemed or construed as creating a joint venture or partnership between any of
the parties hereto. No party is by virtue of this Agreement authorized as an
agent, employee or legal representative of any other party. No party shall have
the power to control the activities and operations of any other and their status
is, and at all times, will continue to be, that of independent contractors with
respect to each other. No party shall have any power or authority to bind or
commit any other. No party shall hold itself out as having any authority or
relationship in contravention of this Section.
13.12 Absence of Third Party Beneficiary Rights. No provisions of this
Agreement are intended, nor shall be interpreted, to provide or create any third
party beneficiary rights or any other rights of any kind in any client,
customer, affiliate, shareholder, partner of any party hereto or any other
person or entity unless specifically provided otherwise herein, and, except as
so provided, all provisions hereof shall be personal solely between the parties
to this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
May 19, 2003.
SARO, INC., BILLSERV, INC.,
a Delaware corporation a Nevada corporation
By: By:
Name: _____________________________ Name: __________________________________
Title: Title:
49
EXHIBIT "A" TO THE ASSET PURCHASE AGREEMENT
ESCROW AGREEMENT
THIS ESCROW AGREEMENT, dated as of May __ , 2003 ("Escrow Agreement"), is
by and between CyberStarts, Inc., a Delaware corporation ("Depositor" or
"CyberStarts"); Billserv, Inc., a Nevada corporation ("Recipient" or
"Billserv"); and WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking
association, as Escrow Agent hereunder ("Escrow Agent").
BACKGROUND
A. CyberStarts and Billserv have entered into an Asset Purchase Agreement
(as amended, the "Underlying Agreement"), dated as of May __, 2003, pursuant to
which Billserv intends to sell and CyberStarts intends to purchase those assets
of Billserv described in the Underlying Agreement. The Underlying Agreement
provides that CyberStarts shall deposit the Escrow Funds (defined below) in a
segregated escrow account to be held by Escrow Agent.
B. Escrow Agent has agreed to accept, hold, and disburse the funds
deposited with it and the earnings thereon in accordance with the terms of this
Escrow Agreement.
C. Pursuant to the Underlying Agreement, CyberStarts and Billserv have
appointed the Representatives (as defined below) to represent them for all
purposes in connection with the funds to be deposited with Escrow Agent and this
Escrow Agreement.
D. In order to establish the escrow of funds and to effect the provisions
of the Underlying Agreement, the parties hereto have entered into this Escrow
Agreement.
STATEMENT OF AGREEMENT
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, for
themselves, their successors and assigns, hereby agree as follows:
1. Definitions. The following terms shall have the following meanings when
used herein:
"CyberStarts Representative" shall mean the person so designated on
Schedule A hereto or any other person designated in a writing signed by
CyberStarts and delivered to Escrow Agent and the Billserv Representative in
accordance with the notice provisions of this Escrow Agreement, to act as its
representative under this Escrow Agreement.
"Escrow Funds" shall mean the funds deposited with Escrow Agent pursuant
to Section 3 of this Agreement, together with any interest and other income
thereon, which funds shall include, without limitation, the initial sum of One
Hundred Five Thousand Dollars ($105,000.00).
"Escrow Period" shall mean the period commencing on the date hereof and
ending on the applicable termination date set forth on Schedule A hereto.
"Joint Written Direction" shall mean a written direction executed by the
Representatives and directing Escrow Agent to disburse all or a portion of the
Escrow Funds or to take or refrain from taking an action pursuant to this Escrow
Agreement.
"Billserv Representative" shall mean the persons so designated on Schedule
A hereto or any other person designated in a writing signed by Billserv and
delivered to Escrow Agent and the CyberStarts Representative in accordance with
the notice provisions of this Escrow Agreement, to act as its representative
under this Escrow Agreement.
"Representatives" shall mean the CyberStarts Representative and the
Billserv Representative.
2. Appointment of and Acceptance by Escrow Agent. CyberStarts and Billserv
hereby appoint Escrow Agent to serve as escrow agent hereunder. Escrow Agent
hereby accepts such appointment and, upon receipt by wire transfer of the Escrow
Funds in accordance with Section 3 below, agrees to hold, invest and disburse
the Escrow Funds in accordance with this Escrow Agreement.
3. Deposit of Escrow Funds. Simultaneously with the execution and delivery
of this Escrow Agreement, CyberStarts will transfer the Escrow Funds in the
amount of One Hundred Five Thousand Dollars ($105,000.00) to Escrow Agent, by
wire transfer of immediately available funds, to the account of the Escrow Agent
referenced on Schedule A hereto.
4. Disbursements of Escrow Funds. Escrow Agent shall disburse Escrow Funds
at any time and from time to time, upon receipt of, and in accordance with, a
Joint Written Direction. Such Joint Written Direction shall contain wiring
instructions or an address to which a check shall be sent. Upon the expiration
of the Escrow Period, Escrow Agent shall distribute, as promptly as practicable,
the Escrow Funds in the manner described on Schedule A, without any further
instruction or direction from the Representatives. All disbursements of funds
from the Escrow Funds shall be subject to the fees and claims of Escrow Agent
and the Indemnified Parties (as defined below) pursuant to Section 10 and
Section 11 below.
5. Suspension of Performance; Disbursement Into Court. If, at any time,
(i) there shall exist any dispute between CyberStarts, Billserv or the
Representatives with respect to the holding or disposition of all or any portion
of the Escrow Funds or any other obligations of Escrow
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Agent hereunder, (ii) Escrow Agent is unable to determine, to Escrow Agent's
sole satisfaction, the proper disposition of all or any portion of the Escrow
Funds or Escrow Agent's proper actions with respect to its obligations
hereunder, or (iii) the Representatives have not within 30 days of the
furnishing by Escrow Agent of a notice of resignation pursuant to Section 7
hereof, appointed a successor Escrow Agent to act hereunder, then Escrow Agent
may, in its sole discretion, take either or both of the following actions:
a. suspend the performance of any of its obligations (including
without limitation any disbursement obligations) under this Escrow
Agreement until such dispute or uncertainty shall be resolved to the sole
satisfaction of Escrow Agent or until a successor Escrow Agent shall have
been appointed (as the case may be).
b. petition (by means of an interpleader action or any other
appropriate method) any court of competent jurisdiction in any venue
convenient to Escrow Agent, for instructions with respect to such dispute
or uncertainty, and to the extent required or permitted by law, pay into
such court, for holding and disposition in accordance with the
instructions of such court, all Escrow Funds, after deduction and payment
to Escrow Agent of all fees and expenses (including court costs and
attorneys' fees) payable to, incurred by, or expected to be incurred by
Escrow Agent in connection with the performance of its duties and the
exercise of its rights hereunder.
Escrow Agent shall have no liability to CyberStarts, Billserv, their respective
shareholders or members or any other person with respect to any such suspension
of performance or disbursement into court, specifically including any liability
or claimed liability that may arise, or be alleged to have arisen, out of or as
a result of any delay in the disbursement of the Escrow Funds or any delay in or
with respect to any other action required or requested of Escrow Agent.
6. Investment of Funds. The Escrow Agent is herein directed and instructed
to initially invest and reinvest the Escrow Funds in the investment indicated on
Schedule A hereto. With the execution of this document, the parties hereto
acknowledge receipt of prospectuses and/or disclosure materials associated with
the investment vehicle, either through means of hardcopy or via access to the
website associated with the investment selected by the parties to this Escrow
Agreement. The parties hereto acknowledge that they have discussed the
investment and are in agreement as to the selected investment. CyberStarts and
Billserv may provide instructions changing the investment of the Escrow Funds
(subject to applicable minimum investment requirements) by the furnishing of a
Joint Written Direction to the Escrow Agent; provided, however, that no
investment or reinvestment may be made except in the following:
a. direct obligations of the United States of America or obligations
the principal of and the interest on which are unconditionally guaranteed
by the United State of America;
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b. certificates of deposit issued by any bank, bank and trust
company, or national banking association (including Escrow Agent and its
affiliates), which certificates of deposit are insured by the Federal
Deposit Insurance Corporation or a similar governmental agency;
c. repurchase agreements with any bank, trust company, or national
banking association (including Escrow Agent and its affiliates); or
d. any institutional money market fund offered by Escrow Agent,
including any institutional money market fund managed by Escrow Agent or
any of its affiliates.
If Escrow Agent has not received a Joint Written Direction at any time
that an investment decision must be made, Escrow Agent shall invest the Escrow
Funds, or such portion thereof as to which no Joint Written Direction has been
received, in investments described in clause (d) above. Each of the foregoing
investments shall be made in the name of Escrow Agent. No investment shall be
made in any instrument or security that has a maturity of greater than six (6)
months. Notwithstanding anything to the contrary contained herein, Escrow Agent
may, without notice to the Representatives, sell or liquidate any of the
foregoing investments at any time if the proceeds thereof are required for any
disbursement of Escrow Funds permitted or required hereunder. All investment
earnings shall become part of the Escrow Funds and investment losses shall be
charged against the Escrow Funds. Escrow Agent shall not be liable or
responsible for loss in the value of any investment made pursuant to this Escrow
Agreement, or for any loss, cost or penalty resulting from any sale or
liquidation of the Escrow Funds. With respect to any Escrow Funds received by
Escrow Agent after ten o'clock, a.m., Charlotte, North Carolina, time, Escrow
Agent shall not be required to invest such funds or to effect any investment
instruction until the next day upon which banks in Charlotte, North Carolina are
open for business.
7. Resignation of Escrow Agent. Escrow Agent may resign and be discharged
from the performance of its duties hereunder at any time by giving ten (10) days
prior written notice to the CyberStarts and Billserv specifying a date when such
resignation shall take effect. Upon any such notice of resignation, the
Representatives jointly shall appoint a successor Escrow Agent hereunder prior
to the effective date of such resignation which shall be a commercial bank,
trust company or other financial institution with a combined capital and surplus
in excess of $10,000,000. The retiring Escrow Agent shall transmit all records
pertaining to the Escrow Funds and shall pay all Escrow Funds to the successor
Escrow Agent, after making copies of such records as the retiring Escrow Agent
deems advisable and after deduction and payment to the retiring Escrow Agent of
all fees and expenses (including court costs and attorneys' fees) payable to,
incurred by, or expected to be incurred by the retiring Escrow Agent in
connection with the performance of its duties and the exercise of its rights
hereunder. After any retiring Escrow Agent's resignation, the provisions of this
Escrow Agreement shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Escrow Agent under this Escrow Agreement. Any
corporation or association into which the Escrow Agent may be merged or
converted or with which it may be consolidated, or any corporation or
association to which all or substantially all of the escrow business of the
Escrow Agent's corporate
-4-
trust line of business may be transferred, shall be the Escrow Agent under this
Escrow Agreement without further act.
8. Liability of Escrow Agent. The Escrow Agent undertakes to perform only
such duties as are expressly set forth herein and no duties shall be implied.
The Escrow Agent shall have no liability under and no duty to inquire as to the
provisions of any agreement other than this Escrow Agreement. The Escrow Agent
shall not be liable for any action taken or omitted by it in good faith except
to the extent that a court of competent jurisdiction determines that the Escrow
Agent's gross negligence or willful misconduct was the primary cause of any loss
to the CyberStarts or Billserv. Escrow Agent's sole responsibility shall be for
the safekeeping and disbursement of the Escrow Funds in accordance with the
terms of this Escrow Agreement. Escrow Agent shall have no implied duties or
obligations and shall not be charged with knowledge or notice of any fact or
circumstance not specifically set forth herein. Escrow Agent may rely upon any
notice, instruction, request or other instrument, not only as to its due
execution, validity and effectiveness, but also as to the truth and accuracy of
any information contained therein, which Escrow Agent shall believe to be
genuine and to have been signed or presented by the person or parties purporting
to sign the same. In no event shall Escrow Agent be liable for incidental,
indirect, special, consequential or punitive damages (including, but not limited
to lost profits), even if the Escrow Agent has been advised of the likelihood of
such loss or damage and regardless of the form of action. Escrow Agent shall not
be obligated to take any legal action or commence any proceeding in connection
with the Escrow Funds, any account in which Escrow Funds are deposited, this
Escrow Agreement or the Underlying Agreement, or to appear in, prosecute or
defend any such legal action or proceeding. Escrow Agent may consult legal
counsel selected by it in the event of any dispute or question as to the
construction of any of the provisions hereof or of any other agreement or of its
duties hereunder, or relating to any dispute involving any party hereto, and
shall incur no liability and shall be fully indemnified from any liability
whatsoever in acting in accordance with the opinion or instruction of such
counsel. CyberStarts and Billserv, jointly and severally, shall promptly pay,
upon demand, the reasonable fees and expenses of any such counsel.
The Escrow Agent is authorized, in its sole discretion, to comply with
orders issued or process entered by any court with respect to the Escrow Funds,
without determination by the Escrow Agent of such court's jurisdiction in the
matter. If any portion of the Escrow Funds is at any time attached, garnished or
levied upon under any court order, or in case the payment, assignment, transfer,
conveyance or delivery of any such property shall be stayed or enjoined by any
court order, or in case any order, judgment or decree shall be made or entered
by any court affecting such property or any part thereof, then and in any such
event, the Escrow Agent is authorized, in its sole discretion, to rely upon and
comply with any such order, writ, judgment or decree which it is advised by
legal counsel selected by it is binding upon it without the need for appeal or
other action; and if the Escrow Agent complies with any such order, writ,
judgment or decree, it shall not be liable to any of the parties hereto or to
any other person or entity by reason of such compliance even though such order,
writ, judgment or decree may be subsequently reversed, modified, annulled, set
aside or vacated.
-5-
9. Indemnification of Escrow Agent. From and at all times after the date
of this Escrow Agreement, CyberStarts and Billserv, jointly and severally,
shall, to the fullest extent permitted by law, defend, indemnify and hold
harmless Escrow Agent and each director, officer, employee, attorney, agent and
affiliate of Escrow Agent (collectively, the "Indemnified Parties") against any
and all actions, claims (whether or not valid), losses, damages, liabilities,
costs and expenses of any kind or nature whatsoever (including without
limitation reasonable attorneys' fees, costs and expenses) incurred by or
asserted against any of the Indemnified Parties from and after the date hereof,
whether direct, indirect or consequential, as a result of or arising from or in
any way relating to any claim, demand, suit, action or proceeding (including any
inquiry or investigation) by any person, including without limitation
CyberStarts or Billserv, whether threatened or initiated, asserting a claim for
any legal or equitable remedy against any person under any statute or
regulation, including, but not limited to, any federal or state securities laws,
or under any common law or equitable cause or otherwise, arising from or in
connection with the negotiation, preparation, execution, performance or failure
of performance of this Escrow Agreement or any transactions contemplated herein,
whether or not any such Indemnified Party is a party to any such action,
proceeding, suit or the target of any such inquiry or investigation; provided,
however, that no Indemnified Party shall have the right to be indemnified
hereunder for any liability finally determined by a court of competent
jurisdiction, subject to no further appeal, to have resulted solely from the
gross negligence or willful misconduct of such Indemnified Party. Each
Indemnified Party shall, in its sole discretion, have the right to select and
employ separate counsel with respect to any action or claim brought or asserted
against it, and the reasonable fees of such counsel shall be paid upon demand by
the CyberStarts and Billserv jointly and severally. The obligations of
CyberStarts and Billserv under this Section 9 shall survive any termination of
this Escrow Agreement and the resignation or removal of Escrow Agent.
The parties agree that neither the payment by CyberStarts or Billserv of
any claim by Escrow Agent for indemnification hereunder nor the disbursement of
any amounts to Escrow Agent from the Escrow Funds in respect of a claim by
Escrow Agent for indemnification shall impair, limit, modify, or affect, as
between CyberStarts and Billserv, the respective rights and obligations of
CyberStarts, on the one hand, and Billserv, on the other hand, under the
Underlying Agreement.
10. Fees and Expenses of Escrow Agent. CyberStarts and Billserv shall
compensate Escrow Agent for its services hereunder in accordance with Schedule A
attached hereto and, in addition, shall reimburse Escrow Agent for all of its
reasonable out-of-pocket expenses, including attorneys' fees, travel expenses,
telephone and facsimile transmission costs, postage (including express mail and
overnight delivery charges), copying charges and the like; provided, that all
such expenses shall not exceed $3,500 except in the event of a dispute or
litigation. The additional provisions and information set forth on Schedule A
are hereby incorporated by this reference, and form a part of this Escrow
Agreement. All of the compensation and reimbursement obligations set forth in
this Section 10 shall be payable by CyberStarts and Billserv, jointly and
severally, upon demand by Escrow Agent. The obligations of CyberStarts and
Billserv under this Section 10 shall
-6-
survive any termination of this Escrow Agreement and the resignation or removal
of Escrow Agent. Escrow Agent is authorized to, and may, disburse to itself from
the Escrow Funds, from time to time, the amount of any compensation and
reimbursement of out-of-pocket expenses due and payable hereunder (including any
amount to which Escrow Agent or any Indemnified Party is entitled to seek
indemnification pursuant to Section 9 hereof). Escrow Agent shall notify the
Representatives of any disbursement from the Escrow Funds to itself or any
Indemnified Party in respect of any compensation or reimbursement hereunder and
shall furnish to the Representatives copies of all related invoices and other
statements. Billserv, CyberStarts and the Representatives hereby grant to Escrow
Agent and the Indemnified Parties a security interest in and lien upon the
Escrow Funds to secure all obligations with respect to the right to offset the
amount of any compensation or reimbursement due any of them hereunder (including
any claim for indemnification pursuant to Section 9 hereof) against the Escrow
Funds. If for any reason funds in the Escrow Funds are insufficient to cover
such compensation and reimbursement, CyberStarts and Billserv shall promptly pay
such amounts to Escrow Agent or any Indemnified Party upon receipt of an
itemized invoice.
11. Representations and Warranties; Legal Opinions. Each of CyberStarts
and Billserv respectively makes the following representations and warranties to
Escrow Agent:
(i) It is duly organized, validly existing, and in good standing
under the laws of the state of its incorporation or organization, and has
full power and authority to execute and deliver this Escrow Agreement and
to perform its obligations hereunder.
(ii) This Escrow Agreement has been duly approved by all necessary
action, including any necessary shareholder or membership approval, has
been executed by its duly authorized officers, and constitutes its valid
and binding agreement enforceable in accordance with its terms.
(iii) The execution, delivery, and performance of this Escrow
Agreement is in accordance with the Underlying Agreement and will not
violate, conflict with, or cause a default under its articles of
incorporation, articles of organization, bylaws, management agreement or
other organizational document, as applicable, any applicable law or
regulation, any court order or administrative ruling or decree to which it
is a party or any of its property is subject, or any agreement, contract,
indenture, or other binding arrangement, including without limitation the
Underlying Agreement, to which it is a party or any of its property is
subject.
(iv) The applicable persons designated on Schedule A hereto have
been duly appointed to act as its representatives hereunder and have full
power and authority to execute and deliver any Joint Written Direction, to
amend, modify or waive any provision of this Escrow Agreement and to take
any and all other actions as the Representatives under this Escrow
Agreement, all without further consent or direction from, or notice to, it
or any other party.
-7-
(v) No party other than the parties hereto has, or shall have, any
lien, claim or security interest in the Escrow Funds or any part thereof.
No financing statement under the Uniform Commercial Code is on file in any
jurisdiction claiming a security interest in or describing (whether
specifically or generally) the Escrow Funds or any part thereof.
(vi) All of its representations and warranties contained herein are
true and complete as of the date hereof and will be true and complete at
the time of any disbursement of the Escrow Funds.
12. Identifying Information. CyberStarts and Billserv acknowledge that a
portion of the identifying information set forth on Schedule A is being
requested by the Escrow Agent in connection with the USA Patriot Act,
Pub.L.107-56 (the "Act"), and CyberStarts and Billserv agree to provide any
additional information requested by the Escrow Agent in connection with the Act
or any similar legislation or regulation to which Escrow Agent is subject, in a
timely manner. The CyberStarts and the Billserv each represent that all
identifying information set forth on Schedule A, including without limitation,
its Taxpayer Identification Number assigned by the Internal Revenue Service or
any other taxing authority, is true and complete on the date hereof and will be
true and complete at the time of any disbursement of the Escrow Funds.
13. Notice. All notices, approvals, consents, requests, and other
communications hereunder shall be in writing and shall be deemed to have been
given when the writing is delivered if given or delivered by hand, overnight
delivery service or facsimile transmitter (with confirmed receipt) to the
address or facsimile number set forth on Schedule A hereto, or to such other
address as each party may designate for itself by like notice, and shall be
deemed to have been given on the date deposited in the mail, if mailed, by
first-class, registered or certified mail, postage prepaid, addressed as set
forth on Schedule A hereto, or to such other address as each party may designate
for itself by like notice.
14. Amendment or Waiver. This Escrow Agreement may be changed, waived,
discharged or terminated only by a writing signed by the Representatives and
Escrow Agent. No delay or omission by any party in exercising any right with
respect hereto shall operate as a waiver. A waiver on any one occasion shall not
be construed as a bar to, or waiver of, any right or remedy on any future
occasion.
15. Severability. To the extent any provision of this Escrow Agreement is
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Escrow Agreement.
-8-
16. Governing Law. This Escrow Agreement shall be construed and
interpreted in accordance with the internal laws of the State of Georgia without
giving effect to the conflict of laws principles thereof.
17. Entire Agreement. This Escrow Agreement constitutes the entire
agreement between the parties relating to the holding, investment and
disbursement of the Escrow Funds and sets forth in their entirety the
obligations and duties of Escrow Agent with respect to the Escrow Funds.
18. Binding Effect. All of the terms of this Escrow Agreement, as amended
from time to time, shall be binding upon, inure to the benefit of and be
enforceable by the respective successors and assigns of CyberStarts, Billserv
and Escrow Agent.
19. Execution in Counterparts. This Escrow Agreement and any Joint Written
Direction may be executed in two or more counterparts, which when so executed
shall constitute one and the same agreement or direction.
20. Termination. Upon the first to occur of the termination of the Escrow
Period, the disbursement of all amounts in the Escrow Funds pursuant to Joint
Written Directions or the disbursement of all amounts in the Escrow Funds into
court pursuant to Section 5 or Section 8 hereof, this Escrow Agreement shall
terminate and Escrow Agent shall have no further obligation or liability
whatsoever with respect to this Escrow Agreement or the Escrow Funds.
21. Dealings. The Escrow Agent and any stockholder, director, officer or
employee of the Escrow Agent may buy, sell, and deal in any of the securities of
the CyberStarts or Billserv and become pecuniarily interested in any transaction
in which the CyberStarts or Billserv may be interested, and contract and lend
money to the CyberStarts or Billserv and otherwise act as fully and freely as
though it were not Escrow Agent under this Agreement. Nothing herein shall
preclude the Escrow Agent from acting in any other capacity for the CyberStarts
or Billserv or for any other entity.
-9-
IN WITNESS WHEREOF, the parties hereto have caused this Escrow Agreement
to be executed under seal as of the date first above written.
CYBERSTARTS, INC. (Depositor)
[CORPORATE SEAL] By: _______________________________
Title: _______________________________
ATTEST:
___________________________________
Secretary
BILLSERV, INC. (Recipient)
[CORPORATE SEAL] By: _______________________________
Title: ______________________________
ATTEST:
___________________________________
Secretary
WACHOVIA BANK, NATIONAL ASSOCIATION
as Escrow Agent
By: _______________________________
Title: ______________________________
-10-
SCHEDULE A
1. Escrow Funds.
Escrow Funds amount: $105,000
Escrow Funds wiring instructions: Wachovia Bank, National Association
ABA# 053000219
Account #5000 0000 16439
ATTN: Corporate Trust - Bond
Administration
Re: CyberStarts/Billserv Escrow Account
#__________
2. Escrow Agent Fees.
Acceptance Fee: $ 500
---------------------------------------
Escrow Fee: $ 2,000
---------------------------------------
Out-of-Pocket Expenses: $
---------------------------------------
[Transactional Costs]: $
---------------------------------------
[Other Fees/Attorney, etc.]: $
---------------------------------------
TOTAL $
---------------------------------------
The Acceptance Fee and the Annual Escrow Fee are payable upon execution of
the escrow documents. In the event the escrow is not funded, the
Acceptance Fee and all related expenses, including attorneys' fees, remain
due and payable, and if paid, will not be refunded. Annual fees cover a
full year in advance, or any part thereof, and thus are not pro-rated in
the year of termination.
The fees quoted in this schedule apply to services ordinarily rendered in
the administration of an Escrow Account and are subject to reasonable
adjustment based on final review of documents, or when the Escrow Agent is
called upon to undertake unusual duties or responsibilities, or as changes
in law, procedures, or the cost of doing business demand. Services in
addition to and not contemplated in this Agreement, including, but not
limited to, document amendments and revisions, non-standard cash and/or
investment transactions, calculations, notices and reports, and legal
fees, will be billed as extraordinary expenses.
Unless otherwise indicated, the above fees relate to the establishment of
one escrow account. Additional sub-accounts governed by the same Escrow
Agreement may incur an additional charge. Transaction costs include
charges for wire transfers, checks, internal transfers and securities
transactions.
3. Taxpayer Identification Numbers.
Depositor: _____________________________________
Recipient: _____________________________________
4. Termination and Disbursement. Unless earlier terminated by the provisions
of the Escrow Agreement, the Escrow Period will terminate six (6) months
after the Closing Date set forth in the Underlying Agreement. Any Escrow
Funds remaining on such date shall be distributed to Billserv in
accordance with Section 4 of the Escrow Agreement.
A-1
SCHEDULE A, continued
5. Investment Instructions
All funds will be invested in the Evergreen Institutional Treasury Money
Market Fund Participant Class (#397).
6. Representatives.
The following person is hereby designated and appointed as CyberStarts
Representative under the Escrow Agreement:
----------------------- ---------------------------------------
Name Specimen signature
The following person is hereby designated and appointed as Billserv
Representative under the Escrow Agreement:
----------------------- ---------------------------------------
Name Specimen signature
7. Representative Information. The following information should be provided
to Escrow Agent separately by each Representative and any future
Representative:
1. Date of Birth
2. Address
3. Mailing Address, if different
4. Social Security Number
A-2
SCHEDULE A, continued
8. Notice Addresses.
Principal Place of Business,
if different
If to CyberStarts at: 1900 Emery Street, NW ____________________________
Second Floor ____________________________
Atlanta, GA 30318 ____________________________
ATTN: General Counsel ____________________________
Facsimile(404) 267-4989
Telephone(404) 267-5178
E-mail: BGoldberg@CyberStarts.Com
If to Billserv at: 211 North Loop 1604 East ____________________________
Suite 200 ____________________________
San Antonio, TX 78232 ____________________________
ATTN: Michael Long ____________________________
Facsimile:_______________________
Telephone:_______________________
E-mail: Michael.Long@Billserv.Com
If to the Escrow
Agent at: Wachovia Bank, National Association, as Escrow Agent
Corporate Trust Bond Administration
__________________________________
__________________________________
ATTENTION:________________________
Facsimile:________________________
A-3
SCHEDULES TO THE ASSET PURCHASE AGREEMENT
List of Schedules Not Included
Schedule Description Reason Not Included
A Accounts Receivable Hard copy only
C Prepaid Expenses Hard copy only
E Unrecorded Liabilities Hard copy only
I Liabilities Not Related to Business Hard copy only
K Subsidiaries of Seller Hard copy only
L Unusable Tangible Assets Hard copy only
M Description of Leased Real Property Hard copy only
N Permits Related to the Business Hard copy only
O Encumbered Intellectual Property Hard copy only
P Work-For-Hire Agreements Hard copy only
V Seller's Unresolved Claims Hard copy only
W Seller's Insurance Hard copy only
Z Seller's Warranties to Customers Hard copy only
AA Tax Return Extensions Hard copy only
CC Overdue Trade Payables Hard copy only
DD Contracts Not Assignable by Seller Hard copy only
EE Consents for Assignment Hard copy only
GG Employee Claims Hard copy only
JJ Does Not Exist N/A
Schedule B
Assumed Contracts
(Sections 1.7 and 4.13)
1. Vendor/Suppliers/Partners
Contract: Description:
ACI Direct Delivery Product
eShare CRM - foundation for eServ
Connect/eCare/eClient
Talisma CRM not used
CheckFree I-Solutions EBPP engine
CheckFree Corporation Biller Service Provider
SpeedScan Document Storage/Retrieval Product
IBM Passport IBM Software support for DB2
Network Associates PGP eBusiness Server Security Software - maintenance
Southwestern Bell Services Local Loop Services
Southwestern Bell Maintenance PBX
Worldcom T1s for Internet support
Southern Plains Power UPS
Timewarner Telecom Internet and local loop Support
Safesite, Inc. Offsite Secure Storage for backup tapes
Digital Defense Security Services
Powerware Generator Maintenance
SBC Datacom Disaster Recovery Cold Site
Sungard Disaster Recovery Services Disaster Recovery
IBM ValuePlan Lease Agreement IBM X440 and DB2 agreement
Metavante Corporation Bill Distribution
Paytrust Bill Distribution
Cyberbills Bill Distribution
MasterCard RPPS Bill Distribution
Paymentech Payment Services
ACH Commerce Payment Services
Merchant Commerce (Innuity) Payment Services
BankOne Treasury Management Payment/Banking Services
ICS Security Monitoring Building Security
DSI Escrow Software Escrow Services
Network Appliance Hardware Maintenance
GE Capital Copier/Fax Leases
De Lage Landen Copier Leases
Third Party Software-see Schedule R
2. Clients
21st Century Insurance- See Schedule T
Bank One
AFSA Data Corp.
Alameda Power & Telecom
Allegheny- See Schedule T
AT&T
Avista-See Schedule T
Call Vision
Central Maine Power
CheckFree
Chevron
Chevron Canada
Church Matters
City of Naperville
City of San Diego
Clark PUD
Connecticut Gas
Dow Jones (Barron's, WSJ)
Entex-See Schedule T
Intermountain Gas- See Schedule T
Las Vegas Valley Water District
Metavante/Paytrust
Montana Power Company/Northwestern Energy
NCAA
Personix
Puget
Sallie Mae Solutions
San Antonio Express-News
San Antonio Water System
San Diego Union Tribune
SFPUC-See Schedule T
Sierra Telephone
Southern Connecticut Gas
Time Warner
Unitil
Waste Management (eCare only)
3. Shareholder Agreement, Billserv Australia PTY Limited
Schedule D
Tangible Assets
Sections 1.46 and 4.6
EQUIPMENT LIST
Included Assets
-------------------------------------------------------------------------------------------------------------
SERVER NAME SERVER TYPE Serial Number or Service Tag Number
-------------------------------------------------------------------------------------------------------------
CLAYFACE DELL DIMENSION 3IDQG
-------------------------------------------------------------------------------------------------------------
DAGGER IBM NETIFINITY 4 23H1895
-------------------------------------------------------------------------------------------------------------
PHOENIX IBM eSERVER x 78P44567
-------------------------------------------------------------------------------------------------------------
ROBIN IBM NETIFINITY 7 23T3741
-------------------------------------------------------------------------------------------------------------
VISION DELL DIMENSION 2ZRLA
-------------------------------------------------------------------------------------------------------------
CALYPSO DELL OPTIPLEX 456S10B
-------------------------------------------------------------------------------------------------------------
DIRECTDELIVERY2 IBM NETFINITY 4 23H2136
-------------------------------------------------------------------------------------------------------------
MAGNETO IBM NETFINITY 5 23X3504
-------------------------------------------------------------------------------------------------------------
HAWKMAN IBM NETFINITY 4 23H2206
-------------------------------------------------------------------------------------------------------------
PENGUIN DELL OPTIPLEX 42T8K01
-------------------------------------------------------------------------------------------------------------
SABRETOOTH IBM NETFINITY 4 23A4596
-------------------------------------------------------------------------------------------------------------
SPIDERMAN IBM NETFINITY 7 23C1747
-------------------------------------------------------------------------------------------------------------
VINDICATOR DELL OPTIPLEX 7XBL20B
-------------------------------------------------------------------------------------------------------------
ELECTRA DELL DIMENSION 8RDMI
-------------------------------------------------------------------------------------------------------------
JOKER1 IBM NETFINITY 5 23X3470
-------------------------------------------------------------------------------------------------------------
PYRO DELL DIMENSION FHUJ9
-------------------------------------------------------------------------------------------------------------
Schedule D
Tangible Assets
Sections 1.46 and 4.6
EQUIPMENT LIST
Included Assets
-------------------------------------------------------------------------------------------------------------
WENDIGO IBM NETFINITY 7 23F0588
-------------------------------------------------------------------------------------------------------------
ATLAS IBM MPRO 23BCT39
-------------------------------------------------------------------------------------------------------------
BATGIRL IBM NETFINITY 4 23A3970
-------------------------------------------------------------------------------------------------------------
SERVER NAME SERVER TYPE Serial Number or Service Tag Number
-------------------------------------------------------------------------------------------------------------
BEAST IBM NETFINITY 4 23A2158
-------------------------------------------------------------------------------------------------------------
BISHOP IBM NETFINITY 5 23F6952
-------------------------------------------------------------------------------------------------------------
BRAINIAC IBM NETFINITY 4 23H3776
-------------------------------------------------------------------------------------------------------------
BULLSEYE IBM NETFINITY 4 23K6088
-------------------------------------------------------------------------------------------------------------
CABLE IBM MPRO 23AAA21
-------------------------------------------------------------------------------------------------------------
CATWONMAN IBM NETFINITY 5 23D6140
-------------------------------------------------------------------------------------------------------------
CLOAK IBM NETFINITY 4 23H2431
-------------------------------------------------------------------------------------------------------------
CYCLOPS DELL OPTIPLEX 1NNFJ01
-------------------------------------------------------------------------------------------------------------
DAFFY IBM NETFINITY 4 23H2419
-------------------------------------------------------------------------------------------------------------
DAREDEVIL IBM NETFINITY 4 23K7020
-------------------------------------------------------------------------------------------------------------
DEADPOOL DELL OPTIPLEX 8XGM501
-------------------------------------------------------------------------------------------------------------
DIRECTDELIVERY IBM eSERVER x 23H8796
-------------------------------------------------------------------------------------------------------------
Schedule D
Tangible Assets
Sections 1.46 and 4.6
EQUIPMENT LIST
Included Assets
-------------------------------------------------------------------------------------------------------------
GOLIATH IBM X440 78-R3526
-------------------------------------------------------------------------------------------------------------
GRENDEL IBM NETFINITY 4 23H2206
-------------------------------------------------------------------------------------------------------------
HAWKEYE IBM NETFINITY 7 23T4577
-------------------------------------------------------------------------------------------------------------
IRONMAN IBM NETFINITY 5 552250K
-------------------------------------------------------------------------------------------------------------
LEX IBM NETFINITY 5 23A0418
-------------------------------------------------------------------------------------------------------------
LOBO IBM NETFINITY 7 23T4916
-------------------------------------------------------------------------------------------------------------
MEPHISTO DELL DIMENSION 1C42T
-------------------------------------------------------------------------------------------------------------
SERVER NAME SERVER TYPE Serial Number or Service Tag Number
-------------------------------------------------------------------------------------------------------------
MYSTERIO IBM NETFINITY 4 23Y1866
-------------------------------------------------------------------------------------------------------------
RIDDLER IBM NETFINITY 5 23GY969
-------------------------------------------------------------------------------------------------------------
ROGUE IBM NETFINITY 5 23GX871
-------------------------------------------------------------------------------------------------------------
SCARECROW IBM NETFINITY 5 552408H
-------------------------------------------------------------------------------------------------------------
SENTRY DELL OPTIPLEX 9RHMB01
-------------------------------------------------------------------------------------------------------------
SPAWN IBM eSERVER X 23H8736
-------------------------------------------------------------------------------------------------------------
SUPERMAN IBM NETFINITY 7 23A0908
-------------------------------------------------------------------------------------------------------------
THING IBM NETFINITY 7 23T4900
-------------------------------------------------------------------------------------------------------------
TOAD DELL OPTIPLEX 9BV4M01
-------------------------------------------------------------------------------------------------------------
Schedule D
Tangible Assets
Sections 1.46 and 4.6
EQUIPMENT LIST
Included Assets
---------------------------------------------------------------------
WOLVERINE IBM eSERVER X 78P4574
---------------------------------------------------------------------
CARNAGE DELL OPTIPLEX 9XGM501
---------------------------------------------------------------------
GALACTUS IBM eSERVER x 23H1452
---------------------------------------------------------------------
GAMBIT DELL DIMENSION FIDFL
---------------------------------------------------------------------
GLEEK IBM NETFINITY 5 552407A
---------------------------------------------------------------------
NOMAD DELL OPTIPLEX 13JQ501
---------------------------------------------------------------------
SILVERSURFER DELL DIMENSION 4JH8U
---------------------------------------------------------------------
SIREN DELL DIMENSION 9JL5U
---------------------------------------------------------------------
STRYFE DELL OPTIPLEX CXGM501
---------------------------------------------------------------------
TUNDRA DELL DIMENSION 3IDQI
---------------------------------------------------------------------
VENOM DELL DIMENSION 6WP2401
---------------------------------------------------------------------
NAMOR IBM MPRO 23AAA18
---------------------------------------------------------------------
CICSO ROUTER* CICSO - PAYMENT TECH
SPEEDERS FAX MODEM* ROBOTICS - PAYMENT TECH
CICSO ROUTER* CICSO - WASTE MGMT.
ACCESS POINT 450 DSU T1* LCENT - SPECTRUM
ROBOTICS MODEM (DIAL BACKUP)* ROBOTICES - SPECTRUM
*Please note these assets are owned by Billserv's clients
Schedule D
Tangible Assets
Sections 1.46 and 4.6
EQUIPMENT LIST
Included Assets
Networking LAN/WAN Assets:
14 Network Racks IBM
7 Network Rack Ortronics
Tape System Qualstar
Datacenter:
2 ten-ton A/C Units Liebert
UPS Powerware
Generator Kohler Power Systems
Fire Detection & Suppression Fike
Fire Alarm Equipment Fike
Command Center Infra-Structures, Inc.
4 File cabinets
PC'S AND LAPTOPS
Item# PC Name Field Tag Number Location Jack ID Number
----- ------------- ---------- -------- ------- ------
70 S-Juliar w7rgh help desk room 4056
123 QA_MAC ym028dakjav 2a076 4088
56 Dell-2 spare parts dl4130b helpdesk room 4145
146 M_HYNES d7c920b 2b031 4146
27 OUTSIDER2 12vux (by Shad) 4037
139 B_Tiller 2b013 4151
52 Dell spare parts 73m4701 storage room 4152
79 T_LYNCH 36ui0 2a006 4006
80 J-GONZALES 20xci0b 2a007 4007
78 A_GUIDRY 9JL6I 2a005 4008
86 J_PULLIN e8uqu 2a014 4010
88 F_ZENG 23dmmm6 2a017 4011
87 K_OBRIEN 2c0720b 2a016 4013
17 M_HARPER cqp3k help desk room 4143
Schedule D
Tangible Assets
Sections 1.46 and 4.6
EQUIPMENT LIST
Included Assets
36 J_BOYSON gv8g601 help desk room 4144
90 P_TEPICHIN 23aaaf8 2a020 4014
92 M-KUSKE di5w00b 2a022 4016
66 C1K6210H1011 fk005ag help desk room 4045
38 R_ROHRBOUGH2 fk008ph help desk room 4046
40 B_Waggner-Laptop 6an5a help desk room 4055
93 T_WILLIAMS 9lrn701 2a023 4017
95 R_ANDREWS e8uqt 2a025 4018
94 S-GERICK - LapTop fk3tq01 2a024 4019
97 M-JOCSON 8rdnd 2a027 4020
59 MSMQ Test j16l20b (By Joe's desk) 4021
60 MSMQ Test Two 50t0001 (by Joe's desk) 4022
98 G_CONRAD 9hh7c01 (Xin using it) 2a028 4023
100 L_LANE ejuwx 2a030 4024
101 P_BRYANT 8rdpn 2a031 4025
102 S-HEATH b6h8y 2a032 4026
132 P_WALTHER 30t001 2b004 4027
130 J-HERNANDEZ 156s10b 2b002 4028
129 L_THORNTON cdi0b 2b001 4029
131 E_OLIVO hkm8501 2b003 4030
133 R_OGAN h23jq501 2b005 4031
136 ninaharwood - laptop 1fh8r01 2b008 4032
134 MICKEY - laptop 9wkr701 2b006 4033
96 J_RODRIGUEZ - laptop 6lbsc01 2a026 4035
99 A_PEREZ FKIJA 2a029 4036
10 J_Knippa 8rdn8 help desk room 4039
33 C1K6216H1007 fk004lt help desk room 4041
13 C1K5703H1025 FK0054W help desk room 4042
19 C1K5705H1018 fk0054n help desk room 4044
35 C1K6211H1020 fk004pv help desk room 4047
7 C1K6041H1002 fk008lu help desk room 4048
34 C1K6212H1016 FK0090Y helpdesk room 4049
75 IBM Thinkpad - laptop 14xfs help desk room 4050
31 E_KIRBY - laptop 689ih Help Desk room 4051
71 A_Moquin - laptop 7d39701 help desk room 4052
74 D_Olwert - laptop 11mpm help desk room 4053
3 M-FRY2 - laptop 76ecx help desk room 4054
69 Training Room Laptop w8mdv help desk room 4057
Schedule D
Tangible Assets
Sections 1.46 and 4.6
EQUIPMENT LIST
Included Assets
8 MattFrye 3ck3401 help desk room 4059
72 R-Whitten2 - laptop 8ilmc help desk room 4061
28 J_CLINTON fidfi help desk 4062
21 ESTUDIO-SPARE qth6001 help desk room 4063
4 SMAC-2 - laptop w7b86 help desk room 4064
5 SMAC3 - laptop w1vbh help desk room 4065
6 SMAC4 - laptop w1yjq help desk room 4066
138 M-Millard 7jhy001 2b012 4067
49 Mark Three v58nc war room 4069
128 SabrinaArausa 3idnn 2a078 4083
127 ChrisRoss fmf820b 2a077 4084
122 SarahBernier fi5w00b 2a076 4085
120 SalmaMartinez 3lef3 2a075 4086
119 JackConrad 3sfb40b 2a074 4087
125 98-Outsider hp077 2a076 4089
121 QA_NT-OUTSIDER 3idnl 2a076 4090
124 QATEST3 36v0n 2a076 4091
126 QATEST4 8rdnt 2a076 4092
111 K_Wogulis 9idjz 2a061 4100
110 EdAskLand 8rdp9 2a059 4101
25 ED-LAP f6e5b (Ed's office) 4102
108 KristinJay 325w00b 2a055 4103
106 SandraOrtiz hi6c20b 2a052 4104
18 F_HERNANDEZ dwx7301 command center 4107
32 H_RABAGO fwx7301 command center 4108
24 R_COLE 2cw7301 command center 4109
68 IBMLAP1 (Sniffer) 14xdr command center 4110
20 N-MORALES -latop wutjh storage room 4111
58 Qa_Conf - laptop vz89u storage room 4113
11 M-LATHAM w8m0u storage room 4116
22 E-DOUGLAS 57rxs storage room 4117
2 J-KENNEDY fhujb storage room 4118
61 R_Wilson c93ej storage room 4119
43 J-STANDIFIRD 23dmmr0 storage room 4120
16 A_Rodriguez 1c42j storage room 4121
64 T_Keith 4jh6e storage room 4122
65 T_Coleman ep3es storage room 4123
30 K_Robinson 4sfb40b storage room 4124
Schedule D
Tangible Assets
Sections 1.46 and 4.6
EQUIPMENT LIST
Included Assets
76 V_Meeder Old Pc 7hx7301 storage room 4125
45 New Dell 1cw7301 storage room 4126
46 Dell Demo 9t8m00b storage room 4127
57 Dell 73m4701 storage room 4128
48 Dell J15w00b storage room 4129
39 Dell 915w00b storage room 4130
50 Gateway (Old) 1042b storage room 4131
51 IBM spare parts 23dmmh3 storage room 4132
42 B_Zahl - laptop w7rg1 storage room 4133
103 A_Learner (SR-1) 10t0001 2a033 4134
104 SR-4 equ98 2a033 4135
55 Black Flat Monitor storage room 4136
9 MikeHynes - laptop h42pv (Mike's office) 4147
83 C1K6040H1013 fk008rk 2a011 4001
82 C1K60421A026 FK009K8 2a010 4002
84 C1K6214H1014 fk008ga 2a012 4003
85 C1K62181A025 FK008ZY 2a013 4004
81 J_Smith3 fk0d8ch 2a008 4005
89 A_CRAMER 3IDNP 2a018 4012
91 K_FOX 6u0wk 2a021 4015
150 B_Baran 22dfj 2b037 4080
26 R_KAUFTHEIL -laptop zqvbf storage room 4114
67 M-Jisha2 w8iju storage room 4115
47 R_Linder - Laptop 76epy (Jose's home)
63 train-2 gt0s501 help desk room 4058
62 train-3 879j101 help desk room 4060
Printers/Scanners
Item# Brand Type Model IOS or IP Serial Location Number
----- ----- ---- ----- --------- ------ -------- ------
3 HP LaserJet 4000 USMB290169 by Ruth 5006
4 HP LaserJet 4050 172.16.2.36 USBD026177 5005
5 HP LaserJet 4050 172.16.2.28 USBB372455 5003
6 HP LaserJet 8100 172.16.2.25 USBG025620 5008
7 HP ColorJet 2000C 172.16.2.22 5009
8 HP LaserJet 4000 172.16.2.23 USEF234245 5002
Schedule D
Tangible Assets
Sections 1.46 and 4.6
EQUIPMENT LIST
Included Assets
9 HP LaserJet 4000 172.16.2.29 USQX008936 5001
11 HP LaserJet 4000 HPLJP001 helpdesk room 5024
12 HP LaserJet 4000 HPLJP002 helpdesk room 5025
13 HP LaserJet 4000 HPLJP003 helpdesk room 5026
14 Hp LaserJet 1100 USGN356254 Mike's office 5030
15 HP ScanJet ADF SG9AA17083 by Ruth 5007
19 HP LaserJet 2100 USGZ180669 storage room 5017
20 HP LaserJet 3100 USBC077411 storage room 5018
21 HP LaserJet 3100 USDL002805 storage room 5019
22 HP LaserJet 3100 USBC079279 storage room 5020
23 HP LaserJet 3100 USDL002820 storage room 5021
24 HP LaserJet 3100 USBC065952 storage room 5022
27 HP LaserJet 3150 USFL002333 helpdesk room 5028
31 Epson CP5E013670 by QA 5033
32 HP LaserJet 3100 USBC070191 Melissa's office5035
Billserv Australia Servers:
S-CHEWBACCA IBM eSERVER x 23H8346
S-DARTHVADER IBM eSERVER x 23H8381
S-DEATHSTAR IBM eSERVER x 23H8497
SKYWALKER IBM eSERVER x 23H8975
S-YODA IBM eSERVER x 23H8491
OBWAN(was Angel) IBM eSERVER x 23H8537
SERVER NAME SERVER TYPE Serial number or Service Tag
----------- ----------- ----------------------------
ADVANCED IBM PC300GL 23AAAG9
BATMAN IBM NETFINITY 5 23A0851
BILLSER DELL OPTIPLEX M200005
FLASH DELL DEMENSION UD5YG
GUARDIAN DELL DEMENSION FGBW60
Schedule D
Tangible Assets
Sections 1.46 and 4.6
EQUIPMENT LIST
Included Assets
HITMAN DELL DEMENSION 1C42W
MAT DELL DEMENSION IGVV2
NIGHTCRAWLER DELL OPTIPLEX FMNFJ01
ODIN IBM NETFINITY 7 23T4890
PUNISHER IBM NETFINITY 7 23T4373
STORM IBM MPRO 238CT24
TWOFACE IBM MPRO 23AAA23
COLOSSUS NET APPLIANCE F760 21183
HULK NET APPLIANCE F760 21183
LOKI IBM NETFINITY 5 23X3475
NETWORK EQUIPMENT MODEL VENDOR
----------------- ----- ------
PIX FIREWALL 515 CISCO
PIX FIREWALL 515 CISCO
EDGE ROUTER - TW 7140 CISCO
EDGE ROUTER - UUNET 7140 CISCO
4000 SWITCH (WIRING CLOSET) 4003 CISCO
4000 SWITCH (WIRING CLOSET) 4003 CISCO
4000 SWITCH (CORE NETWORK) 4006 CISCO
4000 SWITCH (CORE NETWORK) 4006 CISCO
2950 SWITHC (LOAD BALANCERS) 2950 CISCO
2950 SWITHC (LOAD BALANCERS) 2950 CISCO
F5 DNS 3DNS F5
F5 DNS 3DNS F5
F5 LOAD BALANCER/SWITCH BIG-IP F5
F5 LOAD BALANCER/SWITCH BIG-IP F5
LANROVER E/PLUS DIALUP 56KP SHIVA
Schedule D
Tangible Assets
Sections 1.46 and 4.6
EQUIPMENT LIST
Included Assets
ADTRAN DS3 LOCAL CONNECT POINT DS3 SBC
ADTRAN UUNET DALLAS T1 SBC
ADTRAN UUNET HOUSTON T1 SBC
ADTRAN TIME WARNER DS3 SBC
ADTRAN (SPARE) T1 SBC
SOLO SELECT DSU T1 T1 SOLO
1 Telephone Switch Option 21 Nortel
Telephones & Speaker Phones
Item# Name Model# Serial Number Location Jack ID Number CB
----- ---- ------ ------------- -------- ------- ------ --
1 ShelbyGoolsby M2008 NT9K16AC-03 2a003 6001 X
2 Reception Area M2616 NNTM29324T7T 2a054 6131 X
3 Copy Room M2008 NT2K08GH-03 2b054 6126 X
4 Board Room M2008 NT2K08GH-03 2a001 6132 X
5 Board Room Sound Station 12258527 2a001 6133 X
6 A_GUIDRY M2008 NNTM6092D12C 2a005 6002 X
7 T_LYNCH M2008 NNTM6095DDFC 2a006 6003 X
8 J-GONZALES M2008 NNTM60A1938C 2a007 6004 X
9 J_Smith3 (Jarrent) M2008 NT2K08GH-03 2a008 6005 X
10 Empty Desk M2008 NT9K08AD-03 2a009 6006 X
11 C1K60421A026 M2008 NT2K08GH-03 2a010 6007 X
12 C1K6040H1013 M2008 NT2K08GH-03 2a011 6008 X
13 C1K6214H1014 M2008 NT2K08GH-03 2a012 6009 X
14 C1K62181A025 M2008 NNTM60B444BC 2a013 6010 X
15 J_PULLIN M2008 NNTM609628C7 2a014 6011 X
16 F_ZENG M2008 NNTM60B44574 2a016 6012 X
17 Empty Desk M2008 NNTM60A19355 2a017 6014 X
18 K_OBRIEN M2008 NNTM60955853 2a018 6015 X
19 A_CRAMER M2008 NNTM60B444BE 2a019 6013 X
20 P_TEPICHIN M2008 NNTM60B444D0 2a020 6016 X
21 K_FOX M2008 NNTM60A19354 2a021 6018 X
22 M-KUSKE M2008 NNTM60962803 2a022 6019 X
23 T_WILLIAMS M2008 NNTM60A1932C 2a023 6017 X
24 S-GERICK - LapTop M2008 NNTM60B44401 2a024 6020 X
25 R_ANDREWS M2008 NNTM609628C5 2a025 6022 X
26 J_RODRIGUEZ - laptop M2008 NNTM60962804 2a026 6021 X
27 M-JOCSON M2008 NNTM60950E11 2a027 6023 X
28 G_Conrad (Xin) M2008 NNTM6095DDDB 2a028 6026 X
Schedule D
Tangible Assets
Sections 1.46 and 4.6
EQUIPMENT LIST
Included Assets
29 A_PEREZ M2008 NNTM6095DE0E 2a029 6024 X
30 L_LANE M2008 NNTM609628BC 2a030 6027 X
31 P_BRYANT M2008 NNTM60A1934E 2a031 6025 X
32 S-HEATH M2008 NNTM60A1937F 2a032 6028 X
33 A_Learner (SR-1) M2008 NNTM60962807 2a033 6029 X
34 N-Ducote M2008 NNTM60934D5F 2a037 6134 X
35 N-Ducote Sound Station 12225083 2s042 6135 X
36 SandraOrtiz M2008 NT9K08AD-03 2a052 6125 X
37 Empty Desk M2008 NT9K16A3-03 2a053 6124 X
38 Diana Curry (old desk) M2616 NNTM60B5BC56 2a056 6129 X
39 Eric Douglas M2008 NNTM60A19FB1 2a054 6123 X
40 KristinJay M2008 NNTM609628C2 2a055 6122 X
41 K_KELLER M2008 NNTM6093461C 2a058 6130 X
42 Ed AskLand M2008 NNTM60A19F2E 2a059 2121 X
43 Ed AskLand Sound Station 122252223 2a059 6149 X
44 K_Wogulis M2008 NNTM6095DDD3 2a061 6120 X
45 implementations M2008 NNTM6096628C8 2a062 6119 X
46 implementations M2008 NT9K08AD-03 2a063 6118 X
47 implementations M2008 NNTM6095DEDA 2a064 6117 X
48 P_LONG M2008 NT9K08AD-03 2a065 6116 X
49 LeslieOttmers M2008 NNTM29326087 2a066 6142 X
50 JoanieLeihsing M2008 NT9K08AD03 2a067 6115 X
51 Empty Desk M2008 NNTM609628B8 2a068 6114 X
52 CurtisReese M2008 NNTM609628C0 2a069 6113 X
53 KayGerfers M2008 NT9K08AD-03 2a070 6112 X
54 PattySuplick M2008 NNTM6095DDE2 2a071 6111 X
55 QA Conference Room Sound Station 12434206 2a045 6148 X
56 S-Gerick M2008 NNTM60B444C2 2a073 6110 X
57 JackConrad M2008 NT9K08AD-03 2a074 6109 X
58 SalmaMartinez M2008 NNTM6095DE03 2a075 6108 X
59 ChrisRoss M2008 NNTM60A19399 2a077 6107 X
60 SabrinaArausa M2008 NNTM6095DDF9 2a078 6106 X
61 L_THORNTON M2008 NNTM6095DDAA 2b001 6032 X
62 J-HERNANDEZ M2008 NNTM609628C9 2b002 6030 X
63 E_OLIVO M2008 NNTM29326082 2b003 6033 X
64 P_WALTHER M2008 NNTM29324NRJ 2b004 6031 X
65 R_OGAN M2008 NNTM60962774 2b005 6035 X
66 MICKEY - laptop M2008 NNTM6095000B 2b006 6036 X
67 M_JISHA M2008 NNTM609628C3 2b007 6034 X
68 ninaharwood - laptop M2008 NNTM60B444BF 2b008 6037 X
Schedule D
Tangible Assets
Sections 1.46 and 4.6
EQUIPMENT LIST
Included Assets
69 Melissa Askland M2008 NNTM6095DE0F 2B010 6146 X
70 Melissa Askland Sound Station 12250756 2B009 6147 X
73 B_Tiller Sound Station 12457554 2b063 6137 X
74 Bill Tiller M2616 NNTM609346A1 2b013 6088 X
85 GuyGould M2008 NNTM60962806 2b029 6128 X
86 M_HYNES M2008 serial phone 2b031 6158 X
87 KimMcCoy M2008 NNTM2932608A 2b032 6105 X
88 Empty Desk M2008 NNTM60962805 2B033 6104 X
89 stevewilson -laptop M2008 NNTM6095DDDD 2b039 6103 X
90 R_GIL M2008 NNTM60B443DF 2b044 6102 X
91 Finance M2008 NT9K08AD-03 2b045 6101 X
92 RuthTorres M2008 NNTM6093461D 2b047 6100 X
93 FINANCE M2007 NNTM60B443B 2b048 6099 X
94 S_MULLIGAN or L_Turner M2008 NNTM60B2BC7F 2b050 6098 X
95 ArleenWatson M2008 NNTM60G0RBBH 2b051 6097 X
96 Empty Desk Sound Station 12300643 2b056 6092 X
97 Empty Desk M2008 NNTM6095DDF8 2b056 6091 X
98 Empty Desk M2616 NNTM60934D67 2b059 6089 X
99 Empty Desk M2616 NNTM60934D70 2b060 6090 X
100 implementations M2008 NNTM6095DEDA 2b064 6117 X
101 Empty Desk M2008 NNTM609628B8 2B068 6114 X
102 Command Center/Computer Rm M2008 NNTM6095DE06 6150 X
103 Command Center/Computer Rm M2008 NNTM293260C0 6151 X
104 Command Center/Computer Rm AT&T 900MH T010900019515201 Cordless 6152 X
105 Command Center/Switch Room M2008 NNTM6095DDE0 6153 X
106 Command Center/Switch Room M2250 NNTM6094770C 6154 X
107 Command Center/Switch Room M2008 NNTM293240E1 6155 X
108 Command Center/Switch Room M2008 NNTM29326088 6156 X
109 IT Conference Room Sound Station 12300634 2a036 6157 X
Third-Party Software Licenses
Included Assets
Third-Party Software Status QTY Total
-------------------- ------ --- -----
Database 2 EE included 14 14
i-Solutions included 1 1
Avolent OFX Server (see schedule L) included 1 1
Schedule D
Tangible Assets
Sections 1.46 and 4.6
EQUIPMENT LIST
Included Assets
Windows 2000 AS OS included 20 20
Windows 2000 Pro OS included 91 91
Windows 2000 Server OS included 8 8
Windows 98 OS included 2 2
Windows NT OS included 31 31
SQL Server Windows NT included 7 7
PGP Desktop included 71 71
PGP eBusiness Server included 4 4
Delphi 5 Enterprise included 3 3
Java/ASP/JSP included 20 20
Visual Basic included 4 4
Adobe Acrobat included 5 5
Adobe Reader included 59 59
Adobe Framemaker included 1 1
Adobe Illustrator included 3 3
Adobe Pagemaker included 2 2
Adobe Photoshop included 3 3
ColdFusion included 1 1
Director included 1 1
Dreamweaver included 8 8
Drumbeat included 1 1
Flash included 8 8
Backoffice NT Server included 1 1
Exchange Server included 2 2
Internet Explorer included 84 84
Office 2000 Professional included 108 108
Project 2000 included 9 9
Visio Professional included 18 18
PC Anywhere Host/Remote included 50 50
Miva included 2 2
eShare - NetAgent (CRM) (see schedule L)
included 1 1
Symposium included 1 1
Talisma CRM Suite (see schedule L) included 1 1
Schedule D
Tangible Assets
Sections 1.46 and 4.6
EQUIPMENT LIST
Included Assets
Billserv Assets
(Furniture and
Fixtures Only)
------------------------------------------------------------------------------------------------------------------------------------
Inventory Total Cyberstarts Billserv's
Number Floor Location Description QTY QTY QTY
------------------------------------------------------------------------------------------------------------------------------------
2000 2 Boardroom Boardroom Table (seats 20) 1 1
------------------------------------------------------------------------------------------------------------------------------------
2002 2 Boardroom Whiteboard Rolling 1 1
------------------------------------------------------------------------------------------------------------------------------------
2003 2 Boardroom Auxillary Moniter 1 1
------------------------------------------------------------------------------------------------------------------------------------
2005 2 Boardroom Audio Cabinet w/ Extron Crosspoint Series 1 1
------------------------------------------------------------------------------------------------------------------------------------
excess controller 1 1
------------------------------------------------------------------------------------------------------------------------------------
2006 2 Boardroom White Tables 1 1
------------------------------------------------------------------------------------------------------------------------------------
2007 2 Boardroom White-roll-around desk 1 1
------------------------------------------------------------------------------------------------------------------------------------
2008 2 Boardroom Podium (Wooden) 1 1
------------------------------------------------------------------------------------------------------------------------------------
2009 2 Boardroom Panja Audio Visual Controller with Screen
(black, 8 in. display) 1 1
------------------------------------------------------------------------------------------------------------------------------------
2010 2 Boardroom Video Visualizer (Canon RE 350) 1 1
------------------------------------------------------------------------------------------------------------------------------------
2017 2 QA Area/Tech. Supp. White Rolling Table 1 1
------------------------------------------------------------------------------------------------------------------------------------
2020 2 QA Area VP Office Wall-mounted white board 1 1
------------------------------------------------------------------------------------------------------------------------------------
2021 2 QA Area VP Office Wooden Exec. Desk w/Hutch 1 1
------------------------------------------------------------------------------------------------------------------------------------
2022 2 QA Area VP Office Wooden Table 1 1
------------------------------------------------------------------------------------------------------------------------------------
2024 2 QA Area VP Office Black Leather Exec. Chair 1 1
------------------------------------------------------------------------------------------------------------------------------------
2026 2 QA Area Dir Office Lateral Cabinert (2 drawer, black) 1 1
------------------------------------------------------------------------------------------------------------------------------------
2027 2 QA Area Dir Office Small Rolling File Cabinet (black/gray top) 1 1
------------------------------------------------------------------------------------------------------------------------------------
2028 2 QA Area Dir Office Director Cube 1 1
------------------------------------------------------------------------------------------------------------------------------------
2030 2 QA Area Dir Office Roll-around White Table 1 1
------------------------------------------------------------------------------------------------------------------------------------
2033 2 Acct. Manager White insert Table 1 1
------------------------------------------------------------------------------------------------------------------------------------
2037 2 Tech. Support White Insert Table 1 1
------------------------------------------------------------------------------------------------------------------------------------
2043 2 QA Conference Room Conference Table (6 sections, white) 1 1
------------------------------------------------------------------------------------------------------------------------------------
2044 2 QA Conference Room Wall-mounted white board 1 1
------------------------------------------------------------------------------------------------------------------------------------
2047 2 QA Tester Area Large White Rolling Table 1 1
------------------------------------------------------------------------------------------------------------------------------------
2048 2 QA Tester Area White Insert Table 1 1
------------------------------------------------------------------------------------------------------------------------------------
2051 2 CM Area Large White Rolling Table 1 1
------------------------------------------------------------------------------------------------------------------------------------
2052 2 CM Area White Insert Table 1 1
------------------------------------------------------------------------------------------------------------------------------------
2054 2 Acct. Area White insert Table 1 1
------------------------------------------------------------------------------------------------------------------------------------
2063 2 Acct. Area Director Cube 1 1
------------------------------------------------------------------------------------------------------------------------------------
2064 2 Acct. Area Rolling White Board 1 1
------------------------------------------------------------------------------------------------------------------------------------
2065 2 Acct. Area Rolling White Table 1 1
------------------------------------------------------------------------------------------------------------------------------------
Schedule D
Tangible Assets
Sections 1.46 and 4.6
EQUIPMENT LIST
Included Assets
------------------------------------------------------------------------------------------------------------------------------------
2068 2 Acct. Area Gray Rolling Chair in Dir. Office 1 1
------------------------------------------------------------------------------------------------------------------------------------
2069 2 Acct. Area Director Cube 1 1
------------------------------------------------------------------------------------------------------------------------------------
2072 2 Acct. Area Green Leaf Rolling Chair 1 1
------------------------------------------------------------------------------------------------------------------------------------
2073 2 Acct. Area Director Cube 1 1
------------------------------------------------------------------------------------------------------------------------------------
2075 2 Acct. Area Leaf Rolling Chair (red) 1 1
------------------------------------------------------------------------------------------------------------------------------------
2077 2 Acct. Area White Rolling Table 1 1
------------------------------------------------------------------------------------------------------------------------------------
2078 2 Acct. Area Director Cube 1 1
------------------------------------------------------------------------------------------------------------------------------------
2080 2 Acct. Area Wall Mounted White Board 1 1
------------------------------------------------------------------------------------------------------------------------------------
2082 2 Acct. Area White Rolling Table 1 1
------------------------------------------------------------------------------------------------------------------------------------
2083 2 Acct. Area Red Rolling Leaf Chair 1 1
------------------------------------------------------------------------------------------------------------------------------------
2084 2 Acct. Area Smalll White Rolling Table 1 1
------------------------------------------------------------------------------------------------------------------------------------
2089 2 Accounting 2-Drawer Lateral Cabinet (black) 1 1
------------------------------------------------------------------------------------------------------------------------------------
2090 2 Accounting Biege Rolling Cabinet (small) 1 1
------------------------------------------------------------------------------------------------------------------------------------
2093 2 Accounting Oval Rolling Table (white) 1 1
------------------------------------------------------------------------------------------------------------------------------------
2094 2 Accounting 4-Drawer Black Lateral Cabinet 1 1
------------------------------------------------------------------------------------------------------------------------------------
2100 2 Executive Area 4-Drawer Lateral Cabinet (black) 1 1
------------------------------------------------------------------------------------------------------------------------------------
2101 2 Executive Area 5-Drawer Lateral Cabinet (black, 4ft wide) 1 1
------------------------------------------------------------------------------------------------------------------------------------
2103 2 Copy/Mail Area White Insert Table 1 1
------------------------------------------------------------------------------------------------------------------------------------
2112 2 Exec. Admin. 2- Drawer Filing Cabinet 1 1
------------------------------------------------------------------------------------------------------------------------------------
2113 2 Exec. Admin. 4-Drawer Filing Cabinets 1 1
------------------------------------------------------------------------------------------------------------------------------------
2114 2 Exec, Admin. Director Cube (Bill Mames old desk) 1 1
------------------------------------------------------------------------------------------------------------------------------------
2116 2 Exec. Admin. Rolling Oval White Desk 1 1
------------------------------------------------------------------------------------------------------------------------------------
2117 2 Exec. Admin. Small Rolling Cabinet (black/white top) 1 1
------------------------------------------------------------------------------------------------------------------------------------
2118 2 Exec. Admin. 4-Drawer Lateral Cabinet 1 1
------------------------------------------------------------------------------------------------------------------------------------
2121 2 Legal Dept. Wooden Round Table 1 1
------------------------------------------------------------------------------------------------------------------------------------
2123 2 Legal Dept. Black Leather 2-Seater Sofa w/Wooden Legs 1 1
------------------------------------------------------------------------------------------------------------------------------------
2124 2 Legal Dept. Black Leather Chair w/Wooden Legs 1 1
------------------------------------------------------------------------------------------------------------------------------------
2125 2 Legal Dept. Wooden Exec.Office Desk w/Hutch 1 1
------------------------------------------------------------------------------------------------------------------------------------
2126 2 Legal Dept. Black Leather Exec. Chair 1 1
------------------------------------------------------------------------------------------------------------------------------------
2127 2 Legal Dept. Dark Wood Corner Intable 1 1
------------------------------------------------------------------------------------------------------------------------------------
2128 2 Legal Dept. Wooden Exec. Filing Cabinet 1 1
------------------------------------------------------------------------------------------------------------------------------------
2129 2 Legal Dept. Wooden Exec. Armore (tall) 1 1
------------------------------------------------------------------------------------------------------------------------------------
2130 2 IT Exec. Office Wooden Round Table 1 1
------------------------------------------------------------------------------------------------------------------------------------
2131 2 IT Exec. Office Wooden Chairs w/cushion, beige 1 1
------------------------------------------------------------------------------------------------------------------------------------
2132 2 IT Exec. Office Executive Wooden Desk w/hutch 1 1
------------------------------------------------------------------------------------------------------------------------------------
2133 2 IT Exec. Office Wall Mounted White Board 1 1
------------------------------------------------------------------------------------------------------------------------------------
2134 2 IT Exec. Office Black Leather Exec. Chair 1 1
------------------------------------------------------------------------------------------------------------------------------------
2152 2 IT Exec. Office Director Cube 1 1
------------------------------------------------------------------------------------------------------------------------------------
2153 2 IT Exec. Office Oval White Rolling Table 1 1
------------------------------------------------------------------------------------------------------------------------------------
2155 2 IT Exec. Office Purple Rolling Leaf Chair 1 1
------------------------------------------------------------------------------------------------------------------------------------
2156 2 IT Exec. Office 4-Drawer Lateral Cabinet (black) 1 1
------------------------------------------------------------------------------------------------------------------------------------
Schedule D
Tangible Assets
Sections 1.46 and 4.6
EQUIPMENT LIST
Included Assets
------------------------------------------------------------------------------------------------------------------------------------
2157 2 IT Exec. Office Wall Mounted White Board 1 1
------------------------------------------------------------------------------------------------------------------------------------
2158 2 IT Exec. Office Round Black Pedistool w/silver base 1 1
------------------------------------------------------------------------------------------------------------------------------------
2161 2 IT Exec. Office Wall Mounted White Board 1 1
------------------------------------------------------------------------------------------------------------------------------------
2164 2 NAG Gray Rolling Chair 1 1
------------------------------------------------------------------------------------------------------------------------------------
2168 2 Telecom Manger Cube 1 1
------------------------------------------------------------------------------------------------------------------------------------
2169 2 Telecom Small Rolling Cabinet (2-drawer, black w/white top 1 1
------------------------------------------------------------------------------------------------------------------------------------
2170 2 Telecom Green Non-Rolling Chair 1 1
------------------------------------------------------------------------------------------------------------------------------------
2171 2 Telecom Black Leather Chair 1 1
------------------------------------------------------------------------------------------------------------------------------------
2172 2 Telecom 2-Drawer Black Leteral Cabinet 1 1
------------------------------------------------------------------------------------------------------------------------------------
2173 2 IT Isolated Desk Semi-Circle White Table 1 1
------------------------------------------------------------------------------------------------------------------------------------
2182 2 IT Analyst Semi-Circle White Table 1 1
------------------------------------------------------------------------------------------------------------------------------------
2183 2 IT Analyst Beige Square-Backed Chair (non-rolling) 1 1
------------------------------------------------------------------------------------------------------------------------------------
2185 2 IT Conference Room Green Rolling Chair 1 1
------------------------------------------------------------------------------------------------------------------------------------
2186 2 IT Conference Room Oval Conference Table (6 sections, white) 1 1
------------------------------------------------------------------------------------------------------------------------------------
2187 2 IT Conference Room Wall-mounted white board 1 1
------------------------------------------------------------------------------------------------------------------------------------
2189 2 IT Conference Room Black Cylinder Foam Chairs 1 1
------------------------------------------------------------------------------------------------------------------------------------
2190 2 IT Conference Room Rolling White Board 1 1
------------------------------------------------------------------------------------------------------------------------------------
2193 2 IT Conference Room Rolling White Board 1 1
------------------------------------------------------------------------------------------------------------------------------------
2196 2 IT Conference Room Manager Cube 1 1
------------------------------------------------------------------------------------------------------------------------------------
2197 2 IT Conference Room Manager Cube 1 1
------------------------------------------------------------------------------------------------------------------------------------
2198 2 IT Conference Room Manager Cube 1 1
------------------------------------------------------------------------------------------------------------------------------------
2199 2 IT Conference Room Manager Cube 1 1
------------------------------------------------------------------------------------------------------------------------------------
2201 2 IT Conference Room Rolling White Board 1 1
------------------------------------------------------------------------------------------------------------------------------------
2202 2 IT Conference Room White Oval Table 1 1
------------------------------------------------------------------------------------------------------------------------------------
2203 2 IT Conference Room 4-Drawer Lateral File Cabinet 1 1
------------------------------------------------------------------------------------------------------------------------------------
2208 2 IT Conference Room Large White Rectangular Table 1 1
------------------------------------------------------------------------------------------------------------------------------------
2209 2 IT Conference Room White Insert Table 1 1
------------------------------------------------------------------------------------------------------------------------------------
2214 2 Front Lobby Black Leather Couch Set 1 1
------------------------------------------------------------------------------------------------------------------------------------
2215 2 Front Lobby Cloth Chairs with multicolored block pattern 1 1
------------------------------------------------------------------------------------------------------------------------------------
2219 2 Front Lobby Black Leaf Chair 1 1
------------------------------------------------------------------------------------------------------------------------------------
2220 2 Front Lobby Small Rolling 2-Door Cabinet (white top) 1 1
------------------------------------------------------------------------------------------------------------------------------------
2221 2 Front Lobby Small Rolling 3-Door Cabubet 1 1
------------------------------------------------------------------------------------------------------------------------------------
2223 2 Investments Wooden Table 1 1
------------------------------------------------------------------------------------------------------------------------------------
2224 2 Investments Wall Mounted White Board 1 1
------------------------------------------------------------------------------------------------------------------------------------
2225 2 Investments Black Leather Rolling Exec. Boardroom 1 1
------------------------------------------------------------------------------------------------------------------------------------
2226 2 Investments Leaf Chair (purple) 1 1
------------------------------------------------------------------------------------------------------------------------------------
2228 2 Investments Rolling White Board 1 1
------------------------------------------------------------------------------------------------------------------------------------
2229 2 Investments Black Exec. Leather Chair 1 1
------------------------------------------------------------------------------------------------------------------------------------
2230 2 Investments Exec. Wooden Desk w/Hutch 1 1
------------------------------------------------------------------------------------------------------------------------------------
2231 2 Investments Exec. Aimore (wooden) 1 1
------------------------------------------------------------------------------------------------------------------------------------
2232 2 Investments Wood Corner Tale 1 1
------------------------------------------------------------------------------------------------------------------------------------
Schedule D
Tangible Assets
Sections 1.46 and 4.6
EQUIPMENT LIST
Included Assets
------------------------------------------------------------------------------------------------------------------------------------
2233 2 Investments Black Leather Sofa w/wooden legs 1 1
------------------------------------------------------------------------------------------------------------------------------------
2246 2 HR Office Exec, Desk w/Hutch 1 1
------------------------------------------------------------------------------------------------------------------------------------
2247 2 HR Office 2-Drawer Filing Cabinet 1 1
------------------------------------------------------------------------------------------------------------------------------------
2248 2 HR Office 4-Drawer Filing Cabinets 1 1
------------------------------------------------------------------------------------------------------------------------------------
2249 2 HR Office Black Exec. Leather Chair (rollaway) 1 1
------------------------------------------------------------------------------------------------------------------------------------
2250 2 HR Office Round Exec. Wood Desk w/4 chairs w/cushions 1 1
------------------------------------------------------------------------------------------------------------------------------------
2018 2 QA Area/Tech. Supp. Analyst Cubes 2 2
------------------------------------------------------------------------------------------------------------------------------------
2019 2 QA Area/Tech. Supp. Managers Cubes 2 2
------------------------------------------------------------------------------------------------------------------------------------
2029 2 QA Area Dir Office Purple Cushioned Chairs 2 2
------------------------------------------------------------------------------------------------------------------------------------
2034 2 Acct. Manager Rolling Small Filing Cabinets (black/gray top) 2 2
------------------------------------------------------------------------------------------------------------------------------------
2040 2 Deployment Area Half Tables that make a polygon table - white 2 2
------------------------------------------------------------------------------------------------------------------------------------
2042 2 QA Conference Room Rolling Chairs (red, ribbed backed) 2 2
------------------------------------------------------------------------------------------------------------------------------------
2053 2 Acct. Area Desk Cell 2 2
------------------------------------------------------------------------------------------------------------------------------------
2055 2 Acct. Area Rolling Chairs (purple) 2 2
------------------------------------------------------------------------------------------------------------------------------------
2057 2 Acct. Area 2-Drawer Lateral Filing Cabinets (black) 2 2
------------------------------------------------------------------------------------------------------------------------------------
2060 2 Acct. Area 4-Drawer Lateral Cabinets (black) 2 2
------------------------------------------------------------------------------------------------------------------------------------
2066 2 Acct. Area Red Cushioned Chairs (non-rolling) 2 2
------------------------------------------------------------------------------------------------------------------------------------
2067 2 Acct. Area Drawer Black Lateal 2 2
------------------------------------------------------------------------------------------------------------------------------------
2070 2 Acct. Area 2-Drawer Lateral Cabinets (black) 2 2
------------------------------------------------------------------------------------------------------------------------------------
2071 2 Acct. Area Red Cushioned Chairs (non-rolling) 2 2
------------------------------------------------------------------------------------------------------------------------------------
2074 2 Acct. Area Lateral Black Cabinets 2 2
------------------------------------------------------------------------------------------------------------------------------------
2076 2 Acct. Area Red Chairs Non-rolling 2 2
------------------------------------------------------------------------------------------------------------------------------------
2079 2 Acct. Area 2-Drawer Lateral Cabinets (black) 2 2
------------------------------------------------------------------------------------------------------------------------------------
2081 2 Acct. Area Red Chairs (non-rolling) 2 2
------------------------------------------------------------------------------------------------------------------------------------
2086 2 e studios Red Rolling Chairs 2 2
------------------------------------------------------------------------------------------------------------------------------------
2096 2 Executive Area Rolling Leaf Chairs (1 purple, 1 green) 2 2
------------------------------------------------------------------------------------------------------------------------------------
2097 2 Executive Area 2-Drawer Layeral Cabinets (gray) 2 2
------------------------------------------------------------------------------------------------------------------------------------
2098 2 Executive Area Small Rolling Cabinets (black/white top) 2 2
------------------------------------------------------------------------------------------------------------------------------------
2099 2 Executive Area 2-Drawer Lateral Cabinets (black) 2 2
------------------------------------------------------------------------------------------------------------------------------------
2104 2 Exec. Cafe Wooden Tall Tables 2 2
------------------------------------------------------------------------------------------------------------------------------------
2119 2 Exec. Admin. Non-rolling Chairs (purple) 2 2
------------------------------------------------------------------------------------------------------------------------------------
2120 2 Exec. Admin. Rolling Purple Leaf Chairs 2 2
------------------------------------------------------------------------------------------------------------------------------------
2151 2 HR Exec. Office Wooden Chairs w/ beige cushions 2 2
------------------------------------------------------------------------------------------------------------------------------------
2154 2 IT Exec. Office Green Non-Rolling Chaiors 2 2
------------------------------------------------------------------------------------------------------------------------------------
2166 2 NAG Desk Cell 2 2
------------------------------------------------------------------------------------------------------------------------------------
2191 2 IT Conference Room Cylinder Black Foam Chairs 2 2
------------------------------------------------------------------------------------------------------------------------------------
2192 2 IT Conference Room Semi-Circle White Table 2 2
------------------------------------------------------------------------------------------------------------------------------------
2205 2 IT Conference Room Black Cylinder Foam Chairs 2 2
------------------------------------------------------------------------------------------------------------------------------------
2212 2 Breakroom Smalll Square Tables 2 2
------------------------------------------------------------------------------------------------------------------------------------
2216 2 Front Lobby Round Tables 2 2
------------------------------------------------------------------------------------------------------------------------------------
2217 2 Front Lobby Wood Chairs with cloth bottoms & a triangular ivory back 2 2
------------------------------------------------------------------------------------------------------------------------------------
Schedule D
Tangible Assets
Sections 1.46 and 4.6
EQUIPMENT LIST
Included Assets
------------------------------------------------------------------------------------------------------------------------------------
2227 2 Investments Non-Rolling Chairs (2 purple) 2 2
------------------------------------------------------------------------------------------------------------------------------------
2012 2 QA Area/Tech. Supp. Directors Cubes (Ken, Kristen, Eric) 3 3
------------------------------------------------------------------------------------------------------------------------------------
2014 2 QA Area/Tech. Supp. Small Rolling File Cabinets (black/gray top) 3 3
------------------------------------------------------------------------------------------------------------------------------------
2025 2 QA Area Dir Office Lateral Cabinets (4 drawer, black) 3 3
------------------------------------------------------------------------------------------------------------------------------------
2050 2 CM Area Rolling Area (1 purple, 2 red) 3 3
------------------------------------------------------------------------------------------------------------------------------------
2059 2 Acct. Area 2-Drawer Lateral Cabinets (black) 3 3
------------------------------------------------------------------------------------------------------------------------------------
2061 2 Acct. Area 3 ft.-wide Lateral Cabinets (black) 3 3
------------------------------------------------------------------------------------------------------------------------------------
2062 2 Acct. Area 4 ft.-wide Lateral Cabinets (black) 3 3
------------------------------------------------------------------------------------------------------------------------------------
2115 2 Exec. Admin. 4-Drawer Filing Cabinets 3 3
------------------------------------------------------------------------------------------------------------------------------------
2206 2 IT Conference Room Small Black Rolling Cabinets (white top) 3 3
------------------------------------------------------------------------------------------------------------------------------------
2213 2 Breakroom Tall Square Tables 3 3
------------------------------------------------------------------------------------------------------------------------------------
2023 2 QA Area VP Office Wooden Cushioned Chairs 4 4
------------------------------------------------------------------------------------------------------------------------------------
2031 2 Acct. Manager Desk Cell 4 4
------------------------------------------------------------------------------------------------------------------------------------
2035 2 Tech. Support Desk Cell 4 4
------------------------------------------------------------------------------------------------------------------------------------
2036 2 Tech. Support Rolling Chairs 4 4
------------------------------------------------------------------------------------------------------------------------------------
2038 2 Deployment Area Desk Cell 4 4
------------------------------------------------------------------------------------------------------------------------------------
2039 2 Deployment Area Rolling Chairs (red) 4 4
------------------------------------------------------------------------------------------------------------------------------------
2045 2 QA Tester Area Desk Cell 4 4
------------------------------------------------------------------------------------------------------------------------------------
2046 2 QA Tester Area Rolling Chairs (3 red, 1 purplt) 4 4
------------------------------------------------------------------------------------------------------------------------------------
2049 2 CM Area Desk Cell 4 4
------------------------------------------------------------------------------------------------------------------------------------
2056 2 Acct. Area 4-Drawer Lateral Filing Cabinets (black) 4 4
------------------------------------------------------------------------------------------------------------------------------------
2085 2 e studios Desk Cell 4 4
------------------------------------------------------------------------------------------------------------------------------------
2087 2 Accounting Desk Cell (empty) 4 4
------------------------------------------------------------------------------------------------------------------------------------
2091 2 Accounting Desk Cell 4 4
------------------------------------------------------------------------------------------------------------------------------------
2092 2 Accounting Rolling Chairs (purple) 4 4
------------------------------------------------------------------------------------------------------------------------------------
2095 2 Executive Area Desk Cell 4 4
------------------------------------------------------------------------------------------------------------------------------------
2102 2 Copy/Mail Area 4-Drawer Legal Cabinets (black) 4 4
------------------------------------------------------------------------------------------------------------------------------------
2110 2 Exec. Admin. Desk Cell 4 4
------------------------------------------------------------------------------------------------------------------------------------
2111 2 Exec. Admin. Rolling Purple Chairs 4 4
------------------------------------------------------------------------------------------------------------------------------------
2162 2 NAG Desk Cell 4 4
------------------------------------------------------------------------------------------------------------------------------------
2163 2 NAG Rolling Chairs (3 green, 1 red) 4 4
------------------------------------------------------------------------------------------------------------------------------------
2165 2 NAG Cylider Black Foam Chairs 4 4
------------------------------------------------------------------------------------------------------------------------------------
2167 2 NAG Green Rolling Leaf Chairs 4 4
------------------------------------------------------------------------------------------------------------------------------------
2174 2 IT Isolated Desk Rolling Green Leaf Chairs 4 4
------------------------------------------------------------------------------------------------------------------------------------
2175 2 IT Analyst Desk Cell 4 4
------------------------------------------------------------------------------------------------------------------------------------
2176 2 IT Analyst Analyst Desk Cells 4 4
------------------------------------------------------------------------------------------------------------------------------------
2177 2 IT Analyst Analyst Desk Cells 4 4
------------------------------------------------------------------------------------------------------------------------------------
2178 2 IT Analyst Analyst Desk Cells 4 4
------------------------------------------------------------------------------------------------------------------------------------
2179 2 IT Analyst Analyst Desk Cells 4 4
------------------------------------------------------------------------------------------------------------------------------------
2180 2 IT Analyst Analyst Desk Cells 4 4
------------------------------------------------------------------------------------------------------------------------------------
2194 2 IT Conference Room Desk Cell 4 4
------------------------------------------------------------------------------------------------------------------------------------
Schedule D
Tangible Assets
Sections 1.46 and 4.6
EQUIPMENT LIST
Included Assets
------------------------------------------------------------------------------------------------------------------------------------
2195 2 IT Conference Room Rolling Green Leaf Chairs 4 4
------------------------------------------------------------------------------------------------------------------------------------
2207 2 IT Conference Room 2-Drawer Lateral Cabinets (black) 4 4
------------------------------------------------------------------------------------------------------------------------------------
2218 2 Front Lobby Cloth Chair for built-in desk area 4 4
------------------------------------------------------------------------------------------------------------------------------------
2222 2 Investments Wooden Chairs w/cushions 4 4
------------------------------------------------------------------------------------------------------------------------------------
2013 2 QA Area/Tech. Supp. Lateral File Cabinets (3 drawer, black) 5 5
------------------------------------------------------------------------------------------------------------------------------------
2032 2 Acct. Manager Rolling Chairs (4 red, 1 purple) 5 5
------------------------------------------------------------------------------------------------------------------------------------
2058 2 Acct. Area 2-Drawer Lateral filing Cabinets (gray) 5 5
------------------------------------------------------------------------------------------------------------------------------------
2088 2 Accounting Rolling leaf chairs (4 red, 1 purple) 5 5
------------------------------------------------------------------------------------------------------------------------------------
2200 2 IT Conference Room Green Rolling Leaf Chairs 5 5
------------------------------------------------------------------------------------------------------------------------------------
2204 2 IT Conference Room Non-Rolling Chairs ( 4 green, 1 purple) 5 5
------------------------------------------------------------------------------------------------------------------------------------
2105 2 Exec. Cafe Wooden/Cushioned Tall Rollin Chairs 6 6
------------------------------------------------------------------------------------------------------------------------------------
2122 2 Legal Dept. Wooden Cushioned Beige Chairs 6 6
------------------------------------------------------------------------------------------------------------------------------------
2211 2 Breakroom Tall Plastic Orange Chairs 6 6
------------------------------------------------------------------------------------------------------------------------------------
2015 2 QA Area/Tech. Supp. Cushioned Chairs (red, non-rolling) 7 7
------------------------------------------------------------------------------------------------------------------------------------
2016 2 QA Area/Tech. Supp. Rolling Chairs (red) 8 8
------------------------------------------------------------------------------------------------------------------------------------
2210 2 Breakroom Small Plastic Orange Chairs 8 8
------------------------------------------------------------------------------------------------------------------------------------
2041 2 QA Conference Room Rolling Chairs (purple, squared back) 12 12
------------------------------------------------------------------------------------------------------------------------------------
2184 2 IT Conference Room Red Square-Backed Rolling Chairs 12 12
------------------------------------------------------------------------------------------------------------------------------------
2001 2 Boardroom Black leather Chairs for Boardroom Area 16 16
------------------------------------------------------------------------------------------------------------------------------------
2181 2 IT Analyst Rolling Chairs (17 green, l purple) 18 18
------------------------------------------------------------------------------------------------------------------------------------
Schedule D
Tangible Assets
Sections 1.46 and 4.6
EQUIPMENT LIST
Included Assets
--------------------------------------------------------------------------------
Serial Number or
SERVER NAME SERVER TYPE Service Tag Number
--------------------------------------------------------------------------------
CLAYFACE DELL DIMENSION 3IDQG
--------------------------------------------------------------------------------
DAGGER IBM NETIFINITY 4 23H1895
--------------------------------------------------------------------------------
PHOENIX IBM eSERVER x 78P44567
--------------------------------------------------------------------------------
ROBIN IBM NETIFINITY 7 23T3741
--------------------------------------------------------------------------------
VISION DELL DIMENSION 2ZRLA
--------------------------------------------------------------------------------
CALYPSO DELL OPTIPLEX 456S10B
--------------------------------------------------------------------------------
DIRECTDELIVERY2 IBM NETFINITY 4 23H2136
--------------------------------------------------------------------------------
MAGNETO IBM NETFINITY 5 23X3504
--------------------------------------------------------------------------------
HAWKMAN IBM NETFINITY 4 23H2206
--------------------------------------------------------------------------------
PENGUIN DELL OPTIPLEX 42T8K01
--------------------------------------------------------------------------------
SABRETOOTH IBM NETFINITY 4 23A4596
--------------------------------------------------------------------------------
SPIDERMAN IBM NETFINITY 7 23C1747
--------------------------------------------------------------------------------
VINDICATOR DELL OPTIPLEX 7XBL20B
--------------------------------------------------------------------------------
ELECTRA DELL DIMENSION 8RDMI
--------------------------------------------------------------------------------
JOKER1 IBM NETFINITY 5 23X3470
--------------------------------------------------------------------------------
PYRO DELL DIMENSION FHUJ9
--------------------------------------------------------------------------------
Schedule D
Tangible Assets
Sections 1.46 and 4.6
EQUIPMENT LIST
Included Assets
--------------------------------------------------------------------------------
WENDIGO IBM NETFINITY 7 23F0588
--------------------------------------------------------------------------------
ATLAS IBM MPRO 23BCT39
--------------------------------------------------------------------------------
BATGIRL IBM NETFINITY 4 23A3970
--------------------------------------------------------------------------------
Serial Number or
SERVER NAME SERVER TYPE Service Tag Number
--------------------------------------------------------------------------------
BEAST IBM NETFINITY 4 23A2158
--------------------------------------------------------------------------------
BISHOP IBM NETFINITY 5 23F6952
--------------------------------------------------------------------------------
BRAINIAC IBM NETFINITY 4 23H3776
--------------------------------------------------------------------------------
BULLSEYE IBM NETFINITY 4 23K6088
--------------------------------------------------------------------------------
CABLE IBM MPRO 23AAA21
--------------------------------------------------------------------------------
CATWONMAN IBM NETFINITY 5 23D6140
--------------------------------------------------------------------------------
CLOAK IBM NETFINITY 4 23H2431
--------------------------------------------------------------------------------
CYCLOPS DELL OPTIPLEX 1NNFJ01
--------------------------------------------------------------------------------
DAFFY IBM NETFINITY 4 23H2419
--------------------------------------------------------------------------------
DAREDEVIL IBM NETFINITY 4 23K7020
--------------------------------------------------------------------------------
DEADPOOL DELL OPTIPLEX 8XGM501
--------------------------------------------------------------------------------
DIRECTDELIVERY IBM eSERVER x 23H8796
--------------------------------------------------------------------------------
Schedule D
Tangible Assets
Sections 1.46 and 4.6
EQUIPMENT LIST
Included Assets
--------------------------------------------------------------------------------
GOLIATH IBM X440 78-R3526
--------------------------------------------------------------------------------
GRENDEL IBM NETFINITY 4 23H2206
--------------------------------------------------------------------------------
HAWKEYE IBM NETFINITY 7 23T4577
--------------------------------------------------------------------------------
IRONMAN IBM NETFINITY 5 552250K
--------------------------------------------------------------------------------
LEX IBM NETFINITY 5 23A0418
--------------------------------------------------------------------------------
LOBO IBM NETFINITY 7 23T4916
--------------------------------------------------------------------------------
MEPHISTO DELL DIMENSION 1C42T
--------------------------------------------------------------------------------
Serial Number or
SERVER NAME SERVER TYPE Service Tag Number
--------------------------------------------------------------------------------
MYSTERIO IBM NETFINITY 4 23Y1866
--------------------------------------------------------------------------------
RIDDLER IBM NETFINITY 5 23GY969
--------------------------------------------------------------------------------
ROGUE IBM NETFINITY 5 23GX871
--------------------------------------------------------------------------------
SCARECROW IBM NETFINITY 5 552408H
--------------------------------------------------------------------------------
SENTRY DELL OPTIPLEX 9RHMB01
--------------------------------------------------------------------------------
SPAWN IBM eSERVER X 23H8736
--------------------------------------------------------------------------------
SUPERMAN IBM NETFINITY 7 23A0908
--------------------------------------------------------------------------------
THING IBM NETFINITY 7 23T4900
--------------------------------------------------------------------------------
TOAD DELL OPTIPLEX 9BV4M01
--------------------------------------------------------------------------------
Schedule D
Tangible Assets
Sections 1.46 and 4.6
EQUIPMENT LIST
Included Assets
--------------------------------------------------------------------------------
WOLVERINE IBM eSERVER X 78P4574
--------------------------------------------------------------------------------
CARNAGE DELL OPTIPLEX 9XGM501
--------------------------------------------------------------------------------
GALACTUS IBM eSERVER x 23H1452
--------------------------------------------------------------------------------
GAMBIT DELL DIMENSION FIDFL
--------------------------------------------------------------------------------
GLEEK IBM NETFINITY 5 552407A
--------------------------------------------------------------------------------
NOMAD DELL OPTIPLEX 13JQ501
--------------------------------------------------------------------------------
SILVERSURFER DELL DIMENSION 4JH8U
--------------------------------------------------------------------------------
SIREN DELL DIMENSION 9JL5U
--------------------------------------------------------------------------------
STRYFE DELL OPTIPLEX CXGM501
--------------------------------------------------------------------------------
TUNDRA DELL DIMENSION 3IDQI
--------------------------------------------------------------------------------
VENOM DELL DIMENSION 6WP2401
--------------------------------------------------------------------------------
NAMOR IBM MPRO 23AAA18
--------------------------------------------------------------------------------
CICSO ROUTER* CICSO - PAYMENT TECH
SPEEDERS FAX MODEM* ROBOTICS - PAYMENT TECH
CICSO ROUTER* CICSO - WASTE MGMT.
ACCESS POINT 450 DSU T1* LCENT - SPECTRUM
ROBOTICS MODEM (DIAL BACKUP)* ROBOTICES - SPECTRUM
*Please note these assets are owned by Billserv's clients
Schedule D
Tangible Assets
Sections 1.46 and 4.6
EQUIPMENT LIST
Included Assets
Networking LAN/WAN Assets:
14 Network Racks IBM
7 Network Rack Ortronics
Tape System Qualstar
Datacenter:
2 ten-ton A/C Units Liebert
UPS Powerware
Generator Kohler Power Systems
Fire Detection & Suppression Fike
Fire Alarm Equipment Fike
Command Center Infra-Structures, Inc.
4 File cabinets
PC'S AND LAPTOPS
Item# PC Name Field Tag Number Location Jack ID Number
----- ------------- ---------- -------- ------- ------
70 S-Juliar w7rgh help desk room 4056
123 QA_MAC ym028dakjav 2a076 4088
56 Dell-2 spare parts dl4130b helpdesk room 4145
146 M_HYNES d7c920b 2b031 4146
27 OUTSIDER2 12vux (by Shad) 4037
139 B_Tiller 2b013 4151
52 Dell spare parts 73m4701 storage room 4152
79 T_LYNCH 36ui0 2a006 4006
80 J-GONZALES 20xci0b 2a007 4007
78 A_GUIDRY 9JL6I 2a005 4008
86 J_PULLIN e8uqu 2a014 4010
88 F_ZENG 23dmmm6 2a017 4011
87 K_OBRIEN 2c0720b 2a016 4013
17 M_HARPER cqp3k help desk room 4143
Schedule D
Tangible Assets
Sections 1.46 and 4.6
EQUIPMENT LIST
Included Assets
36 J_BOYSON gv8g601 help desk room 4144
90 P_TEPICHIN 23aaaf8 2a020 4014
92 M-KUSKE di5w00b 2a022 4016
66 C1K6210H1011 fk005ag help desk room 4045
38 R_ROHRBOUGH2 fk008ph help desk room 4046
40 B_Waggner-Laptop 6an5a help desk room 4055
93 T_WILLIAMS 9lrn701 2a023 4017
95 R_ANDREWS e8uqt 2a025 4018
94 S-GERICK - LapTop fk3tq01 2a024 4019
97 M-JOCSON 8rdnd 2a027 4020
59 MSMQ Test j16l20b (By Joe's desk) 4021
60 MSMQ Test Two 50t0001 (by Joe's desk) 4022
98 G_CONRAD 9hh7c01 (Xin using it) 2a028 4023
100 L_LANE ejuwx 2a030 4024
101 P_BRYANT 8rdpn 2a031 4025
102 S-HEATH b6h8y 2a032 4026
132 P_WALTHER 30t001 2b004 4027
130 J-HERNANDEZ 156s10b 2b002 4028
129 L_THORNTON cdi0b 2b001 4029
131 E_OLIVO hkm8501 2b003 4030
133 R_OGAN h23jq501 2b005 4031
136 ninaharwood - laptop 1fh8r01 2b008 4032
134 MICKEY - laptop 9wkr701 2b006 4033
96 J_RODRIGUEZ - laptop 6lbsc01 2a026 4035
99 A_PEREZ FKIJA 2a029 4036
10 J_Knippa 8rdn8 help desk room 4039
33 C1K6216H1007 fk004lt help desk room 4041
13 C1K5703H1025 FK0054W help desk room 4042
19 C1K5705H1018 fk0054n help desk room 4044
35 C1K6211H1020 fk004pv help desk room 4047
7 C1K6041H1002 fk008lu help desk room 4048
34 C1K6212H1016 FK0090Y helpdesk room 4049
75 IBM Thinkpad - laptop 14xfs help desk room 4050
31 E_KIRBY - laptop 689ih Help Desk room 4051
71 A_Moquin - laptop 7d39701 help desk room 4052
74 D_Olwert - laptop 11mpm help desk room 4053
3 M-FRY2 - laptop 76ecx help desk room 4054
69 Training Room Laptop w8mdv help desk room 4057
Schedule D
Tangible Assets
Sections 1.46 and 4.6
EQUIPMENT LIST
Included Assets
8 MattFrye 3ck3401 help desk room 4059
72 R-Whitten2 - laptop 8ilmc help desk room 4061
28 J_CLINTON fidfi help desk 4062
21 ESTUDIO-SPARE qth6001 help desk room 4063
4 SMAC-2 - laptop w7b86 help desk room 4064
5 SMAC3 - laptop w1vbh help desk room 4065
6 SMAC4 - laptop w1yjq help desk room 4066
138 M-Millard 7jhy001 2b012 4067
49 Mark Three v58nc war room 4069
128 SabrinaArausa 3idnn 2a078 4083
127 ChrisRoss fmf820b 2a077 4084
122 SarahBernier fi5w00b 2a076 4085
120 SalmaMartinez 3lef3 2a075 4086
119 JackConrad 3sfb40b 2a074 4087
125 98-Outsider hp077 2a076 4089
121 QA_NT-OUTSIDER 3idnl 2a076 4090
124 QATEST3 36v0n 2a076 4091
126 QATEST4 8rdnt 2a076 4092
111 K_Wogulis 9idjz 2a061 4100
110 EdAskLand 8rdp9 2a059 4101
25 ED-LAP f6e5b (Ed's office) 4102
108 KristinJay 325w00b 2a055 4103
106 SandraOrtiz hi6c20b 2a052 4104
18 F_HERNANDEZ dwx7301 command center 4107
32 H_RABAGO fwx7301 command center 4108
24 R_COLE 2cw7301 command center 4109
68 IBMLAP1 (Sniffer) 14xdr command center 4110
20 N-MORALES -latop wutjh storage room 4111
58 Qa_Conf - laptop vz89u storage room 4113
11 M-LATHAM w8m0u storage room 4116
22 E-DOUGLAS 57rxs storage room 4117
2 J-KENNEDY fhujb storage room 4118
61 R_Wilson c93ej storage room 4119
43 J-STANDIFIRD 23dmmr0 storage room 4120
16 A_Rodriguez 1c42j storage room 4121
64 T_Keith 4jh6e storage room 4122
65 T_Coleman ep3es storage room 4123
30 K_Robinson 4sfb40b storage room 4124
Schedule D
Tangible Assets
Sections 1.46 and 4.6
EQUIPMENT LIST
Included Assets
76 V_Meeder Old Pc 7hx7301 storage room 4125
45 New Dell 1cw7301 storage room 4126
46 Dell Demo 9t8m00b storage room 4127
57 Dell 73m4701 storage room 4128
48 Dell J15w00b storage room 4129
39 Dell 915w00b storage room 4130
50 Gateway (Old) 1042b storage room 4131
51 IBM spare parts 23dmmh3 storage room 4132
42 B_Zahl - laptop w7rg1 storage room 4133
103 A_Learner (SR-1) 10t0001 2a033 4134
104 SR-4 equ98 2a033 4135
55 Black Flat Monitor storage room 4136
9 MikeHynes - laptop h42pv (Mike's office) 4147
83 C1K6040H1013 fk008rk 2a011 4001
82 C1K60421A026 FK009K8 2a010 4002
84 C1K6214H1014 fk008ga 2a012 4003
85 C1K62181A025 FK008ZY 2a013 4004
81 J_Smith3 fk0d8ch 2a008 4005
89 A_CRAMER 3IDNP 2a018 4012
91 K_FOX 6u0wk 2a021 4015
150 B_Baran 22dfj 2b037 4080
26 R_KAUFTHEIL -laptop zqvbf storage room 4114
67 M-Jisha2 w8iju storage room 4115
47 R_Linder - Laptop 76epy (Jose's home)
63 train-2 gt0s501 help desk room 4058
62 train-3 879j101 help desk room 4060
Printers/Scanners
Item# Brand Type Model IOS or IP Serial Location Number
----- ----- ---- ----- --------- ------ -------- ------
3 HP LaserJet 4000 USMB290169 by Ruth 5006
4 HP LaserJet 4050 172.16.2.36 USBD026177 5005
5 HP LaserJet 4050 172.16.2.28 USBB372455 5003
6 HP LaserJet 8100 172.16.2.25 USBG025620 5008
7 HP ColorJet 2000C 172.16.2.22 5009
8 HP LaserJet 4000 172.16.2.23 USEF234245 5002
Schedule D
Tangible Assets
Sections 1.46 and 4.6
EQUIPMENT LIST
Included Assets
9 HP LaserJet 4000 172.16.2.29 USQX008936 5001
11 HP LaserJet 4000 HPLJP001 helpdesk room 5024
12 HP LaserJet 4000 HPLJP002 helpdesk room 5025
13 HP LaserJet 4000 HPLJP003 helpdesk room 5026
14 Hp LaserJet 1100 USGN356254 Mike's office 5030
15 HP ScanJet ADF SG9AA17083 by Ruth 5007
19 HP LaserJet 2100 USGZ180669 storage room 5017
20 HP LaserJet 3100 USBC077411 storage room 5018
21 HP LaserJet 3100 USDL002805 storage room 5019
22 HP LaserJet 3100 USBC079279 storage room 5020
23 HP LaserJet 3100 USDL002820 storage room 5021
24 HP LaserJet 3100 USBC065952 storage room 5022
27 HP LaserJet 3150 USFL002333 helpdesk room 5028
31 Epson CP5E013670 by QA 5033
32 HP LaserJet 3100 USBC070191 Melissa's office5035
Billserv Australia Servers:
S-CHEWBACCA IBM eSERVER x 23H8346
S-DARTHVADER IBM eSERVER x 23H8381
S-DEATHSTAR IBM eSERVER x 23H8497
SKYWALKER IBM eSERVER x 23H8975
S-YODA IBM eSERVER x 23H8491
OBWAN(was Angel) IBM eSERVER x 23H8537
Serial number or
SERVER NAME SERVER TYPE Service Tag
ADVANCED IBM PC300GL 23AAAG9
BATMAN IBM NETFINITY 5 23A0851
BILLSER DELL OPTIPLEX M200005
FLASH DELL DEMENSION UD5YG
GUARDIAN DELL DEMENSION FGBW60
Schedule D
Tangible Assets
Sections 1.46 and 4.6
EQUIPMENT LIST
Included Assets
HITMAN DELL DEMENSION 1C42W
MAT DELL DEMENSION IGVV2
NIGHTCRAWLER DELL OPTIPLEX FMNFJ01
ODIN IBM NETFINITY 7 23T4890
PUNISHER IBM NETFINITY 7 23T4373
STORM IBM MPRO 238CT24
TWOFACE IBM MPRO 23AAA23
COLOSSUS NET APPLIANCE F760 21183
HULK NET APPLIANCE F760 21183
LOKI IBM NETFINITY 5 23X3475
NETWORK EQUIPMENT MODEL VENDOR
----------------- ----- ------
PIX FIREWALL 515 CISCO
PIX FIREWALL 515 CISCO
EDGE ROUTER - TW 7140 CISCO
EDGE ROUTER - UUNET 7140 CISCO
4000 SWITCH (WIRING CLOSET) 4003 CISCO
4000 SWITCH (WIRING CLOSET) 4003 ISCO
4000 SWITCH (CORE NETWORK) 4006 CISCO
4000 SWITCH (CORE NETWORK) 4006 CISCO
2950 SWITHC (LOAD BALANCERS) 2950 CISCO
2950 SWITHC (LOAD BALANCERS) 2950 CISCO
F5 DNS 3DNS F5
F5 DNS 3DNS F5
F5 LOAD BALANCER/SWITCH BIG-IP F5
F5 LOAD BALANCER/SWITCH BIG-IP F5
LANROVER E/PLUS DIALUP 56KP SHIVA
Schedule D
Tangible Assets
Sections 1.46 and 4.6
EQUIPMENT LIST
Included Assets
ADTRAN DS3 LOCAL CONNECT POINT DS3 SBC
ADTRAN UUNET DALLAS T1 SBC
ADTRAN UUNET HOUSTON T1 SBC
ADTRAN TIME WARNER DS3 SBC
ADTRAN (SPARE) T1 SBC
SOLO SELECT DSU T1 T1 SOLO
1 Telephone Switch Option 21 Nortel
Telephones & Speaker Phones
Item# Name Model# Serial Number Location Jack ID Number CB
----- ---- ------ ------------- -------- ------- ------ --
1 ShelbyGoolsby M2008 NT9K16AC-03 2a003 6001 X
2 Reception Area M2616 NNTM29324T7T 2a054 6131 X
3 Copy Room M2008 NT2K08GH-03 2b054 6126 X
4 Board Room M2008 NT2K08GH-03 2a001 6132 X
5 Board Room Sound Station 12258527 2a001 6133 X
6 A_GUIDRY M2008 NNTM6092D12C 2a005 6002 X
7 T_LYNCH M2008 NNTM6095DDFC 2a006 6003 X
8 J-GONZALES M2008 NNTM60A1938C 2a007 6004 X
9 J_Smith3 (Jarrent) M2008 NT2K08GH-03 2a008 6005 X
10 Empty Desk M2008 NT9K08AD-03 2a009 6006 X
11 C1K60421A026 M2008 NT2K08GH-03 2a010 6007 X
12 C1K6040H1013 M2008 NT2K08GH-03 2a011 6008 X
13 C1K6214H1014 M2008 NT2K08GH-03 2a012 6009 X
14 C1K62181A025 M2008 NNTM60B444BC 2a013 6010 X
15 J_PULLIN M2008 NNTM609628C7 2a014 6011 X
16 F_ZENG M2008 NNTM60B44574 2a016 6012 X
17 Empty Desk M2008 NNTM60A19355 2a017 6014 X
18 K_OBRIEN M2008 NNTM60955853 2a018 6015 X
19 A_CRAMER M2008 NNTM60B444BE 2a019 6013 X
20 P_TEPICHIN M2008 NNTM60B444D0 2a020 6016 X
21 K_FOX M2008 NNTM60A19354 2a021 6018 X
22 M-KUSKE M2008 NNTM60962803 2a022 6019 X
23 T_WILLIAMS M2008 NNTM60A1932C 2a023 6017 X
24 S-GERICK - LapTop M2008 NNTM60B44401 2a024 6020 X
25 R_ANDREWS M2008 NNTM609628C5 2a025 6022 X
26 J_RODRIGUEZ - laptop M2008 NNTM60962804 2a026 6021 X
27 M-JOCSON M2008 NNTM60950E11 2a027 6023 X
28 G_Conrad (Xin) M2008 NNTM6095DDDB 2a028 6026 X
Schedule D
Tangible Assets
Sections 1.46 and 4.6
EQUIPMENT LIST
Included Assets
29 A_PEREZ M2008 NNTM6095DE0E 2a029 6024 X
30 L_LANE M2008 NNTM609628BC 2a030 6027 X
31 P_BRYANT M2008 NNTM60A1934E 2a031 6025 X
32 S-HEATH M2008 NNTM60A1937F 2a032 6028 X
33 A_Learner (SR-1) M2008 NNTM60962807 2a033 6029 X
34 N-Ducote M2008 NNTM60934D5F 2a037 6134 X
35 N-Ducote Sound Station 12225083 2s042 6135 X
36 SandraOrtiz M2008 NT9K08AD-03 2a052 6125 X
37 Empty Desk M2008 NT9K16A3-03 2a053 6124 X
38 Diana Curry (old desk) M2616 NNTM60B5BC56 2a056 6129 X
39 Eric Douglas M2008 NNTM60A19FB1 2a054 6123 X
40 KristinJay M2008 NNTM609628C2 2a055 6122 X
41 K_KELLER M2008 NNTM6093461C 2a058 6130 X
42 Ed AskLand M2008 NNTM60A19F2E 2a059 2121 X
43 Ed AskLand Sound Station 122252223 2a059 6149 X
44 K_Wogulis M2008 NNTM6095DDD3 2a061 6120 X
45 implementations M2008 NNTM6096628C8 2a062 6119 X
46 implementations M2008 NT9K08AD-03 2a063 6118 X
47 implementations M2008 NNTM6095DEDA 2a064 6117 X
48 P_LONG M2008 NT9K08AD-03 2a065 6116 X
49 LeslieOttmers M2008 NNTM29326087 2a066 6142 X
50 JoanieLeihsing M2008 NT9K08AD03 2a067 6115 X
51 Empty Desk M2008 NNTM609628B8 2a068 6114 X
52 CurtisReese M2008 NNTM609628C0 2a069 6113 X
53 KayGerfers M2008 NT9K08AD-03 2a070 6112 X
54 PattySuplick M2008 NNTM6095DDE2 2a071 6111 X
55 QA Conference Room Sound Station 12434206 2a045 6148 X
56 S-Gerick M2008 NNTM60B444C2 2a073 6110 X
57 JackConrad M2008 NT9K08AD-03 2a074 6109 X
58 SalmaMartinez M2008 NNTM6095DE03 2a075 6108 X
59 ChrisRoss M2008 NNTM60A19399 2a077 6107 X
60 SabrinaArausa M2008 NNTM6095DDF9 2a078 6106 X
61 L_THORNTON M2008 NNTM6095DDAA 2b001 6032 X
62 J-HERNANDEZ M2008 NNTM609628C9 2b002 6030 X
63 E_OLIVO M2008 NNTM29326082 2b003 6033 X
64 P_WALTHER M2008 NNTM29324NRJ 2b004 6031 X
65 R_OGAN M2008 NNTM60962774 2b005 6035 X
66 MICKEY - laptop M2008 NNTM6095000B 2b006 6036 X
67 M_JISHA M2008 NNTM609628C3 2b007 6034 X
68 ninaharwood - laptop M2008 NNTM60B444BF 2b008 6037 X
Schedule D
Tangible Assets
Sections 1.46 and 4.6
EQUIPMENT LIST
Included Assets
69 Melissa Askland M2008 NNTM6095DE0F 2B010 6146 X
70 Melissa Askland Sound Station 12250756 2B009 6147 X
73 B_Tiller Sound Station 12457554 2b063 6137 X
74 Bill Tiller M2616 NNTM609346A1 2b013 6088 X
85 GuyGould M2008 NNTM60962806 2b029 6128 X
86 M_HYNES M2008 serial phone 2b031 6158 X
87 KimMcCoy M2008 NNTM2932608A 2b032 6105 X
88 Empty Desk M2008 NNTM60962805 2B033 6104 X
89 stevewilson -laptop M2008 NNTM6095DDDD 2b039 6103 X
90 R_GIL M2008 NNTM60B443DF 2b044 6102 X
91 Finance M2008 NT9K08AD-03 2b045 6101 X
92 RuthTorres M2008 NNTM6093461D 2b047 6100 X
93 FINANCE M2007 NNTM60B443B 2b048 6099 X
94 S_MULLIGAN or L_Turner M2008 NNTM60B2BC7F 2b050 6098 X
95 ArleenWatson M2008 NNTM60G0RBBH 2b051 6097 X
96 Empty Desk Sound Station 12300643 2b056 6092 X
97 Empty Desk M2008 NNTM6095DDF8 2b056 6091 X
98 Empty Desk M2616 NNTM60934D67 2b059 6089 X
99 Empty Desk M2616 NNTM60934D70 2b060 6090 X
100 implementations M2008 NNTM6095DEDA 2b064 6117 X
101 Empty Desk M2008 NNTM609628B8 2B068 6114 X
102 Command Center/Computer Rm M2008 NNTM6095DE06 6150 X
103 Command Center/Computer Rm M2008 NNTM293260C0 6151 X
104 Command Center/Computer Rm AT&T 900MH T010900019515201 Cordless 6152 X
105 Command Center/Switch Room M2008 NNTM6095DDE0 6153 X
106 Command Center/Switch Room M2250 NNTM6094770C 6154 X
107 Command Center/Switch Room M2008 NNTM293240E1 6155 X
108 Command Center/Switch Room M2008 NNTM29326088 6156 X
109 IT Conference Room Sound Station 12300634 2a036 6157 X
Third-Party Software Licenses
Included Assets
Third-Party Software Status QTY Total
-------------------- ------ --- -----
Database 2 EE included 14 14
i-Solutions included 1 1
Avolent OFX Server (see schedule L) included 1 1
Windows 2000 AS OS included 20 20
Schedule D
Tangible Assets
Sections 1.46 and 4.6
EQUIPMENT LIST
Included Assets
Windows 2000 Pro OS included 91 91
Windows 2000 Server OS included 8 8
Windows 98 OS included 2 2
Windows NT OS included 31 31
SQL Server Windows NT included 7 7
PGP Desktop included 71 71
PGP eBusiness Server included 4 4
Delphi 5 Enterprise included 3 3
Java/ASP/JSP included 20 20
Visual Basic included 4 4
Adobe Acrobat included 5 5
Adobe Reader included 59 59
Adobe Framemaker included 1 1
Adobe Illustrator included 3 3
Adobe Pagemaker included 2 2
Adobe Photoshop included 3 3
ColdFusion included 1 1
Director included 1 1
Dreamweaver included 8 8
Drumbeat included 1 1
Flash included 8 8
Backoffice NT Server included 1 1
Exchange Server included 2 2
Internet Explorer included 84 84
Office 2000 Professional included 108 108
Project 2000 included 9 9
Visio Professional included 18 18
PC Anywhere Host/Remote included 50 50
Miva included 2 2
eShare - NetAgent (CRM) (see schedule L)
included 1 1
Symposium included 1 1
Talisma CRM Suite (see schedule L) included 1 1
Schedule D
Tangible Assets
Sections 1.46 and 4.6
EQUIPMENT LIST
Included Assets
Billserv Assets
(Furniture and
Fixtures Only)
------------------------------------------------------------------------------------------------------------------------------------
Inventory Total Cyberstarts Billserv's
Number Floor Location Description QTY QTY QTY
------------------------------------------------------------------------------------------------------------------------------------
2000 2 Boardroom Boardroom Table (seats 20) 1 1
------------------------------------------------------------------------------------------------------------------------------------
2002 2 Boardroom Whiteboard Rolling 1 1
------------------------------------------------------------------------------------------------------------------------------------
2003 2 Boardroom Auxillary Moniter 1 1
------------------------------------------------------------------------------------------------------------------------------------
2005 2 Boardroom Audio Cabinet w/ Extron Crosspoint Series 1 1
------------------------------------------------------------------------------------------------------------------------------------
excess controller 1 1
------------------------------------------------------------------------------------------------------------------------------------
2006 2 Boardroom White Tables 1 1
------------------------------------------------------------------------------------------------------------------------------------
2007 2 Boardroom White-roll-around desk 1 1
------------------------------------------------------------------------------------------------------------------------------------
2008 2 Boardroom Podium (Wooden) 1 1
------------------------------------------------------------------------------------------------------------------------------------
2009 2 Boardroom Panja Audio Visual Controller with Screen
(black, 8 in. display) 1 1
------------------------------------------------------------------------------------------------------------------------------------
2010 2 Boardroom Video Visualizer (Canon RE 350) 1 1
------------------------------------------------------------------------------------------------------------------------------------
2017 2 QA Area/Tech. Supp. White Rolling Table 1 1
------------------------------------------------------------------------------------------------------------------------------------
2020 2 QA Area VP Office Wall-mounted white board 1 1
------------------------------------------------------------------------------------------------------------------------------------
2021 2 QA Area VP Office Wooden Exec. Desk w/Hutch 1 1
------------------------------------------------------------------------------------------------------------------------------------
2022 2 QA Area VP Office Wooden Table 1 1
------------------------------------------------------------------------------------------------------------------------------------
2024 2 QA Area VP Office Black Leather Exec. Chair 1 1
------------------------------------------------------------------------------------------------------------------------------------
2026 2 QA Area Dir Office Lateral Cabinert (2 drawer, black) 1 1
------------------------------------------------------------------------------------------------------------------------------------
2027 2 QA Area Dir Office Small Rolling File Cabinet (black/gray top) 1 1
------------------------------------------------------------------------------------------------------------------------------------
2028 2 QA Area Dir Office Director Cube 1 1
------------------------------------------------------------------------------------------------------------------------------------
2030 2 QA Area Dir Office Roll-around White Table 1 1
------------------------------------------------------------------------------------------------------------------------------------
2033 2 Acct. Manager White insert Table 1 1
------------------------------------------------------------------------------------------------------------------------------------
2037 2 Tech. Support White Insert Table 1 1
------------------------------------------------------------------------------------------------------------------------------------
2043 2 QA Conference Room Conference Table (6 sections, white) 1 1
------------------------------------------------------------------------------------------------------------------------------------
2044 2 QA Conference Room Wall-mounted white board 1 1
------------------------------------------------------------------------------------------------------------------------------------
2047 2 QA Tester Area Large White Rolling Table 1 1
------------------------------------------------------------------------------------------------------------------------------------
2048 2 QA Tester Area White Insert Table 1 1
------------------------------------------------------------------------------------------------------------------------------------
2051 2 CM Area Large White Rolling Table 1 1
------------------------------------------------------------------------------------------------------------------------------------
2052 2 CM Area White Insert Table 1 1
------------------------------------------------------------------------------------------------------------------------------------
2054 2 Acct. Area White insert Table 1 1
------------------------------------------------------------------------------------------------------------------------------------
2063 2 Acct. Area Director Cube 1 1
------------------------------------------------------------------------------------------------------------------------------------
2064 2 Acct. Area Rolling White Board 1 1
------------------------------------------------------------------------------------------------------------------------------------
2065 2 Acct. Area Rolling White Table 1 1
------------------------------------------------------------------------------------------------------------------------------------
2068 2 Acct. Area Gray Rolling Chair in Dir. Office 1 1
------------------------------------------------------------------------------------------------------------------------------------
2069 2 Acct. Area Director Cube 1 1
------------------------------------------------------------------------------------------------------------------------------------
Schedule D
Tangible Assets
Sections 1.46 and 4.6
EQUIPMENT LIST
Included Assets
------------------------------------------------------------------------------------------------------------------------------------
2072 2 Acct. Area Green Leaf Rolling Chair 1 1
------------------------------------------------------------------------------------------------------------------------------------
2073 2 Acct. Area Director Cube 1 1
------------------------------------------------------------------------------------------------------------------------------------
2075 2 Acct. Area Leaf Rolling Chair (red) 1 1
------------------------------------------------------------------------------------------------------------------------------------
2077 2 Acct. Area White Rolling Table 1 1
------------------------------------------------------------------------------------------------------------------------------------
2078 2 Acct. Area Director Cube 1 1
------------------------------------------------------------------------------------------------------------------------------------
2080 2 Acct. Area Wall Mounted White Board 1 1
------------------------------------------------------------------------------------------------------------------------------------
2082 2 Acct. Area White Rolling Table 1 1
------------------------------------------------------------------------------------------------------------------------------------
2083 2 Acct. Area Red Rolling Leaf Chair 1 1
------------------------------------------------------------------------------------------------------------------------------------
2084 2 Acct. Area Smalll White Rolling Table 1 1
------------------------------------------------------------------------------------------------------------------------------------
2089 2 Accounting 2-Drawer Lateral Cabinet (black) 1 1
------------------------------------------------------------------------------------------------------------------------------------
2090 2 Accounting Biege Rolling Cabinet (small) 1 1
------------------------------------------------------------------------------------------------------------------------------------
2093 2 Accounting Oval Rolling Table (white) 1 1
------------------------------------------------------------------------------------------------------------------------------------
2094 2 Accounting 4-Drawer Black Lateral Cabinet 1 1
------------------------------------------------------------------------------------------------------------------------------------
2100 2 Executive Area 4-Drawer Lateral Cabinet (black) 1 1
------------------------------------------------------------------------------------------------------------------------------------
2101 2 Executive Area 5-Drawer Lateral Cabinet (black, 4ft wide) 1 1
------------------------------------------------------------------------------------------------------------------------------------
2103 2 Copy/Mail Area White Insert Table 1 1
------------------------------------------------------------------------------------------------------------------------------------
2112 2 Exec. Admin. 2- Drawer Filing Cabinet 1 1
------------------------------------------------------------------------------------------------------------------------------------
2113 2 Exec. Admin. 4-Drawer Filing Cabinets 1 1
------------------------------------------------------------------------------------------------------------------------------------
2114 2 Exec, Admin. Director Cube (Bill Mames old desk) 1 1
------------------------------------------------------------------------------------------------------------------------------------
2116 2 Exec. Admin. Rolling Oval White Desk 1 1
------------------------------------------------------------------------------------------------------------------------------------
2117 2 Exec. Admin. Small Rolling Cabinet (black/white top) 1 1
------------------------------------------------------------------------------------------------------------------------------------
2118 2 Exec. Admin. 4-Drawer Lateral Cabinet 1 1
------------------------------------------------------------------------------------------------------------------------------------
2121 2 Legal Dept. Wooden Round Table 1 1
------------------------------------------------------------------------------------------------------------------------------------
2123 2 Legal Dept. Black Leather 2-Seater Sofa w/Wooden Legs 1 1
------------------------------------------------------------------------------------------------------------------------------------
2124 2 Legal Dept. Black Leather Chair w/Wooden Legs 1 1
------------------------------------------------------------------------------------------------------------------------------------
2125 2 Legal Dept. Wooden Exec.Office Desk w/Hutch 1 1
------------------------------------------------------------------------------------------------------------------------------------
2126 2 Legal Dept. Black Leather Exec. Chair 1 1
------------------------------------------------------------------------------------------------------------------------------------
2127 2 Legal Dept. Dark Wood Corner Intable 1 1
------------------------------------------------------------------------------------------------------------------------------------
2128 2 Legal Dept. Wooden Exec. Filing Cabinet 1 1
------------------------------------------------------------------------------------------------------------------------------------
2129 2 Legal Dept. Wooden Exec. Armore (tall) 1 1
------------------------------------------------------------------------------------------------------------------------------------
2130 2 IT Exec. Office Wooden Round Table 1 1
------------------------------------------------------------------------------------------------------------------------------------
2131 2 IT Exec. Office Wooden Chairs w/cushion, beige 1 1
------------------------------------------------------------------------------------------------------------------------------------
2132 2 IT Exec. Office Executive Wooden Desk w/hutch 1 1
------------------------------------------------------------------------------------------------------------------------------------
2133 2 IT Exec. Office Wall Mounted White Board 1 1
------------------------------------------------------------------------------------------------------------------------------------
2134 2 IT Exec. Office Black Leather Exec. Chair 1 1
------------------------------------------------------------------------------------------------------------------------------------
2152 2 IT Exec. Office Director Cube 1 1
------------------------------------------------------------------------------------------------------------------------------------
2153 2 IT Exec. Office Oval White Rolling Table 1 1
------------------------------------------------------------------------------------------------------------------------------------
2155 2 IT Exec. Office Purple Rolling Leaf Chair 1 1
------------------------------------------------------------------------------------------------------------------------------------
2156 2 IT Exec. Office 4-Drawer Lateral Cabinet (black) 1 1
------------------------------------------------------------------------------------------------------------------------------------
2157 2 IT Exec. Office Wall Mounted White Board 1 1
------------------------------------------------------------------------------------------------------------------------------------
2158 2 IT Exec. Office Round Black Pedistool w/silver base 1 1
------------------------------------------------------------------------------------------------------------------------------------
Schedule D
Tangible Assets
Sections 1.46 and 4.6
EQUIPMENT LIST
Included Assets
------------------------------------------------------------------------------------------------------------------------------------
2161 2 IT Exec. Office Wall Mounted White Board 1 1
------------------------------------------------------------------------------------------------------------------------------------
2164 2 NAG Gray Rolling Chair 1 1
------------------------------------------------------------------------------------------------------------------------------------
2168 2 Telecom Manger Cube 1 1
------------------------------------------------------------------------------------------------------------------------------------
2169 2 Telecom Small Rolling Cabinet (2-drawer, black w/white top 1 1
------------------------------------------------------------------------------------------------------------------------------------
2170 2 Telecom Green Non-Rolling Chair 1 1
------------------------------------------------------------------------------------------------------------------------------------
2171 2 Telecom Black Leather Chair 1 1
------------------------------------------------------------------------------------------------------------------------------------
2172 2 Telecom 2-Drawer Black Leteral Cabinet 1 1
------------------------------------------------------------------------------------------------------------------------------------
2173 2 IT Isolated Desk Semi-Circle White Table 1 1
------------------------------------------------------------------------------------------------------------------------------------
2182 2 IT Analyst Semi-Circle White Table 1 1
------------------------------------------------------------------------------------------------------------------------------------
2183 2 IT Analyst Beige Square-Backed Chair (non-rolling) 1 1
------------------------------------------------------------------------------------------------------------------------------------
2185 2 IT Conference Room Green Rolling Chair 1 1
------------------------------------------------------------------------------------------------------------------------------------
2186 2 IT Conference Room Oval Conference Table (6 sections, white) 1 1
------------------------------------------------------------------------------------------------------------------------------------
2187 2 IT Conference Room Wall-mounted white board 1 1
------------------------------------------------------------------------------------------------------------------------------------
2189 2 IT Conference Room Black Cylinder Foam Chairs 1 1
------------------------------------------------------------------------------------------------------------------------------------
2190 2 IT Conference Room Rolling White Board 1 1
------------------------------------------------------------------------------------------------------------------------------------
2193 2 IT Conference Room Rolling White Board 1 1
------------------------------------------------------------------------------------------------------------------------------------
2196 2 IT Conference Room Manager Cube 1 1
------------------------------------------------------------------------------------------------------------------------------------
2197 2 IT Conference Room Manager Cube 1 1
------------------------------------------------------------------------------------------------------------------------------------
2198 2 IT Conference Room Manager Cube 1 1
------------------------------------------------------------------------------------------------------------------------------------
2199 2 IT Conference Room Manager Cube 1 1
------------------------------------------------------------------------------------------------------------------------------------
2201 2 IT Conference Room Rolling White Board 1 1
------------------------------------------------------------------------------------------------------------------------------------
2202 2 IT Conference Room White Oval Table 1 1
------------------------------------------------------------------------------------------------------------------------------------
2203 2 IT Conference Room 4-Drawer Lateral File Cabinet 1 1
------------------------------------------------------------------------------------------------------------------------------------
2208 2 IT Conference Room Large White Rectangular Table 1 1
------------------------------------------------------------------------------------------------------------------------------------
2209 2 IT Conference Room White Insert Table 1 1
------------------------------------------------------------------------------------------------------------------------------------
2214 2 Front Lobby Black Leather Couch Set 1 1
------------------------------------------------------------------------------------------------------------------------------------
2215 2 Front Lobby Cloth Chairs with multicolored block pattern 1 1
------------------------------------------------------------------------------------------------------------------------------------
2219 2 Front Lobby Black Leaf Chair 1 1
------------------------------------------------------------------------------------------------------------------------------------
2220 2 Front Lobby Small Rolling 2-Door Cabinet (white top) 1 1
------------------------------------------------------------------------------------------------------------------------------------
2221 2 Front Lobby Small Rolling 3-Door Cabubet 1 1
------------------------------------------------------------------------------------------------------------------------------------
2223 2 Investments Wooden Table 1 1
------------------------------------------------------------------------------------------------------------------------------------
2224 2 Investments Wall Mounted White Board 1 1
------------------------------------------------------------------------------------------------------------------------------------
2225 2 Investments Black Leather Rolling Exec. Boardroom 1 1
------------------------------------------------------------------------------------------------------------------------------------
2226 2 Investments Leaf Chair (purple) 1 1
------------------------------------------------------------------------------------------------------------------------------------
2228 2 Investments Rolling White Board 1 1
------------------------------------------------------------------------------------------------------------------------------------
2229 2 Investments Black Exec. Leather Chair 1 1
------------------------------------------------------------------------------------------------------------------------------------
2230 2 Investments Exec. Wooden Desk w/Hutch 1 1
------------------------------------------------------------------------------------------------------------------------------------
2231 2 Investments Exec. Aimore (wooden) 1 1
------------------------------------------------------------------------------------------------------------------------------------
2232 2 Investments Wood Corner Tale 1 1
------------------------------------------------------------------------------------------------------------------------------------
2233 2 Investments Black Leather Sofa w/wooden legs 1 1
------------------------------------------------------------------------------------------------------------------------------------
2246 2 HR Office Exec, Desk w/Hutch 1 1
------------------------------------------------------------------------------------------------------------------------------------
Schedule D
Tangible Assets
Sections 1.46 and 4.6
EQUIPMENT LIST
Included Assets
------------------------------------------------------------------------------------------------------------------------------------
2247 2 HR Office 2-Drawer Filing Cabinet 1 1
------------------------------------------------------------------------------------------------------------------------------------
2248 2 HR Office 4-Drawer Filing Cabinets 1 1
------------------------------------------------------------------------------------------------------------------------------------
2249 2 HR Office Black Exec. Leather Chair (rollaway) 1 1
------------------------------------------------------------------------------------------------------------------------------------
2250 2 HR Office Round Exec. Wood Desk w/4 chairs w/cushions 1 1
------------------------------------------------------------------------------------------------------------------------------------
2018 2 QA Area/Tech. Supp. Analyst Cubes 2 2
------------------------------------------------------------------------------------------------------------------------------------
2019 2 QA Area/Tech. Supp. Managers Cubes 2 2
------------------------------------------------------------------------------------------------------------------------------------
2029 2 QA Area Dir Office Purple Cushioned Chairs 2 2
------------------------------------------------------------------------------------------------------------------------------------
2034 2 Acct. Manager Rolling Small Filing Cabinets (black/gray top) 2 2
------------------------------------------------------------------------------------------------------------------------------------
2040 2 Deployment Area Half Tables that make a polygon table - white 2 2
------------------------------------------------------------------------------------------------------------------------------------
2042 2 QA Conference Room Rolling Chairs (red, ribbed backed) 2 2
------------------------------------------------------------------------------------------------------------------------------------
2053 2 Acct. Area Desk Cell 2 2
------------------------------------------------------------------------------------------------------------------------------------
2055 2 Acct. Area Rolling Chairs (purple) 2 2
------------------------------------------------------------------------------------------------------------------------------------
2057 2 Acct. Area 2-Drawer Lateral Filing Cabinets (black) 2 2
------------------------------------------------------------------------------------------------------------------------------------
2060 2 Acct. Area 4-Drawer Lateral Cabinets (black) 2 2
------------------------------------------------------------------------------------------------------------------------------------
2066 2 Acct. Area Red Cushioned Chairs (non-rolling) 2 2
------------------------------------------------------------------------------------------------------------------------------------
2067 2 Acct. Area Drawer Black Lateal 2 2
------------------------------------------------------------------------------------------------------------------------------------
2070 2 Acct. Area 2-Drawer Lateral Cabinets (black) 2 2
------------------------------------------------------------------------------------------------------------------------------------
2071 2 Acct. Area Red Cushioned Chairs (non-rolling) 2 2
------------------------------------------------------------------------------------------------------------------------------------
2074 2 Acct. Area Lateral Black Cabinets 2 2
------------------------------------------------------------------------------------------------------------------------------------
2076 2 Acct. Area Red Chairs Non-rolling 2 2
------------------------------------------------------------------------------------------------------------------------------------
2079 2 Acct. Area 2-Drawer Lateral Cabinets (black) 2 2
------------------------------------------------------------------------------------------------------------------------------------
2081 2 Acct. Area Red Chairs (non-rolling) 2 2
------------------------------------------------------------------------------------------------------------------------------------
2086 2 e studios Red Rolling Chairs 2 2
------------------------------------------------------------------------------------------------------------------------------------
2096 2 Executive Area Rolling Leaf Chairs (1 purple, 1 green) 2 2
------------------------------------------------------------------------------------------------------------------------------------
2097 2 Executive Area 2-Drawer Layeral Cabinets (gray) 2 2
------------------------------------------------------------------------------------------------------------------------------------
2098 2 Executive Area Small Rolling Cabinets (black/white top) 2 2
------------------------------------------------------------------------------------------------------------------------------------
2099 2 Executive Area 2-Drawer Lateral Cabinets (black) 2 2
------------------------------------------------------------------------------------------------------------------------------------
2104 2 Exec. Cafe Wooden Tall Tables 2 2
------------------------------------------------------------------------------------------------------------------------------------
2119 2 Exec. Admin. Non-rolling Chairs (purple) 2 2
------------------------------------------------------------------------------------------------------------------------------------
2120 2 Exec. Admin. Rolling Purple Leaf Chairs 2 2
------------------------------------------------------------------------------------------------------------------------------------
2151 2 HR Exec. Office Wooden Chairs w/ beige cushions 2 2
------------------------------------------------------------------------------------------------------------------------------------
2154 2 IT Exec. Office Green Non-Rolling Chaiors 2 2
------------------------------------------------------------------------------------------------------------------------------------
2166 2 NAG Desk Cell 2 2
------------------------------------------------------------------------------------------------------------------------------------
2191 2 IT Conference Room Cylinder Black Foam Chairs 2 2
------------------------------------------------------------------------------------------------------------------------------------
2192 2 IT Conference Room Semi-Circle White Table 2 2
------------------------------------------------------------------------------------------------------------------------------------
2205 2 IT Conference Room Black Cylinder Foam Chairs 2 2
------------------------------------------------------------------------------------------------------------------------------------
2212 2 Breakroom Smalll Square Tables 2 2
------------------------------------------------------------------------------------------------------------------------------------
2216 2 Front Lobby Round Tables 2 2
------------------------------------------------------------------------------------------------------------------------------------
2217 2 Front Lobby Wood Chairs with cloth bottoms & a triangular ivory back 2 2
------------------------------------------------------------------------------------------------------------------------------------
2227 2 Investments Non-Rolling Chairs (2 purple) 2 2
------------------------------------------------------------------------------------------------------------------------------------
2012 2 QA Area/Tech. Supp. Directors Cubes (Ken, Kristen, Eric) 3 3
------------------------------------------------------------------------------------------------------------------------------------
Schedule D
Tangible Assets
Sections 1.46 and 4.6
EQUIPMENT LIST
Included Assets
------------------------------------------------------------------------------------------------------------------------------------
2014 2 QA Area/Tech. Supp. Small Rolling File Cabinets (black/gray top) 3 3
------------------------------------------------------------------------------------------------------------------------------------
2025 2 QA Area Dir Office Lateral Cabinets (4 drawer, black) 3 3
------------------------------------------------------------------------------------------------------------------------------------
2050 2 CM Area Rolling Area (1 purple, 2 red) 3 3
------------------------------------------------------------------------------------------------------------------------------------
2059 2 Acct. Area 2-Drawer Lateral Cabinets (black) 3 3
------------------------------------------------------------------------------------------------------------------------------------
2061 2 Acct. Area 3 ft.-wide Lateral Cabinets (black) 3 3
------------------------------------------------------------------------------------------------------------------------------------
2062 2 Acct. Area 4 ft.-wide Lateral Cabinets (black) 3 3
------------------------------------------------------------------------------------------------------------------------------------
2115 2 Exec. Admin. 4-Drawer Filing Cabinets 3 3
------------------------------------------------------------------------------------------------------------------------------------
2206 2 IT Conference Room Small Black Rolling Cabinets (white top) 3 3
------------------------------------------------------------------------------------------------------------------------------------
2213 2 Breakroom Tall Square Tables 3 3
------------------------------------------------------------------------------------------------------------------------------------
2023 2 QA Area VP Office Wooden Cushioned Chairs 4 4
------------------------------------------------------------------------------------------------------------------------------------
2031 2 Acct. Manager Desk Cell 4 4
------------------------------------------------------------------------------------------------------------------------------------
2035 2 Tech. Support Desk Cell 4 4
------------------------------------------------------------------------------------------------------------------------------------
2036 2 Tech. Support Rolling Chairs 4 4
------------------------------------------------------------------------------------------------------------------------------------
2038 2 Deployment Area Desk Cell 4 4
------------------------------------------------------------------------------------------------------------------------------------
2039 2 Deployment Area Rolling Chairs (red) 4 4
------------------------------------------------------------------------------------------------------------------------------------
2045 2 QA Tester Area Desk Cell 4 4
------------------------------------------------------------------------------------------------------------------------------------
2046 2 QA Tester Area Rolling Chairs (3 red, 1 purplt) 4 4
------------------------------------------------------------------------------------------------------------------------------------
2049 2 CM Area Desk Cell 4 4
------------------------------------------------------------------------------------------------------------------------------------
2056 2 Acct. Area 4-Drawer Lateral Filing Cabinets (black) 4 4
------------------------------------------------------------------------------------------------------------------------------------
2085 2 e studios Desk Cell 4 4
------------------------------------------------------------------------------------------------------------------------------------
2087 2 Accounting Desk Cell (empty) 4 4
------------------------------------------------------------------------------------------------------------------------------------
2091 2 Accounting Desk Cell 4 4
------------------------------------------------------------------------------------------------------------------------------------
2092 2 Accounting Rolling Chairs (purple) 4 4
------------------------------------------------------------------------------------------------------------------------------------
2095 2 Executive Area Desk Cell 4 4
------------------------------------------------------------------------------------------------------------------------------------
2102 2 Copy/Mail Area 4-Drawer Legal Cabinets (black) 4 4
------------------------------------------------------------------------------------------------------------------------------------
2110 2 Exec. Admin. Desk Cell 4 4
------------------------------------------------------------------------------------------------------------------------------------
2111 2 Exec. Admin. Rolling Purple Chairs 4 4
------------------------------------------------------------------------------------------------------------------------------------
2162 2 NAG Desk Cell 4 4
------------------------------------------------------------------------------------------------------------------------------------
2163 2 NAG Rolling Chairs (3 green, 1 red) 4 4
------------------------------------------------------------------------------------------------------------------------------------
2165 2 NAG Cylider Black Foam Chairs 4 4
------------------------------------------------------------------------------------------------------------------------------------
2167 2 NAG Green Rolling Leaf Chairs 4 4
------------------------------------------------------------------------------------------------------------------------------------
2174 2 IT Isolated Desk Rolling Green Leaf Chairs 4 4
------------------------------------------------------------------------------------------------------------------------------------
2175 2 IT Analyst Desk Cell 4 4
------------------------------------------------------------------------------------------------------------------------------------
2176 2 IT Analyst Analyst Desk Cells 4 4
------------------------------------------------------------------------------------------------------------------------------------
2177 2 IT Analyst Analyst Desk Cells 4 4
------------------------------------------------------------------------------------------------------------------------------------
2178 2 IT Analyst Analyst Desk Cells 4 4
------------------------------------------------------------------------------------------------------------------------------------
2179 2 IT Analyst Analyst Desk Cells 4 4
------------------------------------------------------------------------------------------------------------------------------------
2180 2 IT Analyst Analyst Desk Cells 4 4
------------------------------------------------------------------------------------------------------------------------------------
2194 2 IT Conference Room Desk Cell 4 4
------------------------------------------------------------------------------------------------------------------------------------
2195 2 IT Conference Room Rolling Green Leaf Chairs 4 4
------------------------------------------------------------------------------------------------------------------------------------
2207 2 IT Conference Room 2-Drawer Lateral Cabinets (black) 4 4
------------------------------------------------------------------------------------------------------------------------------------
Schedule D
Tangible Assets
Sections 1.46 and 4.6
EQUIPMENT LIST
Included Assets
------------------------------------------------------------------------------------------------------------------------------------
2218 2 Front Lobby Cloth Chair for built-in desk area 4 4
------------------------------------------------------------------------------------------------------------------------------------
2222 2 Investments Wooden Chairs w/cushions 4 4
------------------------------------------------------------------------------------------------------------------------------------
2013 2 QA Area/Tech. Supp. Lateral File Cabinets (3 drawer, black) 5 5
------------------------------------------------------------------------------------------------------------------------------------
2032 2 Acct. Manager Rolling Chairs (4 red, 1 purple) 5 5
------------------------------------------------------------------------------------------------------------------------------------
2058 2 Acct. Area 2-Drawer Lateral filing Cabinets (gray) 5 5
------------------------------------------------------------------------------------------------------------------------------------
2088 2 Accounting Rolling leaf chairs (4 red, 1 purple) 5 5
------------------------------------------------------------------------------------------------------------------------------------
2200 2 IT Conference Room Green Rolling Leaf Chairs 5 5
------------------------------------------------------------------------------------------------------------------------------------
2204 2 IT Conference Room Non-Rolling Chairs ( 4 green, 1 purple) 5 5
------------------------------------------------------------------------------------------------------------------------------------
2105 2 Exec. Cafe Wooden/Cushioned Tall Rollin Chairs 6 6
------------------------------------------------------------------------------------------------------------------------------------
2122 2 Legal Dept. Wooden Cushioned Beige Chairs 6 6
------------------------------------------------------------------------------------------------------------------------------------
2211 2 Breakroom Tall Plastic Orange Chairs 6 6
------------------------------------------------------------------------------------------------------------------------------------
2015 2 QA Area/Tech. Supp. Cushioned Chairs (red, non-rolling) 7 7
------------------------------------------------------------------------------------------------------------------------------------
2016 2 QA Area/Tech. Supp. Rolling Chairs (red) 8 8
------------------------------------------------------------------------------------------------------------------------------------
2210 2 Breakroom Small Plastic Orange Chairs 8 8
------------------------------------------------------------------------------------------------------------------------------------
2041 2 QA Conference Room Rolling Chairs (purple, squared back) 12 12
------------------------------------------------------------------------------------------------------------------------------------
2184 2 IT Conference Room Red Square-Backed Rolling Chairs 12 12
------------------------------------------------------------------------------------------------------------------------------------
2001 2 Boardroom Black leather Chairs for Boardroom Area 16 16
------------------------------------------------------------------------------------------------------------------------------------
2181 2 IT Analyst Rolling Chairs (17 green, l purple) 18 18
------------------------------------------------------------------------------------------------------------------------------------
Schedule F
Assets of Affiliates
(Section 2.1(b))
None.
Seller shall retain ownership and assets supporting Bills.com ; and its consumer
payments business.
Schedule G
Telephone & Fax Numbers & Domain Names
(Section 2.2(m))
Main Line 210-402-5000
o 4 blocks of 100 DID (210-402-5000 - 5199 & 210-483-8100 - 8199)
o 210-404-1456 - 1FB line
o 210-404-1999 - 1FB line
o 210-404-2827 - 1FB line
Toll Free Lines:
***** Need to add all Toll free numbers for the eCare center and for voice mail
access.
888-281-5364 Bills.com (Excluded)
877-245-7002 Reliant
877-222-5665 NCAA 1
877-222-8866 NCCA 2
888-942-9507 Open
888-824-5735 PSE
877-Bil-lmai (toll free voice mail access)
Domain Names:
Domains:
---------------------------------------------------------------------------------------------------
Domain Name VeriSign Expiration Amount Registrar Comments Need?
Original Date
Date
---------------------------------------------------------------------------------------------------
bills.com 07/30/03 07/31/03 35.00 NetSol EXCLUDED Yes
ASSET
billserv.com 01/18/02 08/02/02 29.00 NetSol Yes
billserv.org 8/27/2000 08/28/03 35.00 NetSol Yes
billserve.com 10/19/97 10/17/01 35.00 NetSol Yes
ebillepicenter.com 02/13/01 02/13/06 25.00 NetSol Yes
ebillepicenter.net 04/11/01 04/11/03 35.00 NetSol
ebillepicenter.org 04/12/01 04/12/03 35.00 NetSol
mypaymentbook.com 11/11/99 11/11/03 35.00 NetSol EXCLUED Yes
ASSET
mypaymentbook.net 11/11/99 11/11/03 35.00 NetSol EXCLUED Yes
ASSET
mypaymentbook.org 11/11/99 11/11/03 35.00 NetSol EXCLUED Yes
ASSET
securebills.com 06/07/99 06/07/03 35.00 NetSol Yes
securebills.net 06/07/99 06/07/03 35.00 NetSol Yes
Certificates:
--------------------------------------------------------------------------------------
Certificate Name VeriSign Original Date Expiration Date Amount Registrad Need?
--------------------------------------------------------------------------------------
au.securebills.com 11/21/01 12/06/03 349.00 VeriSing Yes
client.securebills.com 04/20/01 04/22/03 349.00 VeriSing
csapi.securebills.com 01/03/02 7/1/2003 349.00 C-Free
demo1.billserv.com 08/23/00 N/A 0 SS Yes
--------------------------------------------------------------------------------------
ebill.securebills.com 09/13/01 09/18/03 349.00 VeriSing
ebilldemo.securebills.com 08/16/01 08/20/03 349.00 VeriSing Yes
ebillrouter.securebills.com 01/17/01 01/18/04 249.00 VeriSing Yes
--------------------------------------------------------------------------------------
ecare.au.securebills.com 01/24/02 01/26/04 349.00 VeriSing Yes
ecare.securebills.com 04/25/01 04/27/03 249.00 VeriSing Yes
eclient.securebills.com 02/24/00 09/17/03 249.00 VeriSing Yes
einsert.au.securebills.com 02/06/02 02/01/04 349.00 VeriSing Yes
--------------------------------------------------------------------------------------
einsert.securebills.com 09/10/01 09/14/03 349.00 VeriSing Yes
eshare.securebills.com 05/16/00 ??? ??? VeriSing Yes
ofx.securebills.com 02/28/00 02/16/03 249.00 VeriSing Yes
qa.securebills.com 07/16/01 ??? 249.00 VeriSing
Yes reliant.securebills.com 06/06/00 ??? 349.00 VeriSing Yes
reports.securebills.com 08/18/00 N/A 0 SS Yes Other Certs:
--------------------------------------------------------------------------------
mastercard.securebills.com 10/14/2001 10/15/04 N/A M-Card Yes
--------------------------------------------------------------------------------
Schedule H
Excluded Assets
Section 2.3
EQUIPMENT LIST
Excluded Assets
Serial number or
SERVER NAME SERVER TYPE Service Tag Number
----------- ----------- ------------------
General Support:
AQUAMAN DELL DEMENSION 0W8DI
CEREBRO IBM NETFINITY 5 23RH005
DIABLO IBM E-SERVER X 23H8368
HAVOK DELL DEMENSION HP078
VISION DELL DEMENSION 2ZRLA
DOMINO DELL DEMENSION DHTBI
ROBIN-SECURITY DELL OPTIPLEX 08QVV
ICEMAN IBM NETFINITY 5 552408P
MRFREEZE IBM NETFINITY 5 23B7736
NIGHTWING DELL DEMENSION 0DR1W
SHAZAM IBM NETFINITY 4 23K6495
SPECTRE IBM NETFINITY 7 23T4908
THOR IBM NETFINITY 5 23X3505
Network LAN/WAN:
2 4000 SWITCH 4003 CISCO serial numbers FOX04021218, FOX 04021214
2 LINKSYS STACKPRO 16 PORTSHUB serial numbers 9400000404, 8410000753
1 Network Rack IBM
1 Network Rack Ortronics
1 Cisco PIX Firewall Model 520 - serial 18009463
1 Telephone Switch Option 21 Nortel
MISC:
Schedule H
Excluded Assets
Section 2.3
EQUIPMENT LIST
Excluded Assets
MISC:
PC'S AND LAPTOPS
Item# PC Name Field Tag Number Location Jack ID Number
----- ------- ----- ---------- -------- --------------
77 ShelbyGoolsby hp074 2a003 4009
159 ArleenWatson 2prf301 2b051 4071
158 L_TURNER u1jlq 2b050 4072
156 V_MEEDER 12x67 2b049 4073
155 RuthTorres 8rdmq 2b047 4074
154 R_GIL fhmez 2b044 4075
148 KimMcCoy cjm8501 2b032 4076
147 ACCTOUT IC42M 2b032 4077
149 RubenBarron cth6001 2b036 4078
151 eStudio_MAC xb02406fhsg 2b037 4079
153 EdyHernandez hth6001 2b040 4081
152 stevewilson-laptop y960c 2b039 4082
118 S-Gerick gzt5801 2a073 4093
116 KayGerfers 656s10b 2a070 4094
117 PattySuplick 379j101 2a071 4095
115 CurtisReese hk9j601 2a069 4096
113 LeslieOttmers 8jr6401 2a066 4097
114 JoanieLeihsing gnrf301 2a067 4098
112 P_LONG 2vvki0i 2a065 4099
109 K_KELLER 008iv 2a058 4105
107 RickyRaney 2zrhi 2a054 4106
23 F-ZENG2 - laptop 6ap18 storage room 4112
157 S_MULLIGAN fhmey 2b050 4139
53 SMAC-1 - laptop f6e4m (Mickey's desk) 4141
41 L-LEAL 3idqh (by Linnell) 4142
145 GuyGould fhmen 2b029 4148
144 MarkBindseil ep3er 2b028 4149
140 M_LONG fk009dp 2b015 4150
137 M_ASKLAND e8uqs 2b010 4153
1 M_MILLARD2 - laptop
f6eji home
12 terrispare - laptop (home)
15 M_LONG3 - laptop 9963t home
37 Mlong_MAC - laptop
PowerG4 home & office
44 L_HOCHLAP - laptop
6ag6m home
Schedule H
Excluded Assets
Section 2.3
EQUIPMENT LIST
Excluded Assets
135 M_JISHA fi81n 2b007 4034
105 N-Ducote 23dmmx4 2a037 4038
29 R_whitten qhtb2 help desk room 4040
141 L-HOCH fi8ib 2b017 4068
142 T_DIAMOND 7ibph 2b022 4070
54 M_Long (old home fk00p67 storage
pc) room 4137
143 T_HUNTER2 7felh 2b023 4138
73 K-Carson2 - 6wif5 (Mickey's
laptop desk) 4140
Printers/Scanner
Item# Brand Type Model IOS or IP Serial Location Number
----- ----- ---- ----- --------- ------ -------- ------
1 HP LaserJet 3150 USDLD36595 Louis's office 5013
2 HP LaserJet 4050 172.16.2.27 USBF000766 5014
10 Xerox Laser 7700GX 172.16.2.32 LGM401827 5004
18 HP LaserJet 3150 USDL004489 Tony's office 5015
Melissa's
33 HP ColorJet 2000C office 5034
Micheal's
34 NEC Laser Printer 613653555C office 5012
30 HP ScanJet ADF SG8BL1119F by Steve 5032
35 HP LaserJet 3200 USAH019310 Terrie's office 5016
Telephones & Speaker Phones
Item# Name Model# Serial Number Location Jack ID Number
----- ---- ------ ------------- -------- ------- ------
71 M Millard M2008 NNTM60B58C43 2b011 6087
72 M-Millard Sound Station 12434207 2b012 6136
75 M_LONG M2008 NNTM6092D139 2b015 6143
159 M_LONG M2616 Get Serial No
160 M_LONG Sound Station Get Serial No
76 L-HOCH M2616 NNTM60934D64 2b018 6093
77 L-HOCH Sound Station 12439164 2b018 6094
78 T_DIAMOND M2008 NNTM60920132 2b022 6095
79 T-Diamond Sound Station 12517839 2b022 6096
80 T_HUNTER M2616 NNTM6092D133 2b023 6141
81 T_HUNTER Sound Station 12280546 2b024 6140
Schedule H
Excluded Assets
Section 2.3
EQUIPMENT LIST
Excluded Assets
82 War Room M2008 NNTM609D78A2 6138
83 War Room Sound Station 12457412 6139
84 MarkBindseil M2008 NNTM60A19356 2b028 6127
110 M2616 NNTM60920121 Mike Jisha 6038
111 M2008 NT2K08GH-03 Mike Jisha 6039
112 M2008 NT2K08GH-03 Mike Jisha 6040
113 M2008 NT9K08AD-03 Mike Jisha 6041
114 M2008 NT9K08AD-03 Mike Jisha 6042
115 M2008HF NNTM60962770 Mike Jisha 6043
116 M2008GHF NNTM609628BA Mike Jisha 6044
117 M2616 NNTM60A19FA4 Mike Jisha 6045
118 M2008 NT2K08GH-03 Mike Jisha 6046
119 M2008 NNTN6095B85C Mike Jisha 6047
120 M2008HF NT9K08AD-03 Mike Jisha 6048
121 M2008 NT9K08AD03 Mike Jisha 6049
122 M2008 NT2K08GH-03 Mike Jisha 6050
123 M2616 NNTM60B30D05 Mike Jisha 6051
124 M2616 NNTM60A19F2E Mike Jisha 6052
125 M2008 NT2K08GH-03 Mike Jisha 6053
126 M2008 NT2K08GH-03 Mike Jisha 6054
127 M2008 NT9K08AD-03 Mike Jisha 6055
128 M2616 NNTM6092D134 Mike Jisha 6056
129 M2616 NNTM6092D2CC Mike Jisha 6057
130 M2008 NT9K08AD-03 Mike Jisha 6058
131 M2616 NNTM60A19FB5 Mike Jisha 6059
132 M2616 NNTM60B30D4F Mike Jisha 6060
133 M2008hf NNTM6095DDB4 Mike Jisha 6061
134 M2008HF NNTM60955DDDF Mike Jisha 6062
135 M2616 NNTM6092D0F8 Mike Jisha 6063
136 M2008HF NNTM609628C6 Mike Jisha 6064
137 M2616 NT9K16AC-03 Mike Jisha 6065
138 M2008 NT2K08GH-03 Mike Jisha 6066
139 M2008HF NNTM60962003 Mike Jisha 6067
140 M2008 NT2K08GH-03 Mike Jisha 6068
141 M20088HF NNTM60A19385 Mike Jisha 6069
142 M2008HF NNTM60B444CC Mike Jisha 6070
143 M2008HF NNTM60A11935B Mike Jisha 6071
144 M2008 NT2KGH-03 Mike Jisha 6072
Schedule H
Excluded Assets
Section 2.3
EQUIPMENT LIST
Excluded Assets
145 M2008 NT9K08AD-03 Mike Jisha 6073
146 M2008 NT9K08AD-03 Mike Jisha 6074
147 M2008 NT2K08GH-03 Mike Jisha 6075
148 M2008 NT2K08GH-03 Mike Jisha 6076
149 M2008 NT2K08GH-03 Mike Jisha 6076
150 M2008 NT2K08GH-03 Mike Jisha 6077
151 M2008 NNTM60B444B1 Mike Jisha 6079
152 m2008 NT2K08GH-03 Mike Jisha 6080
153 M2616 NT9K16AC-03 Mike Jisha 6081
154 M2008HF NNTM6095DDD5 Mike Jisha 6082
155 Sound Station 12385365 Mike Jisha 6083
156 Sound Station 12300585 Mike Jisha 6084
157 Sound Station 12444510 Mike Jisha 6085
158 M2008f NNTM609628BA Mike Jisha 6086
Third-Party Software Licenses
Excluded Assets
Third-Party Software Status QTY Total
Windows 2000 Advance Server OS excluded 3 3
Windows 2000 Professional OS excluded 44 44
Windows 2000 Server OS excluded 1 1
Windows 98 OS excluded 2 2
Windows NT OS excluded 16 16
SQL Server Windows NT excluded 3 3
PGP Desktop excluded 30 30
PGP eBusiness Server excluded 1 1
Delphi 5 Enterprise excluded 1 1
Java/ASP/JSP excluded 10 10
Visual Basic excluded 1 1
Adobe Acrobat excluded 5 5
Adobe Reader excluded 41 41
Adobe Framemaker excluded 1 1
Adobe Illustrator excluded 2 2
Adobe Pagemaker excluded 2 2
Adobe Photoshop excluded 2 2
ColdFusion excluded 1 1
Schedule H
Excluded Assets
Section 2.3
EQUIPMENT LIST
Excluded Assets
Director excluded 1 1
Dreamweaver excluded 3 3
Drumbeat excluded 1 1
Flash excluded 3 3
Backoffice NT Server excluded 0 0
Exchange Server excluded 2 2
Internet Explorer excluded 41 41
Office 2000 Professional excluded 41 41
Project 2000 excluded 3 3
Visio Professional excluded 5 5
PC AnyWhere Host/Remote excluded 10 10
Platinum Accounting Software excluded 1 1
ETrade Optionlink excluded 1 1
ADP HR Software excluded 1 1
Billserv Assets
(Furniture and
Fixtures Only)
----------------------------------------------------------------------------------------------------------------------------
Inventory Total Billserv's
----------------------------------------------------------------------------------------------------------------------------
Number Floor Location Description QTY QTY
----------------------------------------------------------------------------------------------------------------------------
1000 1 Human Resources Wooden Executive Table 1 1
----------------------------------------------------------------------------------------------------------------------------
1001 1 Human Resources Wooden Chair w/ Cushions 4 4
----------------------------------------------------------------------------------------------------------------------------
1002 1 Human Resources Wooden Executive Desk w/hutch 6 6
----------------------------------------------------------------------------------------------------------------------------
1003 1 Human Resources Leather Chairs (4 red, 1 purple, 1 green)Rollways 6 6
----------------------------------------------------------------------------------------------------------------------------
1004 1 Human Resources White Wallside Tables 1 1
----------------------------------------------------------------------------------------------------------------------------
1005 1 Human Resources Clear Chairs w/Black Cushions 3 3
----------------------------------------------------------------------------------------------------------------------------
1006 1 Human Resources Stationary Chairs (4 red, 4 purple) 6 6
----------------------------------------------------------------------------------------------------------------------------
1007 1 Human Resources Wall Mounted White Board 1 1
----------------------------------------------------------------------------------------------------------------------------
1008 1 Human Resources Rolling 2-door Filliing Cabinets 5 5
----------------------------------------------------------------------------------------------------------------------------
1009 1 Human Resources Manger Desk 1 1
----------------------------------------------------------------------------------------------------------------------------
1010 1 Human Resources Analyst Desk 4 4
----------------------------------------------------------------------------------------------------------------------------
1011 1 Human Resources Locker 1 1
----------------------------------------------------------------------------------------------------------------------------
1012 1 Human Resources Rolling White Oval Table 1 1
----------------------------------------------------------------------------------------------------------------------------
1013 1 Training Room Gray Cushion Rolling Chairs 16 16
----------------------------------------------------------------------------------------------------------------------------
1014 1 Training Room White/Gray Training Tables w/Keyboard holes- Large 5ft 6 6
----------------------------------------------------------------------------------------------------------------------------
Schedule H
Excluded Assets
Section 2.3
EQUIPMENT LIST
Excluded Assets
----------------------------------------------------------------------------------------------------------------------------
1015 1 Training Room White/Gray Training Tables w/Keyboard holes- Small 3ft 3 3
----------------------------------------------------------------------------------------------------------------------------
1016 1 Training Room Training Podium desk (Gray) 1 1
----------------------------------------------------------------------------------------------------------------------------
1017 1 Training Room Wall Mounted White Board 1 1
----------------------------------------------------------------------------------------------------------------------------
1018 1 Training Room Rolling White Table (Work) 1 1
----------------------------------------------------------------------------------------------------------------------------
1 Training Room Ceiling mounted LCD Projector 1 1
----------------------------------------------------------------------------------------------------------------------------
1019 1 Training Room Wall Mounted Screen 1 1
----------------------------------------------------------------------------------------------------------------------------
1020 1 ecare Lockers (gray) 1 1
----------------------------------------------------------------------------------------------------------------------------
1021 1 ecare Leaf Chairs (2 red, 12 green, 10 purple) 29 29
----------------------------------------------------------------------------------------------------------------------------
1022 1 ecare Reps Desk (CSR) 23 23
----------------------------------------------------------------------------------------------------------------------------
1023 1 ecare Supervisor Desk 2 2
----------------------------------------------------------------------------------------------------------------------------
1024 1 ecare Director Desk 1 1
----------------------------------------------------------------------------------------------------------------------------
1025 1 ecare Off White Cushion Chairs 10 10
----------------------------------------------------------------------------------------------------------------------------
1026 1 ecare White Tables 3 3
----------------------------------------------------------------------------------------------------------------------------
1027 1 ecare Wall Metal White Boards 2 2
----------------------------------------------------------------------------------------------------------------------------
1028 1 ecare Non Rolling Chairs (5 red, 5 green) 10 10
----------------------------------------------------------------------------------------------------------------------------
1029 1 ecare Wall Side Table 1 1
----------------------------------------------------------------------------------------------------------------------------
1030 1 ecare Rolling White Table (Oval) 1 1
----------------------------------------------------------------------------------------------------------------------------
1031 1 ecare White Square Table (5ft) 1 1
----------------------------------------------------------------------------------------------------------------------------
1032 1 ecare (White Conference Table (4 sections) 1 1
----------------------------------------------------------------------------------------------------------------------------
1033 1 ecare 6 Shelf Bookcase (Black) 1 1
----------------------------------------------------------------------------------------------------------------------------
1034 1 ecare 2-Drawer Rolling Filling Cabinets 1 1
----------------------------------------------------------------------------------------------------------------------------
1035 1 ecare Gray Lockers 23 23
----------------------------------------------------------------------------------------------------------------------------
1036 1 ecare Reps Desk 23 23
----------------------------------------------------------------------------------------------------------------------------
1037 1 ecare Sup. Desk 2 2
----------------------------------------------------------------------------------------------------------------------------
1038 1 ecare Manager Desk 1 1
----------------------------------------------------------------------------------------------------------------------------
1039 1 ecare Leaf Chairs (11 brown, 7 red, 10 purple) 28 28
----------------------------------------------------------------------------------------------------------------------------
1040 1 ecare Administrative assistant Desk 1 1
----------------------------------------------------------------------------------------------------------------------------
1041 1 ecare White Rolling Table 1 1
----------------------------------------------------------------------------------------------------------------------------
1042 1 ecare White Small Table (Oval) 1 1
----------------------------------------------------------------------------------------------------------------------------
1043 1 VP Office ecare Exec. Desk w/Hutch (Wooden) 1 1
----------------------------------------------------------------------------------------------------------------------------
1044 1 VP Office ecare Exec. Wooden 1 1
----------------------------------------------------------------------------------------------------------------------------
1045 1 VP Office ecare Exec. Wood Table w/4 Wooden Chairs 1 1
----------------------------------------------------------------------------------------------------------------------------
1046 1 ecare Black Leather Exec. Chair 1 1
----------------------------------------------------------------------------------------------------------------------------
1047 1 ecare Straight Chairs (1 red, 2 greeen) 3 3
----------------------------------------------------------------------------------------------------------------------------
1048 1 ecare conference Conference table (white, 4 sections) 4 4
----------------------------------------------------------------------------------------------------------------------------
1049 1 ecare conference Gray Leather Chairs (Rolling) 8 8
----------------------------------------------------------------------------------------------------------------------------
1050 1 ecare conference Side Chairs (colorfull) 2 2
----------------------------------------------------------------------------------------------------------------------------
1051 1 ecare cafe. Cafe Tables (2 tall, 2 short) 4 4
----------------------------------------------------------------------------------------------------------------------------
1052 1 ecare cafe. Cafe Chairs (4 tall, 4 short) 8 8
----------------------------------------------------------------------------------------------------------------------------
1053 1 Storage Room Fish Tank (Black, 3 pieces) 1 1
----------------------------------------------------------------------------------------------------------------------------
1054 1 Storage Room Desktops (19 Reps Desk) 17 Sup) 36 36
----------------------------------------------------------------------------------------------------------------------------
Schedule H
Excluded Assets
Section 2.3
EQUIPMENT LIST
Excluded Assets
----------------------------------------------------------------------------------------------------------------------------
1055 1 Storage Room Exec. Desk (Wooden w/Hutch) 2 2
----------------------------------------------------------------------------------------------------------------------------
1056 1 Storage Room Small Portable Air Conditioner (Model CFO.5) 1 1
----------------------------------------------------------------------------------------------------------------------------
1057 1 Storage Room Exec Round Wood Desk 1 1
----------------------------------------------------------------------------------------------------------------------------
1075 OffSite, EDS Storage Various Cabinets, Lighting, Fixtures that were left over from
the sublease all
----------------------------------------------------------------------------------------------------------------------------
2004 2 Boardroom Plasma Screens (Pioneer) 2 1
----------------------------------------------------------------------------------------------------------------------------
Switches, Extron Digital Wideo Scaler DVS 150,
----------------------------------------------------------------------------------------------------------------------------
Panasonic VCR A6-1330, TOA 900 Series II
----------------------------------------------------------------------------------------------------------------------------
Amplifer A-912MK2, AMY Axcent Integrated
----------------------------------------------------------------------------------------------------------------------------
2011 2 QA Area/Tech. Supp. Whiteboard (Rolling) 3 3
----------------------------------------------------------------------------------------------------------------------------
2106 2 Exec. Boardroom Long Oval Wooden Boardroom Table (seats 8) 1 1
----------------------------------------------------------------------------------------------------------------------------
2107 2 Exec. Boardroom Leather Chairs in Exec. Boardroom 8 8
----------------------------------------------------------------------------------------------------------------------------
2108 2 Exec. Boardroom Rolling White Board 1 1
----------------------------------------------------------------------------------------------------------------------------
2109 2 Exec. Boardroom Tripod Easel (paper holder) 1 1
----------------------------------------------------------------------------------------------------------------------------
2135 2 Louis Office 3 piece Leather Furniture Set (couch/2 chairs) 1 1
----------------------------------------------------------------------------------------------------------------------------
3136 2 Louis Office 2-piece Table Set (light wood couch-side & coffee 1 1
----------------------------------------------------------------------------------------------------------------------------
3137 2 Louis Office 3-piece cabinet set (light wood) 1 1
----------------------------------------------------------------------------------------------------------------------------
3138 2 Louis Office 2 Light Wood Chairs w/beige cushions 2 2
----------------------------------------------------------------------------------------------------------------------------
3139 2 Louis Office Light Wood Hutch Wall Unit 1 1
----------------------------------------------------------------------------------------------------------------------------
3140 2 Louis Office Light Wood Desk 1 1
----------------------------------------------------------------------------------------------------------------------------
2141 2 Louis Office Leather Exec. Chair (black) 1 1
----------------------------------------------------------------------------------------------------------------------------
2142 2 Exec. Marketing Off. Round Wooden Table 1 1
----------------------------------------------------------------------------------------------------------------------------
2143 2 Exec. Marketing Off. Wooden Beige Cushioned Chairs 6 6
----------------------------------------------------------------------------------------------------------------------------
Schedule H
Excluded Assets
Section 2.3
EQUIPMENT LIST
Excluded Assets
----------------------------------------------------------------------------------------------------------------------------
2144 2 Exec. Marketing Off. Rolling White Board 1 1
----------------------------------------------------------------------------------------------------------------------------
2145 2 Exec. Marketing Off. Wooden Exec Desk w/Hutch 1 1
----------------------------------------------------------------------------------------------------------------------------
2146 2 Exec. Marketing Off. Wooden Lateral Cabinet 1 1
----------------------------------------------------------------------------------------------------------------------------
2147 2 Exec. Marketing Off. Wooden Armoire 1 1
----------------------------------------------------------------------------------------------------------------------------
2148 2 Exec. Marketing Off. 2-piece Wooden Table Set (couch side & coffee 1 1
----------------------------------------------------------------------------------------------------------------------------
2149 2 Exec. Marketing Off. 2-piece set (black leather couch & chair) 1 1
----------------------------------------------------------------------------------------------------------------------------
2150 2 Exec. Marketing Off. Brown Leather Exec. Chair 1 1
----------------------------------------------------------------------------------------------------------------------------
2160 2 IT Exec. Office Rolling White Board 1 1
----------------------------------------------------------------------------------------------------------------------------
2188 2 IT Conference Room Rolling White Board 1 1
----------------------------------------------------------------------------------------------------------------------------
2234 2 Exec. Office (Hunter) Wooden Table w/stanless steel legs 1 1
----------------------------------------------------------------------------------------------------------------------------
2235 2 Exec, Office (Hunter) Black Chairs w/cushions 5 5
----------------------------------------------------------------------------------------------------------------------------
2236 2 Exec. Office (Hunter) Rolling White Board 1 1
----------------------------------------------------------------------------------------------------------------------------
2237 2 Exec. Office (Hunter) Drawer Filing Cabinet 1 1
----------------------------------------------------------------------------------------------------------------------------
2238 2 Exec. Office (Hunter) Black Leather Sofa w/Chair 1 1
----------------------------------------------------------------------------------------------------------------------------
2239 2 Exec. Office (Hunter) Coffee Table (glass) 1 1
----------------------------------------------------------------------------------------------------------------------------
2240 2 Exec. Office (Hunter) Side Chairs (colorfull) 2 2
----------------------------------------------------------------------------------------------------------------------------
2241 2 Exec. Office (Hunter) Round End Table 2 2
----------------------------------------------------------------------------------------------------------------------------
2242 2 Exec. Office (Hunter) Wooden Side Desk 1 1
----------------------------------------------------------------------------------------------------------------------------
2243 2 Exec. Office (Hunter) Exec. Glass Desk w/black cabinet 1 1
----------------------------------------------------------------------------------------------------------------------------
Schedule H
Excluded Assets
Section 2.3
EQUIPMENT LIST
Excluded Assets
----------------------------------------------------------------------------------------------------------------------------
2245 2 Michael's Office Michael Office (complete CEO's office - all furnishings) 1 1
----------------------------------------------------------------------------------------------------------------------------
1 All first floor All fxitures, cabinets, wiring, carpet, etc 1 1
----------------------------------------------------------------------------------------------------------------------------
Schedule L
Non-operating assets
(Section 4.6)
Third-Party Software Status
Avolent OFX Server - Contract expires May '2003 - in working condition
but license expiration will force it to come out of
service.
eShare - NetAgent (CRM)- Working, but not under maintenance contract
Talisma CRM Package - Not in production, nor has is the final license
payment been made - there is an offset payment due
to both parties.
63 PC's or Laptops, specifically ones marked as"spare parts, storeroom, or help
desk" or computers that were used by employees that were laid-off, on the
included assets schedule D, we can not warrant that they are in working
condition but will warrant that 90% have licensed operating systems.
Schedule Q
(Section 4.12(c))
I. Patents
None.
II. Trademarks
Billserv, Inc., (Registered Trademark through Patent & Trademark Office)
Billserv, Inc. and design (Registered Trademark through
Patent & Trademark Office)
eServ (Registered Trademark through Patent & Trademark Office)
bills.com (excluded from transfer)
bills.com and design (excluded from transfer)
Click Your Bills Goodbye (excluded from transfer)
III. Registered Copyrights
None.
Schedule R
Third-Party Software Licenses
(Section 4.12(d))
Included Assets
Third-Party Software Status QTY Total
-------------------- ------ --- -----
Database 2 EE included 14 14
i-Solutions included 1 1
Avolent OFX Server (see schedule L) included 1 1
Windows 2000 AS OS included 20 20
Windows 2000 Pro OS included 91 91
Windows 2000 Server OS included 8 8
Windows 98 OS included 2 2
Windows NT OS included 31 31
SQL Server Windows NT included 7 7
PGP Desktop included 71 71
PGP eBusiness Server included 4 4
Delphi 5 Enterprise included 3 3
Java/ASP/JSP included 20 20
Visual Basic included 4 4
Adobe Acrobat included 5 5
Adobe Reader included 59 59
Adobe Framemaker included 1 1
Adobe Illustrator included 3 3
Adobe Pagemaker included 2 2
Adobe Photoshop included 3 3
ColdFusion included 1 1
Director included 1 1
Dreamweaver included 8 8
Drumbeat included 1 1
Flash included 8 8
Backoffice NT Server included 1 1
Exchange Server included 2 2
Internet Explorer included 84 84
Office 2000 Professional included 108 108
Project 2000 included 9 9
Visio Professional included 18 18
PC Anywhere Host/Remote included 50 50
Miva included 2 2
eShare - NetAgent (CRM) (see schedule L) included 1 1
Symposium included 1 1
Talisma CRM Suite (see schedule L) included 1 1
Schedule R
Third-Party Software Licenses
(Section 4.11(d))
Excluded Assets
Third-Party Software Status QTY Total
Windows 2000 Advance Server OS excluded 3 3
Windows 2000 Professional OS excluded 44 44
Windows 2000 Server OS excluded 1 1
Windows 98 OS excluded 2 2
Windows NT OS excluded 16 16
SQL Server Windows NT excluded 3 3
PGP Desktop excluded 30 30
PGP eBusiness Server excluded 1 1
Delphi 5 Enterprise excluded 1 1
Java/ASP/JSP excluded 10 10
Visual Basic excluded 1 1
Adobe Acrobat excluded 5 5
Adobe Reader excluded 41 41
Adobe Framemaker excluded 1 1
Adobe Illustrator excluded 2 2
Adobe Pagemaker excluded 2 2
Adobe Photoshop excluded 2 2
ColdFusion excluded 1 1
Director excluded 1 1
Dreamweaver excluded 3 3
Drumbeat excluded 1 1
Flash excluded 3 3
Backoffice NT Server excluded 0 0
Exchange Server excluded 2 2
Internet Explorer excluded 41 41
Office 2000 Professional excluded 41 41
Project 2000 excluded 3 3
Visio Professional excluded 5 5
PC AnyWhere Host/Remote excluded 10 10
Platinum Accounting Software excluded 1 1
ETrade Optionlink excluded 1 1
ADP HR Software excluded 1 1
Schedule S
Proprietary Software
(Section 4.12(k))
Billserv Software Products
Software
eServ Select
eServ Express
eServ Gateway
Tuition Payment Plan
IVR Reporting System
Advance Payment System
eServ View
eServ Connect
Bill Distribution
Biller Direct
Payment Processing
Direct Delivery
Warehousing
eInsert
Payment without Presentment
Online Enrollment Assistance
Preferred Enrollment
Single Logon
Schedule T
Renegotiations/Terminations
(Section 4.13 (a))
Southwest Student Services - Renegotiated; one-year agreement effective 4/1/03
Reliant/Entex/Centerpoint - work order to decommission site expires 9/1/03
San Fransisco PUC - continued servicing on expired contract. Client demands
compliance with domestic partner insurance requirements or will not renew
contract
Allegheny - on a month to month basis until transitioned to CheckFree
Avista - contract terminated 3/31/03
Intermountain Gas - terminate services in July or August 2003; have not
completed DAS documentation
21st Century - contract expires 5/25/03, will cease servicing on or before
6/23/03
Clark Public Utilities - contract expires 10/1/03
Schedule T
Renegotiations/Terminations
(Section 4.13 (a))
Continued
Southwest Student Services - Renegotiated; one-year agreement effective 4/1/03
Reliant/Entex/Centerpoint - work order to decommission site expires 9/1/03
San Fransisco PUC - continued servicing on expired contract. Client demands
compliance with domestic partner insurance requirements or will not renew
contract
Allegheny - on a month to month basis until transitioned to CheckFree
Avista - contract terminated 3/31/03
Intermountain Gas - terminate services in July or August 2003; have not
completed DAS documentation
21st Century - contract expires 5/25/03, will cease servicing on or before
6/23/03
Clark Public Utilities - contract expires 10/1/03
Schedule U
Consents for Assumed Contracts
(Section 4.13(a))
CheckFree Corporation
Bank One and Paymentech
Mastercard RPPS
Speedscan
ACH Commerce
IBM
Cyberbills
Paytrust
Sungard Recovery Services, L.P.
All billing customers
Shareholder Agreement, Billserv Australia PTY Limited
Schedule X
Brokers
(Section 4.15)
The Company agrees to pay Stifel, Nicolaus & Company a flat-fee of $315,000 plus
immaterial expenses, if any.
Schedule Y
Accounts Receivable
Section 4.16
A/R subject to 3 liens and $293,027.34 offset liability for Talisma (in A/P) and
$143,310.25 offset liability for CheckFree (in A/P).
Schedule BB
Purchaser Disclosure Schedule
(Article 5)
Purchaser hereby represents and warrants that there are no exceptions to the
representations and warranties provided in Article V.
Schedule HH
Satisfaction of Material Unsecured Creditors
(Section 6.11(a))
Bexar County Tax Assessor
Metavante Corporation
Secure Commerce Services, Inc. (Paytrust)
Southwestern Bell
Time Warner Telecom, Inc.
WorldCom Communications, Inc.
Schedule II
Satisfaction of Other Unsecured Creditors
(Section 6.11(b))
Balance as of 5/13/03
---------------------
Bexar County Tax Assessor $97,512.02
Metavante Corporation $ 5,488.52
Secure Commerce Services, Inc. (Paytrust) $ 2,644.50
Southwestern Bell (data lines and long distance) $15,535.44
Time Warner Telecom, Inc. $ 7,102.20
WorldCom Communications, Inc. (T1s and local) $ 7,426.12
Schedule KK
Conditions to Obligations of Purchaser
(Section 9.3(d))
At Closing, or reasonably thereafter, the following Secured Creditors will be
satisfied pursuant to Section 9.3(d):
Balance as of 5/13/03
---------------------
Laurus Master Fund approx. $1,800,000.00
Kootnz McCombs $ 248,915.08
CheckFree $ 165,284.00
APPENDIX "B"
TRANSITION SERVICES AGREEMENT
This Transition Services Agreement ("Transition Agreement") is entered
into as of the ___ day of May, 2003 by Saro, Inc., a Delaware corporation
("Purchaser") and Billserv, Inc., a Nevada corporation ("Seller"). Capitalized
terms used herein and not otherwise defined herein shall have the respective
meanings ascribed to them in the Agreement (as defined below).
RECITALS:
A. Seller is engaged in the business of providing electronic bill
presentment and payment solutions, and Purchaser is interested in purchasing,
and Seller is interested in selling, the Business.
B. Purchaser and Seller have entered into that certain Definitive Asset
Purchase Agreement (the "Agreement"), whereby Seller intends to sell and
Purchaser intends to purchase (the "Transaction") those Assets of the Business
detailed in the Agreement.
C. Purchaser and Seller have agreed that Seller shall provide certain
activities related to transitioning certain employees for employment with
Purchaser, cooperating with Purchaser to transition 1) the data center that
supports the Business ("Data Center") and 2) the Office Space to Purchaser after
the Closing, and assign certain Third Party Arrangements (as defined below) to
Purchaser as of the Closing (collectively, the "Transition Services").
D. Seller and Purchaser have agreed that Purchaser will perform certain
activities for Seller, as well as make certain commitments to and with Seller
related to transitioning Seller during the Term (as defined below) and after the
Closing (the "Seller Transition Services").
E. Seller wishes to provide and Purchaser wishes to obtain the Transition
Services and Purchaser wishes to provide and Seller wishes to obtain the Seller
Transition Services on the terms and conditions set forth herein.
Now, therefore, in consideration of the mutual agreements set forth below,
the sufficiency of which is acknowledged, the parties agree as follows:
A. EMPLOYEE RETENTION RESPONSIBILITIES
1. Seller Employees. During the period from execution of the Agreement
until Closing (the "Term"), Seller will retain all employees of Seller
necessary to operate Seller's business in the ordinary course (a
"Necessary Employee"). In the event a Necessary Employee of Seller
terminates his or her employment status with Seller or is terminated by
Seller for cause during the Term (a "Terminating Necessary Employee"),
Seller will replace such Necessary Employee as soon as reasonably possible
(a "Necessary Employee Replacement"). Up to but not after Closing, Seller
is responsible
for all costs associated with 1) hiring the Necessary Employee
Replacement, 2) training the Necessary Employee Replacement, 3)
compensating the Necessary Employee Replacement, and 4) providing
employment benefits, if any, to the Necessary Employee Replacement (1
through 4 being the "Employee Costs"). In the event Purchaser makes an
offer of employment to Tony Diamond or Steve Wilson, as described below,
and Purchaser requests that such individuals perform any services on
behalf of Seller or Purchaser during the Term, Purchaser will be
responsible for all compensation, employee benefits, and other expenses
associated with such individuals.
2. Key Executive. Purchaser has made a written offer of employment
pursuant to an employment agreement with terms and conditions that are
commercially reasonable to Willard Tiller, Jr. a member of Seller's
executive team (the "Key Executive"). The Key Executive will have five
complete business days to accept or reject the employment contract. Seller
agrees to use best efforts to encourage the Key Executive to accept the
employment contract and agrees that it will not interfere with or delay
the Key Executive's decision regarding the same.
3. Other Key Employees. Purchaser will make an offer of employment that is
commercially reasonable to each of the persons listed immediately below
("Other Key Employees"). The Other Key Employees will have five complete
business days to accept or reject their respective offers of employment.
Seller agrees to use best efforts to encourage the Other Key Employees to
accept their respective offers of employment and agrees that it will not
interfere with or delay the Other Key Employees' decisions regarding the
same. The Other Key Employees are as follows:
(i) Employees to be based in Atlanta:
1. Jose Gonzales
2. Mickey Torres
3. John Pullin
(ii) Sallie Mae team employees to be based in San Antonio:
1. Stan Gerick
2. Nina Harwood
3. Maria Munoz
4. Tracy Williams
5. Xin Zhao
(iii) Client Services team employees to be based in San Antonio:
1. Edmund Askland
2
2. Sandra Ortiz
3. Christopher Ross
4. Katherine Wogulis
5. Eric Douglas
6. Ford Zeng
(iv) A minimum of four (4) of the following six (6) employees must
agree to employment, initially based in San Antonio, but to
move to Atlanta at that time Purchaser relocates the Data
Center as contemplated herein:
1. Peter Bryant
2. Kelly Fox
3. Shad Heath (to remain in San Antonio after Data
Center relocation)
4. Michael Kuske
5. Linnell Lane
6. Rendy Ogan
4. Temporary Employment Arrangements. Purchaser will make an offer of
temporary employment that is commercially reasonable to each of the
persons listed immediately below ("Temporary Employees"). The Temporary
Employees will have five complete business days to accept or reject their
respective offers of temporary employment. Seller agrees to use best
efforts to encourage the Temporary Employees to accept their respective
offers of temporary employment and agrees that it will not interfere with
or delay the Temporary Employees' decisions regarding the same. The
Temporary Employees are as follows:
1. Tony Diamond
2. Michael Hynes
3. Steve Wilson
4. Ruth Torres
5. Replacement of Key Employees. In the event that the Key Executive, one
or more of the Other Key Employee listed in Sections 3(i)-(iii) or more
than three of the Other Key Employees listed in Section 3(iv), or one or
more of the Temporary Employees (collectively, the "Key Employees," and
each a "Key Employee") rejects their respective employment offers (a
"Rejecting Key Employee"), Purchaser may waive the
3
need for such Rejecting Key Employee or hire a reasonably suitable
replacement for such Rejecting Key Employee (a "Replacement Employee").
However, in the event a Rejecting Key Employee is also a Necessary
Employee and such Necessary Employee either terminates his or her
employment with Seller or is released by Seller for cause during the Term
as a Terminating Necessary Employee, Seller will provide for a Necessary
Employee Replacement pursuant to A1 above. In the event Purchaser hires a
Replacement Employee, Purchaser will be responsible for the Employee Costs
related to the Replacement Employee as of such employee's date of hire;
provided, however that in the event the Rejecting Key Employee that is the
predecessor to such Replacement Employee remains employed with Seller
during the Term, Seller will train such Replacement Employee at no cost to
Purchaser during the Term. Seller will have no performance obligation or
any other obligations with respect to any employee matters hereunder after
the Closing.
6. Control of Employees. During the Term, Seller will retain authority to
control and direct all of Seller's employees (which includes the Necessary
Replacement Employees) and the Replacement Employees in furtherance of
operating the business in the ordinary course.
7. Condition Precedent to Employment Offers. All offers of employment
contemplated in this Transition Agreement, including Temporary Employment
Arrangements, are expressly conditioned upon the closing of the assets
acquisition set forth in the Agreement between Purchaser and Seller. In
the event Purchaser and Seller fail to close the transaction set forth in
the Agreement, then all offers of employment are void and rescinded
without liability to any party.
B. DATA CENTER SERVICES
Prior to Closing, Seller shall cooperate with Purchaser to provide to
Purchaser information in Seller's custody and control relating to the Business,
as well as technical and Business-specific advice, to aid Purchaser's planning
and relocation of the Data Center from San Antonio, TX to Atlanta, GA ("Data
Center Relocation Planning"). The Data Center Relocation Planning consists of
the following activities:
1. Develop a cost/benefit analysis, which includes a comprehensive a
list of tasks needed to complete each of the following three (3)
scenarios related to the relocation of the Data Center to Atlanta:
(i) Scenario 1 - declare "disaster" with Seller's hosting service
provider, SunGard Data Systems, Inc.; switch production to
SunGard; disassemble, ship and reconfigure the San Antonio
Data Center infrastructure to Atlanta; switch production to
Atlanta Data Center;
(ii) Scenario 2 - consolidate current San Antonio Data Center
infrastructure to smaller number of servers; secure short-term
lease (i.e. less then 120 days) for replacement servers in
Atlanta to mirror the San Antonio Data Center; switch
production to Atlanta Data Center; and
4
(iii) Scenario 3 - maintain San Antonio Data Center.
2. Develop a comprehensive list of written recommendations, including
cost estimates, necessary steps, and implementation of such steps to
obtain SAS 70 certification for the Atlanta Data Center.
3. Develop a comprehensive plan, including cost estimates and necessary
steps, to achieve the certifications for the Atlanta Data Center
from Visa International and MasterCard International Inc., similar
to those currently held by Seller for the San Antonio Data Center.
4. Develop a written plan to orderly terminate or transition Seller's
San Antonio Data Center vendors and suppliers, including, but not
limited to ACH Commerce, Innuity, Bank One, and Paymentech.
5. To the extent the following materials have not already been provided
to Purchaser pursuant to the Agreement, Seller shall provide
Purchaser with a comprehensive, written, asset inventory list for
the San Antonio Data Center, including, but not limited to:
software; hardware (including warranty status); and, third party
software licenses including contact information, software support
and maintenance services with applicable expiration dates and
renewal terms.
6. Develop a comprehensive, written recommendation for the physical
relocation of the San Antonio Data Center software, equipment, and
related documentation to Atlanta.
7. Cooperate with Purchaser during Purchaser's relocation of personnel
to the Atlanta Data Center.
With regard to Seller's cooperation with Purchaser to provide technical and
Business-specific advice to aid Purchaser's Data Center Relocation Planning,
Seller shall not be liable to Purchaser, or to anyone who may claim any right
due to its relationship with Purchaser or any of its employees, agents, or other
persons affiliated in any way with Purchaser, for any acts or omissions in the
performance of the services provided hereunder, except when said acts or
omissions of Seller are due to Seller's willful misconduct or gross negligence.
Purchaser shall indemnify and hold Seller harmless from any obligations, costs,
claims, judgments, attorneys' fees, and other attachments arising from the
performance of the services rendered to Purchaser hereunder, except when the
same are due to the willful misconduct or gross negligence of Seller.
C. OFFICE SERVICES
Prior to Closing, Seller shall cooperate with Purchaser to negotiate Purchaser's
lease of that portion of the office space desired by Purchaser located at 211
North Loop 1604 East, Suite 200, San Antonio, TX 78232 (the "Leased Premises")
in accordance with the following requirements:
1. Purchaser will lease approximately six thousand eight hundred
(6,800) square feet which represents the first floor of the Leased
Premises;
5
2. Purchaser will commit to a twelve (12) month term of lease;
3. Purchaser will pay approximately fifteen dollars ($15.00) per square
foot for the Leased Premises; and any other commercially reasonable
terms as are usual and customary in arrangements for similar leased
premises;
4. All rental fees for that part of the Leased Premises used for the
Data Center will be waived for approximately three (3) months; and,
5. Seller and Purchaser will attempt to negotiate the right of the
parties to occupy the Leased Premises for a period of thirty (30)
days following Closing.
Except as set forth herein, Purchaser is responsible for all costs
associated with the lease of such office space, including monthly lease
payments. Purchaser and Seller agree that renegotiation of Seller's lease of the
Leased Premises is critical to the ongoing success and operations of the
Business and that Purchaser's renegotiation of such lease in accordance with the
parameters set forth herein is a condition to Closing pursuant to the Agreement.
The failure of the parties to renegotiate the lease of the Leased Premises shall
not entitle Purchaser to the Termination Fee (as set forth in the Agreement).
D. THIRD PARTY RELATIONSHIPS AND LICENSES
Seller has entered into certain third-party arrangements, including, but
not limited to, software license agreements, distribution arrangements,
transaction processing arrangements, and other vendor relationships that are
vital to the success of the ongoing operation of the Business ("Third Party
Arrangements"). As stated in the Agreement, Seller will execute and deliver
assignment instruments and take such further actions as may be necessary to
properly evidence the transfer of such Third Party Arrangements to Purchaser as
set forth in Schedule U of the Agreement.
E. SELLER TRANSITION SERVICES
1. Mail Delivery. For a period of 6 months following the date of Closing,
Purchaser will accept all mail and deliveries on behalf of Seller, any
current or former employee, officer, or director of Seller, Bills.com,
Inc., or Payment Data Systems, Inc., whether delivered through the U.S.
Postal Service or any other entity or person providing such services.
Purchaser will provide reasonable safekeeping and will not disturb the
physical integrity of such materials while in Purchaser's possession.
Purchaser agrees to notify Seller of the arrival of such materials at
reasonable times during the 6-month period contemplated hereunder, and
Seller agrees to take physical custody of such materials with reasonable
promptness after notification by Purchaser.
2. E-Mail Forwarding. For a period of 6 months following the date of
Closing, Purchaser agrees to forward all e-mail correspondence addressed
to Louis Hoch, Terri Hunter, Marshall Millard, Tony Diamond, or Michael
Long as instructed by such individuals pursuant to the notice provisions
below.
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3. Data Back-Up. On the date of Closing, or within a reasonably prompt
time thereafter, Purchaser will be permitted to create and retain data
center back-up tapes relating to the Business and Seller will be permitted
to copy and then destroy all electronic and any other information related
to the Excluded Assets ("Excluded Information"). Purchaser warrants that
Purchaser will not use the Excluded Information for any purpose at any
time.
4. Telephone Forwarding. Purchaser agrees to forward from Purchaser's
switch to Seller's switch all incoming telephone calls related to Seller.
Seller will provide Purchaser with all applicable telephone numbers
related to the foregoing in the manner described in the notice section
below. Such services will be at no cost to Seller; provided, however, that
Seller will promptly reimburse Purchaser for all reasonable long-distance
tolls associated with such services.
5. Access to Premises. Purchaser and Seller will be responsible for
prorating the lease payment and the common area expenses associated with
the Leased Premises for the month of Closing, with Seller responsible for
such portion of those expenses accrued from the first day of such month
through the date of Closing, and Purchaser being responsible for such
portion of those expenses accrued from the day after Closing until the end
of such month. For a period of thirty (30) days following the date of
Closing, Purchaser will provide Seller reasonable use and access to the
Leased Premises in order for Seller to relocate the Excluded Assets.
6. Partitioning Assets. Prior to Closing, Purchaser and Seller will agree
upon a plan to partition or remove, whether physically or otherwise, the
Assets from the Excluded Assets in a reasonably prompt manner following
Closing. Seller will be responsible for those costs incurred herein solely
with respect to the Excluded Assets. Purchaser will be responsible for
those costs incurred herein solely with respect to the Assets. Seller and
Purchaser will be responsible, in equal portion, for the costs incurred
herein with respect to partitioning those assets that will be both Assets
and Excluded Assets.
7. Travel Expenses. In the event Seller or any employee, officer,
director, agent, or independent contractor of Seller is required or
requested to travel in furtherance of the Agreement, this Transition
Services Agreement, or any Ancillary Agreement, Purchaser shall promptly
reimburse Seller for all travel, lodging, and other expenses reasonably
incurred pursuant thereto, all of which expenses must be pre-approved by
Purchaser.
8. Re-Transferred Assets. Purchaser agrees that in the event Purchaser's
lease of the Leased Premises is terminated or Purchaser otherwise leaves
or vacates the Leased Premises, Purchaser will, for good and valuable
consideration the receipt and sufficiency of which is hereby acknowledged,
transfer to Seller good, lawful, and unencumbered title to and in the
following Assets (the "Re-Transferred Assets"):
ASSET MANUFACTURER
----- ------------
(i) two (2) ten ton A/C Units Liebert
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(ii) Uninterruptable Power Supply Power Ware
(iii) Generator Kohler Power Systems
(iv) Fire Detection and Suppression System Fike
(v) Fire Alarm Equipment Fike
(vi) Command Center Infra Structures, Inc.
Purchaser shall give Seller thirty (30) days' prior written notice of any
termination of Purchaser's lease of the Leased Premises or Purchaser's intention
to leave or vacate the Leased Premises. Purchaser shall provide Seller
reasonable access to the Leased Premises in facilitation of Seller's removal of
the Re-Transferred Assets from the Leased Premises.
F. TERM AND TERMINATION
1. Termination. This Transition Agreement may be terminated by:
1. mutual written consent of Purchaser and Seller;
2. upon the termination of the Agreement between Purchaser and Seller;
or
3. the expiration or satisfaction of all responsibilities of or
services provided by the parties.
2. Effect of Termination. In the event of termination of this Transition
Agreement, as provided in Section F, this Agreement shall be of no further force
or effect; provided, however, that (i) this Section F and Section Q shall
survive the termination of this Transition Agreement and shall remain in full
force and effect, and (ii) the termination of this Transition Agreement shall
not relieve any party from liability for any willful breach of any
representation, obligation or duty contained in this Agreement.
G. WARRANTIES
Purchaser and Seller acknowledge and agree that Seller is providing all
the Transition Services and, as applicable to Section E, the Seller Transition
Services, pursuant to this Transition Agreement at the request of Purchaser, and
Purchaser is providing the Seller Transition Services pursuant to this
Transition Agreement at the request of Seller. Seller and Purchaser warrant that
the Transition Services and Seller Transition Services, as applicable, provided
hereunder shall be performed, in all material respects, in good faith, in
compliance with all applicable federal, state and local laws and regulations,
and in a professional, workmanlike and timely manner.
8
H. DEFAULT
If either party believes that the other is in default under this
Transition Agreement, it shall give the allegedly defaulting party written
notice thereof and allow ten (10) days for the party to remedy the alleged
default before taking any other action. If a default is not remedied within the
cure period, the non-defaulting party may terminate the Agreement and this
Transition Agreement and recover such damages and exercise any other remedies as
may be permitted under applicable law and the Agreement.
I. NOT PARTNERS; NO THIRD PARTY BENEFICIARIES
Nothing contained herein or in any related document shall be deemed to
render the parties partners of one another for any purpose. There are no third
party beneficiaries of this Transition Agreement.
J. NOTICES
Any communications concerning this Transition Agreement shall be addressed
as follows:
Billserv, Inc. (for Seller)
211 North Loop 1604 East, Suite 200
San Antonio, TX 78232
Attention:
E-Mail: ______________________
Saro, Inc. (for Purchaser)
1900 Emery Street, NW
2nd Floor
Atlanta, GA 30318
Communications shall be effective when actually delivered as addressed above.
Any party may change its address for receipt of notices by submitting the change
in writing to the other party.
K. INDULGENCE NOT WAIVER
A party's indulgence in the failure of the other to observe the
requirements of this Transition Agreement in any instance shall not waive the
right of a party to enforce this Transition Agreement in accordance with its
terms.
L. AMENDMENT AND WAIVER IN WRITING
No provision of this Transition Agreement can be amended or waived, except
by a statement in writing signed by the party against which enforcement of the
amendment or waiver is sought.
M. ASSIGNMENT
Neither party may assign any rights under this Transition Agreement
without the written consent of the other party, except that this Transition
Agreement may be assigned to any
9
corporate affiliate of Purchaser upon notice to Seller. Any attempted assignment
or delegation without the required prior consent shall be void.
N. ENTIRE AGREEMENT
This Transition Agreement represents the entire agreement between the
parties concerning the subject matter hereof, and all oral discussions and prior
agreements are merged herein.
O. SEVERABILITY
Should any provision of this Transition Agreement be invalid or
unenforceable for any reason, the remaining provisions hereof shall remain in
full effect.
P. TIME OF ESSENCE
Time is of the essence of this Transition Agreement, and all dates and
time periods specified herein shall be strictly observed unless mutually agreed
by the parties in writing.
Q. APPLICABLE LAW
The validity, construction and enforcement of this Transition Agreement
shall be determined according to the laws of Delaware applicable to contracts
executed and performed entirely within that state, in which state this
Transition Agreement has been executed and delivered.
R. CAPTIONS NOT CONTROLLING
Captions and headings have been included in this Transition Agreement for
the convenience of the parties, and shall not be construed as affecting the
content of the respective paragraphs.
S. DISPUTE RESOLUTION
Any controversy, dispute or claim arising out of or relating to this
Transition Agreement (except to the extent it incorporates a request for
injunctive relief) shall be submitted to non-binding mediation in order to
attempt to resolve such controversy, dispute or claim. Any such mediation shall
be conducted (1) by a single mediator selected jointly by agreement of the
parties or (2) if the parties are unable to agree upon a mediator within five
(5) days after receipt of notice initiating mediation, by an impartial mediator
selected by the American Arbitration Association. The mediation shall take place
in San Antonio, Texas within thirty (30) days after the receipt of the notice
initiating mediation, and each party will bear its own expenses and attorneys'
fees and an equal share of the fees and expenses of the mediator. The mediator,
acting reasonably, shall establish the dates, times, places and general conduct
of the mediation sessions. No party shall be compelled to participate in any
meeting or meetings with the mediator pursuant to this paragraph for more than
two (2) days, or at any time more than thirty (30) days after the receipt of
notice initiating such mediation. Thereafter, if a controversy, dispute or claim
remains unresolved, the parties may proceed to the courts.
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T. CONFLICTS
In the event of any conflict between the terms of this Transition
Agreement and the terms of the Agreement between the parties, the terms of the
Agreement shall control.
Executed as of the date first written above.
BILLSERV, INC.
By:____________________________________
Title:_________________________________
SARO, INC.
By:____________________________________
Title:_________________________________
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Billserv, Inc.
211 North Loop 1604 East, Suite 200 San Antonio, Texas 78232
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Michael R. Long, Louis A. Hoch, or any one
or more of them, as proxies, each with the power to appoint his or her
substitute, and hereby authorizes each of them to represent and to vote, as
designated below, all the shares of common stock of Billserv, Inc. (the
"Company") held of record by the undersigned on June 13, 2003 at the Special
Meeting of Stockholders to be held on July 14, 2003, or any adjournments
thereof.
(Continued and to be signed on the reverse side)
14475
SPECIAL MEETING OF STOCKHOLDERS OF
BILLSERV, INC.
July 14, 2003
Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible.
Please detach along perforated line and mail in the envelope provided.
[down arrow] [down arrow]
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF DIRECTOR AND
"FOR" PROPOSALS 2, 3 and 4. PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE |X|
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1. Election of Director:
NOMINEE:
|_| FOR NOMINEE |_| Louis A. Hoch
|_| WITHHOLD AUTHORITY
FOR NOMINEE
FOR AGAINST ABSTAIN
2. Proposal to approve the asset purchase transaction |_| |_| |_|
whereby Saro, Inc., a wholly owned subsidiary of
Cyberstarts, Inc., would purchase substantially all
of the assets and assume certian liabilities of the
Company.
3. Proposal to change the name of the Company from |_| |_| |_|
"Billserv, Inc." to "Payment Data Systems, Inc."
4. Proposal to ratify the appointment of Ernst & Young |_| |_| |_|
LLP, certified public accountants, as the
independent auditors for the Company for the fiscal
year ending December 31, 2003.
In their discretion, the proxies are authorized to vote upon such other business
as may properly come before the meeting or any adjournment thereof. This proxy
when properly executed will be voted in the manner directed herein by the
undersigned shareholder. If no direction is made as to a proposal, this proxy
will be voted FOR such Proposal.
To change the address on your account, please check the box at right |_|
and indicate your new address in the address space above. Please note
that changes to the registered name(s) on the account may not be
submitted via this method.
Signature of Stockholder___________________________________ Date:_______________
Signature of Stockholder___________________________________ Date:_______________
Note: Please sign exactly as your name or names appear on this Proxy. When
shares are held jointly, each holder should sign. When signing as
executor, administrator, attorney, trustee or guardian, please give full
title as such. If the signer is a corporation, please sign full corporate
name by duly authorized officer, giving full title as such. If signer is a
partnership, please sign in partnership name by authorized person.