EXHIBIT 10.24
MEMORANDUM OF UNDERSTANDING
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This Memorandum of Understanding (this "Memorandum") is entered into as of
the 30th day of March, 2000, by and between divine interVentures, inc.
("Divine") and Aon Corporation ("Aon"). This Memorandum sets forth the basic
terms upon which Divine and Aon currently contemplate collaborating with respect
to the development and operation of (i) the insurance brokerage, production and
consulting component of FiNetrics, Inc. (Divine's dedicated financial services
portal, which will provide comprehensive financial products and services to the
small-size business marketplace ("FiNetrics")) ("eInsco"), and (ii) an
insurance/reinsurance facility ("Divine Reinsurance"), which will facilitate
eInsco' relationship with its insurance company markets and allow the parties to
participate in a portion of the underwriting profit generated by the insurance
business produced by eInsco.
Subject to Section 7 of this Memorandum, Divine and Aon currently intend to
negotiate and, if mutually agreeable terms are reached, execute, within sixty
(60) days of the date of this Memorandum, one or more definitive written
agreements (collectively, the "Definitive Agreement"), which set forth the terms
of the parties' agreement, if any, with respect to FiNetrics, eInsco and Divine
Reinsurance, including, among other things, those set forth herein.
SECTION 1. eInsco. Aon will be recognized as a partner company in FiNetrics,
with respect to eInsco, on an exclusive or non-exclusive basis, as the parties
may agree. Divine will be generally responsible for funding the development and
implementation of the Internet and e-commerce platform for FiNetrics. Aon will
be responsible for and entitled to the following in connection with its
relationship with FiNetrics:
1.1 Aon will provide such facilities management services to eInsco, as the
parties may agree upon. FiNetrics and Aon will enter into a definitive
management agreement with respect to the foregoing services, and Aon
will receive agreed upon fee compensation therefor, as agreed by the
parties.
1.2 Aon will provide FiNetrics and its clients with access to Aon's
insurance company markets, as FiNetrics and Aon may agree. With
respect to any such access, FiNetrics and Aon will enter into a
definitive insurance brokerage/production agreement, which will
provide for the sharing of commission and fee revenue generated
through Aon's insurance company markets.
1.3 Aon will offer its proprietary small business insurance programs
through FiNetrics or eInsco, as appropriate, on a non-exclusive basis,
as the parties may from time to time agree.
1.4 FiNetrics will promote the Aon insurance products and services offered
by or through FiNetrics and will direct its clients to such products
and services subject to the client's specific direction to the
contrary. The foregoing is based on the general understanding that
FiNetrics use of Aon's insurance products and services is dependent on
such products and services meeting agreed-upon standards.
1.5 Aon will acquire an agreed-upon minority equity interest in FiNetrics,
in consideration of (i) providing the foregoing products, services and
other value, and (ii) an agreed-upon capital infusion to FiNetrics.
The specific amount and form of such capital infusion, and the terms
and conditions upon which Aon will acquire and hold such equity
interest, will be as agreed upon in the Definitive Agreement.
1.6 Divine and Aon (and/or their affiliates, as applicable) will enter
into a shareholders or other similar agreement relating to their
respective ownership of FiNetrics, including provisions addressing
corporate governance, future capital requirements, appropriate
transfer restrictions, buy-sell arrangements, etc.
Section 2. Divine Reinsurance. Divine and Aon will organize and capitalize one
or more insurance/reinsurance companies, which will constitute Divine
Reinsurance. The specific legal form, regulatory status and domicile of Divine
Reinsurance will be determined based on its operations and scope of activity.
Divine Reinsurance will be capitalized at an initial level of $50 million, which
must constitute qualified regulatory capital and surplus under applicable law.
Divine Reinsurance will participate, as an assuming reinsurer, in the insurance
business produced by or through eInsco and such other insurance business as its
management considers appropriate to create a balanced and stable risk portfolio;
such participation may be on either a treaty or facultative basis, as Divine
Reinsurance's management considers appropriate. Divine and Aon will be entitled
to and responsible for the following with respect to Divine Reinsurance:
2.1 Divine (or one or more of its affiliates) will make an agreed-upon
cash infusion to Divine Reinsurance, in exchange for a majority equity
interest commensurate with the amount of such infusion in relation to
the contemplated initial capitalization of Divine Reinsurance.
2.2 Aon (or one or more of its affiliates) will make an agreed-upon
infusion of cash or other consideration, in exchange for a minority
equity interest commensurate with the amount of such infusion in
relation to the contemplated initial capitalization of Divine
Reinsurance. Aon's capital contribution may be in cash or such other
form as the parties may agree
2.3 Divine and Aon will enter into a shareholders or other similar
agreement relating to their respective ownership of Divine
Reinsurance, including
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provisions addressing corporate governance, future capital
requirements, appropriate transfer restrictions, buy-sell
arrangements, etc.
2.4 Aon will use all commercially reasonable efforts to cause the various
insurance company markets with whom it places eInsco business to
include Divine Reinsurance on their respective treaty reinsurance
programs or otherwise cede a portion of such business to Divine
Reinsurance. In addition, as the provider of management services as
described in Section 2.5 hereof, Aon will identify other underlying
insurance business and risk portfolios that may provide appropriate
balance and diversification to Divine Reinsurance's reinsurance
business, and, at the request of Divine Reinsurance's management, will
use commercially reasonable efforts to arrange for the cession of a
portion of such other business to Divine Reinsurance.
2.5 Aon will provide general management services to Divine Reinsurance,
including contract negotiations with ceding insurers, underwriting,
reinsurance claims administration, regulatory compliance, record and
systems management, accounting and general administration. Divine
Reinsurance and Aon will enter into a definitive management agreement
with respect to the foregoing services, and Aon will receive agreed-
upon compensation therefor, in cash or such other form as the parties
may agree.
Section 3. Public Announcements and Disclosure. Divine and Aon will issue a
joint press release announcing the relationship set forth in this Memorandum;
the form and content of such press release, as well as any prospective public
announcements relating to the subject matter of this Memorandum, must be
approved by both Aon and Divine, subject to applicable securities laws. Such
press release will in all events be subject to any federal and state securities
laws to which Divine and/or FinNetrics may be subject. Notwithstanding the
foregoing, upon the advice of legal counsel, and with the prior approval of the
other party, Divine and Aon will be permitted to include a description of the
substance of this Memorandum in any filing made with the Securities and Exchange
Commission or any state or foreign securities regulator having jurisdiction over
such issuer or its securities.
Section 4. Confidentiality and Non-Disclosure. Divine and Aon hereby
acknowledge that, in the context of the relationships contemplated in this
Memorandum, each will become privy to certain confidential and proprietary
information of the other, including client identity and data, which is not
otherwise available in the public domain. In this regard, Divine and Aon hereby
agree to hold all such confidential and proprietary information of the other in
the strictest confidence and not to disclose or otherwise use such information
outside of the contexts contemplated in this Memorandum. Divine and Aon may
enter into one or more confidentiality agreements setting forth, in more
specific detail, the covenants and obligations contemplated by this Section 4.
Section 5. Term of this Memorandum. This Memorandum will remain in effect
until the earlier of (i) the effective date of the Definitive Agreement (or in
the event that the Definitive
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Agreement is comprised of more than one agreement, the effective date of the
agreement which supersedes the last remaining portion of this Memorandum), (ii)
90 days following the date of this Memorandum, or (iii) termination of this
Memorandum by Aon or Divine giving the other notice to such effect. To the
extent that the confidentiality and non-disclosure covenants and obligations
generally set forth in Section 4 of this Memorandum are not addressed in the
Definitive Agreement, such covenants and obligations shall remain in effect
indefinitely, or until the subject information is no longer recognized as
confidential and proprietary under the law.
Section 6. Equity Investment. Simultaneous with the execution of this
Memorandum, Aon and Divine are entering into a purchase agreement (the "Purchase
Agreement") to purchase $25,000,000 of the non-voting common stock of Divine,
simultaneous with the closing of Divine's initial public offering.
Notwithstanding anything to the contrary herein (including Section 5
hereof), or in the Purchase Agreement, this Memorandum shall termiante without
any liability to Divine or FiNetrics, in the sole discretion of Divine, if the
transactions contemplated by the Purchase Agreement are not consummated.
Section 7. Miscellaneous. This Memorandum does not create any legal or binding
obligations, other than as expressly set forth in Sections 3, 4 and 5, which are
the only sections which shall survive the termination of this Agreement. This
Memorandum may not be amended without the written consent of Divine and Aon.
This Memorandum will be governed by and construed in accordance with the laws of
Illinois, without regard to principles of conflicts of law. Neither Divine nor
Aon shall be obligated to enter into any definitive agreements with respect to,
or otherwise consummate, any of the transactions contemplated hereby, unless (i)
the Board of Directors of each of Divine and Aon approves such agreements and
transactions and, with respect to Divine, such agreements and transactions are
approved by its Investment Committee and Conflicts Committee, and (ii) the
parties negotiate, agree upon and execute definitive agreements, on terms
agreeable to each of them, in their sole discretion.
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IN WITNESS WHEREOF, the parties have executed this Memorandum of
Understanding, as of the date first written above.
Aon Corporation divine interVentures, Inc.
By: /s/ Xxxxxxx Xxxx By: /s/ Xxxxxxx X. Xxxxxxxxx
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Xxxxxxx X. Xxxxxxxxx
Title: Chairman and CEO Executive Vice President
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ACKNOWLEDGED AND AGREED TO:
FiNetrics, Inc.
By: /s/ Xxxxxxx Xxxxxxx
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Xxxxxxx Xxxxxxx
President
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