EXECUTION COPY
STRATEGIC ALLIANCE AGREEMENT
This Strategic Alliance Agreement (this "Agreement"), dated as of April
29, 2002, by and between Intuit Inc., a Delaware corporation, having offices at
0000 Xxxxxx Xxxxxx, Xxxxxxxx Xxxx, Xxxxxxxxxx 00000 ("Intuit"), Xxxxxx Xxxxxxx &
Co., Inc., a Delaware corporation, having offices at 000 Xxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000 ("Xxxxxxx") and, for purposes of Sections 1(e)(v), 4(a), 4(d) and
9(c), Investment Solution, Inc., a Delaware corporation ("ISI").
WHEREAS, Intuit is engaged in the business of providing personal
finance software products and services, including, without limitation, its
Quicken(R) desktop software products Quicken Basic, Quicken Deluxe, Quicken Home
and Business and Quicken Suite (excluding TurboTax and any third party products
contained therein) (collectively, "Quicken") and its Internet-based
Xxxxxxx.xxx(TM) service ("Xxxxxxx.xxx") (collectively, the "Quicken Products");
WHEREAS, Xxxxxxx is engaged in the business of providing retail
brokerage services for publicly traded securities, mutual funds and other
related products;
WHEREAS, the parties desire to work together to develop, market and
operate the Joint Brokerage Service (as defined herein); and
WHEREAS, ISI is an affiliate of Intuit that is applying for
registration as a limited purpose broker-dealer and whose business will consist
in part of referring users of the Quicken Products to the Joint Brokerage
Service.
NOW, THEREFORE, in consideration of the mutual promises contained in
this Agreement, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows
(with certain capitalized terms having the meanings set forth in Section 13
hereof):
1. STRATEGIC ALLIANCE.
(a) Objective of the Strategic Alliance. The exclusive strategic
alliance contemplated herein will be the vehicle whereby Intuit and Xxxxxxx
together offer a joint brokerage service to customers as contemplated herein,
Intuit as a technology, marketing and content provider and Xxxxxxx as a
broker-dealer and provider of certain brokerage and other services.
(b) Development. The milestones for development of the Joint Brokerage
Service are set forth in Exhibit A. The parties shall provide the specifications
for, and the features and functionality for use by the customers of, the Joint
Brokerage Service that are set forth in the definition of Joint Brokerage
Service, the definition of Brokerage Platform and in Exhibit A.
(c) Customer Agreement. Prior to a customer's use of the Joint
Brokerage Service, such customer shall enter into a customer agreement with
Xxxxxxx in the form agreed upon by the parties and attached as Exhibit B hereto
from time to time.
(d) Branding. Intuit and Xxxxxxx, based on market and customer research
and subject to regulatory requirements, will determine the branding of the Joint
Brokerage Service. Final approval of the branding will be mutually agreed upon.
The current example of the branding to be used for the Joint Brokerage Service
is attached hereto as Exhibit C.
(e) Customer and Other Services. The parties will have the following
responsibilities with respect to the development, marketing and operation of the
Joint Brokerage Service.
(i) Xxxxxxx shall provide the standard broker-dealer services,
including without limitation systems and customer service, compliance review,
new accounts administration and telephone trading operations for the Joint
Brokerage Service, in accordance with applicable laws, industry standards and
the service standards set forth in Exhibit D (which standards will be at least
as high as the highest standard provided by Xxxxxxx to its other customers from
time to time on or after the Launch Date).
(ii) Intuit shall provide technical service related to the Quicken
Products utilized by customers of the Joint Brokerage Service, in accordance
with applicable laws, industry standards and the service standards set forth in
Exhibit D (which standards will be at least as high as the highest standard
provided by Intuit to its other customers from time to time on or after the
Launch Date).
(iii) [Intentionally Omitted.]
(iv) As between the parties, Xxxxxxx shall be solely responsible
for the Content, including without limitation any Intuit Licensed Content
licensed to Xxxxxxx by Intuit or other third-party Content providers, that is
available on or accessible through the Joint Brokerage Service, complying with
applicable laws and regulations of any Regulatory Authority having jurisdiction
over Xxxxxxx. In furtherance of the foregoing, (I) Intuit shall provide any
Content to Xxxxxxx prior to its being made available on or accessible through
the Joint Brokerage Service, and Xxxxxxx shall have the right, in its reasonable
discretion, to approve or disapprove such Content (and such Content shall not be
made available on or accessible through the Joint Brokerage Service if Xxxxxxx
disapproves of it, it being understood that the primary focus of Xxxxxxx'x
review of such Content shall be with respect to regulatory concerns) and (II)
Xxxxxxx shall have the right, at any time, to require Intuit to remove any
Content from the Joint Brokerage Service so long as the removal of such Content
is based upon regulatory concerns. In the case of the foregoing subclause (I),
Xxxxxxx shall generally review and approve or disapprove of Content within five
(5) Business Days after Intuit has provided such Content to Xxxxxxx, subject to
a longer review period for particularly complex or lengthy Content. The parties
shall agree on a form of disclaimer to be used on the Joint Brokerage Service.
As between the parties, Intuit shall be solely responsible for the Content,
including without limitation any Intuit Licensed Content, that is available on
or through Xxxxxxx.xxx (other than the "Investing" tab (or its successor tab) or
the Joint Brokerage Service, it being understood that the Content on the
"Investing" tab (or its successor tab) is a subset of the Content on the Joint
Brokerage Service) complying with applicable laws and regulations of any
Regulatory Authority having jurisdiction over Intuit.
2
(v) Intuit and ISI will use commercially reasonable efforts to
promote the brokerage and other services provided by Xxxxxxx through the Joint
Brokerage Service, including without limitation by referring users of the Intuit
products to the Joint Brokerage Service in accordance with the marketing plan
adopted and approved by the Steering Committee.
(vi) Prior to the Launch Date, Intuit and Xxxxxxx shall provide
training on the terms set forth in Exhibit D.
(vii) Each party shall market the Joint Brokerage Service in
accordance with the marketing plans to be developed by the Operating Teams.
(f) Tracking and Reporting. The Operating Teams will track the key
metrics for the Joint Brokerage Service described on Exhibit E during the time
frames set forth on such Exhibit. The parties shall deliver such reports as are
described in Exhibit E.
2. BROKERAGE PLATFORM. Xxxxxxx will directly, and through its
vendor(s), develop and provide to the Joint Brokerage Service the Brokerage
Platform, in accordance with the development and delivery milestones set forth
on Exhibit A. Although, as set forth above, Xxxxxxx may delegate such
obligations to Pershing, responsibility for performance thereof shall remain the
obligation of Xxxxxxx.
3. MANAGEMENT. The strategic alliance will be managed by a Steering
Committee (the "Steering Committee") in accordance with the terms and conditions
set forth in Exhibit F. The Steering Committee will establish "operating teams"
(the "Operating Teams") in accordance with the terms and conditions set forth in
Exhibit F.
4. FINANCIAL ASPECTS.
(a) 50/50 Split of Gross Revenues.
(i) Gross Revenues generated from (I) Joint Customers (except as
contemplated by subsection (ii) below) and (II) (x) any Existing Xxxxxxx
Customer that migrates to the Joint Brokerage Service after the period beginning
on the Launch Date and ending twenty-four (24) months thereafter, (y) any Future
Xxxxxxx Customer that migrates to the Joint Brokerage Service after the period
beginning on the date on which such customer establishes an account at Xxxxxxx
and ending twenty-four (24) months thereafter and (z) any Acquired Xxxxxxx
Customer that migrates to the Joint Brokerage Service after the period beginning
on the effective date of the acquisition of such customer and ending twenty-four
(24) months thereafter, from brokerage products and services offered through the
Joint Brokerage Service as of the Launch Date, will be split 50/50 between ISI
and Xxxxxxx. Xxxxxxx will pay ISI its share of Gross Revenue pursuant to Section
4(d). The parties agree that the customers in (x) through (z) shall be included
in the definition of Joint Customers.
(ii) Gross Revenues generated from Joint Customers from brokerage
products and services offered through the Joint Brokerage Service, which
products and services are not available through the Joint Brokerage Service as
of the Launch Date, will be split in accordance with a formula, and paid at a
time, to be determined by the Steering Committee.
3
(b) 50/50 Split of Expenses. The parties will not be reimbursed for any
costs or expenses incurred in connection with the strategic alliance except for
Incremental Expenses. Incremental Expenses will be split 50/50 between Intuit
and Xxxxxxx, provided that such Incremental Expenses are within the budget set
forth in the annual business and financial plan approved by the Steering
Committee (which, for the Start-up Period, shall be the Initial Business Plan).
Each party will advance any and all Incremental Expenses incurred by such party
during a True-Up Period. The Steering Committee shall from time to time review
and approve, in its sole discretion, the payment of any Incremental Expenses
that are in excess of budgeted amounts or that were not specifically set forth
in the annual business and financial plan approved by the Steering Committee
(which, for the Start-up Period, shall be the Initial Business Plan).
Notwithstanding anything to the contrary set forth herein, the parties agree
that all Incremental Expenses incurred by the parties since February 4, 2002
that are reflected and detailed in the Initial Business Plan shall be split
50/50.
(c) Reports of Incremental Expenses and Gross Revenues. Within fifteen
(15) calendar days after the end of each month, (i) Xxxxxxx shall deliver to
Intuit a report setting forth all Incremental Expenses (the "Xxxxxxx IE") that
pursuant to Section 4(b) are subject to the Incremental Expenses split and that
have been incurred by Xxxxxxx during such month, (ii) Intuit shall deliver to
Xxxxxxx a report setting forth all Incremental Expenses (the "Intuit IE") that
pursuant to Section 4(b) are subject to the Incremental Expenses split and that
have been incurred by Intuit during such month and (iii) Xxxxxxx shall deliver
to Intuit a report setting forth the Gross Revenues described in Section 4(a)(i)
that are earned by Xxxxxxx during such month. Each of the reports referred to in
this subsection shall be prepared on the accrual basis of accounting in
accordance with GAAP. Any adjustments required to correct such reports shall be
made in the report for the month following discovery of the need for the
adjustment and shall be brought to the attention of, and explained to, the
non-discovering party. The parties will promptly furnish each other back-up
schedules or other information requested in connection with any of the reports
referred to in this subsection.
(d) True-Up of Gross Revenues. Within twenty-five (25) calendar days
after the end of each True-Up Period, based on reports delivered by Xxxxxxx
under subsection (c)(iii) above, Xxxxxxx, in consultation with Intuit's finance
representative, shall calculate the amount equal to fifty percent (50%) of the
Gross Revenue for that True-Up Period and shall pay such amount to ISI.
Notwithstanding anything in this Agreement to the contrary, Xxxxxxx shall not be
required to make any payment of Gross Revenue that would otherwise be due to ISI
(or a person designated by Intuit) under this Agreement if, at the time such
payment would be due, each of the following conditions exists: (i) ISI is
statutorily disqualified (within the meaning of Section 3(a)(39) of the Exchange
Act) from conducting a business as a broker-dealer or is not then registered
with the SEC as a broker-dealer; (ii) Intuit has not designated another SEC
registered broker-dealer to receive such payments (which broker-dealer is not,
at the time such payment would be due, statutorily disqualified (within the
meaning of Section 3(a)(39) of the Exchange Act) from conducting a business as a
broker-dealer and is, at such time, registered with the SEC as a broker-dealer),
such broker-dealer to be reasonably acceptable to Xxxxxxx; and (iii) Xxxxxxx
reasonably believes (with the written advice of its legal counsel to such
effect, which legal counsel may assume that the relevant facts presented to it
by Xxxxxxx are true and correct without independent investigation) that
Xxxxxxx'x payment of such Gross Revenue would violate any applicable law or any
other rule or regulation of any Regulatory Authority; provided, however, that in
the event that Xxxxxxx refrains from making any payment of Gross Revenue
pursuant to this sentence, Intuit shall use its best efforts (and Xxxxxxx shall
use its commercially reasonable efforts to cooperate in good faith with Intuit)
to restructure the compensation arrangements hereunder to confer upon Intuit the
economic benefits contemplated hereunder consistent with applicable law.
4
(e) True-Up of Incremental Expenses. Within twenty-five (25) calendar
days after the end of each True-Up Period, based on the reports delivered by
Intuit and Xxxxxxx under subsections (c)(i) and (ii) above, Xxxxxxx, in
consultation with Intuit's finance representative, shall calculate an amount
equal to fifty percent (50%) of the collective Incremental Expenses of Intuit
and Xxxxxxx for that True-Up Period (the "IE Split") and (I) if the Xxxxxxx IE
for such True-Up Period is greater than the IE Split, then Intuit shall pay to
Xxxxxxx such difference, or (II) if the Intuit IE for such True-Up Period is
greater than the IE Split, then Xxxxxxx shall pay to Intuit such difference.
(f) Payments. Any payment to be made pursuant to subsections (d) and
(e) above shall be made within seven (7) calendar days after Xxxxxxx, in
consultation with Intuit's finance representative, completes such calculation.
All payments made pursuant to this Section 4 shall be made by wire transfer of
immediately available funds to the account for the payee set forth on Exhibit G
or such other account as Xxxxxxx or Intuit (or ISI), as the case may be, may
designate in writing from time to time. In the event any such payment is not
made when due, the entire unpaid amount shall accrue interest until it has been
paid in full at the rate of the lesser of (i) prime plus 2% per annum or (ii)
the highest rate then permitted under applicable law.
(g) Section 4 Audit Rights. Based on the calculations made in this
Section 4, within twenty-five (25) calendar days after the end of each True-Up
Period, Xxxxxxx shall prepare and issue a report (a "True-Up Statement") setting
forth the amount of the Gross Revenue split for Xxxxxxx and Intuit, the IE Split
and the amount paid to Xxxxxxx or Intuit for each True-Up Period. Xxxxxxx and
Intuit shall have the right, at their own expense, to audit each other's books
and records relating to a True-Up Statement. Such an audit may be conducted no
more than once as to each True-Up Statement by employees of Intuit or Xxxxxxx or
an accounting firm that is a member of the American Institute of Certified
Public Accountants, Public Companies Practice Section. The results of any audit
shall be promptly reported to the audited party and any issues shall be resolved
by the Steering Committee. The Gross Revenue split and the IE Split set forth in
a True-Up Statement shall become conclusive and not subject to challenge twelve
(12) months after the True-Up Statement is issued unless there is an audit
ongoing or any unresolved audit issue is being discussed by the Steering
Committee in which case it shall become conclusive and not subject to challenge
when resolved.
5. Cross Selling.
(a) Intuit shall not directly promote on the Joint Brokerage Service
either competitive brokerage products or any other third party advertisements
(except Compaq advertisements); provided, however, that Intuit shall not be
prohibited from promoting products or services that are under the Intuit brands
or co-brands on the pages of the Joint Brokerage Service that are not
Pershing-framed pages, which products or services would not otherwise be
directly competitive with brokerage products. On the Pershing-framed pages, the
parties shall promote only advertisements that benefit the Joint Brokerage
Service. Intuit shall not place competitive brokerage advertisements on the
Xxxxxxx.xxx home page or on the page after clicking on the "Investing" tab (or
its successor tab) but before logging on to the Joint Brokerage Service. Intuit
shall not otherwise, however, be prohibited from providing branded or co-branded
tools or content (but not Brokerage Accounts) to other broker-dealers or from
promoting competitive products or services of broker-dealers through a variety
of advertising and marketing relationships.
5
(b) Xxxxxxx shall not directly promote on the Joint Brokerage Service
(including, without limitation by providing hyperlinks to a competitor's web
site from the Joint Brokerage Service) any products or services that directly
compete with the products and services currently provided by Intuit. In the
event that, after the Effective Date, Intuit provides additional products or
services that are competitive with the products or services that Xxxxxxx has
been promoting on the Joint Brokerage Service, Xxxxxxx shall cease promoting
those products or services on the Joint Brokerage Service as soon as
commercially reasonably practicable and shall not renew such promotional
offerings. Following a Change of Control as to which Intuit does not terminate
this strategic alliance, neither Xxxxxxx nor the acquiring entity, as the case
may be, shall (i) promote on the Joint Brokerage Service or otherwise market to
Joint Customers any of the acquirer's products or services or (ii) move the
Joint Customers from the Brokerage Platform on the Joint Brokerage Service to
another brokerage platform.
(c) Notwithstanding anything to the contrary set forth in this Article
5, (i) Intuit shall not be prohibited from directly or indirectly promoting
(except that they shall be so prohibited on the Pershing-framed pages of the
Joint Brokerage Service) products and services marketed to small businesses,
sole proprietors or individual employees through their employers pursuant to the
Principal Agreement and (ii) Xxxxxxx shall not be prohibited from directly or
indirectly promoting to Xxxxxxx Customers, on any pages of the Joint Brokerage
Service, any products or services.
6. INTELLECTUAL PROPERTY; OWNERSHIP OF ASSETS.
(a) Intellectual Property.
(i) Intuit Ownership. As between the parties, Intuit will own and
control all right, title and interest in and to (I) the look and feel of the
Joint Brokerage Service, including, without limitation, as between the parties
the look and feel of all aspects of the Quicken Products that relate to the
Joint Brokerage Service (excluding the look and feel of the Xxxxxxx Content and
the Pershing-framed pages of the Joint Brokerage Service (other than Intuit
Content included thereon)), (II) the software, APIs, and other intellectual
property embodied in the Quicken Products and the Joint Brokerage Service
(excluding the Pershing-framed pages of the Joint Brokerage Service (except for
Intuit Content included therein) and the Xxxxxxx Content); and (III) all Intuit
trademarks and service marks, including without limitation those Intuit
trademarks and service marks appearing in the Quicken Products and the Joint
Brokerage Service pages.
(ii) Xxxxxxx Ownership. As between the parties, Xxxxxxx will own
and control all right, title and interest in and to (I) the software and other
intellectual property embodied in Xxxxxxx'x website (excluding the Intuit
Content, if any), (II) the look and feel of the Pershing-framed pages of the
Joint Brokerage Service (excluding the Intuit Content included thereon, if any),
and (III) all Xxxxxxx trademarks and service marks, including without limitation
those Xxxxxxx trademarks and service marks appearing in the Quicken Products and
the Joint Brokerage Service pages.
6
(b) Customer Information. Joint Customer information will be jointly
owned by the parties and each of the parties will ensure that the Joint
Customers are so informed.
(c) Trademark Licenses.
(i) During the Term and, if applicable, the Wind-Down Period, each
party hereby grants to the other a nonexclusive, worldwide, royalty-free,
non-transferable, non-sublicensable (except as set forth in the last sentence of
this subsection) license to use the marks of the other party listed below (the
"Marks") only in accordance with the terms of this Agreement and to carry out
the purposes of this Agreement, subject to prior review and approval by the
other party and in compliance with the other party's trademark policies in
effect from time to time including, but not limited to, trademark usage and
cooperative advertising policies. The Marks are:
Intuit Marks: Xxxxxxx.xxx, Quicken Brokerage and Quicken
Siebert Marks: Xxxxxxx and design
Notwithstanding the foregoing, Xxxxxxx may sublicense these rights, in whole or
in part, to Pershing provided, that Pershing agrees in a writing, in form and
substance reasonably acceptable to Intuit and to which Intuit is an express
third party beneficiary, to comply with the terms of this Section 6(c) in
connection with its use of Intuit's Marks.
(ii) Each of Intuit and Xxxxxxx shall have the right to
pre-approve any use of any of its Marks by the other party in any medium,
including, without limitation, any press releases. Such approval shall not be
unreasonably withheld, delayed or conditioned. Such approval shall be
accomplished by notifying the owner of the Marks in writing of the intended use.
The owner of the Marks shall have five (5) Business Days from its receipt of
such notice to make comments and/or approve such use; provided, however, that in
the case of (A) a press release that can be made more than thirty-six (36)
hours, but is required to be made less than five (5) Business Days, after the
party seeking approval becomes aware of the facts requiring disclosure or (B) an
earnings press release, the owner of the Marks shall have thirty-six (36) hours
from its receipt of such notice to make comments and/or approve such use;
provided, further, that in the case of a press release that is required to be
made less than thirty-six (36) hours after the party seeking approval becomes
aware of the facts requiring disclosure, the party seeking approval shall to the
extent practicable seek the input of the owner of the Marks as to such use. In
the case of the five (5) Business Day and thirty-six (36) hour approval periods,
if the owner of the Marks does not provide such a response within such period,
it shall be deemed to have approved the use. Any use by one party of the other
party's Marks shall inure to the benefit of the other party as trademark owner.
7
(d) Linking Licenses.
(i) License to Intuit. During the Term and, if applicable, the
Wind-Down Period, Xxxxxxx hereby grants to Intuit a non-exclusive, worldwide,
royalty-free, non-transferable, non-sublicensable license to (I) link to the
Pershing-framed pages of the Joint Brokerage Service and (II) subject to
Xxxxxxx'x prior review and approval, to use, reproduce, make available and
publicly display, reframe, publicly market, distribute, transmit, promote and
sublicense the Xxxxxxx Owned Content, in whole or in part, in the Joint
Brokerage Service, solely in connection with Intuit's performance of this
Agreement; provided, however, that any sublicensing of such Xxxxxxx Owned
Content by Intuit shall only be in connection with the operation of the Joint
Brokerage Service.
(ii) License to Xxxxxxx. During the Term and, if applicable, the
Wind-Down Period, Intuit hereby grants to Xxxxxxx a non-exclusive, worldwide,
royalty-free, non-transferable (except as set forth in the last sentence of this
subsection), non-sublicensable license to (I) link to Xxxxxxx.xxx and the
non-Pershing-framed pages of the Joint Brokerage Service and (II) subject to
Intuit's prior review and approval, to use, reproduce, make available and
publicly display, reframe, publicly market, distribute, transmit, promote and
sublicense the Intuit Content, in whole or in part, on the Pershing-framed pages
of the Joint Brokerage Service, solely in connection with Xxxxxxx'x performance
of this Agreement; provided, however, (I) that Intuit shall have no obligation
to sublicense any portion of the Intuit Licensed Content or any of the Intuit
Owned Content that is not owned by Intuit as to which a required third party
consent to such sublicense has not been obtained or as to which a third party
would be entitled to additional consideration for such sublicense, (II) that
Xxxxxxx'x sublicense with respect to the Intuit Licensed Content or any of the
Intuit Owned Content that is not owned by Intuit shall be subject to any
agreements between Intuit and the sources or providers of such Intuit Licensed
Content or Intuit Owned Content that is not owned by Intuit, (III) that any
restrictions to the sublicense or other obligations imposed on Xxxxxxx by reason
of the foregoing subsection (II) must be communicated to Xxxxxxx in writing by
Intuit at least thirty (30) calendar days before Xxxxxxx will be bound by such
restrictions and/or obligations, and (IV) that any sublicensing of such Intuit
Content by Xxxxxxx shall only be in connection with the operation of the
Pershing-framed pages of the Joint Brokerage Service. Xxxxxxx shall have the
right to assign all of its rights and obligations under this Section 6(d)(ii) to
Pershing, provided that Pershing assumes in a writing, in form and substance
reasonably acceptable to Intuit and to which Intuit is an express third party
beneficiary, all of Xxxxxxx'x rights and obligations under this Section
6(d)(ii).
(e) Third Party Licenses. Intuit and Xxxxxxx will cooperate in good
faith to obtain any third party licenses that the Steering Committee determines
are appropriate for the Joint Brokerage Service, including without limitation
licenses from Pershing.
7. REPRESENTATIONS AND WARRANTIES; INDEMNITY.
(a) Representations and Warranties.
(i) Each party represents and warrants to the other as of the
Effective Date and as of the Launch Date that (I) it has the full right, power
and authority to enter into this Agreement and to discharge its obligations
hereunder (including, without limitation, granting the licenses granted
hereunder); (II) the execution and delivery by it of this Agreement and any
other agreement entered into by such party contemplated by the transactions
8
contemplated hereby does not, and the consummation of the transactions
contemplated hereby and thereby does not and will not, conflict with, result in
a violation or breach of, or constitute a default under, any agreement or
contract to which it is a party; (III) (except as disclosed in writing prior to
the Effective Date or pursuant to Section 7(a)(iv) by one party to the other
party), it has all permits, licenses and authorizations required by applicable
United States Regulatory Authorities to perform its obligations hereunder; and
(IV) it has, and during the Term and the Wind-Down Period will continue to have,
the right to grant the licenses granted by it hereunder.
(ii) Xxxxxxx represents and warrants to Intuit as of the Effective
Date and the Launch Date (except as disclosed in writing to Intuit prior to the
Effective Date or pursuant to Section 7(a)(iv)), and covenants, that:
(I) Xxxxxxx has not exceeded in any material respect the
business activities enumerated in any membership agreements or other limitations
imposed in connection with its registrations, forms (including, without
limitation, Form BDs) and reports filed with an Exchange or any governmental
entity relating to its broker-dealer business or operations. Xxxxxxx is
registered in all of the states of the United States of America, the District of
Columbia and Puerto Rico as a broker-dealer and is authorized in each of those
states to conduct the types of businesses set forth in Xxxxxxx'x Form BD, and
Xxxxxxx has filed all reports, registrations and statements, together with any
amendments required to be made with respect thereto, that it was required to
file since 1997 with an Exchange or any governmental entity relating to its
broker-dealer business and operations, and all other reports and statements
relating to Xxxxxxx'x broker-dealer business and operations required to be filed
by it have been filed including, without limitation, any report or statement
required to be filed pursuant to the laws, rules or regulations of the United
States, any state or any governmental entity and any other Regulatory Authority
and Xxxxxxx has paid all fees and assessments due and payable in connection
therewith. The information contained in such registrations, forms and reports
was true and complete in all material respects as of the date of the filing
thereof. Each such registration is in full force and effect on the date hereof.
Except for normal examinations conducted by a Regulatory Authority in the
regular course of the business of Xxxxxxx, no Regulatory Authority has initiated
any proceeding or investigation into the business or operations of Xxxxxxx or
any of its employees, agents, brokers or representatives. There is no unresolved
violation or exception by any Regulatory Authority with respect to any report or
statement relating to any examination of Xxxxxxx.
(II) Each of Xxxxxxx'x employees that is required to be
registered as a registered representative or a salesperson with the SEC, the
securities commission of any state or foreign jurisdiction or any other
Regulatory Authority is duly registered as such, and all such registrations are
in full force and effect. All federal, state and foreign registration
requirements of Xxxxxxx have been complied with in all material respects and
such registrations as currently filed, and all periodic reports required to be
filed with respect thereto, are accurate and complete in all material respects.
(III) Neither Xxxxxxx nor any of its Affiliates is subject
to any cease-and-desist or other order or enforcement action issued by, or a
party to any written agreement, consent agreement or memorandum of understanding
with, or a party to any commitment letter or similar undertaking to, or is
subject to any order or directive by, or has been ordered to pay any civil
9
penalty by, or is a recipient of any supervisory letter from, or has adopted a
board resolution at the request or suggestion of, any Regulatory Authority that
materially restricts the conduct of its business or that in any material manner
relates to its capital adequacy, its ability to pay dividends, its credit or
risk management policies, its management or its business (each, a "Regulatory
Agreement"), nor has Xxxxxxx or any of its Affiliates been advised in writing or
otherwise by any Regulatory Authority that it is considering issuing or
requesting any such Regulatory Agreement nor is there any pending or, to the
knowledge of Xxxxxxx, threatened regulatory investigation.
(IV) Xxxxxxx (A) has implemented and will maintain during
the term of this Agreement policies and procedures that are reasonably designed
to comply with the applicable federal and state securities and commodities laws,
rules and regulations and Securities Regulations including, without limitation,
those relating to advertising, licensing, sales practices, market conduct,
operation and redundancy of online systems, maintenance of net capital, risk
assessment and continuing education (collectively, the "Xxxxxxx Policies and
Procedures"); and (B) has no knowledge of any material noncompliance with the
Xxxxxxx Policies and Procedures.
(V) The Siebert Marks and the Xxxxxxx Owned Content (other
than any of the Xxxxxxx Owned Content that is not owned by Xxxxxxx)
programmed on the Joint Brokerage Service do not, and will not, infringe
upon any trademark or copyright or misappropriate any trade secret of any
third party, and such Content does not contain any false statements, use
defamatory language or contain any language that illegally damages the
reputation of any Person.
(iii) Intuit represents and warrants to Xxxxxxx as of the
Effective Date and the Launch Date (except as disclosed in writing to Xxxxxxx
prior to the Effective Date or pursuant to Section 7(a)(iv)), and covenants,
that:
(I) Intuit will (A) cause ISI to be registered with the
National Association of Securities Dealers, Inc., and (B) cause ISI to maintain
all approvals necessary for it to receive payments as contemplated by this
Agreement.
(II) The Intuit Marks and the Intuit Owned Content (other
than any of the Intuit Owned Content that is not owned by Intuit) programmed on
the Joint Brokerage Service do not, and will not, infringe upon any trademark or
copyright or misappropriate any trade secret of any third party and such Content
does not contain any false statements, use defamatory language or contain any
language that illegally damages the reputation of any Person.
(III) On the Launch Date, ISI will not have exceeded in any
material respect the business activities enumerated in any membership agreements
or other limitations imposed in connection with its registrations, forms
(including, without limitation, Form BDs) and reports filed with an Exchange or
any governmental entity relating to its broker-dealer business or operations. On
the Launch Date, ISI will have filed all reports, registrations and statements,
together with any amendments required to be made with respect thereto, that it
was required to file with an Exchange or any governmental entity relating to its
broker-dealer business and operations, and all other reports and statements
relating to its broker-dealer business and operations required to be filed by it
will have been filed including, without limitation, any report or statement
required to be filed pursuant to the laws, rules or regulations of the United
States, any state or any governmental entity and any other Regulatory Authority
and ISI will have paid all fees and assessments due and payable in connection
10
therewith. The information contained in such registrations, forms and reports
will be true and complete in all material respects as of the date of the filing
thereof. Each such registration will be in full force and effect on the Launch
Date. On the Launch Date, except for normal examinations conducted by a
Regulatory Authority in the regular course of business of ISI, no Regulatory
Authority will have initiated any proceeding or investigation into the business
or operations of ISI or any of its employees, agents, brokers or representatives
relating to their activities under this Agreement. There will be no unresolved
violation or exception by any Regulatory Authority with respect to any report or
statement relating to any examination of ISI on the Launch Date.
(IV) On the Launch Date, (A) each of ISI's employees that
is required to be registered as a registered representative or a salesperson
with the SEC, the securities commission of any state or foreign jurisdiction or
any other Regulatory Authority will be duly registered as such, and all such
registrations will be in full force and effect, and (B) all federal, state and
foreign registration requirements of ISI will have been complied with in all
material respects, and all periodic reports required to be filed with respect
thereto will be accurate and complete in all material respects.
(V) On the Launch Date, ISI will not (A) be subject to any
Regulatory Agreement, (B) have been advised in writing or otherwise by any
Regulatory Authority that it is considering issuing or requesting any such
Regulatory Agreement and (C) have any pending or, to the knowledge of Intuit,
threatened regulatory investigation.
(VI) On the Launch Date, ISI (A) will have implemented and
will maintain during the term of this Agreement policies and procedures that are
reasonably designed to comply with the applicable federal and state securities
and commodities laws, rules and regulations and Securities Regulations
including, without limitation, those relating to advertising, licensing, sales
practices, market conduct, operation and redundancy of online systems,
maintenance of net capital, risk assessment and continuing education
(collectively, the "Intuit Policies and Procedures"); and (B) will have no
knowledge of any material noncompliance with the Intuit Policies and Procedures.
(iv) During the period beginning on the Effective Date and
ending on the Launch Date, Intuit and Xxxxxxx shall be entitled to provide in
writing to each other any new disclosures or necessary updates to any prior
disclosures to their respective representations and warranties contained in this
Section 7(a) which are necessary to make such representations and warranties
true and correct as of the Launch Date; provided, that any such new disclosure
or update, individually or in the aggregate, does not result in a material
adverse change from the facts previously disclosed.
(v) NEITHER PARTY MAKES ANY WARRANTIES, EXPRESS OR IMPLIED,
AS TO MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR ANY OTHER MATTER,
OTHER THAN THE EXPRESS WARRANTIES CONTAINED IN THIS SECTION 7(a).
11
(b) Indemnity.
(i) Intuit shall indemnify, defend and hold harmless Xxxxxxx, its
parents, subsidiaries and affiliates, and all of their respective members,
employees, officers, directors, proprietors, partners, representatives,
shareholders, agents, attorneys, predecessors, successors, assigns and
licensees, from and against all manner of claim or action and any and all
liability, loss, damage, cost, penalty, fine and expense (including, without
limitation, attorneys' fees) ("Losses") arising from or relating to any claim or
liability asserted by a third party, including, but not limited to, a Joint
Customer ("Third Party Claim"), arising out of (I) the Quicken Products
(expressly excluding the Brokerage Platform and the Xxxxxxx Content), (II) the
other Intuit products and services controlled and provided by Intuit and its
third party providers to the Joint Brokerage Service and (III) any breach (or
any facts alleged by a third party, that if true, would constitute a breach) of
any representation, warranty or covenant of Intuit contained herein; provided,
however, that Intuit shall have no liability for indemnification Losses to the
extent (A) they arise out of a failure of Xxxxxxx to comply in all respects with
applicable law and applicable regulatory or self-regulatory rules and
regulations or obligations to customers or (B) (y) they relate to Incremental
Expenses and such Losses are equal to or less than fifty percent (50%) of the
agreed upon amounts of such Incremental Expenses set forth in any annual
business and financial plan approved by the Steering Committee (which, for the
Start-up Period, shall be the Initial Business Plan) for the period during which
such Losses are incurred by Xxxxxxx and (z) such Incremental Expenses set forth
in such plan have not already been borne by Xxxxxxx pursuant to Section 4(e).
(ii) Xxxxxxx shall indemnify, defend and hold harmless Intuit, its
parents, subsidiaries and affiliates, and all of their respective members,
employees, officers, directors, proprietors, partners, representatives,
shareholders, agents, attorneys, predecessors, successors, assigns and
licensees, from and against all manner of claim or action and any and all Losses
arising from or relating to any Third Party Claim arising out of (I) the
operation of the Joint Brokerage Service that is controlled and provided by
Xxxxxxx and its third party providers and (II) any breach (or any facts alleged
by a third party, that if true, would constitute a breach) of any
representation, warranty or covenant of Xxxxxxx contained herein; provided,
however, that Xxxxxxx shall have no liability for indemnification Losses to the
extent (A) they arise out of a failure of Intuit to comply in all respects with
applicable law and applicable regulatory or self-regulatory rules and
regulations or obligations to customers or (B) (y) they relate to Incremental
Expenses and such Losses are equal to or less than fifty percent (50%) of the
agreed upon amounts of such Incremental Expenses set forth in any annual
business and financial plan approved by the Steering Committee (which, for the
Start-up Period, shall be the Initial Business Plan) for the period during which
such Losses are incurred by Intuit and (z) such Incremental Expenses set forth
in such plan have not already been borne by Intuit pursuant to Section 4(e).
(iii) The party seeking indemnification hereunder (such party the
"Indemnified Party") shall give written notice to the party from whom indemnity
is sought (the "Indemnifying Party") promptly after the Indemnified Party
receives notice of the claim or liability being asserted, but the failure or
delay in doing so shall not relieve the Indemnifying Party from any liability
except to the extent that it is prejudiced by the failure or delay in giving
such notice.
(iv) The Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of its choice
reasonably satisfactory to the Indemnified Party so long as (A) the Indemnifying
Party notifies the Indemnified Party in writing within fifteen (15) calendar
days after the Indemnifying Party has received notice of the Third Party Claim
12
that the Indemnifying Party will undertake the defense, (B) the Third Party
Claim is not asserted by a securities Regulatory Authority with respect to
broker-dealer operations of the Indemnified Party, (C) the persons named or
impleaded in such Third Party Claim do not include both the Indemnifying Party
and the Indemnified Party, and (D) the Indemnifying Party actively conducts the
defense of the Third Party Claim in a reasonable manner. In any such case,
however, the Indemnifying Party will not consent to the entry of any judgment or
enter into any settlement with respect to the Third Party Claim without the
prior written consent of the Indemnified Party (not to be withheld, delayed or
conditioned unreasonably) if such judgment or settlement would impose an
injunction or other equitable relief on the Indemnified Party or would, in the
reasonable judgment of the Indemnified Party, likely establish a precedential
custom or practice materially adverse to the continuing business interests of
the Indemnified Party.
(v) For so long as the defense of the Third Party Claim is being
conducted by the Indemnifying Party in accordance with the preceding section
(II)(D), the Indemnified Party may retain separate co-counsel at its sole cost
and expense and participate in the defense of the Third Party Claim. If the
defense of the Third Party Claim cannot be conducted by the Indemnifying Party
solely because one or more of the conditions in subsections (B) or (C) of
section (II) above is unsatisfied, the Indemnified Party shall defend the claim
itself and may retain counsel of its choice reasonably satisfactory to the
Indemnifying Party, which counsel shall be at the sole cost and expense of the
Indemnifying Party if the Indemnifying Party admits liability, or is determined
in a judgment to be liable, for indemnification to the Indemnified Party (and,
if such judgment against the Indemnifying Party is reversed on a final appeal,
the Indemnified Party shall reimburse the Indemnifying Party for the entire
amount of the costs and expenses of the Indemnified Party's counsel paid by the
Indemnifying Party). In such case, (A) the Indemnified Party will not consent to
the entry of any judgment or enter into any settlement with respect to the Third
Party Claim without the prior written consent of the Indemnifying Party (not to
be withheld, delayed or conditioned unreasonably), and (B) the Indemnifying
Party will not consent to the entry of any judgment or enter into any settlement
with respect to the Third Party Claim without the prior written consent of the
Indemnified Party (not to be withheld, delayed or conditioned unreasonably).
(vi) If any of the conditions set forth in subsections (A) or (D)
of the preceding section (II) is or becomes unsatisfied, the Indemnified Party
may defend against, and consent to the entry of any judgment or enter into any
settlement with respect to, the Third Party Claim in any manner it reasonably
may deem appropriate and the Indemnified Party need not consult with or obtain
any consent from the Indemnifying Party in connection therewith. In such case,
the Indemnifying Party will be liable for the cost and expense of the
Indemnified Party's counsel and for any Losses the Indemnified Party may suffer
resulting from, arising out of, relating to or caused by the Third Party Claim
if and when the Indemnifying Party is determined in a judgment to be liable for
indemnification hereunder (and, if such judgment against the Indemnifying Party
is reversed on a final appeal, the Indemnified Party shall reimburse the
Indemnifying Party for the entire amount of the Losses and costs and expenses of
the Indemnified Party's counsel paid by the Indemnifying Party). Notwithstanding
the foregoing, if the condition in subsection (A) of the preceding section (II)
is or becomes unsatisfied because the Indemnifying Party in good faith disputes
its obligation to indemnify the Indemnified Party for the Third Party Claim, the
Indemnifying Party shall be entitled to consent to any settlement of such Third
Party Claim (such consent not to be unreasonably withheld, delayed or
conditioned); provided that if the Indemnifying Party does not consent to any
such proposed settlement and a judgment in a greater amount is later rendered,
13
(1) the Indemnifying Party shall be liable for the entire amount of such
judgment, if the Indemnifying Party is determined in a judgment to be liable for
indemnification under this Section 7(b) (and, if such judgment against the
Indemnifying Party is reversed on a final appeal, the Indemnified Party shall
reimburse the Indemnifying Party for the entire amount of the judgment paid by
the Indemnifying Party), and (2) the Indemnifying Party shall be liable in any
event for the amount of such judgment which is in excess of the proposed
settlement amount (whether or not the Indemnifying Party is determined in a
judgment to be liable for indemnification under this Section 7(b)). In the event
that the Indemnified Party defends any Third Party Claim as contemplated by this
subsection (IV), the Indemnified Party shall keep the Indemnifying Party
reasonably informed of such defense.
8. LIMITATION ON LIABILITY. Neither party shall be liable to the other
party for any damages arising out of any interruption of business, loss of
profits, loss of use of facilities, loss of customers or loss of goodwill or for
any other indirect, special, incidental or consequential damages. For greater
certainty, in connection with a Third Party Claim for which a party is entitled
to indemnification under Section 7(b), the Indemnifying Party shall be liable
for the entire judgment, settlement or other remedy owing to such third party
(whether it includes indirect damages or otherwise).
9. TERM AND TERMINATION.
(a) Term. Unless sooner terminated pursuant to subsection (b) below,
this Agreement shall begin on the Effective Date and remain in effect for an
initial period of ten (10) years (the "Term"). The Term shall be extended
automatically for successive two (2) year terms thereafter unless a party gives
notice of termination to the other party at least sixty (60) calendar days prior
to the beginning of the next renewal Term.
(b) Termination and Effect of Termination. This Agreement may be
terminated as follows:
(i) by Intuit, by giving written notice to Xxxxxxx that Intuit
will no longer provide a tab on Xxxxxxx.xxx (whether known as the "Investing"
tab or otherwise) that provides substantially the same content and functionality
as the "Investing" tab on Xxxxxxx.xxx provided on the Effective Date (whether by
wind-down, sale or otherwise but not solely by rebranding), which notice shall
be given, subject to any confidentiality obligation to which Intuit may be
subject, at least three (3) calendar days prior to Intuit's exiting such
business; provided, however, that Intuit shall use its reasonable efforts to
obtain a release from such confidentiality obligation and upon being so
released, Intuit shall promptly give such notice to Xxxxxxx. In this case, this
Agreement shall terminate on the date on which Intuit's exit of such business is
effective, Xxxxxxx may convert all of the Joint Customer accounts to its own
brokerage service, and Intuit shall pay for Xxxxxxx'x actual costs associated
with the conversion within fifteen (15) calendar days after receipt from Xxxxxxx
of an invoice therefor; provided, that in no event shall such costs exceed
U.S.$1,000,000. In addition, during the two (2) year period after such
termination, the provisions of Sections 11(b) and (c) shall continue to apply.
(ii) by Intuit, upon written notice to Xxxxxxx, following a Change
of Control that has not been approved by Intuit (which written notice must be
given no later than thirty (30) calendar days following such Change of Control),
such approval not to be unreasonably withheld. Without limiting the generality
14
of the foregoing, it shall be deemed reasonable for Intuit to withhold its
approval if the proposed acquiring entity (I) is a competitor of Intuit, (II) is
held in general disrepute, or (III) does not have a management team with
significant operating experience in the brokerage industry. In this case,
Intuit, in its sole and absolute discretion, may convert all of the Joint
Customer accounts either to its own brokerage service or a third party's service
of Intuit's choosing. In the event that Intuit decides to convert the Joint
Customer accounts, Xxxxxxx or the acquiring entity, as the case may be, will
provide the services set forth in Section 1 during the Wind-Down Period and
shall pay for Intuit's actual costs associated with the conversion within
fifteen (15) calendar days after receipt from Intuit of an invoice therefor;
provided, that in no event shall such costs exceed U.S.$1,000,000.
(iii) by Intuit, upon written notice to Xxxxxxx, following Xxxxxxx
becoming statutorily disqualified (within the meaning of Section 3(a)(39) of the
Exchange Act) due to a violation of the anti-fraud provisions of or rules under
the Federal securities laws or a breach by Xxxxxxx of its fiduciary duties, and
(I) such disqualification results in the loss of 30% of Xxxxxxx'x customer
accounts or the withdrawal of 30% of Xxxxxxx'x customer assets within three (3)
months following the date on which Xxxxxxx becomes statutorily disqualified or
(II) Xxxxxxx is prohibited, barred or suspended from doing business as a
broker-dealer, which prohibition, bar or suspension has a material adverse
effect on Xxxxxxx'x ability to perform its obligations under this Agreement and
remains in effect for more than three Business Days. Any written notice of
termination pursuant to this subsection must be given no later than thirty (30)
calendar days following the event which gives rise to the right to terminate. In
this case, Intuit, in its sole and absolute discretion, may convert all of the
Joint Customer accounts either to its own brokerage service or a third party's
service of Intuit's choosing. In the event that Intuit decides to convert the
Joint Customer accounts, Xxxxxxx, to the extent it may legally do so, will
provide the services set forth in Section 1 at the agreed upon service levels
during the Wind-Down Period (and, with respect to those services which Xxxxxxx
is not legally able to provide, Xxxxxxx shall use commercially reasonable
efforts to cause a Person that is legally able to do so to perform those
services), and shall pay for Intuit's actual costs associated with the
conversion within fifteen (15) calendar days after receipt from Intuit of an
invoice therefor.
(iv) by one party, upon written notice to the other party,
following (I) the failure by the other party to maintain its required service
levels expressly stated to be failures for purposes of this subsection as set
forth in Exhibit D, (II) the failure by the other party, three (3) times during
any fiscal year, to deliver any report required to be delivered by it under
Sections 4(c) and 4(g) within thirty (30) calendar days after such report is
due, or (III) the failure by the other party, three (3) times, to deliver any
report required to be delivered by it under Section 1(f) within thirty (30)
calendar days after such report is due which failure has continued for thirty
(30) calendar days following written notice thereof. Any written notice of
termination pursuant to this subsection must be given no later than thirty (30)
calendar days following the event which gives rise to the right to terminate. In
this case, the terminating party, in its sole and absolute discretion, may
convert all of the Joint Customer accounts either to its own brokerage service
or, if the terminating party is Intuit, a third party's service of Intuit's
choosing. The non-terminating party will provide the services set forth in
Section 1 during the Wind-Down Period and shall pay the terminating party's
actual costs associated with the conversion within fifteen (15) calendar days
after receipt of an invoice therefor; provided, that in no event shall such
costs exceed U.S.$1,000,000.
15
(v) by one party, upon written notice to the other party,
following (I) the failure by the other party to pay an amount owing by it
pursuant to Section 4(d) [True-Up of Gross Revenues], 4(e) [True-Up of
Incremental Expenses] or 7(b) [Indemnity] (in the case of any of the foregoing,
where liability for payment is undisputed) within thirty (30) calendar days
after the due date for payment thereof or after the date on which any disputed
payment is finally determined , (II) a material breach by the other party of
Section 5(a) or 5(b) [Cross Selling], as the case may be, which breach has
continued for thirty (30) calendar days after written notice thereof by the
non-breaching party, (III) the other party willfully taking action with the
intent to attempt to move any or all of the Joint Customers away from the Joint
Brokerage Service (it being understood that a party placing a general
advertisement for brokerage services that is not targeted to Joint Customers
and/or Quicken and/or Xxxxxxx.xxx customers shall not constitute an action with
the requisite intent), (IV) a material breach by the other party of Section 11
[Non-Competition; Exclusivity], (V) a material breach by the other party of
Section 14(c) [Privacy Policy], (VI) a material breach by the other party of
Section 14(d) [Security Requirements], (VII) a material breach by the other
party of Section 12 [Confidentiality] or (VIII) a material infringement by the
other party of intellectual property that is solely owned or controlled by the
terminating party (including without limitation its Marks), which action or
breach, in the case of subsections (IV) through (VIII), has (if capable of being
cured) not been cured within thirty (30) calendar days after written notice
thereof by the terminating party or (if not capable of being cured) the
non-terminating party has not within thirty (30) calendar days after written
notice thereof by the terminating party taken steps reasonably designed to
ensure that such action or breach will not recur; provided, however, that in the
event an action or breach by such non-terminating party under the same
subsection (IV), (V), (VI), (VII) or (VIII), as applicable, has previously
occurred within the three (3) year period preceding such action or breach, the
non-terminating party shall not be entitled to such thirty (30) calendar day
cure/remedial action period provided in this subsection. Any written notice to
terminate under this subsection must be given no later than thirty (30) calendar
days following the later of (1) the event which gives rise to the right to
terminate and (2) the expiration of any applicable cure period. In this case,
the terminating party, in its sole and absolute discretion, may convert all of
the Joint Customer accounts either to its own brokerage service or, if the
terminating party is Intuit, a third party's service of Intuit's choosing. The
non-terminating party will provide the services set forth in Section 1 during
the Wind-Down Period and shall pay the terminating party's actual costs
associated with the conversion within fifteen (15) calendar days after receipt
of an invoice therefor; provided, that in no event shall such costs exceed
U.S.$1,000,000.
(vi) by either party, upon written notice to the other party, if
the Joint Brokerage Service fails to meet the Financial Performance Standards
for a Financial Performance Standards Measurement Period, and then fails to meet
the Financial Performance Cure Standards for the Financial Performance Cure
Period, such written notice to be given (if at all) within thirty (30) calendar
days after the end of the Financial Performance Cure Period. The parties will
work diligently to improve performance during the Financial Performance Cure
Period to a standard determined by the Steering Committee at the commencement of
the Financial Performance Cure Period (the "Financial Performance Cure
Standards"). In determining the Financial Performance Cure Standards for any
Financial Performance Cure Period, the Steering Committee shall take into
account general economic conditions, the performance of the entire brokerage
industry generally and the performance of the online brokerage industry in
particular. In the case of a termination pursuant to this subsection (vi), the
Steering Committee shall determine the allocation of the Joint Customer accounts
("Allocation"). This Allocation shall be based on the concept that the parties
16
shall share in the value of Joint Customer accounts equally. In the event that
the Steering Committee is unable to determine both the Allocation and the
Closing Joint Customer Valuation within thirty (30) Business Days after the
termination of this Agreement, the determination of the Closing Joint Customer
Valuation shall be determined in the manner set forth in Section 9(f) and the
Allocation shall be determined by the valuation firm (or firms) which finally
determines the Closing Joint Customer Valuation in accordance with that section.
In the event that the Steering Committee determines the Closing Joint Customer
Valuation but is unable to determine the Allocation within thirty (30) Business
Days after the termination of this Agreement, Intuit and Xxxxxxx shall, within
five (5) calendar days thereafter, jointly choose a valuation firm (e.g., an
investment bank or an accounting firm) to determine the Allocation, which
valuation firm shall complete its determination within fifteen (15) calendar
days of its engagement.
(vii) if a Change of Control has occurred, by Intuit, upon written
notice to Xxxxxxx or the acquiring entity, as the case may be, if the Joint
Brokerage Service fails (I) to meet or exceed Financial Performance Standards
for any given Financial Performance Standards Measurement Period, which failure
has not been cured in the following Financial Performance Standards Measurement
Period; or (II) to meet the Financial Performance Standards for any two
consecutive Financial Performance Standards Measurement Periods (even if the
failure in one or both of those Financial Performance Standards Measurement
Periods has been cured), such written notice to be given (if at all) within
thirty (30) calendar days after the later of (i) the event which gives rise to
the right to terminate and (ii) the expiration of any applicable cure period. In
either case, Intuit, in its sole and absolute discretion, may convert all of the
Joint Customer accounts either to its own brokerage service or a third party's
service of Intuit's choosing. In the event that Intuit decides to convert the
Joint Customer accounts, Xxxxxxx or the acquiring entity, as the case may be,
will provide the services set forth in Section 1 during the Wind-Down Period and
shall pay for Intuit's actual costs associated with the conversion within
fifteen (15) calendar days after receipt from Intuit of an invoice therefor;
provided, that in no event shall such costs exceed U.S.$1,000,000.
(viii) if a Change of Control has occurred, by Intuit, upon
written notice to Xxxxxxx or the acquiring entity, as the case may be, if the
Steering Committee reaches a deadlock on the Financial Performance Standards or
the business and financial plan for a fiscal year (such written notice to be
given (if at all) within thirty (30) calendar days after such deadlock). In this
case, Intuit, in its sole and absolute discretion, may convert all of the Joint
Customer accounts either to its own brokerage service or a third party's service
of Intuit's choosing. In the event that Intuit decides to convert the Joint
Customer accounts, Xxxxxxx or the acquiring entity, as the case may be, will
provide the services set forth in Section 1 during the Wind-Down Period and
shall pay for Intuit's actual costs associated with the conversion within
fifteen (15) calendar days after receipt from Intuit of an invoice therefor;
provided, that in no event shall such costs exceed U.S.$1,000,000.
(ix) by either party, upon written notice to the other party,
following the failure by the other party to meet a milestone set forth in
Section II(C) of Exhibit A, which failure, in the reasonable judgment of the
terminating party, has resulted in or will result in the Launch Date occurring,
if at all, later than the latest date for the Joint Brokerage Service Launch set
forth in Section II(C) of Exhibit A (provided that such failure by the
non-terminating party did not result from and is not related to any failure by
the terminating party to meet a milestone set forth in Section II(C) of Exhibit
A). In this case, the non-terminating party shall reimburse the terminating
party for any and all Incremental Expenses incurred by it since February 4, 2002
that are reflected and detailed in the Initial Business Plan.
17
(x) by one party, by giving written notice to the other party
pursuant to Section 9(a). In this case, this Agreement shall terminate on the
last day of the Term or renewal Term during which such notice is given, as the
case may be. In the event that (I) Intuit is the terminating party, during the
two (2) year period after such termination, the provisions of Sections 11(b) and
(c) shall continue to apply, or (II) Xxxxxxx is the terminating party, during
the two (2) year period after such termination, the provisions of Section 11(a)
shall continue to apply. In addition the non-terminating party, in its sole and
absolute discretion, may convert all of the Joint Customer accounts either to
its own brokerage service or, if the non-terminating party is Intuit, a third
party's service of Intuit's choosing. The terminating party will provide the
services set forth in Section 1 during the Wind-Down Period and shall pay the
non-terminating party's actual costs associated with the conversion within
fifteen (15) calendar days after receipt of an invoice therefor; provided, that
in no event shall such costs exceed U.S.$1,000,000.
(c) Wind-Down Period; Conversion of Joint Customer Accounts.
(i) In the case of a termination pursuant to Section 9(b) (other
than 9(b)(ix)), the parties shall continue, to the extent permitted by law, to
support the Joint Brokerage Service (and, with respect to those services which a
party is not legally able to provide, such party shall use best efforts to cause
a Person that is legally able to do so to perform those services) until the
earlier of (i) a period of nine (9) months from the date of termination or (ii)
the completion of the conversion process of Joint Customer accounts to be
converted (the "Wind-Down Period"). The parties will continue to split Gross
Revenues (on the terms described above) from Joint Customers and Incremental
Expenses (as set forth in the annual business and financial plan approved by the
Steering Committee (which, for the Start-up Period, shall be the Initial
Business Plan)) incurred during the Wind-Down Period. In the event that the
Wind-Down Period is less than nine (9) months, the party that is converting the
Joint Customer accounts shall notify the other party when the Wind-Down Period
has ended. In the case of a termination where Intuit has Joint Customer accounts
allocated to it or exercises its right to convert them, during and after the
Wind-Down Period, Xxxxxxx will transfer, or cause to be transferred, the
accounts of those Joint Customers to ISI or the third party service of Intuit's
choosing and cooperate with any reasonable requests of Intuit in connection with
such transfers.
(ii) In the case of a termination pursuant to subsections
9(b)(ii), (iii), (iv), (v), (vii), (viii) or (x) above where Intuit is entitled
to convert the Joint Customer accounts and does not convert all of the Joint
Customer accounts, Xxxxxxx or any acquiring entity, as the case may be, will pay
to ISI, in the sole discretion of Xxxxxxx or any acquiring entity, as the case
may be, either (I) a lump sum payment in an amount equal to one-half of the
Closing Joint Customer Valuation of the Joint Customer accounts in existence and
not converted as of the end of the Wind-Down Period or (II) a share of Gross
Revenues from the Joint Customer accounts in existence and not converted as of
the end of the Wind-Down Period for so long as any such Joint Customer remains a
customer of Xxxxxxx (such share to be determined by the Steering Committee, but
in any event to be less than 50%). In the event that the Steering Committee
cannot make such determination within thirty (30) Business Days after the
termination of this Agreement, the parties shall resolve such dispute in
accordance with Section 9(f). In the case of a termination pursuant to
18
subsections 9(b)(ii), (iv), (v) (but only with respect to subsections (I), (II),
(IV), (V), (VI), (VII) or (VIII) of Section 9(b)(v)), (vii), (viii) or (x) above
where Intuit is entitled to convert the Joint Customer accounts and exercises
such right, Intuit will pay to Xxxxxxx or any acquiring entity, as the case may
be, in the sole discretion of Intuit, either (I) a lump sum payment in an amount
equal to one-half of the Closing Joint Customer Valuation of the Joint Customer
accounts in existence and so converted as of the end of the Wind-Down Period or
(II) a share of Gross Revenues from the Joint Customer accounts in existence and
so converted as of the end of the Wind-Down Period for so long as any such Joint
Customer remains a customer of Intuit or its third party provider (such share to
be determined by the Steering Committee, but in any event to be less than 50%).
In the event that the Steering Committee cannot make such determination within
thirty (30) Business Days after the termination of this Agreement, the parties
shall resolve such dispute in accordance with Section 9(f).
(iii) In the case of a termination pursuant to subsections
9(b)(i), (iv), (v) or (x) above where Xxxxxxx is entitled to convert the Joint
Customer accounts, Xxxxxxx will pay to ISI, in Xxxxxxx'x sole discretion, either
(I) a lump sum payment in an amount equal to one-half of the Closing Joint
Customer Valuation of the Joint Customer accounts in existence as of the end of
the Wind-Down Period or (II) a share of Gross Revenues from the Joint Customer
accounts in existence as of the end of the Wind-Down Period for so long as any
such Joint Customer remains a customer of Xxxxxxx (such share to be determined
by the Steering Committee, but in any event to be less than 50%). In the event
that the Steering Committee cannot make such determination within thirty (30)
Business Days after the termination of this Agreement, the parties shall resolve
such dispute in accordance with Section 9(f).
(iv) In the event that any party exercises its right to convert
any or all of the Joint Customer accounts pursuant to subsection 9(b), such
party shall use its commercially reasonable efforts to convert all of the Joint
Customer accounts.
(d) Payments.
(i) In the event of a conversion of accounts contemplated by
Section 9(b)(i), (ii), (iii), (iv), (v), (vii), (viii) or (x), any and all
payments (including, without limitation, all costs associated with such
conversion which have been invoiced as contemplated above) shall be made within
thirty (30) calendar days after the end of the Wind-Down Period (the "Payment
Trigger Date"); provided, however, that in the event that such payment is
greater than $15 million, a party may elect to make such payment over a three
(3) year period so long as such payment accrues interest at the prime rate and
is secured in a manner mutually agreed by the parties, in which case such
payment shall be made as follows: (I) within 30 calendar days after the Payment
Trigger Date, an amount equal to 25% of the aggregate payment, (II) on the first
anniversary of the Payment Trigger Date, an amount equal to 25% of the aggregate
payment, (III) on or prior to the second anniversary of the Payment Trigger
Date, an amount equal to 25% of the aggregate payment and (IV) on or prior to
the third anniversary of the Payment Trigger Date, an amount equal to the
remaining 25% of the aggregate payment. Notwithstanding the foregoing, in the
event that payments contemplated by the previous sentence are to be made based
on a share of Gross Revenues, then only the costs associated with such
conversion which have been invoiced as contemplated above shall made within the
thirty (30) calendar day period following the date of receipt of such invoice.
19
(ii) Any or all payments due pursuant to Section 9(b)(vi) shall be
made by the party or parties required pursuant to the Allocation to make such
payment within thirty (30) calendar days after the Allocation has been
determined; provided, however, that in the event that such payment is greater
than $15 million, a party may elect to make such payment over a three (3) year
period so long as such payment accrues interest at the prime rate and is secured
in a manner mutually agreed by the parties, in which case such payment shall be
made as follows: (I) within 30 calendar days after the date of such
determination, an amount equal to 25% of the aggregate payment, (II) on the
first anniversary of the date of such determination, an amount equal to 25% of
the aggregate payment, (III) on or prior to the second anniversary of the date
of such determination, an amount equal to 25% of the aggregate payment and (IV)
on or prior to the third anniversary of the date of such determination, an
amount equal to the remaining 25% of the aggregate payment.
(iii) Any payment due pursuant to Section 9(b)(ix) shall be made
by the non-terminating party within thirty (30) calendar days after the later
of: (I) the effective date of such termination hereunder and (II) the
non-terminating party's receipt of evidence reasonably satisfactory to it
documenting the terminating party's Incremental Expenses.
(iv) All payments made pursuant to this Section 9 shall be made by
wire transfer of immediately available funds to the account for the payee set
forth on Exhibit G or such other account as Xxxxxxx or Intuit (or ISI), as the
case may be, may designate in writing from time to time. In the event any such
payment is not made when due, the entire unpaid amount shall accrue interest
until it has been paid in full at the rate of the lesser of (I) prime plus 2%
per annum or (II) the highest rate then permitted under applicable law.
(e) Financial Performance Standards; Annual Business and Financial Plan
Review.
(i) (I) For the Start-Up Period, the Financial Performance
Standards shall be as follows: the Actual Net Revenue and the Actual Operating
Profit shall be greater than or equal to the Projected Net Revenue and the
Projected Operating Profit, respectively, and the number of new Joint Customer
accounts shall be greater than or equal to the number set forth in the Initial
Business Plan.
(II) For all other Financial Performance Standards
Measurement Periods, the Financial Performance Standards will be determined by
the Steering Committee. In determining the Financial Performance Standards for
any Financial Performance Standards Measurement Period, the Steering Committee
shall take into account general economic conditions, the performance of the
entire brokerage industry generally and the performance of the online brokerage
industry in particular.
(III) Xxxxxxxx Xxxxxxxx (or his designee) and Xxxxxx
Xxxxxxxx (or his designee) shall meet (in person or by telephone) no less
frequently than weekly in order to discuss the status of the Joint Brokerage
Service.
(ii) On each Expense Review Date, the Steering Committee shall
review the performance of the Joint Brokerage Service against the then-current
annual business and financial plan. In the event that the Joint Brokerage
Service is not performing up to such plan as of such Expense Review Date, the
Steering Committee shall have the discretion to agree to modify expenses and
20
revenue forecasts and to update the annual business and financial plan and the
applicable Financial Performance Standards to reflect such modifications. In the
event that the Joint Brokerage Service is performing in excess of such plan, the
Steering Committee shall have the discretion to agree to modify expenses and
revenue forecasts and to update the annual business and financial plan and the
applicable Financial Performance Standards to reflect such excess demand. Intuit
and Xxxxxxx shall use their commercially reasonable efforts to allocate
appropriate resources to meet such revised plan. In the event that the Steering
Committee cannot agree on a revised annual business and financial plan or
revised Financial Performance Standards within fifteen (15) calendar days after
the Expense Review Date, such issue shall be resolved as set forth in Exhibit F.
(iii) The parties agree that, in the event the amount budgeted for
Trading Errors in any annual business and financial plan (including the Initial
Business Plan) exceeds the amount of Incremental Expenses related to Trading
Errors incurred by the parties during such year, the excess amount shall be
carried forward as a reserve and shall be used to increase the amount budgeted
for Trading Errors in the next succeeding annual business and financial plans
approved by the Steering Committee.
(f) Procedures for Deadlock. In the event that the Steering Committee
cannot determine the Closing Joint Customer Valuation within thirty (30)
Business Days after the termination of this Agreement, each party shall, within
five (5) Business Days thereafter, engage a third party valuation firm (e.g., an
investment bank or an accounting firm) to determine the Closing Joint Customer
Valuation. If the determinations of the two valuation firms are within 15% of
each other, such determinations shall be averaged and shall constitute the
Closing Joint Customer Valuation. If they are not, within five (5) Business Days
thereafter, Intuit and Xxxxxxx shall jointly choose a third valuation firm to
determine the Closing Joint Customer Valuation. In the event that the third
valuation firm's determination of Closing Joint Customer Valuation is between
the determinations of the first two valuation firms, then the third valuation
firm's determination shall be the Closing Joint Customer Valuation. If the third
valuation firm's determination of Closing Joint Customer Valuation is outside of
the range of the first two valuation firms' determinations, then the median of
the three determinations shall be the Closing Joint Customer Valuation. In each
instance, such valuation firm shall complete such determination within fifteen
(15) calendar days of its engagement. The parties shall follow the same dispute
resolution procedure in the event that the Steering Committee cannot determine
the share of Gross Revenues from Joint Customer accounts to be paid pursuant to
Section 9(c)(ii) or Section 9(c)(iii).
10. Distribution of Other Products. Intuit and Xxxxxxx shall in good
faith discuss arrangements for (a) the distribution of Intuit products (e.g.,
Quicken branded loans, Quicken desktop software products, Quicken branded credit
cards, etc.) to Xxxxxxx Customers, (b) the distribution of Xxxxxxx products to
Intuit customers and (c) the distribution by Xxxxxxx and/or Intuit of jointly
branded products (e.g., mutual funds).
11. NON-COMPETITION; EXCLUSIVITY.
(a) During the Term and the Wind-Down Period, neither Xxxxxxx nor any
of its Affiliates will launch, directly or indirectly, an alliance substantially
similar to the one contemplated herein (which is, providing Brokerage Accounts
with integrated personal finance content targeted to U.S. customers) with any
financial portal (e.g., AOL, Yahoo) or financial website or financial software
21
provider (e.g., Microsoft). Notwithstanding the foregoing, if this Agreement is
not terminated by Xxxxxxx pursuant to Section 9(b)(x), during the Wind-Down
Period Xxxxxxx and its Affiliates may negotiate and enter into an agreement with
respect to such an alliance; provided that such alliance is launched only after
the end of the Wind-Down Period. This Section 11(a) is not intended to preclude
Xxxxxxx from offering SiebertNet on a private label basis to banks and/or
insurance companies (it being understood that any such offering shall not
include any Intuit Content, tools, trademarks, functionality, software or other
technology).
(b) During the Term and the Wind-Down Period, Intuit and its Affiliates
shall not, either directly or through a strategic alliance substantially similar
to the one contemplated herein, offer branded or co-branded Brokerage Accounts
targeted to U.S. customers, unless Intuit is entitled to convert (whether
because they are allocated to Intuit or otherwise) some or all of the customers
following termination. Intuit shall not, however, be prohibited from providing
branded or co-branded tools or content (but not Brokerage Accounts) to other
broker-dealers or from promoting competitive products or services of
broker-dealers through a variety of advertising and marketing relationships
except as expressly prohibited by the first three sentences of Section 5(a).
Further, nothing shall prohibit Intuit from providing connectivity to users of
the Quicken Products or other Intuit products that enables them to download or
otherwise access their other financial institution account information into or
through the Quicken Products or other Intuit products or on the Joint Brokerage
Service. In addition, notwithstanding the foregoing, if this Agreement is not
terminated by Intuit pursuant to Section 9(b)(i) or 9(b)(x), during the
Wind-Down Period Intuit and its Affiliates may negotiate and enter into an
agreement to provide such products and services; provided that such products and
services are available only after the end of the Wind-Down Period.
Notwithstanding anything in this Agreement to the contrary, Intuit shall not be
prohibited from marketing or providing, directly or indirectly, investment
products and services to small businesses, sole proprietors or individual
employees through their employers pursuant to Intuit's agreement with the
Principal Life Insurance Company dated September 26, 2001 (the "Principal
Agreement"), but in no event shall any such products or services be marketed or
provided by Intuit on the Pershing-framed pages of the Joint Brokerage Service.
The Principal Agreement does not provide for the marketing or provision of
investment products or services through Quicken and Xxxxxxx.xxx.
(c) After launching the Joint Brokerage Service (assuming the Joint
Brokerage Service is meeting or beating the annual business and financial plan
approved by the Steering Committee without taking into account unapproved
expenses (which, for the Start-Up Period, shall be the Initial Business Plan))
Intuit will begin a process to evaluate its small business brokerage opportunity
(not including its existing deal with Principal Life Insurance Company).
o The Intuit team will investigate: (a) sizing of the market opportunity (b)
identification of the likely customer targets (c) specification of the
small business brokerage offering (d) development of its key strategies and
(e) investment required to launch a successful service. As part of the
investigation process, Intuit agrees to seek appropriate input from
Xxxxxxx.
o Based on the above, and any other relevant factors, the Intuit team will
specify the small business brokerage offering. Once the requirements are
established they will be reviewed by Xxxxxxx. Xxxxxxx will then, within a
reasonable period of time not to exceed one month, inform Intuit of
Xxxxxxx'x intent and ability to service the small business customer base.
22
x Xxxxxxx must be able to deliver the full small business brokerage offering
within six months of Xxxxxxx informing Intuit of Xxxxxxx'x intent and
ability to service the small business customer base.
o If Xxxxxxx can deliver the small business brokerage offering within this
period of time, both parties will move ahead, with Xxxxxxx as the sole
provider, with the intent that the terms (business model economics) for the
small business offering, will be similar to what the parties have agreed to
for the Joint Brokerage Service.
o In the event that Xxxxxxx elects not to or cannot provide the small
business brokerage offering (scope as specified by the Intuit team) to
customers within six months, the non-compete set forth in Section 11(b)
above and the prohibitions set forth in the third sentence of Section 5(a)
above shall no longer be in effect with respect to small business
customers, and Intuit is free to take the actions set forth in Section
11(b) and the third sentence of Section 5(a) with respect to small business
customers.
o In the event that Intuit and Xxxxxxx disagree about Xxxxxxx'x ability to
deliver the required small business brokerage offering, both companies
agree to use a mutually acceptable third party to decide.
12. CONFIDENTIALITY. The parties agree to be subject to the terms and
conditions of the confidentiality provision set forth in Exhibit H.
13. Definitions. The following terms, when used in this Agreement,
shall have the meanings set forth below:
(a) "accused party" has the meaning set forth in Section 14(u)(i)(II).
(b) "Acquired Xxxxxxx Customers" means Xxxxxxx customer Brokerage
Accounts that are acquired by Xxxxxxx after the Launch Date, whether by
purchase, merger or through any means of acquiring new accounts.
(c) "Actual Net Revenue" means, for any period, the net revenues of the
Joint Brokerage Service for that period calculated in the same manner as
Projected Net Revenue for that period.
(d) "Actual Operating Profit" means, for any period, the operating
profits of the Joint Brokerage Service for that period, calculated in the same
manner as Projected Operating Profit for that period.
(e) "Affiliate" means, as applied to any Person any other Person
directly or indirectly controlling, controlled by or under common control with,
that Person. For the purposes of this definition, "control" (including with
correlative meanings, the terms "controlling," "controlled by," and "under
common control with") as applied to any Person, means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of that Person, whether through ownership of voting securities or
by contract or otherwise.
23
(f) "Agreement" has the meaning set forth in the introductory
paragraph.
(g) "Allocation" has the meaning set forth in Section 9(b)(vi).
(h) "Arbitration Notice" has the meaning set forth in Section
14(u)(i)(II).
(i) "Arbitration Party" has the meaning set forth in Section 14(u)(i).
(j) "Brokerage Accounts" means a facility that enables a customer,
among other things, at a minimum to buy and sell securities.
(k) "Brokerage Platform" means the Brokerage Platform to be provided by
Xxxxxxx which shall, at a minimum, provide the following functionality that
enables or provides: (i) customers to open retail Brokerage Accounts (via the
web, phone, mail and branch); (ii) trading functionality for equities, mutual
funds, and options (via web and phone); (iii) all clearing agent functions; (iv)
books and records system; (v) OFX brokerage statement download to Quicken 2003
for Windows and Mac; (vi) an API (or other means) to electronically transfer
information about a customer's holdings from the Joint Brokerage Service to
Xxxxxxx.xxx at the individual lot level to support tax calculations and the
ability to display tax impact information in the order process; (vii) Joint
Customers to access both Xxxxxxx.xxx and the web-based portion of the Joint
Brokerage Service with a single log-in; (viii) account applicants to submit
their application online without having to submit paperwork; (ix) a database and
user interface that allow customers to specify lots when they place a "sell"
order; (x) automated Tax Return support (1099 Download into TurboTax and
TurboTax for the Web) for Tax Year 2002, including without limitation cost basis
information; and (xi) Customer Support as set forth in Exhibit D.
(l) "Business Day" means any day that is not a Saturday, a Sunday or
other day on which banks are required or authorized by law to be closed in the
City of New York or the City of San Francisco.
(m) "Change of Control" means (i) any transaction or series of
transactions which results in the transfer of ownership or control to a single
Person or group of affiliated Persons (other than Xxxxxx Xxxxxxx) of fifty
percent (50%) or more of (I) the voting power of Xxxxxxx or SFC or (II) any
class of stock or other equity interest (or any instrument convertible into
equity) of Xxxxxxx or SFC, effected by means of the sale of stock, merger,
consolidation, issuance of shares, reorganization, share exchange or other form
of transaction or agreement, other than any such transaction undertaken solely
for the purpose of reincorporating Xxxxxxx or SFC, as the case may be, in a
different jurisdiction, or (ii) a sale or other disposition of all or
substantially all of the assets of Xxxxxxx or SFC to a Person (other than Xxxxxx
Xxxxxxx).
(n) "Closing Joint Customer Valuation" means, as of the date of
termination of this Agreement, the average market value per account of the Joint
Customer accounts, as determined by the Steering Committee. In the event that
the Steering Committee cannot determine the average market value of the Joint
Customer accounts, the parties shall resolve such dispute in accordance with
Section 9(f).
(o) "Confidential Material" has the meaning set forth in Exhibit H.
24
(p) "Content" shall mean content, research, advice or other materials,
including without limitation third party materials (except where expressly
stated to the contrary).
(q) "Dispute" has the meaning set forth in Section 14(u)(i)(I).
(r) "Effective Date" means April 29, 2002.
(s) "Exchange" means the New York Stock Exchange, the National
Association of Securities Dealers, Inc., and any other self-regulatory or
governmental organization with jurisdiction over Xxxxxxx or ISI, including,
without limitation, the SEC.
(t) "Exchange Act" has the meaning set forth in Exhibit H.
(u) "Existing Xxxxxxx Customers" means Xxxxxxx customer Brokerage
Accounts that exist on the Launch Date.
(v) "Expense Review Date" shall mean the date that is three (3) months
after the Launch Date and the last day of each three (3) month period thereafter
or more frequently as deemed necessary by the Steering Committee.
(w) "Financial Performance Cure Period" means (i) with respect to the
Initial Financial Performance Standards Measurement Period, one year after such
Financial Performance Standards Measurement Period, and (ii) with respect to any
other Financial Performance Standards Measurement Period, one hundred eighty
(180) calendar days after such Financial Performance Standards Measurement
Period.
(x) "Financial Performance Cure Standards" has the meaning set forth in
Section 9(b)(vi).
(y) "Financial Performance Standards" means the performance criteria
with respect to the Joint Brokerage Service set forth in Section 9(e).
(z) "Financial Performance Standards Measurement Period(s)." The
initial Financial Performance Standards Measurement Period shall be the Start-Up
Period (the "Initial Financial Performance Standards Measurement Period").
Subsequent Financial Performance Standards Measurement Periods shall be
determined by the Steering Committee (each period to be referred to as a
"Financial Performance Standards Measurement Period") and shall be on a fiscal
year basis ending July 31st; provided, however, that following a Change of
Control, each subsequent Financial Performance Standards Measurement Period
shall be on a calendar quarter basis.
(aa) "Future Xxxxxxx Customers" means Xxxxxxx customer Brokerage
Accounts that are established with Xxxxxxx after the Launch Date.
(bb) "GAAP" means generally accepted accounting principles in effect in
the United States from time to time, consistently applied.
25
(cc) "Gross Revenues" means all revenues received by Xxxxxxx in
connection with a Brokerage Account including, without limitation, trading
commissions, margin and interest income, mutual fund fees (e.g., 12b-1,
shareholder servicing and administrative fees), investment advisory fees, order
flow fees, account maintenance fees and other fees.
(dd) "IE Split" has the meaning set forth in Section 4(e).
(ee) "Incremental Expenses" shall mean those costs and expenses
incurred by either party that are directly related to the creation, growth,
support, maintenance and operation of the Joint Brokerage Service as set forth
in the annual business and financial plan approved by the Steering Committee
(which, for the Start-up Period, shall be the Initial Business Plan).
Incremental Expenses shall include, but not be limited to, (i) personnel costs
(related to product development, marketing, finance, regulatory, new accounts,
customer service and trading personnel) that are above each party's excess
capacity existing at the Effective Date, (ii) the cost of marketing programs,
promotion, advertising and research, (iii) website maintenance costs, (iv) the
cost of additional equipment (including, without limitation, communications
equipment and hardware) and software that is directly related to the Joint
Brokerage Service or is above each party's excess capacity existing at the
Effective Date, (v) trading related expenses and fees (including, without
limitation, transaction clearing costs and all other costs related to the
trading in, or maintenance of, the accounts of Joint Customers and that are
charged to Xxxxxxx by its clearing broker), (vi) expenses related to errors, in
the ordinary course and consistent with past Xxxxxxx experience, associated with
an individual taking an order from a Joint Customer or otherwise handling a
Joint Customer account ("Trading Errors") and (vii) any other costs that are
directly related to the joint revenue stream and/or the Joint Brokerage Service.
The Steering Committee shall decide the appropriate method of funding capital
expenditures (as opposed to current period expenses in accordance with GAAP)
related to the Joint Brokerage Service (including, without limitation, any costs
related to Xxxxxxx'x procuring additional premises and/or undergoing a
significant reorganization of its operations in the event the success of the
Joint Brokerage Service requires Xxxxxxx to do so), and the depreciation or
amortization of such items over their useful lives shall be treated as
Incremental Expenses. If an expense were to occur even if the Joint Brokerage
Service did not exist, then it should not qualify as an Incremental Expense.
(ff) "Indemnified Party" has the meaning set forth in Section
7(b)(iii)(I).
(gg) "Indemnifying Party" has the meaning set forth in Section
7(b)(iii)(I).
(hh) "Initial Business Plan" means the initial business plan, adopted
by the parties prior to the Effective Date, that describes the projected Gross
Revenues, Incremental Expenses, net revenues, operating profits and operations
of the Joint Brokerage Service during the Start-Up Period and which is attached
hereto as Exhibit I, as amended by the Steering Committee.
(ii) "Initial Financial Performance Standards Measurement Period" has
the meaning set forth in the definition of "Financial Performance Standards
Measurement Period."
(jj) "Intuit" has the meaning set forth in the introductory paragraph.
(kk) "Intuit Content" means the Intuit Licensed Content and the Intuit
Owned Content.
26
(ll) "Intuit IE" has the meaning set forth in Section 4(c).
(mm) "Intuit Licensed Content" means any Content provided by Intuit to
the Joint Brokerage Service that is not owned, produced or developed by Intuit.
(nn) "Intuit Owned Content" means any Content provided by Intuit to the
Joint Brokerage Service that is owned, produced or developed by Intuit.
(oo) "Intuit Policies and Procedures" has the meaning set forth in
Section 7(a)(iii)(VI).
(pp) "ISI" has the meaning set forth in the introductory paragraph.
(qq) "Joint Brokerage Service" means the joint brokerage service that
will provide brokerage services to retail customers, including but not limited
to: the ability to trade securities and access investment research and content,
obtain customer service and account information and maintenance. These services
will primarily be delivered via the web but will also permit customers to access
these services via telephone (automated system as well as call center), mail and
through retail branches. The Joint Brokerage Service is more fully described in
Sections I, II(A) and II(B) of Exhibit A.
(rr) "Joint Customers" means customers that apply for a Brokerage
Account on the Joint Brokerage Service who are not Xxxxxxx Customers (except as
contemplated by Section 4(a)(i)).
(ss) "Launch Date" means the date on which the Joint Brokerage Service
is fully operational, which date is currently anticipated to fall in the period
from mid-August to mid-September, 2002.
(tt) "Losses" has the meaning set forth in Section 7(b)(i).
(uu) "Marks" has the meaning set forth in Section 6(c)(i).
(vv) "NASD" has the meaning set forth in Section 14(u)(i).
(ww) "NYSE" has the meaning set forth in Section 14(u)(i).
(xx) "Objection Notice" has the meaning set forth in Section
14(u)(i)(II).
(yy) "Operating Profit" means, as to any True-Up Period, the time at
which the Joint Brokerage Service has a positive Actual Operating Profit.
(zz) "Operating Teams" has the meaning set forth in Section 3.
(aaa) "Payment Trigger Date" has the meaning set forth in Section
9(d)(i).
(bbb) "Pershing" means the Pershing Division of Xxxxxxxxx, Xxxxxx &
Xxxxxxxx Securities Corporation, or any other clearing broker engaged by Xxxxxxx
from time to time which is reasonably satisfactory to Intuit.
27
(ccc) "Pershing Agreement" means the Fully Disclosed Clearing Agreement
of Pershing Division of Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation,
dated April 29, 2002, by and among Pershing and Xxxxxxx.
(ddd) "Person" means any natural person, general or limited
partnership, corporation, limited liability company or partnership, firm,
association, governmental or regulatory authority or other legal entity.
(eee) "Principal Agreement" has the meaning set forth in Section 11(b).
(fff) "Profitability Date" means the last day of the first True-Up
Period in which the Joint Brokerage Service has achieved an Operating Profit.
(ggg) "Projected Net Revenue" means (a) until the end of the Start-Up
Period, "Projected Net Revenue" of the Joint Brokerage Service as set forth in
the Initial Business Plan and (b) after the Start-Up Period, "Projected Net
Revenue" of the Joint Brokerage Service as determined by the Steering Committee.
(hhh) "Projected Operating Profit" means (a) until the end of the
Start-Up Period, "Projected Operating Profit" of the Joint Brokerage Service as
set forth in the Initial Business Plan and (b) after the Start-Up Period,
"Projected Operating Profit" of the Joint Brokerage Service as determined by the
Steering Committee.
(iii) "Quicken" has the meaning set forth in the Recitals.
(jjj) "Quicken Products" has the meaning set forth in the Recitals.
(kkk) "Xxxxxxx.xxx" has the meaning set forth in the Recitals.
(lll) "Referee" has the meaning set forth in Section 14(u)(i)(II).
(mmm) "Regulatory Agreement" has the meaning set forth in Section
7(a)(ii)(III).
(nnn) "Regulatory Authority" means any regulatory authority,
governmental entity or self-regulatory authority.
(ooo) "SEC" has the meaning set forth in Exhibit H.
(ppp) "Securities Act" has the meaning set forth in Exhibit H.
(qqq) "Securities Regulations" means the constitution, rules,
regulations, statutes or policies now in effect or hereafter adopted by or
administered by the Exchanges or the SEC now or hereafter in effect.
(rrr) "SFC" means Xxxxxxx Financial Corp., a New York corporation.
(sss) "Xxxxxxx" has the meaning set forth in the introductory
paragraph.
28
(ttt) "Xxxxxxx Content" means the Xxxxxxx Licensed Content and the
Xxxxxxx Owned Content.
(uuu) "Xxxxxxx Customers" means the Existing Xxxxxxx Customers, the
Future Xxxxxxx Customers and the Acquired Xxxxxxx Customers.
(vvv) "Xxxxxxx IE" has the meaning set forth in Section 4(c).
(www) "Xxxxxxx Licensed Content" means any Content provided by Xxxxxxx
to the Joint Brokerage Service that is not owned, produced or developed by
Xxxxxxx.
(xxx) "Xxxxxxx Owned Content" means any Content provided by Xxxxxxx to
the Joint Brokerage Service that is owned, produced or developed by Xxxxxxx.
(yyy) "Xxxxxxx Policies and Procedures" has the meaning set forth in
Section 7(a)(ii)(IV).
(zzz) "Start-Up Period" means the period beginning on the Launch Date
and ending on July 31, 2003.
(aaaa) "Steering Committee" has the meaning set forth in Section 3.
(bbbb) "Term" has the meaning set forth in Section 9(a).
(cccc) "Third Party Claim" has the meaning set forth in Section
7(b)(i).
(dddd) "Trading Errors" has the meaning set forth in the definition of
"Incremental Expenses."
(eeee) "True-Up Period" means (a) until the Profitability Date, the
periods (i) beginning on August 1st and ending on January 31st and (ii)
beginning on February 1st and ending on July 31st and (b) after the
Profitability Date, the periods (i) beginning on August 1st and ending on
October 31st, (ii) beginning on November 1st and ending on January 31st, (iii)
beginning on February 1st and ending on April 30th and (iv) beginning on May 1st
and ending on July 31st.
(ffff) "True-Up Statement" has the meaning set forth in Section 4(g).
(gggg) "Wind-Down Period" has the meaning set forth in Section 9(c)(i).
14. MISCELLANEOUS
(a) Breach of Cross-Sell Provision. In the event that any party
terminates this Agreement pursuant to Section 9(b)(v)(II), the terminating party
shall be entitled to receive all revenues generated by the non-terminating party
from such cross-sell activities.
(b) Xxxxxxx Customers. Xxxxxxx may, upon written terms and conditions
to be agreed upon by the parties, convert its own customers to the Joint
Brokerage Service. If Xxxxxxx elects to convert its customers to the Joint
Brokerage Service, Xxxxxxx will pay Intuit an amount as determined by the
Steering Committee (such amount to be reasonably related to the actual costs
29
associated with providing such services to Xxxxxxx'x customers), it being
understood that such customers will be converted to the Joint Brokerage Service
within 18 months of the Launch Date. In such event, Intuit will provide through
Xxxxxxx.xxx the same enhanced analytical features and other functionality for
the use of Xxxxxxx Customers as are provided for the use of Joint Customers;
provided, however, nothing in this Agreement shall permit Xxxxxxx to enter into
any third party transactions which includes the use of the Intuit functionality,
Content and software to support other brokerage customers without the prior
written consent of Intuit.
(c) Privacy Policy. Each party shall comply with the terms of the
privacy policy set forth on Exhibit J.
(d) Security Requirements. Each party shall comply with the terms of
the security requirements set forth on Exhibit K.
(e) SiebertNet Customers. Xxxxxxx will begin the conversion process of
all of its existing SiebertNet customers from Fidelity to Pershing when
reasonably practicable after the Launch Date, subject, among other things, to
the cooperation of its current clearing broker and any successor.
(f) Devotion of Efforts. During the term of this Agreement, each party
shall devote commercially reasonable time and efforts to the business
contemplated hereunder and to the implementation of this strategic alliance.
(g) Survival. Sections 1, 4, 5, 6, 7(a)(v), 7(b), 8, 9(b), 9(c), 9(d),
9(f), 11, 12, 13 and 14 shall survive termination of this Agreement (with
respect to Section 11, only until the later of the end of (i) the Wind-Down
Period or, if applicable, (ii) the period set forth in Section 9(b)(i) or
9(b)(x), and with respect to Sections 1, 5 and 6(c)-(d), only until the end of
the Wind-Down Period, and with respect to Sections 4(a)-(f), only until the
True-Ups for the Wind-Down Period and any preceding True-Up Period have been
completed and all amounts to be paid in connection therewith have been paid).
(h) General Audit Right. (i) Notwithstanding Section 4(g), during the
Term and the Wind-Down Period, Intuit shall be permitted to audit, either itself
or through outside auditors, Xxxxxxx'x books and records relating to the
information disclosed by Xxxxxxx as contemplated by this Agreement to verify the
accuracy of such information. Intuit shall itself bear all costs and expenses
relating to such audit.
(ii) Notwithstanding Section 4(g), during the Term and the
Wind-Down Period, Xxxxxxx shall be permitted to audit, either itself or through
outside auditors, Intuit's books and records relating to the information
disclosed by Intuit as contemplated by this Agreement to verify the accuracy of
such information. Xxxxxxx shall itself bear all costs and expenses relating to
such audit.
(i) Governing Law. This Agreement will be governed by California law as
applied to agreements entered into and to be performed entirely within
California without regard to its choice of law or conflicts of law principles.
30
(j) Severability. (i) If any provision of this Agreement is found to be
invalid or unenforceable by a court of competent jurisdiction, such provision
shall be severed from the remainder of this Agreement, which shall remain in
full force and effect.
(ii) The parties hereto recognize that the laws and public
policies of the various states of the United States may differ as to the
validity and enforceability of covenants similar to those set forth in Section
11. It is the intention of the parties that the provisions of Section 11 be
enforced to the fullest extent permissible under the laws and policies of each
jurisdiction in which enforcement may be sought, and that the unenforceability
(or the modification to conform to such laws or policies) of any provisions of
Section 11 shall not render unenforceable, or impair, the remainder of the
provisions of Section 11. Accordingly, if any provision of Section 11 shall be
determined to be invalid or unenforceable, such invalidity or unenforceability
shall be deemed to apply only with respect to the operation of such provision in
the particular jurisdiction in which such determination is made and not with
respect to any other provision or jurisdiction.
(iii) The parties hereto acknowledge and agree that the provisions
of Section 11 are reasonable and that any remedy at law for any breach of the
provisions of Section 11 would be inadequate, and Xxxxxxx and Intuit hereby
consent to the granting by any court of an injunction or other equitable relief,
without the necessity of actual monetary loss being proved, in order that the
breach or threatened breach of such provisions may be effectively restrained.
(k) Amendment. No alteration, amendment, waiver, cancellation or other
change in any provision of this Agreement shall be valid or binding on either
party unless agreed to in writing by both parties.
(l) Waiver. The failure of either party to enforce any provision of
this Agreement shall in no way be construed to be a waiver of such provision,
nor in any way to affect the right of either party to enforce each and every
provision of this Agreement thereafter. The express waiver by either party of
any provision, condition or requirement of this Agreement shall not constitute a
waiver of any future obligation to comply with such provision, condition or
requirement. Any such waiver must be in writing.
(m) Force Majeure. Neither Xxxxxxx nor Intuit shall be liable in
damages for any delay or default in performing any obligation hereunder other
than for the payment of money if that delay or default is due to any cause
beyond the reasonable control and without fault or negligence of that party;
provided that, in order to excuse its delay or default hereunder, a party shall
notify the other of the occurrence or the cause, specifying the nature and
particulars thereof and the expected duration thereof; and provided, further,
that within fifteen (15) calendar days after the termination of such occurrence
or cause, such party shall give notice to the other party specifying the date of
termination thereof. All obligations of both parties shall return to being in
full force and effect upon the termination of such occurrence or cause
(including without limitation any payments which became due and payable
hereunder prior to the termination of such occurrence or cause). For the purpose
of this subsection (m), a "cause beyond the reasonable control" of a party shall
include, without limiting the generality of the phrase, any act of God, act of
any governmental or other authority or statutory undertaking, industrial
dispute, fire, explosion, accident, power failure, flood, riot or war (declared
or undeclared).
31
(n) Assignment. This Agreement shall be binding upon and shall inure to
the benefit of the parties and their respective successors and permitted
assigns. Neither party may assign or transfer this Agreement nor delegate its
obligations under this Agreement without the prior written consent of the other
party, which consent shall not be unreasonably withheld. Any attempted
assignment in violation hereof shall be void.
(o) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given or made (and
shall be deemed to have been duly given or made upon receipt) by delivery in
person, by overnight courier service, by facsimile (followed by delivery of a
copy via overnight courier service) or by registered or certified mail (postage
prepaid, return receipt requested) to the respective parties at the following
addresses (or at such other address for a party as shall be specified in a
notice given in accordance with this subsection (o)):
if to Intuit:
Intuit Inc.
0000 Xxxxxx Xxxxxx
Xxxxxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxxxxxx
Telecopier: (000) 000-0000
with copies to:
Xxxxxx, Xxxxx & Xxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Gold
Telecopier: (000) 000-0000
if to Xxxxxxx:
Xxxxxxx Financial Corporation
000 Xxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxxx Xxxxxxx
Telecopier: (000) 000-0000
with copies to:
Fulbright & Xxxxxxxx L.L.P.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxx
Telecopier: (000) 000-0000
32
(p) Disclaimer of Agency; No Partnership. The relationship between
Intuit and Xxxxxxx established by this Agreement (or contemplated by this
strategic alliance) is that of independent contractors and, except as expressly
provided herein, nothing contained in this Agreement (or contemplated by this
strategic alliance) will be construed to (i) give any party the power to direct
or control the day-to-day activities of any other party, or (ii) allow any party
to create or assume any obligation on behalf of the other party for any purpose
whatsoever. The parties acknowledge and agree that this strategic alliance will
not constitute a partnership (including, without limitation, a limited
partnership) or a joint venture by reason of this Agreement or this strategic
alliance or otherwise (including, without limitation, for federal and state
income tax purposes), that no party will be, by reason of this Agreement or this
strategic alliance or otherwise, a partner or joint venturer of the other party
for any purpose, and that this Agreement may not be construed to suggest
otherwise.
(q) Entire Agreement. The terms and conditions of this Agreement
(including, without limitation, the Exhibits to this Agreement) constitute the
entire agreement between the parties and supersede all previous agreements and
understandings, whether oral or written, between the parties hereto with respect
to the subject matter of this Agreement. In the event of any conflict between
the terms of this Agreement and the terms of an Exhibit hereto, the terms of
such Exhibit shall control.
(r) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one and the same instrument. A facsimile
transmission of the signed Agreement shall be legal and binding on all parties.
(s) Negotiation. The parties hereto, by executing below, acknowledge
that the provisions and language of this Agreement have been negotiated and
specifically agree that no provision of this Agreement shall be construed
against a party by reason of such party having drafted such provision of this
Agreement.
(t) Non-Exclusive Remedies. Except as otherwise expressly set forth in
this Agreement, the remedies set forth herein are not the exclusive remedies of
the parties hereto.
(u) Exclusive Arbitration of Certain Claims.
(i) The parties acknowledge that, pursuant to the Pershing
Agreement and the rules of certain Regulatory Authorities, Xxxxxxx is required
to submit certain controversies between it and other third parties, including
Pershing (each such third party being referred to as an "Arbitration Party"), to
arbitration conducted before the New York Stock Exchange, Inc. (the "NYSE") or
NASD Dispute Resolution, Inc. ( "NASD") and in accordance with the procedural
rules of the selected organization. In addition, Intuit and Xxxxxxx have agreed
that the customer agreement for the Joint Brokerage Service will provide that
all customer claims (to the extent permitted by applicable rules) against
Xxxxxxx, Xxxxxxxx and/or Intuit or any other third party service provider to the
Joint Brokerage Service will be arbitrated before the NYSE or NASD and in
accordance with the procedural rules of the selected organization. Xxxxxxx
agrees that Intuit is not a party to the customer agreement for the Joint
Brokerage Service (or to any other customer agreement of Xxxxxxx) by virtue of
Intuit having agreed that such customer agreement shall provide an obligation
for the customer to arbitrate its claims against Intuit, and Xxxxxxx will not
represent to its customers that Intuit is a party to any such customer
agreement. Intuit must approve the form of any agreement between Xxxxxxx and any
of its customers by which a customer agrees to arbitrate claims against Intuit
before any such form is adopted by Xxxxxxx. In furtherance of the foregoing, the
parties agree as follows:
33
(I) If Intuit notifies Xxxxxxx in writing that it believes
in good faith that Xxxxxxx has breached any of its representations, warranties
or covenants contained herein (the "Dispute"), and Xxxxxxx has a good faith
belief that Pershing or another Arbitration Party is wholly or partially
responsible for such Dispute and so informs Intuit, then Intuit and Xxxxxxx
shall commence, within sixty (60) calendar days of Intuit's providing written
notice to Xxxxxxx, a joint arbitration (Intuit against Xxxxxxx and Xxxxxxx
against Pershing or such other Arbitration Party) before the NYSE or NASD, as
the exclusive means of resolving the Dispute (subject to the following). If such
joint arbitration is not commenced within the aforementioned period (by Xxxxxxx
not timely initiating an arbitration against Pershing or such other Arbitration
Party), then Intuit may file a lawsuit against Xxxxxxx relating to the Dispute
(and withdraw any previously filed arbitration against Xxxxxxx); provided, that
if in such lawsuit Xxxxxxx impleads Pershing or such other Arbitration Party,
and Pershing or such other Arbitration Party thereafter, and without any
inducement by Xxxxxxx, files to stay or dismiss the lawsuit and initiates an
arbitration against Xxxxxxx conducted before the NYSE or NASD, Intuit will, upon
being reimbursed by Xxxxxxx for the costs and fees Intuit incurred with respect
to the filing of the original arbitration and the lawsuit, voluntarily dismiss
its lawsuit without prejudice and refile its claim in the same arbitration forum
in which the dispute between Xxxxxxx and Pershing or such other Arbitration
Party is being heard. In no event shall Intuit be required to arbitrate any
Dispute with Xxxxxxx where the Dispute arises from or is related to a lawsuit
between a third party and Intuit in a court of law, unless (A) Xxxxxxx has
informed Intuit in writing that Xxxxxxx contends that Pershing or another
Arbitration Party is wholly or partially responsible for such Dispute and (B)
Intuit has a right to compel such third party to arbitrate.
(II) If an NYSE or NASD arbitration relating to the Joint
Brokerage Service is initiated against Intuit or Xxxxxxx (each of which would be
an "accused party") by a customer, Pershing or another Arbitration Party, and
the accused party has a good faith belief that the other party hereto is wholly
or partially responsible for the claims made in such arbitration, the accused
party shall inform the other party hereto in writing (an "Arbitration Notice")
of the accused party's intention to join the other party hereto in such
arbitration. If the other party hereto disputes that it is wholly or partially
responsible for the claims made in such arbitration, it shall so inform the
accused party in writing (an "Objection Notice") within ten business days of the
other party's receipt of the Arbitration Notice. If the other party hereto has
not delivered an Objection Notice within ten business days of its receipt of the
Arbitration Notice, then the accused party may join the other party hereto in
such NYSE or NASD arbitration, and the other party hereto shall agree to such
joinder and to arbitrate the accused party's claims against it in the same forum
in which the NYSE or NASD arbitration is being heard, as the exclusive means of
resolving such claims. If, however, the other party hereto delivers an Objection
Notice within ten business days of its receipt of the Arbitration Notice, the
parties shall, within ten business days of the accused party's receipt of such
Objection Notice, choose a mutually acceptable third party (the "Referee") for
the sole purpose of determining whether the accused party has a colorable
cross-claim against the other party hereto in connection with the claims made
against the accused party in the NYSE or NASD arbitration. The Referee shall
34
render his or her decision within five days of submission, and the parties shall
cooperate with the Referee and provide such information, as the Referee shall
request. The Referee's decision shall be final and not subject to appeal, and in
no event shall it be admissible for any reason in any subsequent proceeding
(except in a proceeding between the parties hereto concerning a breach of this
provision). If the Referee determines that the accused party has a colorable
cross-claim against the other party hereto in connection with the claims made
against the accused party in the NYSE or NASD arbitration, then the accused
party may join the other party hereto in such NYSE or NASD arbitration, and the
other party hereto shall agree to such joinder and to arbitrate the accused
party's claims against it in the same forum in which the NYSE or NASD
arbitration is being heard, as the exclusive means of resolving such claims. If
the Referee determines that the accused party does not have a colorable
cross-claim against the other party hereto in connection with the claims made
against the accused party in the NYSE or NASD arbitration, then the accused
party shall not seek to join the other party hereto in such arbitration;
however, the accused party shall not be prevented from bringing its claims
against the other party in court.
(ii) Any arbitration pursuant to this section shall be conducted
in accordance with the procedural rules of the applicable self-regulatory
organization. If any such arbitration involves technology, licensing or
intellectual property issues, the parties agree, to the extent possible, to have
the arbitration conducted by a panel in which at least one arbitrator has
knowledge of the relevant technology, licensing or intellectual property subject
matter.
(iii) This provision shall not apply where (a) a joint arbitration
by or against Intuit and Xxxxxxx cannot or may not for any reason be commenced
or maintained before the NYSE or NASD; or (b) the Dispute which Intuit is
asserting against Xxxxxxx arises from or is related to a lawsuit between a third
party and Intuit in a court of law, unless (I) Xxxxxxx has informed Intuit in
writing that Xxxxxxx contends that Pershing or another Arbitration Party is
wholly or partially responsible for such Dispute and (II) Intuit has a right to
compel such third party to arbitrate.
(iv) The arbitrators in any arbitration hereunder shall resolve
all legal issues presented by applying the substantive, internal laws of the
State of New York (without giving effect to the conflicts of law or choice of
law principles thereof and excluding the United Nations Convention on the
International Sale of Goods), and shall apply such substantive law to the facts
as established by the evidence. Such arbitration shall be final and binding on
the parties.
(v) EXCEPT AS EXPRESSLY SET FORTH IN THIS SECTION, THE PARTIES ARE
NOT WAIVING THEIR RIGHT TO SEEK EQUITABLE OR OTHER REMEDIES IN COURT OR OTHER
DISPUTE RESOLUTION FORUMS FOR CLAIMS ARISING UNDER OR RELATED TO THIS AGREEMENT,
INCLUDING, BUT NOT LIMITED TO ANY CLAIM FOR BREACH OF THIS ARBITRATION
PROVISION.
(v) Future Payroll Acquisitions. Article 11 of this Agreement does not
apply to any acquisitions Intuit may make of payroll companies or payroll
businesses that involve the provision of retirements plans to small businesses
(e.g. 401K, Simple XXX, SEP and similar plans) provided that assets in these
plans are not held in a broker dealer in which Intuit has an economic interest
and that none of these products are integrated with Quicken or Xxxxxxx.xxx or
marketed to Quicken or Xxxxxxx.xxx customers.
35
IN WITNESS WHEREOF, the parties, through their authorized officers,
have duly executed this Agreement intending it to be effective and binding as of
the date first written above.
INTUIT INC.
By: /s/ Xxxxx X. Xxxxxxxxxx
-------------------------------------------
Name: Xxxxx X. Xxxxxxxxxx
Title: Executive Vice President
Small Business and Personal Finance
FOR PURPOSES OF SECTIONS 1(e)(v), 4(a), 4(d)
and 9(c) ONLY
INVESTMENT SOLUTION, INC.
By: /s/ Xxxx Xxxxxxxxxx
-------------------------------------------
Name: Xxxx Xxxxxxxxxx
Title: CFO
XXXXXX XXXXXXX & CO., INC.
By: /s/ Xxxxxx Xxxxxxx
-------------------------------------------
Name: Xxxxxx Xxxxxxx
Title: Chairman, President
