AGREEMENT AND PLAN OF MERGER
BY AND AMONG
DIGITAL INSIGHT CORPORATION,
VIFI LLC
AND
VIRTUAL FINANCIAL SERVICES, INC.
Dated as of January 3, 2002
ARTICLE I
THE MERGER
1.1 The Merger.............................................................2
1.2 Effective Time; Closing................................................2
1.3 Effect of the Merger...................................................2
1.4 Limited Liability Company Agreement....................................2
1.5 Manager and Officers...................................................2
1.6 Effect on Capital Stock................................................2
1.7 Surrender of Certificates..............................................4
1.8 No Further Ownership Rights in Company Stock...........................4
1.9 Taking of Necessary Action; Further Action.............................5
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF COMPANY
2.1 Corporate Organization.................................................5
2.2 Capitalization of Company..............................................5
2.3 Subsidiaries and Equity Investments....................................6
2.4 Corporate Authority, Etc...............................................6
2.5 No Violation...........................................................6
2.6 Consents and Approvals.................................................6
2.7 Financial Statements; Absence of Undisclosed Liabilities...............7
2.8 Absence of Certain Changes or Events; No Material Adverse Change.......7
2.9 Tax Matters............................................................7
2.10 Title to Property......................................................8
2.11 Compliance with Laws...................................................9
2.12 Litigation.............................................................9
2.13 Contracts..............................................................9
2.14 Employee Plans; ERISA.................................................10
2.15 Intellectual Property.................................................12
2.16 Restrictions on Business Activities...................................13
2.17 Brokers and Finders...................................................13
2.18 Environmental Matters.................................................13
2.19 Transactions with Affiliates..........................................14
2.20 Chapter 42 of the IBCL Not Applicable.................................14
2.21 Tax Matters...........................................................14
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
3.1 Organization and Qualification; Subsidiaries..........................14
3.2 Certificate of Incorporation and Bylaws...............................15
3.3 Capitalization........................................................15
3.4 Authority Relative to this Agreement..................................15
3.5 No Conflict; Required Filings and Consents............................16
3.6 SEC Filings; Financial Statements.....................................16
3.7 No Undisclosed Liabilities............................................17
3.8 Absence of Certain Changes or Events..................................17
3.9 Promissory Notes......................................................17
3.10 Litigation............................................................17
3.11 Compliance with Laws..................................................17
3.12 Tax Matters...........................................................18
3.13 Brokers...............................................................18
3.14 Merger Sub Operations.................................................18
ARTICLE IV
CONDUCT PRIOR TO THE EFFECTIVE TIME
4.1 Conduct of Business by Company........................................18
4.2 Conduct of Business by Parent.........................................20
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Confidentiality; Access to Information................................20
5.2 No Solicitation.......................................................21
5.3 Public Disclosure.....................................................22
5.4 Commercially Reasonable Efforts; Notification.........................22
5.5 Third Party Consents..................................................23
5.6 Company Stock Options.................................................23
5.7 Form S-8..............................................................24
5.8 Employees.............................................................24
5.9 Indemnification.......................................................24
5.10 Lease Assumption......................................................24
5.11 Asset Transfer........................................................24
5.12 Closing Payment.......................................................24
5.13 Indiana Training 2000 Grant Fund Training Program.....................25
5.14 Credit Card Services Assets...........................................25
ARTICLE VI
CONDITIONS TO THE MERGER
6.1 Conditions to Obligations of Each Party to Effect the Merger..........25
6.2 Additional Conditions to Obligations of Company.......................25
6.3 Additional Conditions to the Obligations of Parent and Merger Sub.....26
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 Termination...........................................................27
7.2 Notice of Termination; Effect of Termination..........................28
7.3 Fees and Expenses.....................................................28
7.4 Amendment.............................................................29
7.5 Extension; Waiver.....................................................29
ARTICLE VIII
GENERAL PROVISIONS
8.1 Notices...............................................................29
8.2 Interpretation; Definitions...........................................30
8.3 Counterparts..........................................................30
8.4 Entire Agreement; Third Party Beneficiaries...........................31
8.5 Severability..........................................................31
8.6 Other Remedies; Specific Performance..................................31
8.7 Governing Law.........................................................31
8.8 Rules of Construction.................................................31
8.9 Assignment............................................................31
INDEX OF EXHIBITS
Exhibit A Form of Stockholders Agreement...............................A-1
Exhibit B Form of Escrow Agreement ....................................B-1
Exhibit C Form of Certificate of Merger................................C-1
Exhibit D Form of Non-Compete Agreement................................D-1
Exhibit E Form of Promissory Note......................................E-1
Exhibit F Terms of Option for Non-Exclusive License....................F-1
Exhibit G Form of Master Interface Support and Marketing Agreement.....G-1
Exhibit H Credit Card Services Assets..................................H-1
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and
entered into as of January 3, 2002, among Digital Insight Corporation, a
Delaware corporation ("Parent"), ViFi LLC, a Delaware limited liability
company of which Parent is the sole member ("Merger Sub"), and Virtual
Financial Services, Inc., an Indiana corporation ("Company").
RECITALS
A. Upon the terms and subject to the conditions of this Agreement
and in accordance with the Delaware Limited Liability Company Act ("DLLCA")
and the Delaware General Corporation Law (the "DGCL"), Parent and Company
intend to enter into a business combination transaction.
B. The Board of Directors of Company has (i) determined that the
Merger (as defined in Section 1.1) is consistent with, and in furtherance of,
the long-term business strategy of Company and is fair to, and in the best
interests of, Company and its shareholders, (ii) approved this Agreement, the
Merger (as defined below) and the other transactions contemplated by this
Agreement, and (ii) recommended that the shareholders of the Company approve
this Agreement and the Merger.
C. The shareholders of Company have approved this Agreement and the
Merger.
D. The Board of Directors of Parent has (i) determined that the
Merger is consistent with, and in furtherance of, the long-term business
strategy of Parent and is fair to, and in the best interests of, Parent and
its stockholders, and (ii) approved this Agreement, the Merger and the other
transactions contemplated by this Agreement.
E. Concurrent with the execution and delivery of this Agreement, the
shareholders of Company are executing and delivering the Stockholders
Agreement in the form attached hereto as Exhibit A (the "Stockholders
Agreement") and any person becoming a shareholder of Company prior to the
Effective Time (as defined herein) shall execute the Stockholders Agreement.
F. The parties intend, by executing this Agreement, to adopt a plan
of reorganization within Section 368 of the Internal Revenue Code of 1986, as
amended (the "Code").
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. Prior to the Effective Time (as defined in Section 1.2),
Company shall cause itself to be (the "Reincorporation") reincorporated under
the DGCL (the resulting entity being referred to as the "Delaware Company"). In
the Reincorporation, each outstanding share of the Company's common shares, no
par value (the "Indiana Company Stock") shall be converted into one share of the
Delaware Company's common stock, $0.001 par value (the "Company Stock"), and
each outstanding option to purchase Indiana Company Stock will be converted into
an option to purchase the same number of shares of Company Stock at the same
exercise price and on the same terms and conditions. At the Effective Time and
subject to and upon the terms and conditions of this Agreement, the applicable
provisions of the DLLCA and the DGCL, Delaware Company shall be merged with and
into Merger Sub (the "Merger"), the separate corporate existence of Delaware
Company shall cease and Merger Sub shall continue as the surviving entity.
Merger Sub as the surviving entity after the Merger is hereinafter sometimes
referred to as the "Surviving Entity." Unless otherwise specifically provided
herein, all references to "Company" shall include Delaware Company.
1.2 EFFECTIVE TIME; CLOSING. Subject to the provisions of this Agreement,
the parties hereto shall cause the Merger to be consummated by filing a
Certificate of Merger in the form attached hereto as Exhibit C with the
Secretary of State of the State of Delaware in accordance with the relevant
provisions of DLLCA and the DGCL (the "Merger Documents") (the time of such
filing being the "Effective Time") as soon as practicable on or after the
Closing Date (as herein defined). The closing of the Merger (the "Closing")
shall take place at the offices of O'Melveny & Xxxxx LLP, 000 Xxxxx Xxxx Xxxxxx,
Xxx Xxxxxxx, Xxxxxxxxxx, at a time and date to be specified by the parties,
which shall be no later than the second business day after the satisfaction or
waiver of the conditions set forth in Article VI, or at such other time, date
and location as the parties hereto agree in writing (the "Closing Date").
1.3 EFFECT OF THE MERGER. At the Effective Time, the effect of the Merger
shall be as provided in this Agreement and the applicable provisions of the
DLLCA and the DGCL. Without limiting the generality of the foregoing, the
Surviving Entity shall possess all the rights, privileges, powers and
franchises, and shall be subject to all the debts, restrictions, disabilities
and duties, of Company and Merger Sub, all without further act or deed.
1.4 LIMITED LIABILITY COMPANY AGREEMENT. At the Effective Time, the
Limited Liability Company Agreement of Merger Sub shall be the Limited
Liability Company Agreement of the Surviving Entity.
1.5 MANAGER AND OFFICERS. The manager of the Surviving Entity shall be
the manager of Merger Sub immediately prior to the Effective Time. The initial
officers of the Surviving Entity shall be the officers of Merger Sub
immediately prior to the Effective Time, until their respective successors
are duly appointed.
1.6 EFFECT ON CAPITAL STOCK. Subject to the terms and conditions of this
Agreement, at the Effective Time, by virtue of the Merger and without any
action on the part of Merger Sub, Company or the holders of any of the
following securities, the following shall occur:
(a) CONVERSION OF COMPANY STOCK. All of the shares of the Company Stock
issued and outstanding immediately prior to the Effective Time will be
canceled and extinguished and automatically converted (subject to Sections
1.6(c) and 1.6(f)) and upon surrender of the certificate representing shares
of Company Stock in the manner provided in Section 1.7, into the right to
receive in the aggregate (i) cash equal to $3,750,000 (the "Cash Portion"),
(ii) an aggregate principal amount of Promissory Notes in the form and having
the terms set forth in Exhibit E hereto (the "Promissory Notes") equal to
$3,750,000, and (iii) a number of shares of the Common Stock, $0.001 par
value per share, of Parent (the "Parent Common Stock") determined by
subtracting from 2,018,775 the Option Shares (as defined below) (collectively,
the "Merger Consideration"). The term "Option Shares" means the result of (x)
2,013,889 multiplied by (y) the Option Factor (as defined below). The term
"Option Factor" means the percentage (calculated to five decimal points)
determined by dividing (I) the total number of shares of Company Stock
immediately prior to the Effective Time issuable upon conversion of any
convertible securities or the exercise of any options or warrants (the
"Diluting Shares"), by (II) the sum of the total number of shares of Company
Stock outstanding immediately prior to the Effective Time plus the Diluting
Shares. Each share of Company Stock issued and outstanding prior to the
Effective Time will be converted (subject to Sections 1.6(c) and 1.6(f)) into
the right to receive the Cash Portion of the Merger Consideration, the
aggregate principal amount of the Promissory Notes constituting a portion of
the Merger Consideration and the number of shares of Parent Common Stock
constituting a portion of the Merger Consideration, in each case divided by the
number of Outstanding Shares (as defined below). The term "Outstanding Shares"
means the total number of shares of Company Stock outstanding immediately prior
to the Effective Time.
The shares of Parent Common Stock referred to in this Section 1.6(a)(iii)
shall be adjusted to reflect fully the effect of any stock split, stock dividend
(including any dividend or distribution of stock convertible into Parent stock,
whether common stock or preferred stock), reorganization, recapitalization or
other similar change with respect to Parent stock after the date hereof and
prior to the Effective Time.
(b) ESCROW AGREEMENT. Parent shall establish and maintain an escrow (the
"Escrow Account") comprised of 236,111 shares of Parent Common Stock
(collectively, the "Escrow Shares"), and shall designate and appoint U.S.
Trust Company of California or such other third party escrow agent that is
acceptable to Parent and the Stockholders' Agent (as defined in the
Stockholders Agreement) in connection therewith (the "Escrow Agent") to serve
in accordance with the Escrow Agreement attached as Exhibit B hereto (the
"Escrow Agreement") to be entered into among Parent, the Escrow Agent and the
Stockholders' Agent at Closing. Any disbursements of Escrow Shares to Parent
or any other indemnified party shall be treated as a reduction of the
aggregate purchase price under this Agreement.
(c) CANCELLATION OF PARENT-OWNED STOCK. Each share of Company Stock held
by Company or owned by Merger Sub, Parent or any direct or indirect wholly
owned subsidiary of Company or of Parent immediately prior to the Effective
Time shall be canceled and extinguished without any conversion thereof.
(d) STOCK OPTIONS. At the Effective Time, all options to purchase
Company Stock identified in Section 2.2 of the Company Schedule (as defined in
Article II hereof) shall be assumed by Parent in accordance with Section 5.6
hereof.
(e) MEMBERSHIP INTEREST OF MERGER SUB. The Membership Interest of Merger
Sub issued and outstanding immediately prior to the Effective Time shall
remain outstanding as the Membership Interest of the Surviving Entity.
(f) FRACTIONAL SHARES. No fraction of a share of Parent Common Stock
will be issued by virtue of the Merger, but in lieu thereof each holder of
shares of Company Stock who would otherwise be entitled to a fraction of a share
of Parent Common Stock (after aggregating all fractional shares of Parent Common
Stock that otherwise would be received by such holder) shall, upon surrender
of such holder's Certificate(s) (as defined in Section 1.7(b)) receive from
Parent an amount of cash (rounded to the nearest whole cent), without
interest, equal to the product of (i) such fraction, multiplied by (ii) the
average closing price of Parent Common Stock for the ten trading days
immediately preceding the last full trading day prior to the Effective Time,
as reported on the Nasdaq National Market ("Nasdaq").
1.7 SURRENDER OF CERTIFICATES. On the Closing Date, Parent shall provide
each holder of record (as of the Effective Time) of a certificate or
certificates (the "Certificates"), which immediately prior to the Effective
Time represented outstanding shares of Company Stock whose shares were
converted into the right to receive the Merger Consideration or cash in lieu
of any fractional shares pursuant to Section 1.6(f), (i) a letter of
transmittal in customary form (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only
upon delivery of the Certificates to Parent and shall contain such other
provisions as Parent may reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for the Merger
Consideration and cash in lieu of any fractional shares pursuant to Section
1.6(f). Upon surrender of the Certificates for cancellation to Parent or to
such other agent or agents as may be appointed by Parent, together with such
letter of transmittal, duly completed and validly executed in accordance with
the instructions thereto, the holders of such Certificates shall be entitled
to receive in exchange therefor the Merger Consideration and any payment in
lieu of fractional shares which such holders have the right to receive
pursuant to Section 1.6(f), and the Certificates so surrendered shall
forthwith be canceled. Until so surrendered, outstanding Certificates will
be deemed from and after the Effective Time, for all corporate purposes, to
evidence only the right to receive the Merger Consideration and the right to
receive an amount in cash in lieu of the issuance of any fractional shares in
accordance with Section 1.6(f).
1.8 NO FURTHER OWNERSHIP RIGHTS IN COMPANY STOCK. Delivery of the Merger
Consideration (together with any cash paid in respect thereof pursuant to
Sections 1.6(f)) shall be deemed to have been delivered in full satisfaction
of all rights pertaining to such shares of Company Stock, and there shall be
no further registration of transfers on the records of the Surviving Entity
of shares of Company Stock which were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates are presented to
the Surviving Entity for any reason, they shall be canceled and exchanged as
provided in this Article I.
1.9 TAKING OF NECESSARY ACTION; FURTHER ACTION. If, at any time after
the Effective Time, any further action is necessary or desirable to carry out
the purposes of this Agreement and to vest the Surviving Entity with full right,
title and possession to all assets, property, rights, privileges, powers and
franchises of Company and Merger Sub, the current officers and directors of
Company and Merger Sub will take all such lawful and necessary action.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF COMPANY
Except as otherwise disclosed in the Company disclosure schedule
attached hereto (the "Company Schedule"), Company hereby represents and
warrants to Parent and Merger Sub as follows as of the date hereof:
2.1 CORPORATE ORGANIZATION. Company is a corporation duly organized and
validly existing under the laws of its state of incorporation. Company has
furnished to Parent a complete and correct copy of its Articles of Incorporation
and By-Laws, as amended to the date hereof, and the proposed Certificate of
Incorporation and By-Laws of Delaware Company (the "Company Charter Documents").
Company has all requisite corporate power and authority to own or lease its
properties and assets and to conduct its business as now conducted. Company is
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction where the character of the properties owned or leased by it or
the nature of the business conducted by it makes such qualification necessary,
except where the failure to do so would not have a Material Adverse Effect on
Company. As used in this Agreement, the phrase "Material Adverse Effect on
Company" means (i) as to matters which can reasonably be quantified in economic
terms, any effect which has resulted in or would reasonably be expected to
result in, with respect to Company, a diminution or decrease in the value of
properties or assets, an increase in liabilities or obligations (whether
accrued, contingent or otherwise), an adverse change in the business or
financial condition, or any combination thereof involving, individually or in
the aggregate, with respect to the applicable representation or warranty, more
than $500,000, (ii) as to matters which cannot reasonably be quantified in
economic terms, a material adverse effect on the condition (financial or
otherwise), business, assets, liabilities or results of operations of Company,
or (iii) a material adverse effect on the ability of Company to consummate the
transactions contemplated by this Agreement; provided, however, that in no event
shall any of the following be deemed, in and of itself, to constitute a Material
Adverse Effect on Company: (i) a change that results from conditions generally
affecting the U.S. economy or the industry in which Company operates (including
laws and regulations applicable to such industry), or (ii) a change that results
from the taking of any action required by this Agreement.
2.2 CAPITALIZATION OF COMPANY. The authorized capital stock of Company
consists of 450,000,000 shares of Indiana Company Common Stock and 50,000,000
preferred shares, no par value (the "Indiana Company Preferred Stock"). As of
the date hereof, 900,013.5 shares of Indiana Company Stock are issued and
outstanding and no shares of Indiana Company Preferred Stock are issued and
outstanding. All of the outstanding shares of Indiana Company Stock have been,
and all of the shares of Company Stock to be outstanding as of the Closing Date
will be, duly authorized and validly issued, fully paid and non-assessable and
owned of record and beneficially as set forth in Section 2.2 of the Company
Schedule. Except as set forth in Section 2.2 of the Company Schedule, there are
no outstanding options, warrants, agreements, conversion rights, preemptive
rights or other rights to subscribe for, purchase or otherwise acquire any
Indiana Company Stock or any unissued or treasury shares of the capital stock of
Company which have been issued, granted or entered into by Company. All
outstanding shares of Indiana Company Stock have been, and all of the Company
Stock Options (as defined in Section 5.8 hereof) will be, issued and granted in
all material respects in compliance with applicable securities law and other
requirements of law.
2.3 SUBSIDIARIES AND EQUITY INVESTMENTS. Company has no subsidiaries nor
does the Company own, directly or indirectly, any equity or similar interest
in or any interest convertible, exchangeable or exercisable for, any equity
or similar interest in, any corporation, partnership, joint venture or other
business, association or entity.
2.4 CORPORATE AUTHORITY, ETC. Company has the corporate power and
authority to enter into this Agreement and to carry out its obligations
hereunder. The execution and delivery of this Agreement and the performance
of Company's obligations hereunder have been duly authorized by the Board of
Directors and shareholders of Company, and no other corporate proceedings on
the part of Company are necessary to authorize such execution, delivery and
performance. This Agreement has been duly executed and delivered by Company
and, assuming the due authorization, execution and delivery hereof by Parent
and Merger Sub, is a valid and legally binding obligation of Company,
enforceable against Company in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, receivership, moratorium
or other laws relating to or affecting the rights and remedies of creditors
generally and to general equitable principles (regardless of whether at law
or in equity).
2.5 NO VIOLATION. Subject to receipt of the consents, waivers,
authorizations and approvals or the making of the declarations or filings
referred to in Section 2.6 hereof, the execution, delivery and performance by
Company of this Agreement will not (a) violate any provision of any statute,
rule or regulation applicable to Company or any order, judgment or decree of
any court, governmental or regulatory authority, or arbitrator to which
Company is subject, (b) violate the Company Charter Documents, (c) violate,
conflict with or constitute (or, with due notice or lapse of time or both,
result in) a default under, or result in the acceleration of or entitle any
party to accelerate (whether after the giving of notice or lapse of time or
both) any obligation under, any provision of any material contract, lease,
loan agreement, mortgage, security agreement, trust indenture, license or
other agreement or instrument to which Company is a party or by which it is
bound, or (d) result in the creation or imposition of any lien, charge or
encumbrance upon or security interest in any of the properties or assets of
Company, that in the case of clauses (a), (c) or (d) would have a Material
Adverse Effect on Company or prevent the consummation of the Merger.
2.6 CONSENTS AND APPROVALS. Except for the filing of the Merger Documents
as required by the DLLCA and the DGCL, and except as set forth in Section 2.6
of the Company Schedule, no consent, waiver, authorization or approval of any
court, administrative agency, commission, governmental or regulatory
authority (a "Governmental Entity"), or of any other person or entity, and no
declaration to or filing with any such Governmental Entity, is required in
connection with the execution and delivery of this Agreement by Company or
the performance by Company of its obligations hereunder, except for those as
to which the failure to make, file, give or obtain would not have a Material
Adverse Effect on Company or prevent the consummation of the Merger.
2.7 FINANCIAL STATEMENTS; ABSENCE OF UNDISCLOSED LIABILITIES. Section 2.7
of the Company Schedule sets forth the audited balance sheets of Company at
December 31, 2000 and 1999 and the related statements of operations,
shareholders' equity and cash flows for the three years ended December 31,
2000 (including the related notes thereto) of Company, prepared in accordance
with GAAP applied on a consistent basis throughout the periods involved (the
"Audited Financial Statements"), and the unaudited balance sheet of the
Company at September 30, 2001 and the related statements of operations,
shareholders equity and cash flows for the nine-month periods ended September
30, 2001 and 2000 (the "Unaudited Financial Statements" and with the Audited
Financial Statements, collectively the "Financial Statements"). The
Financial Statements are complete in all material respects (subject in the
case of the Unaudited Financial Statements, to normal year-end adjustments
and the lack of notes), and present the financial position and results of
operations of Company as of December 31, 2000 and 1999 and September 30, 2001
and for the periods covered in accordance with GAAP, and comply as to form in
all material respects with applicable accounting requirements. Except as
reflected, reserved against or otherwise disclosed in the Financial
Statements and liabilities incurred since September 30, 2001 in the ordinary
course of business, Company does not have any indebtedness or liability.
2.8 ABSENCE OF CERTAIN CHANGES OR EVENTS; NO MATERIAL ADVERSE CHANGE.
Except as set forth in Section 2.8 of the Company Schedule, since December
31, 2000, Company has not taken any action of a type referred to in
Section 4.1 of this Agreement that would have required the consent of Parent
if such action were to have been taken during the period between the date
hereof and the Closing Date, and there has been no Material Adverse Effect on
Company.
2.9 TAX MATTERS.
(a) For purposes of this Agreement, "Tax" or "Taxes" shall include any and
all federal, state, county, local, foreign and other taxes, assessments and
other governmental charges, including, without limitation, income, gross
receipts, capital stock, franchise, profits, employee and payroll related,
withholding, foreign withholding, social security, unemployment, disability,
real property, personal property, stamp, excise, occupation, sales, use,
transfer, value added, alternative minimum or estimated taxes, including any
interest, penalties or additions to tax in respect of the foregoing.
(b) (i) AllTax declarations, reports and returns required to be filed with
respect to Company have been duly and timely filed (taking into account any
valid extensions of time); (ii) such Tax declarations, reports and returns are
complete and correct in all material respects; (iii) all Taxes shown on such
declarations, reports or returns and on assessments received with respect
thereto have been paid in full; and (iv) there are no material unresolved claims
for Taxes with respect to which Company is or may be liable, except as may have
been adequately provided for in a reserve on the Financial Statements. All Tax
declarations, reports and returns required to be filed with respect to Company
after the Effective Time shall be the responsibility of Parent.
(c) No deficiencies for any Taxes for which Company is or may be liable
have been asserted or assessed or, to the knowledge of Company, proposed (and
are currently pending).
(d) No waivers of the time to assess any Taxes for whichCompany is or may
be liable have been given or requested.
(e) Company is not a party to any pending action or proceeding before any
court or any other governmental or regulatory authority for the assessment or
collection of any Taxes.
(f) There are no liens with respect to Taxes (except for liens with respect
to property taxes not yet due) upon any of the properties or assets of Company.
(g) Company, as of the Effective Time, will have withheld with respect to
its employees all federal and state income Taxes, Taxes pursuant to the Federal
Insurance Contribution Act, Taxes pursuant to the Federal Unemployment Tax Act
and other Taxes required to be withheld, except such Taxes which are not
material to Company.
(h) There is no contract, agreement, plan or arrangement to which Company
is a party as of the date of this Agreement, including but not limited to the
provisions of this Agreement, covering any employee or former employee of
Company that, individually or collectively, would reasonably be expected to give
rise to the payment of any amount that would not be deductible pursuant to
Sections 280G, 404 or 162(m) of the Code. There is no contract, agreement, plan
or arrangement to which Company is a party or by which it is bound to compensate
any individual for excise taxes paid pursuant to Section 4999 of the Code.
(i) Company has not filed any consent agreement under Section 341(f) of the
Code or agreed to have Section 341(f)(2) of the Code apply to any disposition of
a subsection (f) asset (as defined in Section 341(f)(4) of the Code) owned by
Company.
(j) Company is not a party to nor has any obligation under any tax-sharing,
tax indemnity or tax allocation agreement or arrangement.
(k) Except as set forth in Section 2.9(k) of the Company Schedule, Company
has not distributed the stock of any corporation in a transaction satisfying the
requirements of Section 355 of the Code. No Company Stock has been distributed
in a transaction satisfying the requirements of Section 355 of the Code.
2.10 TITLE TO PROPERTY. Company does not own any real property. Except as
set forth in Sections 2.9(k) and 2.10 of the Company Schedule, Company has good
title to all of its material properties and assets, free and clear of all liens,
charges and encumbrances except liens reflected in the Financial Statements, or
which have arisen in the ordinary course of business since the date of the
Financial Statements, liens for taxes not yet due and payable and such liens or
other imperfections of title which would not, individually or in the aggregate,
have a Material Adverse Effect on Company. All leases pursuant to which Company
leases from others material real or personal property are in full force and
effect, and Company is not in default under any of such leases nor is there any
event which, with notice or lapse of time, or both, would constitute a default
by Company under any of such leases except for any such default as would not
have a Material Adverse Effect on Company.
2.11 COMPLIANCE WITH LAWS. The business and operations of Company are in
compliance with all laws, regulations, rules, judgments, orders and decrees
applicable thereto, except where the failure so to comply would not have a
Material Adverse Effect on Company.
2.12 LITIGATION. Except as set forth in Section 2.12 of the Company
Schedule, there are no actions, suits, proceedings or investigations pending or,
to the knowledge of Company, threatened before any court, governmental or
regulatory authority or arbitrator, against Company which would reasonably be
expected to interfere with the consummation of the Merger or to have a Material
Adverse Effect on Company. Neither Company nor any of its assets or properties
is subject to any order, judgment or decree of any court, governmental or
regulatory authority or arbitrator which would have a Material Adverse Effect on
Company.
2.13 CONTRACTS. Except as set forth in Section 2.13 of the Company
Schedule, Company is not a party to or bound by:
(a) any employment or consulting agreement, contract or commitment with any
officer, director or employee, other than those that are terminable by Company
on no more than thirty (30) days' notice without liability or financial
obligation to Company;
(b) any agreement or plan, including, without limitation, any stock option
plan, stock appreciation right plan or stock purchase plan, any of the benefits
of which will be increased, or the vesting of benefits of which will be
accelerated, by the occurrence of any of the transactions contemplated by this
Agreement or the value of any of the benefits of which will be calculated on the
basis of any of the transactions contemplated by this Agreement;
(c) any agreement of indemnification or any guaranty other than any
agreement of indemnification entered into in connection with the sale or license
of software or hardware products in the ordinary course of business;
(d) any agreement, contract or commitment currently in force relating to
the disposition or acquisition by Company after the date of this Agreement of a
material amount of assets not in the ordinary course of business or pursuant to
which Company has any material ownership interest in any corporation,
partnership, joint venture or other business enterprise;
(e) any mortgages, indentures, guarantees, loans or credit agreements,
security agreements or other agreements or instruments relating to the borrowing
of money by Company or extension of credit to Company;
(f) any settlement agreement entered into within three (3) years prior to
the date of this Agreement;
(g) any contracts or agreements that limit or restrict Company, or to
Company's knowledge, any of its officers or key employees, from engaging in any
business and any contracts or agreements that limit or restrict anyone other
than Company's employees or consultants from competing with Company;
(h) any contract, agreement or commitment requiring Company to register the
resale of its capital stock or securities under federal or state securities
laws;
(i) any powers of attorney or comparable delegations of authority granted
by Company;
(j) any contract or commitment for capital expenditures having a remaining
balance in excess of $50,000;
(k) any lease with respect to any property, real or personal, whether as
lessor or lessee;
(l) any contract, agreement or commitment with any director, officer or
shareholder of Company;
(m) any contract, agreement or undertaking not terminable without penalty,
cost or liability on notice not exceeding 30 days;
(n) any contract, agreement or commitment that calls for the sale of any of
the property or assets of, or calls for the acquisition of property or assets
by, Company exceeding $50,000;
(o) in addition to the foregoing, any other agreement, contract or
commitment that involves a commitment or liability or has a value in excess of
$50,000; or
(p) any other material agreement, contract or commitment of any kind.
Neither Company, nor to Company's knowledge, any other party to a
Company Contract (as defined below), is in breach, violation or default
under, and Company has not received written notice that it has breached,
violated or defaulted under, any of the material terms or conditions of any
of the agreements, contracts or commitments to which Company is a party or by
which it is bound that are required to be disclosed in the Company Schedule
(any such agreement, contract or commitment, a "Company Contract") in such a
manner as would permit any other party to cancel or terminate any such
Company Contract, or would permit any other party to seek material damages or
other remedies (for any or all of such breaches, violations or defaults, in
the aggregate).
2.14 EMPLOYEE PLANS; ERISA.
(a) Except as set forth in Section 2.14 of the Company Schedule, Company is
not a party to any employment agreement.
(b) Company is not a party to any collective bargaining agreement.
(c) Set forth in Section 2.14 of the Company Schedule is a list of (i) all
employee benefit plans (as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")), and (ii) all profit sharing,
stock bonus, pension, 401(k), ESOP, savings, medical, dental, disability, life
or accident insurance, bonus, incentive, stock option, deferred compensation and
other similar compensation or employee benefit plans, funds, programs or
arrangements, which are maintained for the benefit of, or relate to any or all
employees of Company (the plans referred to in clauses (i) and (ii) being
collectively referred to as the "Plans"). A complete and correct copy, as of the
date hereof, of each Plan has been furnished to Parent.
(d) None of the Plans is a multiemployer plan within the meaning of
Section 4001 of ERISA.
(e) Each of the Plans is in compliance in all material respects with the
requirements of all applicable statutes, orders and governmental rules and
regulations currently in effect, including, but not limited to, the Code and
ERISA.
(f) There are no audits, inquiries or proceedings pending or, to the
knowledge of Company, threatened by the Internal Revenue Service (the "IRS") or
Department of Labor (the "DOL") with respect to any Plans. All contributions,
reserves or premium payments required to be made or accrued as of the date
hereof to the Plans have been timely made or accrued. Any Plan intended to be
qualified under Section 401(a) of the Code and each trust intended to qualify
under Section 501(a) of the Code still is within its remedial amendment period
under applicable Treasury Regulations or IRS pronouncements to apply for a GUST
determination letter and to make any amendment necessary to obtain a favorable
determination. Company has no commitment to establish any new Plan or to modify
any Plan (except to the extent required by law or to conform any such Plan to
the requirements of any applicable law or as set forth in Section 2.14(f) of the
Company Schedule). Each Plan can be amended, terminated or otherwise
discontinued after the Effective Time in accordance with its terms.
(g) Neither Company nor any of its Affiliates has at any time ever
maintained, established, sponsored, participated in, or contributed to any plan
subject to Title IV of ERISA or Section 412 of the Code and at no time has
Company contributed to or been requested to contribute to any "multiemployer
plan," as such term is defined in ERISA or to any plan described in Section
413(c) of the Code. Neither Company nor any officer or director of Company is
subject to any material liability or penalty under Sections 4975 through 4980B
of the Code or Title I of ERISA. No "prohibited transaction," within the meaning
of Section 4975 of the Code or Sections 406 and 407 of ERISA, not otherwise
exempt under Section 408 of ERISA, has occurred with respect to any Plan.
(h) None of the Plans promises or provides medical or other welfare
benefits to any former employee of Company except as required by COBRA or other
applicable law or by the terms of a written agreement with such former employee,
and Company has not represented, promised or contracted (whether in oral or
written form) to provide welfare retiree benefits to any employee, former
employee, director, consultant or other person, except to the extent required by
statute.
(i) Company is not bound by or subject to (and none of its assets or
properties is bound by or subject to) any arrangement with any labor union. No
employee of Company is represented by any labor union or covered by any
collective bargaining agreement and, to the knowledge of Company, no campaign to
establish such representation is in progress. There is no pending or, to the
knowledge of Company, threatened labor dispute involving Company and any group
of its employees nor has Company experienced any labor interruptions over the
past three (3) years. Company is in compliance in all material respects with all
applicable material foreign, federal, state and local laws, rules and
regulations respecting employment, employment practices, terms and conditions of
employment and wages and hours.
(j) Except as set forth in Section 2.14(j) of the Company Schedule, neither
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (i) result in any payment (including
severance, unemployment compensation, golden parachute, bonus or otherwise)
becoming due to any shareholder, director or employee of Company under any Plan
or otherwise, (ii) materially increase any benefits otherwise payable under any
Plan, or (iii) result in the acceleration of the time of payment or vesting of
any such benefits. Notwithstanding the foregoing, at the Closing, the employees
of Company will cease participating in the Plans and will become 100% vested in
their accounts in the re: Member Data Services 401(K) Plan.
2.15 INTELLECTUAL PROPERTY.
(a) Except as set forth in Section 2.15 of the Company Schedule, Company
owns, or is licensed or otherwise possesses legally enforceable rights to use,
all patents, trademarks, trade names, service marks, domain names, copyrights,
and any applications therefor, maskworks, net lists, schematics, technology,
know-how, trade secrets, algorithms, processes and computer software programs or
applications ("Intellectual Property") that are used in the business of Company
as currently conducted, other than such Intellectual Property the loss of use of
which would not have a Material Adverse Effect on Company.
(b) Section 2.15 of the Company Schedule lists (i) all material patents and
patent applications, registered trademarks, trade names and service marks and
registered copyrights and maskworks included in the Intellectual Property,
including the jurisdictions in which each such Intellectual Property right has
been issued or registered or in which any application for such issuance and
registration has been filed, and (ii) all material licenses and other agreements
as to which Company is a party and pursuant to which any person is authorized to
use any Intellectual Property of Company or Company is authorized to use any
third party patents, trademarks or copyrights, including software ("Third Party
Intellectual Property Rights") which are incorporated in, are, or form a part of
any product of Company that is material to its business, except for commercially
available software used by Company in the ordinary course of business.
(c) To the knowledge of Company, there is no unauthorized use, disclosure,
infringement or misappropriation of any Intellectual Property rights of Company,
or any Intellectual Property right of any third party to the extent licensed by
or through Company, by any third party.
(d) To the knowledge of Company, Company is not in breach of any license or
other agreement relating to the Intellectual Property of Company or Third Party
Intellectual Property Rights, except for such breaches which would not,
individually or in the aggregate, have a Material Adverse Effect on Company.
(e) Company (i) has not been a party to any suit, action or proceeding
which involves a claim of infringement of any patents, trademarks, service
marks, copyrights or violation of any trade secret or other proprietary right of
any third party; or (ii) has not brought any action, suit or proceeding for
infringement of Intellectual Property or breach of any license agreement
involving Intellectual Property against any third party. To the knowledge of
Company, the design, development, distribution, marketing, licensing or sale of
products or services of Company does not infringe on any patent, trademark,
service xxxx or copyright of any third party.
(f) Company has secured valid written assignments or work for hire
agreements from all consultants and employees who contributed to the creation
and development of Intellectual Property of the rights to such contributions
that Company does not already own by operation of law, except such assignments
or work for hire agreements of which the failure to obtain would not,
individually or in the aggregate, have a Material Adverse Effect on Company.
(g) Company has taken reasonable steps to protect Company's rights in its
confidential information and trade secrets that it wishes to protect.
2.16 RESTRICTIONS ON BUSINESS ACTIVITIES. There is no agreement, judgment,
injunction, order or decree binding upon Company which has or could reasonably
be expected to have the effect of prohibiting or materially impairing the
conduct of business by Company as presently conducted.
2.17 BROKERS AND FINDERS. Company has not engaged any broker, finder or
investment banker in connection with this Agreement.
2.18 ENVIRONMENTAL MATTERS. Company (i) has obtained all applicable
permits, licenses, and other authorizations that are required under
Environmental Laws (as defined below) the absence of which is reasonably likely
to have a Material Adverse Effect on Company; and (ii) is in compliance in all
material respects with all material terms and conditions of such required
permits, licenses and authorizations, and also is in compliance in all material
respects with all Environmental Laws. "Environmental Laws" means all Federal,
state, local and foreign laws and regulations relating to pollution of the
environment (including ambient air, surface water, ground water, land surface or
subsurface strata) or the protection of human health and worker safety,
including, without limitation, laws and regulations relating to emissions,
discharges, releases or threatened releases of Hazardous Materials (as defined
below), or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous Materials.
"Hazardous Materials" means chemicals, pollutants, contaminants, wastes, toxic
substances, radioactive and biological materials, asbestos-containing materials,
hazardous substances, petroleum and petroleum products or any fraction thereof,
excluding, however, Hazardous Materials contained in products typically used for
office and janitorial purposes properly and safely maintained in accordance with
Environmental Laws.
2.19 TRANSACTIONS WITH AFFILIATES. Except as set forth in Section 2.19 of
the Company Schedule, no director, officer or other Affiliate or "associate" (as
such term is defined in Rule 12b-2 under the Securities Exchange Act of 1934
(the "Exchange Act")) of Company or, to Company's knowledge, any person with
whom any such director, officer or other Affiliate or associate has any direct
or indirect relation by blood, marriage or adoption, or, to Company's knowledge,
any entity in which any such director, officer or other Affiliate or associate,
owns any beneficial interest (other than a publicly held corporation whose stock
is traded on a national securities exchange or in the over-the-counter market
and less than 1% of the stock of which is beneficially owned by all such
persons) has any interest in (i) any contract, arrangement or understanding with
Company, or relating to the business or operations of Company, (ii) any loan,
arrangement, understanding, agreement or contract for or relating to
indebtedness of Company, or (iii) any property (real, personal or mixed),
tangible or intangible, used or currently intended to be used in, the business
or operations of Company.
2.20 CHAPTER 42 OF THE IBCL NOT APPLICABLE. Chapter 42 of the IBCL will not
apply to the execution, delivery or performance of this Agreement or the
consummation of the Merger or the other transactions contemplated by this
Agreement.
2.21 TAX MATTERS. Company is not aware of any agreement, plan or other
circumstance that would prevent the Merger from constituting a reorganization
under Section 368 of the Code.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Except as otherwise disclosed in the Parent disclosure schedule
attached hereto (the "Parent Schedule"), Parent and Merger Sub jointly and
severally represent and warrant to Company as follows:
3.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. Parent is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has the requisite corporate power and authority to own,
lease and operate its assets and properties and to carry on its business as it
is now being conducted. Merger Sub is a duly formed and validly existing limited
liability company under the laws of the State of Delaware with the power under
the DLLCA and its Limited Liability Company Agreement to own, lease and operate
its assets and properties and to carry on its business as it is now being
conducted. Each of Parent and Merger Sub is qualified to do business, and is in
good standing, in each jurisdiction where the character of the properties owned
or leased by it or the nature of its activities makes such qualification
necessary, except for such failures to be so would not have a Material Adverse
Effect on Parent. As used in this Agreement, the phrase "Material Adverse Effect
on Parent" means a material adverse effect on the condition (financial or
otherwise), business, assets, liabilities or results of operations of Parent and
its subsidiaries considered as a whole, or a material adverse effect on the
ability of Parent to consummate the transactions contemplated by this Agreement;
provided, however, that in no event shall any of the following be deemed, in and
of itself, to constitute a Material Adverse Effect on Parent: (i) a change that
results from conditions generally affecting the U.S. economy, or the industry in
which Parent operates (including laws and regulations applicable to such
industry), (ii) a change that results from the pendency of the transactions
contemplated hereby, (iii) a change that results from the taking of any actions
required by this Agreement, or (iv) a reduction in the stock price of Parent
Common Stock.
3.2 CERTIFICATE OF INCORPORATION AND BYLAWS. Parent has previously
furnished to Company complete and correct copies of its Certificate of
Incorporation and Bylaws as amended to date (together, the "Parent Charter
Documents").
3.3 CAPITALIZATION. The authorized capital stock of Parent consists of
(i) 100,000,000 shares of Parent Common Stock, and (ii) 5,000,000 shares of
Preferred Stock, $0.001 par value per share ("Parent Preferred Stock"). At the
close of business on December 15, 2001, (i) 29,260,999 shares of Parent Common
Stock were issued and outstanding, (ii) no shares of Parent Common Stock were
held in treasury by Parent or by subsidiaries of Parent, (iii) 398,220 shares of
Parent Common Stock were reserved for future issuance pursuant to Parent's
employee benefit plans, (iv) 4,945,350 shares of Parent Common Stock were
reserved for issuance upon the exercise of outstanding options ("Parent
Options") to purchase Parent Common Stock and (v) 11,447 shares of Parent Common
Stock were reserved for future issue upon the exercise of outstanding warrants
to purchase Parent Common Stock. As of the date hereof, no shares of Parent
Preferred Stock were issued or outstanding. All of the Membership Interest in
Merger Sub is held by Parent. All of the outstanding shares of Parent's capital
stock have been duly authorized and validly issued and are fully paid and
nonassessable. All shares of Parent Common Stock subject to issuance as
aforesaid, upon issuance on the terms and conditions specified in the
instruments pursuant to which they are issuable, shall, and the shares of Parent
Common Stock to be issued pursuant to the Merger will be, duly authorized,
validly issued, fully paid and nonassessable. All outstanding shares of Parent
Common Stock, all outstanding Parent Stock Options, and the Membership Interest
of Merger Sub have been issued and granted in all material respects in
compliance with applicable securities laws and other requirements of law.
3.4 AUTHORITY RELATIVE TO THIS AGREEMENT. Parent has the corporate power
and authority to execute and deliver this Agreement, and to carry out its
obligations hereunder. Merger Sub has the power under the DLLCA and its Limited
Liability Company Agreement to execute and deliver this Agreement and to carry
out its obligations hereunder. The execution and delivery of this Agreement by
Parent and Merger Sub and the consummation by Parent and Merger Sub of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Parent and all necessary actions under the DLLCA
and the Limited Liability Company Agreement of Merger Sub on the part of Merger
Sub, and no other corporate or limited liability company proceedings on the part
of Parent or Merger Sub are necessary to authorize such execution, delivery or
performance, subject only to the filing of the Merger Documents pursuant to
DLLCA and the IBCL. This Agreement has been duly and validly executed and
delivered by Parent and Merger Sub and, assuming the due authorization,
execution and delivery by Company, constitutes a legal and binding obligation of
Parent and Merger Sub, enforceable against Parent and Merger Sub in accordance
with its terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium and other laws affecting creditors' rights generally,
or by general equitable principles (regardless of whether enforcement is sought
in a proceeding at law or in equity).
3.5 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by Parent and Merger Sub
do not, and the performance of this Agreement by Parent and Merger Sub shall
not, (i) conflict with or violate the Parent Charter Documents or the Limited
Liability Company Agreement of Merger Sub, (ii) subject to compliance with the
requirements set forth in Section 3.5(b) below, conflict with or violate any
law, rule, regulation, order, judgment or decree applicable to Parent or any of
its subsidiaries or by which it or their respective properties are bound or
affected, or (iii) result in any breach of or constitute a default (or an event
that with notice or lapse of time or both would become a default) under, or
impair Parent's or any such subsidiary's rights or alter the rights or
obligations of any third party under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of the properties or assets of Parent
or any of its subsidiaries pursuant to, any material note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which Parent or any of its subsidiaries is a party
or by which Parent or any of its subsidiaries or its or any of their respective
properties are bound or affected, except to the extent such conflict, violation,
breach, default, impairment or other effect could not in the case of clauses
(ii) or (iii) individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on Parent.
(b) The execution and delivery of this Agreement by Parent and Merger Sub
do not, and the performance of this Agreement by Parent and Merger Sub shall
not, require any consent, approval, authorization or permit of, or filing with
or notification to, any Governmental Entity except (i) for applicable
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), state securities and Blue Sky laws, the rules and regulations of Nasdaq,
and the filing of the Merger Documents as required by the DLLCA and the IBCL and
(ii) where the failure to obtain such consents, approvals, authorizations or
permits, or to make such filings or notifications, (x) would not prevent
consummation of the Merger or otherwise prevent Parent or Merger Sub from
performing their respective obligations under this Agreement or (y) could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Parent.
3.6 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Parent has made available to Company a correct and complete copy of
each report, schedule, registration statement and definitive proxy statement
filed by Parent with the Securities and Exchange Commission (the "SEC") on or
after October 1, 1999 (the "Parent SEC Reports"), which are all the forms,
reports and documents required to be filed by Parent with the SEC since October
1, 1999. The Parent SEC Reports (i) were prepared in accordance with the
requirements of the Securities Act of 1933, as amended (the "Securities Act") or
the Exchange Act, as the case may be, and (ii) did not at the time they were
filed (or if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing) contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. None of Parent's subsidiaries is
required to file any reports or other documents with the SEC.
(b) Each set of financial statements (including, in each case, any related
notes thereto) contained in the Parent SEC Reports was prepared in accordance
with GAAP applied on a consistent basis throughout the periods involved (except
as may be indicated in the notes thereto or, in the case of unaudited
statements, do not contain footnotes as permitted by Form 10-Q of the Exchange
Act) and each fairly presents the consolidated financial position of Parent and
its subsidiaries at the respective dates thereof and the consolidated results of
its operations and cash flows for the periods indicated, except that the
unaudited interim financial statements were or are subject to normal year-end
adjustments which were not or are not expected to be material in amount.
(c) Parent has made available to Company a complete and correct copy of any
amendments or modifications, which have not yet been filed with the SEC but
which are required to be filed, to agreements, documents or other instruments
which previously had been filed by Parent with the SEC pursuant to the
Securities Act or the Exchange Act.
3.7 NO UNDISCLOSED LIABILITIES. Neither Parent nor Merger Sub has any
liabilities except (i) liabilities reflected, reserved against or otherwise
disclosed in the Parent SEC Reports, (ii) liabilities incurred since December
31, 2000 in the ordinary course of business, (iii) liabilities that individually
or in the aggregate do not exceed $2,000,000, and (iv) liabilities identified in
Section 3.7 of the Parent Schedule.
3.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in Section
3.8 of the Parent Schedule, since December 31, 2000, there has not been: (i) any
Material Adverse Effect on Parent, (ii) any declaration, setting aside or
payment of any dividend on, or other distribution (whether in cash, stock or
property) in respect of, any of Parent's capital stock, or any purchase,
redemption or other acquisition by Parent of any of Parent's capital stock or
any other securities of Parent, (iii) any split, combination or reclassification
of any of Parent's capital stock, or (iv) any material change by Parent in its
accounting methods, principles or practices, except as required by concurrent
changes in GAAP.
3.9 PROMISSORY NOTES. The Promissory Notes have been duly authorized by all
necessary corporate action on the part of Parent and, upon execution and
issuance of the Promissory Notes as provided in this Agreement, will constitute
legal and binding obligations of Parent, enforceable against Parent in
accordance with their terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium and other laws affecting creditors' rights generally,
or by general equitable principles (regardless of whether enforcement is sought
in a proceeding at law or in equity).
3.10 LITIGATION. Except as set forth in Section 3.10 of the Parent
Schedule, there are no actions, suits, proceedings or investigations pending or,
to the knowledge of Parent, threatened before any court, governmental or
regulatory authority or arbitrator, against Parent which would reasonably be
expected to interfere with the consummation of the Merger or to have a Material
Adverse Effect on Parent.
3.11 COMPLIANCE WITH LAWS. The business and operations of Parent and Merger
Sub are in compliance with all laws, regulations, rules, judgments, orders and
decrees applicable thereto, except where the failure so to comply would not have
a Material Adverse Effect on Parent.
3.12 TAX MATTERS. Parent is not aware of any agreement, plan or other
circumstance that would prevent the Merger from constituting a reorganization
under Section 368 of the Code.
3.13 BROKERS. Parent has not engaged any broker, finder or investment
banker in connection with this Agreement.
3.14 MERGER SUB OPERATIONS. Merger Sub has not (a) engaged in any business
activities, (b) conducted any operations other than in connection with the
transactions contemplated hereby or (c) incurred any liabilities other than in
connection with the transactions contemplated hereby.
ARTICLE IV
CONDUCT PRIOR TO THE EFFECTIVE TIME
4.1 CONDUCT OF BUSINESS BY COMPANY. During the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
pursuant to its terms or the Effective Time, Company shall, except as set forth
in Section 2.9(k) of the Company Schedule and except to the extent that Parent
shall otherwise consent in writing, carry on its business, in the ordinary
course in all material respects, and in compliance in all material respects with
all applicable laws and regulations, pay its debts and Taxes when due subject to
good faith disputes over such debts or taxes, pay or perform other material
obligations when due, and use its commercially reasonable efforts consistent
with past practices and policies to (i) preserve intact its present business
organization, (ii) keep available the services of its present officers and
employees and (iii) preserve its relationships with customers, suppliers,
distributors, licensors, licensees, and others with which it has business
dealings.
In addition, except as expressly permitted or required by the terms of
this Agreement, without the prior written consent of Parent, during the
period from the date of this Agreement and continuing until the earlier of
the termination of this Agreement pursuant to its terms or the Effective
Time, Company shall not do any of the following:
(a) Waive any stock repurchase rights, accelerate, amend or change the
period of exercisability of options or reprice options granted under any
employee, consultant, director or other stock plans or authorize cash payments
in exchange for any options granted under any of such plans;
(b) Grant any severance or termination pay to any officer or employee
except pursuant to written agreements outstanding on the date hereof and as
previously disclosed in writing to Parent, or adopt any new severance plan;
(c) Transfer or license to any person or entity or otherwise extend, amend
or modify any rights to the Intellectual Property of Company other than in the
ordinary course of business consistent with past practice, or enter into grants
to transfer or license to any person future patent rights other than in the
ordinary course of business consistent with past practices, provided that in no
event shall Company license on an exclusive basis or sell any of its
Intellectual Property;
(d) Declare, set aside or pay any dividends on or make any other
distributions (whether in cash, stock, equity securities or property) in respect
of any capital stock or split, combine or reclassify any capital stock or issue
or authorize the issuance of any other securities in respect of, in lieu of or
in substitution for any capital stock;
(e) Purchase, redeem or otherwise acquire, directly or indirectly, any
shares of capital stock of Company;
(f) Issue, deliver, sell, authorize, pledge or otherwise encumber or
propose any of the foregoing with respect to, any shares of capital stock or any
securities convertible into shares of capital stock, or subscriptions, rights,
warrants or options to acquire any shares of capital stock or any securities
convertible into shares of capital stock, or enter into other agreements or
commitments of any character obligating it to issue any such shares or
convertible securities;
(g) Cause, permit or propose any amendments to the Company Charter
Documents;
(h) Acquire or agree to acquire by merging or consolidating with, or by
purchasing any equity interest in or a portion of the assets of, or by any other
manner, any business or any corporation, partnership, association or other
business organization or division thereof, or otherwise acquire or agree to
acquire any assets or enter into any agreement outside the ordinary course of
Company's business consistent with past practice;
(i) Sell, lease, license, encumber or otherwise dispose of any of Company's
properties or assets other than in the ordinary course of business consistent
with past practice;
(j) Incur any indebtedness for borrowed money or guarantee any such
indebtedness of another person, issue or sell any debt securities or options,
warrants, calls or other rights to acquire any debt securities of Company, enter
into any "keep well" or other agreement to maintain any financial statement
condition or enter into any arrangement having the economic effect of any of the
foregoing;
(k) Adopt or amend any employee benefit plan, policy or arrangement, any
employee stock purchase or employee stock option plan, or enter into any
employment contract or collective bargaining agreement, pay any special bonus or
special remuneration to any director or employee, or increase the salaries or
wage rates or fringe benefits (including rights to severance or indemnification)
of its directors, officers, employees or consultants;
(l) Make any individual or series of related payments outside of the
ordinary course of business in excess of $50,000;
(m) Revalue any of its assets or, except as required by GAAP, make any
change in accounting methods, principles or practices;
(n) Incur or enter into any agreement, contract or commitment outside of
the ordinary course of business in excess of $50,000 individually;
(o) Make any Tax election that, individually or in the aggregate, is
reasonably likely to adversely affect in any material respect the Tax liability
or Tax attributes of Company or settle or compromise any material income Tax
liability;
(p) Engage in any action that would cause the Merger to fail to qualify as
a "reorganization" under Section 368 of the Code, whether or not otherwise
permitted by this Article IV;
(q) Take any action that will extend the exercise period of any Company
Stock Option (as defined in Section 5.6) or cause the vesting period of any
Company Stock Option to accelerate under any circumstances, regardless of
whether such circumstances are to occur before or after the Effective Time, or
otherwise amend the terms of any Company Stock Option.
(r) Agree in writing or otherwise to take any of the actions described in
Section 4.1 (a) through (q) above.
4.2 CONDUCT OF BUSINESS BY PARENT. During the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
pursuant to its terms or the Effective Time, Parent and Merger Sub shall carry
on their business in the ordinary course in all material respects and in
compliance in all material respects with all applicable laws and regulations and
shall not engage in any action that would cause the Merger to fail to qualify as
a "reorganization" under Section 368 of the Code, whether or not otherwise
permitted by the provisions of this Article IV.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 CONFIDENTIALITY; ACCESS TO INFORMATION.
(a) The parties acknowledge that Company and Parent have previously
executed a mutual nondisclosure agreement, dated as of September 22, 2000 (the
"Confidentiality Agreement"), which Confidentiality Agreement will continue in
full force and effect in accordance with its terms.
(b) Each of Company and Parent will afford the other and the other's
accountants, counsel and other representatives reasonable access during normal
business hours and upon reasonable notice to its properties, books, records and
personnel during the period prior to the Effective Time to obtain all
information concerning its business as such other party may reasonably request.
Any investigation shall be conducted in such a manner as to minimize the
interference with the operation of their respective business. No information or
knowledge obtained in any investigation pursuant to this Section 5.1 will affect
or be deemed to modify any representation or warranty contained herein or the
conditions to the obligations of the parties to consummate the Merger.
(c) No party or its representatives shall contact any of the employees,
customers, licensors, licensees or strategic partners of, or other having
business dealings with, the other party in connection with the transactions
contemplated by this Agreement without the prior written authorization of the
other party.
5.2 No Solicitation. From and after the date of this Agreement until the
Effective Time or termination of this Agreement pursuant to Article VII, Company
will not, nor will it authorize or permit any of its officers, directors,
affiliates or employees or any investment banker, attorney or other advisor or
representative retained by any of them to, directly or indirectly, (i) solicit,
initiate, encourage or induce the making, submission or announcement of any
Acquisition Proposal (as defined below), (ii) participate in any discussions or
negotiations regarding, or furnish to any person any information with respect
to, or take any other action to facilitate any inquiries or the making of any
proposal that constitutes or may reasonably be expected to lead to, any
Acquisition Proposal, (iii) engage in discussions with any person with respect
to any Acquisition Proposal, (iv) approve, endorse or recommend any Acquisition
Proposal or (v) enter into any letter of intent or similar document or any
contract, agreement or commitment contemplating or otherwise relating to any
Acquisition Transaction (as defined below). Without limiting the foregoing, it
is understood that any violation of the restrictions set forth in this Section
5.2 by any officer or director of Company or any investment banker or attorney
of Company shall be deemed to be a breach of this Section 5.2 by Company.
For purposes of this Agreement, "Acquisition Proposal" shall mean any
offer or proposal (other than an offer or proposal by Parent) relating to any
Acquisition Transaction. For the purposes of this Agreement, "Acquisition
Transaction" shall mean any transaction or series of related transactions
other than the transactions contemplated by this Agreement involving:
(A) any acquisition or purchase from Company by any person of voting
securities of Company that if consummated would result in any person or
"group" (as defined under Section 13(d) of the Exchange Act and the rules and
regulations thereunder) beneficially owning 5% or more of the total
outstanding voting securities of Company or any merger, consolidation,
business combination or similar transaction involving Company; (B) any sale,
lease (other than in the ordinary course of business), exchange, transfer,
license (other than in the ordinary course of business), acquisition or
disposition of any material portion of the assets of Company; or (C) any
liquidation, dissolution, recapitalization or other significant corporate
reorganization of Company.
In addition to the other obligations of Company set forth in this
Section 5.2, Company as promptly as practicable, and in any event within 24
hours, shall advise Parent orally and in writing of any request for
information which Company reasonably believes would lead to an Acquisition
Proposal or of any Acquisition Proposal, or any inquiry with respect to or
which Company reasonably should believe would lead to any Acquisition
Proposal, and, subject to compliance with the terms of any confidentiality
agreement existing on the date of this Agreement, the material terms and
conditions of such request, Acquisition Proposal or inquiry, and the identity
of the person or group making any such request, Acquisition Proposal or
inquiry. Company will keep Parent informed in all material respects of the
status and details (including material amendments or proposed amendments) of
any such request, Acquisition Proposal or inquiry.
5.3 PUBLIC DISCLOSURE. Parent and Company will consult with each other and
agree before issuing any press release or otherwise making any public statement
with respect to the Merger or this Agreement and will not issue any such press
release or make any such public statement prior to such agreement, except as may
be required by law or any listing agreement with a national securities exchange,
in which case reasonable efforts to consult with the other party will be made
prior to any such release or public statement.
5.4 COMMERCIALLY REASONABLE EFFORTS; NOTIFICATION.
(a) Upon the terms and subject to the conditions, including, without
limitation, Section 5.2, set forth in this Agreement, each of the parties agrees
to use all commercially reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, and to assist and cooperate with the
other parties in doing, all things necessary, proper or advisable to consummate
and make effective, in the most expeditious manner practicable, the Merger and
the other transactions contemplated by this Agreement, including using
reasonable efforts to accomplish the following: (i) the taking of all reasonable
acts necessary to cause the conditions precedent set forth in Article VI to be
satisfied, (ii) the obtaining of all necessary actions or nonactions, waivers,
consents, approvals, orders and authorizations from Governmental Entities
(including, without limitation, the HSR Act) and the making of all necessary
registrations, declarations and filings (including registrations, declarations
and filings with Governmental Entities, if any) and the taking of all reasonable
steps as may be necessary to avoid any suit, claim, action, investigation or
proceeding by any Governmental Entity, (iii) the obtaining of all necessary
consents, approvals or waivers from third parties required as a result of the
transactions contemplated by this Agreement, (iv) the defending of any suits,
claims, actions, investigations or proceedings, whether judicial or
administrative, challenging this Agreement or the consummation of the
transactions contemplated hereby, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental Entity
vacated or reversed and (v) the execution or delivery of any additional
instruments necessary to consummate the transactions contemplated by, and to
fully carry out the purposes of, this Agreement. In connection with and without
limiting the foregoing, each of Parent and Company and their respective Boards
of Directors shall, if any state takeover statute or similar statute or
regulation is or becomes applicable to the Merger, this Agreement or any of the
transactions contemplated by this Agreement, use all commercially reasonable
efforts to ensure that the Merger and the other transactions contemplated by
this Agreement may be consummated as promptly as practicable on the terms
contemplated by this Agreement and otherwise to minimize the effect of such
statute or regulation on the Merger, this Agreement and the transactions
contemplated hereby. Notwithstanding anything herein to the contrary, nothing in
this Agreement shall be deemed to require Parent, Company or any subsidiary or
Affiliate of Parent or Company to agree to any divestiture by itself or any of
its Affiliates of shares of capital stock or the imposition of any material
limitation on the ability of any of them to conduct their business or to own or
exercise control of such assets, properties and stock.
(b) Company shall give prompt notice to Parent upon becoming aware that any
representation or warranty made by it contained in this Agreement has become
untrue or inaccurate in any material respect, or of any failure of Company to
comply with or satisfy in any material respect any covenant, condition or
agreement to be complied with or satisfied by it under this Agreement. If any
event, condition, fact or circumstance that is required to be disclosed pursuant
to this Section 5.4(b) requires any change in the Company Schedule, or if any
such event, condition, fact or circumstance would require such a change assuming
the Company Schedule were dated as of the date of the occurrence, existence or
discovery of such event, condition, fact or circumstance, then Company shall
promptly deliver to Parent an update to the Company Schedule specifying such
change. No such update shall be deemed to supplement or amend the Company
Schedule for the purpose of determining (i) the accuracy of any of the
representations and warranties made by Company in this Agreement and (ii)
whether any of the conditions set forth in Section 6 have been satisfied.
(c) Parent shall give prompt notice to Company upon becoming aware that any
representation or warranty made by it or Merger Sub contained in this Agreement
has become untrue or inaccurate in any material respect, or of any failure of
Parent or Merger Sub to comply with or satisfy in any material respect any
covenant, condition or agreement to be complied with or satisfied by it under
this Agreement. If any event, condition, fact or circumstance that is required
to be disclosed pursuant to this Section 5.4(c) requires any change in the
Parent Schedule, or if any such event, condition, fact or circumstance would
require such a change assuming the Parent Schedule were dated as of the date of
the occurrence, existence or discovery of such event, condition, fact or
circumstance, then Parent shall promptly deliver to Company an update to the
Parent Schedule specifying such change. No such update shall be deemed to
supplement or amend the Parent Schedule for the purpose of determining (i) the
accuracy of any of the representations and warranties made by Parent and Merger
Sub in this Agreement and (ii) whether any of the conditions set forth in
Section 6 have been satisfied.
5.5 THIRD PARTY CONSENTS. As soon as practicable following the date hereof,
Parent and Company will each use its commercially reasonable efforts to obtain
any consents, waivers and approvals under any of its or subsidiary's respective
agreements, contracts, licenses or leases required to be obtained in connection
with the consummation of the transactions contemplated hereby, except for those
consents, waivers and approvals as to which the failure to obtain would not have
a Material Adverse Effect on Company or Parent.
5.6 COMPANY STOCK OPTIONS. At the Effective Time, each outstanding option
to purchase shares of Company Common Stock (each, a "Company Stock Option"),
whether vested or unvested, shall by virtue of the Merger be assumed by Parent.
Each Company Stock Option so assumed by Parent under this Agreement will
continue to have, and be subject to, the same terms and conditions of such
options immediately prior to the Effective Time, except that (i) each Company
Stock Option will be or will become exercisable in accordance with its terms for
that number of whole shares of Parent Common Stock equal to the product (rounded
to the nearest whole number of shares of Parent Common Stock) of the number of
shares of Company Common Stock that were issuable upon exercise of such Company
Stock Option immediately prior to the Effective Time multiplied by the result
obtained by dividing the number of Option Shares by the number of Diluting
Shares (the "Option Exchange Rate"), and (ii) the per share exercise price for
the shares of Parent Common Stock will be the per share exercise price of the
Company Stock Option immediately prior to the Effective Time divided by the
Option Exchange Rate. Within thirty (30) days following the Closing, Parent will
send to each holder of an assumed Company Stock Option a written notice setting
forth (A) the number of shares of Parent Common Stock subject to such assumed
Company Stock Option, and (B) the exercise price per share of Parent Common
Stock issuable upon exercise of such assumed Company Stock Option.
5.7 FORM S-8. Parent agrees to (i) reserve for issuance a sufficient number
of shares of Parent Common Stock for delivery upon exercise of assumed Company
Stock Options; (ii) file all documents required to be filed to cause the shares
of Parent Common Stock issuable upon exercise of the assumed Company Stock
Options to be quoted on Nasdaq; and (iii) file a registration statement on Form
S-8 for the shares of Parent Common Stock issuable with respect to assumed
Company Stock Options as soon as is reasonably practicable, and in any event
within 60 days, after the Effective Time and shall use commercially reasonable
efforts to maintain the effectiveness of such registration statement thereafter
for so long as any such options remain outstanding.
5.8 EMPLOYEES. Employees of Company employed by the Surviving Entity after
the Effective Time will be entitled to participate in such employee benefit
plans provided by the Surviving Entity or Parent after the Closing to the extent
and consistent with the terms of such plans. If any employee of Company becomes
a participant in any employee benefit plan of Parent or one of its subsidiaries,
such employee shall, to the extent permitted by such plan, be given credit for
all service with Company prior to the Effective Time for purposes of vesting
eligibility and for benefit accrual purposes. Nothing in this Section 5.8 shall
be deemed to constitute an employment contract between the Surviving Entity and
any individual, or a waiver of the Surviving Entity's right to discharge any
employee at any time, with or without cause, subject to the terms of any
employment agreement with such employee.
5.9 INDEMNIFICATION. From and after the Effective Time, Surviving Entity
will fulfill and honor in all respects the obligations of Company pursuant to
the indemnification provisions of the Charter Documents of Company.
5.10 LEASE ASSUMPTION. Company shall cause re: Member Data Services to (i)
assume the office lease with Duke Weeks Realty Limited Partnership and the
lease with OMIF, LLC with respect to the Company's disaster recovery facility;
(ii) cause Company to be released from any further obligation with respect to
such leases; and (iii) allow Surviving Entity at least six months from the
Closing Date to vacate the premises.
5.11 ASSET TRANSFER. Company shall cause re: Member Data Services to (i)
take title to certain fixed assets of Company as designated by Parent prior to
Closing; and (ii) allow Surviving Entity the use of such assets for a period of
six months following the Closing Date.
5.12 CLOSING PAYMENT. Prior to the Closing, Parent and Company shall
negotiate in good faith to determine the costs incurred by re: Member Data
Services with respect to the six-month period referred to in Section 5.10(iii)
and the value of the assets transferred as contemplated by Section 5.11. Any
amounts owed by Company to re: Member Data Services or by re: Member Services
Data to Company shall be paid at the Closing.
5.13 INDIANA TRAINING 2000 GRANT FUND TRAINING PROGRAM. Company shall cause
re: Member Data Services to assume all obligations and indemnify Company against
any liability relating to the State of Indiana Training 2000 Grant Fund Training
Program.
5.14 Credit Card Services Assets. Immediately after the Effective Time, in
consideration of the transfer by the former shareholders of Company to Parent of
4,886 shares of Parent Common Stock, Parent shall cause Surviving Entity to
transfer to the former shareholders of the Company the assets set forth in
Exhibit H hereto relating to the Company's credit card services business.
ARTICLE VI
CONDITIONS TO THE MERGER
6.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE MERGER. The
respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction at or prior to the Closing Date of the
following conditions:
(A) REINCORPORATION. Company shall have been reincorporated in Delaware as
Delaware Company.
(B) NO ORDER. No Governmental Entity shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation, executive order,
decree, injunction or other order (whether temporary, preliminary or permanent)
which is in effect and which has the effect of making the Merger illegal or
otherwise prohibiting consummation of the Merger.
(C) TAX OPINION. Parent and Company shall have received a written opinion
from O'Melveny & Xxxxx LLP and Xxxxxx & Xxxxxxx, Attorneys at Law, PC,
respectively, in form and substance reasonably satisfactory to the recipient, to
the effect that the Merger will constitute a reorganization within the meaning
of Section 368(a) of the Code and such opinion shall not have been withdrawn.
The parties to this Agreement agree to make such reasonable representations as
requested by such counsel for the purpose of rendering such opinions.
(D) NON-EXCLUSIVE LICENSE OPTION. Parent and First Internet Bank shall have
negotiated an option for a Non-Exclusive License Agreement substantially on the
terms set forth on Exhibit F, and Company and re: Member Data Services shall
have executed and delivered such option.
(E) MASTER INTERFACE SUPPORT AND MARKETING AGREEMENT. Parent and re: Member
Data Services shall have executed and delivered a Master Interface Support and
Marketing Agreement substantially on the terms set forth on Exhibit G.
6.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF COMPANY. The obligation of
Company to consummate and effect the Merger shall be subject to the satisfaction
at or prior to the Closing Date of each of the following conditions, any of
which may be waived, in writing, exclusively by Company:
(A) REPRESENTATIONS AND WARRANTIES. Each representation and warranty of
Parent and Merger Sub contained in this Agreement (i) shall have been true and
correct as of the date of this Agreement and (ii) shall be true and correct on
and as of the Closing Date with the same force and effect as if made on and as
of the Closing Date, except that those representations and warranties which
address matters only as of a particular date shall have been true and correct as
of such particular date. Company shall have received a certificate with respect
to the foregoing signed on behalf of Parent by an authorized officer of Parent.
(B) AGREEMENTS AND COVENANTS. Parent and Merger Sub shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by them on or prior to the
Closing Date, and Company shall have received a certificate to such effect
signed on behalf of Parent by an authorized officer of Parent.
(C) CONSENTS. Parent and Merger Sub shall have obtained all consents,
waivers and approvals required in connection with the consummation of the
transactions contemplated hereby.
(D) MATERIAL ADVERSE EFFECT. There shall not have been any Material Adverse
Effect on Parent since the date of this Agreement. Company shall have received a
certificate with respect to the foregoing signed on behalf of Parent by its
President and Chief Financial Officer.
(E) OPINION OF COUNSEL. The shareholders of Company shall have received an
opinion from O'Melveny & Xxxxx LLP, counsel to Parent, to the effect that the
shares of Parent Common Stock constituting a portion of the Merger
Consideration, when issued in accordance with this Agreement, will be validly
issued, fully paid and non-assessable.
6.3 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF PARENT AND MERGER SUB. The
obligation of Parent and Merger Sub to consummate and effect the Merger shall be
subject to the satisfaction at or prior to the Closing Date of each of the
following conditions, any of which may be waived, in writing, exclusively by
Parent:
(A) REPRESENTATIONS AND WARRANTIES. Each representation and warranty of
Company contained in this Agreement (i) shall have been true and correct as of
the date of this Agreement and (ii) shall be true and correct on and as of the
Closing Date with the same force and effect as if made on and as of the Closing
Date, except that those representations and warranties which address matters
only as of a particular date shall have been true and correct as of such
particular date. Parent shall have received a certificate with respect to the
foregoing signed on behalf of Company by its Chief Executive Officer.
(B) AGREEMENTS AND COVENANTS. Company shall have performed or complied in
all material respects with all agreements and covenants required by this
Agreement to be performed or complied with by it at or prior to the Closing
Date, and Parent shall have received a certificate to such effect signed on
behalf of Company by the Chief Executive Officer of Company.
(C) CONSENTS. Company shall have obtained all consents, waivers and
approvals required in connection with the consummation of the transactions
contemplated hereby.
(D) MATERIAL ADVERSE EFFECT. There shall not have been any Material Adverse
Effect on Company since the date of this Agreement. Parent shall have received a
certificate with respect to the foregoing signed on behalf of Company by its
Chief Executive Officer
(E) STOCKHOLDERS AGREEMENT. The Stockholders Agreement shall have been
executed and delivered by each of the shareholders of Company and shall be in
full force and effect as of the Effective Time.
(F) NON-COMPETE AGREEMENTS. Xxxxx Xxxxxx shall have executed and delivered
to Parent a Non-Compete Agreement substantially in the form attached hereto as
Exhibit D.
(G) OPTION TERMINATION. That certain Virtual Financial Services, Inc. Stock
Option Agreement has been terminated.
(H) LINE OF CREDIT. Company shall no longer be a party to that certain
Business Loan Agreement with Huntington National Bank, dated October 15, 2001,
and any liens or encumbrances on the assets of Company with respect thereto,
shall have been released to the reasonable satisfaction of Parent.
(I) FINANCIAL STATEMENTS. Company shall have delivered to Parent the
balance sheet of Company at September 30, 2001 and the related statements of
operations, shareholders' equity and cash flows for the nine-month periods ended
September 30, 2001 and 2000, audited by Deloitte & Touche LLP, and such
financial statements shall not differ in any material respect from the Unaudited
Financial Statements.
(J) PURCHASE OF COMPANY STOCK. Xxxxx Xxxxxx shall have acquired all of the
shares of Company Stock owned by Xxxxxx Xxxxxx.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 TERMINATION. This Agreement may be terminated at any time prior to the
Effective Time:
(a) by mutual written consent duly authorized by the Boards of Directors of
Parent and Company;
(b) by either Company or Parent if the Merger shall not have been
consummated by March 31, 2002 for any reason; provided, however, that the right
to terminate this Agreement under this Section 7.1(b) shall not be available to
any party whose action or failure to act has been a principal cause of or
resulted in the failure of the Merger to occur on or before such date and such
action or failure to act constitutes a breach of this Agreement;
(c) by either Company or Parent if a Governmental Entity shall have issued
an order, decree or ruling or taken any other action, in any case having the
effect of permanently restraining, enjoining or otherwise prohibiting the
Merger, which order, decree, ruling or other action is final and nonappealable;
(d) by Company, upon a breach of any representation, warranty, covenant or
agreement on the part of Parent or Merger Sub set forth in this Agreement, or if
any representation or warranty of Parent shall have become untrue, in either
case such that the conditions set forth in Section 6.2(a) or Section 6.2(b)
would not be satisfied as of the time of such breach or as of the time such
representation or warranty shall have become untrue, provided, that if such
inaccuracy in Parent's representations and warranties or breach by Parent is
curable by Parent, then Company may not terminate this Agreement under this
Section 7.1(d) for thirty (30) days after delivery of written notice from
Company to Parent of such breach, provided Parent continues to exercise best
efforts to cure such breach (it being understood that Company may not terminate
this Agreement pursuant to this paragraph (d) if such breach by Parent is cured
during such thirty (30)-day period); or
(e) by Parent, upon a breach of any representation, warranty, covenant or
agreement on the part of Company set forth in this Agreement, or if any
representation or warranty of Company shall have become untrue, in either case
such that the conditions set forth in Section 6.3(a) or Section 6.3(b) would not
be satisfied as of the time of such breach or as of the time such representation
or warranty shall have become untrue, provided, that if such inaccuracy in
Company's representations and warranties or breach by Company is curable by
Company, then Parent may not terminate this Agreement under this Section 7.1(e)
for thirty (30) days after delivery of written notice from Parent to Company of
such breach, provided Company continues to exercise best efforts to cure such
breach (it being understood that Parent may not terminate this Agreement
pursuant to this paragraph (e) such breach by Company is cured during such
thirty (30)-day period).
7.2 NOTICE OF TERMINATION; EFFECT OF TERMINATION. Any termination of this
Agreement under Section 7.1 above will be effective immediately upon the
delivery of written notice of the terminating party to the other parties hereto
(or such later time as may be required by Section 7.1). In the event of the
termination of this Agreement as provided in Section 7.1, this Agreement shall
be of no further force or effect, except (i) as set forth in this Section 7.2,
Section 2.17, Section 3.13, Section 5.1(a), Section 7.3 and Article VIII, each
of which shall survive the termination of this Agreement, and (ii) nothing
herein shall relieve any party from liability for fraud in connection with, or
any willful breach of, this Agreement.
7.3 FEES AND EXPENSES. All fees and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such expenses whether or not the Merger is consummated.
7.4 AMENDMENT. Subject to applicable law, this Agreement may be amended by
the parties hereto at any time by execution of an instrument in writing signed
on behalf of each of Parent, Merger Sub and Company.
7.5 EXTENSION; WAIVER. At any time prior to the Effective Time, any party
hereto may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant hereto and (iii)
waive compliance with any of the agreements or conditions for the benefit of
such party contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party. Delay in exercising any right under this
Agreement shall not constitute a waiver of such right.
ARTICLE VIII
GENERAL PROVISIONS
8.1 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given on the date of delivery if delivered
personally or by commercial delivery service, or sent via telecopy (receipt
confirmed) to the parties at the following addresses or telecopy numbers (or at
such other address or telecopy numbers for a party as shall be specified by like
notice):
(a) if to Parent or Merger Sub, to:
Digital Insight Corporation
00000 Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: President
Facsimile: (000) 000-0000
with a copy (not constituting notice) to:
O'Melveny & Xxxxx LLP
000 X. Xxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxx, Esq.
Facsimile: (000) 000-0000
(b) if to Company, to:
Virtual Financial Services, Inc.
0000 Xxxxxxxxxx Xxxxxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000-0000
Attention: Chairman, Chief Executive
Facsimile: (000) 000-0000
with a copy (not constituting notice) to:
Xxxxxx & Xxxxxxx, Attorneys at Law, PC
000 Xxxxxxxx Xxxxxx, #0000
Xxxxxxxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxx X. Strain, Esq.
Facsimile: (000) 000-0000
8.2 INTERPRETATION; DEFINITIONS.
(a) When a reference is made in this Agreement to Exhibits, such reference
shall be to an Exhibit to this Agreement unless otherwise indicated. When a
reference is made in this Agreement to Sections, such reference shall be to a
Section of this Agreement. Unless otherwise indicated the words "include,"
"includes" and "including" when used herein shall be deemed in each case to be
followed by the words "without limitation." The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. When reference is
made herein to "the business of" an entity, such reference shall be deemed to
include the business of all direct and indirect subsidiaries of such entity.
Reference to the subsidiaries of an entity shall be deemed to include all direct
and indirect subsidiaries of such entity.
(b) For purposes of this Agreement:
(i) the term "knowledge" of a party hereto, with respect to any matter in
question, means the actual knowledge of the executive officers of such party,
without any duty of inquiry or investigation;
(ii) the term "person" shall mean any individual, corporation (including
any non-profit corporation), general partnership, limited partnership, limited
liability partnership, joint venture, estate, trust, company (including any
limited liability company or joint stock company), firm or other enterprise,
association, organization, entity or Governmental Entity.
8.3 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
8.4 ENTIRE AGREEMENT; THIRD PARTY BENEFICIARIES. This Agreement and the
documents and instruments and other agreements among the parties hereto as
contemplated by or referred to herein, including the Company Schedule and Parent
Schedule (a) constitute the entire agreement among the parties with respect to
the subject matter hereof and supersede all prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof, it being understood that the Confidentiality Agreement shall continue in
full force and effect until the Closing and shall survive any termination of
this Agreement; and (b) are not intended to confer upon any other person any
rights or remedies hereunder.
8.5 SEVERABILITY. In the event that any provision of this Agreement, or the
application thereof, becomes or is declared by a court of competent jurisdiction
to be illegal, void or unenforceable, the remainder of this Agreement will
continue in full force and effect and the application of such provision to other
persons or circumstances will be interpreted so as reasonably to effect the
intent of the parties hereto. The parties further agree to replace such void or
unenforceable provision of this Agreement with a valid and enforceable provision
that will achieve, to the extent possible, the economic, business and other
purposes of such void or unenforceable provision.
8.6 OTHER REMEDIES; SPECIFIC PERFORMANCE. Except as otherwise provided
herein, any and all remedies herein expressly conferred upon a party will be
deemed cumulative with and not exclusive of any other remedy conferred hereby,
or by law or equity upon such party, and the exercise by a party of any one
remedy will not preclude the exercise of any other remedy. The parties hereto
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to seek an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States or any state having jurisdiction, this
being in addition to any other remedy to which they are entitled at law or in
equity.
8.7 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of law thereof.
8.8 RULES OF CONSTRUCTION. The parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Agreement
and, therefore, waive the application of any law, regulation, holding or rule of
construction providing that ambiguities in an agreement or other document will
be construed against the party drafting such agreement or document.
8.9 ASSIGNMENT. No party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other parties. Subject to the preceding sentence, this Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
[The remainder of this page has been intentionally left blank]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized respective officers as of the date first
written above.
DIGITAL INSIGHT CORPORATION
By: /s/ Xxxx Xxxxxx
Name: Xxxx Xxxxxx
Title: Chairman & Chief Executive Officer
VIFI LLC
By: Digital Insight Corporation, its
Manager
By: /s/ Xxxx Xxxxxx
Name: Xxxx Xxxxxx
Title: Chairman & Chief Executive Officer
VIRTUAL FINANCIAL SERVICES, INC.
By: /s/ Xxxxx X. Xxxxxx
Name: Xxxxx X. Xxxxxx
Title: Chief Executive Officer
[Signature page to Merger Agreement]
EXHIBIT A
FORM OF STOCKHOLDERS AGREEMENT
THIS STOCKHOLDERS AGREEMENT (this "Agreement") is made and entered into
as of January 3, 2002, between Digital Insight Corporation, a Delaware
corporation ("Parent"), and the undersigned, constituting one or more of the
shareholders (the "Stockholders") of Virtual Financial Services, Inc., an
Indiana corporation ("Company").
RECITALS
A. Parent, ViFi LLC and Company are entering into an Agreement and
Plan of Merger (the "Merger Agreement") which provides for the merger (the
"Merger") of Company with and into ViFi LLC.
B. Upon consummation of the Merger as contemplated by the Merger
Agreement, the shares of Company Stock held by Stockholders will be converted
into cash, promissory notes and shares of the common stock, $0.001 par value
per share, of Parent ("Parent Common Stock").
C. As an inducement to Parent to enter into the Merger Agreement and
the Stock Agreement and in consideration of the execution of the Merger
Agreement and the Stock Agreement by Parent, Stockholders agree as set forth
below.
D. Capitalized terms used in this Agreement and not defined herein
shall have the meanings ascribed to them in the Merger Agreement.
NOW THEREFORE, intending to be legally bound, the parties hereto agree
as follows:
1. REPRESENTATIONS OF STOCKHOLDER. Each Stockholder individually
hereby represents and warrants to Parent that:
(a) such Stockholder understands that the issuance of the Parent
Common Stock and a promissory note to Stockholder pursuant to the Merger will be
on the basis that the issuance thereof is exempt from registration pursuant to
Section 4(2) of the Securities Act of 1933, as amended (the "Securities Act"),
and that Parent's reliance upon such exemption is predicated upon such
Stockholder's representations;
(b) such Stockholder understands that the securities to be issued to
Stockholder pursuant to the Merger have not been registered under the Securities
Act or any applicable state securities law and must be held indefinitely unless
subsequently registered under the Securities Act and all applicable state
securities laws or an exemption from such registration is available;
(c) the securities to be issued to such Stockholder pursuant to the
Merger will be acquired by such Stockholder for investment for such
Stockholder's own account and not as a nominee or agent, and not with a view to
the sale or distribution thereof in a manner that would violate the Securities
Act;
(d) such Stockholder (i) has such knowledge and experience in
financial and business matters to be capable of evaluating the merits and risks
of such Stockholder's prospective investment in securities of Parent; (ii) has
received all of the information Stockholder has requested from Parent or Company
that Stockholder considers necessary or appropriate for deciding whether to
accept the securities of Parent; (iii) has the ability to bear the economic
risks of the Stockholder's prospective investment; and (iv) is able to hold the
securities of Parent for an indefinite period of time and to suffer complete
loss of Stockholder's investment;
(e) such Stockholder understands that each certificate representing
the Promissory Note or shares of Parent Common Stock issued to such Stockholder
pursuant to the Merger shall contain a legend to the effect that such securities
have not been registered under the Securities Act or any state securities laws
and such securities may not be sold or transferred in the absence of
registration under the Securities Act and all applicable state securities laws
or an applicable exemption therefrom; and
(f) such Stockholder has full power and authority to make, enter into
and carry out the terms of this Agreement, and this Agreement has been duly
executed and delivered by such Stockholder and constitutes the valid and binding
obligation of such Stockholder, enforceable in accordance with its terms.
2. INDEMNIFICATION. (a) Provided that the Closing under the Merger
Agreement has occurred, Stockholders, severally and not jointly, will
indemnify and hold harmless Parent, Parent's affiliates and the Surviving
Corporation, as well as, in each case, each of their respective officers,
directors and employees and each of the heirs, executors, successors and
assigns of any of the foregoing (in each case, collectively, the "Indemnified
Parties") from and against all claims, losses, liabilities, damages and
reasonable expenses, including, without limitation, reasonable attorneys'
fees and reasonable costs of investigation and litigation (collectively,
"Damages") arising out of or relating to (i) any breach of the
representations and warranties made by Company in the Merger Agreement or in
the certificates delivered by Company pursuant to the Merger Agreement, or
(ii) failure by Company to have performed or complied in all material
respects with all agreements or covenants required by the Merger Agreement to
be performed or complied with by Company at or prior to the Closing Date.
(b) Provided that the Closing under the Merger Agreement has
occurred, Stockholders will, severally and not jointly, indemnify the
Indemnified Parties from and against all Damages arising out of or relating
to any breach of the representations and warranties of Stockholder contained
in Section 1 of this Agreement.
(c) Notwithstanding the foregoing, no Stockholder shall be
required to pay any amount for Damages with respect to subsection (a) above
of this Agreement (i) unless the aggregate amount otherwise payable by
Stockholders with respect to all claims for indemnification pursuant to
subsection (a) above of this Agreement would exceed $100,000 (the "Threshold"),
whereupon Damages otherwise payable, including the amount of the Threshold,
shall be payable by the Stockholders, and (ii) except with respect to claims
based on fraud committed by such Stockholder, recourse of the Indemnified
Parties to the Escrow Shares (as defined in the Merger Agreement) shall be the
sole and exclusive remedy of the Indemnified Parties against Stockholders for
Damages with respect to subsection (a) above of this Agreement. Nothing in this
Section 2(c) will affect Parent's obligations under the Promissory Notes.
(d) Indemnification with respect to Damages with respect to
subsection (a) above shall expire on the first anniversary of the Closing
Date; provided, however, that Damages with respect to breaches of Sections
2.2, 2.4 and 2.9 of the Merger Agreement shall expire upon expiration of the
applicable statutes of limitation; provided, further that if prior to that
date notice of any claim for Damages has been given by an Indemnified Party
as provided herein, then the right to indemnification with respect thereto
shall remain in effect until such matter shall have been finally determined
and disposed of, and any indemnification due in respect thereof shall have
been paid.
(e) Promptly after receipt by an Indemnified Party of notice of
any claim, liability or expense to which the indemnification obligations
hereunder would apply, the Indemnified Party shall give notice thereof in
writing to the Stockholders' Agent (as defined below), but the omission to
give such notice promptly will not relieve the Stockholders from any
liability except to the extent that the Stockholders shall have been
prejudiced as a result of the failure or delay in giving such notice. Such
notice shall state the information then available regarding the amount and
nature of such claim, liability or expense, including an estimate, if
practicable, of the amount of Damages that have been or may be suffered or
incurred by the Indemnified Party attributable to such claim and the basis of
the Indemnified Parties' request for indemnification under this Agreement.
(f) With respect to third party claims, if within 20 days after
receiving the notice described in clause (e) above, the Stockholders' Agent
gives written notice to the Indemnified Parties stating that the Stockholders
dispute and intend to defend against such claim, liability or expense at
their own cost and expense, then counsel for the defense shall be selected by
the Stockholders' Agent (subject to the consent of the Indemnified Parties,
which consent shall not be unreasonably withheld), and the Indemnified
Parties shall not be required to make any payment with respect to such claim,
liability or expense as long as the Stockholders are conducting a good faith
and diligent defense at the expense of the Stockholders; provided, however,
that the assumption of defense of any such matters by the Stockholders shall
relate solely to the claim, liability or expense that is subject or
potentially subject to indemnification. The Stockholders shall have the
right, with the consent of the Indemnified Parties, which consent shall not
be unreasonably withheld, to settle all indemnifiable matters related to
claims by third parties which are susceptible to being settled, provided the
Stockholders' obligations to indemnify the Indemnified Parties therefor will
be fully satisfied. The Stockholders and the Indemnified Parties shall each
furnish the other with all documents and information that the Stockholders or
Indemnified Parties shall reasonably request and shall consult with each
other prior to acting on major matters, including settlement discussions.
Notwithstanding anything herein stated, each Indemnified Party shall at all
times have the right to fully participate in such defense at its own expense
directly or through counsel; provided, however, if the named parties to the
action or proceeding include both the indemnifying parties and the
Indemnified Parties and representation of both parties by the same counsel
would be inappropriate under applicable standards of professional conduct, in
the reasonable opinion of the Indemnified Parties, the expense of one
separate counsel for the Indemnified Parties shall be paid by the
Stockholders. If no such notice of intent to dispute and defend is given, or
if such diligent good faith defense is not being or ceases to be conducted in
the reasonable opinion of the Indemnified Parties, the Indemnified Parties
shall undertake the defense of (with counsel selected by the Indemnified
Parties), and shall have the right to compromise or settle (exercising
reasonable business judgment), such claim, liability or expense with the
consent of the Stockholders, which shall not be unreasonably withheld. The
Stockholders will pay any and all amounts owed to the Indemnified Parties
under this Agreement upon a final judgment or settlement or an earlier
agreement between the Stockholders and the Indemnified Parties.
3. LOCK-UP AGREEMENT. Except pursuant to a registered offering
pursuant to Section 4 hereof, Each Stockholder agrees that Stockholder will
not, without the prior written consent of Parent, offer, sell, contract to
sell, pledge or otherwise dispose of, or enter into any transaction which is
designed to, or might reasonably be expected to, result in the disposition
(whether by actual disposition or effective economic disposition due to cash
settlement or otherwise), directly or indirectly, or establish or increase a
put equivalent position or liquidate or decrease a call equivalent position
within the meaning of Section 16 of the Securities Exchange Act of 1934, as
amended, with respect to, any shares of Parent Common Stock to be received by
Stockholder pursuant to the Merger until the first anniversary of the Closing
Date.
4. PIGGYBACK REGISTRATION. If at any time after the first
anniversary of the Closing Date Parent proposes to register any of its common
stock or preferred stock ("Other Securities") under the Securities Act (other
than a registration on Form S-4 or S-8 or any successor form thereto),
whether or not for sale for its own account, in a manner which would permit
registration of Registrable Securities (as defined below) for sale for cash
to the public under the Securities Act, it will each such time give prompt
written notice to each Stockholder which is the record holder of Registrable
Securities (a "Holder") of its intention to do so at least 10 business days
prior to the anticipated filing date of the registration statement relating
to such registration. Such notice shall offer each such Holder the
opportunity to include in such registration statement such number of
Registrable Securities as each such Holder may request. Upon the written
request of any such Holder made within five business days after the receipt
of Parent's notice (which request shall specify the number of Registrable
Securities intended to be disposed of), Parent shall effect, in connection
with the registration of the Other Securities, the registration under the
Securities Act of all Registrable Securities which Parent has been so
requested to register; provided that:
(a) if at any time after giving written notice of its intention
to register any securities and prior to the effective date of such
registration, Parent shall determine for any reason not to register or to
delay registration of such securities, Parent may, at its election, give
written notice of such determination to the Holders who requested inclusion
and, thereupon, (A) in the case of a determination not to register, Parent
shall be relieved of its obligation to register any Registrable Securities in
connection with such registration and (B) in the case of a determination to
delay such registration, Parent shall be permitted to delay registration of
any Registrable Securities requested to be included in such registration for
the same period as the delay in registering such Other Securities;
(b) (i) if the registration referred to in the first sentence
of this Section 4 is to be an underwritten primary registration on behalf of
Parent, and the managing underwriter advises Parent in writing (with a copy
to the Holders who requested registration) that, in such firm's opinion, such
offering would be materially and adversely affected by the inclusion therein
of the Registrable Securities requested to be included therein, Parent shall
include in such registration: (1) all securities Parent proposes to sell for
its own account ("the Parent Securities") and (2) up to the full number of
Registrable Securities in excess of the number and dollar amount of the
Parent Securities which, in the good faith opinion of such managing
underwriter, can be a sold without materially and adversely affecting such
offering of the Parent Securities (and, if less than the full number of such
Registrable Securities, allocated pro rata among the Holders of such
Registrable Securities on the basis of the number of securities requested to
be included therein by each such Holder), and (ii) if the registration
referred to in the first sentence of this Section 4 is to be an underwritten
secondary registration on behalf of holders of securities (other than
Registrable Securities) of Parent (the "Other Holders"), and the managing
underwriter advises Parent in writing (with a copy to the Holders who
requested registration) that in its good faith opinion such offering would be
materially and adversely affected by the inclusion therein of the Registrable
Securities requested to be included therein, Parent shall include in such
registration the amount of securities (including Registrable Securities) that
such managing underwriter advises, allocated pro rata among the Other Holders
and the Holders on the basis of the number of securities (including
Registrable Securities) requested to be included therein by each Other Holder
and each Holder;
(c) Parent shall not be required to affect any registration of
Registrable Securities under this Section 4 incidental to the registration of
any of its securities in connection with mergers, acquisitions, reincorporation,
dividend reinvestment plans or stock option or other executive or employee
benefit or compensation plans; and
(d) Any Holder desiring to sell Registrable Securities must
execute an underwriting or similar agreement and complete and execute all
reasonable questionnaires, powers of attorney, indemnities, lock-up letters
and other documents reasonably required under the underwriting arrangement.
For the purposes of this Section 4 and Section 5, "Registrable
Securities" means the shares of Parent Common Stock held by the Stockholders
immediately after the Closing under the Merger Agreement, any stock or other
securities into which or for which such shares of Parent Common Stock may
thereafter be changed, converted or exchanged, and any other securities
issued to the Holders of such shares of Parent Common Stock (or such shares
into which or for which such shares are so changed, converted or exchanged)
upon any reclassification, share combination, share subdivision, share
dividend, merger, consolidation or similar transaction, provided that any
such securities shall cease to be Registrable Securities if (i) a
registration statement with respect to the sale of such securities shall have
become effective under the Securities Act and such securities shall have been
disposed of in accordance with the plan of distribution set forth in such
registration statement, (ii) such securities shall have been transferred
pursuant to Rule 144, or (iii) such securities are held by a Holder other
than a Stockholder and Parent has furnished to such Holder an opinion of
counsel, which opinion shall be reasonably satisfactory to such Holder, to
the effect that all of such securities are permitted to be distributed by
such Holder in one transaction pursuant to Rule 144(k).
5. DEMAND REGISTRATION. (a) At any time after the first anniversary
of the Closing under the Merger Agreement, upon written notice from a Holder
requesting that Parent effect the registration under the Securities Act of
any or all of the Registrable Securities held by such Holder, which notice
shall specify the number of Registrable Securities for which registration is
requested and the intended method or methods of disposition of such
Registrable Securities, Parent shall have the right, exercisable within 10
days by written notice to such Holder, to purchase all of the Registrable
Securities requested to be registered by such Holder at a cash price per
share equal to the arithmetic mean of each of the closing sales prices per
share of Parent Common Stock on the Nasdaq National Market for each of the 15
consecutive trading days ending on the fifth trading day immediately
preceding the date of the written notice from the Holder under this Section
5(a). The closing of such purchase shall take place no later than 15 days
after the date of the written notice from Parent under this Section 5(a). If
Parent gives written notice under this Section 5(a), the written notice from
the Holder under this Section 5(a) shall not be deemed a request for
registration for purposes of Section 5(b).
(b) If Parent does not exercise its right to purchase under
Section 5(a) above, Parent shall, within 15 days after receipt of the
Holder's request, serve written notice (the "Request Notice") of such
registration request to all other Holders of Registrable Securities. The
Request Notice will state that Parent will include in such registration all
Registrable Securities, subject to the limitations of this Section 5(b) and
to compliance with the other provisions of this Agreement, as to which Parent
receives written requests for inclusion within 15 days after the date of the
Request Notice. As promptly as practicable after such 15 day period, Parent
shall use its best efforts to effect the registration under the Securities
Act of the Registrable Securities to be included for disposition in
accordance with the intended method or methods of disposition stated in the
Holder's request, provided that:
(i) if prior to receipt of a registration request
pursuant to this Section 5(b), Parent had commenced a financing plan
through a formal "all hands" meeting with outside advisors, including
an underwriter if such financing plan is an underwritten offering, and,
in the good-faith judgment of Parent's underwriter, confirmed to Parent
in writing (with a copy to the Holders requesting registration), a
registration by the requesting Holders at the time and on the terms
requested would materially and adversely affect such financing plan of
Parent (a "Transaction Blackout"), Parent shall give written notice of
such events to the Holders requesting registration and shall not be
required to serve the Request Notice and effect a registration pursuant
to this Section 4(b) until the earliest of (A) Parent's abandonment of
such offering, (B) 90 days after the termination of such offering, (C)
the termination of any "hold back" period obtained by the underwriter(s)
of such offering from any person, including Parent, in connection
therewith or (D) 110 days after receipt by the Holder requesting
registration of the written notice of Transaction Blackout from Parent;
(ii) if, at the time of receipt of a registration request
or while a registration request is pending pursuant to this Section
5(b), the Company has determined in good faith that (A) the filing of a
registration statement would jeopardize or delay a contemplated
material transaction other than a financing plan involving Parent or
would require the disclosure of material information that Parent has a
bona fide business purpose for preserving as confidential, or (B)
Parent then is unable to comply with SEC requirements applicable to the
requested registration, Parent shall not be required to effect a
registration pursuant to this Section 5(b) until the earlier of (1) the
date upon which such contemplated transaction is completed or abandoned
or such material information is otherwise disclosed to the public or
ceases to be material or Parent is able to so comply with applicable
SEC requirements, as the case may be, and (2) 90 days after Parent
makes such good-faith determination, provided that Parent shall not be
permitted to delay a requested registration in reliance on this clause
(ii) more than once in any 180-day period; and
(iii) Parent shall be obligated to file only one registration
statement pursuant to this Section 5(b) and shall not be obligated to
file a registration statement relating to a registration request pursuant
to this Section 5(b) if such registration request (including Registrable
Securities requested to be included in response to a Request Notice) is
for a number of Registrable Securities which have an aggregate market
value less than $10 million.
(c) Notwithstanding any other provision of this Agreement to
the contrary, a registration requested pursuant to this Section 5 shall
not be deemed to have been effected (and, therefore, not requested for
purposes of Section 5(b)), (A) until the registration statement with
respect thereto has become effective under the Securities Act (unless
the registration statement fails to become effective because the Holders
request that the registration be withdrawn for a reason other than
contemplated in clause (B)); (B) if it is withdrawn based upon material
adverse information relating to Parent that is different from the
information known to the Holder requesting registration at the time of
the Holder's request for registration; or (C) if after it has become
effective such registration is interfered with by any stop order,
injunction or other order or requirement of the SEC or other governmental
agency or court for any reason other than a misrepresentation or an
omission by a Holder whose Registrable Securities are the subject of such
registration statement.
(d) If the Registrable Securities are to be sold in an
underwritten offering, the underwriter or underwriters and manager or
managers that will administer the offering will be selected by Parent,
and the Holders who desire to sell Registrable Securities must execute
an underwriting or similar agreement and complete and execute all
reasonable questionnaires, powers of attorneys, indemnities, lock-up
letters and other documents reasonably required under the underwriting
arrangement.
6. OBLIGATIONS OF PARENT. In the case of each offering of Registrable
Securities made pursuant to Section 4 or 5 of this Agreement, Parent agrees to
(i) prepare and file with the Securities and Exchange Commission (the "SEC") on
one or more registration statements in accordance with Section 4 or 5, as
applicable with respect to the shares of Registrable Securities, and shall use
commercially reasonable efforts to cause such registration statement to become
effective; (ii) except as provided herein, keep such registration statement
effective until the earlier of the sale of all of the shares of Registrable
Securities so registered or 90 days after the effectiveness of such registration
statement; (iii) promptly prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to comply with the provisions of the Securities
Act with respect to the sale or other disposition of all securities proposed to
be registered in such registration statement in order to keep such registration
statement effective until the earlier of the sale of all of the shares of
Registrable Securities so registered or 90 days after the effectiveness of such
registration statement; (iv) furnish to the Holders without charge such number
of copies of such registration statement, each amendment and supplement thereto,
and any prospectus (including any preliminary prospectus and any amended or
supplemented prospectus) in conformity with the requirements of the Securities
Act, and such other documents as the Holders may reasonably request in order to
effect the offering and sale of the shares of the Registrable Securities to be
offered and sold, but only while Parent shall be required under the provisions
hereof to cause the registration statement to remain current; (v) use its
commercially reasonable efforts to register or qualify the shares of the
Registrable Securities covered by such registration statement under the
securities or blue sky laws of such jurisdictions as the Holders shall
reasonably request (provided that Parent shall not be required in connection
therewith or as a condition thereto to qualify to do business or to file a
general consent to service of process in any such jurisdiction where it has not
been qualified), keep such registration or qualification in effect for as long
as such registration statement remains in effect, and do any and all other acts
or things which may be necessary or advisable to enable the Holders to
consummate the public sale or other disposition of the Registrable Securities
in such jurisdictions; (vi) cause all such Registrable Securities to be listed
on each securities exchange on which similar securities issued by Parent are
then listed, and enter into such customary agreements as may be required in
furtherance thereof, including, without limitation, listing applications and
indemnification agreements in customary
form; (vii) notify the Holders upon the happening of any event as a result of
which, or the discovery that, the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact
or omits to state a material fact required to be stated therein or necessary
to make the statements therein not misleading in light of the circumstances
then existing; (viii) so long as the registration statement remains
effective, promptly prepare, file and furnish to the Holders a reasonable
number of copies of a supplement to or an amendment of such prospectus as may
be necessary so that, as thereafter delivered to the purchasers of the
Registrable Securities, such prospectus shall not include an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in the
light of the circumstances then existing; (ix) notify the Holders, promptly
after it shall receive notice thereof, of the date and time the registration
statement and each post-effective amendment thereto has become effective or a
supplement to any prospectus forming a part of such registration statement
has been filed; (x) notify the Holders promptly of any request by the SEC for
the amending or supplementing of such registration statement or prospectus or
for additional information; and (xi) advise the Holders, promptly after it
shall receive notice or obtain knowledge thereof, of the issuance of any stop
order by the SEC suspending the effectiveness of the registration statement
or the issuance by any state securities commission or other regulatory
authority of any order suspending the qualification or exemption from
qualification of any of the Registrable Securities under state securities or
"blue sky" laws, or the initiation or threatening of any proceeding for that
purpose, and promptly use its commercially reasonable efforts to prevent the
issuance of any stop order or other order or to obtain its withdrawal if such
stop order should be issued.
7. EXPENSES. In the case of each offering of Registrable Securities
made pursuant to Section 4 or 5 of this Agreement, Parent agrees to pay the
expenses incurred by Parent in connection with any registration of
Registrable Securities pursuant to this Agreement, including all SEC and blue
sky registration and filing fees, printing expenses, transfer agents' and
registrars' fees, the fees and disbursements of Parent's counsel and
independent accountants and the reasonable fees and disbursements of one
counsel to the Holders. The Holders shall be responsible for all commissions
and transfer taxes.
8. INDEMNIFICATION AND CONTRIBUTION.
(a) In the case of each offering of Registrable Securities made
pursuant to Section 4 or 5 of this Agreement, Parent agrees to indemnify and
hold harmless each Holder, its officers and directors, each underwriter of
Registrable Securities so offered and each person, if any, who controls any
of the foregoing persons within the meaning of the Securities Act, from and
against any and all claims, liabilities, losses, damages, expenses and
judgments, joint or several, to which they or any of them may become subject,
under the Securities Act or otherwise, including any amount paid in
settlement of any litigation commenced or threatened, and shall promptly
reimburse them, as and when incurred, for any reasonable legal or other
expenses incurred by them in connection with investigating any claims and
defending any actions, insofar as such losses, claims, damages, liabilities
or actions shall arise out of, or shall be based upon, any untrue statement
or alleged untrue statement of a material fact contained in the registration
statement (or in any preliminary or final prospectus included therein) or any
amendment thereof or supplement thereto, or in any document incorporated by
reference therein, or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that Parent shall not
be liable to a particular Holder in any such case to the extent that any such
loss, claim, damage, liability or action arises out of, or is based upon, any
untrue statement or alleged untrue statement, or any omission, if such
statement or omission shall have been made in reliance upon and in conformity
with information relating to such Holder furnished to Parent in writing by or
on behalf of such Holder specifically for use in the preparation of the
registration statement (or in any preliminary or final prospectus included
therein) or any amendment thereof or supplement thereto. Such indemnity
shall remain in full force and effect regardless of any investigation made by
or on behalf of a Holder and shall survive the transfer of such securities.
The foregoing indemnity agreement is in addition to any liability which
Parent may otherwise have to each Holder, its officers and directors,
underwriters of the Registrable Securities or any controlling person of the
foregoing; provided that, as to any underwriter or person controlling any
underwriter, this indemnity does not apply to any loss, claim, damage,
liability or action arising out of or based upon any untrue statement or
alleged untrue statement or omission or alleged omission in any preliminary
prospectus if a copy of a prospectus was required to be sent or given and was
not sent or given by or on behalf of an underwriter to such person asserting
such loss, claim, damage, liability or action at or prior to the written
confirmation of the sale of the Registrable Securities as required by the
Securities Act, such untrue statement or omission had been corrected in such
prospectus, and copies of the corrected prospectus were provided to such
underwriter prior to the giving or sending of such written confirmation.
(b) In the case of each offering made pursuant to this
Agreement, each Holder of Registrable Securities included in such offering,
by exercising its registration rights hereunder, agrees to indemnify and hold
harmless Parent, its officers and directors and each person, if any, who
controls any of the foregoing within the meaning of the Securities Act (and
if requested by the underwriters, each underwriter who participates in the
offering and each person, if any, who controls any such underwriter within
the meaning of the Securities Act), from and against any and all claims,
liabilities, losses, damages, expenses and judgments, joint or several, to
which they or any of them may become subject under the Securities Act or
otherwise, including any amount paid in settlement of any litigation
commenced or threatened, and shall promptly reimburse them, as and when
incurred, for any legal or other expenses incurred by them in connection with
investigating any claims and defending any actions, insofar as any such
losses, claims, damages, liabilities or actions shall arise out of, or shall
be based upon, any untrue statement or alleged untrue statement of a material
fact contained in the registration statement (or in any preliminary or final
prospectus included therein) or any amendment thereof or supplement thereto,
or any omission or alleged omission to state therein a material fact relating
to the Holder required to be stated therein or necessary to make the
statements therein not misleading, but in each case only to the extent that
such untrue statement of a material fact is contained in, or such material
fact relating to the Holder is omitted from, information relating to such
Holder furnished in writing to Parent by or on behalf of such Holder
specifically for use in the preparation of such registration statement (or in
any preliminary or final prospectus included therein) or any amendment or
supplement thereto. The foregoing indemnity is in addition to any liability
which such Holder may otherwise have to Parent, or any of its directors,
officers or controlling persons; provided, however, that, as to any
underwriter or any person controlling any underwriter, this indemnity does
not apply to any loss, claim, damage, liability or action arising out of or
based upon any untrue statement or alleged untrue statement or omission or
alleged omission in any preliminary prospectus if a copy of a prospectus was
required to be sent or given and was not sent or given by or on behalf of an
underwriter to such person asserting such loss, claim damage, liability or
action at or prior to the written confirmation of the sale of the Registrable
Securities as required by the Securities Act, such untrue statement or
omission had been corrected in such prospectus, and copies of the corrected
prospectus were provided to such underwriter prior to giving or mailing of
such written confirmation; and provided, further, that in no event shall any
such Holder be liable for any amount in excess of the net proceeds received
from the sale of the Registrable Securities by such Holder in the subject
offering.
(c) Each party indemnified under paragraph (a) or (b) of this
Section 8 shall, promptly after receipt of notice of any claim or the
commencement of any action against such indemnified party in respect of which
indemnity may be sought, notify the indemnifying party in writing of the
claim or the commencement thereof; provided that the failure to notify the
indemnifying party shall not relieve it from any liability which it may have
to an indemnified party on account of the indemnity agreement contained in
paragraph (a) or (b) of this Section 8, except to the extent the indemnifying
party was prejudiced by such failure, and in no event shall relieve the
indemnifying party from any other liability which it may have to such
indemnified party. If any such claim or action shall be brought against an
indemnified party, and it shall notify the indemnifying party thereof, the
indemnifying party shall be entitled to participate therein, and, to the
extent that it wishes, jointly with any other similarly notified indemnifying
party, to assume the defense thereof with counsel reasonably satisfactory to
the indemnified party. After notice from the indemnifying party to the
indemnified party of its election to assume the defense of such claim or
action, the indemnifying party shall not be liable to the indemnified party
under this Section 8 for any legal or other expenses subsequently incurred by
the indemnified party in connection with the defense thereof other than
reasonable costs of investigation; provided that each indemnified party, its
officers and directors, if any, and each person, if any, who controls such
indemnified party within the meaning of the Securities Act, shall have the
right to employ separate counsel reasonably approved by the indemnifying
party to represent them if the named parties to any action (including any
impleaded parties) include both such indemnified party and an indemnifying
party, and such indemnified party shall have been advised by counsel either
(i) that there may be one or more legal defenses available to such
indemnified party that are different from or additional to those available to
such indemnifying party or (ii) a conflict may exist between such indemnified
party and such indemnifying party, and in that event the fees and expenses of
one such separate counsel for all such indemnified parties shall be paid by
the indemnifying party. An indemnified party will not enter into any
settlement agreement which is not approved by the indemnifying party, such
approval not to be unreasonably withheld. The indemnifying party may not
agree to any settlement of any such claim or action which provides for any
remedy or relief other than monetary damages for which the indemnifying party
shall be responsible hereunder, without the prior written consent of the
indemnified party, which consent shall not be unreasonably withheld. In any
action hereunder as to which the indemnifying party has assumed the defense
thereof with counsel reasonably satisfactory to the indemnified party, the
indemnified party shall continue to be entitled to participate in the defense
thereof, with counsel of its own choice, but, except as set forth above, the
indemnifying party shall not be obligated hereunder to reimburse the
indemnified party for the costs thereof. In all instances, the indemnified
party shall cooperate fully with the indemnifying party or its counsel in the
defense of each claim or action.
(d) If the indemnification provided for in this Section 8 shall
for any reason be unavailable to an indemnified party in respect of any loss,
claim, damage or liability, or any action in respect thereof, referred to
herein, then each indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by such
indemnified party as a result of such loss, claim, damage or liability, or
action in respect thereof, in such proportion as shall be appropriate to
reflect the relative fault of the indemnifying party on the one hand and the
indemnified party on the other with respect to the statements or omissions
which resulted in such loss, claim, damage or liability, or action in respect
thereof, as well as any other relevant equitable considerations. The
relative fault shall be determined by reference to whether the untrue or
alleged untrue statement of a material fact or omission or alleged omission
to state a material fact relates to information supplied by the indemnifying
party on the one hand or the indemnified party on the other, the intent of
the parties and their relative knowledge, access to information and
opportunity to correct or prevent such statement or omission, but not by
reference to any indemnified party's stock ownership in Parent. In no event,
however, shall a Holder be required to contribute in excess of the amount of
the net proceeds received by such Holder in connection with the sale of
Registrable Securities in the offering which is the subject of such loss,
claim, damage or liability. The amount paid or payable by an indemnified
party as a result of the loss, claim, damage or liability, or action in
respect thereof, referred to above in this Section shall be deemed to
include, for purposes of this paragraph, any legal or other expenses
reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claims. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
9. RULE 144. Until such time as each Holder may sell in compliance
with the Securities Act all Registrable Securities held by such Holder in
compliance with Rule 144(k) (or its then equivalent), Parent shall take such
measures and file such information, documents and reports as shall be
required by the SEC as a condition to the applicability of Rule 144.
10. VOTING. Each Stockholder hereby approves the Merger Agreement
and the Merger, as defined in the Merger Agreement. Provided that the
Closing under the Merger Agreement has occurred, each Stockholder hereby
agrees, until the first anniversary of the Closing Date, (i) to vote and to
grant or withhold a written consent with respect to (or, if and to the extent
that a Stockholder is the beneficial but not the record owner, agrees to
cause to be voted and to cause a written consent to be granted or withheld
with respect to) all shares of Parent Common Stock that such Stockholder
beneficially owns (whether acquired pursuant to the Merger or otherwise) as
recommended by the Board of Directors of Parent; and (ii) not to propose any
matter to the Board of Directors of Parent or its stockholders that requires
or contemplates the vote or consent of the stockholders of Parent or any
nominees for election as directors of Parent without, in the case of clause
(ii), the prior approval of the Board of Directors of Parent, which approval
shall be in the sole and absolute discretion of such Board of Directors.
11. STOCKHOLDERS' AGENT. Stockholders hereby irrevocably appoint
Xxxxx Xxxxxx as his, her or its agent and as the agent for purposes of all
matters relating to this Agreement, the Merger Agreement and the Escrow
Agreement (the "Stockholders' Agent"), and Xxxxx Xxxxxx hereby accepts his
appointment as the Stockholders' Agent. Parent shall be entitled to deal
exclusively with the Stockholders' Agent on all matters relating to this
Agreement and the Escrow Agreement, and shall be entitled to rely
conclusively (without further evidence of any kind whatsoever) on any
document executed or purported to be executed on behalf of Stockholders by
the Stockholders' Agent, and on any other action taken or purported to be
taken on behalf of Stockholders by the Stockholders' Agent, as fully binding
upon Stockholders. If the Stockholders' Agent shall die, become disabled or
otherwise be unable to fulfill his responsibilities as agent of the
Stockholders, then the former stockholders of Company holding a majority of
the shares of Parent Common Stock issued pursuant to the Merger and the Stock
Purchase shall, within ten days after such death or disability, appoint a
successor agent and, promptly thereafter, shall notify Parent of the identity
of such successor. Any such successor shall become the "Stockholders' Agent"
in accordance with this Section 11. The Stockholders' Agent shall be
reimbursed by the Stockholders for his reasonable out-of-pocket expenses
incurred in connection with serving as the Stockholders' Agent under this
Agreement and the Escrow Agreement. Stockholders' Agent shall not be liable
for any act done or omitted hereunder as Stockholders' Agent while acting in
good faith and in the exercise of reasonable judgment. The Stockholders
shall severally indemnify Stockholders' Agent and hold Stockholders' Agent
harmless against any loss, liability or expense incurred without gross
negligence, bad faith or willful misconduct on the part of Stockholders'
Agent and arising out of or in connection with the acceptance or
administration of Stockholders' Agent's duties hereunder and under the Escrow
Agreement, including the reasonable fees and expenses of any legal counsel
retained by Stockholders' Agent.
12. MISCELLANEOUS.
(A) SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, void or unenforceable, then the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated.
(B) BINDING EFFECT AND ASSIGNMENT. This Agreement and all of
the provisions hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns, but,
except as otherwise specifically provided herein, neither this Agreement nor
any of the rights, interests or obligations of the parties hereto may be
assigned by either of the parties without prior written consent of the other.
(C) AMENDMENTS AND MODIFICATION. This Agreement may not be
modified, amended, altered or supplemented except upon the execution and
delivery of a written agreement executed by the parties hereto.
(D) NO INCONSISTENT AGREEMENTS. With respect to the provisions
of Sections 4 through 9 of this Agreement, Parent has not entered into, nor
will Parent enter into, any agreement that is inconsistent with the rights
granted to the Holders of Registrable Securities in this Agreement or
otherwise conflicts with the provisions hereof.
(E) NOTICES. All notices and other communications pursuant to
this Agreement shall be in writing and shall be deemed given on the date of
delivery if delivered personally or by a commercial delivery service, or sent
via telecopy (receipt confirmed) to the parties at the following addresses or
telecopy numbers (or such other address or telecopy numbers for a party as
shall be specified by like notice):
If to Parent: Digital Insight Corporation
00000 Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: President
Facsimile: (000) 000-0000
With a copy (not constituting notice) to:
O'Melveny & Xxxxx LLP
000 X. Xxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxx, Esq.
Facsimile: (000) 000-0000
If to Stockholder: Xxxxx Xxxxxx
0000 Xxxxxxxxxx Xxxxxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000-0000
With a copy (not constituting notice) to:
Xxxxxx & Xxxxxxx, Attorneys at Law, PC
000 Xxxxxxxx Xxxxxx, #0000
Xxxxxxxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxx X. Strain, Esq.
Facsimile: (000) 000-0000
(F) GOVERNING LAW. This Agreement shall be governed by the
laws of the State of Delaware, without reference to rules of conflicts of law.
(G) ENTIRE AGREEMENT. This Agreement contains the entire
understanding of the parties in respect of the subject matter hereof, and
supersedes all prior negotiations and understandings between the parties with
respect to such subject matter.
(H) EFFECT OF HEADINGS. The section headings are for
convenience only and shall not affect the construction or interpretation of
this Agreement.
(I) TERMS. Capitalized terms not otherwise defined herein shall
have the meaning given such terms in the Merger Agreement.
(J) COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
[The remainder of this page has been intentionally left blank]
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed on the day and year first above written.
DIGITAL INSIGHT CORPORATION STOCKHOLDERS
By:
-------------------------- ------------------------------
Signature
Name:
-------------------------- ------------------------------
Title:
------------------------
[Signature page to Stockholders Agreement]
EXHIBIT B
FORM OF ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement") is entered into as of _______,
2002, by and between Digital Insight Corporation, a Delaware corporation
("Parent"), Xxxxx Xxxxxx (the "Stockholders' Agent"), as agent for the former
stockholders of Virtual Financial Services, Inc., an Indiana corporation
("Company"), and _______________, a _______________, as Escrow Agent (the
"Escrow Agent").
W I T N E S S E T H
WHEREAS, Parent, ViFi LLC and Company have entered into an Agreement
and Plan of Merger, dated as of January 3, 2002 (the "Merger Agreement"),
pursuant to which Company will be merged with and into ViFi LLC and all the
capital stock of Company will be converted into cash, promissory notes and
Common Stock, $0.001 par value per share, of Parent (the "Parent Common
Stock"); and
WHEREAS, the Merger Agreement requires that 236,111 shares of Parent
Common Stock issuable pursuant to the Merger Agreement be deposited in escrow
at the Closing (as defined in the Merger Agreement) (such shares of Parent
Common Stock being referred to as the "Shares");
WHEREAS, Parent desires that the Escrow Agent hold in escrow the Shares
in accordance with the terms and conditions hereinafter set forth, and the
Escrow Agent has agreed to act as Escrow Agent hereunder, in accordance with
the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements hereinafter set forth, the parties hereto, intending
to be bound legally, agree as follows:
Section 1. APPOINTMENT OF ESCROW AGENT. Parent hereby appoints and
designates the Escrow Agent, and the Escrow Agent hereby agrees, to receive
the Shares and to hold and deliver the Shares as set forth herein.
Section 2. ESCROW DEPOSIT.
2.1 DEPOSIT. There is hereby established a separate escrow account
with the Escrow Agent in which Parent, simultaneously with the execution of
this Escrow Agreement, is depositing with the Escrow Agent the Shares, to be
held and disbursed by the Escrow Agent as hereinafter set forth.
2.2 RECEIPT. The Escrow Agent hereby acknowledges receipt of and
accepts the Shares in escrow and agrees to hold and keep same in accordance
with the terms and conditions hereof and for the uses and purposes stated
herein.
2.3 ESCROW PERIODS. The Escrow with respect to the Indemnification
Shares shall be in existence immediately following the Effective Time, as
defined in the Merger Agreement, and shall terminate at 5:00 p.m. (Pacific
Time) on _______________ 200__ (the "Escrow Period"); provided, however, that
the Escrow Period shall not terminate with respect to any portion of the
Shares, which in the reasonable judgment of Parent is necessary to satisfy
any then pending and unsatisfied claims specified in any Officer's Certificate
(as defined below) delivered to the Escrow Agent and Stockholders' Agent prior
to the termination of the Escrow Period with respect to facts and circumstances
existing prior to the termination of such Escrow Period. As soon as all such
claims have been resolved and the Escrow Agent has received notice thereof from
Parent, the Escrow Agent shall deliver to the persons listed on Annex I to this
Agreement (the "Company Stockholders") that number of Shares determined by
multiplying the total number of Shares then held by Escrow Agent by the
percentage relating to Shares set forth next to the name of each Company
Stockholder on Annex I. Unless Parent has delivered an Officer's Certificate as
provided above, if prior to the end of the Escrow Period Stockholders' Agent
provides the Escrow Agent and Parent a written notice that Parent is in default
under the certain Promissory Note dated ___, 2002, by Parent to _________ and
within ten business days after receipt of such notice by Parent, Parent has not
provided written notice to Escrow Agent and Stockholders' Agent asserting that
it is not in default under such Promissory Note, Escrow Agent shall deliver to
the Company Stockholders that number of Shares determined by multiplying the
total number of shares then held by Escrow Agent by the percentage relating
to Shares set forth next to the name of each Company Stockholder on Annex I.
2.4 OWNERSHIP. The Company Stockholders shall have all indicia of
ownership of the Shares while they are held in the escrow account, including,
without limitation, the right to vote the Shares (subject to Section 4.1
hereof) and the obligations to pay all taxes, assessments, and charges with
respect thereto, but excluding the right to sell, transfer, pledge or
hypothecate or otherwise dispose of any Shares; provided, that any
distribution on or with respect to the Shares and any other shares or
securities into which such Shares may be changed or for which they may be
exchanged pursuant to corporate action of Parent affecting holders of Parent
Common Stock generally shall be delivered to and held by Escrow Agent in the
escrow account and shall be subject to the provisions herein. Except as
contemplated hereunder, no Shares or any beneficial interest therein may be
pledged, sold, assigned or transferred, including by operation of law, other
than by will or by the laws of descent or distribution in the event of the
death of a Company Stockholder, by a Company Stockholder or be taken or
reached by any legal or equitable process in satisfaction of any debt or
other liability of such Company Stockholder. Parent shall treat the Shares
as outstanding for accounting purposes. In addition, within seven (7) days
after the Closing, Parent and the Company Stockholders shall provide Escrow
Agent with executed W-9 forms for tax reporting purposes.
2.5 DISTRIBUTIONS. Any cash dividends, dividends payable in
securities or other distributions of any kind (but excluding any shares of
Parent Common Stock received upon a stock split or stock dividend) shall be
promptly distributed by the Escrow Agent to, and for tax reporting purposes
shall be allocable to, the beneficial holder of the Shares to which such
distribution relates. Any shares of Parent Common Stock received by the
Escrow Agent upon a stock split or stock dividend made in respect to the
Shares shall be added to the escrow account and become a part thereof.
Section 3. PROCEDURES FOR DISBURSEMENT. The Escrow Agent shall hold
the Shares for the exclusive benefit of Parent and the Company Stockholders,
as provided in this Escrow Agreement, and shall disburse the Shares only in
accordance with the following terms and conditions:
(a) Upon receipt by the Escrow Agent at any time on or before
the last day of the Indemnification Escrow Period of an Officer's Certificate
from Parent, the Escrow Agent shall, subject to the provision of Section 3(b)
hereof, deliver to Parent the Shares having the value specified in the
Officer's Certificate. "Officer's Certificate" shall mean a certificate
signed by any officer of Parent: (A) stating that Parent has incurred
"Damages," as defined in the Stockholders Agreement attached to the Merger
Agreement, for which it is entitled to indemnity (hereinafter individually, a
"Loss" and collectively, "Losses"), (B) specifying in reasonable detail the
individual items of Losses included in the amount so stated, and (C) the
number of Shares to be delivered to Parent (based on the closing price of a
share of Parent Common Stock on the trading day immediately preceding the
date of submission of the Officer's Certificate, as reported on the Nasdaq
National Market).
(b) At the time of delivery of any Officer's Certificate to the
Escrow Agent, a duplicate copy of such certificate shall be delivered to the
Stockholders' Agent and for a period of thirty (30) days after such delivery,
the Escrow Agent shall make no delivery to Parent of any portion of the
Shares. After the expiration of such thirty (30) day period, unless Parent
has notified the Escrow Agent in writing that the Stockholders have paid the
Losses in cash, the Escrow Agent shall make delivery of the Shares requested
by Parent in its Officer's Certificate; provided, however, that no such
delivery may be made if the Stockholders' Agent shall object in a written
statement to the claim made in the Officer's Certificate, and such statement
shall contain specific bases upon which such objection is being made and
shall have been delivered to the Escrow Agent and Parent prior to the
expiration of such thirty (30) day period. If the Stockholders' Agent only
objects in part to the claim made in the Officer's Certificate, any Losses
not objected to will be paid by the Escrow Agent to Parent.
(c) If by the termination of the Escrow Period, the Escrow
Agent has not received any written instructions or other documents specified
in Section 3 directing the release of the Shares, the Escrow Agent shall
deliver the Shares to the Company Stockholders, whereupon the Escrow Agent
shall be relieved of any further obligation pursuant hereto.
(d) Upon disbursement of the Shares in accordance with this
Section 3, regardless of whether prior to the expiration of the Escrow
Period, the Escrow Agent shall be discharged from all obligations under this
Escrow Agreement and shall have no further duties or responsibilities in
connection herewith.
Section 4. ESCROW AGENT.
4.1 DUTIES. The Escrow Agent undertakes only to accept, hold and
disburse the Shares in accordance with the provisions of this Escrow
Agreement. The Escrow Agent shall not be under any duty to give the Shares
any greater degree of care than it gives its own similar property. With
respect to any matter on which the holders of Parent Common Stock are
entitled to vote, the Escrow Agent shall vote the Shares that it is entitled
to vote as directed in writing by Stockholders' Agent.
4.2 FEES AND EXPENSES. Parent shall pay all of the Escrow Agent's
standard charges for professional services and its other charges in
connection with the Escrow Agent's service under this Agreement.
4.3 INDEMNIFICATION. Except with respect to claims based upon gross
negligence or willful misconduct that are successfully asserted against the
Escrow Agent, Parent shall indemnify and hold harmless the Escrow Agent (and
any successor to the Escrow Agent) from and against any and all costs,
losses, claims, damages, liabilities and expenses (including reasonable costs
of investigation, court costs and attorney's fees and related other charges)
which may be imposed upon or incurred by the Escrow Agent in connection with
its service as Escrow Agent hereunder, including any litigation arising from
this Escrow Agreement or involving the subject matter hereof.
4.4 AMBIGUITY OR DISPUTE. If the Escrow Agent is uncertain as to its
duties and rights hereunder, or if any objections are received with respect
to actions proposed to be taken by the Escrow Agent under Section 3, or in
the event of any other dispute between or conflicting claims by or among
Parent or any Company Stockholders with respect to the Shares, the Escrow
Agent shall be entitled, at its sole option, to refuse to comply with any
demands, claims or instructions and to refrain from taking any action other
than to keep all property held by it in escrow until the Escrow Agent is
directed otherwise in joint written instructions signed by Parent and the
Stockholders' Agent or by a final, nonappealable judgment by a court of
competent jurisdiction, and the Escrow Agent is authorized to deposit the
Shares with, or commence an interpleader action in, any court of competent
jurisdiction, whereupon the Escrow Agent shall be relieved of any further
obligation pursuant hereto. The Escrow Agent shall not be or become liable
in any way for actions taken in accordance with this Section 4.4.
4.5 RESIGNATION. The Escrow Agent reserves the right to resign as
Escrow Agent at any time, provided ten day's prior written notice is given to
the other parties hereto. Parent reserves the right to remove the Escrow
Agent by written notice at any time, provided that such notice is given to
the Escrow Agent at least ten days prior to the effectiveness of such
removal. Upon the resignation or removal of the Escrow Agent, Parent and
Stockholders' Agent shall agree on a new Escrow Agent.
Section 5. LIABILITIES OF ESCROW AGENT.
5.1 LIMITATIONS ON ESCROW AGENT'S RESPONSIBILITY AND LIABILITY.
(a) The Escrow Agent does not have any interest in the Shares
but is serving as escrow holder only, having only possession thereof. The
Escrow Agent makes no representation as to the validity, value, genuineness
or sufficiency of the Shares.
(b) The Escrow Agent shall be under no duty to accept
instructions from any person other than Parent or the Stockholders' Agent,
and shall only accept such instructions to the extent and in the manner
provided in this Escrow Agreement.
(c) The Escrow Agent shall be permitted to consult with counsel
of its choice and shall not be liable for any action taken, suffered, or
omitted by it in good faith in accordance with the advice of such counsel.
(d) The Escrow Agent shall not be liable, except for its own
gross negligence or willful misconduct, and, except with respect to claims
based upon such gross negligence or willful misconduct that are successfully
asserted against the Escrow Agent, Parent shall indemnify and hold harmless
the Escrow Agent (and any successor to the Escrow Agent) as provided in
Section 4.3.
(e) The Escrow Agent shall not be liable for loss or damage
resulting from any good faith act or forbearance of the Escrow Agent, any
default, error, action or omission of any party other than the Escrow Agent,
any delay that is not caused by the Escrow Agent, the Escrow Agent's
assertion or failure to assert any cause of action or defense in any judicial
or administrative proceeding, or any loss or damage that arises after the
Shares has been disbursed in accordance with the terms of this Escrow
Agreement.
5.2 RELIANCE. The Escrow Agent shall be entitled to rely upon any
order, judgment, certification, instruction, notice or other writing
delivered to it in compliance with the provisions of this Agreement without
being required to determine the authenticity or the correctness of any fact
stated therein or the propriety or validity thereof. The Escrow Agent may
act in reliance upon any instrument comporting with the provisions of this
Agreement or signature believed by it to be genuine, and may assume that any
person purporting to give notice or receipt or advice or to make any
statement or to execute any document in connection with the provisions hereof
has been duly authorized to do so.
5.3 NO IMPLIED DUTIES; COLLATERAL AGREEMENTS. The Escrow Agent shall
not be obligated to perform any duties that are not expressly set forth in
this Escrow Agreement, and no implied covenants or obligations shall be
inferred from this Agreement against the Escrow Agent.
Section 6. TERMINATION. This Escrow Agreement shall be terminated on
the earlier of (i) the disbursement by the Escrow Agent of the Shares, or
(ii) the termination of the Escrow Period, except as provided in Section 2.3
above. This Escrow Agreement shall not be otherwise terminated. The rights
of the Escrow Agent and the obligations of Parent under Sections 4.2 and 4.3
shall survive notwithstanding termination of this Agreement or the
resignation of the Escrow Agent.
Section 7. OTHER PROVISIONS.
7.1 NOTICES. All notices, demands, requests, or other communications
which may be or are required to be given, served, or sent by any party to any
other party pursuant to this Agreement shall be in writing and shall be
deemed given on the date of delivery if delivered personally or by commercial
delivery service, or sent via telecopy (receipt confirmed) to the parties at
the following addresses or telecopy numbers (or at such other address or
telecopy numbers for a party as shall be specified by like notice):
To Parent: Digital Insight Corporation
00000 Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: President
Facsimile: (000) 000-0000
With a copy (which shall not constitute
notice) to:
O'Melveny & Xxxxx LLP
000 X. Xxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxx, Esq.
Facsimile: (000) 000-0000
To the Escrow Agent:
-------------------------
-------------------------
-------------------------
-------------------------
Attention:
-------------
Facsimile:
-------------
To the Stockholders'
Agent: Xxxxx Xxxxxx
0000 Xxxxxxxxxx Xxxxxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
With a copy (which shall not constitute notice)
to:
Xxxxxx & Xxxxxxx, Attorneys at Law, PC
000 Xxxxxxxx Xxxxxx, #0000
Xxxxxxxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxx X. Strain, Esq.
Facsimile: (000) 000-0000
7.2 BENEFIT AND ASSIGNMENT. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
successors and assigns as permitted hereunder. No person or entity other
than the parties hereto is or shall be entitled to bring any action to
enforce any provision of this Agreement against any of the parties hereto,
and the covenants and agreements set forth in this Agreement shall be solely
for the benefit of, and shall be enforceable only by, the parties hereto and
the Company Stockholders or their respective successors and assigns as
permitted hereunder. No party to this Agreement may assign this Agreement or
any rights hereunder without the prior written consent of the other parties
hereto.
7.3 ENTIRE AGREEMENT; AMENDMENT. This Agreement contains all the
terms agreed upon by the parties with respect to the escrow arrangement that
is the subject matter hereof and supersedes all prior oral or written
agreements, commitments or understandings with respect to such matters. This
Agreement may be amended only by a written instrument signed by the party
against whom enforcement of any waiver, change, modification, extension or
discharge is sought.
7.4 ADDITIONAL ACTIONS AND DOCUMENTS. Each of the parties hereto
hereby agrees to take or cause to be taken such further actions, to execute,
deliver and file or cause to be executed, delivered and filed such further
documents and instruments, and to use best efforts to obtain such consents,
as may be necessary or as may be reasonably requested in order to fully
effectuate the purposes, terms and conditions of this Agreement.
7.5 HEADINGS. The headings of the sections and subsections of this
Agreement are for purposes of reference only and do not evidence the
intentions of the parties.
7.6 SEVERABILITY. In the event that a court of competent
jurisdiction holds that a particular provision or requirement of this
Agreement is in violation of any applicable law, each such provision or
requirement shall be enforced only to the extent it is not in violation of
such law or is not otherwise unenforceable, and all other provisions and
requirements of this Agreement shall remain in full force and effect.
7.7 GOVERNING LAW. This Agreement shall be governed by, and
construed according to, the laws of Delaware (without regard to the choice of
law provisions thereof).
7.8 COUNTERPARTS. To facilitate execution, this Agreement may be
executed in as many counterparts as may be required; and it shall not be
necessary that the signatures of, or on behalf of, each party, or that the
signatures of all persons required to bind any party, appear on each
counterpart; but it shall be sufficient that the signature of, or on behalf
of, each party, or that the signatures of the persons required to bind any
party, appear on one or more of the counterparts. All counterparts shall
collectively constitute a single agreement. It shall not be necessary in
making proof of this Agreement to produce or account for more than a number
of counterparts containing the respective signatures of, or on behalf of, all
of the parties hereto.
[The remainder of this page has been intentionally left blank]
IN WITNESS WHEREOF, the parties hereto have executed this Escrow
Agreement as of the date set forth above.
DIGITAL INSIGHT CORPORATION
By:
-----------------------------
Name:
Title:
[ ],
AS ESCROW AGENT
By:
-----------------------------
Name:
Title: Authorized Officer
XXXXX XXXXXX,
AS STOCKHOLDERS' AGENT
-----------------------------------
ANNEX I
COMPANY STOCKHOLDERS
EXHIBIT C
FORM OF CERTIFICATE OF MERGER
OF
VIRTUAL FINANCIAL SERVICES, INC.
INTO
VIFI LLC
The undersigned limited liability company, organized and existing under
and by virtue of the Limited Liability Company Act of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That the name and state of organization of each of the
constituent entities of the merger are as follows:
NAME TYPE OF ENTITY STATE OF ORGANIZATION
ViFi LLC Limited Liability Company Delaware
Virtual Financial Corporation Delaware
Services, Inc.
SECOND: That an Agreement and Plan of Merger between the parties to
the merger has been approved, adopted, certified, executed and acknowledged
by each of ViFi LLC and Virtual Financial Services, Inc. in accordance with
the requirements of Section 18-209 of the Limited Liability Company Act of
the State of Delaware and Section 251 of the General Corporations Law of the
State of Delaware.
THIRD: That the name of the surviving limited liability company of the
merger is ViFi LLC.
FOURTH: That the executed Agreement and Plan of Merger is on file at
the principal place of business of ViFi LLC. The address of the principal
place of business of ViFi LLC is 00000 Xxxxxx Xxxx, Xxxxxxxxx, Xxxxxxxxxx
00000.
FIFTH: That a copy of the Agreement and Plan of Merger will be
furnished by ViFi LLC, on request and without cost, to any member of ViFi LLC
or stockholder of Virtual Financial Services, Inc.
[The remainder of this page has been intentionally left blank]
IN WITNESS WHEREOF, ViFi LLC has caused this Certificate of Merger to
be executed by its duly authorized officer this _______ day of ________.
VIFI LLC
By: Digital Insight Corporation,
its Manger
By:
-----------------------------
Name:
Title:
EXHIBIT D
FORM OF NON-COMPETE AGREEMENT
THIS NON-COMPETE AGREEMENT (this "Agreement") is made and entered into
as of _______________, 2002, among ViFi LLC, a Delaware limited liability
company ("Company"), Digital Insight Corporation ("Parent"), a Delaware
corporation and holder of all of Membership Interest in Company, and Xxxxx
Xxxxxx ("Stockholder"). Reference is made to that certain Agreement and Plan
of Merger, dated as of January 3, 2002 (the "Merger Agreement"), by and among
Parent, Virtual Financial Services, Inc. and Company, which provides for
(a) Virtual Financial Services, Inc. to be merged with and into Company, with
Company continuing as the surviving entity (the "Surviving Entity"); and
(b) all of the outstanding capital stock of Virtual Financial Services, Inc.
to be converted into cash and shares of Parent's capital stock. Capitalized
terms used in this Agreement and not defined herein shall have the meanings
ascribed to them in the Merger Agreement.
W I T N E S S E T H
WHEREAS, on the date hereof, as a result of the consummation of the
transactions described in the Merger Agreement, Parent owns all of the issued
and outstanding shares of capital stock of Surviving Corporation;
WHEREAS, Parent and Surviving Entity are engaged in the business of the
delivery of products and services to enable financial institutions to provide
retail and commercial banking, xxxx payment, online lending, target
marketing, e-commerce and account aggregation over the Internet (the
"Business");
WHEREAS, Stockholder has considerable experience and knowledge with
respect to the operation of the Business and knows or has access to
confidential information and/or trade secrets associated with the operation
of the Business that are competitively valuable;
WHEREAS, if Parent and Surviving Entity are to receive the full value
of the transactions consummated pursuant to the Merger Agreement, Parent and
Surviving Entity must have full and enforceable assurances from Stockholder
that Stockholder will preserve and protect, and will not use, the
aforementioned confidential information and trade secrets. Without such
assurances, Parent and Virtual Financial Services, Inc. would not have agreed
to the transactions described in the Merger Agreement; and
WHEREAS, if Parent and Surviving Entity are to receive the full value
of the transactions consummated pursuant to the Merger Agreement, they must
have the agreement of Stockholder that, following the Closing, Stockholder
will not compete with the Business of Parent and Surviving Entity. Without
such an agreement, Parent and Virtual Financial Services, Inc. would not have
agreed to the transactions described in the Merger Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants
set forth herein, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
Section 1. NON-COMPETITION. In view of the fact that any activity of
Stockholder in violation of the terms hereof would deprive Parent, Surviving
Entity and their affiliates (as defined below) of the benefit of the bargain
under the Merger Agreement, as a material inducement to and a condition
precedent of Parent's obligations thereunder, and to preserve the goodwill
associated with Surviving Entity's business, Stockholder hereby agrees to the
following restrictions on his activities:
Stockholder hereby agrees that during the period commencing on the date
hereof and ending 24 months after the date hereof, Stockholder will not,
directly or indirectly, anywhere in the United States, engage in any activity
which is, or participate or invest in, provide or facilitate the provision of
financing to, or assist (whether as owner, part-owner, shareholder, partner,
director, officer, trustee, employee, agent or consultant, or in any other
capacity), any business, organization or person (as defined below) other than
Parent or Surviving Entity (or any affiliate of Parent or Surviving Entity),
whose business, activities, products or services are competitive with the
Business conducted by Parent or Surviving Entity (or any affiliate of Parent
or Surviving Entity) as of the date hereof [other than activities by First
Internet Bank as specifically authorized by that certain Non-Exclusive
License Option, dated concurrently herewith.]. In addition, Stockholder
hereby agrees that during the period commencing on the date hereof and ending
60 months after the date hereof, Stockholder will not, directly or
indirectly, solicit Business, for or on behalf of Stockholder or any such
competitor, from any entity or person who was a client of Surviving Entity on
the date hereof. The parties intend that the covenants contained in the
preceding portion of this paragraph shall be construed as a series of
separate covenants, one for each of the separate geographical areas to which
this Agreement applies. Except for the geographic coverage, the terms of
each such covenant shall be deemed identical to the terms of the covenant
described above.
Stockholder hereby agrees that during the period commencing on the date
hereof and ending 24 months after the date hereof, Stockholder will not,
without the express written consent of Parent, directly or indirectly,
anywhere in the United States, solicit for employment, for or on behalf of
Stockholder or any such competitor, any officer or employee of Surviving
Entity, or encourage, for or on behalf of Stockholder or any such competitor,
any such officer or employee to terminate his or her relationship or
employment with Surviving Entity.
Notwithstanding anything herein to the contrary, Stockholder may make
passive investments in any enterprise, the shares of which are publicly
traded, if such investment constitutes less than five (5) percent of the
equity of such enterprise. As of the date of this Agreement, Stockholder has
no business interests in or relating to the Business whatsoever other than
his interest in Virtual Financial Services, Inc., and interests in public
companies of less than five (5) percent.
For purposes of this Agreement, the term "person" shall mean an
individual, a corporation, an association, a partnership, a limited liability
company, an estate, a trust, and any other entity or organization, and any
reference to an "affiliate" of a person shall be deemed to include any person
controlling, controlled by or under common control with such person.
Section 2. SCOPE OF AGREEMENT. The parties acknowledge that the time,
scope, geographic area and other provisions of this Agreement have been
specifically negotiated by sophisticated commercial parties and agree that
(a) all such provisions are reasonable under the circumstances of the
transactions contemplated by the Merger Agreement, (b) all such provisions
are given as an integral and essential part of the transactions contemplated
by the Merger Agreement, and (c) but for the covenants of Stockholder
contained in this Agreement, the other parties hereto would not have entered
into or consummated the transactions contemplated by the Merger Agreement.
Stockholder has independently consulted with Stockholder's counsel and has
been advised in all respects concerning the reasonableness and propriety of
the covenants contained herein, with specific regard to the Business to be
conducted by Parent, Surviving Corporation and their affiliates.
Section 3. CERTAIN REMEDIES; SEVERABILITY. It is specifically
understood and agreed that any breach of the provisions of this Agreement by
Stockholder will result in irreparable injury to the other parties hereto, that
the remedy at law alone will be an inadequate remedy for such breach and that,
in addition to any other remedy they may have, Parent and Surviving Entity
shall be entitled to enforce the specific performance of this Agreement by
Stockholder through both temporary and permanent injunctive relief without
the necessity of proving actual damages, but without limitation of their
right to damages and any and all other remedies available to them, it being
understood that injunctive relief is in addition to, and not in lieu of, such
other remedies. In the event that any covenant contained in this Agreement
shall be determined by any court of competent jurisdiction to be unenforceable
by reason of its extending for too great a period of time or over too great a
geographical area or by reason of its being too extensive in any other respect,
it shall be interpreted to extend only over the maximum period of time for
which it may be enforceable and/or over the maximum geographical area as to
which it may be enforceable and/or to the maximum extent in all other respects
as to which it may be enforceable, all as determined by such court in such
action. The existence of any claim or cause of action which Stockholder may
have against Parent, Surviving Entity or any of their affiliates shall not
constitute a defense or bar to the enforcement of any of the provisions of this
Agreement.
Section 4. JURISDICTION. The parties hereby irrevocably submit to the
non-exclusive jurisdiction of the courts of the State of California to
construe and enforce the covenants contained in this Agreement. In the event
that the courts of any state shall hold such covenants unenforceable (in
whole or in part) by reason of the breadth of such scope or otherwise, it is
the intention of the parties hereto that such determination shall not bar or
in any way affect the right of Parent, Surviving Entity or any of their
affiliates to the relief provided for herein in the courts of any other state
within the geographic scope of such covenants, as to breaches of such
covenants in such other respective states, the above covenants as they relate
to each state being, for this purpose, severable into diverse and independent
covenants.
Section 5. NOTICES. All notices, requests, demands and other
communications hereunder shall be deemed to have been given on the date of
delivery if delivered personally or by commercial delivery service, or sent via
telecopy (receipt confirmed) to the parties at the following addresses or
telecopy numbers (or such other address or telecopy numbers for a party as
shall be specified by like notice):
To Parent Digital Insight Corporation
or Surviving 00000 Xxxxxx Xxxx
Entity: Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: President
Facsimile: (000) 000-0000
with a copy (not constituting notice) to:
O'Melveny & Xxxxx LLP
000 Xxxxx Xxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxx, Esq.
Facsimile: (000) 000-0000
To Stockholder: Xxxxx Xxxxxx
0000 Xxxxxxxxxx Xxxxxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
with a copy (not constituting notice) to:
Xxxxxx & Xxxxxxx, Attorneys at Law, PC
000 Xxxxxxxx Xxxxxx, #0000
Xxxxxxxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxx X. Strain, Esq.
Facsimile: (000) 000-0000
Section 6. MISCELLANEOUS. This Agreement shall be governed by and
construed under the laws of the State of Delaware, and shall not be modified or
discharged in whole or in part except by an agreement in writing signed by
the parties hereto. The prevailing party in any controversy hereunder shall
be entitled to reasonable attorneys' fees and expenses. The failure of any
of the parties to require the performance of a term or obligation or to
exercise any right under this Agreement or the waiver of any breach hereunder
shall not prevent subsequent enforcement of such term or obligation or
exercise of such right or the enforcement at any time of any other right
hereunder or be deemed a waiver of any subsequent breach of the provision so
breached, or of any other breach hereunder. This Agreement shall inure to
the benefit of, and be binding upon, successors of Parent and Company by way
of merger, consolidation or transfer of substantially all the assets of
Parent or Company as applicable, and may not be assigned by Stockholder.
This Agreement supersedes all prior understandings and agreements between the
parties relating to the subject matter hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
VIFI LLC
By: Digital insight Corporation, its
Manager
By:
-------------------------------
Name:
Title:
DIGITAL INSIGHT CORPORATION
By:
-------------------------------
Name:
Title:
STOCKHOLDER
-------------------------------
[Signature page to Non-Compete Agreement]
EXHIBIT E
FORM OF PROMISSORY NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR
ANY STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED, SOLD OR HYPOTHECATED
WITHOUT COMPLIANCE WITH THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
OF 1933 AND ALL APPLICABLE STATE SECURITIES LAWS OR AN AVAILABLE EXEMPTION
THEREFROM.
$__________ Los Angeles, California
_______________, 2002
FOR VALUE RECEIVED, Digital Insight Corporation, a Delaware corporation
("Maker"), unconditionally promises to pay to the order of _______________
("Payee"), the principal amount of ____________________ dollars ($__________),
with interest on the unpaid principal amount from the date hereof until
principal is paid in full at a rate of six percent (6%) per annum. $_____ of
the principal hereof shall be payable on each of _____, 2002, _____, 2002,
_____, 2002 and _____, 200__. Interest shall be payable in arrears on the
same day principal is payable.
1. PAYMENT. Principal and interest on this note are payable in
lawful money of the United States at _______________, or such other place as
Payee shall have designated in writing for such purpose at least five
business days in advance of the applicable payment date.
If any payment of principal or interest on this note shall become due
on a Saturday, Sunday or legal holiday under the laws of the State of
California, or any other day on which banking institutions in The City of Los
Angeles are obligated or authorized by law or executive order to close, such
payment shall be made on the next succeeding business day in California, and
any such extended time of the payment of principal shall be included in
computing interest at the rate this note bears prior to maturity in
connection with such payment.
2. PREPAYMENT. Maker shall prepay in full the unpaid principal
amount of this note and any accrued and unpaid interest to, but excluding,
the date of repayment, on the earlier of (i) the closing of a sale of equity
securities or debt securities of Maker that results in Maker receiving at
least $25,000,000 in net proceeds, and (ii) any merger, sale of assets as an
entirety or substantially as an entirety, recapitalization or business
combination involving Maker where the holders of the Common Stock of Maker
immediately prior to such transaction do not own, directly or indirectly, 50%
or more of the aggregate voting power of the resulting entity. Principal and
interest on this note may also be prepaid at any time, in whole or in part,
without premium or penalty in lawful money of the United States. If Maker
elects to prepay this note, or any portion hereof, it shall give notice of
such prepayment in writing not less than ten (10) nor more than thirty (30)
days prior to the date fixed for such prepayment, which notice shall
specify: (i) the date fixed for prepayment; and (ii) the amount of such
prepayment. Prepayments shall include payment in cash of all accrued
interest on the amount so prepaid.
Upon receipt of any payment or prepayment of interest or principal,
Payee shall make a notation on this note of the payment received and provide
Maker with evidence acceptable to Maker that the payment has been received by
Payee and so noted. Upon payment in full, this note shall be surrendered to
Maker for cancellation.
3. AUTHORITY. Maker has the corporate power and authority to execute
and deliver this note, and to carry out its obligations hereunder, and no other
corporate proceedings on the part of Maker is necessary to authorize such
execution, delivery or performance. This note has been duly and validly
executed and delivered by Maker and constitutes a legal and binding obligation
of Maker, enforceable against Maker in accordance with its terms, except as
may be limited by bankruptcy, insolvency, reorganization, moratorium and other
laws affecting creditors' rights generally, or by general equitable principles
(regardless of whether enforcement is sought in a proceeding at law or in
equity).
4. Default. Maker shall be in default hereunder upon the occurrence
of any one of the following events:
(a) default in the payment of interest on this note to Payee when due,
which default shall continue and remain unremedied for at least five days;
(b) default in the payment of principal on this note to Payee when
due, whether at maturity or otherwise;
(c) a court having jurisdiction shall have entered a decree or order
granting relief in respect of Maker in any involuntary proceeding under any
applicable bankruptcy, insolvency, conservatorship, receivership,
reorganization or other similar law now or hereafter in effect, or appointing
a receiver, liquidator, trustee, assignee or custodian, or similar official,
of Maker or of all or substantially all of its property, or for the winding
up or liquidation of its affairs, and such decree or order shall have
remained in full force and unstayed for a period of 60 days; or
(d) Maker shall institute proceedings for relief under any applicable
bankruptcy, insolvency, conservatorship, receivership, reorganization or any
other similar law now or hereafter in effect, or shall consent to the
institution of any such proceeding against it, or shall consent to the
appointment of a receiver, liquidator, trustee, assignee or custodian, or
similar official, of it or of all or substantially all of its property, or
shall make an assignment for the benefit of creditors.
Whenever Maker shall be in default as aforesaid, Payee, at its option, may
declare the entire unpaid principal balance hereof together with all accrued
and unpaid interest thereon immediately due and payable. Maker agrees to pay
on demand all costs of collection, including reasonable attorneys' fees, paid
or incurred by Payee in enforcing any rights of Payee.
5. MISCELLANEOUS.
(a) All notices and other communications provided for hereunder shall
be in writing and mailed, telecopied or delivered as follows: if to Maker,
at its address specified opposite its signature below; and if to Payee, at
_________________________; or in each case at such other address as shall be
designated by Payee or Maker. All such notices and communications shall,
when mailed or telecopied or sent by overnight courier, be effective when
deposited in the mails, delivered to the overnight courier, as the case may
be, or sent by telecopier.
(b) No failure or delay on the part of Payee to exercise any right,
power or privilege under this note and no course of dealing between Maker and
Payee shall impair such right, power or privilege or operate as a waiver of
any default or an acquiescence therein, nor shall any single or partial
exercise of any such right, power or privilege preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies expressly provided in this note are cumulative to, and
not exclusive of, any rights or remedies that Payee would otherwise have. No
notice to or demand on Maker in any case shall entitle Maker to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of the right of Payee to any other or further action in any
circumstances without notice or demand.
(c) If any provision in or obligation under this note shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
(d) THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF MAKER AND PAYEE
HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD
TO CONFLICTS OF LAWS PRINCIPLES.
(e) ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST MAKER ARISING OUT OF OR
RELATING TO THIS NOTE MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF
COMPETENT JURISDICTION IN THE STATE OF CALIFORNIA, AND BY EXECUTION AND
DELIVERY OF THIS NOTE MAKER ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS
PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF
THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND
IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION
WITH THIS NOTE.
THIS NOTE (OR ANY INTEREST IN THIS NOTE) SHALL NOT BE (1) TRANSFERRED
BY PAYEE WITHOUT THE PRIOR WRITTEN CONSENT OF MAKER, WHICH CONSENT MAY BE
WITHHELD BY MAKER FOR ANY REASON OR (2) PLEDGED BY PAYEE WITHOUT THE PRIOR
WRITTEN CONSENT OF MAKER, WHICH CONSENT MAY NOT BE UNREASONABLY WITHHELD.
IN WITNESS WHEREOF, Maker has caused this note to be executed and
delivered by its duly authorized officer as of the day and year and at the
place first above written.
DIGITAL INSIGHT CORPORATION
By:
---------------------------
Title:
---------------------------
Address:
EXHIBIT F
TERMS OF OPTION FOR NON-EXCLUSIVE LICENSE
1. Option in favor of re: Member Data Services, Inc.
2. Term of option: Perpetual
3. If option is exercised, the terms of the license will be as follows:
a. non-exclusive license to use the source code to provide internet
banking solely to First Internet Bank;
b. no right to sublicense or franchise;
c. no obligations on the part of Surviving Entity or Parent to
maintain the source code or run the code on the servers of
Surviving Entity or Parent;
d. re: Member Data Services, Inc. to pay to Surviving Entity a fee
of $0.25 per customer/end user per month; and
e. such other terms and conditions as the parties may agree to.
EXHIBIT G
FORM OF MASTER INTERFACE SUPPORT
AND MARKETING AGREEMENT
DIGITAL INSIGHT
Master Interface Support and Marketing Agreement
This Master Interface Support and Marketing Agreement (the "Agreement")
is entered into as of the last date indicated in the Signature Page below
("Effective Date") by and between Digital Insight Corporation, located at
00000 Xxxxxx Xxxx, Xxxxxxxxx, Xxxxxxxxxx 00000 ("DI") and the entity whose
name and address are indicated in the Signature Page below ("Partner").
INTRODUCTION
WHEREAS, DI is in the business of providing home banking, cash
management and other interactive financial services through the Internet to
customers of financial institutions;
WHEREAS, Partner is the owner of certain data processing systems and is
in the business of providing transaction processing and other administrative
services to financial institutions;
WHEREAS, the Parties wish to have Partner continue to support existing
interface software and to develop new interface software that will allow DI's
systems to interface with Partner's core data processing systems;
WHEREAS, Partner wishes to make available DI's online interactive
financial products and services to Partner's financial institution clients;
and
WHEREAS, DI wishes to have Partner solicit, and Partner wishes to
solicit, orders for the online interactive financial services offered by DI
from Partner's financial institution clients.
NOW THEREFORE, DI and Partner (each a "Party"; together, the "Parties")
agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, each of the following terms has the meaning
set forth hereafter, such meaning to be equally applicable both to the
singular and plural forms of the terms herein defined:
1.1 "AFFILIATE" means, with respect to any Party, any individual or entity
that directly or indirectly controls, is controlled by or is under
common control with that Party. As used in this definition, "control"
means either (a) the ownership of greater than fifty percent (50%) of
an entity's voting securities or (b) the ability, through contract or
otherwise, to control an entity's operating activities.
1.2 "CERTIFICATION" is the process by which Partner tests the reliability
and functionality of DI Interface and certifies its suitability for
deployment, as set forth more fully in Section 2.1.3 herein.
1.3 "DELIVERY DATE" means the date on which the DI Services are generally
commercially available to the End Users, as determined by DI in its
sole discretion.
1.4 "DI CUSTOMER" means a financial institution that has contracted with
DI, or its Affiliate, to receive the DI Services.
1.5 "DI INTERFACE" means the software application, programs and
administrative platforms developed by DI and its Affiliates which will
permit the DI System to access and operate with Partner's data
processing system.
1.6 "DI MARKS" means the trademarks, trade names, service marks, service
names, logos that are proprietary to DI and its Affiliates, and any
additions, modifications or improvements to the foregoing that may be
made by DI from time to time.
1.7 "DI SERVICES" means the online interactive financial products and
services provided by DI, or by its Affiliates, to DI Customers,
including, without limitation, a proprietary home banking, cash
management and xxxx payment, lending, account aggregation, check
imaging, target marketing, and eCommerce portal products and services,
each as set forth more fully on Exhibit A attached hereto, and all
future improvements, enhancements and modifications thereto (whether in
the form of upgrades, new releases or new versions).
1.8 "DI SYSTEM" means the Equipment, the DI Interface, software and
administrative platform necessary to provide the DI Services.
1.9 "DI TECHNOLOGY" shall mean: (i) the DI System; (ii) any and all
technology, information, data, know-how, ideas, designs, software,
inventions, documentation, resources and all other tangible and
intangible items made, conceived or reduced to practice by DI alone or
jointly with Partner or any third party hereunder, or in the
maintenance, operation or improvement of the Services; and (iii) all DI
Intellectual Property rights in (i) and (ii).
1.10 "END USER" means the ultimate user of the DI Services.
1.11 "EQUIPMENT" means the router, channel service unit, dial-up modem, PCs,
(in some cases port servers or PC middleware controller) and connecting
cables required to provide the communications link from Partner's host
computer system to the DI frame relay.
1.12 "FEE BASED CUSTOMER" means a Partner Customer that executes a Master
Services Agreement with DI or its Affiliates for the purchase of DI
Services during the Term of this Agreement.
1.13 "INITIAL ORDER" means the DI Services originally procured by a Fee
Based Customer under a DI Master Services Agreement, and limited to the
initial term of that Master Services Agreement, for which Partner shall
receive Monthly Fees. Initial Order excludes any upgrades, add-ons and
additional products and services purchased by the Fee Based Customer
subsequent to the original execution of the Master Services Agreement.
1.14 "INTELLECTUAL PROPERTY" means any and all (by whatever name or term
known or designated) tangible and intangible and now or hereafter known
or existing: copyrights (including derivative works, as defined by the
United States Copyright Act, thereof), trade secrets, mask work rights,
know-how, patents, shop-rights and any other intellectual and industrial
property and proprietary rights, of every kind and nature throughout the
universe and however designated, and including all registrations,
applications, renewals and extensions thereof, but in no event shall
Intellectual Property include any trademark, trade name, service xxxx or
other origin or products or services.
1.15 "MONTHLY FEES" has the meaning set forth in Section 7.1 below.
1.16 "PARTNER CUSTOMER" means a financial institution customer of Partner.
1.17 "PARTNER INTERFACE" means the software and administrative platforms
developed by Partner which will interact with the DI Interface to
permit the DI System to access and operate with Partner's data
processing system.
1.18 "PARTNER MARKS" means the trademarks, trade names, service marks,
service names, logos that are proprietary to Partner, and any
additions, modifications or improvements to the foregoing that may be
made by Partner from time to time.
1.19 "PARTNER MATERIALS" has the meaning set forth in Section 2.1.1(a) below.
1.20 "PARTNER SYSTEM" means the Partner data processing system.
1.21 "TECHNICAL SUPPORT" means technical support and other assistance as may
be reasonably requested by DI for development, testing, Certification,
operation, maintenance, improvement and expansion of the DI Interface,
which shall include, without limitation, the "Baseline Technical
Support" as provided in Section 2.2 herein.
1.22 "TERM" has the meaning set forth in Section 11.1.
1.23 "TESTING ENVIRONMENT" has the meaning set forth in Section 2.1.2 below.
1.24 "WEB SITE" means a financial institution's presence or location on the
World Wide Web portion of the Internet, containing, without limitation,
a home page and additional documents and files.
ARTICLE II
INTERFACE SOFTWARE AND SERVICES.
2.1 INTERFACE DEVELOPMENT.
2.1.1. DEVELOPMENT AND TESTING OF INTERFACES
(a) Partner shall provide to DI or its Affiliates, free of
charge, all data fields and applications within the Partner
System, and other formats, layouts, specifications,
applications, information, sample file extracts, or other
materials within or related to the Partner System as
required for the development and testing of the DI
Interface, improvement and expansion of the DI Services,
and development of new products and features of the DI
Services (the "Partner Materials").
(b) Upon DI's reasonable request, Partner shall develop and
provide the Partner Interface to the Partner System and shall
use commercially reasonable efforts to maintain the Partner
Interface and to make such changes thereto in order to
permit the DI System and DI Interface to communicate and
operate effectively with the Partner System at all times.
2.1.2 TESTING ENVIRONMENT. Partner shall provide DI with a test
environment (including without limitation any hardware or
software, and test accounts including user names and passwords,
which shall be updated monthly) as necessary for the testing of
the DI Interface. DI hereby grants Partner a limited, revocable,
nontransferable license to use the DI Interface solely for
testing purposes.
2.1.3 CERTIFICATION. DI shall test, and Partner shall cooperate with
efforts to test, the reliability and interoperability of the DI
Interface and, if appropriate, certify its suitability for
deployment (the "Certification") (a) prior to Partner being
entitled to access data from, or otherwise communicate with, the
Digital Insight System, and (b) at such other times as DI, in its
sole discretion, may reasonably determine (including, without
limitation, in the event of a modification to the DI Interface).
Partner acknowledges that if Partner fails to cooperate fully
with DI Certification efforts as may be required from time to
time during the term of this Agreement, then the Fee Based
Customers' ability to access data from, or otherwise communicate
with, the DI System may be compromised and may result in losses
to DI which are subject to Partner's indemnification obligations,
and further that the Monthly Fees may be suspended until such
time as Partner furnishes such Certification cooperation. To
facilitate any Certification, Partner hereby agrees to provide to
DI free of charge any data, materials and assistance as DI may
reasonably request.
2.1.4 ACCESS. Partner will provide DI with access at any site within its
control where the Partner System is installed, as necessary for
installation of the DI Interface and Equipment to provide the DI
Services to a Fee Based Customer.
2.1.5 TECHNICAL COMMUNICATION. DI and Partner each agree to provide to
the other any information regarding the operation or performance of
either the DI System or the Partner System which is either
material or substantive prior to undertaking system changes which
may affect either the operation or performance of the DI System
or Partner System.
2.1.6 TELECOMMUNICATION CHARGES. DI, on behalf of DI Customers, will pay
the cost of telecommunications between DI and Partner systems
necessary to facilitate testing and maintaining the DI Interface,
and ongoing production environment to provide the DI Services to
Fee Based Customers.
2.1.7 SECURITY PROVISIONS. Partner and DI will operate under jointly
developed, mutually agreeable standards for password security
into the DI System.
2.1.8 CONNECTIVITY. For online interfaces, Partner will use commercially
reasonable efforts to support TCP/IP connectivity. For batch
interfaces, Partner will provide extract files via FTP through
dial-up asynch modem or frame connectivity.
2.2 TECHNICAL SUPPORT.
2.2.1 TECHNICAL SUPPORT. Partner will provide DI with all necessary
Technical Support during the Term of the Agreement. The parties
agree that the cost of any Technical Support provided by Partner
hereunder is included in the Monthly Fees set forth on Exhibit A.
2.2.2 TECHNICAL SUPPORT FOLLOWING EXPIRATION OR TERMINATION. Following
any expiration or termination of this Agreement, Partner shall
continue to provide Technical Support and Partner Materials to
DI, as requested by DI to provide the DI Services to DI's
existing Fee Based Customers as of the date of such termination
or expiration. DI shall pay Partner the Monthly Fees set forth on
Exhibit A during such period in which Partner provides the
Technical Support following expiration or termination.
2.2.3 FAILURE TO PROVIDE. Any failure by Partner to provide Technical
Support during the Term of the Agreement shall be deemed a material
breach of this Agreement. In addition, in the event of any
failure by Partner to provide Technical Support under this
Section 2.2, DI may suspend its payment obligations to Partner
for the duration of such failure without incurring any liability
for such suspension.
2.2.4 CHANGES IN PARTNER MATERIALS. In the event of any new release, new
version, modification, or bug-fix to the Partner System, Partner
will provide DI with any Partner Materials necessary for full
operability of the DI Interface with such new or modified Partner
System. In the event of a new release of the Partner System
(noted by a change to the left of the decimal place in the
release number, e.g., 1.0 to 2.0), Partner shall provide DI with
such Partner Materials one-hundred-and-eighty (180) days prior to
the general commercial availability of such new release. In the
event of a new version of the Partner System (noted by a change
to the right of the decimal place in the release number, e.g.,
1.1 to 1.2) Partner shall provide DI with such Partner Materials
ninety (90) days prior to the general commercial availability of
such new version. Notwithstanding the foregoing, Partner shall
use commercially reasonable efforts to provide DI with such
Partner Materials as promptly as reasonably possible.
2.2.5 CURRENTLY INSTALLED INTERFACES. If the DI Interface is currently
installed, any proposed additional expansion of, or modifications
to, the DI Interface relating to the existing Partner System as
of the Effective Date shall first be mutually agreed upon by the
Parties. Partner shall provide, or make available to DI, free of
charge, the Partner Materials (including without limitation all
data fields, formats, layouts, specifications, application
information, or other materials) within or related to the Partner
System as required for the development and testing of such
expanded or modified DI Interface.
2.2.6 GENERAL PARTNER OBLIGATIONS. Partner shall provide Digital Insight
with all information, facilities and assistance as DI may
reasonably require in order to fulfill its obligations hereunder,
including, but not limited to: (a) providing personnel capable of
interfacing with DI technical support personnel; (b) maintaining
proper hardware and software maintenance procedures and operating
methods; (c) implementing proper procedures for security of data,
accuracy of input and output, back-up plans, and escalation
procedures, including without limitation restart and recovery
plans in the event of hardware or software failure or
malfunction; (d) participating in DI's periodic disaster recovery
tests at no cost to DI; (e) submitting to, cooperating with and
participating in any financial, regulatory or other audits by DI
and/or any federal or state regulatory authorities; and (f)
providing to DI or DI's federal and/or state regulators, upon
written request, copies of any and all audited financial and
electronic data processing reviews and reports (i.e., third party
reviews).
2.3 LICENSES AND OWNERSHIP OF PROPRIETARY RIGHTS.
2.3.1 GRANT OF LICENSE. Partner hereby grants to Digital Insight a
limited, non-exclusive, nontransferable, worldwide, royalty-
freelicense to the use Partner Interface and the Partner Materials
solely for the purpose of providing the Digital Insight Services to
Partner and all future customers of Digital Insight during the term
of this Agreement.
2.3.2 OWNERSHIP. It is the intent and the desire of the Parties to
maintain separate technologies. As such, (a) Digital Insight shall
own all right, title and interest in and to the Digital Insight
Interface, the Digital Insight System, and all modifications,
updates, enhancements, software and materials developed by or for
Digital Insight in connection therewith, and (b) Partner shall
own all right, title and interest in and to the Partner
Materials, the Partner Interface and all modifications, updates,
enhancements, software and materials developed by Partner in
connection therewith. The intellectual property in any completed
documents or works which contain the Digital Insight Interface,
the Digital Insight System, or the Other Digital Insight
Interfaces, as well as the Partner Interface, Partner Materials,
or any combination thereof, shall not be deemed jointly owned by
the Parties. Neither of the Parties may on its own exploit any
such works except (i) under the terms of this Agreement; (ii)
with the express prior written permission from the other Parties;
or (iii) after all material owned by the other party has been
removed.
ARTICLE III
APPOINTMENT OF REPRESENTATIVE
3.1 APPOINTMENT. DI hereby appoints Partner as its non-exclusive
representative to market and promote DI Services and to solicit orders
for DI Services, and Partner accepts such appointment, all in
accordance with the terms and conditions of this Agreement. Partner
acknowledges and agrees that, with regard to Partner, this appointment
is non-exclusive as to geographic area and that DI may itself or
through resellers or agents, resell or market DI Services in any given
geographic area at any time. Partner shall solicit orders only from
Partner Customers, and shall not market and promote DI Services to (i)
customers of other entities providing core processing services or
service bureaus to financial institutions; (ii) Internet service
providers or ASP aggregators; (iii) software providers, or other
re-marketers of online financial services; (iv) any other entity that
intends, directly or indirectly, to resell or license the DI Services
to financial institutions; or (v) DI Customers with whom DI has an
existing contractual relationship. Partner has no authority to appoint
any associate re-marketers or sub-dealers of DI Services without first
obtaining DI's written consent. Partner agrees that all orders shall
be solicited only in conjunction with the data processing services of
Partner and acknowledges that it has no authority to solicit orders for
DI Services on a stand-alone basis.
3.2 RELATIONSHIP OF PARTIES. DI and Partner are separate and independent
entities. Nothing in this Agreement shall be construed to create a
relationship other than that of independent parties contracting with
each other solely for the purpose of carrying out the provisions of
this Agreement. Neither Party is granted any express or implied right
or authority by the other Party to assume or create any obligation or
responsibility on behalf of or in the name of the other Party in any
manner whatsoever unless an authorized representative of the other
Party first consents thereto in writing. Each Party retains its own
authority and responsibility for its organization. Partner shall have
the right to appoint and employ, and shall be responsible for its own
salespeople, employees, agents and representatives and shall be solely
responsible for determining the manner of its performance under this
Agreement.
3.3 PERIODIC MEETINGS. Partner and DI shall meet at least annually for the
purpose of reviewing and discussing activity related to this Agreement.
3.4 PARTNER EXCLUSIVITY. Partner agrees that during the Term of this
Agreement, Partner shall not directly or indirectly market, sell,
resell, license, distribute, recommend, endorse or otherwise promote
any eFinance services or online banking solutions that are competitive
to the DI Services to the Partner Customers or prospective Partner
Customers.
ARTICLE IV
PARTNER RESPONSIBILITIES.
4.1 SALES EFFORTS. Partner shall exert commercially reasonable efforts to
market and promote DI Services to Partner Customers and prospective
Partner Customers. Without limiting the foregoing, Partner shall:
4.1.1 On a quarterly basis provide DI with a complete contact list of
Partner Customers to enable DI to conduct mailing and telemarketing
campaigns at DI's expense,
4.1.2 Allow DI to exhibit marketing information and demonstrations of the
DI Services, and provide speaking opportunities at all events
sponsored by Partner where such Internet financial services are
included in the event, provided that DI pay all applicable fees
as charged by Partner to other endorsed providers, and
4.1.3 Include DI in Partner listings of business partners whether written
or electronic, with product and company information and refer to DI
as Partner's Exclusive Partner as set forth in Sections 3.4 and
6.4 herein.
4.2 TRAINING. DI will conduct up to one (1) Partner sales qualification
training session per year at a Partner sales meeting at the expense of
DI. Partner shall provide DI with a complete contact list of its sales
and account management personnel to enable DI to directly communicate
DI Services information to such personnel.
4.3 CONTACT POINTS. The parties will each assign an Alliance Manager to
oversee the Parties relationship and act as the primary point of
contact to address and respond to inquiries and issues that may arise
under this Agreement. Additionally, Partner shall appoint and maintain
an individual to serve as a primary point if contact for technical
issues regarding interface, implementation, and testing related issues
concerning the DI System and Partner System.
ARTICLE V
ORDER PROCESS
5.1 PRICING. Partner shall solicit orders for DI Services at the
then-current list prices established by DI. DI reserves the right to
amend the price list, at its sole discretion. DI will promptly
communicate the new price list to Partner in writing. DI will honor
its prices quoted by Partner in any outstanding proposals presented
prior to the receipt of the new price list for a period of sixty (60)
days from the date of notice to Partner of the price change.
5.2 LEADS AND CUSTOMER CONTRACTS. Partner shall forward all leads it
receives for the DI Services to DI in the form set forth on Exhibit B
Lead Registration Form. DI may, in its sole discretion, accept or
reject the Lead Registration Form. DI shall have the exclusive and
final authority to negotiate the terms of the service contract (the
"Master Services Agreement" or "MSA") with a potential Fee Based
Customer for DI Services. Partner acknowledges that DI shall have no
obligation to provide the DI Services with respect to any financial
institution until such time as DI has obtained an executed MSA from
such financial institution. Partner agrees to provide such sales
assistance as is reasonably requested by DI to close the sale.
5.3 INVOICING. DI will be responsible for all invoicing of fees for the DI
Services with respect to its fees to Fee Based Customers. Partner
agrees to provide such assistance as is reasonably requested by DI from
time to time to facilitate the collection process. Partner will be
solely responsible for all invoicing for its own services to Fee Based
Customers.
5.4 FEES FOR INTERFACE. Partner may charge a fee to Fee Based Customers,
including a one-time implementation fee and recurring access fee, so
long as such charges do not exceed the fees for similar interface
software offerings provided to other Partner Customers. Moreover,
Partner agrees that any fees charged by Partner to a Fee Based Customer
shall not exceed the fees charged for similar interface software
offerings provided to the Fee Based Customer by Partner.
ARTICLE VI
ADVERTISING AND PROMOTION.
6.1 MARKETING MATERIALS. DI will provide to Partner, free of charge,
sufficient quantities of marketing materials for the promotion of the
DI Services. Partner shall not use the DI Marks on any stationary,
documents or advertising without first obtaining the written consent of
DI.
6.2 ADVERTISING AND PROMOTIONS. During the Term of this Agreement, Partner
will promote and present DI as Partner's Exclusive Partner for eFinance
services and/or online banking solutions, as set forth in Section 3.4
herein. All advertising placed by Partner shall be at its sole expense.
All advertising placed by DI shall be at the sole expense of DI. Each
Party, respectively, shall have the opportunity to review and approve in
writing all advertising and promotions placed by the other where the
non-placing Party's name, product or service name, logo or trademark
appears.
6.3 ACKNOWLEDGMENT OF RELATIONSHIP/AFFILIATION. For purposes of press
releases and other public announcements regarding Partner
relationship/affiliation with DI, Partner agrees to request in writing
prior to publication, permission to use the DI name, product or service
name, logo or trademark and as such DI will not deny such requests
without cause. In addition, DI agrees to obtain in writing prior to
publication, permission to use the Partner name, logo or trademark.
6.4 DEMONSTRATION COPIES.
6.4.1 In the performance of Partner's obligations hereunder, it may be
necessary for Partner to demonstrate the DI System and DI Services.
Accordingly, DI will provide Partner with a demonstration copy(ies)
of the software program and applications, as appropriate, that
enable the DI Services (the "Demo Software") and all subsequent
updates, at no additional cost. Subject to the terms and conditions
herein, during the Term of this Agreement DI hereby grants to
Partner a non-exclusive, non-transferable, limited license to use
the Demo Software for the sole purpose of demonstrating the DI
Services to Partner Customers and prospective Partner Customers.
6.4.2 Partner shall not copy, alter, modify, translate, decompile,
disassemble, reverse engineer, or otherwise attempt to derive
source code, or create derivative works of the Demo Software, or
any part thereof, or knowingly allow others to do so, during or
after the Term.
6.4.3 Except as otherwise specifically provided in this Agreement, Partner
shall not loan, rent, lease, provide, sub-license or otherwise
transfer the Demo Software, including any part thereof, to any
other person or entity.
6.4.4 The Demo Software and all copies thereof are and shall remain the
exclusive property of DI and must be returned to DI upon
termination or expiration of this Agreement, or destroyed upon
the request of DI.
ARTICLE VII
COMPENSATION
7.1 MONTHLY FEES. DI will pay Partner a monthly fee in the amount
corresponding to the schedule set forth in Exhibit A attached hereto
for each Fee Based Customer for all Initial Orders for a period not to
exceed one (1) year from the Delivery Date applicable to such Fee Based
Customer ("Monthly Fees") so long as the Fee Based Customer remains a
DI Customer. The Monthly Fees consist of Partner's percentage share of
the net fees actually received by DI from Fee Based Customers for
monthly charges, as described further in Exhibit A. Partner acknowledges
and agrees that the Monthly Fees shall apply only to new Fee Based
Customers following the Effective Date and shall not apply to any Fee
Based Customers who are DI Customers at or prior to the Effective Date,
even if such DI Customer is also a Partner Customer.
7.2 DELIVERY DATE. The Monthly Fee shall not accrue for any Fee Based
Customer until thirty (30) days following the Delivery Date for such
Fee Based Customer. In no event shall DI have any obligation to pay
Monthly Fees in the event of any suspension, failure or termination by
Partner of its Technical Support obligations hereunder.
7.3 PAYMENT. DI shall pay Partner all amounts due Partner via automated
clearing house ("ACH") or check within thirty (30) days following the
end of the calendar month for which such Monthly Fees have accrued.
7.4 RIGHT TO AUDIT. Each Party shall maintain complete and accurate
records with respect to its obligations hereunder. Each Party hereby
grants the other the right to audit such records, provided that any
such audits may occur no more than once per calendar year upon at least
ten (10) days prior written notice and subject to any such auditor
entering into a confidentiality agreement reasonably acceptable to the
Party whose records are subject to inspection, and further subject to
any confidentiality obligations owed to third parties. All such records
shall be made available to the other Party's independent certified
public accountant for the purpose of confirming the accuracy of any
reports, cooperative advertising expenses or payments made hereunder.
ARTICLE VIII
NON-DISCLOSURE AND USE OF MARKS
8.1 CONFIDENTIAL INFORMATION AND TRADE SECRETS.
8.1.1 For purposes hereof "Confidential Information" shall mean all
information exchanged by Partner and DI in connection with: the
negotiation, execution and performance of this Agreement; any
other data or information that is sensitive material and not
generally known to the public, including, but not limited to,
pricing (including, without limitation, any DI price lists),
products, services, marketing and sales plans and estimates,
financial data, operations, customer relations or service and
business performance results, customer lists, and End User data;
any other technical information, design, process, procedure,
formula, invention, know-how or improvement that is commercially
valuable and secret; all confidential or proprietary concepts,
documents, reports, data (including financial institution end
user data), specifications, computer software, flow charts and
databases provided by either Party during the negotiation,
execution or performance of this Agreement. In addition,
Confidential Information shall include, without limitation, the
DI Technology, the DI System, the Partner System, the Partner
Materials and all elements and components thereof.
8.1.2 In the event either Partner or DI discloses Confidential Information
to the other, the receiving Party shall: (1) use such Confidential
Information only for the purposes for which such disclosure was
made; (2) restrict dissemination to employees on a need-to-know
basis and only to those employees who have executed a nondisclosure
agreement as protective of the other Party's Confidential
Information as of its own confidential information, and which makes
such other Party under this Agreement a third party beneficiary of
such nondisclosure agreement, with all rights necessary to fully
enforce the nondisclosure agreement with respect to its own
Confidential Information; (3) prohibit dissemination to uninvolved
third parties, such as investors and other nonaffiliated entities;
and (4) guard such information from disclosure with the same degree
of care the receiving Party guards its own information of a like
character, but under no circumstances less than a reasonable degree
of care.
8.1.3 Confidential Information previously disclosed by either Party to the
other Party and presently in the possession of the other Party
shall be deemed to have been disclosed under this Section.
8.1.4 Confidential Information shall not include information that is or
becomes publicly known through no wrongful act of the recipient
or is received from a third party free to disclose it without
obligation to the owner.
8.1.5 The Parties agree that the obligations hereunder are necessary and
reasonable in order to protect the other Party's business, and
expressly agree that monetary damages would be inadequate to
compensate the other Party for any breach by such Party of any
covenants and agreements set forth herein. Accordingly, the
Parties agree and acknowledge that any such violation or threatened
violation will cause irreparable injury to the other Party and that,
in addition to any other remedies that may be available in law, in
equity or otherwise, the other Party shall be entitled to obtain
injunctive relief against the threatened breach of this Agreement
or the continuation of any such breach, without the necessity of
proving actual damages.
8.1.6 The rights and obligations set forth in this Section 8.1 shall
continue until such time as the Confidential Information is made
publicly known and generally available through no act or omission
of the receiving party.
8.2 SERVICE MARKS. Subject to the terms and conditions of this Agreement,
DI grants to Partner a limited, non-exclusive, personal, non-transferable
and royalty-free right and license to use the DI Marks in the form
provided by DI, both in word and design form, solely in connection with
activities which are designed to promote and support the DI Services
hereunder. Subject to the terms and conditions of this Agreement, Partner
grants to DI a limited, non-exclusive, personal, non-transferable and
royalty-free right and license to use the Partner Marks in the form
provided by Partner, both in word and design form, solely in connection
with activities which are designed to promote and support the DI Services
hereunder. The Parties agree to use the marks only in accordance with
this Agreement.
ARTICLE IX
WARRANTIES AND LIMITATIONS
9.1 WARRANTIES. Each Party represents and warrants to the other Party
hereto that such Party has the full power to enter into this Agreement,
to carry out its obligations under this Agreement, and to grant or
accept, respectively, the appointments, rights and licenses granted
hereunder.
Additionally, Partner represents and warrants that:
(i) The Partner Materials are and at all times will remain
complete, accurate and current;
(ii) The Partner Materials, Partner System, Partner Interface, and
the Testing Environment, and all components thereof, do not
and will not infringe any third party's intellectual property,
confidentiality or privacy rights; and
(iii) The Partner Materials, Partner System, Partner Interface, and
the Testing Environment, and all components thereof, do not
and will not violate any law, regulation or statute in the
applicable jurisdiction.
9.2 SERVICES WARRANTIES. As between DI and Partner, DI shall be solely
responsible for performing all actions and accepting liability arising
from any DI Services provided by DI, and all warranties, if any, for
the DI Services shall run directly from DI to DI Customers.
9.3 NO WARRANTIES ON BEHALF OF DI. In no event shall Partner make any
representation, guarantee or warranty concerning the DI Services except
as expressly authorized in writing by DI. DI MAKES NO WARRANTIES OR
CONDITIONS TO PARTNER, EXPRESS, STATUTORY, IMPLIED, OR OTHERWISE, AND
DI SPECIFICALLY DISCLAIMS THE IMPLIED WARRANTIES AND CONDITIONS OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
9.4 LIMITATION OF LIABILITY. EXCEPT FOR ANY LIABILITY ARISING UNDER SECTION
8.1, IN NO EVENT SHALL DI'S LIABILITY ARISING OUT OF THIS AGREEMENT
EXCEED THE TOTAL AMOUNT OF MONTHLY FEES PAID TO PARTNER BY DI HEREUNDER
DURING THE CALENDAR YEAR PRECEDING COMMENCEMENT OF THE ACTION GIVING
RISE TO SUCH LIABILITY. IN NO EVENT WILL DI BE LIABLE TO PARTNER OR
ANY THIRD PARTY FOR ANY CONSEQUENTIAL, INCIDENTAL, INDIRECT, SPECIAL OR
PUNITIVE DAMAGES WHATSOEVER (INCLUDING WITHOUT LIMITATION, DAMAGES FOR
LOSS OF PROFITS, LOSS OF USE, BUSINESS INTERRUPTION, LOSS OF DATA OR
OTHER PECUNIARY LOSS), IN CONNECTION WITH OR ARISING OUT OF THE
FURNISHING, PERFORMANCE OR USE OF THE INTERFACE, SOFTWARE OR SERVICES,
WHETHER BASED UPON CONTRACT, TORT OR ANY OTHER LEGAL THEORY, INCLUDING
NEGLIGENCE, EVEN IF DI HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES. THIS LIMITATION SHALL APPLY NOTWITHSTANDING ANY FAILURE OF
THE ESSENTIAL PURPOSE OF ANY LIMITED REMEDY PROVIDED HEREIN.
ARTICLE X
INDEMNIFICATION
10.1 BY DI. DI shall defend and/or settle any claims, suits, actions or
proceedings (collectively, a "Claim") brought by any third party against
Partner that allege: (i) a breach of any of DI's warranties in Article IX
herein; (ii) that the DI Interface, the DI System or the Demo Software
infringes their copyright, trademark or patent rights; or (iii) a breach
of DI's obligations under Section 8.1 herein. DI's obligations under this
Section 10.1 shall be subject to Partner providing DI with: (i) sole
control of any Claim and any settlement negotiations; (ii) prompt written
notice of the Claim; and (iii) full information and cooperation and
reasonable assistance, at DI's expense (excluding compensation for time
of personnel) in connection with the defense and/or settlement of the
Claim. Subject to the foregoing, DI shall promptly pay any settlement or
final judgment entered against Partner to the extent such settlement or
judgment is based upon such a Claim. Notwithstanding any provision to the
contrary stated herein, DI will not be liable for any infringement based
on or a claim arising out of (a) a modification of the DI System, DI
Services, DI Interface or the Demo Software; (b) a modification of the DI
Marks or DI Technology by any party other than DI; or (c) the combination
of the DI Marks or DI Technology with other software, items or processes
not furnished by DI if such infringement or loss would have been avoided
by the use of the DI Marks or DI Technology alone. NOTWITHSTANDING
SECTION 8.1.5, THE FOREGOING OBLIGATIONS CONSTITUTE DI'S SOLE LIABILITY
AND PARTNER'S SOLE REMEDY WITH RESPECT TO INFRINGEMENT OF INTELLECTUAL
PROPERTY RIGHTS RELATING TO THE DI SERVICES, DI TECHNOLOGY OR DI MARKS.
10.2 BY PARTNER. Partner shall defend and/or settle any claims, suits, actions
or proceedings (collectively, a "Claim") brought by third parties against
DI that allege: (i) a breach of any of Partner's warranties in Article IX
herein; (ii) any claim arising out of Partner's representations or
warranties regarding the DI Services other than those warranties expressly
authorized in writing by DI; (iii) any other misrepresentations of
Partner; or (iv) a breach of Partner's obligations under Article II, III,
IV, or Section 8.1 herein. Partner's obligations under this Section 10.2
shall be subject to DI providing Partner with: (i) sole control of any
Claim and any settlement negotiations; (ii) prompt written notice of the
Claim; and (iii) full information and cooperation and reasonable
assistance, at Partner's expense (excluding compensation for time of
personnel) in connection with the defense and/or settlement of the Claim.
Subject to the foregoing, Partner shall promptly pay any settlement or
final judgment entered against DI to the extent such settlement or
judgment is based upon such a Claim. Notwithstanding any provision to the
contrary stated herein, Partner will not be liable for any infringement
based on or a claim arising out of (a) a modification of the Partner
Marks or Partner Materials by any party other than Partner; or (b) the
combination of the Partner Marks or Partner Materials with other software,
items or processes not furnished by Partner if such infringement or loss
would have been avoided by the use of the Partner Marks or Partner
Materials alone. NOTWITHSTANDING SECTION 8.1.5, THE FOREGOING OBLIGATIONS
CONSTITUTE PARTNER'S SOLE LIABILITY AND DI'S SOLE REMEDY FOR
MISREPRESENTATION OR INFRINGEMENT OF INTELLECTUAL PROPERTY RIGHTS
RELATING TO THE PARTNER MATERIALS OR PARTNER MARKS.
ARTICLE XI
TERM
11.1 TERM. This Agreement shall begin on the Effective Date and shall extend
for an initial term of five (5) years. This Agreement shall
automatically renew in three (3) year increments thereafter unless
either Party serves written notice of non-renewal to the other no less
than sixty (60) days prior to any renewal date of this Agreement. The
initial term and any renewal term shall be referred to herein as the
"Term."
11.2 TERMINATION FOR BREACH. Either Party shall have the right to terminate
this Agreement by written notice if the other Party is in material
breach of any terms of this Agreement and the breaching Party fails to
remedy such breach within thirty (30) days after receipt of written
notice of the breach from the non-breaching Party; provided, however,
that either Party may immediately terminate this Agreement upon a
material breach of any of the terms in Section 8.1.
11.3 RETURN OF MATERIALS. Upon the termination or expiration of this
Agreement, Partner's appointment under this Agreement shall terminate.
In that event, Partner shall immediately cease to use and shall either
destroy or return to DI all promotional and advertising materials and
all copies of the DI Interface or Demo Software in its possession.
11.4 EFFECT OF TERMINATION. The termination or expiration of this Agreement
for reasons other than breach by Partner shall not affect Partner's
rights to the Monthly Fees then-accrued and payable under Section 7.1;
provided, however, that DI may offset and deduct from any or all
amounts owed to Partner, the amount of its damages arising out of
Partner's breach of this Agreement. Partner shall be solely responsible
for all commitments and obligations incurred or assumed by Partner during
the Term of this Agreement or thereafter to Partner Customers, and DI
shall not be held responsible in any manner for such commitments,
irrespective of any suggestion or recommendation with respect thereto by
DI or any of its employees or representatives unless DI has expressly
agreed in writing to assume the commitment or obligation.
ARTICLE XII
GENERAL TERMS AND CONDITIONS
12.1 CHANGE. Partner shall promptly advise DI of any material changes in
Partner's status, organization, personnel, and similar matters that may
directly or indirectly impact the provision of DI Services to Fee Based
Customers.
12.2 SURVIVAL. In the event of any termination or expiration, Articles VIII,
X and the provisions of Sections 2.2.2, 2.3, 6.5.4, 11.3, 11.4 and 12.2
and any payment obligations incurred prior to the effective date of
such expiration or termination, shall survive.
12.3 ARBITRATION. The Parties agree that, notwithstanding Section 8.1.5,
all disputes arising out of this Agreement, the subject matter thereof,
or related thereto shall be submitted to arbitration, which shall be
the sole and exclusive means for resolution of such disputes and shall
be final and binding upon the Parties. Any such arbitration shall be
held in the City of Los Angeles, California or such other location as
the Parties shall mutually agree upon, and shall be governed by the
rules of the American Arbitration Association then in force. The
dispute shall be resolved by one (1) arbitrator which is acceptable to
both Parties. In the event that the Parties cannot agree upon a
mutually acceptable arbitrator, either Party may request the American
Arbitration Association to appoint an arbitrator pursuant to the
required arbitrator's background criteria above and the Commercial
Arbitration Rules. The arbitrator shall issue a reasoned award upon
conclusion of the hearing.
12.4 INJUNCTIVE RELIEF. Pursuant to Section 8.1.5, either Party may obtain
injunctive relief to remedy an actual or threatened unauthorized
disclosure of Confidential Information or to remedy an actual or
threatened unauthorized use of the Confidential Information, or other
unauthorized use of proprietary rights, without first resorting to
arbitration. Both Parties agree that such disclosures or use will
cause damage to the owner of the information or right that cannot be
adequately compensated through monetary damages and that injunctive
relief may issue without proof of actual monetary damages.
12.5 NO THIRD PARTY BENEFICIARY RIGHTS. With the sole exception of Section
8.1.2 herein, no provision of this Agreement is intended or shall be
construed to provide or create any third party beneficiary right or any
other right of any kind in any third party, including Partner Customer
or DI Customer or a Fee Based Customer.
12.6 ASSIGNMENT. No Party may assign its rights or obligations hereunder
without the written consent of the other Party, which consent shall not
be unreasonably withheld.
12.7 PERFORMANCE EXCUSED. A Party shall be excused for a failure to perform
hereunder to the extent that such failure is directly or indirectly
caused by any occurrence commonly known as force majeure, including,
without limitation, delays arising out of acts of God, acts or orders
of a government, agency or instrumentality thereof, acts of public
enemy (including terrorism), riots, embargoes, strikes or other
concerted acts of workers (whether of the providing Party or other
persons), casualties or accidents, deliveries of materials,
transportation or shortage of cars, trucks, fuel, power, labor or
materials, or any other causes, circumstances or contingencies within
or without the United States of America, which are beyond the control
of the service provider.
12.8 NOTICE. Any notice in connection with this Agreement shall be deemed
duly given if mailed by prepaid registered or certified mail (return
receipt requested) or sent via facsimile to the addressee at the
address (and facsimile number) shown in the Signature Page below and
shall be deemed received as noted on the return receipt. At any time
each Party may specify a change of address by like notice.
12.9 GOVERNING LAW. The laws of the State of California shall govern this
Agreement, without regard to the conflict of laws principles thereof.
12.10 SEVERABILITY. Any portion or provision of this Agreement which is
invalid, illegal or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity,
illegality or unenforceability, without affecting in any way the
remaining portions or provisions hereof in such jurisdiction or, to the
extent permitted by law, rendering that or any other portion or
provision hereof invalid, illegal or unenforceable in any other
jurisdiction.
12.11 MODIFICATIONS, AMENDMENTS OR WAIVERS. Except as otherwise provided
herein, provisions of this Agreement may be modified, amended or waived
only by a written document specifically identifying this Agreement and
signed by a duly authorized executive officer of each of the Parties.
12.12 ENTIRE AGREEMENT. This Agreement (including the Exhibits hereto)
constitutes the entire agreement of the Parties with respect to the
subject matter hereof and supersedes all prior written or oral and all
contemporaneous oral agreements, understandings and negotiations
between the Parties with respect to the subject matter hereof. Partner
acknowledges that it has not been induced to enter this Agreement by
any representations or statements, oral or written, not contained in
this Agreement.
12.13 COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be considered one and the same Agreement and shall become
effective when one or more counterparts have been signed by each of the
Parties and delivered to the other Party.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed by the duly exercised signatures set forth below.
Partner: DI:
Re: Member Data Services, Inc. Digital Insight Corporation
Signed: Signed:
------------------------- -------------------------
By: By:
------------------------- -------------------------
Its: Its:
------------------------- -------------------------
Date: Date
------------------------- -------------------------
Address: Address:
re: Member Data Services, Inc. DI Corporation.
0000 Xxxxxxxxxx Xxxxxxxxx 00000 Xxxxxx Xxxx
Xxxxxxxxxxxx, Xxxxxxx 00000-0000 Xxxxxxxxx, XX 00000
Attn: Chief Executive Officer Attn: Chief Executive Officer
Contact Information: Contact Information
Telephone: Telephone:
------------------------- -------------------------
Fax: Fax:
------------------------- -------------------------
EXHIBIT A
1. DI SERVICES AND MONTHLY FEES
I. QUALIFYING PRODUCTS
With respect to Fee Based Customers, for each of the individual component
products of the DI Services set forth below, Partner shall receive the stated
percentage of the "net revenue"* of the monthly charges for each of the
products described below.
2. Banking
DI SALES DESCRIPTION
CODE
1005 AXIS Internet Banking Monthly Minimum
3. AXIS Internet Banking - Volume PRICING
DI SALES DESCRIPTION
CODE
1005 Internet Banking Customer Access Monthly Fees 0-5000 active users
1005 Internet Banking Customer Access Monthly Fees 5001-10000 active
users
1005 Internet Banking Customer Access Monthly Fees 10001-15000 active
users
1005 Internet Banking Customer Access Monthly Fees 15001-20000 active
users
1005 Internet Banking Customer Access Monthly Fees 20001-24000 active
users
1005 Internet Banking Customer Access Monthly Fees 24001-29000 active
users
1005 Internet Banking Customer Access Monthly Fees 29001-35000 active
users
1005 Internet Banking Customer Access Monthly Fees 35001-40000 active
users
1005 Internet Banking Customer Access Monthly Fees more than 40001
active users
AXIS LENDING - CONSUMER
DI SALES DESCRIPTION
CODE
2511 Call Center: Alert List
2516 Call Center: Pre Approval
2524 Call Center Update Pre Approval/Alert
2526 Call Center: Automated Decision
2531 Call Center: Decision with Review
2541 AnyTime Lender: Monthly Minimum
2562 AnyTime Lender: Automated Decision
2567 AnyTime Lender: Decision with Review
2571 AnyTime Lender: Pre Approval
2576 AnyTime Lender: Alert List
2580 AnyTime Lender Update Pre Approval/Alert List
2591 Desktop Lender: Automated Decision
2592 Desktop Lender: Pre Approval
2593 Desktop Lender: Alert List
AXIS CASH MANAGEMENT
DI SALES DESCRIPTION
CODE
3005 AXIS Cash Management Monthly Minimum
3010 AXIS Cash Management Per Company
AXIS ADVANCED TARGET MARKETING
DI SALES DESCRIPTION
CODE
4511 ATM Application: ATM Plus Monthly Fee
4516 ATM Application: ATM Premier Monthly Fee
4518 ATM Application: ATM Survey Module Monthly Fee
II. REVENUE SHARE OF MONTHLY FEES
PLAN DESCRIPTION SHARE OF
MONTHLY
RECURRING
FEES
Platinum 1) Partner exclusively promotes DI, can 10%
support other providers to meet customer
requirements; 2) has no internal product
offering(s); and 3) supports the DI Interface
III. MISCELLANEOUS
* "Net Revenue" means the revenue actually received and recognized by DI for
the ordinary monthly charges invoiced to a Fee Based Customer for the
products and services described above, less any returns, credits, set-offs
and other adjustments; does not include any upfront charges, pass-through
expenses or extraordinary fees, such as one-time implementation fees, early
termination fees or fees for telecommunication lines.
THE PARTIES INTEND THAT EACH OF THE FOREGOING COMPENSATION ARRANGEMENTS
BE STRUCTURED IN A MANNER THAT COMPLIES WITH APPLICABLE STATE AND FEDERAL
LAWS. IN THE EVENT ANY OF THE PAYMENT COMPONENTS IS DECLARED NULL, VOID OR
OTHERWISE UNENFORCEABLE BY OPERATION OF LAW, SUCH COMPONENT SHALL BE SEVERED
FROM THIS AGREEMENT TO THE MINIMAL EXTENT NECESSARY, AND THE OTHER COMPONENTS
SHALL OTHERWISE BE AND REMAIN IN FULL FORCE AND EFFECT.
EXHIBIT B
4. LEAD REGISTRATION FORM
Partner Information (required)
Partner Company Name: Primary Contact/ Date Date
Title: Submitted: Closed:
Partner Street Address: Partner Phone: Partner Fax:
Partner City/State/Zip Code: Partner Email: Partner Sales Executive:
Prospect Information (required)
Financial Institution ("FI") Name: DI Services: (Check all that apply)
Office Location & Primary Contact Name: [ ] AXIStm Internet Banking
[ ] Xxxx Payment - Metavante
Partner Sales Executive: [ ] Xxxx Payment - CheckFree
[ ] AXIStm Cash Management
[ ] AXIStm Advanced Target Marketing
[ ] Other:
------------------------
Estimated Setup Fees to Digital Insight
US$
---------------------------------
Engagement Information (required)
Brief description of Partner's project/contract with FI:
[ ] DI approves this Lead Registration Form. This Lead Registration Form
expires on the earlier of: (i) the Effective Date of the Fee Based Customer
MSA between DI and the FI; or (ii) six (6) months following the Date
Submitted written above. Thereafter, DI is free to approach the FI regarding
a direct sale of any DI Services.
[ ] DI rejects this Lead Registration Form.
Acceptance Acknowledgement
Partner Alliance Manager: Signature and Date:
EXHIBIT H
CREDIT CARD SERVICES ASSETS
ViFi
Card Services
EQUIPMENT
Arksys software
Software ITM System
Data for AS400
AS 400
AS 400 Software
IBM tape drive
OTHER EQUIPMENT (A PORTION FOR CARD SERVICES)
Adtran communication device
Communication equipment
P.C.'s
Racks
UPS
Firewall
Routers
Cubicles, etc.
OTHER ASSETS
Current customer contracts (Service agreements)
